Environment & Poverty Times
Sustainable consumption: a fairer deal for poor consumers
By Sonja Vermeulen
A version of this article appeared as an IIED briefing in January 2009
On our finite planet, the dictates of ecology and technology limit economic growth. Yet a key element of this issue – consumption – has until recently hardly figured on policy agendas. Now there is growing recognition that transformation towards a low-carbon, resource-efficient economy means tackling consumption as well as production. Gov- ernments and businesses are beginning to make concerted, if uncoordinated, efforts to reduce energy and resource use. Rethinking consumption could, however, drive an even bigger wedge between rich and poor. Any new agenda for consumption needs to factor in equity as well as environmental benefit.
Summary World consumption is highly skewed, with the poorest people consuming the least and the richest as much as ten times more food and energy per capita.
Consumption, well-being and sustainability
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There is huge scope to manage global consumption. Evidence shows that well- being can be delinked from consumption, economic growth delinked from rising resource use, and local development delinked from international trade. Initiatives to tackle overconsumption also need to deliver a fair deal to poorer people who consume little, guaranteeing a decent basic level to all. Consumption needs to be understood as a social issue, not just an environmental is- sue, with renewed emphasis on inclusion of the world’s poor majority, and collective de- cisions over individual consumer choices.
Fair share: the overlooked challenge in consumption Just over a decade ago, inequity in global consumption was the focus of the UN De- velopment Programme’s 1998 Human De- velopment Report, Consumption for Human Development. It showed that the world’s richest fifth consume 45% of all meat and fish, and the poorest fifth 5%; that the richest fifth use 58% of all energy, and the poorest fifth less than 4%; and that the richest fifth own 87% of the world’s vehicles, while the poorest fifth own less than 1%.
These contrasts apply as much within as between countries. In Brazil, for example, the wealthiest use 18 times more energy than the poorest in a year.
Today, consumption is firmly back on the agenda. The UN-coordinated Marrakech Process, which supports sustainable con- sumption and production through targeted advice, technical assistance and other means,
Our current global economic model is predicated on the assumption that higher consumption, driven by economic growth, begets greater well-being. Supplies of natural resources drive any rise in consumption, but increasingly also limit it. With climate change threatening to dampen economic growth and the UN predicting a global popu- lation of 9 billion by 2050, policymakers must question whether consumption and well-being can rise indefinitely.
Evidence shows that poorer people do indeed benefit from higher incomes and associated boosts in consumption, but that at higher income levels, the connection between greater consumption and greater well-being dwindles. The links between consumption of different resources and their environmental impacts, such as pollution and depletion, are difficult to quantify. As a result, consumer campaigns often target high-visibility rather than high-impact areas of consumption (such as air-freighted vegetables and low- energy light bulbs, rather than road transport and household insulation).
A key question for national policymakers is whether and how economic growth can be decoupled from material consumption and its environmental impacts. Examples of “relative decoupling” – reducing increases in environmental impacts relative to economic growth – can be identified. For example, in 2006-7 India delivered a GDP growth of 8% with only 3.7% growth in its total primary energy consumption. On the other hand, “absolute decoupling” – increases in eco- nomic growth alongside actual reductions in material consumption and environmental impacts – are technically and economically
has been increasingly active since 2003. Na- tional governments are turning rhetoric into legislation. China, for example, introduced the Circular Economy Law in 2008; its ambitious goal is to increase resource-use efficiency tenfold.
But amid the renewed attention to solv- ing problems of over-consumption and “mis-consumption” (consumption of environmentally damaging products) is a worrying reticence regarding equity is- sues. Around 80% of the world lives in poverty, surviving on less than $10 a day. For them, the need is to consume more, not less. So is it possible to reduce global overconsumption – to transform to a low- carbon, low-material, low-water economy – in ways that do not penalize poor people, but create opportunities for them to raise their standards of living?
possible, but have not yet proved feasible in terms of policy.
Consumption, trade and development It is often argued that low-income countries benefit greatly from trade with high-value markets such as the European Union and the United States. But how accurate is this view? If wealthy nations reduce their consumption – and by implication, their trade – will this have a significant negative impact on the world’s poorest?
A look at the pros and cons of trade shows that this is a complex area. Trade does bring benefits. It stimulates changes to national, regional and local economies. Prices shift for local goods that can be produced more cheaply elsewhere and the values associ- ated with skilled labour often increase. Opportunities arise to upgrade skills and technology, with spill-over benefits for the broader economy.
There are, however, also risks. One is that industries in some exporter countries will be outcompeted by more efficient busi- nesses elsewhere. Supply chains within liberalized economies become increasingly buyer-driven. In the agrifood sector, for ex- ample, retailers demand that suppliers meet requirements of scale, quality, safety and packaging, which can exclude the smallest and poorest producers.
Leading thinkers now challenge the as- sumption that trade will bring automatic trickle-down benefits for development. It is an open question whether trade with the richest benefits the poorest. A sharper focus on regional trade and value-addition, backed by strong development strategy, may help poor people secure their livelihoods while decreasing their reliance on consumption in rich nations.
A new politics of consumption International discussion round consumption continues to emphasize voluntary, individual consumption choices. To date, a variety of public and private policy initiatives have aimed to change the consumption patterns of individuals by encouraging domestic energy efficiency, locally grown food and bicycle transport, for example. But there are three important limits to the possible impacts of individual lifestyle-based solutions.
First, consumers’ individual choices are limited by infrastructure, such as urban design centred on car use, or by policy trade- offs such as the need to balance food safety against food waste. Secondly, we buy not raw materials but goods and services, derived from complex value chains that are difficult
to understand or influence. Finally, at least a quarter of global consumption cannot be attributed to household end-users, which reveals the importance of government pro- curement and public policy.
In seeking solutions to overconsumption, we need to concentrate on societies and structures as a whole, rather than their individual actions. Shorter-term solutions may rely on improving efficiencies within existing modes of production and consump- tion (reformist changes). In the longer term, however, what is needed is a re-think of how and what we consume (transformist changes). Either way, real shifts in patterns of consumption will challenge ideals of maximum individual choice. Instead, we will need collective “choice editing”, and to consider seriously emerging recommenda- tions of per capita quotas for carbon, water, meat or ecological footprints.
Critical too is providing a fair deal for poorer consumers. The 1998 Human Development Report suggested overarching principles to guarantee a basic level of consumption for everyone while reducing the negative impacts of global overconsumption. While many governments have subsequently acted to reduce overconsumption at the national level, there are far fewer examples of initia- tives that explicitly link the overconsumption of the wealthy to the underconsumption of the poor, to provide incentives for redistribu- tion of consumption patterns.
The opportunities, however, are tremendous. Governments and businesses have yet to take advantage of the bounty of easy wins where environmental gains and long-term savings in cost converge. Delivering a fair deal to poorer consumers requires careful use of pricing mechanisms as a means to reduce consumption, so as not to exclude them from access to goods and services. Pro-poor enterprises also need support to cover the initially capital-intensive and carbon-intensive investments that will allow them longer-term resource efficiency, such as construction of major new mass-transit infrastructure.
A global agenda for tackling consumption must incorporate the ideas and agency of the world’s poor majority. We need to move beyond Northern agendas to recognize in- equalities among people and not just among countries – and to return the emphasis firmly to collective decisions rather than individual consumer choices.
About the author: Sonja Vermeulen is Pro- gramme Director for Business and Sustainable Development, International Institute for Environ- ment and Development (IIED).
The Happy Planet Index 2.0: Why good lives don’t have to cost the Earth (2009), by Abdallah, S et al
“Economists like the concept of efficiency, and the Happy Planet Index is the ultimate efficiency ratio – the final valuable output di- vided by the original scarce input,” Professor Herman Daly, University of Maryland.
School children of Bhutan http://www.youtube.com/
In an age of uncertainty, society globally needs a new compass to set it on a path of real prog- ress. The Happy Planet Index (HPI) provides that compass by measuring what truly matters to us – our well-being in terms of long, happy and meaningful lives – and what matters to the planet – our rate of resource consumption. The HPI brings them together in a unique form which captures the ecological efficiency with which we are achieving good lives.
This report presents results from the second global HPI. It shows that we are still far from achieving sustainable well-being, and puts forward a vision of what we need to do to get there.
The current economic and ecological crises have discredited the dogmas of the last 30 years. The unwavering pursuit of economic growth – embodied in the overwhelming focus on Gross Domestic Product (GDP) – has left over a billion people in poverty, and has not notably improved the well-being of those who were already rich, nor even provided us with economic stability. Instead it has brought us straight to the cliff edge of rapidly diminish-
ing natural resources and unpredictable climate change. We need to see this current crisis as an opportunity. Now is the time for societies around the world to speak out for a happier planet, to identify a new vision of progress, and to demand new tools to help us work towards it. The HPI is one of these tools.
Publisher: New Economics Foundation ISBN: 978 1 904882 55 8
The publication is available at www.hap- pyplanetindex.org/public-data/files/happy-
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