|
Natural
Capital:
A Critical Foundation of Our Economy
Helping
rural and Aboriginal communities protect natural capital
3.1
Rural, Agricultural and Aboriginal Communities Are Important
Stewards of Natural Capital
Rural and Aboriginal communities, especially
those whose economies are dependent on agriculture or natural
resource extraction, have a more direct relationship with
natural capital than their urban counterparts: they tend to
rely more directly on natural capital for their economic and
social well-being. Yet that same close connection also brings
a particular set of tensions that require careful management.
Farmers, for example, seek to maximize
the returns from their land while ensuring that they do not
deplete or contaminate their soil. Modern farming is also
energy-intensive, while remaining heavily dependent on a predictable
climate that is increasingly threatened by global emissions
of greenhouse gases from the burning of fossil fuels. Resource
industry communities prosper from the extraction and processing
of natural resources (fish, timber, minerals, oil and gas),
while seeking to avoid the aesthetic and human health problems
that can directly impact their communities from poor management,
and the economic dislocations that can result from overharvesting.
|
|
|
At the same time, many resource industries face increasing
demands from consumers worldwide for assurances that their products
come from sources with sound environmental and resource management
practices. In addition, while farm and resource communities depend
directly on natural capital for their livelihoods, they also face
growing pressures to act as stewards of natural spaces on behalf
of all Canadians. Frequently, however, society does not reward them
for playing this role.
Aboriginal communities face particularly strong
tensions. While resource development presents many Aboriginal (and
other rural and northern) communities with tremendous economic opportunities,
it also brings high risks such as the further erosion of traditional
ways of life and cultural cohesion. Without a significant investment
in skills development, many Aboriginal people risk missing out on
the economic benefits, while being left with the environmental damage
and social dislocation that can result from sporadic resource development.
3.2
Budget Recommendations
The recommendations in this section of the
Greening of the Budget submission stem from two reports issued over
the past two years by the NRTEE: Securing Canada’s Natural
Capital: A Vision for Nature Conservation in the 21st Century
(released in June 2003) and Aboriginal Communities and Non-Renewable
Resource Development (released in June 2001).
In Securing Natural Capital, the NRTEE set
out a strategic framework for enhancing conservation in Canada.
The framework features five core elements: designing conservation
solutions through integrated land use planning; encouraging industry
to become a better steward of Canada’s lands and seas; encouraging
and supporting local communities in conservation planning and monitoring;
building and sharing a strong base of knowledge to support conservation;
and valuing natural capital to ensure that economic decisions formally
factor in the value of nature.
The NRTEE’s Aboriginal Communities
report – which focused on Aboriginal communities in the Northwest
Territories – stated that a strong economic, social and regulatory
framework is urgently needed to ensure the long-term sustainable
development of the North’s non-renewable resources, with benefits
flowing to local Aboriginal communities. To build this framework,
Canada needs to invest strategically in five key areas: building
regulatory capacity, building information capacity, cumulative effects
management, improving education, and creating opportunities for
meaningful consultations.
This year’s budget submission focuses on areas that both reports
argued are necessary to maintain natural capital in rural areas:
- creating incentives for stewardship of natural
capital by all members of society, including agricultural, rural
and Aboriginal communities and resource industries;
- strategically investing in enhancing the capacity
of Aboriginal communities to share the economic benefits from
resource development and manage their natural capital sustainably;
and
- accelerating conservation planning in areas where
unique opportunities exist to plan in advance of major industrial
development, most particularly the Mackenzie Valley in the Northwest
Territories.
Specific budget recommendations to achieve these
three objectives are included in this submission.
3.2.1
Enhance the Ecogifts Program
The Ecogifts Program is an important tool for
enhancing conservation and encouraging action by individual landowners.
Since 1995, aspects of the Income Tax Act have supported
the donation of ecologically sensitive lands and conservation easements
for conservation purposes. However, several adjustments to the Ecogifts
Program could be made to enhance its applicability and ability to
target conservation of priority landscapes:
Reduce the capital gains tax on
ecological gifts to zero. Under the Income Tax
Act, any disposition of land, whether by donation or by sale,
is deemed to have occurred at fair market value, with any increase
in value thereafter being taxed as a capital gain. As a result,
landowners who donate their lands are taxed on their notional capital
gains, even though they have received no such income. Although amendments
to the Income Tax Act have partially addressed this problem,
it remains a barrier to conservation. Removal of the capital gains
tax on ecological gifts would encourage more owners of ecologically
sensitive land to donate the title or conservation easements to
a conservation organization.
Expand the program to include inventory
lands. The disposition of land held as inventory yields
a profit rather than a capital gain (because it is not a “capital
asset”), 100% of which is deemed income for income tax purposes.
Such land is not eligible for tax benefits under the Ecogifts Program,
which applies only to capital gains associated with ecological gifts.
As the Ecogifts Program is intended to offer incentives to preserve
significant ecological areas, it should apply to all people and
companies owning qualified land, regardless of how the land is held.
|
Recommendation 4:
That the Ecogifts Program be
enhanced to further encourage private landowners to conserve
ecologically sensitive lands.
This would entail:
- removing the remaining capital gains tax
from gifts of ecologically sensitive lands and easements;
and
- extending provisions of the Ecogifts Program
to include donations of ecologically significant lands held
by corporations or individuals as inventory of their business.
|
3.2.2
Provide Incentives to Create an Environmental Farm Plan
Farmers can adopt a wide variety of measures
to enhance ecological services on their lands. Some of these measures
should be introduced in the context of Environmental Farm Plans.
There are seven Environmental Farm Plan programs
across the country, in Alberta, Ontario, Quebec and each of the
Atlantic provinces. Under these programs, farmers voluntarily prepare
a plan that identifies areas of environmental concern and sets goals
for improvement, often in return for a financial incentive. Participants
in Ontario, for example, receive a cash transfer of up to $1,500
per farm business to support the implementation of new management
practices. As of May 30, 2001, approximately 20,000 farm families
were participating in the program. 1
The federal government’s Agricultural Policy
Framework is seeking to enhance the use of Environmental Farm Plans,
although delivery of related programs would remain with local organizations.
Additional fiscal incentives for farmers could be linked to the
adoption and implementation of Environmental Farm Plans and their
equivalents.
|
Recommendation 5: That Agriculture
and Agri-Food Canada and Finance Canada, in partnership with
provincial governments as appropriate, introduce a suite of
specific incentives for landowners through Environmental Farm
Plans or their equivalents, including:
- accelerated capital cost allowance claims
on conservation equipment, such as flushing bars, fencing,
and watering and manure management facilities; and
- cost sharing for capital improvements and
equipment related to conservation objectives.
|
3.2.3
Create a National Sustainable Tourism Strategy
New long-term measures are needed to ensure
that communities benefit from conservation. Tourism provides one
way for rural, resource-dependent, remote (R3) communities to maximize
the economic benefits of living near protected areas.
Tourism strategies are typically based on local knowledge
and the unique ecology, history and culture of the local landscape.
For example, an advisory committee struck by the Minister of Canadian
Heritage in 1996 recommended the development of a heritage tourism
strategy for the entire Banff–Bow Valley area. The Banff/Lake
Louise Tourism Bureau subsequently organized a Heritage Working
Group composed of high-level representatives from the public and
private sectors.
Other such communities could use similar strategies.
However, there is currently no national framework to support the
development or promotion of these strategies.
| Recommendation
6: That $5 million be provided to Canadian Heritage
and partners such as the Tourism Industry Association of Canada
and community representatives to develop a national sustainable
tourism strategy to enhance the economic benefits associated
with protected areas for local communities. |
3.2.4
Ensure Meaningful Aboriginal Consultation in Large Project Proposals
Consultations relating to major non-renewable
resource projects in the North, such as diamond mines and pipelines,
place tremendous demands on all participants. These projects are
by their very nature complex and controversial. Consultation begins
at the early planning stages and continues throughout the project
review and regulatory processes and into the operational phase.
Many of the consultation processes for these projects go far beyond
direct participation in environmental assessment hearings and therefore
do not qualify for intervenor funding.
These consultation processes threaten to overwhelm
Aboriginal organizations and governments. For instance, ongoing
access to expertise in a variety of areas is essential if they are
to understand and respond to the large volume of technical material
contained in project applications. All of these demands come on
top of the routine matters that have, in many cases, already stretched
Aboriginal governmental capacity to the limit.
Major projects are vitally important to non-renewable
resource development in the North. The NRTEE is concerned that existing
core resources are insufficient to support the consultation effort
required for these projects.
| Recommendation
7: That a $15-million Large Projects Consultation Fund
be created to facilitate participation by Aboriginal governments
and organizations in consultations for large non-renewable resource
development projects in the three northern territories. This
funding should be made available before intervenor funding is
provided under any relevant environmental assessment or regulatory
process. |
3.2.5
Support Cumulative Effects Management for the Northwest Territories
Although the environmental regulation of non-renewable
resource projects in the North has improved, the challenge of addressing
the cumulative effects of multiple non-renewable resource projects
and related activities remains. Whereas the effects of an individual
mine or natural gas resource project may be acceptable, the combined
impact of numerous projects in a single region may not.
The most important initiative in cumulative effects
management in Canada’s North is the Cumulative Effects Assessment
and Management Framework for the Northwest Territories. The purpose
of this framework is to “provide a systematic and coordinated
approach to the assessment and management of cumulative effects
in the NWT, reflecting the needs of various stakeholders, without
prejudice to land claims activities or existing legislation.”2
Although the Cumulative Effects Assessment and Management
Framework initiative has received some funding from the federal
government, long-term funding has yet to be secured.
| Recommendation
8: That $25.8 million be allocated over six years to
continue implementing the Cumulative Effects Assessment and
Management Framework under development by Indian and Northern
Affairs Canada and Environment Canada. After five years, funding
requirements should be reassessed. |
3.2.6
Support the Mackenzie Valley Environmental Impact Review Board
Given the projections of rapid development
of non-renewable resources over the next 25 years, a strong regulatory
framework is urgently needed for the Northwest Territories.
Although the integrated regulatory and resource management
regime created under the Mackenzie Valley Resource Management
Act is a good first step, the NRTEE is concerned that the boards
and agencies created under the Act may be underfunded. Without adequate
resources, the boards will be overwhelmed by their workload and
may be unable to function, thus delaying project planning and approvals.
For the Mackenzie Valley Environmental Impact Review
Board, building capacity is a precondition to sustainable, long-term
resource management. It will also provide regulatory certainty for
potential project proponents, a key factor in any decision to invest.
As well, increased funding would allow for intervenor funding at
regulatory hearings – a provision consistent with other regulatory
legislation such as the Canadian Environmental Assessment Act.
| Recommendation
9: That the Mackenzie Valley Environmental Impact Review
Board be provided with a five-year funding commitment of at
least $2.2 million per year. |
|
Natural Capital in Rural and Aboriginal
Communities
|
|
Measure
|
Estimated Cost
|
Implementing Agency
|
Purpose and Benefits
of Measure
|
| 4. Enhance the Ecogifts Program |
|
Finance Canada |
Expand the program to remove the remaining capital
gains tax on gifts of land, and include donations of land held
in business inventories. Encourages landowners to donate ecologically
sensitive lands to charitable land trusts |
| 5. Working with provincial governments, introduce
a suite of specific incentives for landowners through Environmental
Farm Plans |
|
Agriculture and Agri-Food Canada
Finance Canada
|
Provide incentives to landowners to purchase
equipment related to conservation objectives |
| 6. Fund partnership between Canadian Heritage
and the Tourism Industry Association of Canada to develop a
national sustainable tourism strategy |
$ 5 million |
Canadian Heritage |
Maximize opportunities from sustainable tourism |
| 7. Create a Large Projects Consultation Fund
for northern Aboriginal communities |
$15 million |
Indian and Northern Affairs |
Provide resources to allow Aboriginal communities
to fully participate in the Canada consultation process. Ensure
that concerns of Aboriginal communities are addressed in large
project proposals at the pre-intervenor stage |
| 8. Support the development and implementation
of a cumulative effects management framework for the NWT |
$25.8 million over 6 years |
Indian and Northern Affairs Canada |
Enable planning to avoid unforeseen cumulative
impacts of resource development activities |
| 9. Provide stable funding for the Mackenzie Valley
Environmental Impact Review Board |
$2.2 million per year over 5 years |
|
Ensure decisions regarding development activities
account for all relevant considerations |
Endnotes
1 Ontario Crop and Soil Improvement Association
Web site (www.ontariosoilcrop.org/EFP.htm).
2 NWT Cumulative Effects
Assessment and Management Working Group, CEAM Framework Work
Plan Summary, Yellowknife, April 2000, p. 3.
Next set of recommendations
Protecting
Natural Capital in Urban Communities
|
Investing in Canada's Natural Capital