What Are the Economic Implications of Overshoot, if Any? Mathis Wackernagel, Ph.D. Global Footprint Network BI Norwegian Business School In Celebration of Jørgen Randers Oslo May, 2015
How much nature we have and use: The Ecological Footprint FOREST PRODUCT footprint CARBON footprint FISHING grounds 3
Measurement Unit: global hectare (gha) Fore example, if this hectare is twice as productive as a world average, biologically productive hectare. Then it is worth 2 gha. 1 ha 2 gha For example, if this hectare is half as productive as a world average, biologically productive hectare. Then it is worth ½ gha. 1 ha ½ gha 4
South Korea Japan China Viet Nam www.footprintnetwork.org 5
Egypt: Footprint and Biocapacity per person Footprint per person Biocapacity per person 6 Data: Global Footprint Network
7 Data: IMF
Economic Situation in Egypt after the revolution Washington Post: Caroline Freund (a senior fellow at the Peterson Institute for International Economics and former chief economist for the Middle East and North Africa at the World Bank). the country's ailing economy is at the heart of political unrest. www.dailynewsegypt.com: Egypt s economy over three years of turmoil english.alarabiya.net: President Sisi: Egypt s economic situation is very difficult 8
Ecological Creditors and Ecological Debtors 1961 Debtor Creditor 9
Ecological Creditors and Ecological Debtors today Debtor Creditor Global Footprint --------------------------- = 1.5 Global Biocapacity 10
Biocapacity is not everything. But do you have the $$$ to buy it from somewhere else? 7% 7% 71% 15% Vertical line: World-average per capita income Source: Global Footprint Network 11
Natural vs financial capital 1. OK, externalities 2. Liquidity 3. Subsidies gov want to secure resource access 4. Brand takes all NC furthest removed from customer 5. Proactive liquidation policies as income strategy
Economic Impact of Resource Overuse Income (short term, flow) GDP Wealth (long-term, stocks) Over Biotic Resources using Abiotic Resources INCREASES DECREASES 13
Switzerland: Footprint and Biocapacity per person Footprint per person Biocapacity per person 14 Data: Global Footprint Network
How many Switzerlands do we have? 15
How many do we use? 16
17 Data: IMF
Which view serves you best? 18
Conclusion Physical trends can be measured and do not look pretty Conventional economic measures as used now are blind to any of them even though same measures could be used to identify growing risks. 19
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mathis@footprintnetwork.org
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What I would expect If Overshoot (vs. biocapacity deficit) persists, meaning technology or markets do not compensate: 1. Effort to get everyday supplies increases ( inflation ). 2. Value of existing assets that depend on supplies decreases ( deflation ). 3. Labor loses vis-à-vis natural capital owners.
What is the material bottleneck? Rare earths? Fossil fuel? Biocapacity! 27
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PER CAPITA CONSUMPTION / RESOURCE EFFICIENCY = PER CAPITA ECOLOGICAL FOOTPRINT (DEMAND) Five Factors DIFFERENCE BETWEEN BIOLOGICAL DEMAND AND SUPPLY AREA x BIO- PRODUCTIVITY / POPULATION = PER CAPITA BIOCAPACITY (SUPPLY)
Norway: Footprint and Biocapacity per person Biocapacity per person Footprint per person 31 Data: Global Footprint Network
World: Footprint and Biocapacity per person Biocapacity per person Footprint per person 32 Data: Global Footprint Network
The Preferred Factor: Can We Decouple? Source: EC/EEA
1.8 Switzerland 1.6 1.4 United States of America 1.2 1 Denmark France United Kingdom 0.8 Austria Italy 0.6 Relative Income of resident compared to world total Sweden Finland Canada Fraction of world total GNI held by average resident (billionths) Spain 0.4 New Zealand Portugal Argentina Mexico 0.2 World Chile Brazil Colombia China Ecuador 0-5 -4-3 -2-1 0 1 2 3 4 5 6 7 8 9 10 11 12 Biocapacity Deficit or Biocapacity Reserve (gha/cap) Biocapacity Deficit and Global Income Share (1985 2009) Global Footprint Network with data from National Footprint Accounts for x-axis
1.8 Switzerland 1.6 1.4 United States of America 1.2 1 Denmark France United Kingdom 0.8 Austria Italy 0.6 Relative Income of resident compared to world total Sweden Finland Canada Fraction of world total GNI held by average resident (billionths) Spain 0.4 New Zealand Portugal Argentina Mexico 0.2 World Chile Brazil Colombia China Ecuador 0-5 -4-3 -2-1 0 1 2 3 4 5 6 7 8 9 10 11 12 Biocapacity Deficit or Biocapacity Reserve (gha/cap) Biocapacity Deficit and Global Income Share (1985 2009) Global Footprint Network with data from National Footprint Accounts for x-axis
1.8 Switzerland 1.6 1.4 United States of America 1.2 1 Denmark France United Kingdom 0.8 Austria Italy 0.6 Relative Income of resident compared to world total Area of country resilience Sweden Finland Canada Fraction of world total GNI held by average resident (billionths) Spain 0.4 New Zealand Portugal Argentina Mexico 0.2 World Chile Brazil Colombia China Ecuador 0-5 -4-3 -2-1 0 1 2 3 4 5 6 7 8 9 10 11 12 Biocapacity Deficit or Biocapacity Reserve (gha/cap) Biocapacity Deficit and Global Income Share (1985 2009) Global Footprint Network with data from National Footprint Accounts for x-axis
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