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A Sustainable Economic System

Bank of Canada, Ottawa

We are using resources as if we had two planets, not one. There can be no Plan B because there is no planet B.” United Nations Secretary-General Ban Ki-moon, Seoul, 29 October 2012

Canada and the world's economic systems are based on the premise of continual economic growth despite the obvious fact that unending economic growth is impossible on a finite planet. This is not just a future scenario. The exploitation of natural resources has already far surpassed the planet’s carrying capacity, resulting in degradation of ecosystems and the loss of biodiversity around the world. In fact, every major ecosystem on the planet is in decline, and species are going extinct at a rate previously only seen during the earths great extinction events. In 1972, the Club of Rome published The Limits to Growth describing the dangers of continued growth, but the world has yet to pay heed. In Canada in 1972 most large scale resource development was confined to the heavily populated south. In the decades since, resource development has pushed farther and farther northward into lands that were remote and wild. Ecosystems are being degraded and destroyed at an alarming rate. Even the far north is threatened as a warming climate permits access to Canada’s Arctic waters.

The problem is that we have developed an economic system that requires constant growth to function. It is an economics where the price we pay for something does not usually reflect the full costs of producing it. When we purchase a product which pollutes the air or destroys land or ecosystems, those costs are not in the purchase price but are paid by someone else, either with tax dollars or with a decrease in the quality of our life. These costs are considered externalities and don't factor into our economics. This has allowed us to forge ahead in the destruction of the planet in the name of efficiency. It is only efficient however because we don't include the costs.

We also don't take account of the costs when evaluating our progress as a society. The current practice is to determine our economic and overall wellbeing on the basis of the GDP (Gross Domestic Product). However, the GDP is just the market value of all final goods and services produced in the country. It fails to account for environmental degradation, resource depletion or the wellbeing of people. Hence, it is a terrible indicator of our well being or the well being of the planet and should not be used as one.

What needs to change: To protect the environment and ensure a healthy future for humans and wildlife, it is imperative that Canada and other nations develop stable or “steady state” economic systems in which there is no net depletion of natural resources. Such a system must incorporate externalities and be based on the understanding of the finite nature of the planet. Corporations must be made to pay the true cost of producing their products, and not be able to pass on these costs for society to pay. The GDP must also be replaced with indicators that include both environmental and social factors.

Canadians need to become engaged in a debate towards an environmentally sustainable economic system. Bring it up with your neighbors, friends and policymakers and lets get this discussion going. The Canadian Ecosystems Alliance is working with Taproot Canada to bring attention to this issue. Please visit their website for more information.

Links to organizations promoting an environmentally sustainable economic system: