Ecological Footprint: Economic Performance and Resource Constraints
MATHIS WACKERNAGEL and ALESSANDRO GALLI
Mathis Wackernagel is co-creator of the Ecological Footprint, a resource accounting tool, and President of Global Footprint Network (www.footprintnetwork.org), an international think tank working to advance sustainability. Alessandro Galli is a senior scientist at Global Footprint Network.
nformation is critical to survival. Sound decisions are made with as much empirical evidence as possible, not based on a blind guess. It’s reckless—or dangerous—to take an action on I anything less.
Imagine, for example, flying an aircraft without a fuel gauge. We’re fine on take off, but once in the air and flying for a while, we need to know how much kerosene is in the plane’s tank. Do we have enough to land safely at our destination, or will we fly merrily along until the engine starts to sputter, until it’s too late to avoid the crash? Only a fool would willingly pilot such an aircraft.
Imagine, now, making life altering decisions based on assumptions—assumptions concerning how much fuel and other critical resources we have for our economies, decisions that affect our wellbeing and security. It would be foolish take any of this for granted. Yet it’s something we do every day.
Our economies have many indicators, but no fuel gauge. All the world over, economic activities depend on access to natural resources. But what performance indicators tell us how much nature a country or a region has and how much it uses?
Over-consumption
It’s a critical question. Ecological, water, biomass and fossil energy resources are an absolute necessity for human beings, and for our economies.1 But for several decades now, our appetite for resources has exceeded what the planet can regenerate—by an ever larger margin. Year by year, we consume more of our natural capital.
In the last fifty years, global achievements in economic growth, poverty reduction and improved welfare have been counterbalanced by an increasing strain on the biosphere. Forests, particularly in tropical zones, are cut faster than they can regrow. Fish are caught faster than they can restock. World per capita food and services consumption has grown during the last four decades. Global extraction of natural resources (e.g., biomass, fossil fuels, metal ores, and other
12 minerals) has increased by nearly 45 per cent in the last twenty five years.2 Many countries in arid and semi arid regions (e.g., Central and West Asia, North Africa) are already close to or below the threshold for water scarcity of an annual one thousand cubic metres per person. Greenhouse gas emissions are accumulating in the atmosphere, causing climatic change and additional pressure on the health of ecosystems. The situation is unsustainable.
As food and energy crises multiply around the globe, it has become more evident that the twenty first century will be shaped by ecological constraints. However, governments still operate their economies under the old model, when resource trends were immaterial to economic performance. Policy decisions are still made on the assumption of limitless resources and ecosystem services.
It is a fateful assumption. Our planet has boundaries, and sustainable economic performance cannot be secured unless we operate within them. We already use too much of the world’s renewable resources, causing greater scarcity and contributing to skyrocketing costs. If humanity does not change course, planetary boundaries will be further exceeded, with a calamitous impact on the world’s economy. The situation is particularly threatening to those countries which operate with growing resource dependencies, since their dependence on global (vanishing) resource stocks makes them particularly exposed to risk.
Data demonstrates that a country’s success will depend on how well it can compete for natural resources. To remain competitive in this resource constrained world, governments will need to look beyond GDP and value ecological stability as much as industrial output. Leaders will require policy and management tools to link resource trends to their nations’ competitiveness and economic performance.
Human society is heading towards resource induced economic turbulence, but there is still time to avert a crash. Governments need a framework to help them understand the importance of the control of resource overuse. They need a fuel gauge to tell them how much nature (or ecosystem capacity) they have, how fast they are using it, and how quickly nature’s stocks can be replenished.
Ecological Footprint
The Ecological Footprint is a resource accounting tool comprising two primary indicators: the Ecological Footprint , which quantifies the demand humanity makes of the biosphere’s renewable natural capital, and biocapacity , which quantifies Earth’s supply. 3
The Ecological Footprint is a measure of the biologically productive areas that people require to support all their use. This includes the biological resources they consume (plant based, animal based and fish based), the area to sequester the carbon waste from the burning of fossil fuels, and the space it takes to host all buildings and other infrastructures. The supply measure, biocapacity , tracks the amount of biologically productive land and sea area in a region, country or the world. Biocapacity can thus be considered human society’s ecological budget, a measure of the renewable natural capital within which humanity—and all wild species—should live.
13 Both measures are expressed in terms of global hectares , hectares of land or sea area with world average bioproductivity. Those global hectares are calculated for each year, since technology and harvest practices are changing.
The first systematic attempt to calculate the Ecological Footprint and biocapacity of nations began in 1997.4 Building on this assessment, Global Footprint Network created its National Footprint Accounts programme in 2003. Every year, the National Footprint Accounts use sixty seven million data points to document the Footprint and biocapacity of more than 230 countries and territories, as well as global trends. Since calculations are based on a consistent United Nations data set, they can reach back as far as 1961.
As financial expenditure is compared against income, so the National Footprint Accounts compare Ecological Footprint and biocapacity values to derive a natural capital comparison. A biocapacity deficit situation is identified when the Ecological Footprint value is higher than the biocapacity value; conversely, when biocapacity is higher than the Ecological Footprint, the National Footprint Accounts report a biocapacity reserves situation.
(It is important to note that the National Footprint Accounts measure only one specific, central question of sustainability: How much biocapacity humans demand, and how much is available. Therefore, it is not a comprehensive sustainability, or environmental, measure—just an answer to this particular question.)
For economies, the planet’s biocapacity—its renewable natural capital—is their limiting “fuel”, or as economists say, their limiting “production factor”. The goods and services that sustain a healthy human society—including access to food, safe water, sanitation, culture, manufactured goods and economic opportunity—all depend on functioning and healthy ecosystems.
Even our use of fossil energy is constrained by biocapacity, because of nature’s limited absorptive capacity for its primary waste: carbon dioxide (CO 2). Even with no new finds whatsoever, if we burned all the fossil fuels we’ve already found—gas, oil and coal—the carbon concentration in the atmosphere would rise to 1,700 parts per million (ppm). That would more than quadruple the current carbon concentrations in the atmosphere, and it would radically exceed the threshold that climate scientists warn would trigger catastrophic levels of climate change.
Currently we are at 392 ppm for CO 2, and over 400 ppm if we include other greenhouse gases. Climate scientists advise not to exceed 450 ppm if we are to avert a temperature rise of more than 2 degrees Celsius (other climate models have revised the threshold down to 350 ppm).
In other words, from a climate perspective, there is no more room for fossil fuel use. And many alternatives to fossil fuel will compete for resources as well, making biocapacity even more constrained.
14 Results: The Global Situation
The most recent edition of the National Footprint Accounts found that in 2007, humanity’s Ecological Footprint of 2.7 global hectares per capita exceeded the planet’s biocapacity (calculated at 1.8 global hectares per capita) by approximately 50 per cent. In other words, we demanded the equivalent of 1.5 Earths’ worth of renewable resources. This human demand to planet ratio has increased 2.5 times since 1961.
This state of affairs, in which the global Footprint exceeds biocapacity, is known as ecological overshoot .
In a condition of overshoot, not only is Earth’s yearly flow of natural capital consumed, but also its standing stock of capital. Each country, however, is characterised by a different natural capital balance, and uniquely prepared to operate in a resource constrained world.
Figure 1 shows how the natural capital balances of world countries have changed dramatically in just a lifetime. While most countries were experiencing positive balances (biocapacity reserve) in 1961, more than 80 per cent of the world’s population now lives in countries that use more biocapacity than they have available. These deficits are met in part by importing resources from foreign ecosystems, but to a greater extent by over exploiting natural capital stocks and carbon sinks.
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Figure 1: Natural capital balance status for the world’s countries, 1961 (top) and 2007 (bottom). Biocapacity reserve (green) is defined as a domestic Ecological Footprint less than domestic biocapacity; biocapacity deficit (red) as an Ecological Footprint greater than domestic biocapacity. In 2007, more than 80 per cent of the world’s population lived in countries that consumed more than their respective ecosystems can regenerate (in net terms). Source: Global Footprint Network, Ecological Footprint Atlas 2010 .
16 Our most recent projections indicate that, in a business as usual scenario, humanity’s Ecological Footprint could equal two Earths’ worth of resources by about 2030. 5 At the same time, up to two thirds of the world’s population is at risk of experiencing water scarcity, and approximately one billion people could face absolute water scarcity by 2025.
The result is unprecedented pressure on our natural systems, a pressure that is changing the way countries must approach their use and management of natural resources. Yet, most countries are still increasing their biocapacity deficits.
In a world of increasing ecological constraints, countries will probably find it more difficult to access limited and costly ecological services. Biocapacity deficits increase vulnerability to price volatility and supply disruptions, with attendant economic, social and geopolitical risks. Countries with biocapacity reserves can better meet these challenges, but only if they continue to manage their biocapacity so that it provides an ongoing stream of wealth, and do not liquidate it for short term cash.
The Mediterranean Region
The Mediterranean region is a particularly salient example of the biocapacity dilemma. Resource limitations have been shaping the history of many of its cultures. And today, the resource situation is becoming a particularly significant force defining the context of its economies.
Since the rise of agriculture, the Mediterranean region has been shaped by its diverse and vast ecological resources. Ecological deterioration, from forest loss to desertification, has always accompanied the history of the region, but never has the pressure on the region’s ecological resources been as intense as it is today. For this reason, and in light of global ecological overshoot, in January 2010 Global Footprint Network launched a two year initiative to bring the concept of ecological limits to the centre of policy debate in the Mediterranean region. 6
In a forthcoming report, we find that the average Ecological Footprint of a resident of the Mediterranean region increased 37 per cent, from 2.4 to 3.3 global hectares per capita, during the period 1961–2007. 7 In the same period, population has doubled, causing the total regional Ecological Footprint to increase 2.6 times. Moreover, the biocapacity available in the region decreased 38 per cent, from 2.1 to 1.3 global hectares per capita (see Figure 2).
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Figure 2: Top: Trends in the per capita Ecological Footprint (red) and biocapacity (green) of the world (solid lines) and Mediterranean region (dashed lines). Bottom: commodity prices for selected commodities (solid lines) and averaged price for all commodities combined (dashed line) from 1961 to 2007, indexed to 2000, derived from World Bank commodity price data. Source: Global Footprint Network, Mediterranean Ecological Footprint Trends.
Since 1961, the Mediterranean region has been demanding more resources than those locally available, with its Ecological Footprint increasingly exceeding biocapacity.
In the 1960s and early 1970s, the world as a whole was still not running a biocapacity deficit. The world was then characterised by a global biocapacity reserve situation, allowing easy access to resources not locally available. That is no longer the case. Today, resources are getting scarcer globally, and Mediterranean economies are experiencing decreasing prosperity and competitiveness.
18 Even when the entire world went into ecological overshoot in 1976, a decline in global commodity prices (probably caused by more efficient production) masked the risk of incurring a biocapacity deficit. But systemic risk has been apparent since 2000: the Mediterranean region is over exploiting its own biocapacity, and the world’s diminishing resources are becoming more expensive.
The fact that globally humans are using more resources than those available is a problem for the Mediterranean, which depends highly on global resources (in 2007, only 38 per cent of the resource needs of Mediterranean residents were satisfied by the resources locally available).
When consumption exceeds local availability, depletion of local biocapacity is likely to take place and countries turn to international trade in order to maintain their demands for natural capital. Access to outside resources thus becomes limited by (a) the global natural capital budget, and (b) the ability of countries to pay for these assets.
Our analysis indicates that both a biocapacity and an economic crisis are happening at the same time, causing a structural problem for the region and its countries:
● “Physical limits” exist and they might impede such long term access to external resources. While the Mediterranean’s dependence on external resources has massively increased during the last thirty years, the region’s major trade partners have shifted from countries and regions with biocapacity reserves (e.g., Canada, Scandinavia, South America) to those which are running resource shortages themselves (e.g., the United States, China, non Mediterranean European nations). The significance of this shift is that exporting nations might be unable to meet their own needs, which would restrict the ability of Mediterranean countries to import resources from those nations. It is not unimaginable that, for instance, when supply decreases, exporting countries will take care of their needs first—cutting on exports.
● “Economic limits” exist as well. While the Mediterranean’s appetite for global resources is increasing, the world’s (limited) resources are becoming more expensive and the relative purchasing power of Mediterranean societies is diminishing (see Figure 3). As all countries are depending more and more on resources they do not have available locally, the global resource economy is turning into a global auction: more people are bidding for fewer resources. Nations losing relative income compared to the world, are losing in their ability to compete for the global resources they depend on.
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Figure 3: The Mediterranean region’s GDP by component (left axis), and GDP relative to world average (right axis), 1961–2007.
These factors combine to pose significant economic, social and geopolitical risks, especially for nations in the south eastern part of the Mediterranean.
A Focus on Greece
While Greece’s biocapacity has remained almost unvaried over the last forty six years (from 1961 to 2007), the increase in per capita Ecological Footprint (+130 per cent) coupled with a 33 per cent increase in population has caused its total national Ecological Footprint to increase by a factor of three in the same time period.
This, in turn, has caused an increased biocapacity deficit: while the local natural capital of Greece was able to meet almost 92 per cent of the national requirement for natural resources and ecological service in 1961, in 2007 it satisfied only around 30 per cent of such needs. This burdens the Greek economy as this dependence translates into significant and rising costs for accessing natural capital from outside its borders.
Moreover, while Greece has long since been dependent upon external assets, mainly in terms of energy, fuels and energy intensive commodities, since the year 2000 net imports of agricultural, livestock and fish products have also started to play a significant role. This has two main immediate consequences: (a) biomass related products are limited and thus countries will have to compete internationally for them, and (b) the large carbon Footprint reflects already large costs for importing fossil fuels. Further, the ecological deficit of the carbon Footprint component indicates susceptibility to potential price increases from global climate change agreements, as well as a lack of biomass substitutes for fossil fuel, should that be necessary.
At the same time, Greece’s financial capacity to be competitive in the global market has diminished. The annual per capita GDP growth rate has been continuously decreasing since the mid 1970s, public debt is increasing, and borrowing costs spiked in 2009 when the true state of
20 Greece’s debt became known. The combined result of these events is a reduction in the overall competitiveness of Greece—which makes it even more difficult to compete for scarce natural capital—and a reduction in the country’s capacity to provide for the basic needs of its people.
The direct consequences of these events for measures of wellbeing such as the UN Human Development Index (HDI) might not be fully realised for a decade or two. However, a look at HDI values for the years 2000, 2005 and 2010 shows that while Greece’s HDI increased by about 6 per cent between 2000 and 2005, possibly because of the country’s accession to the European Monetary Union and its adoption of the Euro currency, between 2005 and 2010 the increase was far more modest (+1 per cent).8
Factory World or Global Auction?
In a world of unlimited resources, additional demand will stimulate additional supply. For instance, if more books and chairs are purchased, more books and chairs are produced. The limit to supply is demand. All that matters is your absolute income—more income will give you the possibility to buy more products and services.
From such a frame, we would look at the physical and economic limits to natural capital accessibility in the following way:
$50,000 N e eieti SDlar 20 0)) 00 (2 rs Dolla US in resident per GNI $45,000 Factory $40,000 world… $35,000 Switzerland $30,000 or?
United States of America $25,000
Denmark $20,000 United Kingdom Germany France $15,000 Italy
$10,000 SpainGreece Portugal $5,000Mexico World Ecuador $- ChinaIndia -5 -4 -3 -2 -1 0 1 2 3 Biocapacity Deficit or Biocapacity Remainder (gha/ cap)
Figure 4: Changes in absolute income and biocapacity deficits of countries over the period 1980–2007. (gha/cap = global hectares per capita.) Source: Income data from World Bank. Biocapacity deficit from Global Footprint Network.
21 For most countries, income has increased over approximately the last three decades—even if adjusted for purchasing power. At the same time, their biocapacity deficit has increased as well (or countries’ reserves have vanished). As Figure 4 demonstrates, countries’ residents have higher incomes on average—and they have also increased their resource consumption.
Some may interpret this to mean that countries are generally on a successful track. They may even encourage countries to run biocapacity deficits, since countries with larger deficits seem to be producing higher incomes as well. Others may regard growing biocapacity deficits as an unfortunate cost of doing business, but question whether biocapacity deficits are economically significant. Yet others may look at this graph and wonder whether this level of income can be maintained in the future when the resource situation is getting ever tighter. These three different interpretations are all living happily in parallel. Which is right?
The main point to consider is the following: maybe we no longer live in a “factory world”. Maybe we have already entered a global resource auction. Because if we assume that we are in a world of significant resource limitations, as indicated by growing global overshoot, the world we are in can be more likened to an auction of finite goods. In such an auction, what matters is not an absolute ability to pay, but relative ability compared to the other bidding powers present in the auction room. From that perspective, the same information of Figure 4 looks like the diagram in Figure 5.
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1.8 r to fwol oalGI edb aeae residen average by held GNI l tota orld w of ction Fra
Switzerland 1.6
1.4 …global
United States of America 1.2 auction? (billionths) Denmark 1
United Kingdom France Germany 0.8
Italy 0.6
SpainGreece 0.4 Portugal t t Mexico 0.2 W orld
Ecuador 0ChinaIndia -5 -4 -3 -2 -1 0 1 2 3 Biocapacity Deficit or Biocapacity Remainder (gha/ cap)
Figure 5: Changes in relative income (compared to world) and biocapacity deficits of countries over the period 1980–2007. (gha/cap = global hectares per capita.) Data Source: Income data from World Bank. Biocapacity deficit from Global Footprint Network.
When analysing the same data from this perspective of relative income, the interpretation becomes more obvious. Relative income means: How much does a person get from the total global income pie? Because at the end of the day, each person finds him or herself in competition with all the remaining buying power of the world when bidding for the limited global resources.
Figure 5 shows that, for most countries in the graph, relative income has decreased. China is one of the few exceptions (for China, the challenge still is that the absolute level is rather low, but China is gaining proportionally). At the same time, for most countries (with the exception of Germany) biocapacity deficit has increased (or their reserves have vanished). Again, while Germany has not increased its biocapacity deficit, its deficit is still at a very high level. Assuming humanity now is in an auction world, this would mean that as countries’ dependence on global resources is increasing, their ability to bid for resources is weakening. They are facing a structural problem. This structural problem is amplified by the fact that it is happening in most countries at once, meaning that the global economy’s resilience is at stake as well.
The world is one interconnected global economy, with all participants bidding on Earth’s ecological budget. Every year, we need more of its limited natural capital. Every year, we take more than can be regenerated.
The comparison to an auction of limited goods could be questioned, since biocapacity can increase. Indeed, the planet’s biocapacity (in terms of biomass generated) may have increased by
23 as much as 20 per cent on average between 1961 and 2007, according to our estimates. Yet during that same period, human demand for biocapacity has grown nearly threefold.
If we accept the argument that we are now in an “auction world”, countries need to keep careful track of whether they are getting stronger or weaker in bidding for resources. The more countries run biocapacity deficit, the more they expose themselves to the global auction dynamics. If their dependence on foreign ecosystems is increasing while their ability to bid for resources is vanishing, they are being challenged on two fronts simultaneously. It points to a systemic structural weakening of the countries.
In the past, when resources were relatively cheap, access to and the price of resources were a minor concern to economic planners. But resources have grown into being an ever larger cost factor today, and will possibly be more so in the future. This structural double challenge is shaping the economic playing field of the decades to come.
Entering a New Era
We are entering a new era—the era of the global resource auction. When resources were plentiful, there was limited risk exposure to running a biocapacity deficit and relying on external resources. But as global overshoot increases, we are becoming subject to a global auction: resources are becoming scarcer and costlier, while many countries are losing their competitive edge to buy the very resources that fuel their economies and sustain their peoples’ wellbeing. In time, access to these resources will no longer be guaranteed. Inevitably, economies will crash.
The risks to national security and prosperity are difficult to overstate. Resource constraints are already becoming trigger points for many economic and political conflicts. The Euro crisis (or the Mediterranean crisis) and the Arab Spring occurred in regions that were proportionally over exposed to skyrocketing resource costs.
Europe, for instance, will be increasingly challenged by this reality, not only because of growing instability in geopolitically strategic areas, but also because of the potential weakening of some of its member countries; growing resource constraints are beginning to shave off significant economic potential from their national economies.
Governments have reacted slowly to the resource trends we identify through our National Footprint Accounts. Three misconceptions have for too long shackled their approach to environmental protection and climate change.
1. Governments still (mis)perceive that taking action is a burden they will need to shoulder for the good of the world—rather than recognising that their lack of action on environmental protection and climate change will have an increasingly important impact on their competitiveness and economic wellbeing.
2. The second misapprehension is that national governments need focus only on CO 2 emissions. Yes, CO 2 is a significant issue. Yes, climate is simpler because it essentially concerns one substance (carbon). And yes, there are already many international climate efforts under way.
24 But the exclusive focus on climate ignores other increasing ecological deficits with more immediate and country relevant risks. The food–water–energy–climate nexus—i.e., the interconnected demand on each of these issues—needs to be addressed as a whole. By addressing it as a whole, it becomes easier to deal with, because countries not only can exploit synergies between them, but will also recognise the strong self interest to act.
3. The third barrier to action on the environment is the belief of governments that there is too little in it for them. The perceived lack of relevance for their particular country’s short to medium term wellbeing has been a major obstacle to progress and international agreement.
If leaders and their administrations appreciated the role that resource dynamics play in their economies and competitiveness, they would have the exact opposite approach. Environmental issues have already started to burden many nations’ economies. Food and energy costs have increased, adding pressure to government budgets at a time of burgeoning national debt.
Conclusions
Global Footprint Network aims to bring the reality of resource constraints into the national and international policy debate, help policy analysts and decision makers more fully assess the risk that resource limitations pose to economic stability, engage with nations, and help them make more effective and informed decisions.
Under conditions caused by shrinking ecological budgets, the necessity of competing internationally for natural resources increases the risk of political, economic and social instability. The faster a nation loses its ecological margin—by a shrinking of its ecological surplus, or even entering into an ecological deficit—the sooner that nation will be forced to manage resource demand, energy efficiency and threats to quality of life.
To this end, Global Footprint Network seeks to provide decision makers with critical data— including our National Footprint Accounts—to help them manage their countries’ supply of, and demand on, natural capital. By providing them with detailed insight into how their economies and populations use nature’s services, Ecological Footprint accounting can assist policymakers in taking action to minimise their countries’ demands on ecological assets and to build and strengthen their biocapacity reserves. Such actions not only benefit all on the planet; they are vital to the self interest and wellbeing of every nation.
Nations can remain competitive, even in this resource constrained world. It all comes down to decisions. The Ecological Footprint can support and inform countries’ policy issues from a number of angles:
● To what extent is natural capital relevant for economic success?
● What potential risks could national biocapacity deficit impose?
● If indeed it is true that a country is in a deficit situation, and if we truly are in an auction world, what actions are in this country’s self interest?
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● What will 2030 look like if we fail to address the “resource limitation issue” now?
● What immediate actions can decision makers take to ensure a viable future for their country?
● How is it in each country’s self interest to make resource management a priority?
Addressing these questions can mean the difference between a country’s long term success and its vulnerability in an ever increasingly resource constrained world. Strategic decision making, based on understanding the physical foundations of one’s economy, can reset a nation on a path towards greater success and economic security. The pioneers who choose to understand their resource needs, limits and dependence can better guarantee their peoples’ wellbeing and their nations’ prosperity.
ENDNOTES
1. See André Schneider and Mathis Wackernagel, “Competitiveness in a Resource Constraint World”, The Global Journal , 12 October 2011 [http://theglobaljournal.net/article/view/257/].
2. Arno Behrens et al., “The Material Basis of the Global Economy: Worldwide Patterns of Natural Resource Extraction and Their Implications for Sustainable Resource Use Policies”, Ecological Economics 64, no. 2 (December 2007), pp. 444–53.
3. Mathis Wackernagel, Lillemor Lewan, and Carina Borgström Hansson, “Evaluating the Use of Natural Capital with the Ecological Footprint”, Ambio 28, no. 7 (November 1999), pp. 604–12.
4. Mathis Wackernagel et al., Ecological Footprints of Nations: How Much Nature Do They Use? How Much Nature Do They Have? Rio+5 Forum Study, 10 March 1997, commissioned by the Earth Council and distributed by the International Council for Local Environmental Initiatives, Toronto.
5. David Moore, Gemma Cranston, Anders Reed, and Alessandro Galli, “Projecting Future Human Demand on the Earth’s Regenerative Capacity”, Ecological Indicators 16 (May 2012), pp. 3–10.
6. For additional details, see www.footprintnetwork.org/med.
7. Global Footprint Network, Mediterranean Ecological Footprint Trends , 2012.
8. United Nations Development Programme, Human Development Report 2010: The Real Wealth of Nations: Pathways to Human Development (New York: Palgrave Macmillan, 2011).
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