Ecological Debt, Explained

A year ago, the Intergovernmental Panel on Climate Change released a report. Pooling more than 6,000 scientific publications and drawing contributions from 133 authors, a group of over a thousand scientists found that humankind has less than eleven years to stop massive and irreversible climate change. In order to avoid the risk of a global emergency, governments must limit warming to 1.5°C above pre-industrial levels. For the planet to meet or stay below the threshold, fast and far-reaching changes to the traditional models of resource usage need to occur – and for the most part, attempts to assign responsibility have been inconclusive.

Arguments surrounding the ecological debt of countries have perplexed the international legal framework. Should industrialized countries bear the costs of mitigating the climate crisis? How will less developed countries (LDCs) be persuaded to forego the opportunity to continue their resource-based development? And how have the damages of ecological debt correlated with orthodox forms of financial debt? To understand how these questions have been dismissed and addressed, an explanation of ecological debt as a concept is first and foremost necessary.

Ecological debt refers to the environmental damage caused over a period of time by country A to areas under the jurisdiction of country B or to ecosystems beyond country A’s national jurisdiction through its production and consumption patterns. Economists understand ecological debt by examining industrialized countries as historic borrowers of natural resources pushing the demand curve and LDCs as historic creditors of natural resources providing the supply curve. This concept first emerged as a response to the financial debt of the developing world. LDCs argued that industrialized countries had and continue to systematically expropriate their natural resources for profit, either without paying at all or by paying too little. Measures of ecological debt hence attempt to place a dollar value on the carbon footprint and increasing scarcity of natural wealth, oil, gas, metals, and minerals particularly.

A borrower’s gain of resource utility often exceeds the loss of resource utility of the creditor. The net change tends to be ecologically negative and monetarily positive. The negative ecological effect occurs as Earth’s natural constraints tighten its capacity to regenerate and recover from resource use in a competitive period of time. Simultaneously, the industrial technology advantage of the borrowers allows for the raw goods to be most efficiently turned into valued consumer goods.

While the monetary gains are reaped by borrowers, the ecological losses are incurred by both creditors and borrowers as natural goods are common-pool resources. Add the monetary losses from resource exploitation in the creditor’s jurisdiction to the dollar value of the damage caused by the carbon emissions and the ecological debt of the borrower becomes significant. If accountability in the legal climate framework existed, the debt would be collected in the form of policies that aimed to restore resources and carbon stocks by correcting for the market prices of the exports. As the debt is never collected, concentrated borrowing continues to disadvantage creditors’ productivity the most as it hinders their ability to maintain their domestic biological capacity surplus and participate in the market.

Society’s only other alternative to policy inaction is mutual ecological bankruptcy. And as the reality of resource scarcity becomes more eminent, critics are doubtful that anything other than the equivalent of an environmental war economy will push governments to balance the books.

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