Innovation for the Environment: A Trillion Dollar Market
(The Hill Times, Ottawa, Ontario
March 17, 2003)

The economy’s dependence on the environment is so great that if the Government of Canada is going to produce a successful Innovation Strategy to secure the country’s economic future, the environment is going to have to be a big part of it.

We all know Canada must innovate to improve productivity and prosper in a quickly changing world. What we also need to understand is that innovation and productivity are stimulated, not hindered, by environmental protection measures.

As American economist Michael Porter’s influential work has demonstrated, strict but carefully crafted environmental regulations lead to increased resource productivity and greater innovation. Porter found that environmental protection measures stimulate innovation and productivity in five ways.

• Addressing environmental considerations generates cost-savings through more efficient use of resources and energy.

A properly designed Innovation Strategy could stimulate precisely the sort of economic shifts that make our economy more resource and energy efficient – and consequently less polluting. The Innovation Strategy could encourage pollution prevention approaches to environmental protection that typically result in more efficient use of materials.

The Strategy could encourage the reform of tax policies and spending programs. As an example, the money now used to fund tax breaks and subsidies for fossil fuel energy projects could be redirected to new green energy technology development.

• Pollution-caused damage to health, property and the environment is very costly to society, government, and to industry itself.

In a recent report, the NRTEE estimated the minimum number of brownfield sites in Canadian urban areas at 30,000. Public benefits of redeveloping these sites, instead of developing greenfield land on the city periphery, is estimated at between $4.6 billion and $7.0 billion a year – including reduced health risks, preservation of agricultural land, restoration of environmental quality and removal of health and safety threats, revitalized neighbourhoods, more compact and efficient urban development, improved air quality and reduced greenhouse gas emissions.

• Healthy ecosystems are major producers of wealth.

Forget about running a prosperous economy long-term if we damage the ecosystems that provide clean air, clean water, wood fibre, pollination, and other crucial goods and services that we can no longer take for granted.

These ecosystem goods and services are obviously the basis for our agricultural, resource and tourism industries. But they also attract the skilled workers and footloose businesses of some of today’s most desirable sunrise industries.

But the benefit of including environmental considerations in our Innovation Strategy goes beyond securing these economic sectors. It speaks to something even bigger. We are entering an era where the most valuable natural resources are genetic. Lichens, slugs, mosses, worms, animals without cute faces and plants without brilliant polychromatic displays to dazzle the eye are the sources of wealth in the future.

Bio-chemicals and bio-patterns are giving rise to new products and processes at an increasing rate. Yes our ore deposits are valuable, but as the century progresses, our biodiversity’s deposits in the Bank of Genetic Resources are likely to prove even more valuable.

Canada’s Innovation Strategy could stimulate the transition from an economy that creates wealth by extracting resources, to wealth production based on extracting ideas, patterns and formulas. For example, an Innovation Strategy which takes into account the environment could prompt a government that already funds a Geological Survey to fund a Biological Survey to locate, study and classify the wealth of DNA resources found in Canada’s unique range of biodiversity.

• When we innovate to solve environment-economy challenges at home, we invent or adapt new equipment, products and processes that are exportable at a profit abroad.

The Innovation Strategy should invest in the commercialization of environmental products, services and technologies. There is a pressing need for technologies which address our own country’s environmental challenges including air pollution, water pollution, carbon-based energy dependence, environmentally induced health hazards and sustaining natural ecosystem services.

In a world that is facing more environmental challenges and constraints every day, there is clearly an export opportunity for those who find and market innovative solutions. The world demand is ever increasing for clean energy, water and air, and the technologies that supply and secure them. The global environmental market is $1 trillion a year – and Canada has captured less than one percent of it. This huge international market is an opportunity Canada cannot afford to pass up.

• Conversely, poor – or even questionable – environmental practices need to be improved if a country is to avoid serious losses of export market share, particularly in resource industries.

A consumer boycott – or the threat of one – can change corporate and institutional purchasing policies. The world’s forestry industry, for example, is finding more retailers and producers insisting on lumber and fibre that comes from sources that have had their forestry practices certified by a recognized third party as environmentally responsible.

Formulating an Innovation Strategy without regard to the environment is like buying a fleet of cars in a land that’s built no roads. You may have a lot full of shiny vehicles whose engines purr, but you’re not going anywhere.

David J. McGuinty is President and CEO of the National Round Table on the Environment and the Economy.

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