Abstract

Does a Nation’s Ecological Performance Affect its Economic Stability? The Potential for Enhancing Sovereign Credit Risk Assessments with Ecological Resource Accounts


Mathis Wackernagel, Global Footprint Network, Oakland, CA, USA, Chris Martiniak, Global Footprint Network, Oakland, CA, USA, and University of Michigan Business School, USA, Fred Wellington, World Resources Institute, Sustainable Enterprise Program, and f
This chapter examines how ecological indicators may be able to contribute to assessments of a country's future economic performance. We use Ecological Footprint accounts to track a country’s ecological performance and contrast results from this analysis with overall economic performance measures for nations such as sovereign credit ratings published by leading sovereign rating agencies. Our starting point is the global ecological context: humanity's demand on resources exceeds by approximately 20% what the biosphere can regenerate and this overshoot is increasing. This reality is neither reflected in current prices for resources or waste emissions, nor does future scarcity inform today's prevailing assessments of a country's future economic performance. With increasing global scarcity, it is likely that a country’s resource situation will become an increasingly significant factor in its economic performance as prices for ecological goods and services are adjusted either through international agreements for protecting the biosphere's regenerative capacity or, in absence of such agreements, by the more brutal reality of actual physical limits being encountered. This chapter explains how the Ecological Footprint, a comprehensive measure of human demand on the biosphere, can be used to put economic risks into the context of ecological performance and, in turn, inform assessments of economic stability or competitiveness.
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