Helping Markets Get Prices Right: Natural Capital, Ecosystem Services, and Sustainability

Abstract

Canada faces environmental problems that threaten our stock of natural capital—our endowment of natural resources such as water, forests, land, and atmosphere—and the flow of goods and services that natural capital generates, known as ecosystem services. Much of the literature focuses on climate change and greenhouse gas emissions, but many other challenges persist, including air and water pollution, risks from oil and gas extraction, water scarcity, flooding, loss of natural areas, threatened species, and toxic spills. While regulatory responses exist, their effectiveness is questionable with relatively little use of market-based instruments. We focus on the challenges associated with measuring and developing policy to sustain natural capital and ecosystem services. We highlight problems and identify policy options and “big ideas” that may help us both to improve our understanding of the linkages between natural capital, ecosystem services, and human well-being and to achieve a more sustainable future.