Environmental markets represent a new way of understanding the value of our country’s rich natural capital, particularly their value to our economy. Such markets would reflect the true worth of these assets to our economy and quality of life and encourage greater attention to their preservation. While there is a growing international awareness of environmental markets, this concept has not yet fully informed Canadian policy or innovation. Sustainable Prosperity disseminates this body of knowledge and develops specific policy applications for Canada.

Top Policy Research Priorities
  • Pricing Ecological Goods and Services
  • Instruments for Water Quality and Quantity Conservation
  • Biodiversity Incentives

Economic Instruments for Water Management in Canada

Water is cheap in Canada, which leads to inefficient water use and often creates a funding gap for municipal governments, because the amount paid by users does not typically cover the full costs of supplying water. Even though efficient water pricing and competitive water markets are being used in many jurisdictions internationally, they are underused in Canada. This is regrettable, as the use of market-based instruments alongside traditional regulation can achieve environmentally beneficial outcomes such as increased water use efficiency. This Policy Brief provides a discussion of some lessons and policy barriers for the future use of market-based instruments in Canadian water policy. It then presents two case studies of Canadian jurisdictions that have implemented economic instruments for water management.

Advancing the Economics of Ecosystems and Biodiversity in Canada

While Canada is blessed with a rich endowment of natural resources, and a relatively small population, we still face significant, and growing, problems of biodiversity loss and natural resource depletion. Remedying these problems, and using our natural capital more productively, is essential to ensure an ecologically and economically healthy future.

Nancy Olewiler: "Securing Natural Capital and Ecological Goods and Services for Canada"

In her contribution to the CPA, Nancy Olewiler warns that Canada is facing a crisis due to the mismanagement and loss of its natural resources and habitats. She argues that in order to secure natural capital in Canada, we must put a price on the ecological goods and services that our natural environment supplies. A number of market-based mechanisms are proposed to achieve this, including a tax on carbon and air pollutants (CAP tax), the revenues of which would be used to finance a national conservation plan.

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Environmental Markets

Environmental Markets

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.