Canada’s natural-resource wealth must be included on balance sheets – by Lyn Brown and Julie Desjardins (Globe and Mail – August 18, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Lyn Brown is managing director of the Council for Clean Capitalism. Julie Desjardins is director, reporting and capital markets, of the Chartered Professional Accountants of Canada.

The amount of natural-resource wealth within Canada’s borders is impressive. Natural-resource assets, which include timber, oil, natural gas and other subsoil minerals, have been valued by Statistics Canada at about $1-trillion. This puts Canada in an enviable position relative to other countries.

As with financial and produced or physical assets, natural capital (land, ecosystems and natural-resource stock) generates economic value in various ways. Accounting for Canada’s natural capital enables informed policy and capital-allocation decision making. While Statistics Canada has valued our natural-resource assets, it has not as yet fully incorporated natural capital into its national macroeconomic accounts.

To understand the importance of accounting for and integrating natural capital in public accounts, consider the private sector. Strategic and operating decisions about a business affect its ability to create value and can only be effective or reliable if decision-makers have a complete understanding of relevant assets, liabilities, supply chains, resource bases, stakeholder relationships and other factors.

Today, governments face competing land uses – agricultural, industrial production, energy generation, housing development, recreation, to list just a few. Providing hard data that make the tradeoffs explicit in policy models would foster better-informed public debate and decision making.

Canada’s ecosystems are vast and diverse, contributing essential factors to almost every thriving industry and municipality where businesses operate. Including natural capital in the national accounts is a necessary step toward identifying when and how the depletion of Canadian resources will affect the productive capacity of the economy. It will inform sustainable resource allocation and policy decisions.

The expansion of national macroeconomic accounts and the inclusion of natural capital in decision making are vital if the economy is to remain robust and generate opportunities for long-term value creation and prosperity for future generations.

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