GLOBE SERIES

Natural capital and Canada`s GDP

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Source: GLOBE SERIES

Natural capital is an extension of the traditional economic concepts related to capital (i.e. manufactured means of production) that takes into account goods and services relating to the natural environment.

It is based on the premise that natural ecosystems can yield valuable goods or services that have relevance when a business is calculating investment benefits and risks.

Trees, for example provide a flow of new trees, which in principle could be seen as an ongoing sustainable resource. Natural ecosystems may also provide services like recycling wastes or provide water catchments that aid in flood control.

Today, many leading corporations are starting to integrate natural capital concepts into their balance sheets. Over 20 countries are exploring how to update their GDP with green metrics that reflect a valuation of their natural capital resources.

The challenge for any business seeking to embark on such an initiative is to determine how to properly value and leverage natural capital in its planning process. The first step is to define a workable valuation model that will enable the company to maximize resource productivity, i.e. how to assess the value of 'ecosystem goods and services.'

That is precisely what Corporate Knights Magazine is attempting to do in the upcoming 2011 Green GDP Summit taking place on October 27, 2011 in Toronto.

The event will feature some of Canada's most respected business and public policy leaders, including former Prime Minister the Rt. Honourable Paul Martin (right) and the former head of the World Bank James Wolfensohn.

The goal of the Green GDP Summit is to determine how to account for natural capital and to identify ways of leveraging it for maximum long-term prosperity.

Individual sessions segregated by industry will work through and test a valuation model framework that could be applied to their specific needs, and a keynote address will seek to define strategies for harnessing natural capital as a way to solve Canada productivity challenge.

The long term payoff for integrating natural capital concepts into the planning process for business and government is that it could help change the direction of economic activities toward ensuring long-term sustainability of the environment while meeting the near-term needs of people.

At the event, Paul Martin will be presented with the Corporate Knights Award of Distinction, in recognition of his distinguished career in business and government. Of particular relevance is the fact that 11 years ago as Finance Minister he established a task force for determining indicators for environmentally sustainable development.

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