Interview with Isabel Gordon, director of financial services, District of West Vancouver

Isabel Gordon is director of financial services for the District of West Vancouver. She was previously director of finance for the City of North Vancouver for 25 years. She spoke with MNAI about the municipal accounting profession’s evolving understanding of natural assets.

MNAI: How has the way you perceive natural assets evolved over the course of your career as an accountant and CFO?

Like many accountants, I didn’t start out thinking much about natural assets. On the face of it, forests and streams are fundamentally different from the way accountants think about assets.

However, a few years ago, I was approached by the David Suzuki Foundation to become a natural capital ambassador. I was skeptical, but once I started looking at the data, I realized that there was a strong case to be made for the importance of nature as an asset.

Then, Emanuel Machado and the Town of Gibsons started doing the work of inventorying, valuing and managing natural assets at a local government level. This created more evidence, and a practical direction for other municipalities to go. Their work was followed by the Municipal Natural Assets Initiative, in which the District of West Vancouver participated.

Now, I am starting to see very clear evidence that natural assets provide communities with vital services that have real value.

MNAI: What are the risks and opportunities to local governments in inventorying, valuing and managing nature as an asset?

The main risks to local governments are in not inventorying, valuing and managing nature as an asset.

First, if local governments have not inventoried or valued their natural areas, they simply have no sense of the extent to which they rely on them, or the extent of their exposure if the assets were to fail.

Second, the reality is that if you do not value the services from natural assets then you don’t protect them. In many urban areas there is pressure to develop, and this often means destroying natural assets unless we understand their value. And once nature is gone, it can be hard to get back.

Third are opportunity costs. If local governments do not manage nature assets to provide a stream of cost-effective and reliable services then they may be missing opportunities to save capital and operating costs — money that could be used on other priorities.

To state this in the positive, measuring and managing natural assets can be a way to deliver core services to taxpayers less expensively than through engineered means, and through an asset that will appreciate over time.

MNAI: What challenges do you foresee with municipal natural asset management?

The accounting profession is in the early days of coming to grips with natural assets and questions arise the second we start looking at them.

A key issue is control. Accountants think of assets as resources that are controlled by [the] entity whose accounting you’re doing. This is challenging at a local government level, because in many cases, a stream, river or forest is not wholly controlled by them and may be influenced by multiple other stakeholders, including private landowners, the province and other local governments.

Another issue is valuation. Some of the numbers that get used to value ecosystem services are not accounting numbers as they are not based on fair market value or a transaction.

Ultimately, the accounting profession will need to reconsider what an asset actually is for natural assets to be included fully in the accounting framework. Until this happens, complications will inevitably arise.

However, as we are already seeing in Gibsons, the District of West Vancouver and elsewhere this is by no means an argument for doing nothing; quite the contrary.

MNAI: What do you see as the path forward on accounting for municipal natural assets?

Fundamental shifts need to happen in the accounting sector for natural assets to be fully integrated into our frameworks. None of us can, or should, wait for this shift to happen of its own accord, however.

These shifts will happen precisely because local governments are starting to inventory, value and manage their natural assets. Their work is deepening our understanding and evidence base by the day and will drive larger change.

MNAI: What is your advice for other local governments?

Local governments should consider natural assets first when it comes to delivering services to citizens. Engineered assets are very expensive to maintain. By contrast, there are tremendous advantages when we simply get out of nature’s way or manage and protect it. Practically, this means I would encourage other local governments to start identifying, inventorying, valuing and managing their natural assets.

Once they get information on their natural assets, it becomes very hard to ignore.

Opportunity for a municipal natural assets project in a BC watershed: extended

In municipalities across Canada, infrastructure is aging, capital and operating costs are rising, and service delivery is strained by growing populations and shifting conditions.  Solutions may be around us: there is growing evidence that natural assets provide, or could be restored to provide, services just like engineered assets, and often at lower costs.

However, most local governments lack policies and methods to measure the services provided by natural assets or the risks to services if the natural assets become degraded.

The Municipal Natural Assets Initiative (MNAI) offers a methodology and support for local governments to integrate natural assets into core asset management and financial processes using the same systems as for engineered assets.

MNAI is now offering a watershed-level program in B.C. focussed on the needs and capacities of smaller / rural local governments in a single geographic region.

We have extended the period for local governments to submit applications until after the BC municipal elections and will keep it open until a suitable candidate is identified.

More information and Request for Expressions of Interest

Click here to learn more about the Municipal Natural Assets Initiative.

Please contact [email protected] for additional information and questions.

Lowering development cost charges through eco asset approach

By: Michelle Molnar

British Columbia’s coastal Town of Gibsons has demonstrated—again—that effectively managing municipal natural assets can pay huge dividends. The town was able to decrease the fees charged to developers to cover costs of municipal infrastructure to support their projects (development cost charges, or DCCs) because the natural assets that provide stormwater services to Upper Gibsons do so at lower costs than engineered alternatives. As a result, the DCCs for drainage services will be reduced 74 per cent with the updated DCC bylaw before council in September for a final vote.

Emanuel Machado, a member of MNAI’s board and the chief administrative officer for Gibsons, credits the strategy of managing municipal natural assets for reducing infrastructure costs for services such as storm water management. The streams and ponds in the town’s White Tower Park provide a natural catchment for storm water. By focusing on and expanding the park services, the town was able to avoid expensive engineered solutions.

While Gibsons has been a leader in testing this approach, it’s also being tried in communities across Canada. Five pilot communities used MNAI-developed methodology to assess the value of stormwater services provided by a local natural asset and how that value changed under various scenarios. All pilots demonstrated the significant value of natural assets and their services as well as the financial risk facing municipalities if those services are not identified and managed. In the face of changing climate and increasing development pressures, the value of natural assets increased further because of their resiliency to changing conditions, a condition less present in built infrastructure.

Cost savings are motivating factors for Canadian municipalities facing an estimated $123 billion infrastructure gap. The funding mechanism and savings are an appealing new way for municipalities to maintain and enhance their natural assets.

Results from the First National Cohort: Decision-Maker Summary

By Sara Jane O’Neill

Local governments across Canada are focusing on sustainable service delivery – delivering core municipal services in a socially, economically and environmentally responsible manner. Natural assets, such as wetlands, forests, and creeks, provide many of the same services to communities as engineered assets but are generally not accounted for and/or are undervalued in asset management practices. Any municipal asset management plan that does not include natural assets omits potentially significant dimensions of a community’s financial risk.

The Municipal Natural Assets Initiative (MNAI), convened in 2016, has developed a methodology and guidance documents to help local governments identify, value and manage natural assets within traditional financial and asset management planning frameworks. To test and refine the municipal natural asset management approach and methodology, five pilot communities were selected following a national request for proposals and interview process: The City of Nanaimo, BC, Town of Grand Forks, BC, District of West Vancouver, BC, Town of Oakville, ON, and the Region of Peel, ON.

While the results from each project are unique, they all assessed the value of stormwater services provided by a natural asset under various scenarios. Consequently, some common key messages have emerged:

Natural assets can provide equivalent stormwater management services

Overall, results show that natural assets can provide the same level of stormwater management services as their engineered counterparts. All communities found that their natural asset of interest was meeting at least the 100-year flood storage requirements under current standards. The Region of Peel also assessed water quality management services of their natural assets of interest and found that four of five ecosystem types exceeded provincial requirements for total suspended solid removal.

Under both climate change and intensified development scenarios, the value of natural assets increased

The City of Nanaimo, the Town of Grand Forks and the Region of Peel all assessed the value of their natural assets under climate change scenarios. All found that the value of their natural assets increased under climate change scenarios because they are more resilient and adaptable than other infrastructure solutions. The Town of Oakville assessed their natural asset under an intensified development scenario with the same result – the value of the natural asset increased because it can adapt to changing levels of development pressures.

All pilot communities found that the pilot results provide grounds for investigating the value of other natural assets

The work done by the communities in these pilot projects demonstrates the value and importance of natural assets for sustainable municipal service delivery, but there is more work to be done. Based on the initial findings, each community has expressed a stronger commitment to continue assessing the value and services provided by other natural assets.

To further refine the municipal natural asset management methodology, a second round of projects is already underway with the City of Courtenay, BC, the District of Sparwood, BC, the Town of Oshawa, ON, the Southeast Regional Service Commission, NB, and the Western Valley Regional Service Commission, NB. Two further initiatives, which include expanded materials on core infrastructure asset management and group training for lower capacity small/rural municipalities within one region or watershed are underway, one in British Columbia and one in the Greater Toronto area’s Greenbelt region. Finally, to continue to expand the municipal natural asset management methodology, the MNAI team is developing a methodology for assessing coastal specific services.

Want to learn more about municipal natural assets? The full results from each pilot project can be found here and the shareable Decision-Maker Summary can be found here.

Natural asset management is proving its value in the field

By: Michelle Molnar, Technical Director

While Canada focuses on efforts to reduce climate change, there’s growing recognition that we can’t meet our climate change goals without finding ways to adapt. A natural assets management approach has the advantage of addressing both mitigation and adaptation, taking us to the next level of policy solutions.

Natural assets tend to be more flexible, cost-effective and easier to adaptively manage than built infrastructure under intensifying climate conditions. They offer a wide variety of benefits, including health benefits to society and ecosystems.

Five Canadian communities are ahead of the curve in testing a natural asset management approach. The Municipal Natural Assets Initiative has come up with a way to identify, value and manage natural assets within financial and asset management planning and worked with these communities to test, refine and scale up the process. Gibsons, B.C., was the first community to incorporate natural assets into core municipal decision-making and laid the groundwork for these projects. The approach fills gaps for local governments that have left natural assets off the books.

British Columbia pilots included Nanaimo, Grand Forks and the District of West Vancouver. Ontario brought in the Region of Peel and the Town of Oakville. Models looked at stormwater management, and each community selected a natural asset with guidance from the MNAI team. All pilots found:

  • Natural assets provided stormwater management services equivalent to engineered alternatives.
  • The value of natural assets increased considerably due to their resiliency and adaptability under climate change and intensified development scenarios.
  • The full value of the natural assets is likely much higher since economic valuations did not include lifetime operations and maintenance costs or the value of services beyond stormwater management.

The Nanaimo project focused on a reclaimed wetland and floodplain known as Buttertubs Marsh Conservation Area. The marsh was found to provide stormwater storage and flood-regulation benefits comparable to engineered infrastructure. The marsh’s storage benefit, valued at more than $4.5 million, increased to between about $6.5 and $8.2 million under climate change scenarios.

The City of Grand Forks, which made headlines recently for devastating floods, considered flood-mitigation and related benefits provided by the Kettle River floodplain. The floodplain was found to provide between $500 and $3,500 per hectare in reducing flood damage to the city’s downtown buildings during high river flow events. Findings will help guide a study to recognize the floodplain’s larger watershed role and will be incorporated into the updated Official Community Plan.

The District of West Vancouver focused on a covered creek proposed for daylighting (uncovering a buried stream). The district found the capital costs of restoring the creek are similar to the cost of upgrading the culvert to meet stormwater requirements. They are now able to identify candidate streams for daylighting.

The Region of Peel considered Fletcher’s Creek and East Credit River subwatersheds. Palustrine, isolated and riverine watersheds, as well as forests and green spaces, were the focus. A 100-year storm event and future climate change scenario were tested. The value of the stormwater services provided by natural assets in the subwatersheds was estimated at $704 million under current climate and $764 under future climate change conditions, indicating that natural assets have an essential role in the face of worsening climate change.

The Town of Oakville, which is losing green space to development, considered the Maplehurst remnant channel in relation to natural asset conversions. The town found it would require between $1.2 and $1.4 million to replace a 240-plus-metre channel with engineered infrastructure. Investigating remnant channels and including natural assets in policy has become a town focus.

Although each of the projects had unique constraints and it’s unclear how initial findings will translate into management changes, they demonstrate that the value of natural services can be equivalent to that of engineered alternatives, an important finding in the face of climate change and strained municipal budgets. Five new pilots will further guide municipalities seeking resiliency and adaptation solutions to climate change.

Identifying Barriers And Opportunities Within Professional Planning Practice In Ontario

As infrastructure ages, urban areas grow and ecosystem quality decreases, local governments look for ways to better manage their municipal assets. Municipal natural asset management is a sustainable solution to these multifaceted problems.

Professional planning, as an interdisciplinary field involved in land use decision-making, plays an important key role in implementing municipal natural asset management. This study aims to identify the top five barriers and opportunities in professional planning practice in Ontario that influence municipal natural asset management projects. Read the report and check out the webinar.

Call for Expressions of Interest: Municipal Natural Assets Initiative Watershed roll-out in BC

In municipalities across Canada, infrastructure is aging, capital and operating costs are rising, and service delivery is strained by growing populations and shifting conditions. Solutions may be all around us: there is growing evidence that natural assets provide, or could be restored to provide, services just like engineered assets, often at lower costs.

However, most local governments lack policies and methods to measure services provided by natural assets or the risks to services if the natural assets become degraded.

The Municipal Natural Assets Initiative (MNAI) offers a methodology and support for local
governments to integrate natural assets into core asset management and financial
processes using the same systems as for engineered assets.

MNAI is now offering a watershed-level program in BC focussed on the needs and capacities of
smaller / rural local governments, in a single geographic region.

Additional details and the Request for Expressions of Interest (due date: August 17), to be submitted by a group of local governments, is available at this link.

Visit this link for more information and to read the Request for Expressions of Interest.

Applications from groups of local governments in a single region or watershed are due by August 17th. Please contact [email protected] for additional information and questions.

A game-changing approach

British Columbia, as with other Canadian provinces, is looking at ways to meet its emissions reduction targets. When the province’s auditor general assesses how well it’s doing, people pay attention. The auditor general’s latest report, Managing Climate Change Risks: An Independent Audit, released earlier this year, found that the B.C. government is not adequately managing the risks posed by climate change and is very likely to miss its 2020 emissions reduction target.

The auditor general points out, “local governments are on the frontlines of the effects of climate change, but a lack of financial support, reliable data and provincial policies create challenges.” The report also calls for comprehensive risk assessment and floodplain mapping to prioritize risks. The report identifies the importance of working both to mitigate and adapt to the impacts of climate change.  Risks to the province of not acting decisively include an increase in extreme weather events, more frequent and severe heat waves, and higher risk of wildfires and rising sea levels, among other possibilities.

There are solutions for strong action on both fronts with an approach based on managing municipal natural assets.

Early results from pilot studies across Canada under the Municipal Natural Assets Initiative (MNAI) indicate that the practice of municipal natural asset management offers a solution to the twin problems of aging infrastructure and ecosystems decline. In many cases, natural assets such as forests and wetlands can provide the same services (e.g. stormwater management, flood mitigation) as engineered assets, but at a lower lifecycle cost.

Municipal natural asset management supports ecosystem health and mitigates climate change impacts by:

  • ensuring that natural assets’ full service value is recognized in local government decision-making
  • ensuring they are effectively managed, monitored and maintained to provide municipal services
  • encouraging and providing a financial rationale for rehabilitation and restoration.

Healthy natural assets, in turn, can act as carbon sinks, mitigate climate extremes and provide many co-benefits. Local governments are finding that the value of their natural assets are in fact increasing over time because of their adaptive capacity in the face of climate change.

Local governments across Canada can better manage climate risk by: understanding services that come from natural assets yet are unaccounted for; having in place assets that can withstand the effects of climate change while delivering a reliable and sustainable stream of services; and, lowering capital and operating expenditures.

It’s looking like municipal natural asset management could be a game-changing approach as efforts to tackle climate change ramp up across the country.

Towards a Collaborative Strategy for Municipal Natural Asset Management: Private Lands

The Municipal Natural Assets Initiative aims to equip local governments across Canada with the tools needed to identify and account for natural assets at the community level, as well as the best practice guidelines for working with community stakeholders to increase natural asset management.

As part of series of guiding documents being developed in collaboration with the Municipal Natural Assets Initiative (MNAI), this report highlights how local governments can include private land and private landowners in a comprehensive municipal natural asset management framework.

PDF icon Read the Report

Private lands are key for a comprehensive and collaborative municipal natural asset management strategy

February 7, 2018

Article source: Smart Prosperity Institute

By Sara Jane O’Neill

Communities rely on nature’s services for long-term health, well-being and resilience. When those services disappear as a result of pollution, development, or unsustainable resource use, local governments are on the hook for coming up with ways to replace them. To avoid this risk, local governments are improving how they identify, value, and manage their natural assets by incorporating them into financial and asset management planning decisions. But natural assets do not abide by jurisdictional boundaries or lot lines, so what about the portions of natural assets not owned or managed by local governments?

To effectively manage natural assets, a collaborative approach that includes all stakeholders is needed. This includes private lands and private landowners. While managing natural assets on private lands for public goods and services has historically been a challenge, local governments have access to a number of tools and incentives that can ensure private landowners are partners in the development of an effective strategy that balances private costs with public benefits.

Land acquisition can quickly turn private land to public land, but it requires a funding source. The City of Edmonton and the City of Surrey have made acquisition of significant natural areas a priority and are working on dedicated funding to match that priority. Conservation easements may be a more cost effective alternative. The natural asset remains in private ownership but its management is set out in a legally binding agreement that is unique to each property.

When land cannot be purchased or managed under an easement, local governments have a range of land use planning tools, such as Official Community Plans, specialized plans, and development controls that can be used for protecting natural assets on private lands. These land use planning tools, while critical for outlining the vision of how the community manages its natural assets, are generally only useful when land is undergoing development or redevelopment

What can be done for lands that are not developing or not for sale? Incentives such as payments for ecosystem services, tax incentives, and water quality trading markets build on a beneficiary pays system where those who benefit from natural asset protection (the public) pay those who protect the natural asset (private landowner). User fees, stormwater utilities, and development cost charges are all revenue streams available to local governments for funding natural asset management on private lands. Other sources of funding such as green bonds or provincial/federal grants can help local governments build capacity or invest in new projects and programs.

Private landowners are a critical component for any effective management strategy for natural assets. Bringing them to the table early and applying a new lens to existing tools with a focus on costs and benefits and overall service delivery can ensure the natural services we all rely on are available for generations to come.