Consumer Demand And Global Damage
AS you pack your beach bag or rucksack with summer reading material, tuck in Alan Durning's "How Much Is Enough? The Consumer Society and the Future of the Earth." (W. W. Norton, $8.95.) It's a slim but packed paperback that may leave you feeling uncomfortable but certainly better informed about your role in protecting the global environment. Also include the June issue of Scientific American.
Mr. Durning is a senior researcher at the Worldwatch Institute in Washington, the sober outfit that publishes the "State of the World" report every year, tying together environmental, economic, political, and demographic issues.
What Durning shows (with useful but not overwhelming charts and graphs) is how the richest one-fifth of humanity causes vastly disproportionate environmental damage because of its growing demand for material goods. The danger, he points out, is compounded by the fact that much of the rest of the world - thanks to the communications revolution that has created the global village - not unreasonably now wants the same stuff too.
At the same time as important trends have worked to promote consumerism and increased material wealth for 1 billion people in the most economically advanced countries, the impact on natural resources has grown. The consumption gap between industrialized and developing countries is 18 to 1 for chemicals, 10 to 1 for timber and energy, 3 to 1 for grain and fresh water. Americans on average consume their own weight in basic raw materials each day, and groundwater in the US is being pumped 25 times faster th an the normal rate of replenishment.
Meanwhile, surveys show there has not been any noticeable increase in personal satisfaction or happiness.
"Hoodwinked by a culture of consumption, we have been fruitlessly attempting to satisfy with material things what are essentially social, psychological, and spiritual needs," writes Durning, getting right to the heart of the matter.
A major part of the consumption-environment problem, at least as it involves government policy, is the way economists gauge productivity and relative economic health. This is the thesis of a Scientific American article by Robert Repetto, who used to teach economics at Harvard University and now is with the World Resources Institute.
Classical economists regarded income as the return on natural resources, human resources, and invested capital. But according to Dr. Repetto, Keynes and other neoclassical economists "virtually dropped natural resources from their model and concentrated on labor and invested capital."
"Buildings, equipment, and other manufactured assets are valued as income-producing capital, and their depreciation is written off as a charge against the value of production," he writes. "Natural resources, however, are not so valued. Their loss, even though it may lead to a significant decrease in future production, entails no charge against current income."
In other words, economic modeling is skewed to ignore - say - the cutting down of forests in ways that are not sustainable. This in turn "gives false signals to policymakers," argues Repetto. "It reinforces the illusion that a dichotomy exists between the economy and the environment and so leads policymakers to ignore or destroy the latter in the name of economic growth. It confuses the depletion of valuable assets with the generation of income. The result can be illusory gains in income and permanent lo sses in wealth."
Costa Rica is a good example. Forests have been overcut, farmland seriously damaged by erosion, and fisheries overexploited. Yet the traditional methods of national accounting there (until very recently, at least) substantially overstated the performance of the national economy by ignoring those serious problems.
So how does this connect with American overconsumption? It does so indirectly, when the market responds to the false signals Repetto talks about, setting prices that are too low, and directly, when government subsidizes activities and industries that lead to overconsumption and environmental degradation.
Economists need to pay more attention to the full effect their work can have - including overconsumption that can't last.