Environmental Markets 2012

Sustainable Prosperity (SP) is releasing its first annual report tracking the value of Canada’s environmental markets. The 57 markets covered in this report transact nearly half a billion dollars of payments annually. This value will increase as new markets like the Quebec greenhouse gas cap-and-trade system develop. SP’s report analyses the state of development of Canadian environmental markets, and makes recommendations to help further the development of well-functioning markets, to contribute to environmental quality and economic prosperity. Markets addressing biodiversity and habitat conservation, water quality, water quantity, climate change, and air quality can provide environmental benefits inexpensively if they are well-designed markets. For investors, they also represent an opportunity for exposure to a new and growing asset class.
 

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About the Project

The goal of this project is to shed light on the relationship between economic activity and the environment by exploring the linkages between changes in our natural capital and our measures of productivity generally, and through the construction of an environmentally adjusted measure of productivity specifically.

While it is now commonly accepted that economic activity and the state of our environment are linked, many economic measures still fail to incorporate the environment – both the things we draw from it and the pollution we release into it. By developing and calculating measures of productivity that include natural capital, Canada may be able to better understand these linkages. This, in turn, may lead to the identification of strategies that can help Canada become more efficient and innovative in the use and protection of natural capital, and thus more productive and more prosperous.

Using the forestry sector as a case study, this project aims to construct an environmentally adjusted measure of multifactor productivity. In doing so, we aim to add another layer of understanding to the environmental and economic performance of this sector. The proposed measure will have relevance to the Canadian economy as a whole.