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

Traditionally, decision-makers have relied on economic impact estimates 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 investigates environmentally extended economic impact estimation on a regional scale using a case study region in the province of Alberta known as the Foothills Model Forest (FMF). Conventional economic impact models are environmentally extended in pursuit of enhancing policy analysis and local decision-making. It is found that the flexibility of the computable general equilibrium (CGE) modeling approach 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 and economic impact assessment.