If the people of today had to live sustainably and not spend more than their actual ecological “income,” living standards would fall by a third all around the world. And taking into account the expected population growth over the next thirty years, future living standards could actually be halved – that is unless sustainable change occurs.
The effects of ecological limits on our standard of living are already becoming apparent. China’s project to build oil and coal-fired power stations on a large scale failed – not because the stocks of oil and coal were exhausted but due to a shortage in the water required to cool the power plants. China is not capable of generating electricity and growing food at the same time. Food production in the Western United States is restricted by a shortage of water. Pollution leads to residents of the major cities developing health problems which decrease productivity and can only be rectified at considerable cost, if at all. These limits to growth possibilities are merely indications of the potential consequences that an “ecological credit crisis” could entail.
The use of environmental credit cannot continue as it is at the moment. Despite that, living standards can still be maintained or even improved. Economists have found a solution. It consists of a new type of growth that is focused on innovation and efficiency. This kind of growth could reduce our dependency on environmental debt.
The objective of innovative growth is to generate more performance with less energy and more products with fewer raw materials. This is precisely what is needed for us to maintain our standard of living without relying on environmental debt. Digitization and the virtual economy have a role to play, too. The environmental cost of owning a music album, for instance, is lower today than it was ten years ago. A decade ago, consumers bought a manufactured CD which included a plastic case and packaging and had to be transported. Now, consumers simply download the album directly to their iPod. Downloads may not be entirely free from an environmental perspective, but the innovative, virtual economy has reduced the environmental cost of buying music considerably.