Rio+20: counting the cost of an infinite-growth economy in a finite world

Blog by Craig Simmons, Co-Founder and Director, 19 June 2012

It is always a pleasure to catch up with old friends; and my recent dinner at Global Footprint Network founder Mathis Wackernagel’s Oakland home was no exception. As always, Mathis was brimming with enthusiasm punctuated by practical insights into the complex relationship between the ecological and financial economy.

In 2000, we published Sharing Nature’s Interest, written by Best Foot Forward co-founder Nicky Chambers, myself and Mathis with Rio +10 very much in our sights. Mathis went on to found, with partner Susan Burns, the Global Footprint Network with the ambitious goal of ending ecological overshoot.

The fact that the Global Footprint Network is now celebrating its 11th anniversary and has engaged with around 50 national and regional governments is a testament not only to Mathis’ energy and commitment but also the continuing relevance of the organisation's mission as we approach Rio +20.

The Global Footprint Network’s national footprint accounts, covering 232 countries and territories, have long been considered the ‘gold standard’ balance sheet for the geographical reporting of resource demands (the ecological footprint) and the available supply (biocapacity).

Its latest annual report, ‘What Happens When An Infinite-Growth Economy Runs Into a Finite Planet’, takes the interpretation of the ecological footprint a step further by correlating national ecological deficit with economic resilience.

Have we overlooked resource costs?

Backed by careful analysis, the report makes the convincing case that “the recent financial turmoil in Greece, Italy and elsewhere was fuelled, in large part, by rising resource costs.”

Resource costs have always been woven into the fabric of a nation’s economy but until recently have not been a major determinant of a country’s economic success.

European debt, the report argues, is at least partly attributable to rising resource costs; food and energy prices have increased three or four-fold over the last decade. Volatility in resource prices is also increasing the risk profile of the more dependent national economies. As prices rise, a country must spend more on basic resources, diverting cash away from public expenditure resulting in service cuts, job losses leading to protests and riots.

This vicious circle continues as, in desperation, more natural resources are liquidated, resources become more scarce and populations suffer further deprivations.

Should we track natural resources the same way we monitor financial flows?

To prosper, argues Wackernagel, countries must track their natural resource use as diligently as they monitor their financial flows. Such is the interrelationship of economy and ecology that nations who recognise that they operate within a resource-constrained world increase their chances of economic success.

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