An Ecological Footprint Approach to External Debt Relief

  • Published on
    12-Sep-2016

  • View
    213

  • Download
    1

Transcript

  • oD

    Ta

    sheae(Lcese

    ca

    deforestation or ecologically-degrading mono-crop agexportternal1995; K2001).that suciencycontrarground2000;Slaughtrade r

    the activity that generated the product. Marti-

    main elusive.l debtloringfrom

    g eco-suchtedthat

    ternalerelyat fu-relief

    evelop

    World Development Vol. 31, No. 12, pp. 21612171, 2003 2003 Elsevier Ltd. All rights reserved

    Printed in Great Britain0305-750X/$ - see front matter

    lddev.2003.09.001

    *Many thanks to an anonymous reviewer for commentson an earlier version of the paper. Final revision accep-nez-Alier (1993, p. 106) refers to this as eco-logically unequal exchange and argues that itprimary products have in most cases only in-creased debt burdens.The ecologically-degrading economic activi-

    ties pursued by severely-indebted LDCs are inno small measure a consequence of their beingable to sell their goods in international marketsat ecologically-incorrect pricesthat is, ex-ceedingly low prices that fail to consider theenvironmental loss or damage consequent to

    provides fresh policy implications for such acontingency.The analysis consists of two parts: The rst,

    made possible by new ecological footprint datapublished in the Living Planet Report (Loh,2000), involves estimating the ecological debt tobe distributed among transfer recipient coun-tries in terms of area units or ecologicalgives rriculturein hopes of gaining adequaterevenue with which to nance their ex-debts (Andersson, Folke, & Nystrom,ox, 1997; Muradian & Martinez-Alier,There has thus far been scant evidencech activities foster economic self-su-or development in general. LDCs, on they, have for the most part been losingin relative terms (Haynes & Husan,

    Homer-Dixon, 1995; Pritchett, 1997;ter, 1998). Furthermore, unfavorableelations that overwhelmingly emphasize

    In this paper I apply the ecologicaconcept to the problem of debt relief, expthe possibility of compensatory transfersrich to poor countries based on existinlogical balances. I do not argue thatecological debt relief is necessarily warranthough it may benor do I maintainLDCs are entirely blameless for their exdebt burdensthey seldom if ever are. I mexplore possible scenarios in the event thture circumstances made large-scale debtcompulsory. The framework that I dAn Ecological Fo

    to External

    MARIANOAdelphi University, G

    Summary. This paper applies Martinez-Alierconcept to the problem of debt relief, exploring tto poor countries based on existing ecological bfootprints and ecosystem values to estimate thetransfer recipientsall less-developed countriestransfers in the event that future circumstancompulsory. The study probably underestimatconservative assumptions regarding the environmdebt in physical terms. 2003 Elsevier Ltd. All rights reserved.

    Key words debt relief, ecological debt, ecologi

    inequality, NorthSouth transfers

    1. INTRODUCTION

    Severely-indebted less-developed countries(LDCs) often engage in economic activity that isharmful to their natural environmentssuch as

    www.elsevier.com/locate/worlddevdoi:10.1016/j.worise to an ecological debt increasingly

    216tprint Approach

    ebt Relief

    ORRAS *rden City, NY, USA

    [Environ. Values 2 (1993) 97] ecological debtpossibility of compensatory transfers from richlances. I employ recent estimates on ecologicalcological debt to be distributed among eligibleDCs). The results provide a policy criterion fores make large-scale international debt reliefthe appropriate transfer amounts because ofntal values and the size of the norths ecological

    l distribution, ecological footprint, international

    claimed by the poor. Indeed, it is widely be-lieved that the poor are disproportionately hurtby environmental degradation in general (e.g.,Dasgupta, 1995; Khan, 1997; Torras, 2001),though reliable data to support this claim re-ted: 15 May 2003.

    1

  • bution of environmental damage within a local,regional, or national population. Recent work

    WORLD DEVELOPMENT2162on environmental discrimination and environ-mental justice (Lambert & Boerner, 1997; Ong& Blumenberg, 1993; Vasquez, 1993) attends tothis problem, indeed nding that the losersare generally the poorer or minority groups.Because the topic is not central to the maintheme of my paper, however, I will havenothing more to say here about social ecologi-cal distribution.Spatial ecological distribution expresses how

    environmental damage is distributed acrossrather than withinspecic populations. In theinternational sphere, this would include ecolog-space. 1 The second part involves translatingthe area units to dollar values in order to cal-culate the compensation or transfer due to eacheligible country. My ndings indicate that in-debted LDCs stand to gain much from anecological transfer scheme, in many cases o-setting their entire outstanding debt. My re-sults, moreover, probably underestimate therelevant compensation amounts because ofconservative assumptions that I adopt onmatters of environmental valuation and themagnitude of material ow transfers fromLDCs to industrialized countries.

    2. ECOLOGICAL DISTRIBUTION,ECOLOGICAL DEBT, AND THE

    ECOLOGICAL FOOTPRINT

    Insight into the eects of environmentaldamage on a countrys development prospectscan be gained by investigating how such dam-age is distributed among dierent groups insociety. Political ecologists such as Bryant(1992), Millikan (1992), and Schmink andWood (1987) have studied how existing social,political, and ideological institutions governproperty rights, and how these in turn deter-mine land-use patterns. As often noted in thisliterature, dierential land-use patterns notonly generate dierent environmental out-comes, they determine the resulting winnersand losers from the alternative land uses.Martinez-Alier (1995) coins the term eco-

    logical distribution to describe the degree towhich certain types of environmental damagecreate such winners and losers, and he distin-guishes among three typessocial, spatial, andtemporal ecological distribution. By socialecological distribution he refers to the distri-ically-unequal trade relations in which poorcountries degrade their environments in order toremain economically-competitive (i.e., pro-duce at a low market price). As expressed byMartinez-Alier (1993), such behavior gives riseto an implicit ecological debt owed mostly toLDCs by the rich countries, the latter benetingfrom cheap imports without having to endurethe environmental damage external to theirmanufacture.Finally, temporal ecological distribution re-

    fers to the (social or spatial) distribution ofenvironmental damage across dierent genera-tions. Of the three forms of ecological distri-bution, this one has arguably received the mostattention in recent years since it essentially de-scribes the problem of achieving sustainability(see e.g., Repetto, Magrath, Wells, Beer, &Rossini, 1989; Soloorzano et al., 1991). Tempo-ral ecological distribution addresses inequalityacross generations, such as when a country di-rectly or indirectly consumes more raw materialresources than produced by the natural envi-ronment, thus reducing its size to the detrimentof future generations. Temporal ecologicaldistribution applies to rich and poor countriesalike.I argue that the sizable ecological debts held

    by industrialized countries are grounds for acompensatory transfer scheme aimed at reduc-ing if not eliminating the external debt of manyLDCs. The reasoning is similar to that in ahypothetical carbon trading rights regime(see e.g., Agarwal & Narain, 1991; Epstein &Gupta, 1991; Jenkins, 1996; Solomon, 1999), inwhich LDCs trade CO2 emissions rights (al-located to it according to some criterionpopulation, GDP, or what have you) for cashor debt cancellation. 2 The transfer scheme thatI develop does not, however, resembles thenotion of a debt-for-nature swap. The latterentails compensation from country X for futurepreservation of natural environments in coun-try Y instead of for X s role in already irre-versibly degrading Y s environment. 3

    To the extent that a country is able to con-sume at a level that commands more materialresources than available domestically, it is im-posing a direct environmental cost on othercountries that supply it with such means. Thisis, in Martinez-Aliers lexicon, spatial ecologi-cal maldistribution. The phenomenon supportsecologically-based, crosscountry compensatorytransfers, for two reasons.First, many erstwhile coloniesnow

    LDCshave a long history of providing richer

    countries with much of the material means to

  • consume at higher levels than otherwise possi-ble, and it therefore follows that they are duesome compensation for the historical hardship.One can plausibly argue that the phenomenonto some degree persists even today, althoughthis reasoning is not pursued here. Second,notwithstanding any historical basis for suchcompensation, it seems that, at least in the caseof the most highly indebted countries, somemeasure of debt relief or forgiveness is requiredif we are serious about their ever achievingsignicant economic development. If wide-spread debt relief is indeed inevitable at somepoint, spatial ecological maldistribution oersnot only a justication for it, but a basis fordetermining specic compensation amounts.The implied compensation scheme raises two

    questions, however. First, how do we measurethe dierence between the aggregate amountthat countries consume and the aggregate ma-terial stock available to fund such consump-tion? Second, assuming some uniform metric,how do we translate such totals into currency(e.g., dollar) equivalents so that spatial mal-distribution can be applied to the problem ofdebt relief?

    While I defer discussion of the second ques-tion until later, the existing literature on eco-logical footprints provides a useful startingpoint for addressing the rst. In its simplestterms, a countrys ecological footprint is its percapita resource consumption, measured inarea units meant to reect the implied landarea required to support it. 4 The indicatorprovides insight into the extent to which acountys economy is sustainable when com-pared with the available productive land percapita (termed biocapacity in the ecologicalfootprint literature). If the land requirementexceeds the availability, the country is not on asustainable course, and when the oppositeholds, it is.Figure 1 illustrates how spatial or temporal

    ecological maldistribution must be present inorder for a countrys ecological footprint toexceed its available biocapacity. The bioca-pacity arrows leading from each of the smallfootprint countries to the large footprintcountry represent the spatial maldistributionthat enables the large country to increase itsavailable biocapacity stock (depicted by arrowspointing outward in contrast to the case with

    ECOLOGICAL FOOTPRINT APPROACH 2163Figure 1. An example of ecological footprints and associated biocapacity ows.

  • the global footprint exactly matches availablebiocapacity. This can only be if the present

    WORLD DEVELOPMENT2164generation uses all material ows available toit, no more, no less. 5 Data from the LivingPlanet Report, an internationally collaborativeeort (Loh, 2000) show that the ecologicalpressure of humanity on Earth at present ex-ceeds the world ecosystems regeneration rate.I synonymously use biophysical capacity,

    biocapacity, and carrying capacity to describethe aggregate quantity of material (inputs)available, and appropriated carrying capa-city (hereafter ACC) to indicate the biocapa-city imported by some countries from others inorder to help sustain a certain level of con-sumption in the importing country. Ecologi-cal debt is the monetary equivalent of acountrys ecological decit, and the ecologicaltransfer is the monetary compensation that theexternally indebted countries receive from theecologically indebted ones.

    3. METHODOLOGY

    The rst step in computing the requiredecological transfers is calculation of the totalecological decit on which such transfers arebased. The calculation, in turn, requires iden-tication of the ecologically-indebted countries.Among all countries in ecological decitthatis, with ecological footprint exceeding bioca-pacityI count only the industrialized coun-tries in determining the overall ecologicaldecit. Aside from the colonial legacy argu-ment for doing so, most externally-indebtedLDCs lack the economic means with which tocompensate other countries. It would thereforemake little sense to include them among thethe small countries). Yet the fact that the largecountrys ecological footprint exceeds itsgrowing biocapacity implies that the countrymust be unsustainably harvesting its own nat-ural resources to make up the dierencei.e.,temporal maldistribution.It is important to clarify the meaning of few

    terms, since I use them repeatedly in the ana-lysis to follow. A country is in ecological decitwhen its ecological footprint exceeds its totalbiocapacity, and in ecological surplus when theopposite holds. In contrast to the traditionalaccounting equivalents, however, there is noduality between ecological surpluses anddecits. If there were, the world as a wholewould be in ecological balance, implying thattransferring countries.As for the countries eligible for an ecologicaltransfer, mere possession of a sizable externaldebt would exclude few LDCs. Exemptingecological-decit LDCs from transfer respon-sibility is one thing; designating them eligiblefor an ecological transfer would be quite an-other. The main point of the present analysis isthat ecological decit countries should com-pensate surplus ones. I therefore require pos-session of an ecological surplus for inclusionamong the ecological transfer recipients. 6 Do-ing so leaves out many LDCs that are in eco-logical decitBangladesh, China, and Egypt,for example. There unquestionably are otherdecision rules that one can adopt in determin-ing the transfer recipientssuch as basing thetransfer on per capita ecological footprint andignoring the biocapacity endowmentbutthere is no obviously superior alternative to theecological surplus criterion. My hope is that thesimple and transparent criterion described herewill provoke discussion and consideration ofother alternatives.Further complicating matters is the question

    of what portion of the ecological decit shouldbe allocated to the designated surplus countries.Apportioning all of it among the ecologicaltransfer recipients would imply that the entireecological decit is fed by carrying capacity ap-propriated by the ecologically-indebted coun-tries from the recipient countries. Doing sowould not be proper since temporal ecologicalmaldistributioni.e., unsustainable exploita-tion of domestic natural resource stocksex-plains some percentage of the total in most ifnot all cases. Further assumptions are thereforenecessary.I compare and contrast outcomes under two

    assumed values of the ACC-to-ecological de-cit ratio, 510%. Doing so implies that 9095%of ecological decits are explained by temporalas opposed to spatial maldistributionunreal-istically high, in all likelihood, but I prefer toerr on the side of being too conservative. Thecriteria that I employ for allocating the eco-logical transfer amounts are total exports andpopulation. A greater magnitude of exportsimplies greater economic interdependence withthe outside world and, ceteris paribus, largertransfers of biocapacity from LDCs to supportconsumption in rich countries. I choose popu-lation under the alternative presumption thatevery individual residing in one of the ecologi-cal surplus countries should benet equally;hence countries with large populations receive a

    proportionately larger transfer.

  • 4. DATA

    The ecological footprint and biophysical ca-pacity gures that appear in the Living PlanetReport (Loh, 2000) help us determine whether acountry is in ecological surplus or decit. Asillustrated by specic country examples in Table1, every country ts into one of four transpar-ently-labeled categories: transferring, doubly

    tire world at present is borrowing signicantlyfrom future generations.In Table 3 I list the countries designated to

    share in the overall ecological transfer, indi-cating the pre-transfer external debt for each.In order to compensate the listed countries fortheir ecological surpluses, however, we mustconvert each countrys share of the totaltransfer to dollar equivalents. Here mattersbecome more complicated because no knowndata or estimates of area unit values exist atpresent. The best that we can do is to base thearea unit values on published value estimatesfor terrain types that are most similar to theland classications considered in the LivingPlanet Report. For this purpose I use estimatesby Costanza et al. (1997), albeit modifying thenumbers somewhat. 9

    l debt taxonomy, with country examples

    logical debt Country examples

    Yes United States, Japan, Ireland, Slovenia

    Yes China, India, Mexico, Iran

    No Canada, Australia, Sweden, Finland

    No Brazil, Malaysia, Latvia, Togo

    Table 2. Ecological decit countries

    Country Ecological decit

    (000 area units)

    United States 1,791,769

    Japan 638,907

    Germany 313,711

    United Kingdom 260,602

    Italy 205,944

    ECOLOGICAL FOOTPRINT APPROACH 2165aicted, doubly blessed, and transfer re-cipient. For ecological footprints and biophy-sical capacities for all countries, as well as thedetail behind their calculation, I refer the readerto the Living Planet Report. 7

    External debt, export, and population dataare from the World Bank (2000). 8 Whilepopulation information is available for allcountries presented in the Living Planet Report,the same is not true for external debt and ex-ports. Countries eligible for an ecologicaltransfer for which the export statistic is notavailable only receive the compensation wherepopulation is the criterion for allocation.Countries for which external debt data are notavailable are ineligible for an ecological trans-fer, even if in principle warranted. Fortunately,there are only two such cases, Bosnia andNamibia.I use the Living Planet Report and World

    Bank data to determine the ecological decitand surplus countries and, as we will see, theecological transfer amounts. All told there are16 ecological decit countries as of 1996 andthe total decit exceeds 3.7 billion area units, ofwhich the United States accounts for almosthalf (Table 2). It means that under the 510%ACC assumptions the monetary equivalent ofeither 186.7 million or 373.4 million area unitsis available to be allocated among the surpluscountries. Measured in area units, the ecologi-cal decit for the entire world is just short offour billion, which means that the world is inecological decit to the tune of 251 million evenif we disregard the 16 industrialized countrieslisted. In other words, in addition to any spatialmaldistribution present, it is clear that the en-

    Table 1. Ecological footprintexterna

    External debt Eco

    Transferring countries No

    Doubly aicted countries Yes

    Doubly blessed countries No

    Transfer recipient countries YesFrance 174,753

    Spain 117,987

    Netherlands 51,907

    BelgiumLuxumberg 37,665

    Greece 34,440

    Switzerland 31,095

    Portugal 27,211

    Denmark 22,012

    Austria 10,469

    Ireland 9,884

    Slovenia 5,526

    Total for ecological

    decit countries

    3,733,883

    Total decit for world

    as a whole

    3,985,481

    Source: Living Planet Report (Loh, 2000).

  • Table 3. External debt of countries eligible fo

    Brazil 180.78 Ghana

    Indonesia 128.94 Panama

    Argentina 111.93 Nicaragu

    Malaysia 39.67 Uruguay

    Venezuela, RB 35.36 Congo, Re

    Peru 29.33 Bolivia

    Colombia 28.90 Myanmar

    Co^ote dIvoire 19.52 Hondura

    Sudana 16.97 Gabon

    Ecuador 14.50 Madagasc

    Congo, DR 12.83 Guatema

    Angola 11.23 Uganda

    Cameroon 9.54 Guinea

    i

    G

    R

    logical transfer when population is the allocation criterion.

    WORLD DEVELOPMENT2166For example, while Costanza et al. estimatethe value of the services generated by theworlds natural environment in its entirety, Ionly do so for a subset of the terrain typesconsidered by the authors since not all conformto the ecological footprint methodology. Spe-cically, I omit desert, tundra, open ocean, ice/rock, and urban, and include coastal marinearea, forest, grass/rangeland, wetland, lake/river, and cropland. More important, I onlyconsider direct use benets listed in the

    Mozambique 7.57 Mal

    Tanzania 7.36 Papua New

    Zambia 7.05 Lao PD

    Source: World Bank (2000).a Export data not available. Country only receives an ecoCostanza et al. study: food production, rawmaterials, genetic resources, recreation, andcultural. I disregard the values of the dozen orso indirect or ecological benets that are al-ways much more dicult to estimate absent amarket for such benets. 10

    The area unit value for each land type is thenet present value of its benet ows, which I

    Table 4. Land area values

    Terrain type Area available

    (million hectares)

    Per-hectare net

    present value

    (1996 $s)

    Coastal 3,102 $4,820

    Forest 4,855 $5,300

    Grass 3,898 $1,380

    Wetland 330 $36,340

    Lakes/rivers 200 $5,420

    Cropland 1,400 $1,080

    Weighted average $4,400

    Source: Costanza et al. (1997).obtain by discounting the average annual owat a rate of 5%. Table 4 presents information onthe availability of each land type as well as theNPV per hectare. The estimated value per areaunit after taking the weighted average is $4,400(in contrast to what it would be if calculatedtaking into account allthat is, market andecological benets$36,105). This makes thetotal ecological debt to be allocated amongrecipient countries $821.5 billion in the casewhere ACC equals 5%, and $1.64 trillion whenr ecological transfer, 1996 (billion dollars)

    6.44 Paraguay 2.16

    6.07 Liberiaa 2.11

    a 5.93 Cambodia 2.10

    5.90 Benin 1.59

    p. 5.24 Togo 1.47

    5.20 Georgia 1.36a 5.18 Sierra Leone 1.18

    s 4.53 Chad 1.00

    4.31 Guinea-Bissau 0.94

    ar 4.15 Ctr. African Rep. 0.93

    la 3.77 Botswana 0.61

    3.67 Mongolia 0.53

    3.24 Latvia 0.47

    3.01 Bhutan 0.11

    uinea 2.51

    2.26ACC is assumed to equal 10%.

    5. RESULTS

    I present the post-transfer international bal-ances for ecological surplus countries in Tables5 and 6, contrasting the 5% and 10% hypo-thetical cases for ACC. Rather than providebalances for all 46 surplus countries, I show the10 largest debtors and 10 largest creditorscountries that come out being owedmoney afterreceiving their transferunder each scenario.The fact that all the post-transfer creditors be-gin as international debtors reveals the poten-tial signicance of ecological transfers to thesecountries.If we assume ACC equal to 5% and allocate

    the ecological transfers according to total ex-ports, only four of the 10 largest debtors pre-viously listed in Table 3Brazil, Argentina,Peru, and Co^ote dIvoireremain in the top 10.

  • ns

    M

    C

    Gu

    S

    M

    ECOLOGICAL FOOTPRINT APPROACH 2167Table 5. Adjusted debt when ecological tra

    Country ACC 5%Debt after

    transfer

    Debt prior

    to transfer

    Top 10 debtors

    Brazil 49,036 180,780

    Argentina 43,973 111,930

    Peru 11,975 29,328

    Congo, DR 8,886 12,826

    Co^ote dIvoire 7,556 19,524

    Mozambique 6,546 7,566

    Cameroon 4,652 9,542

    Zambia 4,407 7,054

    Tanzania 4,327 7,362

    Nicaragua 4,005 5,932

    Credit after

    transfer

    Debt prior

    to transfer

    Top 10 creditors

    Malaysia 178,389 39,673

    Venezuela 26,160 35,360

    Indonesia 11,216 128,940If, alternatively, we assume ACC to equal 10%,none of the countries in the original top 10 listremain. Moreover, the post-transfer list of top10 debtors is dominated by sub-Saharan Afri-can countries, eight of 10 all told. Despite rel-atively small external debts, most of the Africancountries in the transfer recipient group haverelatively low export-debt ratios and thereforereceive a fairly meager ecological transfer.Nevertheless, the largest remaining externaldebtMozambiquesis, at $5.5 billion, trivialin comparison to the pre-transfer debts of manycountries.Countries with much larger initial debts

    benet proportionately more. Malaysia, Vene-zuela, Indonesia, and Colombia all appearamong the 10 largest creditors assuming ACCequal to 5%, despite being among the 10 lar-gest pre-transfer debtors. We add three to thisgroupBrazil, Argentina, and Ecuadorif weassume ACC equal to 10%. While the top 10post-transfer debtors were mostly Africancountries, seven of the 10 top creditors areLatin American (and the top two are Asian).

    Paraguay 8,693 2,162

    Latvia 5,764 475

    Botswana 5,728 614

    Colombia 4,795 28,900

    P N Guinea 4,619 2,507

    Gabon 3,983 4,310

    Uruguay 3,614 5,901fer based on total exports (million dollars)

    Country ACC 10%Debt after

    transfer

    Debt prior

    to transfer

    ozambique 5,525 7,566

    ongo, DR 4,947 12,826

    Nicaragua 2,078 5,932

    Zambia 1,760 7,054

    Tanzania 1,292 7,362

    inea-Bissau 801 937

    Mali 506 3,006

    ierra Leone 399 1,179

    adagascar 234 4,146

    Laos 233 2,263

    Credit after

    transfer

    Debt prior

    to transfer

    Malaysia 396,452 39,673

    Indonesia 151,372 128,940

    Venezuela 87,679 35,360There is also a signicant change from the pre-transfer debt rankings if we allocate accordingto population, although not as great as in theexport case. Assuming ACC equal to 5%, sevenof the 10 original top 10 debtors remain in thetop 10 (in fact they are the top seven post-transfer debtors). Yet only two remain on thetop 10 listArgentina and Malaysiawhen weassume ACC to equal 10%. This is not surpris-ing since neither country is very populous incomparison to other large debtorsBrazil andIndonesia in particular. More important, Ar-gentina and Malaysia here are two of only vepost-transfer debtors. Forty-one of 46 countries,in other words, become creditors after thetransfer. The more equitable distribution of the$1.6 trillion dollar ecological debt in this caseindicates less dispersion around the populationmean than around the export mean.Despite being the second-largest pre-transfer

    debtor, Indonesia is not surprisingly the largestpost-transfer creditoreven assuming ACCequal to 5%since it has the worlds fourthlargest population, just shy of 200 million.

    Brazil 82,709 180,780

    Colombia 38,489 28,900

    Argentina 23,985 111,930

    Paraguay 19,547 2,162

    Ecuador 13,217 14,495

    Uruguay 13,129 5,901

    Angola 12,850 11,225

  • an

    WORLD DEVELOPMENT2168Table 6. Adjusted debt when ecological tr

    Country Assuming ACC 5%Debt after

    transfer

    Debt prior

    to transfer

    Top 10 debtors

    Argentina 79,594 111,930

    Brazil 32,497 180,780

    Malaysia 20,274 39,673

    Venezuela 14,876 35,360

    Peru 7,342 29,328

    Co^ote dIvoire 6,772 19,524

    Ecuador 3,755 14,495

    Panama 3,614 6,069

    Gabon 3,278 4,310

    Uruguay 2,925 5,901

    Credit after

    transfer

    Debt prior

    to transfer

    Top 10 creditors

    Indonesia 52,073 128,940Similarly, although Brazil is the second largestdebtor assuming ACC equal to 5% despite re-ceiving a sizable transfer from its 161 millionpopulation, it jumps to the second largestcreditor when we assume ACC to equal 10 in-stead of 5%. The African countries on thewhole benet more from the population crite-rionand the Latin American countries lesssince six of the top 10 creditors are African ascompared to one (Angola, ranked 10th) in theexport case.In addition to illustrating that there are sig-

    nicant potential gains for indebted LDCs, thealternative criteria for ecological transfers thatI have evaluated show that the gains to dierentgeographical areas vary signicantly dependingon the criterion employed. Latin Americancountries on the whole stand to gain more un-der the export criterion while African countriesgain relatively more if we use population. Thecriterion employed appears to make little dif-ference to Asian countries.

    Myanmar 34,651 5,184

    Congo, DR 28,722 12,826

    Tanzania 20,629 7,362

    Uganda 14,450 3,674

    Ghana 9,646 6,442

    Madagascar 8,449 4,146

    Cambodia 7,969 2,100

    Sudan 7,965 16,972

    Mozambique 7,335 7,566sfer based on population (million dollars)

    Country Assuming ACC 10%Debt after

    transfer

    Debt prior

    to transfer

    Argentina 47,259 111,930

    Gabon 2,245 4,310

    Panama 1,159 6,069

    Malaysia 876 39,673

    Congo, Rep. 405 5,241

    Uruguay )51 5,901Guinea-Bissau )1,105 937

    Bhutan )1,201 114Botswana )2,133 614Nicaragua )2,420 5,932

    Credit after

    transfer

    Debt prior

    to transfer

    Indonesia 233,087 128,9406. DISCUSSION AND CONCLUDINGTHOUGHTS

    Externally-indebted LDCs stand to gain agreat deal from ecologically-motivated trans-fers from industrialized countries. Assumingthat ecological decit countries appropriate10% of additional carrying capacity neededfrom these LDCs instead of from their ownbiocapacity stock, many LDCs become netcreditors after the ecological transfer. Amongthe debtors that remain when the ecologicaltransfers are based on total exports, Mozam-biques debt is largest, and it is a mere $5.5billion. The population criterion is more equi-table in that its application results in 41 of the46 original debtor countries becoming netcreditors after the transfer. The largest re-maining debtor in this caseArgentinare-tains a more sizable negative balance of about$47 billion. Even here the amount is less thanone-half the countrys pre-transfer debt.

    Brazil 115,786 180,780

    Myanmar 74,487 5,184

    Congo, DR 70,270 12,826

    Tanzania 48,621 7,362

    Colombia 43,235 28,900

    Sudan 32,901 16,972

    Uganda 32,574 3,674

    Ghana 25,734 6,442

    Mozambique 22,235 7,566

  • LDC external debt burdens. The question ofwhich countries should most gain from eco-

    ample, determination of the transfer recipients

    per capita basisthat is, disregarding avail-able biocapacity. Such a variation would avoidrewarding countries with relatively small pop-ulations or relatively large land masses. In ad-

    enjoy the highest consumption levels. At $4,400

    about $17.5 trillion. Our assumption aboutwhat percentage is spatial and what per-

    we are talking about the total for the entire

    T

    ECOLOGICAL FOOTPRINT APPROACH 2169dition, any alternative approach that allows formore than 46 ecological transfer recipients (asin my exercise) would have the eect of reduc-ing average transfer. Yet the average transfermight increase substantially if we includedecological benets in estimating the area unitvalue or adopted less conservative assump-tions about the share of ecological decit that isfed by carrying capacity appropriated fromabroad.I have stated that the alternative assumptions

    of 5% and 10% for the share of LDC ecologicalfootprint that is appropriated by foreigncountries is conservative. Still, my conclusionssuggest the need to probe deeper into the rela-tionship between ecological decits and theactions of foreign direct investors and multi-nationals in LDC natural environments. Whilethere is no question that such actions make anon-negligible contribution to the ecologicalfootprintand, for that matter, GDPof bothinvesting and host country, more extensive re-search on dierent cases, past and present,might produce the basis for informed estimatesrather than hypothetical assumptions, howeverconservative the latter may appear.While I have focused on the ecological debt

    that emerges from spatial maldistribution, thegeneral problem of ecological footprints ex-

    NO

    1. For those not familiar with the ecological footprint

    literature, these and related concepts are explained in the

    methodology section of this paper.

    2. Jenkins, in fact, also uses the ecological debt

    concept as a justication for NorthSouth compensa-tory transfers.world. One hundred percent of $17.5 trillion, inother words, is what the present generation ofthe worlds people owes all future genera-tions.Both spatial and temporal components of

    ecological distribution merit future researchsince better understanding of ecological mal-distribution is critical to designing future policysolutions to global environmental problems.Each of the two dimensions implies dierentpolicy solutions. Compensatory transfers areindeed one potentially useful method of allevi-ating the spatial aspect of ecological decits.Perhaps more important, they may serve theadditional function of reducing or cancelingoutright the external debt of many LDCs, withpotentially desirable economic and environ-mental consequences. Nevertheless, the factthat the world as a whole is in considerabledecit signies that transfers are by themselvesan insucient means of promoting environ-mental sustainability. The temporal maldistri-bution implied by the ecological footprintanalysis appears to suggest the need to reduceecological footprints across the board. Whetherit implies policy aimed at stabilizing consump-tion levels, developing of less material-intensivetechnologies, or some combination of the two,is a subject for another paper.

    ES

    3. Moreover, unlike the ecological transfer, the debt-

    nature swap generally involves a third partytypically

    an NGOalthough this need not always be so. See,

    among others, Deacon and Murphy (1997), Isla (2001),

    and Tucker (1994).

    4. An area unit is equivalent to a hectare of biologi-centage is temporal does not apply here sincemight be conducted on an ecological footprint per area unit, the world decit is valued atlogical transfers can and should be explored ingreater detail, since my results are likely to besensitive to alternative assumptions. For ex-My main objective has been to illustrate theecological potential for signicant reductions inceeding biocapacity has an important temporalaspect as well. Consider that the worlds totalecological decit, at 3.99 billion area units, ex-ceeds the industrial country total that was al-located as transfers (3.73 billion). That is, theworld ecological footprint exceeds its bioca-pacity even disregarding the 16 countries thatcally productive space with world average productivity.

  • 6. One could undoubtedly rene the formula in such a

    surplus would bear on the outcome. For instance, we

    might deem that countries with relatively small decitsenvironmental valuation studies, often leading to severe

    understatement of the relevant values. As noted by

    E

    WORLD DEVELOPMENT2170or surpluses might be disregarded, that large ecological

    decit LDCs be responsible for some discounted share

    of the total compensation, and that only large ecological

    surplus countries share in the ecological transfer. Yet the

    additional complexities that such considerations raise

    such as how small and large are dened, for

    exampleare beyond my present scope.

    7. The detail includes the subfootprintscropland,

    grazing land, forest, shery, and CO2that make up the

    aggregate ecological footprint as well as the average

    productivity of dierent land types in each country.

    8. I make a few adjustments to the country observations,

    in a couple of cases because of inconsistency between the

    Living Planet Report and World Bank data. Although

    data for Hong Kong are listed separately by both sources,

    I combine themwithChina. In contrast, since the footprint

    and biocapacity data for Belgium and Luxembourg are

    presented as if they were for a single country, I similarly

    REFER

    Agarwal, A., & Narain, S. (1991). Global warming in anunequal world: A case of environmental colonialism.Working Paper, Centre for Science and the Envi-ronment, New Delhi.

    Andersson, T., Folke, C., & Nystrom, S. (1995). Tradingwith the environment: Ecology, economics, institu-tions, and policy. London: Earthscan.

    Ayres, R. (1997). On the economic valuation of ecosystemservices. Working Paper 102/EPS, INSEAD, Fon-tainbleu, France, October.

    Bryant, R. L. (1992). Political ecology: An emergingresearch agenda in Third-World studies. PoliticalGeography, 11, 1236.

    Costanza, R., dArge, R., de Groot, R., Farber, S.,Grasso, M., Hannon, B., Limburg, K., Naeem, S.,ONeill, R. V., Paruelo, J., Raskin, R. G., Sutton, P.,& van den Belt, M. (1997). The value of the worldsecosystem services and natural capital. Nature (May15), 253260.

    Dasgupta, P. (1995). Economic development and theenvironment: Issues, policies, and the political econ-omy. In M. G. Quibria (Ed.), Critical issues in Asiandevelopment (pp. 160185). Oxford: Oxford Univer-sity Press.

    Deacon, R., & Murphy, P. (1997). The structure of anenvironmental transaction: The debt-for-natureswap. Land Economics, 73, 124.

    Epstein, J.,&Gupta,R. (1991).Controlling the greenhouseeect: Five global regimes compared. OccasionalPapers, Washington, DC: The Brookings Institution.

    Haynes, M., & Husan, R. (2000). National inequalityand the catch-up period: Some growth-alonePearce (1991, pp. 242243), ignoring these benets

    results in environmental degradation exceeding the

    ecient amount: Typically, development benets

    can be fairly readily calculated because there are

    attendant cash ows. . . Conservation [ecological] bene-

    ts, on the other hand, are a mix of associated cash ows

    and non-market benets. This fact imparts two biases.The rst is that components with associated cash ows

    are made to appear more real than those without suchcash ows. There is misplaced concreteness and deci-sions are likely to be biased in favor of the development

    option because conservation benets are not readily

    calculable. The second bias follows from the rst. Unless

    incentives are devised whereby the non-market benets

    are internalized. . .conservation benets will automati-cally be downgraded. . . [T]hose who stand to gain from

    timber extraction or agricultural clearance cannot con-

    sume the non-marketed benets. This asymmetry ofvalues imparts a considerable bias in favor of the

    development option.

    NCESway that the relative magnitude of ecological decit or 10. A problem often confronted in resource andIts productivityi.e., how much consumption it can

    sustainis an average of dierent types of terrain with

    varying levels of productivity, weighted according to

    availability of each land type. I discuss the measure in

    greater detail in the data section of the paper. For more

    detail on ecological footprints I refer the reader to

    Picton and Daniels (1999), Rees (1992), Rees and

    Wackernagel (1994), and Wackernagel et al. (1999).

    5. In other words, that it uses material ows as they are

    obtained but leaves intact the stocks that generate the

    ows.aggregate the World Bank data for consistency. Finally, I

    omit Taiwan from the data set since the World Bank does

    not consider it separately from China.

    9. I should add the caveat that many have found

    problems with their approach. See, for example, Ayres

    (1997), Norgaard, Bode, and Values Reading Group

    (1998), and Rees (1998). Still, Costanza et al. provide

    some plausible reasons why their calculations might

    underestimate the actual values (such as the indierence

    of the price system to sustainability issues, or the

    authors disregard for threshold eects or discontinu-

    ities).

  • scenarios. Journal of Economic Issues, 34, 693705.

    Homer-Dixon, T. (1995). The ingenuity gap: Can poorcountries adapt to resource scarcity? Population andDevelopment Review, 21, 587612.

    Isla, A. (2001). Enclosure and micro-enterprise assustainable development: The case of the Canada/

    Picton, T., & Daniels, P. L. (1999). Ecological restruc-turing for sustainable development: Evidence fromthe Australian economy. Ecological Economics, 29,405425.

    Pritchett, L. (1997). Divergence, big time. Journal ofEconomic Perspectives, 11, 317.

    Rees, W. E. (1992). Ecological footprints and appropri-

    ECOLOGICAL FOOTPRINT APPROACH 2171Costa Rica debt-for-nature investment. CanadianJournal of Development Studies, 22, 935955.

    Jenkins, T. (1996). Democratizing the global economyby ecologicalizing economics: The example of globalwarming. Ecological Economics, 16, 227238.

    Khan, H. A. (1997). Ecology, inequality, and poverty:The case of Bangladesh. Asian Development Review,15, 164179.

    Kox, H. (1997). Developing countries primary exportsand the internalization of environmental externali-ties. In J. van den Bergh & J. van der Straaten (Eds.),Economy and ecosystems in change: Analytical andhistorical approaches (pp. 359383). Cheltenham:Edward Elgar.

    Lambert, T., & Boerner, C. (1997). Environmentalinequity: Economic causes, economic solutions. YaleJournal on Regulation, 14, 195234.

    Loh, J. (Ed.). (2000). Living planet report. Gland,Switzerland: World Wildlife Fund International;Cambridge, UK: United Nations Environment Pro-gram; Oakland, CA: Redening Progress; Xalapa,Mexico: Center for Sustainability Studies; Sandvika,Norway: Norwegian School of Management.

    Martinez-Alier, J. (1993). Distributional obstacles tointernational environmental policy: The failures atRio and prospects after Rio. Environmental Values,2, 97124.

    Martinez-Alier, J. (1995). Distributional issues in eco-logical economics. Review of Social Economy, 53,511528.

    Millikan, B. H. (1992). Tropical deforestation, landdegradation, and society: Lessons from Rondo^onia,Brazil. Latin American Perspectives, 19, 4572.

    Muradian, R., & Martinez-Alier, J. (2001). Trade andthe environment: From a southern perspective.Ecological Economics, 36, 281297.

    Norgaard, R., , Values Reading Group& Bode, C.(1998). Next, the value of God and other reactions.Ecological Economics, 25, 3740.

    Ong, P. M., & Blumenberg, E. (1993). An unnaturaltradeo: Latinos and environmental justice. In R.Molares & F. Bonilla (Eds.), Latinos in a changingUS economy: Comparative perspectives on growinginequality (pp. 207225). London: Sage.

    Pearce, D. (1991). An economic approach to saving thetropical forests. In D. Helm (Ed.), Economic policytowards the environment (pp. 239262). Oxford:Blackwell.ated carrying capacity: What urban economicsleaves out.Environment and Urbanization, 4, 121130.

    Rees, W., & Wackernagel, M. (1994). Appropriatingcarrying capacity: Measuring natural capital require-ments of the human economy. In A. Jansson, M.Hammer, C. Folke, & R. Costanza (Eds.), Investingin natural capital: Ecological economics approaches tosustainability (pp. 362390). Washington, DC: IslandPress.

    Rees, W. (1998). How should a parasite value its host?Ecological Economics, 25, 4952.

    Repetto, R., Magrath, W., Wells, M., Beer, C., &Rossini, F. (1989). Wasting assets: Natural resourcesin the national income accounts. Washington, DC:World Resources Institute.

    Slaughter, M. (1998). International trade and per capitaincome convergence: A dierence-in-dierences analy-sis. Working Paper # 6557, National Bureau ofEconomic Research, Cambridge, MA, May.

    Schmink, M., & Wood, C. H. (1987). The politicalecology of Amazonia. In P. D. Little, M. M.Horowitz, & A. E. Nyerges (Eds.), Lands at risk inthe Third World: Local-level perspectives (pp. 3857).Boulder: Westview Press.

    Solomon, B. (1999). New directions in emissions trading:The potential contribution of new institutionaleconomics. Ecological Economics, 30, 371387.

    Soloorzano, R., De Camino, R., Woodward, R., Tosi, J.,Watson, V., Vaasquez, A., Villalobos, C., & Jimeenez,J. (1991). Accounts overdue: Natural resource depre-ciation in Costa Rica. Washington, DC: WorldResources Institute.

    Torras, M. (2001). Welfare accounting and the environ-ment: Reassessing Brazilian economic growth, 19651993. Development and Change, 32, 205229.

    Tucker, M. (1994). A nancial analysis of a proposedMadagascar debt-for-nature swap. Journal of Multi-national Financial Management, 4, 6783.

    Vasquez, X. (1993). The North American Free TradeAgreement and environmental racism. Harvard In-ternational Law Journal, 34, 357379.

    Wackernagel, M., Onisto, L., Bello, P., Linares, A. C.,Falfaan, I., Garca, J., Guerrero, A., & Guerrero, G.(1999). National natural capital accounting with theecological footprint concept. Ecological Economics,29, 375390.

    World Bank (2000). World development indicators (CD-Rom version). Washington DC: World Bank.

    An Ecological Footprint Approach to External Debt ReliefIntroductionEcological distribution, ecological debt, and the ecological footprintMethodologyDataResultsDiscussion and concluding thoughtsReferences

Recommended

View more >