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.
Index
to Articles
|