An Ecological Footprint Approach to External Debt Relief

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    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


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

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


    *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


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


  • 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.



    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.


    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 o...


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