New study of Comprehensive Wealth shows Canada’s fossil fuel economy is unsustainable

In a pioneering report, the International Institute for Sustainable Development in December released the first national study of “comprehensive wealth”, by examining  Statistics Canada data from 1980 to 2013. The concept of comprehensive wealth goes beyond the usual wealth measure of Gross Domestic Product and also includes natural, human and social capital.  The IISD study, Comprehensive Wealth in Canada—Measuring what matters in the long run  states that natural capital is the largest component of Canada’s comprehensive wealth  at 80 per cent, but did not grow at all between 1980 and 2013.  What does this mean for Canada?  The report states:  “The need for Canada to measure and understand comprehensive wealth has never been greater. Its development model is based heavily on the exploitation of natural capital, and the country cannot sustain another 30 years of natural capital depletion. Short-term commodity price volatility and the longer-term global shift to a cleaner, knowledge-driven economy mean that future reliance on fossil fuels to underpin the country’s growth is risky. The current debate about fossil fuel projects and pipelines needs, therefore, to include a vision of transformation toward a low-carbon economy.” The IISD  cites a United Nations report which ranks Canada first among G7 nations in terms of the level of comprehensive wealth per capita  but last in terms of growth in comprehensive wealth.

Report Highlights are at the IISD website  ;   the National Observer also summarized the report in “Canada’s slipping national wealth addicted to oil and gas“.  A Commentary article by the report’s  author Robert Smith  appears as “Why Canada’s resource wealth should fuel the economy” in the Globe and Mail ROB  (Dec. 7).

Canada Caught in a “Staples Trap” and a “Carbon Trap” by Current Pace of Oil Development

The authors of a new report released jointly by the Canadian Centre for Policy Alternatives and the Polaris Institute reject the polarizing framework of “economic interests vs. environmental interests”, or “East vs. West”, and call for a public debate of the social, economic and environmental complexities of Canada’s current “bitumen path”. They argue that Canada’s current “gold rush” approach is creating a double threat to the country: a “staples trap,” which is making our economy less diversified, productive and resilient, and a “carbon trap,” which will make the inevitable day of reckoning for climate adaptation much more expensive and difficult. The report discusses employment impacts, income distribution, international trade, currency effects, and “Dutch Disease” and the Canadian manufacturing sector. An alternate policy approach is recommended, which uses tighter regulation to slow the pace of bitumen extraction and to boost Canadian content in the upstream and downstream supply chains. At the same time, Canada’s economy needs to encourage more balanced, innovative and low-carbon industries.

 

LINK

The Bitumen Cliff: Lessons and Challenges of Bitumen Mega-Developments for Canada’s Economy in an Age of Climate Change by Tony Clarke, Jim Stanford, Diana Gibson, and Brendan Haleyis available at: http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2013/02/Bitumen%20Cliff.pdf