Canada’s ecological footprint by income decile

The CCPA released today a really important contribution to our understanding of climate change and inequality. The study focuses on Bill Rees’ concept of the ecological footprint, which is not exactly the same as greenhouse gas emissions, but highly correlated. Some key findings:

• The richest 10% of Canadian households create an ecological footprint of 12.4 hectares per capita – nearly two-and-a-half times that of the poorest 10%.
• While the size of an individual’s ecological footprint increases as household income increases, the real jump is at that top 10% level. When it comes to environmental impact, it really is a case of the rich and the rest of us.
• The bottom 60% of Canadian households’ ecological footprint is below the national average but even the lowest-income Canadians create an ecological footprint that is several times the average for those in poorer nations.

At our recent Canadian Economics Association panel on carbon pricing, Lars Osberg pointed out that the bottom 80% of families had met their Kyoto commitments, due to stagnant incomes and improvements in greenhouse gas intensity per dollar of output. It is the increases at the top of the distribution that are driving our horrible record on greenhouse gas emissions.

Distribution matters to policy success. The danger of carbon taxes is that they have a bigger hit relative to income on the poorest families, whereas those with the highest incomes are the most likely to buy their way out of change. So if carbon pricing becomes a process of steadily pricing out the poorest, we have some real justice issues on our hands. Thus, the BC case, which channels about one-third of the carbon tax revenues back to low-income families, demonstrates that what matters most is what we do with the revenues.

The study concludes:

While it is evident that all Canadians must make significant efforts to reduce our ecological footprint, it would be a mistake to base policy decisions on the assumption that the underlying drivers of our excessively large ecological footprint are democratically distributed. A strategy that ignores the underlying relationship between ecological impact and income threatens to achieve the worst of all policy worlds: an ineffective strategy that has a substantial negative distributional impact. In short, if we fail to incorporate differences in environmental impact that are systematically related to income, we risk creating an ineffective policy that has the side effect of imposing disproportionate costs on the low- and moderate-income Canadians who
have contributed the least to the problems we are trying to address.