Nova Scotia stands to lose $1.4 billion under Ottawa's new equalization formula that will not benefit any of the Atlantic provinces, according to a new study.

The Atlantic Provinces Economic Council released its report Wednesday, a day after the House of Commons passed a federal budget that critics say undermines the benefits of the 2005 Atlantic Accord.

The budget gives Nova Scotia and Newfoundland and Labrador a choice of sticking with the offshore oil and gas deal that allows them to keep revenues, or accept a new equalization formula but lose some of those offshore riches.

The report's authors say the province should take up the federal government's offer to stick with the old equalization formula.

The new one not only violates the spirit of the Atlantic Accord, they say, it will cut $4 billion from the coffers of the four Atlantic provinces over the next 12 years.

Paul Hobson, an economist at Acadia University in Wolfville, N.S., said the federal government has left Nova Scotia with a $64-million dilemma: Take more short-term cash under the new formula for long-term pain.

"Do we take an extra $64 million in 2008-09? The benefit to the province of remaining within the fixed framework amounts to about $1.4 billion," he said.

That's $1.4 billion less for Nova Scotia in equalization over 13 years if the province gives up offshore revenues, Hobson said.

Locke said Newfoundland and Labrador stands to lose right from the beginning.

"In the first two years, Newfoundland would be worse off in the range of $654 million, and over the life of the estimates it is worse off by $1.4 [billion]," he said.

Even if Newfoundland and Labrador choose to remain in the old equalization formula, their agreement runs out in five years and then the province will be forced into the new deal.

Prime Minister Stephen Harper said Wednesday the new formula is better than the old one, and all the provinces that receive equalization will get more this year.

In another development, Ottawa will ensure Nova Scotia does not lose under either funding arrangement, according to Finance Minister Jim Flaherty.

Flaherty told CBC News the two levels of government are looking for ways to ensure the province will be no worse off — or be even better off — than it is this year.

With files from Canadian Press