February 12, 2007

Mackenzie region ecosystem wealth estimated at ten times resource extraction GDP

The natural wealth of the Mackenzie Region is close to $500 billion, the value of its ecological goods and services calculated to be more than ten times the Gross Domestic Product (GDP) generated by natural resource extraction and other industrial activities in the region, says a new report from the Canadian Boreal Initiative (CBI).

The Real Wealth of the Mackenzie Region, written by ecological economists Mark Anielski and Sara Wilson, represents the first watershed-based natural capital review in Canada. It estimates the ecological goods and services provided by nature in the Mackenzie watershed, an area 1.7 million square kilometres in size whose size and flow rate rank among those of the world's leading river basins, including the Nile, Yangtze and Amazon.

The study considered the economic value of 17 ecosystem services, including water filtration, water supply, and carbon uptake and storage. The Mackenzie region is part of the Boreal forest, the world's largest terrestrial storehouse of carbon, making it one of the world's best defences against global climate change. Boreal ecosystems store more carbon in their peatlands, soils and trees than any other land-based ecosystem, including tropical rainforests, notes the study report.

The estimated GDP of the Mackenzie watershed, based mainly on resource extraction, including mining, oil and gas, and forestry, as well as agriculture was estimated at $41.9 billion in 2005 (an average of $245 per hectare).

The value of the Mackenzie watershed for the Boreal forest and other land cover it contains is estimated at $448 billion per year (an average of $2,631 per hectare) if left in pristine condition, that is, undamaged by industrial and human disturbance. This includes $252 billion (56% of the total) estimated as the value of stored carbon and annual carbon absorbed by forests, peatlands, wetlands and tundra.

The study authors emphasize that their evaluation is not intended to undervalue the resource potential, but rather to temper its value in a broader sustainability context. They point out that the industrial footprint in the region covers 25.6 millon hectares and the cost of natural capital degradation from development is likely to be in the billions of dollars. This does not suggest that natural capital extraction should cease, says the study. Rather, it points to the need for a more prudent approach to future natural capital stewardship so that valuable ecosystem services can be maintained while human needs and economic development objectives are met.

The Ottawa-based CBI commissioned the study primarily to construct a natural capital account for the Mackenzie watershed, including a total economic valuation of the market and non-market benefits of the region's natural capital. It builds on previous work in this area and advances new valuation methods, including those used in the recent global carbon cost estimates by U.K. economist Sir Nicholas Stern.

The Real Wealth of the Mackenzie Region report, as well as an executive summary, may be viewed on the CBI Web site, www.borealcanada.ca. More information is also available from Andrew Dumbrille at the CBI, 613/762-2525.

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