According to the Global Footprint Network, humans have already used a year’s worth of Earth’s resources in 2018. “Earth Overshoot Day” has crept up the calendar from December 29th in 1970 to August 1st in 2018.
The more we consume beyond their estimate of Earth’s ability to regenerate resources, the earlier the date: “The date of Earth Overshoot Day is calculated by comparing humanity’s total yearly consumption (Ecological Footprint) with Earth’s capacity to regenerate renewable natural resources in that year (biocapacity).”
By my calculations, their dates mean that we have consumed about 60% of Earth’s annual resource capacity in 48 years since 1970. The difference is 12 Earth-years of resources, which sounds like a gigantic debt, payable by riding a bike to work, going vegan, enforcing strict population limits, and returning to pre-industrial living conditions wherever possible. Yuck!
Commenters at various sites where the Earth Overshoot Day was published overwhelmingly blame capitalism and overpopulation as root causes of our resource overconsumption. Private businesses have no incentive to maintain resources — greed leads them to exploit the earth for profits today with no regard for tomorrow. The lack of government-provided birth control and sex education because of misogynistic politicians has allowed birth rates in some parts of the world to remain high, putting undue strain on our scarce resources.
The problem with this is that neither economic theory nor global indicators of human well-being bear this out.
What economic theory says about resource use
Economic theory does not say that entrepreneurs disregard the future availability of some productive resource. Entrepreneurs are not in the business of making money today — they are interested in earning profits across time and they will use their resources accordingly.
Even if some resource is exhausted, all it means is that entrepreneurs satisfied consumer demands when consumers wanted them satisfied. It is wrong to blame the producers for resource exhaustion because they are subject to the consumers.
Consumers are also interested in the maintenance of resources, too, though. The way we balance the use of resources today and tomorrow depends on everybody’s rate of time preference, the premium we place on present consumption over future consumption.
We are more likely to save and maintain resources when we expect the future consumption to be greater or better. This is why we don’t eat all of the grapes today, but use some to make wine for future consumption. It’s also why farmers are careful to rotate crops and not overfarm their land so that it will be as productive as possible for as long as possible.
Therefore, the best policies for the maintenance of resources are private property and allowing entrepreneurs to utilize and experiment with new technologies that might decrease costs (using less resources) and increase production (making the future payoff greater). Productivity is not a drain on the Earth’s resources, but a great incentive to entrepreneurs and consumers to save and invest for the future.
Of course, one kind of policy that encourages profligacy is expansionary monetary policy. Inflationary environments lead everyone to consume more than they would have, because holding on to cash while prices are rising is a losing position. Credit expansion also causes entrepreneurs to waste productive resources by pursuing the wrong lines of production — consider the empty mansions in the wake of the Fed-fueled housing bubble that popped in 2007–2008.
Economic theory is clear, then, on what actually leads to overconsumption and malinvestment of present resources. But what about the data? Should we be afraid of overpopulation or dwindling natural resources?
Every indicator of human well-being looks great
In short, no. Every conceivable indicator of human well-being shows that the world is much better off with 7.6 billion people in 2018 than we were with half that in the early 1970s. Earth’s population has doubled, but the share of the population in extreme poverty has been slashed from about 60% in 1970 to less than 10% today.
The illiteracy rate has shrunk from 44% to 14% since 1970. The number of people without access to improved water sources has halved just since 1990. The global average life expectancy has increased by over 12 years since 1973. If you are doubtful that humans are broadly and significantly better off compared to 1970, then browse ourworldindata.org, where I found all of this data, and see for yourself.
So, humans are better off, but what about the Earth? Have we prospered at the expense of our planet?
Is the Earth turning into a desert planet?
Well, the Earth got 14% greener from 1986 to 2016. Aquaculture fish production is significantly outpacing wild-caught fishing, which has flatlined since the 1980s (PDF here, graph below). Cereal production has more than tripled since the 1960s, far outpacing population increases, even though land used for cereal production has stayed about the same (graph below).
Source: FAO, “The State of World Fisheries and Aquaculture” 2016
In 2017, BP estimated that we had 1696.6 billion barrels of proved oil reserves. They project that it is enough for 50 years, but this estimate is based on maintaining 2017 production levels, when it is more than reasonable to expect demand to fall and production to become more efficient. Also, we can expect new technologies to make previously unproved, inaccessible oil reserves accessible. Speaking of energy, net electricity production from nuclear sources has increased 3473% from 1970 to 2013, based on data from the Earth Policy Institute.
We are wealthier and more productive than ever and we seem to be maintaining and even expanding Earth’s capacity to meet our needs. I’m optimistic on this front.
Perhaps the only cause for alarm is that so many people are pessimistic about the world population and our natural resources despite the astounding progress we’ve made just in the last 50 years. Pessimists ask for governments to intervene, but the interventions are either unnecessary or harmful to the progress made possible by the market economy.
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Author: Tyler Durden