Human Carrying Capacity and the 2008 Financial Meltdown

In 1972, a group of researchers funded by the Volkswagon Foundation published a book titled, The Limits to Growth.  Based on a MIT computer model using system dynamics, the book predicted that unless the current trajectory of population and industrial growth was altered, the world would exceed it’s human carrying capacity resulting in a sudden and uncontrollable decline in population and industrial capacity.

By challenging our beliefs in the inevitable rightness and goodness of technical, industrial, and economic growth, the book evoked great controversy and would eventually sell over 30 million copies in more than 30 languages.  Contrary to much of the criticism that the book received, it was neither anti-growth nor did it predict the running out of any specific resource by a date certain.  Noting that it’s research was “preliminary”, the book offered three simple conclusions.

1. If current growth trends continue we will exceed the earth’s human carrying capacity within 100 years.  This overshoot of carrying capacity will result in a sudden and uncontrollable decline in both population and industrial capacity.
2. These growth trends can be altered to achieve a sustainable, “ecological stability” capable of supporting a given human population far into the future.
3. The longer we wait to begin altering growth trends, the lower the probability of successfully achieving a sustainable future.

The 1972 authors gave us some markers to watch for as warning signs or indicators of our possible overshoot of human carrying capacity.

• Deterioration in renewable resources – surface and ground water, forests, fisheries, agricultural land.

• Rising levels of pollution.

• Growing demands for capital, resources, and labor by military and industry to secure, process, and defend resources.

• Investment in human resources (education, shelter, health care) postponed in order to provide immediate consumption and security demands.

• Rising debt; eroding goals for health and environment.

• Growing instability in natural ecosystems.

• Growing gap between rich and poor – between the powerful and the weak.

I’ll return to these warning signs, but first I think it would be useful to define a few key concepts.

Human Carrying Capacity
In the simplest of terms, human carrying capacity in a closed eco-system like earth is a function of population plus the average rate of consumption of that population.  At a given limit, you have the trade off of a high population and low levels of consumption, or low population and higher levels of consumption.

Human carrying capacity is the maximum rates of resource harvesting and waste generation (the maximum load) that can be sustained indefinitely without progressively impairing the productivity and functional integrity of relevant ecosystems wherever the latter may be located. The size of the corresponding population would be a function of technological sophistication and mean per capita material standards. This definition reminds us that regardless of the state of technology, humankind depends on a variety of ecological goods and services provided by nature and that for sustainability, these must be available in increasing quantities from somewhere on the planet as population and mean per capita resource consumption increase. – William E. Rees

Carrying Capacity Overshoot
To overshoot means to grow rapidly beyond the limits of carrying capacity. When this overshoot occurs, it’s due to a limit or barrier exceeded within the system, and the system (natural and/or economic) corrects and begins to slow, stop, or reverse growth.  In addition, as the limits of our natural systems are exceeded they are degraded, which results in the overall carrying capacity being diminished.   Overshoot leads to a sudden and catastrophe collapse.

As the environment is degraded, carrying capacity actually shrinks, leaving the environment no longer able to support even the number of people who could formerly have lived in the area on a sustainable basis. No population can live beyond the environment’s carrying capacity for very long. – William E. Rees

Humans are hard wired to discount the future, so in the context of carrying capacity, I have often wondered what environmental disaster or resource limit would be the tripwire that would launch us into the kind of collective action required to avoid or mitigate overshoot and catastrophic collapse.  Would our tendency to only react when faced with a crisis, doom us to a fate of too little, too late?  Will we miss our window to achieve a sustainable “ecological stability”?

Perhaps the tripwire won’t be a natural limit like global warming, or peak oil, or fisheries collapse, or soils loss.  Perhaps the tripwire will be a systemic economic collapse.  And if it is, will we see it for what it is, or will we clamor in panic for a return to business as usual?

In the 1992 followup publication, Beyond the Limits, the authors clarified their position relative to growth:

A sustainable society would be interested in qualitative development, not physical expansion. It would use material growth as a considered tool, not a perpetual mandate. It would be neither be for nor against growth. Before this society would decide on any specific growth proposal, it would ask what the growth was for, and who would benefit, and what it would cost, and how long it would last, and whether it would be accommodated by the [natural] sources and sinks of the planet.

In other words, they meant that qualitative growth was still possible, and only quantitative growth was limited….more quality of life, less stuff.  The 1992 authors also remained hopeful and stated that:

The decline [overshoot and collapse] is not inevitable. To avoid it two changes are necessary. The first is a comprehensive revision of policies and practices that perpetuate growth in material consumption and in population. The second is a rapid, drastic increase in the efficiency with which materials and energy are used.

The 2004 follow up publication, Limits to Growth: The Thirty Year Update, would not be so optimistic. Based on thirty years of additional data and refinements in their computer modeling, the authors would be forced to conclude that the world was in a dangerous state of overshoot.  Consider again the list of warning signs from the original 1972 publication.

ECONOMIC SYSTEMS:
Rising debt; eroding goals for health and environment.

• In the last eight years the U.S. National Debt has grown from $5.7-trillion to over ten trillion dollars. However, that only begins to tell the story.  If we use generally accepted accounting procedures (GAAP) to determine the nations financial obligations and include the net present value of the unfunded liabilities in social insurance programs such as Social Security and Medicare, then the total federal obligation exceeds $59-trillion dollars.

• According to David Greenlaw, Morgan Stanley’s chief economist, the 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983.

• U.S. household debt as a percentage of GDP has risen from a low of 12% at the beginning of WWII to over 90% in the year 2006.

• U.S. credit card currently exceeds $950-billion, 30% of which is carried by “high risk” borrowers.  Innovest estimates that banks will write off $41- billion in credit card debt in 2008, and $96-billion in 2009.  The American consumer is “tapped out”.

• In 1970, the world’s poorest countries (roughly 60 countries classified as low-income by the World Bank), owed $25 billion in debt.  By 2002, this debt had grown to $523 billion.  Basically, the more the developing countries stay in debt, the more they will feel that they need to milk the earth’s resources for the hard cash they can bring in, and also cut back on social, health, environmental conservation, employment and other important programs.

“Pushing debt has become the easiest and the most profitable business in the U.S. over the past few years. Who wants to take the risks of a producer when financing has become so lucrative? Look at the largest “industrial” corporations in the U.S. over the past decade, or two, and what you see is that they are lot more into financing business than in production business.” – Jas Jain, December 2006

Growing gap between rich and poor – between the powerful and the weak.

• In 1998 more than 45 percent of the globe’s people had to live on incomes averaging $2 a day or less. Meanwhile, the richest one- fifth of the world’s population has 85 percent of the global GNP.  And the gap between rich and poor is widening.

• At the beginning of the 19th century, average incomes in the richest nations were about 4 times greater than those in the poorest nations.  100 years later at the turn of the 20th century, average incomes in the richest nations are 30 times larger.

• An analysis by economists Thomas Piketty and Emmanuel Saez found that despite several periods of healthy growth between 1973 and 2005, the average income of all but the top 10 percent of the income ladder — nine out of ten American families — fell by 11 percent when adjusted for inflation.

• Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations.

• The share of income held by the top 1% in America was as large in 2005 as it was in 1928.

• In the U.S., between 1979 and 2005, the mean after-tax income for the top 1% increased by 176%, compared to an increase of 69% for the top quintile overall, 20% for the fourth quintile, 21% for the middle quintile, 17% for the second quintile and 6% for the bottom quintile.

“…income variance is a long-term (multi-year) indicator of economic activity. The more extreme it gets, the worse the economy and the financial markets eventually will become. Looking at two simplified markets with one man making $100,000,000 per year or 1,000 men making $100,000 per year, there will tend to be more speculative financial markets in the first case, but more automobiles will be sold in the second case. The system tends to be self-adjusting when income variance reaches an extreme, with the speculative market bubble eventually bursting and income and economic activity tending to get redistributed.” – John Williams, Shadow Government Statistics

Investment in human resources (education, shelter, health care) postponed in order to provide immediate consumption and security demands.

• More than half a million people, mostly children, died from measles in 2003 even though effective immunization costs just 30¢, and has been available for over 40 years.

• Since 2003, discretionary spending in the U.S. has declined by 9% for education and 17% for health.

Growing demands for capital, resources, and labor by military and industry to secure, process, and defend resources.

• World military expenditures have increased 45% since 1998 to $1.34-trillion in 2007.

• The USA’s military spending accounted for 45 per cent of the world total in 2007, followed by the UK, China, France and Japan, with 4–5 per cent each.

• Defense accounts for over 50% of the U.S. discretionary budget.  This does NOT include the costs of the Afghan and Iraqi wars.

“Of all the enemies to public liberty war is, perhaps, the most to be dreaded because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes … known instruments for bringing the many under the domination of the few.… No nation could preserve its freedom in the midst of continual warfare.” - James Madison, 1795

Growing instability in natural ecosystems.

• Sea level has risen 10–20 cm since 1900. Most non-polar glaciers are retreating, and the extent and thickness of Arctic sea ice is decreasing in summer.

• Vertebrate species populations have declined by about one-third in the 33 years from 1970 to 2003

• Global extinction of species occurred in the 20th century at a rate that was a thousand times higher than the average rate during the preceding 65 million years. This is likely to destabilize various ecosystems including agricultural systems.  This will threaten food supplies for hundreds of millions of people.

Deterioration in renewable resources – surface and ground water, forests, fisheries, agricultural land.

• The first global assessment of soil loss, based on studies of hundreds of experts, found that 38 percent, or nearly 1.4 billion acres, of currently used agricultural land has been degraded.

• In 2002, the Food and Agriculture Organization of the UN estimated that 75 percent of the world’s oceanic fisheries were fished at or beyond capacity. The North Atlantic cod fishery, fished sustainably for hundreds of years, has collapsed, and the species may have been pushed to biological extinction.

• The Science journal has warned that commercial fish and seafood species may all crash by 2048.

• Global water consumption rose six-fold between 1900 and 1995 – more than double the rate of population growth – and goes on growing as farming, industry and domestic demand all increase.

Rising levels of pollution.

• 40% of America’s rivers and 46% it’s lakes are too polluted for fishing, swimming, or aquatic life.

• The Mississippi River carries 1.5 million ton of nitrogen (fertilizer) pollution into the Gulf of Mexico each year creating a marine dead zone the size of Massachusetts.

• Pollution of freshwater (drinking water) is a problem for about half of the world’s population. Each year there are about 250 million cases of water-related diseases, with roughly 5 to 10 million deaths.

• China already uses more coal than the United States, the European Union and Japan combined. And it has increased coal consumption 14 percent in each of the past two years in the broadest industrialization ever. Every week to 10 days, another coal-fired power plant opens somewhere in China that is big enough to serve all the households in Dallas or San Diego.

• We can measure CO2 levels in the atmosphere going back over 450,000 years by analyzing polar ice cores.   Prior to the industrial revolution they had never been higher than 300ppm.  They are now in excess of 380ppm.

We were in the beginning of an unprecedented global financial meltdown and when I started writing this post, and I was curious as to whether the current financial crisis is just another economic cycle, or is somehow associated with the overshoot and collapse predicted by the authors.  I cannot say it is or is not with any certainty, but there are too many other warning signs (many more than I have listed) to not be very alarmed.  Just as this financial crisis was sudden and severe, so will be the consequences of overshoot.

I think the greatest contribution of Limits to Growth and the follow-on publications was to bring the concepts of human carrying capacity and overshoot into the public discourse.  The consequences of overshoot are many times more troubling than either global warming or peak oil.  Unfortunately, overshoot, like peak oil, may only be evident to policy makers and the general public by looking back from the context of fear, chaos, and crisis, much like we are doing today with the current financial meltdown.

A  year ago I would have bet that peak oil would be the key triggering event of overshoot.  As I watch the daily spectacle of the financial world imploding, I am no longer so sure.  I’ll leave you with a “some day” vision from one of the original authors of Limits to Growth.

It seems to me a powerful message, worth repeating and repeating, that people want peace, simplicity, beauty, nature, respect, the ability to contribute and create. These things are much cheaper and easier to achieve than war, luxury, ugliness, waste, hate, oppression, manipulation. Some day, when everyone understands that nearly all of us truly want the same kind of world, it will take surprisingly little time or effort to have it. – Donnella Meadows

More about human carrying capacity.

Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.” – Thomas Friedman, March 7, 2009

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Electrial Cooperatives and Distributed Power Generation

“Solar [PV] is slowly going to begin to unwind the existing utility economics, to the point where utilities decide they have to get in or they risk losing their core business – exactly [like] the [PC and telcom] transformations we’ve lived through in the last 20 years.”
Travis Bradford, 2008, author of Solar Revolution

For nearly 100 years utility companies have operated with minimal competition as a regulated monopoly. Imagine having a business that nearly always grew and when costs increased, you could just pass them off to your customers in the form of higher prices.  Utilities, much like the long distance telephone carriers of our recent past, are now facing real competition for the first time.  The primary threat is from PV power installed on the rooftops of American homes and unlike revenue losing energy efficiency measures, such as compact fluorescent lighting, efficient heating and cooling equipment, solar hot water systems, and Energy Star appliances, SOME utilities see homeowner PV and wind power generation as a threat to future revenue loss they can block.

The electrical generation and distribution market in America is divided between Investor Owned Utilities (IOU), Public Owned (Federal or city), and Cooperatives formed under the 1936 Rural Electrification Act.

Investor owned utilities have been the first to adopt net metering due to state laws mandating both net metering and minimum requirements for producing power via renewable energy.  Also, because PV power is generated during the hours of peak demand, providing incentives for residential PV makes good business sense because it offsets the higher operating costs of natural gas peak power plants and defers or avoids the capital costs of additional plants.  However, public utilities and cooperatives are typically not subject to these laws, and aside from the preferential Federal hydroelectric power they get on the cheap, cooperatives in particular have resisted pressure to promote and use renewables.

Cooperatives and the Rural Electrification Administration (REA) launched by President Franklin D. Roosevelt in 1935 are one this country’s greatest success stories.  At the time private and investor owned utilities were not willing to take the risk to extend electrical service to rural areas and millions of  american communities, farms, and ranches were without any source of electricity.

The first rural cooperative organizations were humble main street store-fronts and by 1938 the typical coop had about 800 consumer-members with democratically elected directors to manage the affairs of the organization. These early coops were “first name” neighborly affairs and about as formal as your local grange.  A typical “staff” might consist of a manager, a bookkeeper, a line foreman and a single crew.  Growth would be revolutionary, and by the 1940’s REA cooperatives would deliver power to over 97% of America’s farms and ranches and cooperatives would politically band together under the National Rural Electric Cooperative Association.  As the country grew, the demographics of many cooperatives would change from rural to suburban and the original small farm, grassroots, community character would begin to take on a more corporate feel.  In 1987 and 1993, first president Reagan and then President Clinton would attempt to dismantle the REA structure of federal subsidies, but the cooperative “political footprint” had grown too large and powerful.  Today cooperatives are largely resellers of electricity they buy from investor owned and public utilities at wholesale and resell to their members at retail.  Many are “cooperatives” in name and form only and behave and act with the same self interest as any corporation.  Since, in many cases they are neither base or peak power generators, they don’t have the same incentive as the investor owned utilities to manage peak demand and promote and financially support homeowner PV or wind power systems.

The battle for grid access with cooperatives can best be illustrated with a personal example.

I live in geographical middle of Colorado within the service area of the Intermountain Rural Electrical Association (IREA).  The IREA was formed in 1938 and is the largest of 22 Colorado cooperatives serving a population that is both rural and Denver suburban.  The IREA buys it 93% of its power from investor owned utility XCEL and the balance from DOE’s Western Area Power Administration, a federal hydroelectric power provider.  The members of IREA elect board directors in various districts within the IREA service area every four years.  This sounds democratic enough, but unlike the rural members of the 1930’s who helped dig and plant the original power poles, todays members see themselves more as customers and director elections get about as much mind-share as an election for county coroner.  As a result, directors tend to be elected for “life”, getting what amounts to a proxy rubber stamp every four years.  This cozy relationship changed in 2007 when a member revolt in some of the more liberal suburban districts mobilized to elect a director with greener credentials. The trigger for the revolt was IREA’s position on global warming.  IREA’s website devotes an entire page to debunking global warming and they had spent $100,000 that year to fund anti-global warming “research”.  You have to wonder why a relatively small electrical power reseller would spend so much of its members money tilting a political windmills.

The IREA belongs to both the National Rural Electric Cooperative Association and the Colorado Rural Electric Association(CREA).  These lobbying organizations represent large and conservative political footprints at both the state and national levels.  The Colorado state legislature has been at battle with the CREA over a proposed net metering law for cooperatives.  The CREA and IREA’s position is that residential and other customer’s that take advantage of net metering by installing PV or other renewable power technologies do not pay their fair share of indirect costs and that net metering should be limited to a small percentage of customer’s and that excess power generated should only be reimbursed at “wholesale” rates.  This argument is weak at best, and I could apply the identical logic to a customer that weatherizes his home, or installs Energy Star appliances or compact fluorescent lights.  Add to that the irony that over 90% of the electricity I receive from the IREA comes from XCEL energy which has an aggressive Solar Rewards program to encourage net metered generation of PV power.  To promote the program, XCEL has invested $19.5 million in rebates to over 1,000 customers adding more than 4.3 megawatts of solar energy capacity, and plans on adding another 29 megawatts of capacity by 2015.

The Rural Electrification Administration was renamed the Rural Utilities Service (RUS) in 1994 and continues to subsidize cooperatives through low-rate government loans.  The Washington Post recently reported that the RUS “is using taxpayer money to provide billions of dollars in low-interest loans to build coal plants even as Congress seeks ways to limit greenhouse gas emissions.”  Since only 24% of the counties served by cooperatives are completely rural and 200 of the counties served have populations of more than 1 million, the RUS has lost its original rural focus and now subsidizes many urban areas.  Cooperatives are a “New Deal” legacy program that fulfilled its basic function decades ago and now has taken on a life of its own.  It is ironic that the progressive policies that created the electrical cooperatives and brought power to rural American in the 1930’s and 40’s, would evolve into a regressive and entrenched bureaucracy that will probably be the last barrier to a national  policy of net metering and the distributed generation revolution.

Note: The electrical cooperatives eventually lost the net metering battle in Colorado and must now reimburse net metered customers at retail rates.

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