Let's boost Canada’s economic prosperity by putting nature on the balance sheet
As economists predict an impending recession in the United States , the potential impact on Canadian businesses stands as a stark reminder of the immediate need for proactive measures.
The Bank of Canada ’s quarterly Canadian Survey of Consumer Expectations, released in early April, said 67 per cent of consumers are anticipating a recession, up dramatically from 47 per cent last quarter.
Canada requires a comprehensive strategy to generate wealth and attract investment to not only mitigate the risk of recession, but also to support our long-term prosperity.
Wealth generation should start with recognizing the true value of Canada’s greatest treasure: our natural assets. Canada’s public sector needs to assign value to our natural assets on the balance sheets of all levels of government.
Our nation’s rich inventory of natural resources, from pristine lakes and sprawling forests to abundant wildlife reserves and critical minerals , is a significant motivation behind U.S. political figures expressing interest in Canada becoming the 51st state.
Recognizing and leveraging these resources can contribute to maintaining Canada’s economic independence and help foster stability in the face of global challenges.
Government balance sheets do not currently assign a value to natural resources . We need to quickly change this and use innovative thinking to create wealth for strategic investments in Canada’s future.
The tides are shifting and this may present the opportunity we need to get our natural assets reflected in government financial statements. Standards have been proposed by the International Public Sector Accounting Standards Board that would enable governments to recognize certain natural assets on their balance sheets.
This recognition is not just an accounting exercise, but a strategic move to strengthen Canada’s competitiveness and guard our sovereignty. Assigning value to our natural assets can be the first step to the creation of a sovereign wealth fund, one that is supported by these assets.
A nature-based sovereign wealth fund would leverage those assets that are core to our national identity while supporting both the conservation of those assets and strategic investments in national priorities to drive economic growth. Such a fund could strategically invest in artificial intelligence, clean energy, sustainability and advanced manufacturing to drive economic growth.
Through assigning value to our natural assets, governments create monetizable and redeployable assets. For example, it could complement the issuance of green bonds — a form of debt financing for environmental projects. The funds from this financing can support the preservation of these assets, as well as strategic initiatives for Canada’s future.
Unprecedented times call for progressive actions. Canada should not rely on waiting for events such as private purchases or the transfer of rights to its natural resources in order to acknowledge the value of its natural assets.
Former prime minister Pierre Trudeau once said, “We peer so suspiciously at each other that we cannot see that we Canadians are standing on the mountaintop of human wealth, freedom and privilege.”
The time is now for us to recognize our uniquely Canadian wealth and secure our nation’s prosperity.
Bailey Church leads the National Public Sector Accounting Advisory service line at KPMG and the KPMG Global IPSASB network.