Ecoflation: The Newest Addition to the Planet’s Misery

We are in the thick of a global economic recession and all we want to think is “how do we get out of this one”. But, we are also hard pressed on environmental issues. We are now more than ever worried about global warming and climate change and the plethora of problems these terrible twins have brought with them. We are talking floods, drought, heatwaves, wild fires, name them. We are also worried that hitherto abundant natural resources are now scarcer than we want them to be.

Wait, things could get worse – at least according to a report released by the World Resources Institute (WRI) and the consulting firm, A.T. Kearney, on December 2. As pressure on natural resources increases, we are likely to see higher costs in the commodity supply chains. The report predicts that there will be a 13-31% increase in costs by 2013. This will almost certainly be borne by the consumer going by the way businesses operate. By 2018 this cost could be between 19 and 47 percent higher than they are today.

Already, 60% of the world’s ecosystems are degraded and Climate Change is making them worse. Then there is the problem of human population growth – something that really gets into my nerves – coupled with the growth in consumption levels in the worlds fastest growing consumer markets, China and India. These factors will make production expensive and manufacturers will have to bear the cost – alternatively, they can, as they always do, pass the cost to the consumer.

In short, things will cost more due to scarcity of natural raw materials – there will be ecological inflation or “ecoflation” – and it is the producers who have implemented ecologically sound policies who will be better poised to remain profitable. That sounds Utopian, doesn’t it?

It is not Utopian, I believe. For these drivers of environmental cost will make this scenario a reality:

• Climate Change Policy. The United States implements a comprehensive climate-change policy, which spurs international cooperation and results in a global price for greenhouse-gas emissions.
• Water Scarcity. Climate change causes more drought and water scarcity throughout major agricultural regions and leads to increased production costs and declining yields.
• Deforestation. Consumer products companies in the United States and the European Union voluntarily agree to source all wood and fiber from sustainability-certified forests, and to increase the use of recycled fiber for all paper packaging and products.
• Biofuels. Major biofuel-producing countries retreat from existing mandates and apply sustainability requirements to all relevant government policies.

But then again, there is the choice to go green on production. Those production firms that will be more prepared will likely be taking these actions:

• Understand the environmental impacts and dependencies: Examine how cost drivers are exposed to emerging environmental trends and, when possible, seek substitutes with lower environmental impacts.
• Take an inventory of current initiatives: Learn what the company, its suppliers, and its partners already are doing through the value chain.
• Prioritize: Rank environmental issues and opportunities according to their current and future potential impact on costs, revenues, and reputation.
• Chart a new course: Make sustainability principles part of an action plan by including externalities in the decision-making process and establishing the principal performance indicators.

So there you have it. You can now start saving the planet…and some money, or you could go to the WRI site and get the details.

Oh no! We’re all gonna die!

If your regular skeptics would read the WWF’s Living Planted Report, they would call it a doomsday conspiracy theory. They would say that the alarmist – the tree hugging scum who want us to live in the stone age – are, as usual, trying to scare us from accumulating wealth and living like space gods.

The 2008 Living Planet Report was announced today, 29 October 2008, via a press release contained here. It says, in more words than these, that by 2030, we’ll need two planets in order to continue living the way we do. Reason being that we are consuming more natural resources than the planet can produce. Demand has outstripped supply. We already need a third more of the planet to continue living.

Hectares worth of resources consumed by each country (linked from BBC)

The people (i am deliberately avoiding the use of the word “scientists” because the skeptic hates scientists) who came up with this proposition say that some nations already owe the planet a lot. Not surprisingly, the US, China and India are the biggest debtors of the planet.

In the US for instance, each person needs about two times more natural resources than the US has. In fact if the entire population of the earth was to adapt the US’s consumption pattern, we would need 4.5 planets to barely make it to the next day. Maybe the consumption in the US is not the problem. The problem could be that the rest of the world wants to live the American lifestyle instead of convincing the average American of the wisdom of living like a bushman.

Look around. African youth dress like their American counterparts and rap like them, imitate their hand signs and – painfully – curse like them. The most annoying thing is that the African youth are – in the most part – a cheap imitation of the Americans. But that is another story altogether.

In Kenya, we all dream of owning fuel guzzler Hummers – even our Prime Minister has one. Recently, one UN employee acquired the military specification Humvee and there was immediate outcry from the “ethical” online people. Again, the skeptics would have slammed the ethical people with something in the general direction of “a man cant just buy a Humvee and enjoy the attention, just because you think there is global warming?” or “If i can afford to buy, fuel, and service a Humvee, why not?” or simply “killjoys!”

The Humvee that is causing sensation in Nairobi (from Nick Wadhams Blog)

The BBC summarizes this tragedy by saying that three quarters of the human population now lives in countries where consumption levels are outstripping environmental renewal. The BBC calls these nations “ecological debtors” who are drawing and overdrawing from the natural coffers of agricultural land, forests, seas and resources of other countries to sustain them.

In a nutshell, with current consumption rates, each living person on earth needs an average 2.7 hectares of productive land to sustain his lifestyle. If we divide the total human population by the amount of land available it appears that only 2.1 hectares are available per person. This means that the earth has exceeded its human carrying capacity already.

To me, that is not the thing that the skeptics should worry about. They should instead consider that the situation is deteriorating faster than expected. In 2006, the WWF team had predicted that the two-planet syndrome would strike in 2050. Now they had to hack off a whole two decades from their prediction. That doesn’t say they are incorrect, it just says that we never learn.

So what are the solutions?

let me just quote the WWF press release:

The report suggests some key “sustainability wedges” which if combined could stabilize and reverse the worsening slide into ecological debt and enduring damage to global support systems. For the single most important challenge – climate change – the report shows that a range of efficiency, renewable and low emissions “wedges” could meet projected energy demands to 2050 with reductions in carbon emissions of 60 to 80 per cent.

If humanity has the will, it has the ways to live within the means of the planet, but we must recognize that the ecological credit crunch will require even bolder action than that now being mustered for the financial crisis

I must add that a solution also lies in how many children we choose to bring into this planet. Population growth is the problem really. There is simply too many of us such that the earth is groaning under our weight. We are eating ourselves out of existence. But maybe that is a good thing. With humans out of the way, the planet can return to sustainable existence. Problem is, humans wont go down alone; they’ll take the planet with them.