A Brief Look at the Environmental Goods and Services Sector in British Columbia
By Denise Mullen, BC Business Council
There are substantial challenges with establishing a coherent measure of the environmental goods and services (EGS) sector, not only in terms of definitions but also as a proportion of Gross Domestic Product, trade and employment in British Columbia.
For the most part there has always been an EGS sector. Its contribution to the economic activity is already embedded within the system of national accounts (SNA) used by statistical agencies in Canada and other countries. Two examples are water and wastewater treatment, whose contribution to economic activity is already counted as part of utilities or infrastructure spending. Other examples include technologies designed to improve vehicle fuel efficiency or to reduce emissions from power generation; these are captured in the existing data on manufacturing and utilities production and spending. Activities such as consulting and engineering services and hazardous waste management are also included in the SNA.
Estimating the size of the EGS sector, therefore, is mainly an exercise in the reclassification of certain economic activities, rather than inventing something new. It is important to be aware of the risk of double counting. In addition, there is a need to consider the addition of new activities that reflect the evolving nature of the economy in response to new environmental legislation and regulations and to shifts in consumer demand and tastes. Estimating the number of jobs from the EGS sector is directly analogous.
Given the lack of widely accepted data or definitions, a ballpark estimate for the size of the EGS sector is between 1% and 2% of GDP across most advanced economies. This is based on work done by Organisation for Economic Co-operation and Development, the World Trade Organization, Eurostat (European Commission Statistical Agency), the United Nations (System of Economic Environmental Accounting) and some US International Trade Commission. The extrapolation to Canada and BC is shown in Table 1.
For BC, the above suggests the EGS sector amounts to $2.2-4.5 billion in output or GDP. In terms of employment, estimates for the EGS sector range from 2% to 5% of all payroll jobs in advanced economies. The low end percentage lines up with the overall size of the sector in general, while the higher percentage reflects a boarder interpretation of what might be considered to be “green” or “clean economy” jobs.
Potential for Growth
While these numbers may strike some as low, there is significant potential to grow the EGS sector. How quickly this occurs will depend in part on structural changes that move the focus from end-of-pipe equipment and clean-up services to integrated clean technologies, environmentally-sensitive procurement choices by public and private sector entities, funding and support for research, innovation, design, consulting and other services, as opposed to simply clean-up and remediation-based goods and services.
Canada and BC are well positioned to take advantage of EGS export opportunities in emerging markets given our expertise in some of these areas, such as water and wastewater treatment, waste management (especially hazardous wastes), hydrogeology and recycling. We also have solid expertise and lots of companies in environmental consulting, engineering, environmental technologies, biotechnologies, site remediation and energy conservation.
For a more detailed review of the sector as a whole in the Canadian and BC context in relation to global definitions and data, please see the previous Business Council reports on Getting a Handle on the Environmental Goods and Services Industry andHow Big (And What Is) the ‘Green Economy’? The Challenge of Counting ‘Green Jobs’ in BC.