Can annual overconsumption of resources be compensated for later?

Current issues related to economy, (responsible) investment, pension and income: every week an APG expert gives a clear answer to the question of the week. This time: Peter Verbaken, Head of APG’s Commodities Team, on the question of whether overconsumption of commodities can be compensated for later.

April 12 marked the annual “Overshoot Day” in the Netherlands. If every world inhabitant lived as we do in the Netherlands, then on April 12, as many resources and storage space for carbon dioxide would already have been consumed as the earth can regenerate in an entire year. In other words: The Netherlands actually needs 3.6 Earths to meet the consumption of its inhabitants.

Overshoot Day comes relatively early in the year in the Netherlands - as in other Western countries - and also occurs earlier each year. In Brazil, for example, this day is not reached until Aug. 12, and in Indonesia it is not even reached until Dec. 3. Earth (Global) Overshoot Day in recent years falls in July. So in terms of resource consumption and CO2 emissions, we are further “in the red” every year. Can that deficit be made up in the future?

Distant future

To answer that question, Verbaken distinguishes between carbon emissions and consumption of raw materials. “The goal is for both the EU and the United States to be CO2-neutral by 2050 and China by 2060. So by that time, as much or less carbon should be emitted as the earth can absorb annually, or can be captured by human intervention. Then you would no longer have an excess of carbon emissions.” That would not, however, reverse the carbon that has been emitted since the industrial revolution. “There would still be a global warming of - as it looks now - at least 1.5 degrees around 2060. Perhaps in the long run, when substantially less carbon is emitted than the earth can absorb, it may be possible to reverse some of that warming. But that is a scenario for the distant future.”      

That the world’s population consumes more raw materials than the earth can regenerate in a year does not necessarily mean that at some point there will be structural shortages of certain raw materials, Verbaken believes. “For individual raw materials, alternatives are always possible. If there is a temporary shortage of a raw material, the price goes up and then it often turns out that production can be further increased elsewhere to compensate for the shortage. Or demand shifts to a similar product.”

Resource extraction

Much also depends on how a raw material is extracted. “With wood, for example, worldwide deforestation is occurring faster than a forest can recover or be planted. Although the outlook in that regard has improved since the recent change of power in Brazil. Their new president seems to intent on implementing policies aimed at preserving the Amazon rainforest.” Policies can also help combat overfishing in certain regions. “There is already a lot of knowledge on how to make fisheries sustainable and future-proof so that the fish population can recover sufficiently.”

Many crops, including grains such as wheat and corn, can be harvested twice a year in certain regions. Consequently, there is no shortage of those. “Those crops are also being grown more and more efficiently, further increasing the yield per acre.” However, there is much to be gained from using crops such as soybeans. “Currently, corn or soybeans are frequently used as animal feed. Protein intake from meat is very inefficient. Producing a piece of meat costs 10 to 15 times as much protein, in the form of livestock feed, as it yields. At the same time, it does contribute significantly to carbon emissions. So there is much potential gain to be made if our diet is focused less on meat and more on plant-based food.” If the Netherlands consumes 50 percent less animal protein, Overshoot Day will move up by two weeks. 

The fact that Overshoot Day in the Netherlands occurs as early as April year after year does not seem to directly result in a shortage of raw materials in the future. A bigger problem is carbon emissions from the production and consumption of raw materials and the construction of housing and infrastructure. This will warm the earth by at least 1.5 degrees, and that seems harder to reverse than the annual overconsumption of raw materials.