Nature's bounty. (Economics).

Everybody is gung-ho about economic growth. And, why shouldn't they be? Economic growth creates jobs, it increases wealth, it enables us to pay for better social programs such as health care and education. The standard measure of how well our society is performing is the Gross Domestic Product (GDP), the measure of the value of all the goods and services we create. If the GDP is growing at three or four percent a year everybody is happy. If the GDP is declining everybody is miserable. Up: good--down: bad.

A nice simple state of affairs we can all understand until someone such as David McGuinty comes along. He's an economist and he's president of a group in Ottawa called the National Roundtable on the Environment and the Economy (NRTEE) The Roundtable's members are leading Canadians appointed by the prime minister. Their job is to provide "decision makers, opinion leaders, and the Canadian public with advice and recommendations for promoting sustainable development.

"Working with stakeholders across Canada, the NRTEE identifies key issues with both environmental and economic implications, examines these implications, and suggests how to balance economic prosperity with environmental preservation."

The logic is that simply striving to increase the country's GDP will end up wrecking the environment. Mr. McGuinty explains it this way: "Does it make sense to construct an air conditioner that uses an ozone-depleting gas? Yes, it fattens our GDP, both in the construction of the cooling device and in the manufacture of sunscreens to protect us from increased solar radiation, but at what long-term cost?

"... GDP was not designed to tell us if the environmental underpinnings of economic activity--`natural capital'--are being employed in a sustainable fashion. GDP doesn't alert us if we are destroying ecosystem services, such as the ozone layer, which protects people from skin-cancer-causing excess ultraviolet radiation. GDP ignores services provided by Nature and does not acknowledge that some economic advantages damage these services."

What the NRTEE and many others are saying is we have to develop new accounting systems that include the cost of what we get from Nature. These new systems must also be able to tell us whether or not we are using up what Nature provides faster than it is being replaced.

What Nature gives us is huge and mostly free. Also, the gift is so big we have difficulty establishing its value. How do you set a price on the regulation of the atmosphere and climate, the purification and storage of fresh water, or the formation and enrichment of soil?

In 1997, a group of academics took a shot at setting a value on Nature's bounty. The team of economists and environmentalists came up with the figure of $33 trillion U.S. A very rough estimate of Canada's share of that is $2.86 trillion Cdn, or a bit more than $95,000 Cdn for every person in the country.

We could think of that as our deposit in the Bank of Nature. We can be careful and live on the annual interest that deposit pays, leaving the $95,000 capital intact. Or, we can spend the 95 grand, have a party, and wake up in the morning with nothing iii the Bank and a hangover. For the last two or three hundred years we've been partying; but, since 1961, we've really been tearing up the joint. Our industrial society has been placing heavier and heavier demands on the resources Nature has provided. A study released in June 2002 points out where this will lead.

Published in the highly respected U.S. journal The Proceedings of the National Academy of Sciences, the study says we are heading for "ecological bankruptcy." The non-profit group Redefining Progress looked at the links between the economy and the environment and reported that Earth's resources "are like a pile of money anyone can grab while they all close their eyes, but then it's gone."

Just a generation ago, in 1961, our demands on the Earth's resources equalled about 70% of the planet's power to regenerate them. But, today, we are using resources in 12 months that it takes Nature 15 months to replenish.

Some important people are taking note of this kind of economics, among them Canada's former Finance Minister, Paul Martin. In May 2001, Mr. Martin gave a speech indicating he agreed with many of the economic suggestions of the National Roundtable.

"Protection of the environment is not an option," he said. "It is simply something we must do. It is a fundamental issue. It is beyond debate. It is beyond discussion." He said Ottawa has set aside $9 million to develop environmental indicators. These would help us see the impact of our economic activity on the environment, which has never been possible using traditional economics. If Mr. Martin's plan becomes a reality, Canada would be one of the first countries in the world to use environmental indicators.

BAD BECOMES GOOD

Traditional economics measures only the monetary value of goods and services produced. That is then expressed as Gross Domestic Product (GDP). If a fully loaded oil tanker ploughs into rocks on the coast of Cape Breton Island, the cost of the cleanup adds to the GDP. If a surgeon spends all her time removing cancerous tumours from patients that are the result of pollution, her services add to the GDP. If tornadoes and storms become more powerful because of global warming (and they will), repairing the damage they cause will add to the value of the GDP.

YOUR ECOLOGICAL FOOTPRINT 

A typical Canadian places a heavy demand on Earths resources. If everone in the world lived the way we do, we would need four planets the size of Earth to supply all the resources. You can find out your individual impact by completing a simple quiz at a website operated by Redefining Progress (see page 13). In about two minutes you answer a few questions about diet, housing, mobility, etc. At the end, you'll be told how many hectares of the Earth's surface are needed to support your lifestyle.

AU CONTRAIRE

The Fraser Institute, based in Vancouver, is an economic research group that favours the business model for economic development. In April 2002, the Institute published a report that attacked many of the sacred cows of environmentalists.

"Economic progress," the editors of Environmental Indicators (5th Edition) wrote, "is not the enemy of environmental progress but its ally. Rising incomes not only increase the demands for goods and services such as cars, refrigerators, and haircuts, but they also fuel the demand for environmental amenities. This demand gets expressed in a variety of ways, including support for stricter environmental laws, demand for cleaner products, and an increased willingness to donate money to conservation groups. As a result, studies find that once a country reaches a per-capita income of around $8,000 U.S., most indicators of pollution have already begun to fall."

The World Bank reports that access to safe drinking water and sanitation improve almost immediately when incomes in developing countries improve. The Fraser Institute adds that, "While these studies make the conventional view that more production leads to more pollution look out-dated, the idea still has a lot of currency since it has been an important belief of the environmental establishment for over 30 years."

NATURE UNDERVALUED 

A classic example of failing to account for the value of Nature's gifts is the collapse of Canada's East Coast fishery. The traditional Newfoundland fishery was based on catching cod from small boats fairly close to the shore. Then, the government encouraged the use of large boats in the deep ocean. The idea was to catch more fish, process them in Newfoundland, and build up the island's economy. Few people gave much thought to the size and the value of the resource on which the fishery was founded. The cod were over-fished and the fishery crashed. In 1992, Canada banned cod fishing. A decade later, the stocks had still not rebounded.

FACT FILE

In 1996, Canadians spent $11 billion enjoying the wildlife and Natural areas in which they live during a variety of nature-related activities.

Websites

Ecological Fiscal Reform--http://www.pembina.org/ ecological_fis.asp

National Roundtable on the Environment and the Economy--http://www.nrtee-trnee.ca/

Redefining Progress--http:// www.rprogress.org/

Your Ecological Footprint--http://www.earthday.net/ footprint/index.asp#