Chapter 1. the Economy and the Earth: Economy Self-Destructing
The economic indicators for the last half-century show remarkable progress. As noted earlier, the economy expanded sevenfold between 1950 and 2000. International trade grew even more rapidly. The Dow Jones Index, a widely used indicator of the value of stocks traded on the New York Stock Exchange, climbed from 3,000 in 1990 to 11,000 in 2000. It was difficult not to be bullish about the long-term economic prospect as the new century began.6
Difficult, that is, unless you look at the ecological indicators. Here, virtually every global indicator was headed in the wrong direction. The economic policies that have yielded the extraordinary growth in the world economy are the same ones that are destroying its support systems. By any conceivable ecological yardstick, these are failed policies. Mismanagement is destroying forests, rangelands, fisheries, and croplands—the four ecosystems that supply our food and, except for minerals, all our raw materials as well. Although many of us live in a high-tech urbanized society, we are as dependent on the earth's natural systems as our hunter-gatherer forebears were.
To put ecosystems in economic terms, a natural system, such as a fishery, functions like an endowment. The interest income from an endowment will continue in perpetuity as long as the endowment is maintained. If the endowment is drawn down, income declines. If the endowment is eventually depleted, the interest income disappears. And so it is with natural systems. If the sustainable yield of a fishery is exceeded, fish stocks begin to shrink. Eventually stocks are depleted and the fishery collapses. The cash flow from this endowment disappears as well.
As we begin the twenty-first century, our economy is slowly destroying its support systems, consuming its endowment of natural capital. Demands of the expanding economy, as now structured, are surpassing the sustainable yield of ecosystems. Easily a third of the world's cropland is losing topsoil at a rate that is undermining its long-term productivity. Fully 50 percent of the world's rangeland is overgrazed and deteriorating into desert. The world's forests have shrunk by about half since the dawn of agriculture and are still shrinking. Two thirds of oceanic fisheries are now being fished at or beyond their capacity; overfishing is now the rule, not the exception. And overpumping of underground water is common in key food-producing regions.7
Over large areas of the world, the loss of topsoil from wind and water erosion now exceeds the natural formation of new soil, gradually draining the land of its fertility. In an effort to curb this, the United States is retiring highly erodible cropland that was earlier plowed in overly enthusiastic efforts to expand food production. This process began in 1985 with the Conservation Reserve Program that paid farmers to retire 15 million hectares, roughly one tenth of U.S. cropland, converting it back to grassland or forest before it became wasteland.8
In countries that lack such programs, farmers are being forced to abandon highly erodible land that has lost much of its topsoil. Nigeria is losing over 500 square kilometers of productive land to desert each year. In Kazakhstan, site of the 1950s Soviet Virgin Lands project, half the cropland has been abandoned since 1980 as soil erosion lowered its productivity. This has dropped Kazakhstan's wheat harvest from roughly 13 million tons in 1980 to 8 million tons in 2000—an economic loss of $900 million per year.9
The rangelands that supply much of the world's animal protein are also under excessive pressure. As human populations grow, so do livestock numbers. With 180 million people worldwide now trying to make a living raising 3.3 billion cattle, sheep, and goats, grasslands are simply collapsing under the demand. As a result of overstocking, grasslands are now deteriorating in much of Africa, the Middle East, Central Asia, the northern part of the Indian subcontinent, and much of northwestern China. Overgrazing is now the principal cause of desertification, the conversion of productive land into desert. In Africa, the annual loss of livestock production from the cumulative degradation of rangeland is estimated at $7 billion, a sum almost equal to the gross domestic product of Ethiopia.10
In China, the combination of overplowing and overgrazing to satisfy rapidly expanding food needs is creating a dust bowl reminiscent of the U.S. Dust Bowl of the 1930s—but much larger. In a desperate effort to maintain grain self-sufficiency, China has plowed large areas of the northwest, much of it land that is highly erodible and should never have been plowed.11
As the country's demand for livestock products—meat, leather, and wool—has climbed, so have the numbers of livestock, far exceeding those of the United States, a country with comparable grazing capacity. In addition to the direct damage from overplowing and overgrazing, the northern half of China is literally drying out as aquifers are depleted by overpumping.12
These trends are converging to form some of the largest dust storms ever recorded. The huge dust plumes, traveling eastward, affect the cities of northeast China—blotting out the sun and reducing visibility. Eastward-moving winds also carry soil from China's northwest to the Korean Peninsula and Japan, where people regularly complain about the dust clouds that filter out the sunlight and blanket everything with dust. Unless China can reverse the overplowing and overgrazing trends that are creating the dust bowl, these trends could spur massive migration into the already crowded cities of the northeast and undermine the country's economic future.13
The world is also running up a water deficit. The overpumping of aquifers, now commonplace on every continent, has led to falling water tables as pumping exceeds aquifer recharge from precipitation. Irrigation problems are as old as irrigation itself, but this is a new threat, one that has evolved over the last half-century with the advent of diesel pumps and powerful electrically driven pumps.
Water tables are falling under large expanses of the three leading food-producing countries—China, India, and the United States. Under the North China Plain, which accounts for 25 percent of China's grain harvest, the water table is falling by roughly 1.5 meters (5 feet) per year. The same thing is happening under much of India, particularly the Punjab, the country's breadbasket. In the United States, water tables are falling under the grain-growing states of the southern Great Plains, shrinking the irrigated area.14
The diversion of water to provide supplies for irrigation and for cities is also excessive, leaving little or no water in some rivers. The Colorado, the major river in the southwestern United States, now rarely makes it to the sea. China's Yellow River, the cradle of Chinese civilization, runs dry for part of each year, depriving farmers in its lower reaches of irrigation water. The Indus and the Ganges barely reach the sea during the dry season. Little water from the Nile reaches the Mediterranean at any time. Draining rivers dry disrupts the symbiotic relationship between the oceans and the continents. The oceans water the continents as moisture-laden air masses move inland, and the continents nourish the oceans as the returning water carries nutrients with it.15
Economic demands on forests are also excessive. Trees are being cut or burned faster than they can regenerate or be planted. Overharvesting is common in many regions, including Southeast Asia, West Africa, and the Brazilian Amazon. Worldwide, forests are shrinking by over 9 million hectares per year, an area equal to Portugal.16
In addition to being overharvested, some rainforests are now being destroyed by fire. Healthy rainforests do not burn, but logging and the settlements that occur along logging roads have fragmented and dried out tropical rainforests to the point where they often will burn easily, ignited by a lightning strike or set afire by opportunistic plantation owners, farmers, and ranchers desiring more land.
In the late summer of 1997, during an El Niño-induced drought, tropical rainforests in Borneo and Sumatra burned out of control. This conflagration made the news because the smoke drifting over hundreds of kilometers affected people not only in Indonesia but also in Malaysia, Singapore, Viet Nam, Thailand, and the Philippines. A reported 1,100 airline flights in the region were canceled due to the smoke. Motorists drove with their headlights on during the day, trying to make their way through the thick haze. Millions of people became physically sick.17
Deforestation can be costly. Record flooding in the Yangtze River basin during the summer of 1998 drove 120 million people from their homes. Although initially referred to as a "natural disaster," the removal of 85 percent of the original tree cover in the basin had left little vegetative cover to hold the heavy rainfall.18
Deforestation also diminishes the recycling of water inland, thus reducing rainfall in the interior of continents. When rain falls on a healthy stand of dense forest, roughly one fourth runs off, returning to the sea, while three fourths evaporates, either directly or through transpiration. When land is cleared for farming or grazing or is clearcut by loggers, this ratio is reversed—three fourths of the water returns to the sea and one fourth evaporates to be carried further inland. As deforestation progresses, nature's mechanism for watering the interior of large continents such as Africa and Asia is weakening.19
Evidence of excessive human demands can also be seen in the oceans. As the human demand for animal protein has climbed over the last several decades, it has begun to exceed the sustainable yield of oceanic fisheries. As a result, two thirds of oceanic fisheries are now being fished at their sustainable yield or beyond. Many are collapsing. In 1992, the rich Newfoundland cod fishery that had been supplying fish for several centuries collapsed abruptly, costing 40,000 Canadians their jobs. Despite a subsequent ban on fishing, nearly a decade later the fishery has yet to recover.20
Farther to the south, the U.S. Chesapeake Bay has experienced a similar decline. A century ago, this extraordinarily productive estuary produced over 100 million pounds of oysters a year. In 1999, it produced barely 3 million pounds. The Gulf of Thailand fishery has suffered a similarly dramatic decline: depleted by overfishing, the catch has dropped by over 80 percent since 1963, prompting the Thai Fisheries Department to ban fishing in large areas.21
The world is also losing its biological diversity as plant and animal species are destroyed faster than new species evolve. This biological impoverishment of the earth is the result of habitat destruction, pollution, climate alteration, and hunting. With each update of its Red List of Threatened Species, the World Conservation Union-IUCN shows us moving further into a period of mass extinction. In the latest assessment, released in 2000, IUCN reports that one out of eight of the world's 9,946 bird species is in danger of extinction, as is one in four of the 4,763 mammal species and nearly one third of all 25,000 fish species.22
Some countries have already suffered extensive losses. Australia, for example, has lost 16 of 140 mammal species over the last two centuries. In the Colorado River system of the southwestern United States, 29 of 50 native species of fish have disappeared partly because their river habitats were drained dry. Species lost cannot be regained. As a popular bumper sticker aptly points out, "Extinction is forever."23
The economic benefits of the earth's diverse array of life are countless. They include not only the role of each species in maintaining the particular ecosystem of which it is a part, but economic roles as well, such as providing drugs and germplasm. As diversity diminishes, nature's pharmacy shrinks, depriving future generations of new discoveries.
Even as expanding economic activity has been creating biological deficits, it has been upsetting some of nature's basic balances in other areas. With the huge growth in burning of fossil fuels since 1950, carbon emissions have overwhelmed the capacity of the earth's ecosystem to fix carbon dioxide. The resulting rise in atmospheric CO2 levels is widely believed by atmospheric scientists to be responsible for the earth's rising temperature. The 14 warmest years since recordkeeping began in 1866 have all occurred since 1980.24
One consequence of higher temperatures is more energy driving storm systems. Three powerful winter storms in France in December 1999 destroyed millions of trees, some of which had been standing for centuries. Thousands of buildings were demolished. These storms, the most violent on record in France, wreaked more than $10 billion worth of damage—$170 for each French citizen. Nature was levying a tax of its own on fossil fuel burning.25
In October 1998, Hurricane Mitch—one of the most powerful storms ever to come out of the Atlantic—moved through the Caribbean and stalled for several days on the coast of Central America. While there, it acted as a huge pump pulling water from the ocean and dropping it over the land. Parts of Honduras received 2 meters of rainfall within a few days. So powerful was this storm and so vast the amount of water it dropped on Central America that it altered the topography, converting mountains and hills into vast mud flows that simply inundated whole villages, claiming an estimated 10,000 lives. Four fifths of the crops were destroyed. The huge flow of rushing water removed all the topsoil in many areas, ensuring that this land will not be farmed again during our lifetimes.26
The overall economic effect of the storm was devastating. The wholesale destruction of roads, bridges, buildings, and other infrastructure set back the development of Honduras and Nicaragua by decades. The estimated $8.5 billion worth of damage in the region approached the gross domestic product of both countries combined.27
Natural disasters are on the increase. Munich Re, one of the world's largest re-insurance companies, reported that three times as many great natural catastrophes occurred during the 1990s as during the 1960s. Economic losses increased eightfold. Insured losses multiplied 15-fold. Although Munich Re's classification does not distinguish between natural and human-induced catastrophes, much of the increase appears to be due to catastrophes, including storms, droughts, and wild fires that are either exacerbated or caused by human activities.28
Insurers are keenly aware that even modest changes in climate can lead to quantum jumps in damage. For example, a 10-percent increase in a storm's wind speed can double the damage it inflicts. The cost of dealing with rising sea level from a modest temperature rise could easily overwhelm the economies of many countries.29
Andrew Dlugolecki, a senior officer at the CGNU Insurance Group—Britain's largest insurance group—reports that property damage worldwide is rising roughly 10 percent a year. He believes that we are only beginning to see the economic fallout from climate change. At this rate of growth, by 2065 the amount of damage would exceed the projected gross world product. Well before then, Dlugolecki notes, the world would face bankruptcy.30
Perhaps the most disturbing consequence of rising temperature is ice melting. Over the last 35 years, the ice covering the Arctic Sea has thinned by 42 percent. A study by two Norwegian scientists projects that within 50 years there will be no summer ice left in the Arctic Sea. The discovery of open water at the North Pole by an ice breaker cruise ship in mid-August 2000 stunned many in the scientific community.31
This particular thawing does not affect sea level because the ice that is melting is already in the ocean. But the Greenland ice sheet is also starting to melt. Greenland is three times the size of Texas and the ice sheet is up to 2 kilometers (1.2 miles) thick in some areas. An article in Science notes that if the entire ice sheet were to melt, it would raise sea level by some 7 meters (23 feet), inundating the world's coastal cities and Asia's rice-growing river floodplains. Even a 1-meter rise would cover half of Bangladesh's riceland, dropping food production below the survival level for millions of people.32
As the twenty-first century begins, humanity is being squeezed between deserts expanding outward and rising seas encroaching inward. Civilization is being forced to retreat by forces it has created. Even as population continues to grow, the habitable portion of the planet is shrinking.
Aside from climate change, the economic effects of environmental destruction and disruption have been mostly local—collapsing fisheries, abandoned cropland, and shrinking forests. But if local damage keeps accumulating, it will eventually affect global economic trends. In an increasingly integrated global economy, local ecosystem collapse can have global economic consequences.
6. Economic expansion from Worldwatch Institute, op. cit. note 2; Dow Jones Index available from www.djindexes.com/jsp/index.jsp.
7. Loss of topsoil calculated from Mohan K. Wali et al., "Assessing Terrestrial Ecosystem Sustainability," Nature & Resources, October-December 1999, pp. 21-33, and from World Resources Institute (WRI), World Resources 2000-01 (Washington, DC: September 2000); grassland deterioration from Robin P. White et al., Pilot Analysis of Global Ecosystems: Grassland Ecosystems (Washington, DC: WRI, 2000), p. 3; shrinking of forests from U.N. Food and Agriculture Organization (FAO), Forest Resources Assessment (FRA) 2000, www.fao.org/forestry/fo/fra/index.jsp, updated 10 April 2001; overfishing from FAO, The State of World Fisheries and Aquaculture 2000 (Rome: 2000), p. 10; overpumping from Postel, op. cit. note 3, p. 6.
8. USDA, Farm Service Agency Online, "History of the CRP," The Conservation Reserve Program, www.fsa.usda.gov/dafp/cepd/12logocv.htm, viewed 5 July 2001.
9. Loss of productive land in Nigeria from Samuel Ajetunmobi, "Alarm Over Rate of Desertification," This Day (Lagos, Nigeria), 23 January 2001; Kazakhstan from FAO, The State of Food and Agriculture 1995 (Rome: 1995), pp. 174-95; grain production from USDA, op. cit. note 3, and from Sharon S. Sheffield and Christian J. Foster, Agricultural Statistics of the Former USSR Republics and the Baltic States (Washington, DC: Economic Research Service, USDA, September 1993), p. 147; grain prices from IMF, op. cit. note 3.
10. Livestock herd size from FAO, FAOSTAT Statistics Database, , updated 2 May 2001; cost of lost livestock production from H. Dregne et al., "A New Assessment of the World Status of Desertification," Desertification Control Bulletin, no. 20, 1991, cited in Lester R. Brown and Hal Kane, Full House (New York: W.W. Norton & Company, 1994), p. 95; country gross domestic products from IMF, World Economic Outlook (WEO) Database, www.imf.org/external/pubs/ft/weo/2000/02/data/index.htm, September 2000.
11. Expansion of Chinese economy calculated from IMF, op. cit. note 10; plowing of China from Hong Yang and Xiubin Li, "Cultivated Land and Food Supply in China," Land Use Policy, vol. 17, no. 2 (2000); Hou Dongmin, Duan Chengrong, and Zhang Dandan, "Grassland Ecology and Population Growth: Striking a Balance," China Population Today, June 2000, pp. 27-28.
12. FAO, op. cit. note 10.
13. Dong Zhibao, Wang Xunming, and Liu Lianyou, "Wind Erosion in Arid and Semiarid China: An Overview," Journal of Soil and Water Conservation, vol. 55, no. 4 (2000), pp. 439-44; Erik Eckholm, "Chinese Farmers See a New Desert Erode Their Way of Life," New York Times, 30 July 2000.
14. Water tables in key food-producing areas from Postel, op. cit. note 3; share of China's grain harvest from the North China Plain based on Hong Yang and Alexander Zehnder, "China's Regional Water Scarcity and Implications for Grain Supply and Trade," Environment and Planning A, vol. 33, January 2001, pp. 79-95, and on USDA, op. cit. note 3; water tables falling in China from James Kynge, "China Approves Controversial Plan to Shift Water to Drought-Hit Beijing," Financial Times, 7 January 2000; water tables in China and India from International Water Management Institute, "Groundwater Depletion: The Hidden Threat to Food Security," Brief 2, www.cgiar.org/iwmi/intro/brief2.htm, 2001; Bonnie L. Terrell and Phillip N. Johnson, "Economic Impact of the Depletion of the Ogallala Aquifer: A Case Study of the Southern High Plains of Texas," paper presented at the American Agricultural Economics Association annual meeting in Nashville, TN, 8-11 August 1999.
15. Jim Carrier, "The Colorado: A River Drained Dry," National Geographic, June 1991, pp. 4-32; loss of Aral Sea in Postel, op. cit note 3, pp. 93-95, and in Philip P. Mickin, "Desiccation of the Aral Sea: A Water Management Disaster in the Soviet Union," Science, 2 September 1988; Aral Sea fishery from Lester R. Brown, "The Aral Sea: Going, Going.," World Watch, January/February 1991, pp. 20-27; Eric Zusman, "A River Without Water: Examining the Shortages in the Yellow River Basin," LBJ Journal of Public Affairs, spring 1998, pp. 31-41.
16. FAO, Forest Resources Assessment (FRA) 2000, op. cit. note 7.
17. Cindy Shiner, "Thousands of Fires Ravage Drought-Stricken Borneo," Washington Post, 24 April 1998; World Wide Fund for Nature, The Year the World Caught on Fire, WWF International Discussion Paper (Gland: Switzerland: December 1997).
18. "Flood Impact on Economy Limited," China Daily, 1 September 1998; Doug Rekenthaler, "China Survives Fourth Yangtze Flood Crest as Fifth Begins its Journey," Disaster Relief, 11 August 1998; removal of tree cover from Carmen Revenga et al., Watersheds of the World (Washington, DC: WRI and Worldwatch Institute, 1998).
19. Eneas Salati and Peter B. Vose, "Amazon Basin: A System in Equilibrium," Science, 13 July 1984, pp. 129-38.
20. Overfishing from FAO, The State of World Fisheries and Aquaculture 2000, op. cit. note 7; Mark Clayton, "Hunt for Jobs Intensifies as Fishing Industry Implodes," Christian Science Monitor, 25 August 1993; Clyde H. Farnsworth, "Cod are Almost Gone and a Culture Could Follow," New York Times, 28 May 1994.
21. Chesapeake Bay from Anita Huslin, "In Bay Water Off Virginia, Seeds of Hope for Oyster," Washington Post, 5 June 2001; "Regional Crisis Adds to Danger of Overfishing in Gulf of Thailand," Agence France Presse, 22 July 1998; "Bans on Fishing Gear Widens," Bangkok Post, 14 February 2001.
22. Species Survival Commission, 2000 IUCN Red List of Threatened Species (Gland, Switzerland, and Cambridge, UK: World Conservation Union-IUCN, 2000).
23. Robert James Lee Hawke, "Launch of Statement on the Environment," speech by the Prime Minister, Wentworth, NSW, 20 July 1989; John Tuxill and Chris Bright, "Losing Strands in the Web of Life," in Lester R. Brown et al., State of the World 1998 (New York: W.W. Norton & Company, 1998), p. 53.
24. J. Hansen, "Global Temperature Anomalies in .01 C," www.giss.nasa.gov/data/update/gistemp, viewed 8 June 2001.
25. Munich Re, Topics 2000: Natural Catastrophes-The Current Position (Munich: Münchener Ruckversicherungs-Gesellschaft, December 1999), and MRNatCatSERVICE, Significant Natural Disasters in 1999 (Munich: REF/Geo, January 2000); United Nations, World Population Prospects: The 2000 Revision (New York: February 2001).
26. Janet N. Abramovitz, "Averting Unnatural Disasters," in Lester R. Brown et al., State of the World 2001 (New York: W.W. Norton & Company, 2001), pp. 123-24.
27. Ibid.; gross domestic product from IMF, op. cit. note 10.
28. Munich Re, op. cit. note 25, p. 43.
29. Andrew Dlugolecki, "Climate Change and the Financial Services Industry," speech delivered at the opening of the UNEP Financial Services Roundtable, Frankfurt, Germany, 16 November 2000.
30. Ibid.; "Climate Change Could Bankrupt Us by 2065," Environment News Service, 24 November 2000.
31. Lars H. Smedsrud and Tore Furevik, "Towards an Ice-Free Arctic?" Cicerone, 2/2000; John Noble Wilford, "Ages-Old Icecap at North Pole Is Now Liquid, Scientists Find," New York Times, 19 August 2000.
32. Dorthe Dahl-Jensen, "The Greenland Ice Sheet Reacts," Science, 21 July 2000; Bangladesh inundation estimate from World Bank, World Development Report 1999/2000 (New York: Oxford University Press, September 1999).
Copyright © 2001 Earth Policy Institute