Bill C-5, known as the One Canadian Economy Act, which became law late in June, marks a pivotal moment in the federal government’s approach to economic development.
By taking steps to remove interprovincial trade barriers and streamline approval processes for major projects deemed to be in the national interest, Ottawa is signalling a more efficiency-oriented strategy to drive growth and to reduce Canada’s economic dependence on the United States in the face of U.S. President Donald Trump’s tariffs and other threats.
We support this broad direction. But as Ottawa races to unlock the associated economic gains with better policies and streamlined regulation, it must avoid the serious economic errors of degrading natural assets and sacrificing environmental integrity. Streamlining the regulatory process must not mean gutting it.
If Canada weakens its environmental assessment regimes to speed up approvals, it risks sowing the seeds of long-term economic and ecological damage.
In fact, now is the time to strengthen, not erode, our commitment to account for and preserve our natural assets—wetlands, forests, watersheds and biodiversity—as well as their ecosystems, because these provide crucial support for Canada’s prosperity and resilience.
A common refrain from various provincial and federal politicians is that environmental regulation has become duplicative, excessive or inconsistent across jurisdictions, especially when it comes to approving major infrastructure projects.
There is some truth in this. Smarter, more coherent regulation is needed. But streamlining does not mean careless deregulation. Faster does not mean weaker. It means better.
A Welcome Shift–With Caveats
Bill C-5 reflects a long-overdue effort to modernize Canada’s economic policy and regulatory architecture. Key elements—a more diversified trade policy, interprovincial trade liberalization, a huge boost in defence spending and major trade infrastructure investments—are all necessary for long-term competitiveness.
But they are not sufficient on their own and their effectiveness is not certain.
For example, it is not enough to simply lift regulatory barriers. After that is done, firms must still retool their supply chains, revise marketing strategies and reallocate capital to align with the new economic landscape. Many workers will need to upgrade their skills. Canada’s chronic productivity challenges cannot be solved through improved policy and regulation alone.
What Canada’s approach lacks is intelligent regulation that is efficient and predictable, grounded in an accurate valuation of the natural assets at stake. At present, the federal, provincial and most municipal governments do not value and account for natural capital such as wetlands, forests, watersheds and biodiversity in a meaningful and consistent way.
Natural assets provide essential services—clean water, air purification, carbon storage, flood mitigation, etc.—that carry immense economic value. When infrastructure projects degrade or destroy ecosystems, the near-absence of proper valuation of these assets means the true costs are hidden and future taxpayers are left to pick up the tab.
It also means the essential standards of systems approaches are not met. A systems framework requires policies intended to achieve short-term economic gains must not incur significant (i) long-term economic costs and (ii) harm in interconnected systems such as the environment.
Learning From International Best Practices
Canada should look abroad for practical lessons on regulatory rigour and efficiency, while developing our own made-in-Canada model that ensures ecological assets are properly valued.
The Netherlands and some Scandinavian nations, for instance, have integrated permitting processes that incorporate independent review, early environmental screening, clear timelines and binding criteria for sustainability. Best practices in international models include digitization to facilitate applications, tracking and public access. Adaptive and ecosystem-based approaches that consider cumulative, transboundary and ecosystem impacts are also core elements.
These models demonstrate that it is possible to build quickly and regulate effectively without compromising environmental stewardship or the economic value of natural assets.
Natural Infrastructure Is Real Infrastructure
The Liberals campaigned in the April election on a platform that included clear commitments to prioritizing natural infrastructure, as well as mitigating environmental and species-at-risk impacts in areas facing substantial infrastructure development.
Yet, these priorities are largely absent from Bill C-5. Without embedding these concepts into our policy and regulatory architecture, we risk repeating the serious mistakes of the past.
The current narrative on nation-building focuses on roads, bridges, housing and energy systems. But natural infrastructure must also be part of this strategy. Investing in and preserving these ecosystems is both an environmental and economic imperative.
In many cases, maintaining or restoring natural infrastructure can be more cost-effective than manufactured alternatives, especially when factoring in climate resilience and disaster mitigation.
Yet, there remains a glaring failure to properly fund and commit to this asset class. Provinces—particularly Alberta, Saskatchewan, Ontario (Greenbelt and Bill 5) and Quebec—have often resisted or rolled back regulatory protections and planning frameworks that preserve ecological systems. They have also not adopted public accounting of their natural assets and ecosystems.
If federal efforts to centralize and accelerate project approvals ignore this context, we will only deepen the problem.
Housing: A Missed Opportunity?
The push to build millions of new homes over the next decade presents both a challenge and an opportunity.
Done poorly, it risks further environmental degradation, especially when homes are built on sensitive ecosystems or in high-risk fire and flood zones. Done well, it could catalyze a transformation in how we build: prioritizing low-emission, climate-resilient and resource-efficient designs, including prefabricated homes manufactured to the highest sustainability standards.
This opportunity should not be squandered. Streamlined housing approvals that are co-ordinated and consistent across all three levels of government must be paired with strict environmental and planning criteria to ensure we are building for the future, not replicating past mistakes.
Meaningful Indigenous Engagement
The shift toward centralized project approval in Bill C-5 must respect the principles of First Nations consultation, consent and self-determination. Nine First Nations launched a lawsuit against Bill C-5 (and Ontario’s Bill 5) and Indigenous leaders were split after a mid-July meeting with Prime Minister Mark Carney on whether his priorities as outlined in the legislation meet their needs.
These issues deserve genuine dialogue and meaningful action moving forward.
As Canada’s major policy reset continues, the federal government is correct to seek a more unified, efficient approach to economic development. Removing trade barriers and fast-tracking critical infrastructure can yield real benefits. However, these gains will be short-lived if they come at the economic and ecological cost of ignoring or harming our natural assets.
Improved policy design and implementation must include intelligent regulation that recognizes, measures and protects the value of Canada’s natural capital. Otherwise, we risk building an economy on a degraded foundation.
Peter van Dijk is a corporate tax lawyer, an adjunct professor at the Goodman School of Business at Brock University and an adviser to sustainability and technology start-ups.
James K. Stewart is an economist, a senior fellow at the C.D. Howe Institute and an advisory committee member of the Intact Centre on Climate Adaptation. He is also a board member of the Institute for Research on Public Policy, the publisher of Policy Options.
Joanna Eyquem is a climate adaptation scientist, vice-president of the Climate Risk Institute and holds more than 30 related board and advisory positions, including chair of the board for the Natural Assets Initiative.
This post originally appeared on Policy Options under a Creative Commons licence.
