ACCOUNTING FOR BALANCE IN THE ENVIRONMENT 1
by ren on January 16th, 2008
Ali at Greener Assets does accounting for the environment on a daily basis. I thought I’d spend some posts on the subject when I came across an article (New York Times, 2 January 2008), What’s Your Consumption Factor?, by Jared Diamond (OpEd Contributor and geography professor at UCLA).
TO mathematicians, 32 is an interesting number: it’s 2 raised to the fifth power, 2 times 2 times 2 times 2 times 2. To economists, 32 is even more special, because it measures the difference in lifestyles between the first world and the developing world. The average rates at which people consume resources like oil and metals, and produce wastes like plastics and greenhouse gases, are about 32 times higher in North America, Western Europe, Japan and Australia than they are in the developing world. That factor of 32 has big consequences.
The population especially of the developing world is growing, and some people remain fixated on this. They note that populations of countries like Kenya are growing rapidly, and they say that’s a big problem. Yes, it is a problem for Kenya’s more than 30 million people, but it’s not a burden on the whole world, because Kenyans consume so little. (Their relative per capita rate is 1.) A real problem for the world is that each of us 300 million Americans consumes as much as 32 Kenyans. With 10 times the population, the United States consumes 320 times more resources than Kenya does.
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Among the developing countries that are seeking to increase per capita consumption rates at home, China stands out. It has the world’s fastest growing economy, and there are 1.3 billion Chinese, four times the United States population. The world is already running out of resources, and it will do so even sooner if China achieves American-level consumption rates. Already, China is competing with us for oil and metals on world markets.
Per capita consumption rates in China are still about 11 times below ours, but let’s suppose they rise to our level. Let’s also make things easy by imagining that nothing else happens to increase world consumption — that is, no other country increases its consumption, all national populations (including China’s) remain unchanged and immigration ceases. China’s catching up alone would roughly double world consumption rates. Oil consumption would increase by 106 percent, for instance, and world metal consumption by 94 percent.
If India as well as China were to catch up, world consumption rates would triple. If the whole developing world were suddenly to catch up, world rates would increase elevenfold. It would be as if the world population ballooned to 72 billion people (retaining present consumption rates).
Some optimists claim that we could support a world with nine billion people. But I haven’t met anyone crazy enough to claim that we could support 72 billion. Yet we often promise developing countries that if they will only adopt good policies — for example, institute honest government and a free-market economy — they, too, will be able to enjoy a first-world lifestyle. This promise is impossible, a cruel hoax: we are having difficulty supporting a first-world lifestyle even now for only one billion people.
We Americans may think of China’s growing consumption as a problem. But the Chinese are only reaching for the consumption rate we already have. To tell them not to try would be futile.
The only approach that China and other developing countries will accept is to aim to make consumption rates and living standards more equal around the world. But the world doesn’t have enough resources to allow for raising China’s consumption rates, let alone those of the rest of the world, to our levels. Does this mean we’re headed for disaster?
Tags: climate change, consumption rates, economic growth, environment, fossil fuels, greenhouse gasShare This
POSTED IN: Accounting for NonAccountants, Random Thoughts on Accounting
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