19 October 2009

Another Kind of Debt - Who Really Owes Whom?

click image to enlarge - image from Global Footprint Network

Campaigns to end poverty and to drop the debt burden of 'developing' nations rightly call for the freeing of people from the millstone of debt, which can help people lift themselves out of poverty.

This debt, spoken of as debt ‘owed’ by the majority world nations to the 'developed' countries, is a monetary debt. However there is another kind of debt – ecological debt.

Ecological debt accounts not for monetary flow, but the flow of biophysical resources - which raises the question, who really owes whom? Who should be asking for and granting debt forgiveness?

When we talk about debt, we don’t talk about the current [and historical] ecological deficits that many of the wealthy countries are running, and how this impacts on other nations, particularly those supplying the ecological capacity.

The issue of ecological debt was identified by Mahatma Gandhi many years ago when he observed:

‘It took Britain the exploitation of half the globe to be what it is today. How many globes will it take India?’

All human beings, whatever their lifestyles, generate impacts on nature. We use nature’s products and services to feed, house and clothe ourselves, and otherwise sustain our existence.

Until recently, concerns over resource use focused on the depletion of finite non-renewable resources such as fossil fuels and minerals, however it is being increasingly recognised that it is renewable resources which are the non-negotiable limiting factors for sustaining life.

The biosphere’s ability to renew itself is being systematically undermined by the erosion of ecosystem services (eg. climate stability, biological diversity) and the excessive harvesting of resources.

Overshoot – Living Beyond Our Ecological Means

The current development paradigm which dominates both economics and politics globally is that of continuous economic growth into the indefinite future. Historically, countries have sustained this growth by appropriating carrying capacity (resources, ecological services, waste sinks) from elsewhere through purchasing power, with some waste (CO2, CFCs etc) being ‘dumped’ into the global commons.

However this model of dependence on ‘ghost acreage’, which has both the developed and developing world alike in its grasp, ignores one simple reality – not everyone can be a net importer of biocapacity.

Once the biological carrying capacity of the planet is exceeded, ‘development’ occurs through the liquidation of the planet’s natural capital stock, switching from the reproductive use of the resource base, which leaves it intact, to extractive use, which reduces the total store. Instead of living off the Earth’s ‘interest’, humanity begins draining the Earth's 'capital'.

When humanity’s ecological demands in terms of resource consumption and waste generation exceeds what nature can supply, we move into what is termed ‘ecological overshoot’.

Just as constant erosion of business capital weakens an enterprise, such overshoot erodes the planet’s ‘natural capital’, and reduces humanity’s ultimate means. It would be unthinkable to run a business without keeping proper accounts - a business which does not track its activities and keep accurate financial records runs the risk of bankruptcy - yet this is precisely the approach we take with the only planet within our reach capable of supporting life.

Accounting tools are needed to track our biophysical, as well as our monetary wealth.

The Ecological Footprint is a resource accounting tool developed by the Global Footprint Network (GFN), which has been working with the United Nations Environment Program, World Wide Fund for Nature, and the European Environment Agency, among others.

The Footprint is an expression of human demand on nature, expressed in terms of land area. This demand can then be compared to how much productive land, or biocapacity, is available at the national and global level. It is exactly like the economic concept of supply and demand – except unlike market economics, it relates to the real world.

Footprint accounts track the flow of not money, but biophysical resources. These bean counters really do count beans! And cotton. And timber. And the share of the atmosphere each country is occupying with its C02 emissions. This is possible because we know how much productive land is required to sustain these resource flows.

GFN maintains a set of accounts for 200 countries, each with 5,4000 data points. The calculations in the National Footprint Accounts are primarily based on international data sets published by the Food and Agriculture Organization of the United Nations, the International Energy Agency, the UN Statistics Division, and the Intergovernmental Panel on Climate Change.

A national Footprint is determined by multiplying consumption per capita by population, and is corrected for trade by by adding imports to and subtracting exports from national production to determine the consumption figure. Results from this analysis shed light on a country's ecological performance. A country has an ecological reserve if its Footprint is smaller than its biological capacity. Otherwise it runs an ecological deficit.

Today, most countries, and the world as a whole, are running ecological deficits. The world's ecological deficit is equal to its ecological overshoot. While countries can offset ecological deficits through trade or liquidation of national resources, the global ecological deficit cannot be offset through trade. In 2003, humanity's Footprint exceeded the Earth's biological capacity by over 25 percent.

As ecological deficits continue to increase in many countries, the predominant geopolitical lines could shift from the current division between "developed" and "developing" countries. Instead, the line may fall between ecological debtors, countries that depend on net imports of ecological services to maintain their economies, and ecological creditors, countries with ecological reserves. As the world recognizes the implications of ecological scarcity, ecological assets will gain in economic importance relative to yesterday's gold reserves or today's financial assets.

Availability of ecological capacity will play increasingly important role in determining a country's economic competitiveness and its citizens' ability to lead secure, rewarding lives.

High Footprints tend to be the hallmark of ecological debtors, who are running risky ecological deficits in a world where ecological capacity is diminishing.

Ecological creditors may realise that they are liquidating their assets too cheaply in a world where ecological assets will become more valuable.

Both debtors and creditors are beginning to realize the significance of ecological assets and recognize the economic advantage of curbing their Footprints.

What are the opportunities that
emerge from recognising ecological limits?

Quality of Life For All, Within The Means of Nature

Ultimately, the Footprint calls attention to the fact that we only have one planet – just like a household, there is only so much budget to spend.

The question is not whether we can sustain more than six billion people on a western industrial model of development, but how to sustain the projected global population at an adequate standard of living for all within the regenerative biocapacity of one planet.

The quest for the 21st century is how can we secure quality of life for everyone within the means of our one-planet budget?

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