Resource constraints and economic performance in Eastern Europe and Central Asia

December 2011

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December 2011

Resource Constraintsand Economic Performancein Eastern Europe and Central Asia

Note about this report: One of the most significant new data trends presented in this report is the cal-culation of the market costs of biocapacity deficits over the last few decades (as introduced in Section2). The results presented in this report are still crude and simplified. The Global Footprint Network is en-gaged in research to refine this analysis.

Authors: This report was prepared by researchers from the Global Footprint Network. Dr Mathis Wack-ernagel and Kyle Gracey were in charge of the concept and editing. Kristin Butler, Jill Connaway, DrGemma Cranston, Yves de Soye, Faith Flanagan, Deanna Karapetyan, Joy Larson, David Moore, Dr JuanCarlos Morales, and Pati Poblete contributed to the report. Dr André Schneider from André SchneiderGlobal Advisory also provided input, particularly on the competitiveness aspects of the report.

Acknowledgements: The authors would like to thank Stamatios Christopoulos, Adriana Dinu, and AgiVeres from UNDP for their encouragement and thoughtful reviews.

Suggested citation: Global Footprint Network (2011): “Resource Constraints and Economic Perform-ance in Eastern Europe and Central Asia”, Report to UNDP Bratislava, Global Footprint Network, Oaklandand UNDP, Bratislava.

Global Footprint Network

Global Footprint Network, based in Oakland (California), Brussels and Geneva, is an international think tankworking to make ecological limits central to decision-making by advancing the use of the Ecological Foot-print, a resource accounting tool that measures how much nature we have, how much we use and who useswhat. By developing transparent, scientifically robust measures to help leaders monitor and protect ecologi-cal assets, the Global Footprint Network provides decision makers with the tools they need to succeed in an eco-logically-constrained world.

www.footprintnetwork.org

Copyright © 2011by the United Nations Development Programme

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted,in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior per-mission.

The analysis and policy recommendations of this report do not necessarily reflect the views of the United Na-tions Development Programme or its Executive Board.

ISBN 978-92-95092-45-7

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RESOURCE CONSTRAINTS AND ECONOMIC PERFORMANCEIN EASTERN EUROPE AND CENTRAL ASIA

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Section 1: Entering a New Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Ecological Footprint and Biocapacity of the Region – 1961-2007 (per capita) . . . . . . . . . . . . . . . . . 10

Section 2: Key Measures for Economic and Environmental Performance. . . . . . . . . . . . . . . . . . . . . 14

Section 3: Ecological Constraints and National Competitiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Section 4: Navigating the New Era. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Appendix 1: Ecological Footprint and CO2 Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Appendix 2: Ecological Footprint Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Appendix 3: Methodology Improvements and Ecological Footprint Acceptance Worldwide . . . . . . 38

Appendix 4: Resource Trends in Eastern Europe and Central Asia . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Albania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Armenia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Azerbaijan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Belarus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Bosnia and Herzegovina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Bulgaria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Croatia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Cyprus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Hungary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Kazakhstan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Kosovo* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Kyrgyzstan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

the former Yugoslav Republic of Macedonia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

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Table of Contents

* Hereafter referred to in the context of the UN Security Council Resolution 1244.

Moldova . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Montenegro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Poland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Romania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Russian Federation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Serbia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Slovak Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Slovenia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Tajikistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Turkmenistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Ukraine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Uzbekistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

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This report explores the link between resourceconstraints and economic performance for coun-tries in Eastern Europe and Central Asia.

Evidence suggests that humanity is entering anew era where development globally will bemore constrained by resource availability thanever before. Since the Second World War, resourcelimits have seldom been considered to be a sig-nificant economic factor (with the exception ofthe oil crises of the 1970s). They could thereforebe left out of economic equations. This is nolonger the case. Ever more countries have be-come biocapacity debtors. Their residents usemore, in net terms, than what ecosystems withintheir countries can regenerate. Because of thisglobal trend, biocapacity could become the lim-iting factor for economic performance in thetwenty-first century.

This report documents the biocapacity situationof every country in the region, linking it to eco-nomic performance and other indicators of fi-nancial health. It suggests that resource issues aregrowing more prominent and are having moreimpact economically for many countries in theCentral Asia and Eastern Europe region. If globaland regional trends continue, resource constraintswill shortly become the dominant determinant ofeconomic success in this region.

These resource trends are slow-shifting, and hardto reverse. But reversal is possible. First of all, re-versal requires adequate management and re-source accounting tools like the EcologicalFootprint. Once drivers are understood, policiescan be devised and monitored that address thesetrends in cost-effective ways. Without any revers-ing trends, the impact of this growing pressure onnatural capital might rise substantially, and mighteven become increasingly non-linear.

Recognizing these constraints also offers a numberof opportunities. First, it helps to reveal that proac-tively addressing the constraints is in the direct self-interest of nations, since benefits generated byadjusting to this new reality will accrue to the na-tions that act. Those who fail to act will be outcom-peted. While resource constraints are global, therisks and opportunities created by these constraintsare largely local. Hence, early action pays off.

The report concludes by briefly outlining the op-portunity for action. It emphasizes the impor-tance of focusing on wealth generation (naturaland human wealth), rather than on throughput(e.g., gross domestic product (GDP)). If prosperity(that is,, per capita wealth) is taken as the goalpost, countries substantially increase theirchances of succeeding in the coming rapids of re-source constraints if they take action.

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Executive Summary

Over the last half century, people’s well-being has,on average, made stunning advancements. Whileno one disputes that challenges still exist – in-cluding the continuance of extreme poverty, vul-nerability to food and energy price volatility andeconomic inequities in many parts of the world –reports by the United Nations Development Pro-gramme (UNDP) and others show that, in the lastfew decades, human development has increasedin nearly every country (UNDP, 2010).

As more people have achieved greater gains inhealth, education and purchasing power, theyhave increased demand on the world’s natural re-sources – more water, food, energy and associ-ated carbon dioxide (CO2) emissions. In parallel,the human population has increased from 3 bil-lion in 1960 to 7 billion today. Even though con-sumption is very unevenly distributed, this

expansion of the human popu-lation has further increased theimpact on global water, food,and energy supplies, and has ac-celerated the amount of CO2pollution into the world’s atmos-phere and oceans.

While resource constraints havenot been a significant global lim-itation on development in thefirst decades after the SecondWorld War, the situation is chang-ing. Overall demand is now out-stripping the Earth’s regenerative

capacity (Global Footprint Network, 2010). The ex-cess demand is now supplied by liquidation, ratherthan sustainable use, of natural capital. Freshwa-ter, fossil fuels, cropland or biodiversity – the rawmaterials people want most to improve their well-being are increasingly in short supply. Similarly, theby-products of this hunger for goods – waste, ero-sion, carbon pollution, desertification – growlarger every year, as chronicled by the United Na-tions and other global reports (for example, theMillenium Ecosystem Assessment (MEA), the In-ternational Energy Agency (IEA), the Food andAgriculture Organization (FAO) and the Intergov-ernmental Panel on Climate Change (IPCC)).

This supply crunch is already a contributing factorto strife across the globe. It may have fuelled thetension behind the Arab Spring, where rapidlygrowing human demand, including significant

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This section makes the case that humanity is entering into anew era of biocapacity constraints, with constricting suppliesof natural resources. While many of the trends are global, eachcountry is in a unique situation, as demonstrated by the bio-capacity and Footprint trends of countries in Eastern Europeand Central Asia.

Considering the economic relevance of these trends, ad-dressing one’s resource exposure risks is in the competitiveinterest of each country. It allows each country to position it-self favourably in the new era of resource constraints.

Summary of Section 1: Why Biocapacity Matters

Section 1 : Entering a New Era

population growth, was met by localresource constraints and increases inglobal food and energy prizes, shavingoff opportunities and employment,particularly for the younger genera-tion. The crunch certainly is painfullyfelt in regions from the Horn of Africaall the way to Haiti. Human misery andsocietal breakdowns are driven bymuch more than a lack of resources, ofcourse. Yet, even low corruption, bal-anced budgets, and the absence ofethnic conflict, for example, cannoteasily replenish resources that are ei-ther vanishing or already gone.

In fact, countries’ fiscal debt dynamics,where national debt is rising precipi-tously compared to the size of a coun-try’s GDP, might simply be a sign oftrying to overcome the supply crunch.But widening globalization and inter-dependence mean that everyone ismore exposed to shortages and pricevolatility at the same time, and thereare no new, untapped markets or con-tinents to save us from this modern re-source curse – a curse defined not byexploitation of abundance, but byscarcity hidden within the presump-tion of plenty.

Fortunately, as we are entering thisnew era, new tools are also becomingavailable to nations that will helpthem understand the resource limitsthey face, and make smarter choicesin an increasingly connected andcompetitive world. Humanity hasbreached global limits, as succinctlysummarized by researchers from theInternational Geosphere-BiosphereProgramme (IGBP), the Resilience In-stitute and the Stockholm Environ-ment Institute (Rockström et al., 2009).

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• Greenhouse gas (GHG) emissions are accumulating inthe atmosphere, causing climatic changes and po-tential negative feedback on the health of ecosystems(Haberl, 2006; Holdren, 2008; UNEP, 2007; Butchart etal., 2010). Worldwide atmospheric concentrations ofcarbon dioxide (CO2), methane (CH4), and nitrousoxide (N2O), for example, have noticeably increased inrecent decades, and they now considerably exceedthe natural range over the last 650,000 years. With highconfidence, scientists have concluded that theseglobal average concentrations are due to human ac-tivities (IPCC, 2007).

• Many forests, particularly in tropical zones, are cutdown faster than they can re-grow: 130,000 km2 offorest have been destroyed each year for the last 15years.

• 15% of ocean fish stocks were depleted over the sameperiod and fish are caught faster than they can restock(UNEP, 2007). More than 50% of fish stocks are over-exploited commercially (FAO SOFIA 2008).

• Global extraction of natural resources (e.g., biomass,fossil fuels, metal ores and other minerals) has in-creased by approximately 50% in the last 25 years(Behrens et al., 2007; Giljum et al., 2009a; Krausmannet al., 2009) in part due to the world’s population quad-rupling over the last 100 years.

• Availability of freshwater in countries in arid and semi-arid regions of the world, especially Central and West-ern Asia and North Africa, has decreased to or gonebelow below 1,000 m3/capita/year, which is thethreshold for water scarcity (Falkenmark et al., 1989).

• Three of seven planetary boundaries have been ex-ceeded. They are: climate change (CO2 concentrationin the atmosphere <350 ppm and/or a maximumchange of +1 W/m2 in radiative forcing); biogeo-chemical nitrogen (N) cycle (limit industrial and agri-cultural fixation of N2 to 35 Tg N/yr) and the rate atwhich biological diversity is lost (annual rate of <10 ex-tinctions per million species) (Rockström et al., 2009).

Global examples of dwindling resourcesand increasing pollution:

Consistent with this recognition, Ecological Foot-print1 accounts provide an approach to trackhuman demand on the biosphere. By offering anaccounting approach that can be applied at anyscale – product, person, city, country or humanity

– it helps to make such boundaries relevant to de-cisions at the individual, organizational, regionalor national level. These accounts track human de-mand on the biosphere: they summarize the bio-logical assets a country has, as well as the demandits residents put on their own assets and those inthe rest of the world. With these accounts, gov-ernments can better measure their exposure tothe risks of using more biological capacity thanecosystems can give.

The Ecological Footprint can also help nationsbetter understand the interconnectedness ofeconomic threats, allowing them to address rootcauses. Climate change, for example, is not anissue in isolation, but rather a symptom of abroader challenge: humanity’s systematic overuseof the planet’s finite resources. Our natural sys-tems can only generate a limited amount of raw

materials (fish, trees, crops, etc.) and absorb a lim-ited amount of waste (such as carbon dioxide pol-lution). Global Footprint Network quantifies thisrate of output by measuring biocapacity – na-ture’s ability to renew resources and provide eco-

logical services. Biocapacity is asmeasurable as GDP – and, ulti-mately, far more significant, asaccess to basic living resources isessential for people’s ability torise above poverty. Up until now,we have treated biocapacity asan essentially limitless flow, tothe point that our demand fornature’s services now outstripsbiocapacity regeneration by 50per cent.

If the last era was about rapidgains and fast-paced develop-ment, alongside drawdowns in

limited assets, the new era must be about secur-ing long-term wealth. If the last half century wasabout expansion in the context of seemingly un-limited resources, the new era will need to focuson meeting human needs within the means ofwhat ecosystems can provide. But this is only pos-sible if societies have the right information to vi-sualize the scale of challenges they are facing.

As Figures 1-1 and 1-2 illustrate, these challengesare substantial. The fraction of world biocapacitythat most nations use has increased drastically inonly a few decades. Global biocapacity has in-creased slowly due to increased inputs, but notfast enough to counteract overall growth in pop-ulation and consumption.2 Per capita, biocapac-ity is declining as it becomes spread among morepeople, and it is possible (but not addressed inthis report) that the systemic overuse of natural

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1 For a full explanation of terms such as Ecological Footprint, biocapacity, and biocapacity deficit, and the methodology behind their cal-culation, please see Section 2, Appendix 2 (methodology) and the Glossary.

2 Appendix 1 presents other views of these trends, as total biocapacity deficit, per capita, and per $ of GDP, viewed alongside the rise in car-bon emissions, which have occupied a growing portion of the globe’s Ecological Footprint.

Figure 1-1 – World Trend of Ecological Footprint (in number of planets)shown through its component land types. Source: Global Footprint Network,‘National Footprint Accounts’,2010 edition.

World’s biocapacity

Ecol

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al F

ootp

rint (

num

ber o

f Ear

ths)

Built-up Land

Forest Land

Fishing Grounds

Grazing Land

Cropland

Carbon

Footprint

capital, including soil loss, climate change, waterscarcity, and persistent pollutants, will furthercompound this negative trend.

Even if the regenerative ability of the biocapacityremained unaffected by overuse, demand isgrowing so much more rapidly than ecologicalsupply that the mismatch will be limiting to theglobal economy. It is already limiting some peo-ple’s ability to access basic resources, includingportions of poor populations even in wealthy na-tions.

Today, most nations, includingnearly all of Europe and CentralAsia, are running a ‘biocapacitydeficit’: using more biocapacitythan they have within their terri-tories and producing wasteemissions, particularly carbondioxide, that exceed the capac-ity of the globe’s biology to se-quester them. Truly, the worldtoday is not what it was only afew years ago.

In summary, demand for ecolog-ical assets is growing unabatedas global population grows, con-sumption rises, and the size ofthe global economy increases.These trends are likely to con-tinue in the future if measuresare not taken to reduce this de-mand, with growing impacts oneconomic performance andhuman development from re-source limitations.

Many hold the misconceptionthat it is humanity as a wholethat is on a collective slipperyslope of resource depletion.Since it is considered to be aglobal trend, leaders believe that

they can do little about this worldwide challenge.The reality looks different. In spite of some com-mon global trends, the situation for each countryis unique, as illustrated by Figure 1-3, which sum-marize biocapacity and Footprint trends for East-ern Europe and Central Asia. Not only are allcountries in a different position, but also it is theirdomestic decisions that largely determine howwell a country is able to weather emerging re-source constraints.

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Figure 1-2 – Ecological Creditor and Debtor Maps of the world for 1961 and2007: Within less than 50 years, the world has moved to a situation where morethan 80 per cent of the population lives in countries where residents consumemore, in net terms, than the ecosystems of their territory can regenerate. Source:Global Footprint Network, ‘National Footprint Accounts’,2010 edition.

These constraints are particularly pertinent forEastern Europe and Central Asia. Many of thecountries in the region are already running signif-icant biocapacity deficits. At the same time, theirability to purchase ecological services and re-

sources from abroad, as measured by their GDP, islimited, and the high portion of income manyhouseholds in the region spend on food and en-ergy makes those countries particularly vulnera-ble to price shocks.

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Ecological Footprint and Biocapacity of the Region – 1961-2007 (per capita)

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FYR Macedonia

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Figure 1-3 – Summary of the region’s demand on na-ture: 27 nations’ per-person Footprint and biocapacity since1961 (in global hectares (gha) per person) in Eastern Europeand Central Asia (vertical scales differ for each country tobetter depict dynamics). All but three are running bioca-pacity deficits. These deficits are made possible by liquidat-ing their own ecological assets, net importing biocapacity, orusing the global commons. Some have noticeably declin-ing biocapacity per person in addition to overall deficits (Al-bania, Cyprus, Poland, Romania, and Turkey). Most countriesreached ecological limits some time ago, with Kyrgyzstanbeing close to reaching them. Source: Global Footprint Net-work, ‘National Footprint Accounts’, 2010 edition.

This section argues that in thenew era of global resource con-straints, running a biocapacitydeficit is becoming an increasingrisk to national economies. Thereasons are simple: overshoot isonly possible temporarily – aslong as there are stocks to depleteand sinks to fill up with waste.Therefore, for nations to run in-creasing biocapacity deficits orlose biocapacity reserves makesthem increasingly vulnerable tothe dangers of global overshoot.For nations, trade opens ports tonew stocks and sinks. However,these stocks and sinks becomeless available as trading partnersalso start running biocapacitydeficits. As more and more coun-tries bank on being able to main-tain biocapacity deficits, they willsee themselves under increasingcompetitive pressure for dwin-dling piles of resources. If pricesrise quickly or supplies are dis-rupted, their economies will bestrained.3

Countries benefit from beingable to keep track of their bioca-pacity since they can make deci-sions that will allow them to

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This section introduces the key trends for characterising coun-tries’ economic risk exposure to ecological constraints. The over-arching trend – the starting point of the analysis – is theEcological Footprint versus biocapacity comparison. This firstcomparison reveals, among other things, to what extent a coun-try is demanding more ecological services, in net terms, thanthe country’s ecosystems can regenerate:

1. Biocapacity deficit: the difference between Footprint and bio-capacity (in gha per person)

The additional four trends interpret the economic implicationsof such a potential biocapacity deficit:

2. Cost of basic commodities embodied in biocapacity deficit(compared to GDP or GNI). What were the costs of the re-source demand that could not be renewed within the coun-try? How has this changed in the more immediate past?

3. Relative ability to buy from world markets (indicated by coun-try’s GDP per capita compared to total GDP of the world).How is the country’s residents’ share of global income evolv-ing?

4. Public debt (as percentage of GDP). What has been the trendin public debt, and to what extent is public debt within man-ageable dimensions?

5. Human Development Index (HDI)-Footprint path (HDI andFootprint values since 1970). To what extent has the countrybeen able to advance human development, without in-creasing its resource dependence?

These measures are illustrated through examples for Poland,Switzerland, and Kazakhstan. Results for all the Eastern Europeanand Central Asian countries are covered in Appendix 4.

Summary of Section 2: Overview of Country Diagnosis

Section 2 : Key Measures for Economicand Environmental Performance

operate safely in this riskier age. While all capitalstocks need to be monitored carefully, naturalcapital, both from the perspective of availabilityand demands on it, is particularly critical and hastraditionally been overlooked. By determininghow much natural capital they have, how muchthey use, and the types of resources being de-pleted, they can determine whether their eco-logical demand is exceeding, in net terms, whatecosystems of the country can provide.

To illustrate these kinds of trends, two comple-mentary measures can reveal resource perform-ance and limits: per capita biocapacity and percapita Ecological Footprint.

Biocapacity describes the ability of natural assetsto regenerate ecological services. Ecological Foot-prints measure the human demand on biocapac-ity. Both are usually measured over the course ofone year. Current ‘National Footprint Accounts’ in-clude provision of biological resources, use of pro-ductive area for housing and other infrastructure,and sequestration of carbon dioxide from fossilfuel use. Both values can be expressed as totalsfor a given population, or on a per capita basis.

These metrics work as a pair: if the EcologicalFootprint exceeds biocapacity, the country runsa biocapacity deficit. This is marked with a red sur-face. (Figure 2-1 shows Footprint and biocapac-ity; Figure 2-2 shows the composition of theFootprint according to land-use categories). If theworld’s Ecological Footprint exceeds the bioca-pacity that ecosystems provide each year, over-

shoot occurs – the supplies generated by naturalcapital diminish and often become even costlierto access.

In order to provide a simple, but comprehensive,overview of a country’s resource performance,this report describes key time trends that will helpnations understand their biocapacity.

Biocapacity deficit: Human and non-human lifecompete for area on this planet and are ultimatelylimited by the biosphere’s regenerative capacity. Itis upon this premise that the Ecological Footprinttool is built. In addition to crop land, fishinggrounds, forests, and the like, this limitation alsoincludes access to non-renewable resources fromthe lithosphere. For instance, the primary litho-sphere resource, fossil fuel, is most restricted bythe planet’s biocapacity, due to the biosphere’slimited capacity to absorb waste (CO2, in the caseof burning fossil fuels). If humanity burned all thefossil fuel already discovered, the carbon concen-tration would grow to at least 1,700 parts per mil-lion as, for example, emphasized by the UK’sInstitution of Mechanical Engineers (2009). Oresare another resource from the lithosphere. Oresand their products are not ‘used up’ so much asdispersed. Hence, the limiting factor is the energy− from fossil fuels − required to concentrate thesematerials. This puts the limitation back on energy,which in return is limited by biocapacity – partic-ularly in the case of fossil fuel, which is ultimatelylimited by the biosphere’s ability to sequester theassociated CO2 emissions.

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3 Two common criticisms need to be addressed here. Many critics claim: a) Changes in prices will provide a signal for people to switch to sup-plementary goods that are cheaper or more available, and b) Technology will solve our problems – whether it is through efficiency gains,invention of new supplements, or increased ability to clean up our waste. a) Price changes may indeed induce change. But, as argued later,may emerge too late or too rapidly for effective responses. They have not been sufficient in the past to alert us to the resource risk, and insome cases supplements are not readily available. Additional physical indicators are needed for nations to better anticipate potential risks.b) The role of technology can be significant and is emphasized in the solutions list in Section 4 of this report. Our assessment covers pastperformance and shows that technology improvements have been too slow to turn around resource trends (technological advances aretaken into account in historical biocapacity and Footprint trends). This does not mean that they could not be more effective in the future.In fact, similar to research on the impact of environmental regulations, policies that spring from knowledge of resource limits may actu-ally incentivise net positive technological progress earlier and in greater volume than would otherwise be undertaken (this is part of whatis known as the Porter hypothesis).

Many countries, from high in-come to low, are running bioca-pacity deficits. Already, 24 of 28Central Asian and Eastern Euro-pean nations currently carry bio-capacity deficits. What is theeconomic implication of such adeficit? This is what the nextthree analyses explore.

Fiscal cost of biocapacitydeficits: An economist’s mostobvious first consideration forassessing the significance ofsuch a biocapacity deficit wouldbe to estimate the deficit’s fiscalcosts for a country. The econo-mist would want to know: whatare the current costs of the com-modities that make up this bio-capacity deficit, even if eachcitizen is not directly payingthem?

This biocapacity deficit includesmaterial inputs, such as wood,fibre or livestock from abroad.These deficits also contain eco-logical services the country de-pends on that come from othercountries or from the future. Anexample is carbon sequestration.What do these inputs currentlycost the country?

Assessing the market value ofbiocapacity deficits is relevant fortwo primary reasons. First, it helpsto illuminate to what extentthese costs have been a substan-tive factor for an economy in thepast. Secondly, it illustrates towhat extent these costs have be-come more significant in recenttimes, and whether indeed these


Figure 2-2: Poland’s per person Footprint (and its components) in gha perperson since 1961. Source: Global Footprint Network’s ‘National Footprint Ac-counts’, 2010 edition.

Figure 2-1: Poland’s Ecological Footprint and biocapacity in gha per personsince 1961: The national Ecological Footprint represents the biocapacity neededto provide for the average consumption of a resident (upper line). The bioca-pacity is the productive area available within the country (lower line). The redsurface between the lines shows a biocapacity deficit. If the green biocapacityline is above the red Ecological Footprint line, the country has a biocapacity re-serve. Biocapacity deficits can be compensated for by overusing local bioca-pacity (that is, using domestic resources at a rate faster than they regenerate) fora time, or by using biocapacity from abroad, for instance through import. At theglobal level, if consumption is greater than biocapacity, only overuse is possible.This net overuse is called global overshoot. Source: Global Footprint Network’s‘National Footprint Accounts’, 2010 edition.

trends are becoming a material and significant fac-tor for economic performance.

Such costs can be estimated from a number ofperspectives, each one illuminating different as-pects of the issue. For instance, costs can be cal-culated for all net imported resources or only forthe net biocapacity deficit. Thelatter assumes that unused do-mestic biocapacity could be em-ployed and hence could mitigateagainst the biocapacity risk. Also,carbon emission costs could becalculated as the climate changedamage costs, following sugges-tions of the 2006 Stern Report, orat zero cost, reflecting the currentreality of costs outside a limitednumber of carbon markets. Pricescould also be calculated at localcosts or at world market costs.

To keep this initial assessmentsimple and transparent, this re-port only includes the cost ofbasic food and energy commodities (raw and em-bodied) not being provided in net terms by thecountry’s regenerative sources.4 In other words,the calculation adds up the market value of re-sources that the country cannot provide regen-eratively through its own biocapacity, in netterms.5

While current CO2 emission costs are assumed tobe zero, there is still a cost for obtaining fossil fuel.We calculate the costs for fossil fuel use at world-

market prices and national consumption levels ofeach fuel (crude oil, coal, and natural gas), and ac-count for the entire amount used, whether im-ported or from domestic stocks. When imported,the country obviously faces world-market prices.When using one’s own stock, the cost representsa depletion of the country’s assets, that is, a loss of

domestic wealth. If the fuel is sold on domesticmarkets below world-market prices, the differ-ence represents an opportunity cost, that is, lostrevenues. This too, is a cost to the economy.

In essence, this cost calculation represents a mul-tiplication of biocapacity deficits with commodityprices. The global trends in commodity prices areshown in Figure 2-3, with a downward trend inper unit price from the 1960s to the year 2000,and upward sloping prices since then. The ex-

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Figure 2-3: World commodity cost index (real year US$ 2,000) and overalltrends. Source: World Bank Commodity Price Data (Pink Sheet).

4 More elaborate assessments are still being developed by Global Footprint Network.5 This assessment deliberately does not capture the full value of these services, as per the example provided in the important the Economics

of Ecosystems and Biodiversity (TEEB) analysis (2010). Rather, it estimates the economic costs based on actual market transactions. Itthereby excludes values that ecosystem services provide, but markets are not compensating for. There is great value in estimating non-mar-ket values of ecosystem services, as provided by the TEEB study. Studies like TEEB illustrate to what extent the value generation of naturalcapital is being ignored in current economic deliberations. Here we deliberately limit the analysis to actual market transactions, excludingthe externalities TEEB focuses on. This analysis here allows us to estimate current cost pressures on economies. Non-market costs of lostecosystem services and resource depletion are also true burdens on an economy, with real future consequences, but they are typically ig-nored or discounted and do not enter the economic calculations of current economic decision making in a significant way.

ception to these trends were the 1970s priceshocks associated with the oil crisis.

Figure 2-4 shows the trends of these costs forPoland. These costs are contrasted with the coun-try’s Gross National Income (GNI).6

What can one learn from these trends? Materialinputs to a national economy, beyond what couldbe available from the natural capital within thecountry, represent a cost exposure for that econ-

omy. Most of these financialflows (with the exception of op-portunity costs) are a portion ofthe balance of trade attributedto resource costs7 – resources forwhich in net terms there is notsufficient local supply, or whichare depleted, thereby losingwealth.

These costs can be viewed, infirst approximation, as the finan-cial flows that will leave thecountry’s economy. They pay forthe biocapacity services thecountry is receiving from liqui-dation or from elsewhere – andthey are typically commodities.8

For countries with biocapacityreserves, it is the opposite. Forthem, higher commodity pricestranslate into higher financial in-

flows, since they service other countries’ bioca-pacity deficits; or they are a savings and a bufferagainst external resource shocks, and thus have avalue to nations even if not consumed. Pragmaticeconomists may also argue that it may only makesense to deplete lithosphere assets if the earnedmoney is invested in assets that appreciate morerapidly than the deposits. Otherwise, the countrywould be better off delaying exploitation. In otherwords, countries with lithosphere assets that arecommitted to increase their net wealth would in-

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Figure 2-4: Cost of commodities embodied in Poland’s biocapacity deficit. Thecosts of Poland’s biocapacity deficit were high in the 1970s, and have grown signif-icantly over the last 10 years, as resource prices (especially fossil fuels) have been in-creasing. While the preliminary estimates do not allow an exact comparison withPoland’s national income, this analysis suggest that resource costs represent a largeportion of the country’s income, making the economy particularly vulnerable to re-source shocks. Source: Calculated by Global Footprint Network based on biocapac-ity deficit and World Bank world-market prices of representative commodities.

6 Gross national income (or GNI) is gross domestic product (GDP) plus primary incomes receivable from non-resident units minus primary in-comes payable to non-resident units. For example, the profits of a United States (US)-owned company operating in Switzerland will count to-wards US GNI and Swiss GDP, but will not count towards Swiss GNI or US GDP. If a country becomes increasingly in debt, and spends largeamounts of income servicing this debt, this will be reflected in a decreased GNI but not a decreased GDP. If a country sells off its resources toentities outside their country this will also be reflected over time in decreased GNI, but not decreased GDP. GNI is a more meaningful compet-itiveness measure than GDP, since it is sensitive to losses due to increasing national debt or decreasing assets.

7 Note, this is a simplification, as the cost of local overuse is calculated as if these commodities would need to be purchased from the world mar-ket. Also, commodities that in reality are imported, but for which, in net terms, there is sufficient biocapacity within the countries, are excludedfrom this assessment.

8 They also could be ecosystem services. But currently only very few international ecosystem services are being paid for – in spite of recent effortsto establish carbon sequestration markets or offer markets for other ecosystem services, such as biodiversity and ecological integrity, as for in-stance through the United Nations Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation (REDD+).

vest their mineral and oil wealth into other assetsthat may appreciate more rapidly than the min-eral assets themselves, generating net valuethrough those investments.

Both graphs 2-3 and 2-4 show that the decliningtrend of resource costs in the final four decadesof the last century are on an upward swing again.

This cost escalation of resource prices is accentu-ated by the size of the country’s biocapacitydeficit.

Even though availability of and access to bioca-pacity is a real physical constraint, prices in the lastcentury have indicated to economic decision-makers that this physical constraint is a minormatter. Resource exposure represented only asmall, and possibly declining, factor of the overalleconomic cost structure. More recently, though,these costs have been climbing as global re-source supplies have tightened and more coun-tries and people are competing for them.

The economic risk to countries with bioca-pacity deficits is therefore two-fold: The firstconsideration is that biocapacity deficits can onlyslowly be reversed, or might even continue togrow, since they are largely determined by popu-lation size and how long-lasting built infrastruc-ture shapes consumption patterns of thatpopulation. Secondly, they are multiplied by ris-

ing and potentially volatile commodity prices.These compounding factors lead to growingcosts and risks, which put increasing strains on theperformance of the country’s economy.

Countries with large portions of their income de-voted to food and fuel are particularly vulnerable.Figure 2-5 shows world statistics for how much

GDP countries spend on food, utilities, and hous-ing. Poland is near the medians, with expendituresof 13% and 15%, respectively, spending in totalabout 28% of its GDP on these basic resources.

Even countries with biocapacity reserves, likeMontenegro, may need to factor Ecological Foot-print and biocapacity into their decision-making.Having a biocapacity remainder overall does notmean a country is not in deficit in some types ofresources – resources that may be more suscep-tible to price and supply shocks than other types.Still, the larger a biocapacity remainder a countrymaintains, the more it insulates itself againstshocks. Perhaps even more importantly, in a worldwith biocapacity limitations, countries with wellmanaged biocapacity reserves will have a signifi-cant advantage and new opportunities thatmight help set them apart.

As both biocapacity debtors and creditors start tomanage their biocapacity more carefully, theglobal economy will benefit as well. For instance,

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World Average Expenditures as % of GDP (2005)

Maximum Highest 10% Median Lowest 10% Minimum

Food and non-alcoholicbeverages

64% >41% 17% <6% 3%

Housing, water, electri-city, gas and other fuels

24% >15% 10% <5% 1%

Figure 2-5: World Average Expenditures on food and housing and utilities in 2005 as a percentage of GDP. Countrieswith high expenditure, possibly due in part to large biocapacity deficits, will be more vulnerable to increases in global pricesfor these basic commodities. Source: World Bank.

reducing biocapacity deficits means less resourcevolatility for all players.

Global competition – from factory world toglobal auction: The second consideration iswhether a country is getting stronger or weakerover time in bidding for resources against every-one else in the world.

In a world of unlimited resources, additional de-mand should stimulate additional supply. If morebooks, shirts or potatoes are purchased, morebooks, shirts, and potatoes will be produced. Insuch a world, all that matters is your absolute in-come – more income will give you more goods.While this is an idealized world (one where we as-sume there will be no imminent resource con-straints), many economies have effectivelyoperated as if they live in such a world.

However, in a world of resource limitations, withmore and more countries running biocapacitydeficits and depending on global resources, theincreasing demand for global resources turns intoan auction for a finite good. In such an auctionwhat matters is not absolute ability to pay, but therelative ability compared to all the other biddingpower in the auction room.

The world is a large, interconnected global econ-omy, with all participants with (growing) bioca-pacity deficits bidding for the same, limitedbiocapacity resources (that is, the services thebiosphere can provide). It is not unlike an auctionfor the limited supply of original Picasso paintings.Or, more precisely, every year countries need moreor less the same bundle of bio-resources again.However, since the world has a limited regenera-tive capacity, there is only a limited amount avail-able every year, similar to a finite number ofPicasso paintings. But unlike Picassos, countriescannot do without food and other bio-resources.

Still, some may question the comparison to anauction, since biocapacity can be increased as

well. Hence, the limits are not absolute or static.Indeed, while the surface of the planet has not in-creased, the biocapacity on it may have gone up20 per cent on average between 1961 and 2007,according to our preliminary estimates (GlobalFootprint Network 2011). Yet human demand forbiocapacity has grown nearly three-fold. Hence,in a first approximation, this represents a relativelystatic biocapacity supply, which supports the‘auction argument’.

Accepting the reality of the ‘auction world’, thequestion countries need to consider is whetherthey are getting stronger or weaker over time inbidding for resources against everyone else. Howcan this be measured?

One first approximation for measuring change inpeople’s ‘bidding power’ for the world’s resourcesis tracking the trend in a person’s relative share inworld income, as shown in Figure 2-5 for Polandand Switzerland. This figure simply depicts eachcountry’s per capita GNI divided by the total in-come of the rest of the world. This ratio shows theportion of an average resident of a country inglobal income. The trend line of this ratio (in blue)indicates whether the average person in thatcountry is facing lighter or stiffer competition foraccessing the world’s limited biological resources.

Today, the average worldwide ratio for a person’sshare in world income would be 1/7 billionth,since about 7 billion people inhabit the world (orabout 1.4 E-10 or 0.14 billionth, as shown by thedotted yellow line in Figure 2-5). This curve hasbeen declining, since there are more and morepeople sharing the overall total. If a person’s in-come is higher than world average, the likelihoodof being able to purchase from others, rather thanothers purchasing one’s biocapacity, increases.

In a world of global overshoot, this trend is signif-icant. For a country with a decreasing ratio, indi-cating a relative decrease in bidding power for theglobe’s ecological services vis-à-vis the rest of the

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world, it will become increas-ingly more difficult for the coun-try to purchase limitedbiocapacity from abroad. This re-ality is accentuated in a worldwhere global overshoot is in-creasing. (Losing relative incomeat the same time as biocapacitybecomes less available globallycreates a compounding burdenon national economies).

Debt dynamics: The third con-sideration is the debt dynamicsof countries. Debt dynamics isbecoming particularly prominentin the current euro crisis, wheremany nations have rapidly in-creased the national govern-ment’s debt ratio compared toGNI. As debts increase comparedto GNI, budgets become less flex-ible. Less discretionary spendingis available to react to price andsupply shocks; more is going to-wards debt financing. In fact, atone point, debt becomes so highcompared to GNI that debt pay-ments start to grow more rapidlythan the economy, which caneasily turn the situation into anunmanageable debt spiral. Debtdynamics on its own is a signifi-cant issue. Elevated levels of debtin the context of resource con-straints represent an even moresignificant problem. The reason isthat resource constraints maysignificantly reduce growth rates− or may even produce negativegrowth (that is, shrinkage). Underthese conditions, large debt bur-dens become ever more difficultto manage and further reduce acountry’s room to manoeuvre.

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Figure 2-5b: Switzerland’s per person ability to buy on the world market, com-pared to rest of the world. In contrast to countries in Western Europe like Switzer-land, where the relative ability to purchase is declining, Poland’s is increasing.However, the Swiss resident’s advantage is that her or his income is significantlyhigher than world average, even though this advantage is shrinking. This trend il-luminates the economic challenge for a country to sufficiently increase its incomegeneration in order to afford an ever-larger biocapacity deficit. Source: Raw data byWorld Bank on-line statistics, ratio calculated by Global Footprint Network.

Figure 2-5a: The Polish resident’s share in global income. Trends in relativeper person income approximate the trend in a country’s ability to buy sufficientresources from the world market. The Polish resident’s share has been increasingslightly since its independence, and has grown just above world average (blueline). As a reference, the world average is shown with the dotted yellow line.This curve has been declining since there are more and more people sharingthe overall total. With 7 billion people, the average per person is 1/7 billionth orabout 1.4 E-10, since about 7 billion people inhabit the world. If the income ishigher than world average, the likelihood of being able to purchase from others,rather than others purchasing one’s biocapacity, increases. Source: Raw data byWorld Bank on-line statistics, ratio calculated by Global Footprint Network.

This loss of choice becomes additionally signifi-cant since it limits an economy’s ability to retooland adapt. Repositioning economies for a re-source-constrained world by making them less re-source dependent also requires large investmentsof capital. A high debt ratio on top of a biocapac-ity deficit and weakening bidding power furtheramplifies the challenge.

One key measure for debt exposure is a coun-try’s national government debt compared to GNIor GDP.9 It suggests to what extent the nationalgovernment will lose discretionary spendingpower as debt service eats up larger portions of

its budgets. This is particularly true in low growthsituations, where debt burden might be grow-ing more rapidly than the economy, leading topotential economic instabilities (such as run-away debts). An additional metric to capture thisrisk is to track annual debt repayment obliga-tions as a portion of the government’s overallbudget.10

While knowledge of biocapacity deficits helpscountries reveal hidden economic risk, it also high-lights tremendous opportunity. Figure 2-6 putscountry performance into another context:progress towards sustainable development, or theextent to which the country is building a greeneconomy. The green economy is an attempt to op-erationalize sustainable development. It is aboutgetting the fundamentals right: how can we struc-ture the economy so all live well within the resourceconstraints of planet Earth?

This vision of sustainable development extends the1972 Stockholm Conference slogan ‘Only One

Earth’, and complements it with theUnited Nations’ original focus oneconomic and social developmentas expressed in the United NationsDevelopment Programme’s (UNDP)Human Development Report, theMillennium Development Goals, andthe Universal Declaration of HumanRights. It is the essence of the 1987definition promoted by the Brundt-land Report.

Figures 2-6 and 2-7 show how tomake the goals of sustainable devel-opment (or the green economy)more specific by integrating bioca-pacity accounting. Do all live well

(with regard to social and economic development),within the limits of available biocapacity (sustain-ability)?

More specifically, economic and social develop-ment, or human well-being, can be approximatedwith UNDP’s widely used Human Development In-dex (HDI). Despite recognized criticisms, the HDI

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Figure 2.5: Poland’s national debt has been about half of the country’sGDP in recent years. Source: CIA World Factbook – Public Debt.

9 For countries where public debt as a percentage of GNI was not available, public debt as a percentage of GDP was used instead. GNI fig-ures are shown in red in Section 3. Public debt as a percentage of GDP was not available for all countries. The two trends were also avail-able for differing numbers of years. Thus, public debt comparisons cannot be made between all pairs of nations in this report.

10 Tracking debt service would also offer useful information. But it was not possible for the authors to find consistent data sets across allcountries. Having high debt but a very long repayment window, or extremely low interest rates, would reduce the debt risks. The immedi-ate risk stems from high repayment burdens compared to GDP.

represents basic universal out-comes like longevity, health and ed-ucation. Particularly in an intercon-nected world, where peoplecompete throughout the economy,it is difficult for people to thrivewithout basic education and goodhealth. UNDP considers an HDI ofmore than 0.67 to be ‘high humandevelopment’. Environmental sus-tainability, or living within themeans of nature, can be evaluatedby comparing human demand (orEcological Footprint) to availablebiocapacity. Note that some bioca-pacity should be left for otherspecies – otherwise biodiversity andother critical ecosystem servicescannot be maintained.

The resulting global graph providesa high-level snapshot of countries’or populations’ current develop-ment position. It can also be used toshow progress over time, comparethe situation of one communitywith another one or illustrate pat-terns. The graph below depictscountries, and exemplifies the chal-lenge of creating a globally repro-ducible high level of humanwell-being without overtaxing theplanet’s ecological resource base.

The above graph shows the globaldevelopment situation in 2007 inrelation to the goals of sustainabledevelopment (lower right quad-rant).11 Figure 2-7 shows the move-ment of Poland since 1970 (redline).

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Figure 2-6: Global development assessed using UNDP’s Human Develop-ment Index (HDI) as an indicator of human development, and the EcologicalFootprint as a measure of human demand on the biosphere. An EcologicalFootprint less than two gha per person is within global biocapacity constraints.Despite the growing adoption of sustainable development as an explicit pol-icy goal, most countries do not meet both minimum requirements. Sinceevery country contains different amounts of biocapacity, this analysis can alsobe adapted to each country. Also note that the world as a whole is outsidethe Sustainable Development quadrant.

Figure 2-7: Poland’s development path since 1970 assessed using UNDP’sHuman Development Index (HDI) as an indicator of human development, andthe Ecological Footprint as a measure of human demand on biocapacity.Poland’s biocapacity was 3.00 gha per capita in 1970 but only 2.09 by 2007.

11 One could also show how things have changed over the last 40 years: for 1972 (Stockholm conference), 1987 (Brundtland report), 1992(Rio), 2002 (Johannesburg conference), and a projection for 2012 (Rio+20). In the last 40 years, countries have moved significantly, but percapita biocapacity has dropped by nearly half.

These trends demonstrate that while the HDI hasgenerally increased, the resource situation hasgrown ever tighter, putting into question whetherdevelopment progress witnessed over the lastfour decades can be maintained without a shiftto sustainable development. Appendix 4 showshow each country in this report has moved onthe HDI/Ecological Footprint diagram since 1970(or since the inception of the country).

Comparing these trends across countries can helpnations to understand how they are faring againsttheir competitors, allies, trading partners, andneighbours. Figures 2-8 and 2-9 provide some-what representative comparisons for Western Eu-rope and Central Asia, through, respectively,Switzerland and Kazakhstan.

For example, Switzerland’s data look relativelystrong among Western European countries. Eventhough it shows a large biocapacity deficit, thisdeficit has not been increasing rapidly. Also, its in-come level is high compared to the rest of theworld, which allows Switzerland to shield itselffrom resource competition. Declining public debtmake Switzerland financially less vulnerable.Hence, it is not surprising that Switzerland showscontinued progress in achieving even higherhuman development. However, its significant bio-

capacity deficit, particularly incarbon, along with rising fossilfuel prices, may start to reduceits competitiveness at a timewhen its per capita biddingpower against the world is de-clining (but is still higher than av-erage).

Kazakhstan’s performance meas-ure is a typical representation ofCentral Asian countries. Whilestarting as an ecological creditorjust after the Soviet era, it is nowin biocapacity deficit, a deficitthat is slightly growing. Kaza-

khstan has made some progress in its HDI, but ata high cost to biocapacity. Its relatively low pub-lic debt may give it more financial resources tomanage future natural capital constraints. Yet, itsper capita bidding power against the rest of theworld has not improved much and remainsbelow the world average. With its rising carbonfootprint and simultaneously sharply rising fossilfuel prices, future progress may well be threat-ened. It is striking that the value of the fossil fuelused by Kazakhstan residents within a year nowexceeds their annual GDP. In other words, just oneresource category alone is bigger than the entirevalue generation of the country. It is similar to afactory that produces US$100 worth of products,but at a cost of US$200, figuratively speaking.

Poland’s situation falls somewhere in betweenthese two examples, with similar challenges fromdeclining biocapacity and increasing biocapacitydeficit (and cost of biocapacity deficit – particu-larly rising fossil fuel prices and an increasing car-bon-based Ecological Footprint). Its biddingpower has grown, but its high public debt maybe limiting.

As these country examples help illustrate, grow-ing global consumption has rewritten the rules ofeconomic competitiveness. These indicators are

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Figure 2.5: Poland’s national debt has been about half of the country’s GDPin recent years. Source: CIA World Factbook – Public Debt.

essential strategic tools for every country thatwants to succeed in a resource-constrainedworld. Recognizing the danger of these resourcelimitations provides countries with a direct in-centive to innovate and value sustainable devel-opment locally, not just as a global challenge.

The diagnostic approach as presented in this Sec-tion 2 is provided in Appendix 4 for all 28 coun-tries in Eastern Europe and Central Asia.

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Figures 2-8 and 2-9: Competitiveness indicators for Switzerland (above) and Kazakhstan (below). Note that Kaza-khstan’s energy consumption translated into world market costs far exceeds the country’s national income. This indicateshow dramatic and central resource questions have become for economic performance and human development questions.

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The core argument of this report rests on thepremise that we are entering into an era of re-source constraints. The report substantiates thepremise by documenting demand on and avail-ability of biocapacity. Then, it highlights trendsthat suggest that economies’ ability to thrive is al-ready being weakened by this new reality, and ev-idence is put forward for 28 countries in EasternEurope and Central Asia. Therefore, in this new era,national governments need information that as-sists them in defining a new framework and setof tools to manage the challenges facing theircountries. With this clearer understanding of theircontext, and their particular situation, they thencan chart more successfully a pathway that willstrengthen their current position and will allowthem to adapt to resource constraints more read-ily than countries that are not prepared.

A country’s procrastination inpreparing its economy for a re-source-constrained future willbecome an increasing risk. Con-versely, a country’s ability to ad-dress this emerging trend willprovide them with a significantadvantage.

The facts of overshoot are sober-ing, and it is common for peopleto assume humanity is on an un-

stoppable decline towards resource depletion.Because of this, leaders mistakenly believing theycannot do anything about the resource crunch.They may be limiting their focus to using increas-ingly powerful modes of technology and to im-plementing more aggressive trade tactics tocompete for resources. These strategies do notaddress the underlying dynamics and thereforemerely make sure their people ‘lose last’, ratherthan actually win. Without reshaping and signifi-cantly decreasing an economy’s resource de-pendence, this limited intervention only serves toincrease the speed at which we are drawingdown the world’s remaining natural capital.

The ability to compete effectively will continue tobe key in determining a country’s success in thisnew era. But now, governments must expand the

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• In a world of global biocapacity constraints, the self-inter-est of nations (and cities) is aligned with reducing bioca-pacity deficits.

• National competitiveness is therefore interlinked with re-source performance.

• There are many options for action.• Each nation needs to ask itself: What do we need to track

in order to operate safely in this new era?

Summary of Section 3: Overview of Country Diagnosis

Section 3 : Ecological Constraints and National Competitiveness

classical understanding of ‘competitiveness’ in waysthat let go of an outdated focus that is singularly onachieving growth. Leaders will need to recognizethat resource factors are becoming increasingly sig-nificant drivers of, or detractors from, economic per-formance and social stability. Economic stability andwealth creation will no longer be secured by focus-ing on Gross National Product (GDP) alone. In fact,in the new era wealth creation may be increasinglyat cross-purposes with GDP growth.

Leaders will only be truly competitive when theyfind a way to reduce their dependence on finiteresources and natural capital while at the sametime producing real added value for their citizens,including social improvements such as health, fullemployment, and education. To accomplish this,

they must shift from a passive approach, wherethe objective is merely to lose last, to an approachthat focuses on wealth creation.

The ecological dimension of wealth creation is be-coming increasingly influential, as access to eco-logical resources is turning into a limiting factor.Ecological wealth can be strengthened by reduc-ing demand, preserving biocapacity, and imple-menting innovative strategies for more efficient use

of resources. By using these strate-gies when developing long-termplans for everything from energyto agriculture, leaders can makegood infrastructure investmentsthat will promote sustainablehuman development for their na-tions. Therefore, resource con-straints issues need to be at thecore of any government’s eco-nomic decision-making and pol-icy planning.

Reversing biocapacity deficitmeans closing the gap betweenFootprint and available bioca-pacity. Five factors determine thesize of this gap (Figure 3-1).12

On the demand side, the averageFootprint in a country is a func-tion of the goods and serviceseach person consumes, and theresource and waste intensity ofthese goods and services. Re-ductions in individual consump-

tion and the resources used or waste emitted inproducing goods and services all result in asmaller Footprint.

On the supply side, biocapacity per person is de-termined by the amount of biologically produc-

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12 For simplicity’s sake, the discussion here covers only the consumption deficit, not the production deficit. For a further discussion, see GlobalFootprint Network’s Africa’s Ecological Footprint: Human Well-Being and Biological Capital, 2006 version.

Figure 3-1: Five factors. Five factors determine the biocapacity deficit, or thesize of the gap, if any, between available biocapacity and demand on biocapac-ity. Two factors determine people’s Ecological Footprint and three determine theamount of available biocapacity. Two Ecological Footprint Factors: EcologicalFootprints − or total demand on biocapacity − are a function of consumption perperson and resource efficiency. Three Biocapacity Factors: The available bio-capacity per resident in a country is determined by the amount of biologicallyproductive area in the country, the productivity or yield of that area, and thenumber of people among whom this area is shared. Source: Global FootprintNetwork

Five factors

DIFFERENCE BETW.BIOCAPACITYDEMAND AND

BIOCAP. SUPPLY

PER CAPITAECOLOGICALFOOTPRINT(DEMAND)

=

=PER CAPITA

BIOCAPACITY(SUPPLY)

PER

CA

PITA

CO

NSU

MPT

ION

ARE

A

BIO

-PR

OD

UC

TIV

ITY

POPU

LATI

ON

RESO

URC

EEF

FIC

IEN

CY

X /

/

tive area available, the productivity of that areaand the number of people among whom this ca-pacity is shared. Note that increases in productiv-ity may come at the expense of greater resourceuse or waste production. If this is the case, the de-gree to which biocapacity gains are offset by anincreased Footprint must be taken into accountin determining the net impact on overshoot.Some practices for increasing biocapacity mayalso weaken the biocapacity’s longer-term ability,particularly if they include overuse of groundwa-ter, soil depletion or erosion.

Many different strategies could reduce the gapbetween human demand on nature and theavailability of biological capacity. Each of thesestrategies can be seen as a wedge that bridgeshuman demand and nature’s regeneration. Suc-ceeding depends on finding wedges that effec-tively help to close the gap while also increasinghuman well-being. Unless there is an extraordi-narily strong craving in the population and thegovernment for reducing biocapacity deficits, it isunlikely that biocapacity deficit measures will suc-ceed if they do not simultaneously increase thewell-being of the population.

Strategies can be organized along the five factorsdescribed. For instance, reductions in per personconsumption and in the technology factor can beachieved by encouraging highly energy-efficientbuildings and compact cities where non-cartransport options outcompete car use. This trans-port shift is achieved by giving easier access toother means (for instance, by making walking eas-ier than driving) and pricing. Other options in-clude cradle-to-cradle industrial approaches,renewable energy production and smart grids.Technological innovations can increase the effi-ciency of resource use, such as video conferenc-ing instead of travel, meeting communicationneeds with cellular phones rather than landlines,and replacing paper with energy-efficient elec-tronic devices. The Footprint of food might be re-duced by optimizing distribution and cutting

supply chains that are resource-intensive. Typi-cally, eating in season can significantly reduce theresource intensity of food production and distri-bution.

However, efficiency strategies need to be carefullydesigned to make sure that rebound effects arenot eating up the gain from efficiency increases,or that demands are not just displaced to otherresource-consumptive areas. Ecological tax re-forms are likely to be an essential part of avoidingnegative rebound effects.

Other strategies, such as those that would reduceand eventually reverse population growth, maygenerate fewer resource gains in the very shortterm, but lead to large cumulative declines in bio-capacity deficits in the longer term. Populationgrowth can be discouraged most effectivelythrough voluntary measures, and can, if wellplanned, lead to significant economic boons, par-ticularly per capita. Also, there is large potential tobuild synergies of such efforts with strengtheningthe populations’ health and educational poten-tials, as well as reducing violence. While shrinkingpopulations are portrayed by some as a danger-ous spectre, such trends open cost-cutting op-portunities that may well significantly outweighpotential costs, particularly in a resource-con-strained world.

On the biocapacity side, rehabilitation of de-graded lands can increase agricultural, livestock,and forestry yields while minimizing increases inFootprint associated with agricultural area ex-pansion.

The choice of actions should also take into ac-count the longevity and cost of replacement ofinfrastructure. As Figure 3-2 shows, some re-sources, including human capital, last longer thanothers. Strategies should focus on the longest-lived assets first, since these will affect resourceuse longer, and are often more costly to replace orimprove. It can take decades to get an economy

29

and city infrastructure retooled and ready formore severe resource constraints. This also impliesthat waiting comes at a high cost. Those who re-tool first and focus on the right assets will out-compete others trapped with an inefficientinfrastructure. Examples of such investmentsmight include improved human well-being anddemographic composition, since people are a rel-atively long-lived asset.

The idea is simple: our physical assets are long-lived. They lock us in to gains – or traps.

While these changes will occur in the context ofa global economy, nations have the power tochange their own trajectory and take their fateinto their own hands. They do not need to waitfor global agreement in order to act − rather, in-action could endanger their competitive posi-tion. Countries can find the right balancebetween solving challenges locally and buildingon the opportunities of a globalized world. Anaccumulation of independent actions by nationsworking to reduce their own biocapacity deficits

may ultimately lead to increased sustainabilityacross the globe.

In addition, these changes can be accomplishedthrough the same spirit of innovation and entre-preneurship that countries have employed tocompete in the past, as long as they are under-taken within the context, and with the new tools,of this new era.

Government leaders need to ask themselves asimple question: ‘What is the best direction we

can take to secure our own long-term stability and security in atime of increasing resource con-straints?’

Supporting national govern-ment agencies in addressing thisquestion for their economiescould be an effective way for theUNDP to help nations adjust tothese new realities. This could in-clude region- or country-basedprogrammes or in-depth analy-ses of local resource constraints.

The simple question above alsoopens new options and oppor-tunities. And it is not a particu-larly complex task compared tohow nations already managethemselves. Addressing one’sbiocapacity deficit is structurally

not different from attacking financial deficitspending. When a company spends more than itearns, it will look at the financial accounts andidentify the big drivers and opportunities for re-dressing the imbalance. If the cost of the imbal-ance is unbearable, bold action is often taken.

The same is true for a nation’s biocapacity deficits.Good accounting is required to understand thedrivers and thereby the options for action. Thereis no magic to it.

30


Figure 3-2: Focusing first on changes to long-lived assets can help to avoid ‘trap-ping’ a country with infrastructure that may be resource-intensive and thus fi-nancially costly to operate in a resource-constrained world. Assets that produceservices without depending on cheap resources will gain in value. The oppositeis also true. Source: Global Footprint Network.

While many have outlined how resource de-pendence can be reduced, ultimately it will onlyhappen if national governments recognize thesignificance of such action to secure their eco-nomic performance and social stability. Therefore,a simple action framework could follow this six-step sequence of what policy advisors can do:

1. Commit to the country’s economic successthrough a framework that recognizes thatnew strategies may be needed in the con-text of resource constraints.

2. Clarify the goal. Focus on wealth generation(increasing people’s per capita wealth, in-cluding natural, social, and human-madecapital). Generating wealth should take cen-tre stage among policy concerns, not GDP.

3. Measure what nations need to know to operatesafely in this new era. How significant is it toknow finite resource levels and debt balance?

4. Focus on ‘slow things first’. Recognise the sig-nificance of long-lasting stocks or assets indetermining future success. It may help toapproach any large investment or infrastruc-ture project from the perspective of net pres-ent value (or costs). Note that stocks not onlyinclude physical and social infrastructure,but, critically, also demographics. Use thefive factors approach to identify key driversand intervention opportunities.

5. Make it financially feasible. If managed well,a different path may not cost more, but sim-ply require current budgets to be allocateddifferently.

6. Generate easy, early wins. Without them, nopolitical momentum can be built. For in-stance, introduce life-cycle costing in deci-sion-making.

31

Today, the world is a very different place than itwas a generation ago. In the past four decades,large numbers of people across the globe havemade great advances in human development.Improvements in technology, agriculture, manu-facturing, and trade have distributed more re-sources to more people, thus raising standards ofliving. Increased access to goods and services –coupled with improvements in medicine – hascaused dramatic increases in longevity and in thesize of the world’s population.

A consequence of this prosperity is that the worldis now in ecological overshoot. Overall demand isoutstripping the Earth’s regenerative capacity. Ex-panding, or even maintaining, this level of resourcedemand is causing a rapid liquidation of natural re-sources. While it is an unintended consequence, theconsequence is becoming ever more notable.

As demonstrated in this report, these resourceconstraints are likely to be starting to affect eco-nomic performance. This will increasingly con-

tribute to financial insecurity, in-cluding debt crises. Economicstrain may be accelerated by in-creased competition within andbetween nations for access tothe world’s dwindling supplies,even as many people in thesecountries will still require basic re-sources in order to rise out of thepoverty they remain in.

In this new era of resource constraints, leadersneed not only new ways of framing and prioritis-ing the challenges, but also new tools for helpingthem to weigh their options. They need freshstrategies for creating a competitive advantage inpresent circumstances, which will empower themto provide for their people in a sustainable way.Understanding the state of their country’s de-mand on and availability of biocapacity will allowthem to make wise decisions to avoid risk andcapitalize on opportunities. This will generate acompetitive advantage that also stabilizes theglobal resource situation.

This is the essence of the ‘green economy’.

To navigate this new situation, nations need to keeptrack of the state of natural capital over time. Track-ing what they have and what they use will allowleaders to uncover hidden economic risk. For in-stance, using the Ecological Footprint, leaders canassess their biocapacity deficits, compute the fiscalcost of such a deficit to their economies, measure

32


This report attempts to demonstrate that resource constraintshave started to affect economic performance.

Understanding the state of their country’s demand on andsupply of biocapacity will allow nations to make wiser deci-sions to avoid risk and capitalize on opportunities. This is atthe core of what the ‘green economy’ is trying to achieve.

Summary of Section 4: Conclusion

Section 4 : Navigating the New Era

how the loss of their countries’ resources negativelyimpacts their ability to trade, and infer what kind offinancial debt levels they can afford. In addition, in-formation about biocapacity allows people to un-derstand what wealth will be if trends continue orchanges are made, empowering leaders to createlong-term infrastructure plans that operationalizesustainable development and generate wealth.

Trends show that nearly all the countries in theEastern Europe and Central Asia region are run-ning biocapacity deficits. Many are in an eco-nomically challenging position, as measured bytheir buying power vis-à-vis the rest of the world.This trend is making it more difficult for them toafford these biocapacity deficits in the future, par-ticularly for those countries who are already ap-

plying a large percentage of their GDP towardsproviding food, energy, and other basic goods. Byshifting to a competitive strategy that harnessesinformation about biocapacity, leaders in the re-gion could move quickly, and independently, to-wards an economic strategy that focuses onsustainable prosperity.

There is much potential for countries in EasternEurope and Central Asia to succeed. Given therapid political and economic changes many ofthese countries have experienced over the lasttwo decades, they may also be more nimble thanmany established industrial nations in adaptingto new realities and embracing innovative ap-proaches for succeeding in a resource-con-strained world.

33

34


Appendix 1 : Ecological Footprint and CO2 Trends

2

2

35

2

22

2

Based on

− Mathis Wackernagel and Gemma Cranston, answeringquestions raised at the European Commission Workshopon the Ecological Footprint, in response to DirectorateGeneral on the Environment Workshop: ‘Coming to gripswith key indicators: Applying the Ecological Footprint’, 1March 2011.

− Alessandro Galli, David Moore, Gemma Cranston, NinaBrooks and Mathis Wackernagel, ‘Assessing the bios-phere’s natural endowment and human resource con-sumption through the Ecological Footprint: TheMediterranean situation and its implication for the re-gion’s competitiveness’, Global Footprint Network,Geneva, Switzerland contribution to the World ResourcesForum, Davos, 2011.

What the Ecological Footprintmeasures

How much of the biosphere’s regenerative ca-pacity does humanity (or any human activity) de-mand? The Ecological Footprint accounts aredeveloped to answer this one particular researchquestion, nothing else.

For a population, this question becomes: Howmuch of the planet’s (or a region’s) regenerative ca-pacity is demanded to provide all the ecologicalservices (that are competing for mutually exclusivespace) a specified population demands, includingall the resources that the population consumes andto absorb all its waste, using prevailing technology?

Accounts have typically two sides. For example,financial balance sheets include both ‘expendi-ture’ and ‘income’. Similarly, Footprint accountscompare demand on biocapacity (Footprint)against availability of biocapacity.

The Ecological Footprint emerged as a responseto the challenge of sustainable development,which aims at securing human well-being withinplanetary constraints. By staying within planetaryconstraints, one makes sure that biocapacity isavailable now and for future generations. The am-bition lying behind Footprint accounts is to pro-vide motivational, managerial and monitoringcapacity for assessing and dealing with these bio-physical constraints.

Methodology

The Ecological Footprint (Wackernagel 1994, Reesand Wackernagel 1994, Wackernagel et al., 1999)is a resource and emission accounting tool de-signed to track competing human demand onthe biosphere’s regenerative capacity. It includesthe capacity of the biosphere to renew resources,to absorb waste and to provide space for infra-structure. In the current national Footprint calcu-lations, the only waste stream included is CO2from fossil fuel burning. Other waste streamscould be included as well, if consistent data setsbecome available.

36


Appendix 2 : Ecological FootprintMethodology

Human demand (Footprint) can then be comparedwith the Earth’s capacity to renew such resourcesand absorb CO2 (biocapacity) (Wackernagel et al.,2002).

The two components of the accounts – the Eco-logical Footprint and biocapacity − are thus re-source flow measures. Rather than being expressedin metric tonnes per year, each flow is expressed interms of bioproductive land areas annually neces-sary to provide (or absorb) the respective resourceflows (Monfreda et al., 2004). The areas are meas-ured in a common unit: global hectares (gha), or bi-ologically productive hectare with world averageproductivity.

Six main types of bioproductive areas are consid-ered: 1) cropland for the provision of plant-basedfood and fibre products; 2) grazing land and crop-land for the provision of animal-based food andother animal products; 3) marine and inland fishinggrounds for the provision of fish-based food prod-ucts; 4) forest areas for the provision of timber andother forest products; 5) carbon uptake land for theabsorption of anthropogenic CO2 emissions; and 6)built-up area representing productivity lost due tothe occupation of physical space for shelter andother infrastructure (Kitzes et al., 2008).

In calculating Ecological Footprints, a consumer ap-proach is used, in which the amount of regenerativecapacity embedded in production activities as wellas imports and exports is considered. The EcologicalFootprint of consumption (EFC) is calculated byadding to the final Footprint value the Footprint em-bedded in locally produced products (EFP) and in theimported products (EFI) and subtracting the Foot-print of exported products (EFE), as in equation 1:

EFC = EFP + EFI - EFE

Equation 1

Each individual flow can be translated into thecorrespondent appropriation of bioproductive

land area through a multi-step process, describedin equation 2:

EF =P

YNx YF x EQF

Equation 2

where P is the amount of a product harvested orCO2 emitted, YN is the national average yield forthe product P (or its carbon uptake capacity incases where P is CO2), and YF and EQF are theyield and equivalence factors, respectively, for theland-use type in question (Monfreda et al., 2004;Galli et al., 2007). The yield factor indicates the rel-ative productivity of a specific hectare within aparticular land-use category with the world aver-age productivity of that land-use category. Theequivalence factor represents the relative pro-ductivity of one land-use category against theworld average of all land-use categories.

Conversely, the overall biocapacity available in eachnation is calculated as the sum of the biocapacitysupplied by each land type. For any land-use type,biocapacity (BC) is calculated as in equation 3:

BC = A x YF x EQF

Equation 3

where A is the area available for a given land-usetype and YF and EQF are the yield and equiva-lence factors for that land-use type, respectively.The Ecological Footprint can thus be used to in-form governments about the ecological conse-quences of the demands humans place upon thebiosphere and its natural ecosystems. A ‘bioca-pacity deficit’ situation can be identified when theEcological Footprint value is higher than the bio-capacity value; conversely a ‘reserve’ occurs whenbiocapacity ishigher than the Ecological Foot-print.

37

Based on Mathis Wackernagel and Gemma Cranston, an-swering questions raised at the European CommissionWorkshop on the Ecological Footprint, in response to Direc-torate General on the Environment Workshop: ‘Coming togrips with key indicators: Applying the Ecological Footprint’,1 March 2011.

Global Footprint Network (www.footprintnet-work.org) is the steward of the national Footprintmethod and calculations. It is also advocatingcontinuous improvements of the method. Im-provements address shortcomings identified bycriticisms as well as by limitations discovered inFootprint applications. As a scientific organizationaiming to implement policy relevant tools andanalyses, Global Footprint Network depends oninput and suggestions from others regarding cal-culation methods and potential improvements.

There are numerous valid critiques of the Ecolog-ical Footprint method, many of which form thebasis for an active research agenda as describedbelow. A good summary of the research agendais provided by Kitzes et al., 2007-2009, www.foot-pr intnet work .org/download.php?id=32,http://dx.doi.org/10.1016/j.ecolecon.2008.06.022)

What principles underlie EcologicalFootprint accounting?

Sustainable development implies a commitmentto giving all people the opportunity to lead ful-filling lives within the means of planet Earth. Thiskind of development continues to be identifiedas the primary overarching policy goal, as for in-stance in the merging ‘green economy’ debate inthe context of Rio2012 or the OECD’s GreenGrowth strategy. Yet, when it comes to actual en-vironmental strategies and policies, are decisionmakers asking the right questions to lead us to-wards this goal?

When people catch more fish than fishinggrounds can regenerate, fisheries eventually col-lapse; when people harvest more timber thanforests can re-grow, they advance deforestation;when people emit more CO2 than the biospherecan absorb, CO2 accumulates in the atmosphereand contributes to global warming. This overuseof renewable resources is called ‘biocapacity over-shoot’. To achieve sustainable development, it iscrucial to have information regarding humanity’sdemand, both global and local, on the materialflows of the biosphere as well as what the bios-phere is actually able to provide, for any givenyear.

38


Appendix 3 : MethodologyImprovements and EcologicalFootprint Acceptance Worldwide

Hence Ecological Footprint accounting comparesthe actual amount of biological resources pro-duced and the waste absorbed by the planet in agiven year with the number of resources humansextract and how much waste is subsequentlygenerated in that year. This accounting can bedone at any scale, from the resource demand of asingle activity or a single individual, to that of acity, country or the entire world.

These accounts use about 6,000 data points percountry and year. The overwhelming majority ofthese data points are taken from official United Na-tions statistics, mainly FAO, COMTRADE, and IEA.

Often accounts are confused with composite in-dicators, but they are systematically distinct ap-proaches.

Accounts start from a clear research question.They use as their measurement element a unitthat is relatively substitutable. Examples includefinancial accounting, which includes GDP, wheredollars are the unit, or greenhouse gas accounts,where the unit is CO2 equivalents. In the case ofFootprint accounting, the unit is gha.13 In none ofthe accounts are the units universally inter-changeable. They are just a reasonably good ap-proximation of a more or less interchangeableunit. For example, US$1 to a low-income personmay be worth much more than to a billionaire;yet, the dollar is a good approximation of a com-parable unit of purchasing power.

In contrast, composite indicators, such as a Mercerquality of life indicator, which compares the live-ability of cities, or the World Economic Forumcompetitiveness indicator comparing nationaleconomies, or Transparency International’s cor-ruption perceptions index measuring the per-ceived levels of public sector corruption, are a

somehow arbitrary aggregation of diverse indica-tors that are then averaged out according to aparticular weighing framework. The upside of in-dices is that they can be as broad as they wish andcover entire topic areas. The downside is that theresults depend on the arbitrary architecture of theindex, with assumed or implied trade-offs. Inother words, they lack a clear, method independ-ent research question and are therefore at the pe-riphery of truly scientific inquiries. In spite of theirlimited scientific robustness, indices may stillserve useful functions. For instance, they can beused as alarm bells, but cannot be used as man-agement tools or for determining trade-offs.

The underlying premise of the Footprint accountsis based on the recognition that the ecologicalservices demanded for human activities are com-peting for space, which allows biologicalprocesses to harvest rain and sunlight. All the mu-tually exclusive areas needed for all the de-manded services then can be added up to theFootprint.

The area that is demanded is calculated by turn-ing the formula for yield on its head. Since yield isdefined as:

Yield =Amount per year

Area occupted

It follows that

Area occupted =Amount per year

Yield

Rather than expressing the area results in hectares,each hectare is adjusted for its respective bioca-pacity. These adjusted hectares are called gha and,

39

13 A global hectare (gha) is a common unit that encompasses the average productivity of all the biologically productive land and sea areain the world in a given year. Biologically productive areas include cropland, forest and fishing grounds, and do not include deserts, glaciersand the open ocean.

essentially, these gha are biologically productivehectares with world average bioproductivity. Theyare the standard measurement units for both Foot-print and biocapacity. One gha of any area is (in theidealized theory) able to produce a similar amountof ecological services. It is a ‘similar’ amount, be-cause different hectares across the world do notprovide identical services – even so, hectares acrossbiomes and vastly different plant communities,from tropical to boreal, from wet to dry, can be com-pared for their productivity of meat, cereals, timberor carbon sequestration capacity.

More on this calculation methodology is availablethrough Global Footprint Network, including the‘Ecological Footprint Atlas‘ with the complete 2007data and results (based on the 2010 edition), amethod paper, and a guidebook to the ‘NationalFootprint Accounts’ (all available at www.footprint-network.org/atlas). In addition to these scientificpublications, a summary of the results for the gen-eral public is presented in ‘Living Planet Reports’,published by the Worldwide Fund for Nature (WWF),with support from Global Footprint Network, andthe Zoological Society of London (see LPR 2008 andLPR 2010, www.panda.org/livingplanet). The 2010edition of the ‘National Footprint Accounts’ waslaunched in September 2010. As with any edition,the 2011 edition launched in fall 2011 will feature anumber of minor improvements. Larger improve-ments are planned for the 2012 edition.

How are Ecological Footprintaccounts improved?

One significant input for methodological Foot-print improvements emerges from collaborationswith national governments. The following reviewsare examples of such collaborations or inde-pendent assessments by government agencies:

• Switzerland - http://www.bfs.admin.ch/bfs/portal/en/index/themen/21/03/01.html (boththe technical and the descriptive report).

• Germany -http://www.umweltdaten.de/publikatio-nen/fpdf-l/3489.pdf

• France - Stiglitz commission (http://www.s t i g l i t z - s e n - f i t o u s s i . f r / d o c u m e n t s /Issues_paper.pdf);

• France - SOeS of the French Ministry of Sus-tainable Development. The study ‘Une ex-pertise de l’empreinte écologique (May 2009,No. 4)’ examined the transparency and re-producibility of the ‘National Footprint Ac-counts’ and found reproducibility of timetrends within 1-3 per cent. The initial reportis available at http://www.ifen.fr/uploads/media/etudes_documentsN4.pdf,or seehttp://www.ifen.fr/publications/nos-publi-cations/etudes-documents/2009/une-expertise-de-l-empreinte-ecologique-version-provisoire.html

• At the European Union’s ‘Beyond GDP’ con-ference (www.beyond-gdp.eu) a strong en-dorsement arose from the EuropeanEconomic and Social Committee.

• Ireland – http://erc.epa.ie/safer/iso19115/dis-playISO19115.jsp?isoID=56#files

• Belgium - www.wwf.be/_media/04-lies-janssen-ecologische-voetafdrukrekenin-gen_236536.pdf

• Directorate-General for the Environment –June 2008: ‘Potential of the Ecological Foot-print for monitoring environmental impactfrom natural resource use’ available athttp://ec.europa.eu/environment/natres/studies.htm

• United Arab Emirates – Al Basama Al BeeiyaInitiative http://www.agedi.ae/ecofootprint-uae/default.aspx

• Directorate General for Research, Division In-dustry, Research, Energy, Environment, andScientific and Technological Options Assess-ment (STOA), 2001, Ecological Footprintinghttp://www.europarl.europa.eu/stoa/publi-cations/studies/20000903_en.pdf

• As a result, the following methodological as-pects are being worked on currently:

40


Trade

The current method utilizes estimated world av-erage Footprint intensities for all traded goodsand omits trade in services. By utilizing a globalmulti-regional input-output model, the ‘NationalFootprint Accounts’ will more comprehensivelyand consistently track energy and resource flowsembodied in traded goods and services.

Equivalence Factors

Equivalence Factors are central to Ecological Foot-print analysis, as they provide the basis for consis-tent aggregation. They are key to translating ahectare into its respective global hectare value. Thecurrent Equivalence Factors are based on global-av-erage agricultural suitability of various biomes. Al-ternative approaches are being researched

Fisheries

The fishing grounds Footprint is currently under re-vision, with the aim of more explicitly incorporatingestimates of sustainable yield with regard to thespecies group and possibly even at the species level.More geographically explicit catch and speciesrange data will also be incorporated. However,global data availability is still limiting the analysis.

Carbon

Refinements are needed for specifying the bios-phere’s assimilative capacity for CO2 emissions.Possible improvements include:

1. Defining an explicit measure of the bioca-pacity available for carbon uptake, such thatexceeding this capacity (measured in gha)results in an increase in atmospheric con-centrations of CO2.

2. Accounting for carbon uptake by multiplebiomes, including narrowing our measure ofmarine carbon sequestration to encompassonly biological fixation.

3. More explicitly reflecting analysis of theglobal carbon budgets as reported by theIPCC.

SEEA Compatibility

The alignment of the ‘National Footprint Accounts’with the United Nations’ integrated System of En-vironmental-Economic Accounts (SEEA) will im-prove the policy relevance of the ‘NationalFootprint Accounts’ and more easily allow for theincorporation of Ecological Footprint analysis incoordination with economic decision-making.This is particularly relevant for assessments thatallocate overall demand to particular consump-tion categories.

41

42


This appendix applies the diagnostic approach presented inSection 2 to the 28 countries in Eastern Europe and CentralAsia.

The main trends this report highlights span from 1961 totoday and are:

1. Biocapacity deficit (or reserve), the difference betweenFootprint and biocapacity (in gha per person).

Plus the following four trends for interpreting the economicimplications of such a potential biocapacity deficit:

2. Cost of basic commodities embodied in biocapacity deficit(compared to GNI).

3. Trend in relative per capita income compared to world totalas an indication of trends in a country’s ability to buy re-sources from world markets (country’s GDP per capita com-pared to total GDP of the world).

4. Public debt (as a percentage of GDP).5. HDI-Footprint path (HDI and Footprint values since 1970).

Summary of Appendix 4: Resource trends

Appendix 4 : Resource Trends in Eastern Europe and Central Asia

Albania

43

Expenditures as % of GDP (2005)

Food and non-alcoholic beverages 20.6

Housing, water, electricity, gas and other fuels 16.0

Total 36.6

Armenia

44





Total 57.1

Azerbaijan

45




Total 32.3

Belarus

46





Total 29.1

Bosnia and Herzegovina

47




Total 44.0

Bulgaria

48





Total 31.0

Croatia

49




Total 28.1

Cyprus

50





Total 22.7

Czech Republic

51




Total 19.5

Georgia

52





Total 32.0

Hungary

53




Total 19.3

Kazakhstan

Kosovo*

54





Total 24.9

* Disaggregated data for Kosovo are not yet available from most of our data sources.

Kyrgyzstan

55




Total 45.0

the former Yugoslav Republic of Macedonia

56





Total 41.4

FYR Macedonia

FYR Macedonia

FYR MacedoniaFYR Macedonia

FYR Macedonia

Moldova

57




Total 40.0

Montenegro

58





Total 43.1

Poland

59




Total 27.9

Romania

60





Total 35.3

Russian Federation

61




Total 19.7

Serbia

62





Total 38.2

Slovak Republic

63




Total 24.7

Slovenia

64





Total 18.9

Tajikistan

65




Total 54.3

Turkey

66





Total 34.7

Turkmenistan

--- Not available

67


Food and non-alcoholic beverages ---

Housing, water, electricity, gas and other fuels ---

Total ---

Ukraine

68





Total 28.6

Uzbekistan

--- Not available

While data underlying these assessments may be of uneven quality, the trends show that for most countries inthe region, resource issues are a significant economic factor. While many countries were able to generate mod-est human development advances, it has come at marked resource cost.

69


Food and non-alcoholic beverages ---

Housing, water, electricity, gas and other fuels ---

Total ---

Behrens, A., Giljum, S., Kovanda, J., Niza, S. (2007)The material basis of the global economy. World-wide patterns in natural resource extraction andtheir implications for sustainable resource usepolicies. Ecological Economics, 64, 444-453.

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Assets: Capital that is either owned or able to beused in production, whether natural, manufac-tured, or human.

Biocapacity: The ability of natural assets to re-generate ecological services. In current Footprintaccounts, this includes provision of resources, useof productive area for housing and other infra-structure, and sequestration of carbon dioxidefrom fossil fuel use.

Biocapacity deficit: The gap between demandon biocapacity and supply of biocapacity (the op-posite is a biocapacity reserve). A nation’s bioca-pacity deficit would be the gap between thedemand of their residents (for final consumption)and the availability of biocapacity within that na-tion.

Competitiveness: The ability of a country tomaintain its prosperity and secure prosperity.

Debt: The cumulative deficit over time.

Deficit: The gap between the demand of re-sources and the amount obtained.

Ecological Footprint: human demand on bioca-pacity.

Endowments: The initial assets available within acountry, prior to exploitation. The underlying fer-tility of a region due to its intrinsic environmentalsetting can be considered an endowment, even ifthe region no longer supports production due tomismanagement.

Growth: An increase in the monetary output of acountry’s economic system over time (as meas-ured by GDP).

National self-interest: Societal activities that willmaximize citizens’ utility.

Prosperity: The long-term achievement of, or un-interrupted progression towards, goals of nationalself-interest.

Risk, or Sovereign Risk: The probability for largedecreases in the performance of nationaleconomies (including loss of prosperity).

Wealth: The absolute abundance of assets acrossall dimensions: including human capital (skills andtime), manufactured capital (factories, houses,machines), cultural capital (knowledge, trust,democracy), natural capital, financial capital(rights to former forms of capital).

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Glossary

Resource constraints and economic performance in Eastern Europe and Central Asia

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