November 16, 2023

By: Bianca Cecato

This October, I attended and presented at the 33^rd Annual Conference of the Canadian Resource and Environmental Economics Association (CREEA) at the University of Ottawa. Academics from across Canada and the world presented cutting-edge research on pressing issues at the intersection of economics and the environment.

Presentation topics ranged from tools for evaluating environmental and climate strategies, and novel research on the effectiveness of energy policies, to new methods for ecosystem services valuation — all within a Canadian context. International perspectives were well-represented too, with global research findings highlighting potential lessons for Canada on the topics of renewable energy expansion, regulation, and adaptation to climate shocks and natural disasters.

New research tool provides insights for environmental policy

Researchers and policy makers need quality data combined with robust research methodologies to design evidence-based policies. Currently there is no source for complete, standardized, and up-to-date data on Canadian climate and environmental policies. In order to fill this gap, the Canadian Climate Institute, in collaboration with Navius Research, is developing the Carbon Reduction Policy Tracker, a database of emissions reduction policies at the federal, provincial, and territorial levels in Canada. Professor Jennifer Winter of the University of Calgary presented initial insights into this exciting new research tool. She is leading a long-term initiative (of which the Smart Prosperity Institute is a partner) to measure policy stringency and coverage in Canada. One of the initiative’s main goals is to understand how different environmental policies interact and to identify the various gaps and opportunities for improvement.

The importance of data for policy evaluation

Professor Maya Papineau from Carleton University presented the results of a working paper in which she and co-authors evaluated the effectiveness of Canada’s largest residential energy retrofit program, the ecoEnergy rebate initiative. The authors used comprehensive data from individual households, including house characteristics, retrofits, predicted consumption savings, and electricity and natural gas consumption. They found that, in practice, the program only realized half of the predicted energy savings, which underscores the importance of incorporating quality data into the modelling to obtain better estimates of the return per subsidy dollar spent.

The importance of data was also illustrated by Flavia Alves, a PhD candidate at Carleton University. Her research found that the recreational value of Saskatchewan Provincial Parks is comparable to the timber value of Saskatchewan’s forests, which in 2019 was estimated to be $1.2 billion CAD. Given the substantial social and environmental value of forests, these findings point to the importance of allocating resources for forest conservation.

Lessons for Canada

Adaptation. In 2023, Canada was hit by a record-setting series of wildfires, with the most area burned in the country’s recorded history. Relatedly, with climate change, some Canadian regions, such as the prairies and the interior of B.C. are subject to higher risk, duration and severity of droughts. How do we help the population in dry and fire-prone areas? Madeline Turland, a PhD candidate at the University of California-Davis found that while people in California are moving out of fire-prone zones, there is also a relatively high influx of lower-income people moving into those same zones.

I presented my own research that found that people in Indonesia — a country also highly vulnerable to droughts — who migrate out of drought-affected areas improve their own welfare. Both these findings highlight the importance of evaluating policies that facilitate peoples’ ability to move in Canada as a strategy to help them mitigate the effects of climate change, especially lower income individuals who have fewer resources to help them adapt and therefore are potentially more vulnerable to climate shocks.

Regulation and spillovers. Erin Litzow, a PhD candidate at The University of British Columbia, presented work that shows that strict environmental standards in rich countries may cause high emission industrial activities to be relocated to countries with weaker regulatory oversight. Erin and co-authors found that stricter lead emission standards in the U.S. increased exports of lead-acid batteries to Mexico, which affected the academic performance of children exposed to lead pollution. Policymakers must consider these trickle-down effects when designing policies in Canada and in other developed countries, since low-income countries are more vulnerable to bad spillover effects of environmental policies globally.

Energy transition. Canada needs more transmission lines to connect grids that provide energy from renewable sources in a reliable, accessible, and affordable way.  The event’s keynote speaker, Professor Koichiro Ito of the University of Chicago, talked about the importance of market integration for renewable energy expansion. Grid-scale renewables (particularly wind and solar) are inexpensive, but they require investments in infrastructure, especially because solar and wind resources are often positioned far away from urban centers.

We need more policy-oriented research and more research-oriented policy

One of the main takeaways from the conference is the need for an improved and continued interaction between academic research and policy implementation. Quality data and robust research methods like the ones presented at the CREEA conference help us to identify the gaps in environmental policies and provide reliable findings that can guide decision making on how to best allocate resources. The counterpart of this is that policy making must also guide the direction of academic research. Finally, effective communication between academics and policymakers ensures that important academic findings are not lost in translation.