This is the third installment of a series of posts on reinvigorating western Canada’s drive toward increased international economic competitiveness. The recession distracted us from this task but it is time to return to sharpening our competitive edge.
While it is naïve to think that opportunities in the green economy will magically transform western Canada into a land of elves making hacky sacks out of hemp for the international market, it is equally naïve to ignore the advantages of getting greener. The green economy is not a panacea. We should not, for example, expect green jobs to automatically fill the void that would be created if climate policy hammers the oil and gas sector.
It is also important to note that getting greener is not just about reducing greenhouse gases. There are many other environmental opportunities and challenges out there other than climate change.
The West is home to one of the greatest stores of natural capital in the world. From the northern lights and diamonds to the boreal forest, from vast stores of oil and gas to the eastern slopes of the Rockies and the lakes of Manitoba, western Canada overflows with natural beauty, natural resources, and is home to an array of ecological “goods and services.” Harvesting this bounty as well as maintaining it are at the core of the region’s comparative advantage and its quality of life.
There is growing awareness that economic competitiveness and environmental issues are becoming linked in three key ways: 1) jurisdictions that do not take action on environmental issues, such as reducing greenhouse gas emissions, may be penalized by a global marketplace and policy space that are increasingly demanding greener processes and products; 2) there are significant direct and indirect economic costs created by degrading a jurisdiction’s natural capital (e.g., if the water supply becomes contaminated); and 3) there are opportunities to participate in new markets for green products and services, and to save money through less wasteful production systems (“eco-efficiency”). In addition, there are quality of life factors that argue in favour of greener practices that, while of value on their own, also play a role in attracting and retaining skilled labour and investment.
Conversely, it is sometimes argued that jurisdictions that do not adhere to greener practices have the advantage over those that adopt the new approaches. For example, if country X requires a reduction of greenhouse gases that adds to the price of a particular product and country Y does not, country Y has the upper hand in terms of price. While this may be true in the short-term, it is imperative that decision-makers consider the long-term and hidden costs of various policy alternatives, and that businesses adapt now to a higher standard of environmental performance rather than wait and play catch-up down the road.
Managing forest and water resources, reducing greenhouse gases, maintaining agricultural land, addressing conflicting land uses, and improving urban natural capital assets are just a sample of policy areas that have ramifications on competitiveness. An even tighter linkage between “the environment” and “the economy” than is currently in place is essential to the long-term economic success of the region.
Two policy recommendations come to mind:
- Increase investment in the development of alternative energy production technology and generation. The West can be a global leader in energy of all types.
- Develop and implement a comprehensive regional ecological goods and services inventory and introduce pilot projects for paying land owners to provide those services with the goal of increasing the region’s stock of natural capital. There is much that the West can learn here from experiments with market-based incentives for environmental outcomes from Australia.
Posted By: Robert Roach