Churchill Falls Impacts

The Upper Churchill Falls hydroelectric project remains one of the most notorious ventures in Newfoundland and Labrador's resource-development history. It resulted in devastating and irreparable social losses, reaped poor economic benefits for the province's people, and dramatically altered the environment surrounding the falls. It also created a great deal of political animosity between Newfoundland and Labrador and Québec after the two provinces negotiated an agreement in the 1960s allowing Hydro-Quebec to receive most of the development's profits over a 65-year period.

Churchill Falls, ca. 1980s
Churchill Falls, ca. 1980s
The damming of the Churchill River diverted hundreds of waterways and reduced Labrador’s once massive Churchill Falls (also known as Grand Falls and Patshetshunau) to almost a trickle.
Reproduced by permission of Brian C. Bursey. From Brian C. Bursey, Exploring Labrador (St. John's, NL: Harry Cuff Publications, ©1991) 33.

Accompanying economic losses were tremendous social and cultural consequences. The Innu suffered irreparable losses without warning or compensation after the development destroyed ancestral lands, hunting grounds, and burial sites they had used and depended on for generations. This sparked future tensions between Innu leaders and the provincial government during talks surrounding development of the Lower Churchill. Other Labrador residents also resented the Upper Churchill Falls project, feeling it benefited outside interests – largely from Quebec and the island of Newfoundland – rather than local residents.

Economic Impacts

Although Newfoundland and Labrador could produce plenty of electricity at Churchill Falls, it could not access lucrative American and Canadian markets without establishing a power corridor through Québec. After years of protracted and sometimes heated negotiations, Québec agreed to permit access through its territory, but only under conditions that would greatly benefit its own economy.

The two provinces signed an agreement in 1969 committing Newfoundland and Labrador to sell Churchill Falls electricity to Hydro-Québec at fixed prices until the year 2041. The 65-year contract made no allowances for inflation and instead stipulated that Hydro-Québec would pay three-tenths of a cent per kilowatt hour for the first five years of the arrangement, at which time the price would decrease periodically until reaching one-fifth of a cent in 2016. Newfoundland and Labrador agreed to sell the vast majority of power Churchill Falls produced to Québec, retaining only 300 of the total 5,200 megawatts for domestic use. Québec, meanwhile, sold much of its hydroelectricity to outside markets for considerable gain.

J.R. Smallwood, 1948
J.R. Smallwood, 1948
Newfoundland and Labrador Premier J.R. Smallwood hoped the Churchill Falls hydroelectric project would create jobs and revenue for the province's people. Instead, most of the development’s profits went to Quebec.
Photographer unknown. Courtesy of Library and Archives Canada (Detail from: C-031327), Ottawa, Ontario.

The oil crisis of the early 1970s caused the price of energy, including hydroelectricity, to increase dramatically. This in turn created even larger returns for Québec, which could suddenly sell Churchill Falls power at greatly inflated prices. Newfoundland and Labrador, however, continued to sell the same power to Québec at three-tenths of a cent per kilowatt hour. By the late 1970s, Churchill Falls was earning Québec about $600 million a year – roughly 30 times more than Newfoundland and Labrador’s annual $23-million profit.

Newfoundland and Labrador tried to renegotiate its agreement with Hydro-Québec in the decades following 1969, but met with no luck; it also failed in its attempts to challenge the contract in court. The province, meanwhile, still had to maintain the power house, turbines, transformers, and other equipment needed to generate power at Churchill Falls. Unlike the sale price of the project’s hydroelectricity, its maintenance costs steadily rose with inflation and cut deeper into the province’s annual profits, which had dropped to $16 million by 1996.

It eventually became clear the cost of maintaining the generating station would outweigh any gains from selling its hydroelectricity to Quebec. In the 1990s, the government projected it would sustain a $300-million loss by the year 2041. Newfoundland and Labrador Premier Brian Tobin entered into talks with Québec Premier Lucien Bouchard to renegotiate the terms of the original agreement. Unlike earlier attempts, these proved successful and in 1998 Québec agreed to a revised pricing system that would give Newfoundland and Labrador a $2.6-billion profit by 2041.

The two provinces also announced a joint ambition to develop the hydroelectric potential of the Lower Churchill River. This met with protestations from Innu living in Labrador, who – without consultation or compensation – suffered devastating social, cultural, and economic losses during the development of the Upper Churchill hydroelectric project.

Impacts on the Innu

The damming of the Churchill River diverted hundreds of waterways and flooded more than 1,300 km² of land in central Labrador, much of which the Innu people had used for generations. The enormous waterfall, known as Patshetshunau (Steam Rising) by the Innu, but as Churchill Falls by the provincial government, was reduced to almost a trickle as the newly formed Smallwood Reservoir rapidly absorbed millennia-old Innu burial grounds, campsites, and ancestral territory. It also flooded habitat belonging to caribou and other wildlife the Innu hunted, and destroyed canoes, tents, fishing gear, and other Innu belongings.

Innu hunters, ca. 1910
Innu hunters, ca. 1910
The Churchill Falls project flooded Innu burial grounds, campsites, and ancestral territory destroying habitat belonging to caribou and other wildlife Innu hunters had depended on for generations.
From William B Cabot, In Northern Labrador. (London: J. Murray, 1912) 248. Print.

Despite the extensive and irreversible nature of the damage, no known records indicate government or industry officials contacted the Innu people prior to damming the river; nor did they offer compensation to the Innu once their losses became apparent. Although the Innu did not publicly protest the project in the time immediately preceding or following its development, they also lacked an organized body to effectively represent their concerns and interests on the public stage; many Innu also did not speak English fluently during the 1960s and early 1970s


In the years following the development, the Innu became increasingly organized and vocal in their protestations of the Churchill Falls hydroelectric project. They joined the newly formed Native Association of Newfoundland and Labrador (NANL) in 1973 before creating the Naskapi-Montagnais Innu Association (NMIA) in 1975, which later changed its name to Innu Nation in 1990.

Since the 1980s, the Innu have entered into ongoing land-claim negotiations with the federal and provincial governments. Contained within the disputed area is the Lower Churchill River, which is at the centre of a second hydroelectric project the province hopes to develop by 2014. If completed, the Lower Churchill project will flood about 246 km² of land within the Innu land-claim area.

On 9 March 1998, Innu protestors held a large public demonstration in Labrador after being excluded from government talks to develop the Lower Churchill. Since then, the province and its utility, Newfoundland and Labrador Hydro, have agreed to involve the Innu Nation in the project’s development process. The parties are also negotiating a deal that could give the Innu Nation a minority ownership of the Lower Churchill project.

Other Social Impacts

Alongside the Innu, many other Labrador residents felt the Upper Churchill Falls project benefited outside interests at the sacrifice of their own well-being. Although the project created hundreds of jobs, most went to workers from Québec or the island of Newfoundland. Many employees returned home after the construction phase and subsequently spent much of their earnings outside of Labrador. In the meantime, local residents watched thousands of people flock to central Labrador, where construction crews built a modern corporately owned town out of the wilderness.

As profits and employment flowed out of Labrador, many local residents began to resent both the hydroelectric project and the government. They felt the Smallwood administration exploited Labrador’s resources at the expense of its people and that the House of Assembly only represented the concerns of constituents living on the island. Smallwood’s public addresses only intensified the brewing sense of resentment among many Labradorians: “This is our river, this is our waterfall, this is our land,” he said on 17 July 1967. “We are developing it mainly, chiefly, principally for the benefit of Newfoundland. Newfoundland first, Québec second, and the rest of the world last.”

Environmental Impacts

The Upper Churchill Falls project also caused considerable environmental changes in central Labrador. The damming of the Churchill River diverted the water’s flow before reaching the falls and reduced the once-massive waterfall – visible and audible from 16 kilometers away – to a trickle. The resulting flood created the Smallwood Reservoir, the tenth largest freshwater body in Canada, which swallowed vast tracts of forest lands and dramatically altered the local ecosystem.

Caribou, waterfowl, and other wildlife species lost habitat, while the water’s increased methylmercury levels – produced by the rotting of newly submerged vegetation – affected some fish populations. Accelerated erosion also affected the river’s banks as well as several Innu burial grounds, leaving some human bones exposed.

Construction of the town of Churchill Falls also changed the local landscape. An undeveloped wilderness in 1965, the town boasted a bank, school, hotel, pub, theatre, and population of about 2,000 by 1972. Today, about 650 people live at Churchill Falls. Many people now wonder what the environmental, economic, and societal impacts will be if the government proceeds with its plans to develop the Lower Churchill River. Some support the project as a renewable source of relatively nonpolluting energy that could create hundreds of jobs and billions of dollars in revenue for Newfoundland and Labrador.

Others worry the flooding could result in methymercury contamination of waterways and cause a decline in trout, salmon, and other fish populations. It could also destroy habitat used by a wide range of wildlife, including caribou, moose, black bear, beaver, porcupine, mink, and otter. Another concern is the damage the project could do to the area’s heritage. In 1999, the province and Innu Nation released a study of the proposed flood site which found that two trading posts, 20 pre-contact sites, and 65 trapper tilts and Innu campsites could be lost if the project is developed.