by Rob Dietz
Given the stakes (e.g., environmental catastrophe and social upheaval), opening some space in which pundits and politicians can sensibly discuss the limits to growth makes sense. The Center for the Advancement of the Steady State Economy (CASSE) is one of a handful of organizations that have been trying to create this space. Toward this end, CASSE has created a position statement on economic growth that can be endorsed by individuals and organizations.28 This statement recognizes the conflict between economic growth and environmental protection, and calls for the transition to a steady-state economy. At the time of writing, the position statement had been signed by more than 9,000 individuals, including a large number of well-known economists and scientists. It had also been endorsed by 185 organizations, including professional societies, nonprofit organizations, businesses, and political parties. CASSE’s position statement may provide political cover for engaging in discussions about the limits to growth, but for people to embrace the concept of a steady-state economy, they need to understand how it would work and why it would be preferable to what they’ve become accustomed to.
The concept of a dynamic economy that does not require growth to improve quality of life and that finds equilibrium with nature is highly appealing, but many questions remain about how to achieve it. Now that we’ve summarized the case for shifting from more to enough and reviewed the basic features of an economy that embraces enough, we’re ready to tackle these questions. Part II of this book, Strategies of Enough, offers workable proposals to:
• Limit the use of materials and energy to sustainable levels.
• Stabilize population through compassionate and noncoercive means.
• Achieve a fair distribution of income and wealth.
• Reform monetary and financial systems for stability.
• Change the way we measure progress.
• Secure meaningful jobs and full employment.
• Reconfigure the way businesses create value.
To organize the information consistently, we have structured each of the next seven chapters around three questions: What are we doing? What could we do instead? And where do we go from here? Although the proposals provide the starting point for a remarkable economic transformation, they should not be viewed as the definitive answer for how to achieve a steady-state economy. However, they do provide a basis for further discussion and action.
An enlightened transformation to a steady-state economy is a profoundly hopeful prospect. Alignment of economic scale with the realities of ecosystem limits would address many of the world’s most serious environmental problems. Explicit attention to fair distribution of income and wealth would alleviate some of the most grievous social injustices. Recalibration of the reach of markets would eliminate some of the worst abuses of the corporate age. Taken together, these economic changes would help secure a high quality of life for this and future generations. As a bonus, students might even change their attitudes about economics. It’s unlikely that they’d take to shouting, “I LOVE ECON!” in the Quad, but maybe economics would give them something they could believe in.
[ PART II ]
STRATEGIES OF ENOUGH
[ CHAPTER 5 ]
ENOUGH THROUGHPUT
Limiting Resource Use and Waste Production
The Earth has no way of registering good intentions or future inventions or high hopes. It doesn’t even pay attention to dollars, which are, from a planet’s point of view, just a charming human invention. Planets measure only physical things—energy and materials and their flows into and out of the changing populations of living creatures.
DONELLA MEADOWS1
WHAT ARE WE DOING?
Whether a mansion in Monaco, an apartment in Argentina, or a cottage in Cambodia, every household has a measurable metabolism. Materials, from trash cans to ceiling fans, from apple pies to French fries, flow into the household from external sources. Each household also obtains supplies of energy, such as electricity, sunshine, and natural gas, from the outside world. Members of the household consume the materials and use the energy to support their lifestyles. And finally, the household completes the metabolic process by expelling wastes to the environment through carbon dioxide emissions, wastewater discharge, and trash disposal. This metabolism, the flow of materials and energy and the emission of wastes, can be called the throughput of the household.
Some households have a larger throughput than others. For proof, there’s no better source than Material World, an eye-catching book by photographer Peter Menzel. Like a doctor examining a patient to get to the bottom of a metabolic mystery, Menzel takes the pulse of typical households in thirty countries by photographing families and their possessions in front of their homes. The collection of material goods surrounding the Getu family (from Ethiopia) in the foreground of their 320-square-foot hut is small, especially when compared to the possessions of the Skeen family (from the United States) in front of their 1,600-square-foot suburban house.2 The difference in accumulation of material goods between the two households is obvious. A closer inspection of the photographs and captions also reveals the difference in energy throughput. The Getus rely on dung collected from their oxen corral for cooking fuel; the Skeens import electricity to power their appliances and control their home’s temperature, and they use gasoline to power their three motor vehicles. Interestingly, the Skeens’ throughput looks modest compared to that of other Americans today. Since the book was published in the mid-1990s, the typical American family has stepped up its consumption. New single-family homes in the United States in 2010 averaged 2,392 square feet, about 50 percent larger than the Skeens’ home.3
Many conclusions may be drawn from Material World, and one of the clearest is that American households boast a high metabolism—Americans are the unofficial throughput champs. A recent news story reported that if everyone in the world consumed like the average American, we’d need about six earths to sustain ourselves.4 Such statistics are telling, but perhaps a deeper understanding of America’s burgeoning household throughput emerges from the portrait of a curious industry: self storage.
Self storage has been the fastest growing segment of the U.S. commercial real estate sector over the last thirty-five years.5 Self-storage units, which usually occupy row upon row of garages in metal- and concrete-trimmed warehouses, provide a place for households to keep excess stuff. In the not-too-distant past, a small number of self-storage businesses catered to homes in transition (for example, when people were moving from one place to another), but the industry has grown significantly in recent years. The United States now has over 2.2 billion square feet (78 square miles) of rentable self-storage space, more than three times the size of Manhattan Island. Nearly one out of every ten American households leased a unit in 2007, up from one in seventeen in 1995.6 On top of that, one of the most common reasons that customers rent self-storage units is to store items they no longer need or want.7 The flow of materials into American homes has grown so much that it has surpassed the capacity of many of these homes (which have themselves been growing impressively) to contain it. The result is the rise of a self-storage nation.
At the household scale, getting a handle on throughput is relatively easy, even without dragging everything into the front yard like the families in Material World. An audit of household throughput requires tracking how much stuff is coming in and how much waste is flowing out (including exports to the self-storage unit). It also requires documenting energy consumption. For the most part, an auditor would need to collect receipts from shopping, extract data from utility bills, and do some arithmetic—a straightforward, although somewhat tedious, task. But what about a really big household like the economy?
The word “economy” actually derives from two Greek words, oikos (household) and nomos (management). Economics is literally the management of the human household. The larger the household, the more difficult it is to analyze, but researchers have devised useful tools for tracking throughput at broad scales. Material flow analys
is is one such tool—a systematic way to assess the flow of materials through an economy. Rooted in the law of conservation of matter, material flow analysis uses mass balance equations to track the flow of materials from environmental sources, through consumptive processes in the economy, and back to the environment in waste streams.8
Like a household in which the family rents three self-storage units to manage its overflow of stuff, an economy can also have an overactive metabolism. Material flow analysis suggests that the metabolism of the global economy is much higher than it used to be. Humanity now uses eight times more material resources (by weight) than it did a century ago.9 Researchers have concluded that “if the present metabolic rate is maintained, there will ultimately be constraints for development. These may occur as resource scarcities at the supply side, or as environmental degradation at the disposal side.”10
This conclusion resembles what’s being communicated by the ecological footprint, another useful tool for understanding the flow of materials and energy through an economy. As described in Chapter 2, estimates of the global economy’s footprint suggest that humanity is consuming resources and emitting wastes at a rate that is 50 percent faster than what’s sustainable.
These findings suggest we are mismanaging our global household, pulling too many resources in the front door and pushing too much waste out the back door. Current approaches to resource management have become outdated. They are founded upon economic models developed when the world was relatively full of nature and relatively empty of people and manufactured goods.11 During that era, the evolution of agriculture, the spread of colonialism, and the industrial revolution provided seemingly endless frontiers of untapped resources. Coupled with new technologies, expanding economic activity enabled novel, more efficient, and faster use of resources. The worldview that became dominant at that time is captured in the words of the political economist Henry George, who in 1884 wrote:
It is a well-provisioned ship, this on which we sail through space. If the bread and beef above decks seem to grow scarce, we but open a hatch and there is a new supply, of which before we never dreamed. And very great command over the services of others comes to those who as the hatches are opened are permitted to say, “This is mine!”12
The relentless increase in throughput over the last two hundred years has provided humanity with a dizzying array of goods and services and an accompanying rise in material well-being. This growth dynamic has also allowed for a rapid increase in population, which, in turn, has driven even greater levels of resource use. Scholars estimate that humans entirely dominate 36 percent of the earth’s biologically productive surface area.13 The appropriation of materials, energy, and land for economic activity has significantly reduced the space available for nonhuman species, leading to ecosystem breakdowns, extinctions, and decreased biological diversity.14 Excessive levels of throughput are destabilizing the natural systems (e.g., a stable climate, nutrient cycling, fresh water provision, and so on) on which humanity ultimately depends. Overconsumption of nonrenewable resources, such as fossil fuels, and overexploitation of renewable resources, such as forests and fish, may mean that future generations will have to get by on less. Despite the pressure that the economy is placing on the biosphere, the dominant economic model still calls for more. But the boundless economic frontiers envisioned by Henry George appear, at last, to be bounded.
WHAT COULD WE DO INSTEAD?
It’s time to consider a new household management plan. At the planetary scale, there is no off-site self-storage unit where we can extract resources or send wastes. To succeed over the long term, the new plan must incorporate three important operating rules, which were first proposed by Herman Daly:
1. Exploit renewable resources no faster than they can be regenerated.
2. Deplete nonrenewable resources no faster than the rate at which renewable substitutes can be developed.
3. Emit wastes no faster than they can be safely assimilated by ecosystems.15
The economy, as currently configured, does not play by these three rules. Prices often fail to capture the effect of resource depletion, waste generation, and loss of ecosystem services. As a result, the market sends improper signals—if it sends any signal at all—regarding the sustainability of throughput levels. We need to eliminate this market failure and make sure the economy abides by Daly’s three rules. Doing so will require throughput-limiting policies that strike a balance between maintenance of healthy ecosystems and provision of sufficient goods and services.
Some throughput-limiting policies are relatively simple and could be implemented within current institutional arrangements, while others would require the establishment of new institutions.16 Choosing the right policies is a high-stakes game. The urgent environmental problems facing humanity demand prompt action to reduce the flow of materials and energy to sustainable levels. At the same time, policies intended to accomplish this reduction would likely impose constraints on what people could do. On the one hand, the need for safety and security (to avoid resource scarcity and environmental catastrophes) calls for direct methods to lessen throughput immediately. On the other hand, the need for autonomy (from rules and regulations) may make it tough for people to stomach throughput-limiting policies, especially if the policies are viewed as too restrictive. The challenge is to enact policies that reduce throughput with minimal impingement on personal freedom. This challenge calls for careful consideration of when to use direct methods and when to try less direct methods.
Direct Methods to Limit Throughput
The simplest and most direct policy to limit throughput is an outright ban. A ban prohibits the use of a specific material or a particular process in the economy. For example, banning lead as an additive to paint and gasoline has provided significant benefits to society. Lead’s toxic properties can cause debilitating mental health effects. Bans have dramatically decreased exposure and reduced lead-related health problems worldwide.
Rationing is another type of direct policy to limit throughput. Rationing schemes provide each person or company with the right to use a specified amount of a resource. For instance, each person could be allocated a certain number of kilowatt-hours of electricity per month. Such a scheme could decrease both the quantity of resources drawn from mines (e.g., coal and uranium) and the amount of wastes flowing into the environment (e.g., carbon dioxide and nuclear waste).
Bans and rationing have been used effectively to achieve desired reductions in harmful substances, and they could be applied more widely, but they are on the coercive end of the spectrum. With an eye toward less coercive means, Herman Daly and other economists have proposed a tradable permit system as an efficient method of limiting throughput.17 Like bans and rationing, tradable permit systems set direct limits on the use or emission of a substance, but they offer more flexibility in how the limits are achieved. Such systems can come in several flavors, but most contain these basic elements:
• Based on the best available scientific information (and following the three operating rules proposed above), a public authority determines an overall quota for the use of a resource or emission of a pollutant.
• The public authority then distributes or auctions off a number of permits within this quota.
• Each permit mandates the amount of a resource the permit holder can use or the amount of a pollutant the permit holder can emit over a specified period.
• Permit holders can trade their permits (or shares of them) in a competitive market.
The idea is to give permit holders as much autonomy as possible without allowing them to overuse resources or overtax waste absorption capacity.
An intriguing spinoff of tradable permit systems is “cap and share” (Figure 5.1). A cap-and-share scheme sets an overall cap on the use of a resource and divides the cap into equal permits that are distributed to all citizens. Citizens may then sell these permits to industries, which must purchase them in order to use the resource. Each individual in the scheme effectiv
ely owns a share of the resource and sells a permit to producers seeking to profit from the resource. This setup assigns property rights for resources to citizens rather than to corporations. Income from the sale of permits compensates individuals for the increased prices that result from limiting the supply of the resource. As a bonus, individuals who consume less than their fair share of the goods and services produced from the resource are financially rewarded for their virtuous behavior.18
FIG. 5.1. A cap-and-share scheme for CO2 management, in which citizens are allocated emission permits to sell to energy companies, could achieve desired reductions in carbon emissions while providing a fair method for citizens to earn income. SOURCE: see note 18.
Direct methods of limiting throughput, such as bans, rationing, tradable permits, and cap-and-share schemes, have the benefit of offering security. Assuming throughput limits are determined with sound science, they have a high likelihood of accomplishing their purpose—maintaining throughput within ecological limits. But given the relative coerciveness of throughput limits, less direct methods may also prove worthwhile.