What is good economics? What is the true bottom line? Are they the balance sheets, loved by banks and stock markets, that measure out our lives in quarterly earnings?
Or do those balance sheets mislead us? Do they give false pictures of economic health?
Bill Rees, and his graduate student Yoshihiko Wada at the University of British Columbia, have come up with a startling study that shows just how misleading conventional balance sheets can be. Rees is director of the university’s School of Community and Regional Planning.
The study looks at the claim, made on the basis of conventional accounting, that it is more efficient to grow tomatoes in greenhouses than in open fields. It examined two greenhouse and two open field operations, and compared the results of growing 1,000 metric tons of tomatoes.
One greenhouse occupied 2 hectares and the other 3.2. One of the open fields was 12 hectares and the other was 18. According to standard accounting practices, revenues per hectare were 13 times higher and and profits 9 times higher for the greenhouses.
On the surface, therefore, it appeared that the greenhouses made far more efficient use of land.
But did they? Rees has developed a new way of looking at the impact of activities on the environment by using what he calls an « ecological footprint.’’ It indicates how much land is needed to support an activity.
It represents the amount of land required to produce the energy and resources consumed by the activity, as well as the amount needed to assimilate the waste generated by it.
For instance, if gasoline or heating oil is used, the first step is to determine how much ethanol would be needed as a substitute. Next is to calculate how much land would be needed for growing the crops to produce the ethanol.
Similarly with paper and cardboard used. How much forest land would be needed for wood pulp? And how much land would represent the energy used to manufacture and deliver them?
On this basis the study finds that the ecological footprint for one of the greenhouses was 765 hectares and for the other was 919 hectares. The ecological footprint for one of the fields of tomatoes was 43 hectares and for the other it was 56.
« In other words,’’ the study says, « the ecological footprint of a greenhouse tomato is 14 -21 times that of a field tomato.’’ In truth, therefore, greenhouses are enormously less efficient. They may occupy less land, but their demands on the ecosystem are huge.
The study looked at « fertilizer, pesticides, wood chips (as a soil medium), fossil energy, building materials, etc.’’ It also looked at the waste produced, which was mainly carbon dioxide (CO2). To determine the ecological footprint of the CO2, the study calculated how much forest land would be needed to assimilate it.
The inescapable conclusion is that growing hothouse tomatoes is ecologically unsustainable.
As the study shows, Rees has created a tremendously powerful tool for analyzing sustainability. Its full importance sinks home when you begin looking at carrying capacity — the ability of the globe to support life indefinitely without deteriorating.
In a telephone interview, Rees estimated that the minimum ecological footprint of the average Canadian — that is the impact measured in hectares of what the average Canadian consumes and what he or she creates as waste — is 4.3 hectares.
Since there are only about nine billion hectares of productive land in the world — about 1.5 hectares per person — it’s obvious that Canadians are living in a style that is beyond the carrying capacity of the world. « We’re using far more than our equitable share,’’ Rees says.
When carrying capacity is exceeded, it means ecosystems get used up. More CO2 is produced, for instance, than the world can assimilate, and global warming occurs. Or soil is stripped of fertility. Or biodiversity crashes.
« If the Third World were to reach our level of consumption, we’d need two to five additional planets over the next forty years, depending on how population grows,’’ Rees concludes.
That’s a bottom line we should pay attention to.