Economic development

The world economy has, on aggregate, expanded considerably over the past three decades, despite significant fluctuations. World gross national product (GNP) more than doubled from approximately US$14 300 billion in 1970 to an estimated US$29 995 billion in 1999 (Costanza and others 1997, World Bank 2001). However, these figures do not include the value of environmental goods and services which are critical to the Earth's life-support systems, and contribute to human welfare but are outside the market. An estimate of the economic value of these ecosystem services is between US$16 000 billion and US$54 000 billion a year, with an average of US$33 000 billion a year. This estimate should be considered a minimum because of the nature of the uncertainties (Costanza and others 1997).

Gross Domestic Product per capita (US$1995/year), 1972-1999

Despite global economic growth, the gap between rich and poor has widened between developed and developing countries; per capita incomes have risen only marginally except in Europe and North America Source: compiled from World Bank 2001

The world economy grew by 3.1 per cent annually in real gross domestic product (GDP) between 1980 and 1990, and 2.5 per cent annually between 1990 and 1998, with annual per capita growth rates of 1.4 and 1.1 per cent respectively (UNCTAD 2000). There has, however, been significant regional variability over this period, with by far the highest growth rates in Asia and the Pacific, which contains more than half the world population. Per capita GDP (in constant US$1995) almost doubled in Northwest Pacific and East Asia during 1972-99, growing by an annual average of 2.4 per cent a year (compiled from World Bank 2001); by contrast, it fell in sub-Saharan Africa. Despite global economic growth, the gap between rich and poor has widened both between developed and developing countries and within countries, particularly in Latin America and sub-Saharan Africa (UNDP 2001). Per capita incomes have risen only marginally in most regions, with the exceptions of Europe and North America (see figure right). Currently 3.5 billion people in low-income countries earn less than 20 per cent of the world's income, while the 1 billion people living in developed countries earn 60 per cent (UN 2000). The ratio between income earned in countries with the richest 20 per cent of the population, compared to the world's poorest 20 per cent, has also widened - from 30:1 in 1960, to 60:1 in 1990, to 74:1 in 1997 (UNDP 1999).

Growth in use of energy (see box) and transport are both indicators of economic development, and both have severe impacts on the environment. Private vehicular transportation has become an entrenched lifestyle choice among those who can afford it. Since the 1970s, about 16 million new vehicles have come onto the world's roads annually (UNDP, UNEP, World Bank and WRI 1998) and passenger cars account for 15 per cent of total global energy consumption (Jepma and others 1995).

Trends in global energy production and consumption

Energy is a key to socio-economic development. It is also central to achieving the economic, social and environmental goals of sustainable development. Harnessing energy has dramatically expanded people's choices, allowing those with access to enjoy unprecedented productivity, mobility and comfort. But the per capita use of electricity illustrates a major energy divide. The OECD annual average of 8 053 kilowatt-hours (kWh) per capita is nearly 100 times greater than in the least developed countries where it is only 83 kWh per capita (UNDP/UNDESA/WEC 2000). The annual growth rate in total energy use between 1972 and 1999 averaged 2 per cent a year but this decreased from 2.8 per cent in the 1970s to 1.5 per cent in the 1980s and 2.1 per cent in the 1990s (IEA 1999). This decrease was due to weak economic performance in the transition economies in Europe in the 1990s, compounded by the global financial crisis of 1997-98 (UNDP/UNDESA/WEC 2000). The human benefits of energy production and consumption frequently have an environmental downside, which may in turn threaten human health and quality of life. Impacts on atmospheric composition, deforestation leading to soil erosion and siltation of water bodies, the disposal of nuclear fuel waste, and occasional catastrophic accidents such as Chernobyl are some of the widely recognized problems. Globally, per capita consumption has changed relatively little over the past 30 years although total consumption grew by some 70 per cent during 1972-99. At the regional level, per capita consumption has fallen in North America, the greatest consumer, and risen most sharply in West Asia. Reducing fossil fuel energy consumption in areas of high consumption, and achieving more balanced per capita consumption within and between countries, are environmental imperatives for the 21st century.

Per capita energy consumption (tonnes oil equivalent/year)

Total energy consumption (million tonnes oil equivalent/year)

Source: compiled from IEA 1999 and United Nations Population Division 2001

Inequalities in income are also reflected in similar disparities in material consumption (see 'The Ecological Footprint'). It has been estimated that the richest 20 per cent of the world's population accounts for 86 per cent of total private consumption expenditure, consumes 58 per cent of the world's energy, 45 per cent of all meat and fish, 84 per cent of paper, and owns 87 per cent of cars and 74 per cent of telephones. Conversely, the poorest 20 per cent of the world population consumes 5 per cent or less of each of these goods and services (UNDP 1998).

The Ecological Footprint

The Ecological Footprint is an estimate of human pressure on global ecosystems, expressed in 'area units'. Each unit corresponds to the number of hectares of biologically-productive land required to produce the food and wood people consume, the infrastructure people use, and to absorb the CO2 produced from burning fossil fuels; thus the footprint takes into account the total impact people have on the environment. The world's Ecological Footprint is a function of population size, average per capita consumption of resources, and the resource intensity of the technology used. During 1970-96, the world's Ecological Footprint rose from about 11 000 million area units to more than 16 000 million area units. The world average footprint remained fairly constant during 1985-96 at 2.85 area units per capita.

Regional Ecological Footprints (1996, area units per capita)

Note: not all regions correspond exactly to GEO regions Source: WWF and others 2000

For many developing countries poverty, unemployment and low productivity are major concerns. In developing countries as a whole, the informal sector provides 37 per cent of employment, and as much as 45 per cent in Africa (UNCHS 2001). In the 1980s, structural adjustment programmes (SAPs) were introduced by the World Bank to correct underlying economic imbalances and improve economic efficiency through reforms. SAPs have had economic, social and environmental impacts, including negative impacts on social stability and environmental sustainability (Reed 1996). Poverty, unemployment and falling standards of living also emerged as significant problems for countries in economic transition in the 1990s.

One critical issue is that of external debt which stood at US$2 572 614 million in 1999 (World Bank 2001). The Heavily Indebted Poor Countries (HIPCs) initiative was launched in 1996 and by November 2001 debt-reduction packages totalling US$36 000 million had been committed to 24 countries (mainly in Africa) (IMF 2001). However, there has been some disappointment with the initiative, and many of the countries receiving HIPC debt relief still spend more on debt servicing than on basic education or health (Oxfam 2001).