The Rio+20 Earth Summit did not fail, as many critics assert, because of corporate foot dragging. The UN’s flagship development conference failed because the logic of seeking global consensus to achieve sustainability in the 21st Century is demonstrably flawed.
It is also unnecessary. The urgency and economics of sustainability have fundamentally changed over the last 20 years, such that sustainability is, arguably, the overarching strategic imperative for the great economies of the world: the United States, the European Union, China, India and Japan. Fail, and the instability of the global economy will eventually spiral out of control. Succeed and the West gets the aggregate demand it desperately needs while rising Asia gets the revolution in resource productivity without which it cannot survive.
The instability is already mounting. Nature has vividly illustrated scientists’ warnings on the severity of the sustainability challenge and the incredible pace at which it is accelerating. Bigger than just climate change, the feedback loops as polar regions warm, soils are depleted, and oceans are poisoned are only magnifying underlying economic and political frailties. Tellingly, after this last extraordinarily warm winter, more than half of all Americans are now convinced of the connection between manmade carbon emissions and climate change.
But it is the rapid pace of economic inclusion that is motivating the security- and profit-minded. The world is on track to bring 3 billion people into the global middle class over the next twenty years. This should be a massive economic opportunity, except that when they come in, mostly through rural-urban migration, their per capita consumption goes up 300 percent. We brought 1 billion into the global middle class in the last twenty years and are right now consuming 150 percent of our annual planetary income of critical ecosystem services. Our soils, fisheries, forests and freshwater are now being depleted faster that they can regenerate, creating a downward, compounding spiral.
At the same time, demand for global commodities is driving prices through the roof. According to the global consultancy McKinsey, increasing supply to accommodate the needs of 3 billion people and their newfound discretionary income is simply not possible. That puts major economies on a strategic collision course. When critical commodities like energy, water, food, and basic materials prices get too high, markets don’t get a chance to adapt. It takes too long. Rather, politicians intervene to distort markets—first financially and then by force. The geopolitics of oil, freshwater and rare earths over the last decades provides myriad examples.
Sustainability, in other words, is now the underlying challenge of geopolitics in the 21st Century. But that realization alone will not push the great economies to pivot as dramatically as they must. A more prosperous and profitable future must pull them as well. And it must do so in the midst of the Western debt crisis, meaning it must come with its own source of aggregate demand.
And there, demographics and economics have finally aligned, especially for the United States. More than half of all Americans, led by downsizing Baby Boomers and household-forming Millennials, want fundamentally sustainable attributes in their American dream. That’s nearly three times the demand for housing after World War II. They’re looking for smaller homes in vibrant, walkable, service- and opportunity-rich communities. Sprawl is out. Smart growth is in and translates to one-third reductions in energy, water, and waste per capita. Meanwhile, rising global demand for sustainable food and resource productivity means America’s agriculture, tech, and manufacturing sectors have a clear and nearly bottomless market in which innovation and efficiency provides a competitive edge.
Tapping that demand can put America’s people and capital back to work—precisely what economists from Ben Bernanke to Paul Krugman—and politicians on both sides of the aisle—say they want. Nothing short of an environmental 9/11 could move America faster into a leadership role for the 21st Century world.
Getting Washington to embrace this new American Dream is now essential for the other major global economies. For China and India, each with a billion people on the outside wanting in, a U.S.-backed global revolution in resource, food and energy productivity is their only way to meet rising expectations. For Europe and Japan, increased global demand for highly efficient goods and a new rationale for domestic housing and infrastructure turnover is just the ticket to make both Chancellor Merkel and President Hollande happy while letting Japan finance it’s non-nuclear, low-carbon future.
More Rios will not get us there. Beijing, Delhi, Brussels and Tokyo need to bring Washington into a new global club to manage the transition, call it the Group of Five Major Economies for Sustainability (S-5), while future-oriented American businesses and banks have to tell Congress and the President that it’s time for a sustainable American Dream. The American people, the voters, are already there.
Photo: United Nations
Smart Strategy Initiative