As we are greeting the New Year, we want to take a moment to pause, thank our generous supporters and celebrate what we accomplished over the past 12 months. Here are the highlights.
A major milestone for us was the launch, last June in London, of Phase II of ERISC with our partners in the finance industry. Environmental Risk Integration in Sovereign Credit, a research project that seeks to quantify how environmental risk can impact the balance sheet of nations, is a joint program with the United Nations Environment Programme Finance Initiative. We are grateful to participating institutions Caisse des Dépôts, the European Investment Bank, First State Investments, HSBC, Kempen Capital Management, KfW and Standard & Poor’s, who embarked on that journey with us. We are looking forward to announcing first research results and findings in 2015.
The paper documents the latest method for estimating the Ecological Footprint and biocapacity of nations, using the National Footprint Accounts (NFA) applied to more than 200 countries and for the world overall. Results are also compared with those obtained from previous editions of the NFA. According to the 2011 Edition of the National Footprint Accounts, humanity demanded the resources and services of 1.5 planets in 2008; this human demand was 0.7 planets in 1961.
Each new edition of the National Footprint Accounts supports the conclusion that we are in global ecological overshoot, where total demand for ecological goods and services exceed the available supply and regenerative capacity, while also causing carbon waste accumulation.
Energy expert Robert Rapier, the Chief Technology Officer at Merica International, writes and speaks about issues involving energy and the environment. Merica , a privately held energy company, is involved in a wide variety of projects, with a core focus on the localized use of biomass to energy for the benefit of local populations.
In this second of a two-part series on Competitiveness 2.0, one of Global Footprint Network’s strategic programs, the Consumer Energy Report columnist and author of “Power Plays: Energy Options in the Age of Peak Oil” explains below how energy constraints are becoming so central to a nation’s competitiveness.
Released just weeks before world leaders come together in Rio de Janeiro for the UN Conference on Sustainable Development (Rio+20), the report shows rising competition among countries for resources and land use.
“We’ve entered the era of the global auction,” said Global Footprint Network President Mathis Wackernagel, Ph.D., “where nations are now forced to compete fiercely for more expensive and less abundant resources. It’s in their own self-interest to preserve and restore the natural assets they have within their borders and avoid ecological deficit spending. In a resource constrained world, such spending will become an ever more challenging economic burden.”
Figure 1: Pathways into the future. How long can ecological overshoot be sustained? What are the cost and benefit of each path? Using more than Earth can renew is only possible temporarily – while there are sufficient assets to be liquidated and waste sinks to be filled up. Eventually, overshoot will be eliminated – the question is whether it is eliminated by design or by disaster.
The new figures released for humanity’s Ecological Footprint and biocapacity (Earth’s capacity to regenerate resources) show that now, more than ever, countries must manage natural capital as part of their strategy to secure ecological, economic and social success. This holds also true when deploying development strategies that aim at producing lasting progress, for instance for efforts to eliminate hunger and alleviate poverty.
As population and consumption increases, the pressure on the planet continues to grow. Global Footprint Network calculations show that in the past five decades, humanity’s Ecological Footprint has more than doubled. In 2008, the most recent year for which data are available, humanity used the equivalent of slightly more than 1.5 planets to support its activities. In other words, nearly 40 years after Earth went into ecological overshoot, it now takes more than a year and six months for Earth to absorb the CO2 emissions and regenerate the renewable resources that people use in one year.
While humanity’s cropland and fishing Footprints have increased, carbon continues to be the largest driver behind humanity’s ecological overshoot. Carbon now accounts for more than half the global Ecological Footprint, at 54 percent. Land used for food production is another major factor in humanity’s increasing Footprint.
While carbon is a major challenge, it must not be addressed in isolation. Moving from fossil fuel due to climate concerns to alternative sources will reduce the carbon portion of the Footprint, but may also significantly increase pressure on other ecosystems. The lack of biocapacity to accommodate the carbon Footprint also indicates that there may not be sufficient biomass available to substitute the current level of fossil fuel use, should that become necessary.
Though the numbers are stark, countries can still reverse trends. Using a Global Footprint Network Scenario Calculator, the 2012 edition of the Living Planet Report offers potential outcomes based on different choices related to resource consumption, demographic trends, land use and productivity.
Examining the Ecological Footprint at the per-person level shows that people living in different countries vary greatly in their demand on Earth’s ecosystems. For example, if everyone in the world lived like the average resident of Qatar, which presently has the world’s highest per capita Footprint, we would need the equivalent of 6.5 planets to regenerate our resources and absorb the CO2 emissions. If everyone lived like a resident of the United States, we would need the resources of 4 planets.
A few countries are now on the verge of turning from ecological creditors to ecological debtors, including Indonesia, Senegal and Ecuador.
Countries that maintain high levels of resource dependence are putting their own economies at risk,” Wackernagel said. “These countries will expose themselves dangerously to the global auction. But those countries that are able to work within both their financial and their ecological budget will not only serve the global interest, they will have the most resilient economies in a resource-constrained world. If our goal is to make progress last and secure well-being for all, then we can no longer afford to ignore biocapacity deficits in the new era of resource constraints.”
The top 10 countries with the largest Ecological Footprint per person are Qatar, Kuwait, United Arab Emirates, Denmark, the United States, Belgium, Australia, Canada, Netherlands, and Ireland. Countries on the other end of the spectrum such as Afghanistan and Bangladesh have per capita Footprints that, in many cases, are too small to provide for basic needs. These countries may well need to increase their access to resources if they are to bring large segments of the population out of poverty.
Analysis of biocapacity also reveals vast differences between countries. More than 60 percent of the world’s biocapacity is found within the borders of just 10 countries: Brazil, China, the United States, Russia, India, Canada, Australia, Indonesia, Argentina and Congo. Biocapacity per person, calculated by dividing national biocapacity by a country’s population, is also not equivalent around the world. In 2008, the country with the highest biocapacity per person in this report was Gabon, followed in decreasing order by Bolivia, Mongolia, Canada and Australia. With pressure on ecological resources escalating, access to biocapacity will be increasingly important to countries’ competitiveness and to their ability to provide a good quality of life for their citizens.
“For lasting competitiveness, countries need a break with the past,” said Wackernagel. “The good news is that addressing resource risks can open up economic opportunities and advance social equity. The solutions lay in better understanding the choices before us. For this, governments need the knowledge and tools to manage their ecological assets as well as their resource demand.”
How to Participate
As Global Footprint Network approaches its 10th anniversary, we remain committed to reversing these trends by working with governments and maintaining and improving our National Footprint Accounts, the gold standard for measuring key aspects of a country’s ecological wealth and vulnerabilities. You can be part of this global effort by promoting our work, becoming a partner or giving a donation.
The joint project between the UN Environment Programme Finance Initiative (UNEP FI) and Global Footprint Network to assess the financial materiality of ecological risk was launched at the UN Foundation in Washington DC on 17 October 2011. Opening remarks from Paul Clements-Hunt (Head of UNEP FI) and Susan Burns (Senior Vice President of Global Footprint Network) showed a clear commitment from both organisations to this potentially ground breaking project. Richard Burrett, of Earth Capital Partners, also gave an inspiring presentation detailing not only the importance of this project but also how investors currently perceive the financial relevance of natural resources.
It is clear that the tightening constraints on resources and their potential impacts on national economies are not included within current financial analysis. Yet such factors are thought to have growing implications for the long-term credit risk of many government bonds, especially those with long-dated maturities.
A host of financial institutions were in attendance at the launch and participated in a stimulating discussion around the evidence base to show that ecological risks are becoming material for economies and how key ecological data can be linked to the financial and economic indicators. This project will endeavour to shine a light on such questions to explore the role of natural resource accounting in strengthening risk models for government bonds.
Global Footprint Network and UNEP FI would like to thank all those who participated in the launch event and invite any other institutions who are interested to join the project.
Global Footprint Network is the standard setting body for the only Ecological Footprint standards in the world. The Ecological Footprint standards set forth quality criteria for Ecological Footprint studies of sub-national populations, organizations, and products. The goal of the Ecological Footprint Standards is to build consensus among practitioners regarding Ecological Footprint methodology, transparency, and communications. This consensus is important because it helps to establish a forum or a common platform for understanding and communicating about natural resource constraints. To that end, the Ecological Footprint Standards are used as a way of maintaining the scientific credibility and accuracy of Ecological Footprint studies, the policy relevance, and the consistency and appropriateness with which the method is applied and findings communicated.
Global Footprint Network’s Ecological Footprint Standards have been established through a committee-based process that incorporates input from our Partnership Network and Public Comment. The Global Footprint Network Standards Committee is starting the process to review and revise the Ecological Footprint Standards. Participation in the Committee and Procedures for the Committee are outlined in Global Footprint Network Committees Charter. The result of this process will be updates to the 2009 Ecological Footprint Standards to be released towards the end of 2012.
The original goal of the Ecological Footprint Standards is to increase the quality, reliability and consistency of Footprint assessments. As the Ecological Footprint is being adopted by a growing number of government agencies, organizations and communities as a measure of environmental performance, there is an even greater need for quality, consistency, and reliability. This review and revision process for the 2012 Ecological Footprint Standards is a way to maintain this goal of improving comparability.
In addition, as the Ecological Footprint methodology is applied in different circumstances by different practitioners, advances to the methodology and communications strategies are being made. Conducting a review and revision process every three years allows Global Footprint Network to stay on top of advances in Ecological Footprint science and application. By engaging with experts, our Partner Network, and public comment every three years, our Ecological Footprint Standards can allow for a dynamic process that encourages innovation and action.
Global Footprint Network is actively seeking input from our Partner Network and Public Comment
Your feedback is welcome during the entire process! Before the revised Standards are finalized in 2012, there will be two 60-day Public Review periods, one in March – May 2012 and the second in July – September 2012. These are your opportunities to provide more input as the draft develops.
UNEP FI project seeks framework for assessing government bonds
Could an abundance of natural wealth be a factor in positively influencing a country’s credit rating and the quality of its bonds? Could a resource-guzzling economy be cause for a downgrade?
The UN Environment Programme Finance Initiative (UNEP FI) in collaboration with Global Footprint Network and leading financial institutions will endeavor to shine a light on these questions with a groundbreaking project to explore the role of natural resource accounting in strengthening risk models for government bonds. The project seeks to incorporate how much natural wealth countries have – and how much they spend – into assessments of long-term credit risk.
Tightening constraints on resources and their potential impacts on national economies have been largely absent from financial analysis. Yet such factors are thought to have growing implications for the long-term credit risk of many government bonds, especially those with long-dated maturities.
“The global financial crisis has taught us more than anything that some of the core risks that affect the value of debt securities and derivatives can simply run ahead of our ability to understand them,” said Paul Clements-Hunt, Head of UNEP FI. “This is why we must deepen our understanding of the risks posed by climate change, water scarcity and the overuse of natural resources for securities. We should not be caught off-guard again. This project is one of the first that tries to quantitatively and systematically consider the linkages between the use of natural resources and its impact on a country’s core economic indicators that in turn influence the quality of its bonds.”
The bond project was launched yesterday at workshop at a side-event to the UNEP FI Global Roundtable, which is taking place in Washington D.C. this week. The Roundtable draws hundreds of leading financial experts along with high-level government officials seeking to address the link between financial stability and environmental sustainability.
The project has two aims: it will investigate the linkages between ecological risk and country-level risk in sovereign bonds, and develop a methodology to explore how credit rating agencies, investors and financial information providers can integrate ecological data into their respective models. In particular, the analysis will look at the risks to countries whose populations and/or industries require more resources than is domestically available and which are hence reliant on ecological services from abroad.
“As resource constraints tighten globally, countries that depend heavily on ecological services from other nations may find that their resource supply becomes insecure and unreliable. This has economic implications – in particular for countries that depend upon large amounts of ecological assets to power their key industries or to support their consumption patterns and lifestyles,” said Global Footprint Network President Mathis Wackernagel. “Meanwhile, those countries with reserves of valuable natural capital may find themselves in an advantageous position.”
The project will substantiate the business case for financial institutions and ratings agencies to include ecological criteria as a key component of financially material country credit risk analysis. Institutions will thus be enabled to work towards better inclusion of financially-material environmental, social and governance (ESG) issues in financial products and services.
Footprint Forum’s Academic Conference: The State of the Art in Ecological Footprint Theory and Applications
Wednesday, June 9 2010: 2:00 pm – 6:00 pm, dinner at 8:00 pm
Thursday, June 10 2010: 2:00 pm – 5:00 pm (breakout session of public conference)
An event of the Footprint Forum: Meet the Winners of the 21st Century. Colle Val d’Elsa, 7-12 June 2010
Global Footprint Network is calling for abstracts for presentation at the Academic Conference of the Footprint Forum: Meet the Winners of the 21st Century to be held June 7-12, 2010, in Colle di Val d’Elsa, Italy, just outside of Siena, Italy. Submissions are welcome on issues pertinent to biocapacity and Ecological Footprint. Abstracts will be selected for presentation. If your abstract is selected, you will have the opportunity to speak at the session for up to 15 minutes, followed by at least 10 minutes of discussion. In addition, a special issue of Ecological Indicators will include extended versions of a selection of papers presented at Footprint Forum.
About Footprint Forum:
Copenhagen – COP15 – showed us that national governments and political leaders are finding it difficult to act collectively in the global interest. Global Footprint Network is convinced that climate action will only gather momentum once nations see that decisive action is in their own best interest. This compelling self-interest story becomes obvious once we understand climate change in the context of ecological resource constraints, as one of a number of related crises – food, energy, water, biodiversity, and so forth – emerging from humanity’s systematic overuse of available resources. This reframing presents a great impetus for transformation. The focus of Footprint Forum 2010 is on how we can capitalize on this opportunity.
Details of Submission:
Proposed topics should focus on NEW developments on the Ecological Footprint in areas of:
2. Applications; or
3. Communication/policy relevance.
All submissions must be a two-page abstract, and include an introduction, summary of methods and results, and a discussion section. Click here to download the template. Click here to download the abstract submission format and guidelines
Note: If your abstract is not selected, you will have the option of having it presented as a poster at the Forum.