Canada will fund an Indigenous-led study into how oil sands development impacts the health of local communities, the government said on Wednesday, following a tailings water leak from an Imperial Oil site that heightened pollution concerns.

Environment Minister Steven Guilbeault said Ottawa would provide C$12-million over 10 years for the Fort Chipewyan Health Study, which may include an assessment of whether there are heightened risks of cancer for communities downstream of the oil sands region.

Fort Chipewyan is one of several Indigenous communities in remote Northern Alberta that last year learned that tailings water - a toxic mix of bitumen, sand and residual bitumen - had been seeping for months from Imperial's nearby Kearl mining site.

For years those communities have reported higher rates of cancer and other health issues including autoimmune diseases, skin irritations and severe arthritis, Chief Allan Adam of the Athabasca Chipewyan First Nation told reporters on a conference call. He added that his community first called for a health study in 1992.

If the study points to impacts on communities from the oil sands it would force the federal and provincial governments and companies to put stronger environmental and health measures in place, Guilbeault told reporters on the call.

"That would be the only reasonable course of action," he said. "I have heard first-hand how the Kearl mine spill affected the communities but also how these concerns are not new."

Around two-thirds of Canada's five-million barrels per day of crude output come from the oil sands, and Imperial is one of the largest producers alongside Suncor Energy and Canadian Natural Resources.

"Imperial reiterates its support and our willingness to participate in the health study announced today by the federal government to improve understanding and build confidence in our communities regarding our industry," an Imperial spokesperson said in a statement, adding the company regrets the Kearl seepage.

Pathways Alliance, a group of Canada's six biggest oil sands producers, said in a statement it respected the leaders' desire to seek information on the health of their community and the region.

The goal of the study is to develop robust data examining the health and environmental impacts of the oil sands, with specific objectives to be developed by the communities.

Guilbeault said Ottawa had invited the Alberta government to help fund the study but had not received any response. He added that an independent assessment of the risks from tailings ponds would be useful.

The Alberta government said in a statement it was committed to working with Indigenous partners on a health study and would seek more information on the study announced by Ottawa.

The health study is long overdue, Chief Billy-Joe Tuccaro of the Mikisew Cree First Nation, said on the conference call.

"From the time they put the first shovel in the ground all this should have been taken care of ... but now we are playing catch-up 30 or 40 years on as people have died," he said.