Study on the implementation of ecofiscal measures for conservation and adaptation to climate change in the St. Lawrence Lowlands

Most of the ecofiscal measures used around the world apply to the energy and transportation industries to reduce greenhouse gas emissions. Very few measures target adaptation to climate change. However, climate change is contributing to the increase in extreme climatic events and the natural risks associated with them. It generates chronic stress on habitats for species at risk.

In Québec, the St. Lawrence Lowlands are subject to particularly numerous and significant anthropogenic pressures, threatening the ecological balance and deteriorating the quality of ecological services provided by natural areas. This region has also been affected by severe flooding in recent years. This increase in climate risks requires adaptation measures in terms of land use planning in the area.  

• To develop ecofiscal methods aimed at enhancing the ecosystem functions of the St. Lawrence Lowlands to protect the essential habitats of certain species at risk.

1. Produce a conceptual framework by reviewing the literature on the benefits of ecofiscal policy as well as identifying the issues in the conservation of natural environments and species at risk in the St. Lawrence Lowlands. 

2. Create a land register for a given area by developing a land classification grid and applying it to the land register of a municipality in Montérégie.

3. Determine tax rates based on a methodology for evaluating the ecological value of land developed by the Habitat group, taking into account the loss of the estimated ecological value.

4. Calculate subsidies dedicated to conservation: provide an overview of tax subsidy practices aimed at the conservation of private land and calculate an optimal subsidy amount to grant to municipalities and private organizations for this purpose. 

5. Economic analysis of ecofiscal measures: calculate the anticipated revenue from land in a given area based on the information collected as described in points 2 and 3, and analyze it, taking into account its efficiency, equity and administrative costs. 

6.  Examine the legal and political considerations by considering the expected roles of various governments, analyzing the legal framework and reviewing the literature on social acceptability issues.

Ecofiscal policy may be appropriate for regulating the use of unregulated environments, especially in a context of scientific uncertainty. Economic tools could positively influence land conservation, pending a possible regulatory decision. This would be the case, for example, for taxes and subsidies applied throughout a jurisdiction, including in areas deemed less critical according to our scientific knowledge.

It is important to note that ecofiscal policy is not intended to replace regulation, but to provide an additional measure to protect and conserve natural environments. Ecofiscal measures are not suitable for all forms of pollution or damage. The most serious forms of habitat destruction should not be subject to ecofiscal measures, but should fall under a legislated ban. The case of animal and plant habitats containing endangered species is a good example. When natural environments are crucial to the survival of these species, it is inappropriate to charge money their destruction.

Two innovative ecofiscal measures based on the environmental footprint of land use have been proposed: a taxation measure and a subsidy measure. The aim of the report is to validate the feasibility of these methods and measure their effects throughout Quebec.
The tax base of the suggested ecofiscal measures depends on the surface areas of parcels of land for different land use classes.

Tax and subsidy rates are based on models of the value of ecosystem services, on a selection of ecological criteria and on a method of ranking classes of environmental footprints.

To evaluate the measures, a sample of properties in the city of Laval was analyzed. By extrapolation, the results were then generalized to the whole of Quebec. By combining data on the ecofiscal policies, property assessment roll data and census data, the socio-economic impacts of the tax measure can be estimated. A survey was also conducted among Quebecers to assess the social acceptability of the method.

Our results show the technical feasibility of the land use ecological footprint tax. The proposed rates are the result of a rigorous approach based on an estimate of the value of environmental damage.

• For the residential sector, the amount of tax payable is reasonable and relatively proportional to households’ ability to pay. The tax also has the desired effects, i.e. it promotes urban density and the addition of vegetation. 

• For non-residential buildings, the tax burden is somewhat heavier, but it offers good potential. 

• For the agricultural sector, the tax rates generate very high levies, which may lead to negative distortions in the food market.

Polling data shows that the majority of the population opposes the introduction of a new tax on the ecological footprint of land use, but those under 35 support it.

For the subsidy measure, an overview of existing programs in Quebec and around the world makes it possible to draw conclusions about the performance and appropriateness of such a method. It shows that the relationship between the surface area, the ecological value and the market value of land is problematic. The subsidy measure is more costly and less effective than the taxation measure in promoting the preservation and restoration of natural spaces.

• Jérôme Dupras, UQO

• Andrew Gonzalez, Université McGill

• Justin Leroux, HEC-CIRANO

• François Vaillancourt, Université de Montréal - CIRANO

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