Pricing the priceless

Sustainable Prosperity (SP) estimates that Canada’s air, water and biodiversity markets are worth between CAD $448 million and CAD $738 million annually, in a report released today. This report represents the first time anyone has put a dollar figure on the total size of Canadian environmental markets.

“There are more markets in air, water and biodiversity (55 markets or programs in total), and greater amounts of money changing hands in environmental markets in Canada than most people realize. Environmental markets are a tool that, when well-designed with the appropriate institutional and regulatory structure, can produce good outcomes for both the environment and the economy,” said Mike Wilson, Sustainable Prosperity’s Executive Director.

Estimates of environmental markets can vary widely, depending on how “environmental market” is defined. This report defines an environmental market as having a buyer (either private or public sector), a seller, and the exchange of an environmental attribute, such as greenhouse gases or endangered species habitat.

There is still a lot of room to expand the use of environmental markets in Canada, and to expand existing markets. In almost 50% of these markets, especially in water and biodiversity markets, government is the main buyer. There is an opportunity to increase private sector involvement in these markets to help them grow, but this requires policies that enable their involvement while providing the appropriate regulatory oversight.

“The private sector is heavily involved in compliance-driven environmental markets, such as the Western Climate Initiative, because there is policy certainty, and a strong institutional framework. Greater certainty in environmental policy and regulatory flexibility to allow for greater use of markets in Canada can help attract the necessary capital from the private sector to help expand the use of environmental markets”, added Alex Wood, Senior Director of Policy and Markets at Sustainable Prosperity.

The report outlines the role for investors, policy-makers, researchers, conservation and environmental groups, philanthropic groups and foundations and industry in developing new environmental markets, and enhancing those already in place, in Canada.