2008 Living Planet Report, New Water Footprint Index, and the Direct Link Between Financial and Ecological Crises

Late last year, NextNowCollab was part of a conversation marking the launch of the Living Planet Report 2008 at Global Business Network in San Francisco. Conversation starters included Mathis Wackernagel of Global Footprint Network, Greg Searle, Executive Director of Bioregional North America (who gave a great presentation on “One Planet Living“), and Dr. Jean Rogers of Arup.

The 2008 report was released by Global Footprint Network, World Wildlife Federation and Zoological Society of London and offers a look at “nature’s balance sheet,” with new figures on how humanity is using resources, how that compares among nations, and how ecological debt is mounting.

An important development in this year’s report is the adoption of a new index created (finally!) to measure human demand on water: the water footprint, developed by University of Twente, Netherlands Professor Arjen Hoekstra, who also founded the Water Footprint Network, aimed at promoting the transition toward sustainable, fair and efficient use of freshwater resources by advancing the science and application of the water footprint.  The “Water Footprint” measures human demand on fresh water and complements the Ecological Footprint’s measurement of human demand on (other) living resources to give a much fuller footprint.

“The water footprint enables us to more clearly understand the role that global trade plays in addressing local water scarcity. By tracking the flow of water and living resources in our globalized economy through the water footprint and the Ecological Footprint, we are able to advocate for the effective management of these resources.”  Global Footprint Network Manager of Research and Standards Shiva Niazi

The mounting ecological debt data is relevant not only to crises such as climate change and shrinking biodiversity, but also to the current economic crisis:


Protecting the True Fundamentals

A Sustainable Investment Firm’s Response to the Financial Crisis

Environmental concerns tend to take a back seat in tough economic times. But at least one asset management firm is taking exactly the opposite tack – stressing that now, more than ever, sound investing means adequately valuing the underlying natural assets upon which all our economic systems depend.

“So far, the economic crisis we are facing has been explained by financial leverage,” said Carsten Henningsen, co-founder of the global sustainability fund Portfolio 21. “However, there is a direct link between the financial crisis and the ecological crisis. To the extent that ecological limits place limits on the growth rates of earnings, stock prices will fall.”

Now that the Footprint of the world economy exceeds what the planet can regenerate, Henningsen said, “Investors need to readjust their return expectations, because the earth does not have the ecological or financial capacity to sustain unlimited growth” if that growth is linked to increased resource consumption. “Growth of real wealth is restrained by scarcity of natural resources like oil as well as the capacity of the planet to absorb CO2.”

Companies that understand the ecological crisis and are implementing environmental strategies to gain a competitive advantage are those that will be best poised in the long term, Henningsen said

But the issue goes beyond that, according to Henningsen and Portfolio 21 co-founder Leslie Christian. Ultimately, they say, protecting one’s 401K means safeguarding the very viability of the U.S. and world economies. And that means investing in a way that shifts these economies as a whole in a more resource-efficient direction. For example, Portfolio 21 has created investment vehicles to help localize economies, investing in “businesses based on local manufacturing and distribution as a healthy alternative to energy-intensive multinationals shipping goods around the globe.”

What the Meltdown Can Teach Us About Resource Debt

In a recent letter to shareholders, Henningsen and Christian drew a parallel between the financial industry meltdown and the dangers of our rapidly compounding ecological debt.

In the U.S. in the past few years, instead of a sound economy based on products and commerce, they wrote, “We have a financial economy evolving into a casino-like scheme, with money being used to make more money that has little or no connection to underlying functional economic transactions. Without self-imposed limits, the financial system has expanded beyond its means, making it vulnerable to seemingly insignificant disruptions that serve to topple the entire structure like a game of Jenga.”

Just like the financial markets, the world economy has expanded well beyond what the ecological bottom line can support. “Considering the damage that has occurred within an arguably superfluous element of our economy, it is difficult to imagine the severity of the situation as it relates to an absolutely essential element of the economy – the ability of the earth to provide critical ecosystem services like clean air and water, as well as natural resources like timber, crop land and, of course, food.”

That is more reason than ever, Henningsen and Christian say, why smart investing means addressing our underlying resource challenges. Says Christian: “For the planet, there is no Federal Reserve Bank, no lender of last resort unless we can figure out a way to borrow from another planet. The real bottom line is the ecological bottom line that supports the foundation of life and our livelihoods.”  Global Footprint Network blog post

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