Presentation to NS Environment Act Review Panel

Mount St. Vincent University, Halifax, 9 May, 2000
To: Nova Scotia Environment Act Review Panel
From: Ronald Colman, Ph.D, Director, GPIAtlantic
Re: Answer to the questions you raised at the public hearing on May 2.

Dear Ms. Mitchell, Mr. Janowitz and Mr. Johnston,

Thank you for your important work in soliciting public input into the Environment Act review process. I appreciated the opportunity to present the GPIAtlantic perspective to you last week, and look forward to your recommendations in July.

At last week's hearing, you both appeared to accept the "philosophical" aspect of the GPI presentation, but you both were unsure "how" the principle of integrated environmental-economic accounting could be incorporated into the Environment Act. Mr. Janowitz also recommended that Gloria Chao, LL.M., might have the legal expertise to suggest how the suggested amendment could be incorporated into the existing legislation. Ms. Chao agreed to give this question consideration, and I hope that you will be hearing from her on this point.

I have also given your "how" question some more thought, and would like to take this opportunity to continue the dialogue here. Again, I want to emphasize that I am not a lawyer, and have no experience with the mechanics of writing legislation. Nevertheless, I hope these comments will have some relevance to your process.

At the hearing I suggested that the principle of full-cost accounting could be written into the preambular "principles" section of the Environment Act, using similar language to that in the Sustainable Development Strategy developed by the provincial Round Table on Environment and Economy in 1992. What occurred to me after the hearing is that there are already provisions in the existing Environment Act that completely depend, for their implementation, on the existence of integrated economic-environmental accounts, and that may be practically ineffectual without the existence of such accounts. Examples follow below.

If you agree from the following examples that this is the case, then the question really becomes -- "How can the Environment Act function effectively without an explicit acknowledgement of the need for integrated accounts?" or "How could this provision not be included?" rather than the reverse. I also want to emphasize that the "how" question is not an issue from the methodological perspective. GPIAtlantic, in close cooperation with Statistics Canada and other agencies, is already developing these integrated accounts for Nova Scotia, and similar initiatives are under way elsewhere. The methodologies have actually become quite well established and accepted. The "how" issue is, therefore, fundamentally a legalistic issue of suitable incorporation into legislation, rather than of the development of the accounts themselves.

Here are some concrete examples of the dependence of existing provisions of the Environment Act on the adoption of integrated economic-environmental accounts:

The "polluter pay principle" and "precautionary principle" (Part One, section 2, (c) and (b) ii) and the "economic instruments" provisions (section 15) of the Environment Act cannot be effectively applied without a system of integrated economic-environmental accounts that is capable of assessing, in practice, the economic costs of human activities on the environment. So long as environmental impacts continue to be regarded as "externalities" in conventional accounting procedures, rather than being integrated directly into the economic indicators, there is no practical means to assess what polluters should pay, what future costs may be entailed by current actions, or what incentives for remediation or restoration efforts must be built into the system of financial incentives and taxation penalties.

There is, therefore, a real danger that these noble "principles" of the Environment Act will remain as empty words rather than as practical guides to action, unless they are explicitly linked to the existence and adoption of a set of integrated economic-environmental accounts that is capable of assessing pollution costs, appropriate tax penalties and financial incentives, and the potential economic costs of current actions to future generations.

To give one concrete example, the current recognition of the polluter pay and precautionary principles in the Environment Act has not hitherto led to any concerted actions to reduce provincial greenhouse gas emissions, despite an explicit international commitment to do so, and despite the fact that future generations will pay the costs of climate change. Integrated environmental-economic accounting that explicitly includes the costs of greenhouse gas emissions, as the Genuine Progress Index does, for example, would lead to the introduction of tax penalties for vehicles that consume more fuel, incentives for energy conservation, the promotion of a freight shift from road to rail, and a series of other concrete initiatives and measures.

The simple answer to your "how" question is that this is precisely the task that the Nova Scotia Genuine Progress Index has set itself -- namely, to develop cost-benefit analyses that clearly integrate environmental impacts into the economic accounting system that determines the policy agenda and citizen behaviour. The explicit recognition in the Environment Act that this is an essential step to operationalize existing principles within the Act, including the polluter pay and precautionary principles, and the economic instruments provisions (sections 2 and 15), will help make the Act far more effective in practice. To repeat: without that context, it is likely that these principles will remain "paper tigers" rather than practical guides to action that ensure environmental protection is taken into account in the decision-making process.

Quite simply, legislative adoption by the government of the principle of integrated economic-environmental accounting, can help make these sections of the Act a reality. A single sentence added to the Act can acknowledge that in order for the Environment Act to function as a real policy tool, it hereby explicitly mandates the creation of a system of integrated environmental-economic accounts. How that mandate is actually written into the legislation is a task best left for Ms. Chao and other lawyers. However, I would recommend that the language of the Canada Well-being Measurement Act currently before the House of Commons be taken as a useful guide that can easily be adapted to the provincial level.

In essence, the issue is how government can assume "ownership" of the work now being conducted by non-profit agencies like GPIAtlantic. This transfer of ownership is already beginning to happen at the federal level, where ownership is being effectively transferred both through legislation and through initiatives by the bureacracy. At the federal level, the recent budget, the Canada Well-being Measurement Act currently before the House of Commons, Statistics Canada's initiation of the Canadian System for Environmental and Resource Accounts, the federal requirement for departmental sustainable development strategies, and the appointment of the Commissioner for the Environment and Sustainable Development are the vehicles by which the federal government is assuming ownership of the function of integrated economic-environmental accounting.

For these federal initiatives to be translated into effective action requires parallel initiatives at the provincial level. The Environment Act is the most suitable vehicle for this assumption of government "ownership," because its existing provisions depend directly on the existence of such accounts.

Thank you for your important question last Tuesday, and for your consideration of this response. Best of luck with your deliberations in the coming weeks.

Yours sincerely,
Ronald Colman, Ph.D
Director, GPIAtlantic