The Alaska Highway is surrounded by boreal forest running north towards Whitehorse, Yukon in this file photo. A recent report put the economic impact of Canada's boreal forest at $191 billion a year. (Andy Clark/Reuters)

The economic cost of ignoring environmental degradation is far greater than the costs needed to fix it in the long run, a groundbreaking report published with the support of the United Nations said Tuesday.

The report, entitled "Mainstreaming the Economics of Nature" was written by Pavan Sukhdev, a banker who heads the UN's green economy initiative.

It found that nature provides trillions of dollars in "free" services to the global economy every year, and having to account for all of those services being removed would significantly reduce the world's economic output and cost far more.

"From an economic point of view, the flows of ecosystem services can be seen as the ‘dividend’ that society receives from natural capital," the report said.

"Because we get nature’s services for free, we tend to use them wastefully," said Prof. Stewart Elgie, chair of think-tank Sustainable Prosperity, which contributed to the UN's report. "Like a tenant that doesn't pay for electricity, [we tend] to leave the lights on."

Taking an economic perspective, the report proposes that economic instruments can be used to incentivize sustainable environmental practices, and was full of global examples of that in action.

Reducing forest loss by half would generate $3.7 trillion worth of greenhouse gas reductions, the report found, and the largest 3,000 companies in the world cause $2.2 trillion in uncounted environmental costs — the equivalent of more than a third of their annual profits.

'Like a tenant that doesn't pay for electricity, he tends to leave the lights on'—Prof. Stewart Elgie

Fifteen years ago in New York State, Elgie notes, officials had to replace a water treatment plant. A man-made facility would have cost between $6 and $8 billion US, plus between $300 and $500 million annually to maintain. "Instead they paid a bunch of landowners and farm owners in the Hudson river watershed to restore forests … it cost them about $1 billion US," he said, "[and] water rates in New York were 80 per cent lower than they would have been otherwise."

In Canada, the report found that Canada's northern boreal forest is worth $191 billion a year, for all of the services it provides, from storing greenhouse gases, to filtering water. And the greenbelt that surrounds the Greater Toronto Area contributes $2.6 billion annually worth of flood control, waste treatment, and clean air — roughly $3,487 per hectare.

The emerging carbon market will make the boreal forest more valuable as a carbon sink than for its timber, Elgie says. And once people see nature's true price tag, they might be careful what they buy, he hopes.

A recent OECD report ranked Canada 29th of 33 countries in creating economic incentives to reduce pollution and conserve nature. Aside from progress such as recent expansion of national parks and protected marine areas, Liberal Environment critic Gerard Kennedy says Canada is an environmental laggard.

"[Canada] needs to do more than simply put nature in a museum in a restricted area," Kennedy said. "Outside of those parks, Canada's nature is in distress."

With files from the CBC's Susan Lunn