The Great Disruption (7 page)

On the global scale, studies like that by Sir Nicholas Stern have put numbers on this impact in just the narrow case of climate change. In Stern's study, he concluded that unchecked climate change could lead to a 20 percent decline in gross domestic product (GDP), an estimate that appears increasingly conservative as the science progresses.

The economic implications aren't just about the direct costs of systems failing. We also need to consider the costs of creating the required alternative economic infrastructure. These costs are often put forward as a reason for delay. In fact the opposite is the case, because Mother Nature doesn't wait for us to get around to it, so the impacts keep marching on and therefore the response becomes more expensive. Again taking the example of climate change, the International Energy Agency (IEA) has concluded that every year of delay on climate change increases the cost of building the new energy infrastructure required because the necessary rate of reduction gets steeper and steeper, stranding capital assets. They estimate
every year
of delay means we will pay an extra $500 billion.
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The system complexity of the economic impacts of ecosystem degradation is considerable, however, explaining further why it's hard for us to incorporate it into decision making.

This complexity is brought to the fore in studies like the Stockholm Resilience Centre's report into planetary boundaries. Their innovative approach was to identify key natural systems that were critical to human civilization as it has developed and thrived. Where possible, they then defined absolute limits to changes in those systems, limits that could not be crossed without endangering our prosperity and stability. The results were summarized in the scientific journal
Nature
.
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The study identified nine such boundaries and found that we had already crossed three of them—climate change, biodiversity loss, and nitrogen levels—and were approaching several others.

The study provides numerous examples of the interlinkages between ecosystem health and economic prosperity. For example, it showed how our efforts to increase agricultural productivity have led to us dramatically exceeding the earth's capacity to absorb our emissions of nitrogen.

Nutrients in the form of nitrogen are added to the land as fertilizer to boost crop production. However, when they are washed into the oceans, they have the opposite effect, as they encourage algal blooms and deplete oxygen levels to the point where nothing else can survive. So while in this case significant economic benefit comes from higher food productivity, significant economic loss comes from loss of drinking water, loss of fisheries, and dead rivers. It was estimated that the total economic losses from freshwater eutrophication in the United States was $2.2 billion in 2009 alone.
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Other studies have put a number on the total value of all ecosystem services to the economy. The most comprehensive attempt to do so was published in
Nature
in 1997 and has been cited thousands of times subsequently.
15
Based upon a thorough literature review and compilation, the team of scientists and economists who produced the report estimated that the total value of ecosystem services was between $16 trillion and $54 trillion annually, with an average of $33 trillion. They noted the uncertainties but took a conservative approach and stressed that “this must be considered a minimum estimate.” Versus this figure, they noted that total global gross national product (GNP) in 1997 was around half that at $18 trillion. Recent work done by the TEEB project, led by Deutsche Bank's Pavan Sukhdev, provides valuable tools that business and policy makers can use to integrate this way of thinking into their work. While different studies will produce different numbers and details, the core conclusions are always the same. What we get from nature is fundamental to our economy, and without these inputs we would in fact produce nothing. Yet most political debates are still framed in the context of environmental protection being “nice to have” if we can afford it.

What all this means is we have clearly moved beyond needing to protect what environmentalists call “charismatic megafauna” like polar bears and pandas. We are now firmly in the space of needing to protect rather less charismatic creatures, like you and me. Let there be no doubt that if the environment crashes, the economy will go with it.

So while it is clear that environmental damage leads to economic loss, how certain are we of the underlying assessment of the environmental damage? Good science, like good business strategy, requires us to check our conclusions against other sources. In scientific language, we need multiple independent lines of evidence. In the case of the global sustainability challenge, we are fortunate to have a plethora of them.

One of the more famous, because it provides such a beautifully simple way to communicate a complex problem, is the work of the Global Footprint Network.
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This group of scientists, under the supervision of an eminent global advisory board, takes the complexity of the various ecological services such as those detailed in the
MEA
and translates them into the area of the earth's surface needed to sustain them. To quote from their report, they take “5,400 data points for each country, each year, derived from internationally recognized sources to determine the area required to produce the biological resources a country uses and to absorb its wastes, and to compare this with the area available.”

In other words, they work out how much land we would need to support our economy and lifestyle and then compare that with how much suitable land we have available to do so. By analyzing this globally, they show us how many “planets” we need to sustain our current economy—either how much more we can still grow the economy if the answer is less than one planet, or how far past sustainable capacity we are if the answer is more than one. The answer on a global scale is that in 2009, we needed 140 percent of the available land, or 1.4 planets.
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It was just 1986 when we first went past the earth's capacity, and we've been exceeding this capacity ever since. This means we are using up our capital every day now just to survive.

It is often easier to understand the implications of this by thinking about it in terms of personal finance or of running a business.

Suppose you ran your life or your company with all your money coming from two bank accounts, one with the capital—the amount you start with—and one with income—the interest you earn from your capital. You can't obtain any more capital except by transferring it back from your interest account. For humanity, the earth is our capital: We can't create any more planet.

Each year on January 1, the interest you have earned on your capital balance is transferred into your income account, representing in our comparison all the services we take from the earth.

If you ran your life in 2009 the way we run the earth, you would have spent your whole year's interest income by September 25 and the balance would then be zero. However, you'd still have expenses after that date, so you would draw cash from your capital account from September 25 until December 31. This would decrease the balance there, but your lifestyle wouldn't be affected yet because you would have all the cash you needed. You wouldn't yet notice any difference day-to-day.

Then the next year, on January 1, 2010, your interest would be transferred into your income account again, but it would be less than last year because the balance in your capital account would be lower after your withdrawals over the last three months of 2009. In 2010, however, you would have greater need for cash (representing our growing economy), so you would have both less income
and
greater costs. As a result, in 2010 the interest income would be all gone earlier, meaning you would need to draw
more
cash from your capital account than you did in 2009.

Unfortunately, you won't be able to borrow any money to pay back in future. Why not? Because the bank would have noted that your spending was already 40 percent greater than your income and getting worse each year, so there'd be no way you could pay any loan back. Even more fundamental, if your capital account balance represents the planet, there's nothing else to lend you.

Nevertheless, in our comparison, this still works for you for a while. In fact, each year your lifestyle
appears
to get better because your expenditure is growing and you can buy more stuff, representing our growing economy. Things feel good day-to-day.

But then one year there isn't enough money in the capital account to top up your income account. It doesn't happen slowly, it all happens on the day the money runs out. Then suddenly the game is up and your personal economy falls over. You can't pay your bills and you can't buy your food. This is system collapse.

Every time a group of qualified scientists reviews the situation using different approaches, they reach comparable conclusions. In the absence of a monthly statement from the bank, these conclusions are the closest thing we have to a planetary income balance sheet. Their conclusion is we are trading insolvently.

As Joe Romm of ClimateProgress.com has observed, what this means is that the global economy is basically a giant Ponzi scheme. We are using our capital to pay out income to the investors (us), and then one day the capital will run out and the scheme will suddenly fall over.

The question in this comparison becomes, how long do we have? Is it possible to cut back our spending enough to prevent the capital from running out? Can we act to restore our capital by restoring the damage we have already done to the earth? I will answer these questions in the following chapters.

A critical approach taken by the Stockholm Resilience Centre, and one that needs to be given much more prominence, is that there are tipping points in the system that when passed can lead to systemic breakdown that self-accelerates and is irreversible. Fisheries are a good example of this. This risk requires us to set boundaries that allow for a margin of error, something we always do when we apply risk assessments to engineering design tasks. We don't, for example, define the stress levels when a plane will fall apart and then design it to operate at that limit; we allow for a large margin for error because failure is catastrophic.

The crucial significance in all these studies is not the conclusions drawn in each particular report. In the context of the scientific process discussed earlier, the significance is that
whenever
a group of credible scientists analyzes these global issues from their particular perspective, they
all
draw the same basic conclusions—we are using the earth's resources at a rate that cannot be sustained, and if we don't change, the system will at some point face a crisis, most probably a nonlinear one characterized by a disruptive, relatively sudden shift in the state of the global ecosystem.

In order to relate to these issues, people often focus on local impacts of extreme weather or natural climatic disasters. There's no shortage of examples of this playing out today, with direct human and economic impacts. In my home country, Australia, we have in recent years experienced many of them. We've had the worst drought on record, with serious impacts on our food production and collapsing river systems. We've had to urgently build expensive and energy-intensive desalination plants when we faced the prospect that some of our largest cities could run out of water. We've had the most intense wildfires on record, with hundreds killed, and we've had record heat waves that have led to hundreds more fatalities, like the heat wave (the kind that hits just once every
three thousand
years) that ravaged my hometown of Adelaide in March 2008.

As I write this book, new heat records are being set all around the world and in global averages. Pakistan is facing instability and widespread suffering from extraordinary floods. Russia has banned wheat exports after record-breaking temperatures and a severe drought threatened food supplies. Each time a record is broken or new extreme weather impacts are observed, it is easy and understandable to focus on them. However, the science says don't pay too much attention to individual events or years, focus on the global system and trends as a whole, as we've covered. This is what should concern us most.

Despite all this evidence, when I present on this topic, one of the questions I often get is something along the lines of “Surely it's not
that
bad? I understand it's serious, but environmentalists and scientists need to shock us into action, so they exaggerate, don't they?”

In response, I often refer to what a nice day it is outside, what a pleasant and safe walk I had to the venue, what a good breakfast we all had that morning after a good night's sleep in a comfortable home or hotel. My point is to acknowledge that it is really hard, in the face of all this, to internalize that the global ecosystem is on the brink of crisis, or perhaps already in one, when we don't directly feel or see the signals around us.

This is a human response based on instincts we have developed over millions of years. We respond to danger that is physically close and immediate in time. This response has served us well, when the neighboring tribe attacked or when there was a tiger at the cave entrance.

So here we are in the modern era with the same instincts. For most readers, things are good, life is interesting, our needs are met, and the environment we see every day seems pretty good. Sure, there are issues, but it doesn't feel as if we're on the verge of systemic collapse, that's for sure. We focus instead on tonight's dinner, the project we have due at work, or the challenge we're facing in our relationship.

The problem is that we don't sense any danger in our physical, instinctive senses. Those who do, such as those facing wildfire, drought, or flood, respond to that immediate challenge, focusing on their personal safety and protecting their friends and family.