Linking natural capital and productivity

The Rationale for Building an Environmentally Adjusted Measure of Productivity About the Project This paper serves as the foundation for a project economic measures still fail to incorporate the environ- titled “Linking Natural Capital and Productiv- ment – both the things we draw from it and the pollution we release into it. [...] This, this project is to shed light on the relationship in turn, may lead to the identification of strategies that between economic activity and the environment can help Canada become more efficient and innovative in the use and protection of natural capital, and thus by exploring the linkages between changes in our more productive and more prosperous. [...] The distinc- DEFINITION | Natural capital tion between the stock of natural capital and the flow includes, first of all, the resources that we can of value it provides is analogous to a bank account easily recognize and measure such as minerals that holds a stock of money (i.e., financial capital) and provides a flow of value in the form of interest. [...] We benefit from the ecosystem ser- one of the largest primary resource bases in the world; vices the environment provides such as the filtering of ranked third in the world for each of forested area, air by trees and the absorption of floodwaters by plains renewable freshwater resources and oil reserves, and and wetlands. [...] L INKING NATURAL CAPITAL & PRODUCTIV ITY 19 The Rationale for Building an Environmentally Adjusted Measure of Productivity INCLUDING THE ENVIRONMENT IN ECOMONIC METRICS Second, as a result of the changes in public policy that Calculating an environmentally adjusted measure of could be an expected outcome of the creation of envi- productivity29 provides an additional layer of insight into a ronment