Comprehensive Wealth In Canada
Why We’re Talking About It
A few countries, Canada included, have started developing broader wealth estimates as a complement to more traditional indicators of progress. By expanding the definition of wealth, these countries will be better positioned to guide both short- and long-term development.
Thanks to Statistics Canada, Canada has long had robust estimates of produced assets such as machinery and other built infrastructure. Statistics Canada, in a global first, recently added the value of some natural assets to its quarterly national balance sheet. Occasionally, Statistics Canada has produced experimental estimates of the value of human capital and has released its first report on social capital. This work positions Canada as a potential leader in the emerging field of Comprehensive Wealth.
What’s In It For Canada?
It is clear that development remains unsustainable in many parts of the world, particularly in resource-dependent countries that rely heavily on natural capital for income. Indicators suggest that this is true in some ways in Canada as well. Forest loss in parts of the country is threatening endangered species. Pollutant loads are on the rise in many water bodies.
As a country with a high level of well-being, thanks in no small part to our immense stores of natural capital, Canada has much to gain from measuring Comprehensive Wealth.
Over time, the way our Comprehensive Wealth portfolio is managed affects our sustainability. If allowed to decline, Canada’s assets will support lower and lower levels of well-being. Managed well, they will support increased prosperity. In order to know whether we’re headed in the right direction, we need to measure all the things that matter. Today, with our focus on GDP, we only measure part of what matters. Adding measures of Comprehensive Wealth will bring us closer to understanding the full picture.
Canada Is Naturally Positioned To Lead
Canada has a relatively well-developed program of wealth measurement and has the potential to emerge as a leader in the field of Comprehensive Wealth. Good estimates of produced capital already exist. Some components of natural capital are regularly measured and experimental figures have been produced for human capital. Measuring social capital remains a challenge, as elsewhere, but initial efforts are being made.
With the highest per capita natural wealth in the world, Canada has a special responsibility for environmental stewardship. The country is home to 8 per cent of the world’s forests, 3.2 per cent of the world’s arable land and 25 per cent of the world’s wetlands.
Used sustainably, these resources will provide benefits for future generations, including the income needed to invest elsewhere in the Comprehensive Wealth portfolio—urban infrastructure and education, for example. Measuring Comprehensive Wealth will allow for more balanced management of the economy, the environment and society.
Passing on stable — or growing — wealth will enable our children and grandchildren to meet their needs, a social commitment that the current generation must consider. If intergenerational fairness is to be achieved, every generation needs to leave to the next generation assets of at least the same value as those it inherited.
Once Canada compiles Comprehensive Wealth measures regularly, an improved basis for national decision-making will result. Tracking Comprehensive Wealth will let us discover if we are getting the most out of our assets and ensuring long-term sustainability. This will help us maintain Canada’s high standard of living, today and tomorrow.
For example, forestry products are an important part of Canada’s economy. The industry contributed $19.8 billion to Canada’s GDP in 2013. Canada’s forests also provide essential ecosystem services in addition to valuable timber products. Comprehensive Wealth measures can perform a role in evaluating the trade-offs between the economic benefits of timber harvesting and its ecological costs. A fully developed forestry wealth account will reveal the value of forests as a source of timber and as a source of other valuable ecosystem services such as food supply, flood regulation and water purification.
A healthy environment and robust social structures are essential to well-being even if the benefits they yield come without a measureable value. Measures of Comprehensive Wealth will shed light on their importance by valuing these “free” assets or, where monetary valuation is not possible, by measuring them in physical terms.
For example, in recent years, the value of Canada’s oil sands has been falling. The sheer size of this asset, worth about 4% of wealth as measured by StatsCan today, means that well-being in Canada is particularly sensitive to movements in oil prices. Achieving a comprehensive set of Comprehensive Wealth estimates will reveal the extent of this sensitivity.
Canada is one of many counties that have established national sustainable development goals. United Nation’s Environment Program (UNEP) defines sustainable development as “a pattern of societal development along which intergenerational well-being does not decline” and notes that well-being depends on the assets that make up Comprehensive Wealth.
Measures of Comprehensive Wealth are needed if we are to assess the sustainability of development. Unless we know how wealth is evolving, we cannot be sure that the well-being we enjoy today will endure.
It’s time to measure what matters —
for a sustainable and prosperous future.