Despite the slow recovery of the global economy and a lack of political will for addressing environmental and climate change issues, a report by the Environmental Business Journal estimates that the annual value of the global environmental market was $866 billion in 2011, up 4% from the year before. While the US, Western Europe and Japan remain the three largest and most mature environmental markets, growth in the global environmental market in 2011 was led by Africa (up 10%), followed by the Middle East and the rest of Asia (both up 9%). In terms of business sectors, the largest is solid waste management, followed by water utilities and treatment. Recycling, green building, energy efficiency and other areas under the resource recovery and clean energy categories are all growing at faster rates than the overall economy in most nations.
In Canada, there is a large untapped potential for environmental markets. A report released by Sustainable Prosperity in November 2012 estimates that Canada’s combined environmental marketplace is worth between $462 million and $752 million annually. The wide gap between the high and low estimates is due to a lack of transparency and the definition of “environmental market”. In the report, an environmental market is defined as a market having a buyer, a seller and the exchange of an environmental attribute. 57 markets were covered in the report and it is anticipated that the value of the Canadian environmental marketplace will increase as new programs such as Quebec’s greenhouse gas cap-and-trade system develop. Sustainable Prosperity’s analysis indicates that markets addressing biodiversity and habitat conservation, water quality, water quantity, climate change, and air quality can provide environmental benefits inexpensively if they are well-designed markets. For investors, they also represent an opportunity for exposure to a new and growing asset class. These markets may represent a significant financial sum as a whole, but most of the individual ones are small and underdeveloped in terms of their infrastructure and scope. Greater certainty in terms of environmental policy and regulatory flexibility to allow for the increased use of markets would help attract the necessary capital from the private sector to expand and grow Canada’s environmental marketplace.