Frequently Asked Questions

   What is Sustainable Prosperity?

Sustainable Prosperity is a charitable, non-partisan, multi-stakeholder initiative working to protect Canada’s environment and enhance our prosperity. Sustainable Prosperity provides credible research, robust policy proposals, and educational information on environmental pricing reform.

   Who is behind Sustainable Prosperity?

A broad and unusual alliance – leaders from business, non-profits, academia and more – supports Sustainable Prosperity. See our Steering Committee.

   What is Environmental Pricing Reform (EPR)?

Environmental pricing reform (EPR), or “getting the prices right” is the process of adjusting market prices to include environmental costs and benefits. Where market prices omit environmental costs and benefits, rational economic decisions lead to environmental harm, as well as to economic distortions and inefficiencies. Getting the prices right can help to protect the environment and boost Canada’s prosperity.

   How is EPR different from CSR?

CSR – corporate social responsibility – promotes voluntary reduction of environmental harm. However, voluntary approaches fail to address the powerful financial incentives that often cause environmental harm. OECD research calls into question the environmental effectiveness and economic efficiency of voluntary approaches. EPR, in contrast, focuses on changing the policy framework – the rules of the game – so that it is cheaper (or more profitable) to protect the environment. It changes the financial incentives so that self-interest aligns with environmental protection. And by removing externalities, it increases economic efficiency.

   How is EPR different from regulation?

EPR and regulation are similar in that they both create financial incentives to reduce environmental harm – EPR by setting prices for that harm, and regulation by setting standards backed up by (mainly) financial penalties. However, EPR policies are often designed to create dynamic incentives to reduce environmental harm, i.e. incentives that encourage continuous improvement, not just compliance with a threshold.

   What kinds of changes does Sustainable Prosperity want?

We are seeking changes in policy – federally, provincially, and locally – to implement EPR across Canada. EPR means a change in the rules of the game, and a levelling of the playing field, so that cleaner goods and services become cheaper. EPR policies, also known as “market based instruments” (MBI) or “economic instruments,” include tax shifting, cap-and-trade emissions reductions, and developing markets for ecological services.

   Won’t “doing the right thing” cost me more?

Nobody should have to make sacrifices in order to do things that are good for the environment. For individuals, doing the right thing should be cheaper than doing the wrong thing; for business, it should be more profitable. Sustainable Prosperity works toward EPR policies that make this vision a reality.

   Will Canadians support this kind of change?

Canadians are smart: they understand the economic principle that prices influence behaviour. For example, recent polling shows the majority of Canadians favour raising taxes on energy sources that cause climate change in order to encourage individuals and businesses to use less of them. When those tax revenues are devoted to cleaner/efficient energy, or to reducing other taxes, the support climbs to 80%.

   What is green tax shifting?

Green tax shifting isn’t a “tax grab,” or even raising taxes. It’s adjusting relative tax rates. Activities and products that help the environment and the economy become relatively cheaper, while pollution and other things that harm the environment become relatively more expensive. The basic principle is this: if you want less of something, raise taxes on it; if you want more of something, reduce taxes on it. As the saying goes “Tax bads, not goods”.

   What are cap-and-trade emissions reductions?

Under a cap-and-trade system, a cap is placed on the total emissions from a region or an economic sector, and the cap is generally ratcheted downward over time in order to reduce overall emissions. Emissions trading allows individual polluters to buy and sell emissions permits that add up to the capped amount. Thus polluters who can reduce their emissions more cheaply can sell their emissions permits to others. The net result: less pollution at a lower overall cost. See the Globe and Mail article by Sustainable Prosperity’s Stewart Elgie and Dan Gagnier: Emissions Trading: Like foreign aid, but better.

   What are markets for ecological services?

Our environment provides valuable services, but we often fail to include that value in market prices. For instance, wetlands filter water, and forests protect hillsides from collapsing and sliding. When markets fail to reflect the economic value of these services, they can be degraded, resulting in economic losses. When we create markets for these services, people can see – and pay for – their value. And thus we help protect the environment and our financial well-being.

   Would Sustainable Prosperity’s agenda hurt lower income Canadians?

No. The idea that EPR always hurts lower income people is just an old myth. And it reflects a failure to understand instrument design: any set of policies – if badly designed – could hurt lower income people. Sustainable Prosperity works toward EPR policy suites that would protect lower income Canadians from financial hardship. We also need to remember that the poorest among us are often disproportionately harmed by environmental degradation; protecting the environment will improve their quality of life.

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