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Six
new indicators to track Canada's ability to maintain prosperity:
final ESDI report
(Adobe
PDF Version - 872 KB)
The
National Round Table on the Environment and the Economy released
the final report from its Environment and Sustainable Development
Indicators (ESDI) Initiative on May 12 in Ottawa.
The aim of the three-year initiative was to develop a small set
of credible and understandable indicators to track whether Canada's
current economic activities threaten the well-being of future generations.
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"This
initiative is part of a worldwide recognition that current measures
of progress, such as the GDP [gross domestic product], tell
us little about what's happening to the natural, human and social
capital that underpin a healthy society and economy," said
Stuart Smith, Co-Chair of the ESDI Initiative Steering Committee.
"The recommendations in this report are a first step toward
getting an idea of the true cost of economic and policy decisions."
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In
addition to proposing new indicators, the report also recommends
that the government expand its System of National Accounts and improve
the country's systems for gathering environmental information.
Tracking
the state of natural and human capital: Six new indicators
"Right
now, Canada does not keep track of its ecological resources. We
do not know if we are running down our stocks of 'natural capital'
to the detriment of future generations' prosperity," said Dr.
Smith.
To
fill this gap in Canada's understanding of its long-term economic
prospects, the report recommends that the government supplement
existing economic indicators such as the GDP with annual reporting
on the following six measures of natural and human capital:
Air
Quality Trend Indicator-tracks the exposure of Canadians to
ground-level ozone (O3), a particularly harmful air pollutant. For
the first time, the NRTEE report weights, by population, air quality
information from across Canada. One finding is that while the level
of smog Canadians are exposed to is increasing slowly (+3% over
20 years), scientists have discovered the actual level of smog that
can hurt and kill people is lower than previously thought.
Freshwater
Quality Indicator-provides a national measure of whether water
is of sufficient quality for aquatic habitat, recreation, agriculture
and other uses. For the first time, national water quality information
has been assembled showing that in 2002, 22% of monitored waterways
are damaged.
Greenhouse
Gas (GHG) Emissions Indicator-tracks Canada's total annual emissions
of greenhouse gases, including carbon dioxide (CO2), methane, nitrous
oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.
Canadian GHG emissions have increased 16% over the last 20 years.
Forest
Cover Indicator-tracks changes in the extent of Canada's forests.
The report includes Canada's first satellite-based national measure
of forest cover.
| Extent
of Wetlands Indicator-tracks changes in the total area of
wetlands in Canada. Often referred to as the lungs of the planet,
the area covered by wetlands is a proxy for biodiversity. Surprisingly,
there is no information at this time to calculate this indicator,
but it could be constructed in two years from satellite remote-sensing
data. |
"We
must come to grips with the fact that the current means of
measuring progress are inadequate. [These indicators] could
well have a greater impact on public policy than any other
single measure we might introduce."
-
The Minister of Finance, announcing the ESDI initiative
in the 2000 spring budget |
Human
Capital Indicator (Educational Attainment)-tracks the percentage
of the population between ages 25 and 64 with educational qualifications
beyond the secondary school level. This indicator will reveal our
investment in a well-educated workforce and will help us understand
our ability to compete in a global, knowledge-based economy. The
Round Table found that this indicator increased by over 10% from
1990 to 2000.
The
process of developing the indicators was guided by a 30-member steering
committee that included representatives from organizations involved
in developing indicators of sustainability, non-governmental organizations,
business and financial organizations, universities, and government.
An
expanded system of national accounts
The
report also recommends that the government permanently expand its
System of National Accounts (SNA) to include explicit measures of
natural, human and, over time, social capital.
The
most widely used framework for analysis of the Canadian economy,
the SNA is the basis of most of our important macroeconomic indicators,
including the GDP. Yet it focuses almost exclusively on market transactions,
ignoring, for example, the value of unpriced natural resources or
the cost of pollution. Expanding the SNA to include accounts on
more forms of capital will make it a more accurate framework on
which to base economic and policy decisions.
"Just
knowing the level of economic activity - the GDP - is not enough.
It does not tell us about our natural capital stocks," said
David J. McGuinty, President and CEO of the NRTEE. "Nature
provides us with life-sustaining clean air and water, as well as
exploitable natural resources and biodiversity's encyclopedia of
recipes, patterns and ideas. Natural capital is the foundation of
our economy. If nature is in trouble, we need to know sooner rather
than later."
Improved
environmental data
Much
of Canada's environmental information is incomplete and can't be
compared across the country, and is surprisingly poor in some areas,
according to the report. The NRTEE therefore recommends that the
federal government work with all levels of government to improve
the quantity and quality of environmental information, with the
Canadian Information System for the Environment (CISE) playing a
central role.
"The
new indicators and accounts will need the kind of national system
that CISE will promote," Dr. Smith stressed.
The
state of the debate
The
report also discusses areas of disagreement among participants in
the initiative. One of the most controversial is the question of
whether information about Canada's many forms of capital could or
should be translated into a single dollar value, similar to the
GDP. A few participants also disagreed about the form of the final
indicators and whether to include additional indicators.
Next
steps
Implementing
the recommendations will require the involvement of many organizations,
including the Department of Finance and other federal departments,
the Canadian Council of Ministers of the Environment, provincial
agencies, and academic and non-profit organizations. Over the next
year, the NRTEE will promote the implementation of its recommendations
and the value of taking a broader approach to national accounting.
A
broader view of capital
The
NRTEE recommendations are based on an expanded view of capital-an
economic term first used for infrastructure such as buildings
and equipment that enables future economic production-that
includes:
Produced
capital-equipment, buildings, machinery and other infrastructure
that provide benefits over time by helping to produce other
goods and services.
Natural
capital-the natural resources, land and ecosystems that
provide us with natural materials (such as timber) and essential
services (such as the cleansing of fouled air and water and
the provision of productive soil, wildlife habitat, and a
predictable and relatively stable climate).
Human
capital-the "knowledge, skills, competencies and
other attributes embodied in individuals that facilitate the
creation of personal, social and economic well-being."1
Social
capital-the least understood form of capital, roughly
defined as the formal and informal institutional arrangements,
relationships, networks and norms that facilitate collective
action. More work to understand and learn how to measure social
capital is needed.
1
Organisation for Economic Cooperation and Development, The
Well-Being of Nations: The Role of Human and Social Capital
(OECD, 2001). |
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New
direction for the Ecological Fiscal Reform program - energy |
Starting
this spring, the NRTEE's Ecological Fiscal Reform (EFR) program
is shifting its focus to study the role of fiscal policy in reducing
the carbon emission intensity of Canadian energy systems.
The
new direction is motivated by a clear message from stakeholders
that the program should focus on strategic issues of importance
to Canada in the long term, as well as a realization that Canada's
ratification of the Kyoto Accord will produce substantial changes
in the Canadian energy marketplace.
Through
a series of case studies, the NRTEE will seek to demonstrate how
fiscal policy could shift Canadian energy production and consumption
away from carbon-intensive fuels, processes and technologies. Three
case studies will explore the role of fiscal policy in:
- promoting
the commercialization of hydrogen-based energy systems by encouraging
Canadian consumers and corporations to buy hydrogen technologies,
helping to create a hydrogen infrastructure, and increasing support
for R&D in the industry;
- promoting
energy efficiency through both short-term measures (encouraging
home energy audits, capital improvements for more efficient energy
production, and high-efficiency vehicles, for example) and more
systemic approaches (such as promoting co-generation and community-based
or shared energy systems);
- promoting
renewable power by increasing the share of new electricity-generating
capacity sources and encouraging the private sector to generate
green power and Canadian consumers and corporations to purchase
green power.
The
NRTEE expects that the work on each case study will continue for
12 to 18 months. More information about the EFR program is available
on the NRTEE Web site.
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Ecological
fiscal reform
Governments
have traditionally used fiscal policy (taxation and expenditure
policies) to generate revenues and stimulate economic growth,
rather than to achieve broad social and environmental objectives.
The NRTEE's Ecological Fiscal Reform program is designed to
demonstrate how governments can use fiscal policy as a strategic
tool to achieve environmental and economic objectives simultaneously.
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Urban
Sustainability |
The
State of the Debate report on urban sustainability was released
on May 30, 2003, at the Annual Conference and Municipal Expo of
the Federation of Canadian Municipalities in Winnipeg, Manitoba.
The NRTEE is planning to promote the report with a cross-Canada
tour that will include events in five major urban centres (Halifax,
Montreal, Toronto, Winnipeg, Calgary and Vancouver).
The
tour will also promote the national brownfields redevelopment strategy,
which was released in early February. For more information on the
Urban Sustainability program, visit our Web site.
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Conservation
of Natural Heritage
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The
NRTEE will be releasing its State of the Debate report on the conservation
of natural heritage, entitled Securing Canada's Natural Capital:
A Vision for Nature Conservation in the 21st Century, in June 2003.
The report follows consultations held during fall 2002, including
a multistakeholder workshop where more than 70 participants representing
a variety of sectors and regions discussed a draft report and its
recommendations. The report includes the following nature conservation
case studies, which are available on our Web site:
- Clayoquot
Sound Biosphere Reserve (British Columbia)
- Eastern
Scotian Shelf Integrated Management Project (Nova Scotia)
- Lands
for Life (Ontario)
- Manitoba
Mining Sector Consultation (Manitoba)
- Muskwa-Kechika
Management Area (British Columbia)
- Pacific
Estuary Conservation Program (British Columbia)
- Vuntut
National Park (Yukon)
- Yukon
Protected Areas Strategy (Yukon)
To
learn more about the Conservation of Natural Heritage program, visit
our Web site.
Capital
Markets
How
strong is the business case for sustainability? The relationship
between financial performance and corporate activities to improve
environmental and social performance is the focus of the NRTEE's
new Capital Markets program.
The
NRTEE believes that the business case for sustainability has not
yet been adequately made. During the first phase of the program,
it will test this theory by inviting key players in the financial
and corporate sectors, and others, to determine the "state
of the debate" on the links between sustainable practices and
the bottom line. Subsequently, the program will involve developing
recommendations to better link sustainable actions with financial
performance.
For
more information on the Capital Markets program, visit the NRTEE
Web site.
Nature
Phase II
The
Round Table has begun a second phase of the Conservation of Natural
Heritage program. Phase I of the program emphasized the importance
of conservation on the "working landscape"-the portion
of public and private lands allocated to industrial uses, such as
forestry, mining, oil and gas exploration and development, hydroelectric
development, and others. Initial scoping has begun on this second
phase to determine the focus of the program. One potential theme
includes an examination of ecological fiscal reform (EFR) measures
on public land allocated for use to resource companies. The NRTEE
hopes to have the focus of this new program refined by the fall.
For
more information on the Nature Phase II program, visit the NRTEE
Web site.
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Cleaning
up the Past, Building the Future: A National Brownfield Redevelopment
Strategy for Canada
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The
vision of the National Strategy on Brownfield Redevelopment
is to transform Canada's brownfields into economically
productive, environmentally healthy and socially vibrant
centres of community life, through the coordinated efforts
of all levels of government, the private sector and community
organizations. |
Designed
to eliminate key barriers including lack of access to capital,
liability and risk problems, and low stakeholder awareness,
the strategy is a realistic, practical, and innovative blueprint
for action that presents a coordinated, comprehensive national
approach to cleaning up and redeveloping brownfields in Canada.
This
report is available in English and French. For ordering information,
please see the enclosed publications catalogue. |
For
more information, please contact:
National Round Table on the Environment and the Economy
344 Slater Street, Suite 200
Ottawa, Ontario K1R 7Y3
Tel.: (613) 992-7189
Fax: (613) 992-7385
E-mail:
NRTEE
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