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Introduction: Strategies for Achieving Recommendations for Budget 2006 Canada’s future prosperity will be contingent upon a vibrant economy, a healthy environment, and lifelong human health. Good governance dictates that these objectives be pursued in an integrated fashion, collectively embedded in governmental decision-making. Doing so will spur innovation and increased resource-efficiency, and thus strengthen Canada ’s international competitiveness, while preserving and restoring our environmental and social health. Furthermore, it will avoid the expensive health care and environmental remediation costs we will otherwise face due to current pollution patterns. Canada’s current environmental funding must be maintained as the basis for this future prosperity. The programs it supports play a critical role in preserving Canadians’ quality of life and our economic wealth, as well as our cherished environmental heritage. They help to preserve clean air for Canadians to breathe, clean water to drink, and rich fertile soil in which to grow our food. They nurture sustainable energy supplies to power our economy and our lives, and to reduce the risk of global climate change. Furthermore, they preserve national parks and wildlife areas that not only allow a complex diversity of plants and animals to thrive, but also provide internationally-renowned recreational opportunities which stimulate numerous rural economies. In essence, these programs work to preserve our natural capital. Conservative governments have a proud legacy of environmental achievements upon which to build. Brian Mulroney is widely credited as being Canada ’s “greenest” prime minister ever. His Conservative governments introduced the comprehensive $3 billion Green Plan, achieved major progress in reducing acid rain in concert with the United States, and facilitated the Montreal Protocol to phase out CFC’s. Furthermore, they created key sustainable development institutions, such as the National Round Table on Environment and the Economy, and the International Institute for Sustainable Development, which continue to develop important strategies for enduring prosperity. Two fundamental elements of Canada’s economic, environmental, and human health strategies should be the stewardship of our natural capital and the implementation of ecological fiscal reform. Natural capital, which underpins much of Canada ’s economic activity, was described by a Canada West Foundation report as follows: “Natural capital includes resources such as minerals, timber, and oil and gas, which provide the raw materials used in the production of manufactured goods. However, it also includes the land and water resources that anchor our quality of life and support economic activity such as agriculture, forestry, tourism and recreation. Furthermore, natural capital includes living ecosystems — grasslands, oceans and forests — that cleanse fouled air and water, reinvigorate soil and contribute to a predictable, stable climate.”3 Canada was fortunate to be “born” rich with natural capital, and has historically relied heavily on this natural capital for our prosperity. Relative to most other countries, Canada is still rich in terms of the quantity and quality of its natural capital. However, when our performance is viewed from an environmental stress and stewardship perspective, on how well we are managing our natural capital, Canada is doing poorly. We have treated our natural capital with less care than other cherished forms of capital, such as our human and manufactured capital. Canada consumes its natural capital at a much higher rate, and much less efficiently, than other peer countries. The Organization for Economic Cooperation and Development (OECD) ranked Canada 27th for energy consumption, 29th for water consumption, and 26th for greenhouse gas emissions, out of 30 OECD countries.4 We are, in effect, “resource hogs”. This over-consumption, mismanagement and inefficient use of our natural capital is already leading to significant costs to society and in the long-term will undermine Canada’s global competitiveness. Canada needs to make rapid progress in integrating the value of environmental goods and services into its decision-making processes. The Green Budget Coalition believes a government-wide Natural Capital Framework would be an important means of achieving this goal. Such a framework could nurture a greater appreciation of the social and economic benefits of clean air, water, and soil, and prevent the market failures that continue to occur because these price signals are not accurately aligned. Ecological Fiscal Reform (EFR) is “a strategy that redirects a government’s taxation and expenditure programs to create an integrated set of incentives to support the shift to sustainable development.”5 EFR rewards environmental leaders amongst businesses and citizens, penalizes environmental “laggards”, stimulates environmental innovation with global export potential, and expedites the development of an economy where economic success brings concurrent environmental and human health benefits. EFR can improve our long-term economic prosperity by providing financial incentives to purchase goods and services which have a lower impact on environmental and human health, and by making revenue-neutral fiscal adjustments so that prices and taxes better reflect the full societal and environmental costs of specific goods and services. The Green Budget Coalition believes the following five recommendations are the foremost budgetary opportunities to advance environmental sustainability, concurrently with substantial economic and health benefits. One of the recommendations could save over $80 million. The other four recommendations have a modest cost, each of which could be funded through the phase-out of related tax incentives that work contrary to environmental and economic sustainability, or through the implementation of a targeted tax measure. These recommendations together represent a prime opportunity to make substantial progress towards genuine prosperity for current and future generations of Canadians. ______________________________________________________________ 3. Worbets, Barry (2004): Western Canada’s Natural Capital — Towards a New Public Policy Framework. Canada West Foundation. back to text 4. OECD (2004): OECD Environmental Performance Review of Canada. back to text 5. National Round Table on the Environment and the Economy (2005): The state of the debate on the environment and the economy: economic instruments for long-term reductions in energy-based carbon emissions. back to text |