A government-appointed panel has proposed an arm's-length watchdog agency to monitor the effects of industrial development on Alberta's environment.

The proposal would be funded by a combination of industry levies and general taxation revenue.

The committee that wrote the report says creating an independent agency is the best way to ensure its credibility.

The agency would report to the environment minister, but would release its own reports and research as it saw fit.

No price tag was put on the recommendation, which was unveiled by Alberta Environment Minister Diana McQueen.

The recommendation is the latest development in the province's efforts to rehabilitate its environmental monitoring, especially in the oilsands region, which has come in for heavy criticism in recent years.