North Americans must radically alter the way they calculate gross domestic
product to take into account the use of each country's environmental
wealth, says a hard-hitting new report from the international environmental
watchdog set up under NAFTA.

That's because North America's natural resources - from soil and forests to
water and fish, and even clean air - are being consumed at a rate that
cannot be sustained. The watchdog of the North American free-trade
agreement is calling for a way to assess how long such use can continue
before it's too late.

"The health of an environment that sustains 394 million people and an
economy worth $9-trillion [U.S.] is at risk," concludes the first
state-of-the-nations report from the North American Commission for
Environmental Co-operation, to be published Monday.

It adds: "North Americans are faced with the paradox that many activities
on which the North American economy is based impoverish the environment on
which our well-being ultimately depends."

As it stands, the internationally accepted system of national accounts
fails to predict how long a country's environmental capital can be used,
and at what rate, before parts of it collapse, the report says.

"Unlike human or fabricated capital such as buildings and machines, the
depreciation of natural capital is not written off against the value of its
production," the 100-page report says.

The planet's assets can be likened to a bank account, it says.

"By 'spending' natural capital without replenishing it, or by damaging
processes and living systems that cannot be fixed by technology, we are
living off our capital rather than the interest," the report says.

That this urging should come from an environmental group set up by the
NAFTA partners, Canada, the United States and Mexico, is a measure of how
seriously the new economic research on this topic is being taken.

"Because of the research, we are becoming more fluent and aware of the part
that ecosystems play," said Janine Ferretti, the CEC's executive director
"They're the backbone of prosperity."

Mexico has done a pilot study on calculating an ecological GDP. It showed,
for example, that Mexico's GDP calculated the regular way logged an average
annual increase of 2.2 per cent from 1985 to 1992. The ecological GDP
showed an average of 1.3 per cent because it took into account the
depletion of natural assets.

Both Canada and the United States have examined integrating measures of
economy and environment. The United States launched a study of the costs
and savings of the Clean Air Act over 20 years, for example. Implementing
the act cost $524-billion (U.S.), but saved the economy more than
$6-trillion (U.S.).

The fate of the cod fishery on Canada's East Coast is a perfect example of
what happens when natural capital is not taken into account. Past
governments encouraged the use of large fleets to catch and process fish to
build up Newfoundland's economy.

Because too many cod were fished out of the ocean, and too little was
understood about how that system worked, the fishery collapsed.

In 1992, Canada banned cod fishing. Stocks have still not rebounded and
many scientists say they never will. It's a similar story with haddock and
pollock.

"Excessive fishing has destroyed a major piece of the environment," the
report says. "In turn, that has destroyed part of the economy."

Not understanding how a natural system worked led to the loss of tens of
thousands of jobs and a special unemployment program that cost the Canadian
government $1.9-billion in the first five years. It is expected to cost
another $760-million over the next three years.

The growing sense of urgency in understanding the continent's economy in
this way is borne out by some of the report's other findings. While there
is some good news, such as the increase in protected areas to about 15 per
cent of North America from about 5 per cent in 1970, there is also bad news.

Agricultural practices such as no-till planting are lessening the degree of
soil erosion in parts of the agricultural belt, yet soil is still
disappearing. Now it's because farmers rely heavily on chemical fertilizers
that erode soil structure instead of the compost and manure that build it
up, the report says.

As well, high use of fossil fuels is polluting the air and helping to
damage the planet's climate. In the United States, the number of kilometres
travelled by passengers on transit, rail and intercity bus has dropped by
half since 1970 even as the appetite for bigger cars and longer trips
increased.

Old-growth forests in North America continue to disappear, replaced in part
by planted trees that are not as resistant to disease. Mexico, for example,
has already lost 95 per cent of its tropical humid forests and is losing
forests at the fifth-quickest rate of any country in the world.

Based in Montreal, the CEC was established in 1994 to help prevent
conflicts over trade and environment, enforce environmental laws and
examine environmental concerns of the member nations. Former U.S. president
Bill Clinton insisted on its creation before he would agree to ratify NAFTA.

Environmental groups have often accused the three governments of creating
the CEC only to ignore its recommendations.
Cheryl Veary
Office Coordinator / Coordonatrice du Bureau Central
Green Party of Canada & Ontario / Parti Vert du Canada et d'Ontario
244 Gerrard St E
Toronto ON  M5A 2G2
416-929-2397
1-888-6GREEN6
www.green.ca / www.greenparty.on.ca