This is the third annual update of the Bonds and Climate Change report and its Canadian supplement. Since the first report in 2012, the climate bonds landscape in both Canada and the world has changed dramatically.
Environmental trends, particularly declining water availability, soil depletion, and climate change, will impact food production in Canada and globally. These trends will change the growing conditions for agriculture by impacting temperatures, rainfall patterns, length of growing season, and fertilizer requirements. In some scenarios they may have a positive impact on agricultural productivity, and in other scenarios the effect is likely negative.
Natural capital refers to the natural environment and its ecosystems from which we extract ecosystem goods (such as wood, minerals, water) and ecosystem services (such as pollination, flood control, air purification, climate moderation) for our use. Natural capital underpins our economy and yet its use is often underpriced or free, and when we degrade or destroy it we are not often held responsible.
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.