Ecosystem Services Panel Discussion

[0:00] ♪♪♪ So, interestingly enough, I presented to the council in Rocky View County and they were quite interested in the ecosystem service approach, because for them I think they were to be honest their interest was from more of a restoration perspective, so could they get some of the restoration dollars, when when a wetland gets destroyed, and there's a compensation check, could that go to actually restoring wetlands back in Rocky View County, where they could be getting some of these. ecosystem services are developing for it. So there is some interest, but it's probably the opposite way that you were interest you're looking for. One of the things that interests me, or that I've found, is what is it clear what the issue is, so yes, there's development tax dollars.

[1:04] uh... but what's the other side of it, so is it clear if there's a water quality issue, is is there are there a group of people that understand that there's an issue, because if if you otherwise, if you can get the lone drummer beating a drum, it's going to be really difficult. But if there's any kind of way of demonstrating, here are the economic values you get from development, BUT HERE ARE THE THINGS THAT MIGHT LOSE. like we might change or modify or lose. And it doesn't always have to be data. You don't have to do a scientific study about exactly what's going to change in the phosphorus and whatever. If you can have a dialogue that shows the change, the chain of changes, sometimes bringing that up is enough to have a discussion to say, "Wait a minute. What are the unintended consequences?"

[1:44] 'Cause it sounds like right now, The county sees the dollar figures and the tax dollar revenue, but none of the unintended consequences. And so unfortunately, you have to have a willing It has to be a willing discussion about it, but it sounds like the unintended consequences aren't clear. And that might be an area where you want to focus. At least that's what we do. But again, you have to have those willing audiences, right? So you've got to find something... that the council will find important. And if it's an increase in-- water quality costs from changes in wetlands use that might be part of it.

[2:18] Whenever you're making a decision, it doesn't matter what decision, on policy or budget. can you ask yourself what is the expected well-being impact of anything we do? How will that affect? In my wildest dreams, if we had a balance sheet, we could actually go to that balance sheet and answer that question. There has to be a commitment, I think, to full-cost accounting. But if that question with the well-being impact is in play, It leads us down that path of a conversation about what matters and and I think even without the valuation on it I think we have the capacity to figure these things make the trade-offs and at the end of the and go to sleep at night saying, you know, we did the best in terms of discerning.

[3:00] what those impacts are going to be. But I know in, you know, governments They don't budget based on a well-being bottom line. So we've got to cut a little ways here. I just have one other thing to add to that. And it's once it gets down to a planner's decision, Julian referred to it already, like, planners go through this mitigation hierarchy, so can the developer avoid and... But usually there's not any basis to prevent a development.

[3:30] and there usually must be some higher guidance given to planners to determine whether they should force a development tonight go ahead and there's a whole bunch of legal issues that would be challenging the planners in municipalities including have you treated all developers fairly, so there's all sorts of things uh... that that we'd have to worry about, and I think that's why this happens so frequently. If there could be, you know, a review of the performance proposal and trying to strike up a dialogue with them about how to incorporate some of these externalities, even if the project does go ahead, perhaps in how they actually do the development or maintain it in the long run, you could actually influence that.

[4:12] ♪♪♪ Thank you for that question. It's something I taught for 10 years at the U of A. And to me, it's all about reputation. If I looked at the one thing that we look at as We call it the good company. could a good company look like?

[4:44] I worked on the GRI guidelines. years ago, the first guidelines. And that was a good attempt at defining what a good sustainable enterprise might look like. But if I look at metrics like you know the best place to work in Canada or Bloomberg's environmental performance data set. And I put that all together. I would have to-- and I look at Corporate Knights Awards this year for best companies, MEC, tech, Tech number two. What? How could tech make number two? Well, because they obviously achieve some level of performance that I think is their comparative advantage vis-à-vis other industries.

[5:23] resource companies and so I would look as a measurement guy what are the characteristics of tech and their internal behavior that is clearly giving them a you know there is no there is no renewal of license to operate based on that performance right, because corporations I was explained by business students you look at the legal documents of corporations in one of the sections of the doc legal document called best interest, nothing is defined in that section. lawyers will say don't even put fiduciary responsibility in there, so there is no compelling reason to be a good company, but good companies know that brand and reputation and lifetime customer value is worth gold, and that should be on the balance sheet.

[6:09] So These issues of socialist operate are difficult. I would. but I look at behavior, look at tech resources, what they did with the Tunaha Nation in the Cranbrook area with the town of Invermere. with Nature Conservancy and the Columbia Basin Trust, they established a relationship to set aside some of those lands for for ecological values in harmony with still getting the mining options. so again we we just look at, i think there is a behavior want to point to those companies say, you know that you know levers and even the walmart star i would say leading by good example. I'm hearing a lot of companies talk about shared value, which is a whole other conference.

[6:51] if you wanted to talk about that. But really, in my mind, in the conversations that I'm having, companies are looking at social license to operate as what is the potential limiting factors for them to make money. whether that's growth, it's new projects, ETC. I could say a company like, you know, a Plains Midstream loss their license to operate when Section 22 was issued last year. they actually had restrictions and limitations on their throughput in their pipelines. and they actually had to do quite a bit in terms of investments in people and management systems and complete change the way that they run their business from what I've heard.

[7:25] and it's taken that level of investment for them to win it back. And so it's really about what you're trying to achieve and what could be limiting and what you actually have to do to put in place to get stakeholder approval of how you operate your business. It's difficult to measure. And like anything, you can pick any metric to measure anything, really. Thank you. I have a different take on social license, which is some of the interesting ways that it motivates behavior and Usually, companies aren't always in it for their brand, but they're in it for the sector. If the oil sands get shut down, it's Shell, it's everybody. And it's going to be because of the aggregate bad acting and not just one company.

[8:07] And so what that has led to is actually enormous pressure on government to change some of its policies and force regulated policies on the whole sector. instead of just companies going ahead and doing things on a voluntary basis. because even if they do voluntarily make investments If everybody else doesn't follow suit or they free ride off them, there's a big risk that they're all going to go down. And I think companies now are very conscious of that. and avoiding that risk. ♪♪♪ And I like the question because I think in some cases we don't know what we don't know.

[8:51] and we need to actually get in and roll up our sleeves and get our hands dirty. And I think about, you know, PUMA's environmental P&L statement as a first step. I'd love to be able to work with a company in the oil and gas sector and figure out what that might look like if we were actually going to release it. I think ENI last year released their first integrated report, which is really where reporting is going. It's actually a holistic look along. multiple capitals of your business. But E&I is one of the few oil and gas companies that have done it, although there's a few mining companies. I would be really encouraged as the next step if there were companies or a company with a consortium of people to come together to figure out what what that P&L statement for an oil and gas company might look I found really fascinating working with some of our GIS people internally is these little apps, right? So from an ecosystem services or from a monitoring or whatever, bird counts, There are ways of monitoring having citizens out collecting understanding knowing things that can be uploaded somewhere into a cloud or something again not my area of expertise

[9:53] really it's beyond the individual holding things now and I would think that the 1.0 whatever our Apple I think it needs to be in the citizen's domain because when I come up with things or we develop things, they want to know if I as a minister or as a deputy minister go out in public And I say this. Where is the evidence that's going to back me up when I say something controversially? I'm like, well... we're not always going to have that, but we know the trajectory. So I think it's the 1.0 has to be, Don't leave it with government.

[10:23] I just want to say I have the original iPhone that I cracked I bought it in Seattle and I still have it. And I think it's outrageous that we have i6 now. because the I-1 was sufficient with enough little, I can add a thermometer to it and do, you know, ambient air monitoring with the right app and the right upgrade. It's outrageous. And I'm saying nothing has changed in the accounting world for 500 years. We're still 1.0. What we haven't done is acted on the very basics of accounting principles which the Sumerians actually taught us a long time before the Italians got wise to accounting in Venice.

[11:02] There's nothing new under the sun. In fact, I would argue that. Most of what we're doing here is we're making stuff up. We're throwing numbers around out of the air. We're transferring values from Costanza to this and that. And it's just outrageous. And we're not-- so we believe in these numbers. We believe in GDP. And at the end of the day, I say, we don't know anything. We are so clueless. And the best we can do is sit around in a circle have a good conversation and talk about what we want for grandchildren and be pragmatic. and the numbers aren't going to help us necessarily.

[11:34] They will guide us. I mean, I love doing spreadsheets, but you know, at the end of the day, My wife said, you either buy the espresso machine and love it, Shut up about the spreadsheet, you know. We're low on time. Okay, I'm going to answer that because that's actually something that I'm really interested in how you could bring ways to value the future scarcities into a conservation exchange.

[12:11] So-- Yeah, I don't think we need to worry about, like, counting the feathers on the budgie birds, but I do think we need to have our eye on what the future scarcities are. And-- If we start pricing wetland loss or habitat loss in terms of the current state of the world. And we know that there is way more development coming We're not valuing that change in terms of the future risk when we're going to run into the constraints. And that's actually what cumulative effects is all about. So we have thresholds, we have you know, an endpoint. We can see where we want to go, but we aren't actually figuring out how these little changes are getting there, and then making everybody pay.

[12:54] So what's going to happen is we're going to run up to our threshold and then we're going to shut down industry or else we're just going to go over where we want to be and that's no good So we can do it in lots of other markets. Bye. sell green on a futures market, we can sell all sorts of things on options contracts, I do not know why we cannot do this. with ecosystems. So one of the things I think the discussion needs to happen is what is the baseline duty of care? What is it we expect? And not just for baseline for now, but what do we expect in the future? So the Audubon Society released a report at 5:30 this morning while I was driving in dry Edmonton to my bus about the fact that given what's going on, half of the birds in North America are in massive trouble. There's a technical word, but again, that's not my area of expertise. I'm an economist by training.

[13:49] is really scary but how do we actually how do you drive that into something that people care about and what is our baseline duty of care and that's a scary thing I think from a government perspective because it means that we have to tell landowners and we have to set up what is expected, and we haven't done that a lot over time. But I think that's another discussion that needs to happen in the Alberta citizen domain to actually get to from an equity perspective in the future from this whole intergenerational piece, we haven't figured out even in real time what what that is. so we can't until we actually have those discussions about now, how are we going to have those intergenerational equity discussions. and I think it's fascinating. I think, Alberta is the perfect place because we're We're going hard on development, right? So I think, yeah, I'm going to stop.

[14:35] So this is a teachable moment. Anyone who took finance knows that net present value is calculated on discounting the future. But did you know? in the Dark Ages, when they were building cathedrals that took 200 years, over maybe four generations of stonemasons, they used negative interest rates and their net present value. What does that mean? That means You build cathedrals that take 200 years. You value the future. and you spend the time Right? FOR THE FIRST TIME IN A LONG First Nations teach us that. You know, they did potlatch, they had the wampum belt, which represented all the material wealth. They didn't discount the future.

[15:07] All right. We are using tools that are causing us to make decisions that are literally discounting the future and the value of these things as significant to human well-being. So-- you know again we need to go back and and look at the tools, the assumptions we're working with And I love First Nations for that reason, because they remind us. that you know in their culture It was about abundance and potlatching and gifting and sharing and sitting in circle. and they didn't consider being on the land work.

[15:38] It was life. And we... We don't even know what money is. So I'm going to leave you with that. you think about what money is. Thank you. Thank you.