New Internationalist Issue 278


[image, unknown] New Internationalist Issue 278

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Green Economics - The Facts

The impact of increasing economic growth and massive overconsumption by the wealthy has now reached a critical mass threatening the natural capital on which all life is based.

  • Wealth and welfare

    Growth, and especially Gross Domestic Product (GDP), is supposed to reflect relative economic prosperity. In fact GDP does not distinguish between productive and destructive, or sustainable and unsustainable activities.

  • A new Genuine Progess Indicator (GPI) which takes into account the social and enivronmental costs of economic activity shows that individual welfare in the US peaked in the early 1970s and has fallen steadily since. A similar gauge of real human welfare is also being developed in Austria, Britain and Germany. 1

    Hollow numbers

    GDP is a faulty measure of a nation's economic health because it ignores:

  • Ecological costs
    The destruction of an ancient rainforest would be considered a positive boost to the economy based on the market value of the lumber. Habitat destruction, loss of species, recreational use and aesthetic value would not enter into the equation. The key problem is that GDP treats the depletion of natural capital only as income, rather than depreciation of an income-generating asset.
  • Social costs
    All non-monetary activities, including the nurturing and supportive activities of women, are ignored and thus devalued. At the same time the costs of social breakdown - crime prevention, divorce lawyers, psychological counselling - actually adds to GDP.

    Deductions from income

    The Genuine Progress Indicator subtracts from income the negative effects of growth:

  • The costs of commuting; urbanization; auto accidents; water pollution; air pollution; noise pollution
  • The loss of wetlands and farmland
  • The depletion of non-renewable resources and long-term environmental damage.

Costs of growth

Grain drain

[image, unknown] As population has increased, global food production has kept pace, increasing both yields and volume through a combination of increased fertilizer use, expanded irrigation and turning more forests and grasslands into croplands.
From 1950-85 per capita grain output rose by 40% as fertilizer use ballooned ten times. Since then fertilizer use has declined steadily as older agricultural lands reached maximum yields and the addition of new foodland also fell.
The average growth in the world grain harvest dropped from 30 million tons a year from 1950-84 to 12 million tons a year from 1984-92. Even if farmers can maintain this yearly increase, per capita grain supplies will fall from 346 kg in 1984 to 248 kg in 2030. 2

Fewer fish

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From 1950-89 the world fish harvest rose from 22 to 100 million tons, increasing the per capita supply from 9 kg to 19 kg. Now catches are falling and the UN Food and Agricultural Organization warns that all 17 of the world's major fisheries have reached or exceeded sustainable limits and 9 are in serious decline. 3

Water worries

Groundwater is being drained to feed irrigated crops and for domestic and industrial use.
Irrigated land accounts for 16% of total farmland but more than a third of the total harvest. The amount of irrigated land per person peaked in 1978 and has been falling ever since.
In India watertables are falling in several states including the Punjab, India's 'breadbasket', where the level is dropping by more than one metre a year. 4

Up in Smoke

Human activity, especially the burning of fossil fuels, is increasing greenhouse gases like CO2, methane and nitrous oxide. As a result the atmosphere traps heat rays that normally bounce back into space, causing global warming.
Since the industrial revolution atmospheric concentrations of CO2 have increased 25%. Emissions from fossil fuels have increased almost 400% since 1950. 5
The hottest ten years in recorded history have occurred since 1980. Oceanographers now believe average global temperature changes of up to 7º C (enough to melt polar icecaps) can occur within a brief 30-40 year period.

Ecological Footprints

[image, unknown] The 'ecological footprint' of industrialized countries (resources consumed per person) is huge: 4-6 hectares of land are needed to maintain the average consumer lifestyle in the North. Yet in 1990 the total available productive land globally was only 1.7 hectares per person.
Holland for example consumes the output equivalent to 14 times as much productive land as is contained within its own borders. The deficits are expropriated from the resources of lower-income countries.
Currently the human economy consumes about 40% of the earth's total yearly plant production. If the earth's population doubles to 10 billion in the next 35 years we will consume 80% of annual biomass production without increasing living standards for the poor majority. 8
During the next decade India and China will each add ten times as many people as the US. But if per capita consumption remains constant, the impact of American consumption on the environment could exceed the impact of both Third World nations combined. 9

Wealth in Waste

Old linear economy

  • Our linear human economy combines labour and technology with natural resources to produce both finished goods and waste.
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    New Green Economy

  • There is no waste in nature. A green economy would mimic nature by seeking to reduce wasteful production and to direct all waste back into the production cycle. Renewable resources would be consumed only at the rate at which they could be replaced.
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    Mind the gap

    Despite an apparent increase in global growth and steadily increasing per capita income, the gap both within and between rich and poor countries is widening.

    Share of Global Income Over Time

    Year       Richest 20%        Poorest 20%       Ratio of Rich/Poor
    1960             70.2                2.3                    30:1 
    1970             73.9                2.3                    32:1
    1980             76.3                1.7                    45:1
    1989             82.7                1.4                    59:1

  • In 1960 the richest fifth of the world's population received 70% of global income compared to 2.3% for the world's poorest 20%. By 1989 the richest 20% had increased their share to 82.7% while the bottom fifth saw their share of global income shrink from 2.3% to 1.4%.6
  • In Brazil the richest 20% earn 28 times as much as the poorest 20%. In the US from 1977-89 the average real income of the top 1% increased by 78% while the poorest 20% of the population saw their income decrease by 10.4% 7

  • 1 Originally developed by H Daly and J Cobb in For the Common Good (Beacon Press, Boston, 1989)
    2 'Nature's Limits' by Lester Brown in State of the World 1995 (Worldwatch Institute, Washington, DC, 1995)
    3 'Facing Food Insecurity' by Lester Brown, op cit 2
    4 Cited in 'Carrying Capacity: Earth's Bottom Line' by Sandra Postel in State of the World 1994 (Worldwatch Institute, Washington, DC, 1994)
    5 World Resources, A guide to the Global Environment 1994/95 (World Resources Institute, UNEP and UNDP, Oxford University Press, 1995)
    6 Human Development Report, UN Development Programme (Oxford University Press, 1992)
    7 Cited in When Corporations Rule the World, David C Korten (Kumarian Press, 1995)
    8 'Ecological footprints and appropriated carrying capacity: measuring the natural capital requirements of the human economy', by William Rees and Mathis Wackernagel in Investing in Natural Capital (Island Press, Washington, DC, 1994)
    9 Cited in Earth Island Journal, Autumn 1995, p19.

    ©Copyright: New Internationalist 1996

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