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  • How can Victoria re-launch its economy on an ecological, low-carbon path?


    Leslie Campbell

    July 7, 2020

    The coronavirus crashed our growth-dependent economy just as the global community was figuring out how to shift to an economy that doesn't destabilize climate or threaten biodiversity. How will Victoria respond?

     

    THE COVID-19 PANDEMIC has dramatically reduced economic activity. Canada’s Parliamentary Budget Officer Yves Giroux, for instance, estimates real GDP will fall by 12 percent this year, close to four times the steepest drop on record. Stats Canada reports that “from February to May, total employment has fallen by over 2.7 million, as the unemployment rate rose to a record high 13.7 percent.”

    Despite government injections of cash—causing ballooning, unprecedented deficits—people are losing their businesses, their jobs, potentially their homes. They may well have trouble paying their taxes, which means governments will be hard-pressed to deliver all the services (especially with those deficits) we’ve come to expect.

     

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    Statistics Canada’s graphic depiction of what happened to economic activity in Canada in the first three months of 2020

     

    Along with such pain associated with the economic fallout of COVID is a silver lining: climate-warming carbon emissions and other forms of nature-destruction have gone down in synch with our reduced economic activity.

    While many people and governments want to quickly get back to full-tilt economic growth, this is the ideal time to reimagine the economy. How could we rebuild it so that it doesn’t harm life-support systems we depend on? Can we get our economic or material desires in line with the Earth’s carrying capacity? Given the realization that another virus or the climate crisis could destabilize our lives in the future, how can we best reshape our economy so that it is more resilient?

    The solutions will likely involve a radical departure from the traditional economic growth model. The assumption of conventional economics—that we can just keep growing the economy—fails to reflect the reality that Earth’s resources are finite. Most of us acknowledge that climate change has already given rise to costly floods, forest fires, and fatal heat waves. But the encroachment of our continually growing demands on natural systems also threatens food security, water supply, and the physical integrity of coastal communities.

    Bold steps are needed and the pandemic has proven that they can happen in short order if we muster political will and social cohesiveness. The fact that Canada and BC’s economies are based primarily on natural resources, however, poses a significant challenge.

     

    Two reports with lofty, contradictory goals

    A PROVINCE OF BC TASK FORCE and the City of Victoria have both issued economic reports in recent months that appear, at least on the surface, to take seriously the need to transform the economy in a way that protects the natural world and addresses the climate crisis.

    The BC Emerging Economy Task Force’s final report, released in March 2020, states “We cannot stress enough the need to make the changes now in order to have a diversified and resilient future.” It calls into question our reliance on GDP as a measure of success: “Moving beyond GDP and including indicators like work and life balance, education and skills, income and wealth, jobs and earnings, environmental quality and housing, can give us a realistic window into the true state of our province.” The report continues, “These broader measures can be used as a blueprint for addressing challenges including poverty, inequality, climate change, environmental degradation, prosperity, and peace and justice.”

     

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    That report characterizes the emerging economy as: “Rapidly evolving: The economy of the future will experience regular disruption and uncertainty, creating a need for nimble, adaptive and flexible business practices and policy, as well as continuous learning in order to remain globally relevant and competitive.” The future economy will be “low-carbon, circular and sustainable…one where society exists within its ecological means, avoiding the excessive depletion of natural resources while extracting their maximum value and minimizing pollution and environmental degradation in all its forms.”

    The City of Victoria also has a new report addressing such issues. Victoria 3.0 – Recovery Reinvention Resilience – 2020-2041 lays out measures to “build an economy that enables everyone to flourish and that will set Victoria on a path to low-carbon prosperity.”

    Adopted by city council in May, its first of three main goals is helping small business, “the lifeblood of the community,” become more resilient in light of experiences and lessons learned during the COVID-19 pandemic. The assistance seems to come mostly in the form of “how to” guides, new committees, hiring a consultant to guide strategy development, and, as we’ve heard about, opening up patio space and the like for restaurants.

     

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    Tech is the shiny new industry in town, creating $5 billion of economic impact annually (about double that of Victoria’s tourism sector).

    The new, desired economy is described in Victoria 3.0 as “an innovative economy that develops solutions to pressing global challenges, sells these solutions globally, and brings the money back to Victoria.”

    The second goal is “to create a city and an economy for everyone.” A strong and resilient economy has diversity. It provides living wages, childcare, affordable housing, and affordable transportation.

    The third goal, states Victoria 3.0, “is that while we build our economy over the next two decades, we do so within the boundaries of the Earth’s capacity to sustain us.”

    Given the other goals and the nature of cities, this will be the most difficult goal to realize. As the report itself notes, “Cities consume resources from global hinterlands at unsustainable rates [and] produce well over 70 percent of greenhouse gas emissions…”

    Unfortunately, the report doesn’t outline a set of actions that will reduce that impact. In fact, there are recommended actions—like doubling the capacity of the Victoria Conference Centre—that appear to take us in the opposite direction, increasing our footprint. (More on this in an upcoming Focus’ article on the tourism sector.)

    The report mentions how an Arts and Innovation District, along with an Ocean Future Cluster will create low carbon prosperity, yet fails to illuminate us on how, except for a brief mention about creating a “Building Innovation Incubator to stimulate construction innovation for climate impact.”

    The central vision of Victoria 3.0 states: “As the Capital City, Victoria is a future-ready, globally-fluent influencer and innovator. Working within the bounds of the Earth’s capacity to sustain us, we will use our status as a small powerhouse and nurture our innovation ecosystem to create a strong and resilient economy that meets our needs now and anticipates the future.” The jargon-heavy text frequently references working or thinking “like an ecosystem”—but it’s an “innovation ecosystem” or “tech ecosystem,” not the real, endangered varieties.

    Both BC’s Emerging Economy report and Victoria 3.0 pay lip service to the goal of carrying out business without environmental degradation yet fail to appreciate how difficult that is. In the BC report, a Victoria-based tech company is highlighted that helps logging companies operate more efficiently through data-generated 3-D imaging to “harvest” timber. While it might reduce loggers’ consumption of fossil fuels, it is also helping them destroy the capacity of forests to store carbon. In the Victoria report, BC Investment Management Corporation (BCIMC) is highlighted—a corporation, based in Victoria, investing government employees’ pension funds in all the major international oil and gas firms, and more locally, Mosaic (the joint business management unit of Island Timberlands and TimberWest), which clearcuts forests on Vancouver Island, thereby once again preventing those forests from continuing to serve as the best carbon capture and storage facilities in existence.

     

    Economic growth and emissions: decoupling not happening

    AT A RECENT URBAN DEVELOPMENT INSTITUTE WEBINAR on the Victoria 3.0 plan, Mayor Helps, Gordon Fyfe, CEO of BCIMC, and other panellists painted a picture of an exciting future Victoria that will house a growing population of innovators. The City of Victoria will need 6,000 more housing units, on top of the 6,000 recently built, the audience was told. Traditional neighbourhood restrictions on housing form may have to be removed, said Luke Mari of Aryze, a development firm. Fyfe implied that bringing workers and wealth to Victoria is the name of the game—by nurturing tech companies that sell internationally and bring the money back here; bringing in workers and their families, and supplying homes and more jobs for the spouses and kids.

    Is this growth inevitable given Victoria’s liveability? Certainly our political and industry leaders don’t question its desirability, even as they acknowledge the need for a low-carbon future and the need to work “within the bounds of the Earth’s capacity to sustain us.”

    Yet decoupling economic growth from the destabilization of climate and ecological systems is a form of magical thinking according to many experts. There might even be “overcoupling” happening, according to the International Resource Panel. The global economy now needs more materials per unit of GDP than it did at the turn of the century. The European Environmental Bureau states: “not only is there no empirical evidence supporting the existence of a decoupling of economic growth from environmental pressures on anywhere near the scale needed to deal with environmental breakdown, but also, and perhaps more importantly, such decoupling appears unlikely to happen in the future.”

    While there have been dramatic increases in energy efficiency in recent decades, the International Energy Association (IEA), notes that “2018 marked the third consecutive year in which the improvement rate for energy efficiency slowed.” And such measures have been outweighed by the demands of even more dramatic, compounding economic growth, at least pre-pandemic. In European countries where a degree of decoupling seems to be occurring, one study shows it’s been accomplished by shifting energy intensive activities abroad.

    The only thing that seems to cause emissions to decline at any substantial rate is declining economic activity. As the IEA states about COVID-19’s impact: “Not only are annual emissions in 2020 set to decline at an unprecedented rate, the decline is set to be almost twice as large as all previous declines since the end of World War II combined.” [Italics added]

    Until the depth of the economic growth problem is understood, there’s no hope of solving it. And our leaders appear to have no clue. Expansion—of population, industry and prosperity—is the name of the game, with little analysis of the external costs.

    Yet COVID-19 has shown us that we can change our habits, our assumptions even, almost overnight when there’s a threat to our health. It has shown us that economics do not trump everything else with the public, the government or business.

    While the climate and biodiversity crises may not seem as urgent a threat as a pandemic—they are already impacting our well-being. COVID-19 itself was recently acknowledged by the leaders of WHO, the UN and the World Wildlife Fund to be directly related to humans’ over-exploitation of the Earth’s ecological systems.

    Citizens have key roles to play—in the industries and government policies they choose to support and in how they otherwise lead their personal, professional and political lives. The likelihood of both another pandemic and of climate catastrophe demand we rethink many of the things we’ve taken for granted, be willing to change our expectations, give up certain types of consumption, and pay more for others so that their external costs are mitigated.

    The first industry sector we’ll look at is one of Victoria’s and BC’s largest—tourism. Go to story...

    (The BC government is inviting citizens to submit their ideas on the BC Economic Recovery Plan. Visit www.gov.bc.ca/recoveryideas)

     

    Focus editor Leslie Campbell wrote about the need for a transformation to a degrowth economy pre-COVID as well, here.

    Edited by Leslie Campbell



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    Virtually everyone I have talked to doe not express much enthusiasm  for a green recovery.  Most think "FUBAR", or such desperation that we'll go back to "normal", if only for a little while to get a handle on things - which leads to same old, same old. Will (for example) the provincial government call an immediate halt to logging?  Will Victoria call for an immediate cessation to condo construction, in a genuine effort to call a halt to population growth?  Will the feds declare an immediate halt to salt-water commercial fishing, in recognition that fish stocks have become dangerously depleted?

    The list goes on......

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    While COVID-19 has slashed our GDP, at the micro level there's another way of pointing out how ridiculous is the drive for ever-increasing GDP. Now that we are in the present situation, anyone becoming infected with the virus thereby boosts the GDP--such as with purchases of extra acetaminophen, etc. If they are hospitalized, that boosts it even higher. Going into intensive care increases GDP yet again. Funerals also mean additional spending.

    I once remarked to a BC government executive director that every car crash raises the GDP. She replied: "That's why it's called the Gross Domestic Product."

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