Incorporating natural capital into economy-wide impact analysis: a case study from Alberta

Traditionally, decision-makers have relied on economic impactestimates derived from conventional economy-wide models. Conventional models lack the environmental linkages necessary for examining environmental stewardship and economic sustainability, and in particular the ability to assess the impact of policies on natural capital. This study investigatesenvironmentally extended economic impact estimation on a regionalscale using a case study region in the province of Alberta knownas the Foothills Model Forest (FMF). Conventional economic impactmodels are environmentally extended in pursuit of enhancingpolicy analysis and local decision-making. It is found that theflexibility of the computable general equilibrium (CGE) modelingapproach offers potential for environmental extension, with a solid grounding in economic theory. The CGE approach may be the tool of the future for more complete integrated environment andeconomic impact assessment.