With about 150 Canadian municipalities looking to integrate natural assets into their financial reporting, a new guidebook offers metrics to evaluate nature as essential infrastructure that delivers valuable services to a community—not just scenery.
Wetlands, forests, and rivers help with flood protection and clean water, yet they often go unrecognized in government budgets. So the University of Waterloo’s Intact Centre for Climate Adaptation developed Getting Nature into Financial Reporting: Natural Asset Disclosures for Local Governments, a guide to help communities track, value, and protect these natural assets as part of their financial planning.
“With record catastrophic losses in Canada and limited public funds, there has never been a more critical time to harness the services that nature provides for climate resilience, and beyond,” Joanna Eyquem, guide author and managing director of climate resilient infrastructure at the Intact Centre, told The Energy Mix in an email.
Natural assets like forests and coastal dunes are not just decoration, she added—they are “infrastructure that provides financially valuable services, like absorbing and storing water to limit floods, and protecting communities from extreme heat.”
But without appropriate financial values, “nature doesn’t have a voice in decisions when ‘money talks’,” Eyquem added.
Building Natural Asset Disclosure
The guidebook defines key metrics for building a strong natural asset disclosure:
• The kind, extent, and condition of all natural asset types and classes—like wetlands, forests, and soils;
• The three main categories of ecosystem services provided by these assets: providing essential goods like fresh water; regulating and maintaining essential natural processes like the water cycle; and delivering spiritual, recreational, and cultural benefits;
• A financial valuation that assigns a dollar figure to all ecosystem services and their replacement costs;
• All changes during the reporting period, or since the base year.
Natural asset disclosure should include changes in all of those metrics, and in “risks to natural assets identified through the risk management process,” the guide states. A complete disclosure will also report the impacts of those changes on a local government’s financial position and service delivery, with a “description and rationale” for the approach taken to measure all changes.
Just Get Started
The guidebook flags key considerations for local governments to consider for each metric. For instance, staff may want to engage local expertise to help determine the condition of a natural asset. Historical baselines can be a handy reference for assessing change to that asset.
The guidebook also urges its users to “get started” at the earliest. “Local governments do not need to make a complete set of natural asset-related disclosures covering all of the elements identified at once.”
The important thing is to begin, because “the sooner local governments integrate nature into their management and reporting systems, the sooner they will be able to make more informed economic decisions that support the wellbeing and financial stability of their communities.”
No community should consider itself too small to begin such an accounting, Eyquem said. “In fact, many smaller municipalities are leading the way.”
Small But ‘Mighty’ Rossland, B.C.
Among the 150 or so communities across Canada that are already working to identify, assess, value, and better manage their natural assets is the West Kootenay town of Rossland, B.C.
A magnet for powder hounds in winter, and mountain bikers and hikers the rest of the year, Rossland (pop. 4,140) is “mighty when it comes to leadership on climate,” and serious about natural asset management, CFO Mike Kennedy told The Mix.
The city’s upcoming Utilities Master Plan (UMP) will outline future water and sewer infrastructure needs. And a procurement policy that calls for comparisons of the long-term costs of natural versus built infrastructure “has led to progressive conversations with stakeholders about expecting infrastructure beyond concrete,” Kennedy said. One of the projects in the UMP will remove aging sewer infrastructure from beneath a local wetland and restore the ecosystem.
Rossland’s preliminary catalogue of natural assets, their kind and condition, and assessment of core risks, shows its progress on natural asset disclosure. The catalogue includes the forested slope that rises to the west of the town’s primary reservoir, providing protection against erosion above the critical water source as well as carbon sequestration.
The forest is also threaded through with trails beloved by mountain bikers and hikers. Putting a dollar value on the slope and the ecosystem services it provides “in perpetuity, for free,” will protect the resource’s resilience—and also the community’s resilience and wellbeing, Kennedy says.
