Guess what, Canadians… turns out the bank ad on TV is right. You really are “richer than you think”!
In fact, as a new Policy Brief? by Sustainable Prosperity makes clear, Canadians have one of the richest endowments of natural capital in the world, and rely on that natural capital for national wealth to a larger degree than any comparable economy.
Canadians understand intuitively that natural capital is important to our lives and economies, particularly when it comes to natural resources. But it is fair to say that we understand very little about how that natural capital – in its full dimension – contributes to our national wealth, and how degradation of that capital endangers our long-term prosperity. Something like Gross Domestic Product (GDP), for example, which we view as the key indicator or economic progress, tells us nothing about what is happening to our natural capital base. Nobel Award winning economist Joseph Stiglitz has said: “A company with positive cash flow can be running itself into the ground as its capital depreciates. Economies are no different…”.
Like our labour force, machinery, financial resources and knowledge, our natural environment is an asset. Natural capital comprises nature’s assets that produce value — and like all assets, we must understand, measure and manage our natural capital in order to use it optimally. Part of the problem, as the saying goes, is that “you can’t manage what you don’t measure”. We are not measuring how much natural capital we have, at what rate we are using it, or how it is being devalued by pollution, environmental degradation and unsustainable resource extraction.
The problem that creates is that we are making decisions without full information — and we risk making poor decisions. Unvalued natural capital and uncosted environmental degradation can lead us to economic activity that will degrade our economy’s natural capital and put at risk its ability to generate goods, services and income into the future.
Canada’s economy relies on natural capital. Using our resources more efficiently, and increasing their productivity, is crucial to Canada’s sustainable economic growth. We need to start measuring that capital, and managing it more intelligently, to ensure our long-term prosperity