Ecological Footprint: first step towards a new paradigm for sustainable prosperity

1. Ecological Footprint:first step towards a new paradigm for sustainable prosperity ETUI Conference Presentation by Willy De Backer Brussels, 29 June 2009

2. Contents Background The unsustainability trends Beyond GDP: ecological footprint From new indicators to new economy Conclusions

3. My background • 25 years of experience in EU policies • Politics – journalism – energy and environment policies expert • A short-term pessimist, a mid-term realist and a long-term optimist • European Director of Global Footprint Network

4. The Hydra of Unsustainable Growth Food crisis Water Scarcity Biodiversity Energy Descent Economic Shocks Climate Crisis Population Explosion Governance Failure

5. Populationexplosion

6. Climate crisis • The REAL inconvenient truths: • Despite Kyoto and the resource-intensive climate diplomacy circus, CO2 emissions have accelerated from 1.3 per cent per year in the 1990s to 3.3% per year from 2000 to 2006. • The conservative estimates of the IPCC have been proven seriously wrong by new scientific work. Tipping points are approaching much faster. • The EU’s 2 degrees target of warming is very unlikely to be achieved (IEA 2008).

7. Energy descent • The age of cheap energy abundance is over • Geophysical peaks – date unimportant • Nationalisation of energy producers (Aramco, Petrobras, Gazprom) • EROEI: it takes energy to harvest energy sources which are increasingly difficult to find (+ lower quality) • Peak oil, peak gas and maybe even peak coal are around the corner • To prevent a real energy crunch in 2012, we need a fast energy transformation but investments are postponed • Energy transformation takes normally many decades (Smil) – “rate-of-conversion” problem

8. Food crisis Between 2005 and summer 2008, international prices of wheat and maize tripled, price of rice grew fivefold (FAO). In same timespan the number of undernourished people increased from 848 to 923 million, largely because of the food-price crisis. Now over one billion Reason: rise of prices for raw materials and policies for biofuels. Although recession has brought down prices, international agencies predict new price hikes when economic recovery Peak oil will lead to price and production pressure on fertilisers and pesticides

9. Water scarcity No global water scarcity as such but increasing number of regions face water shortages. By 2025, 1 800 million people will be living in countries or regions with absolute water scarcity, and two-thirds of the world population could be under stress conditions (UN data) Increasing conflicts over fresh water (Middle East) Climate impacts – tipping points (Himalaya – Ganga basin)

10. Biodiversity • Biologists warn that we are living in the age of the Seventh Extinction (6th killed the dinosaurs). Between 17000 to 100000 species are becoming extinct every year. • Biodiversity is essential for our global eco-systems (if the bees would disappear, our food systems would collapse) • EU-commissioned study: “The economics of ecosystems and biodiversity” (2009) – Deutsche Bank economist Pavan Sukhdev. • Economic loss of deforestation and degradation is between 2 and 5 trillion dollar EACH year • Comparison: current bank crisis 1.5-3 trillion dollar.

11. EconoShocks • Is the current economic depression the beginning of a series of continuous economic shocks, each more serious than the other? (between deflation and inflation) • Current economic depression is too much seen as result of greed or bad bankers, whereas real underlying reason might be more systemic and related to spiraling commodity prices.

12. Causes of the financial collapse in 2008 • Subprime crisis, credit default swaps, greed? • No, systemic crisis caused in first place by rising commodity prices • There is a direct and underestimated link between current economic crisis and sustainability crisis

13. Governance failure • We are tackling global 21st century problems with 20th century governance structures • UN system is weak and needs serious reform • Return of nationalistic tendencies and protectionism • These and rising energy prices will stall globalisation • Geo-political power shifts (China, re-emergence of Russia) • Are our current democratic structures able to cope with the effects of the challenges? (long decision procedures, rise of populist parties, new extremism, new social conflicts etc.). Tom Friedman: “If only we could be China for one day” • Tendencies to go back to old failed recipes (Keynesianism, hard regulation) instead of thinking “out-of-the-box”.

14. To summarise: Ecological limits to growth RESOURCE SCARCITY Various commodities: peaks of extraction reached or about to be reached Future decrease of extraction & constricted availability Peak oil is approaching, about half the world’s reserves have already been used • LIMITED BIOCAPACITY • = supply of biologically productive area & related ecosystem services • Demand increases & per capitaavailabilitydeclines Overshoot & environmental degradation Scarcebiocapacitythelimittofutureeconomicdevelopment • LIMITED BIOCAPACITY • = supply of biologically productive area & related ecosystem services • Demand increases & per capitaavailabilitydeclines Overshoot & environmental degradation Scarcebiocapacitythelimittofutureeconomicdevelopment Source: SERI Austria 2009 RESOURCE SCARCITY Various commodities: peaks of extraction reached or about to be reached Future decrease of extraction & constricted availability Peak oil is approaching, about half the world’s reserves have already been used

15. What do these trends mean for business and unions? • Harder and more expensive access to raw materials • More pressure for hard environmental legislation • Competitive pressures • More unemployment and pressure on wages • Pressure on the middle classes • Changing consumer market: quality versus quantity; durability of products instead of throwaway culture; • Globalisation will stall - the world will get smaller – more regional and local focus – manufacturing will come back to Europe – agricultural sector of the economy will grow again.

16. What is needed? A Copernican Revolution • The Sustainability Age view Environment Economy Society Economy Society Environment Source: Peter Senge: The Necessary Revolution, 2008, p.102: “businesses need to wake up to the simple fact that ‘the economy is the wholly owned subsidiary of nature, not the other way around’” The Industrial Age view

17. New indicators for this Copernican Revolution • GDP and most alternatives are expressed in monetary values; • When the planet’s limits, its budget, becomes the defining factor for future prosperity, it is necessary to focus on measuring how big is this budget and how much we have used or are using up every year; • The ecological footprint does exactly that; • Ecological Footprint is currently the only accountancy tool which measures the new ecological limits to growth in an easily understandable way.

18. What is Ecological Footprint? An accounting system which measures the ecoservices, energy and materials the planet provides (the “offer”) and compares it with humanity’s consumption (the “demand”) of this natural capital for the production and use of our food, fibres, timber, transport, etc. and for the handling of the waste produced in the process. It is measured in terms of surface of the planet needed in order to provide these resources and expressed in “global hectares”; End result: “If everyone on the planet lived like an American, we would need five planets” – we are living above our means.

19. Footprint Analysis world from 1960 to 2005 • In 2005, our demand of resources was 30% higher than the offer (the Planet’s biocapacity (2.7 global hectares per person versus 2.1 gh available). Overshoot

20. Nature cannot be bailed out • In 2050, we will need 2.5 planets.

21. Strengths and weaknesses of the ecological footprint Easy to understand metaphor to explain that our economy has an ecological basis; The only real indicator of pressure on the Planet’s “carrying capacity” – useful alarm bell Ecological footprint is only 13 years old and is still under development – its development is being led by a small non-profit based in the US (Global Footprint Network) and its partners – standards need to be developed and maintained EF leaves out a lot of dimensions of ecological sustainability (water consumption, soil erosion, toxicity, other greenhouse gases than CO2, does not take into account depletion of fossil fuels and minerals)

22. “Beyond GDP”: the right debate? Danger 1: debate about new indicators will overshadow the more fundamental debate about a new resource-constrained economy; Danger 2: discuss until our statistical experts have found the right new indicator “if you jump out of an airplane you need a crude parachute more than an accurate altimeter. And if you also take an altimeter with you, at least don’t become so bemused in tracking your descent that you forget to pull the ripcord on your parachute. We should be thinking in terms of a parachute, however crude” (Herman Daly)

23. The real debate: “Prosperity without growth” What we need is a debate on creating “prosperity without growth” UK’s Sustainable Development Commission (2009) is a good start.

24. What to do as trade unions? • Unions and social-democratic parties have been too much lured by the free-market ideology of the consumer society – turning citizens into consumers and giving them more “stuff” is not progressive; • Raising the boat for everyone (the neo-liberal religion) is an illusion which will turn into a nightmare when the boats will start going down; • Respecting ecological limits to growth, redefining and redistribution of wealth inside and between our societies should be the name of the game • Political and economic objectives should move from labour productivity to resource productivity; • The left needs a new visionary project based on the one-planet economy idea. It will have to become radical again.

25. Conclusions The world of business and work is facing new huge challenges. We have started the transition from the Industrial Age of Abundancy to the new Sustainability Age of Limits, where we need to bring our economies back to its one-planet limits and therefore redefine growth, competitiveness and governance. Businesses that can adapt their business models, products and services to the one-planet economy challenges will have a strong competitive advantage and will be the winners of the 21st century. Unions should help drive businesses and citizens into that direction. It will need a lot of innovation and courage to leave behind the old dogmas and recipees.

26. Thanks for your attention • Questions? • willy.debacker@skynet.be