Environmental damages of the top ten percent consumers exceed global climate and biodiversity funding gaps
We find that the total environmental damage costs per person in the top 10% consumers worldwide is $2.3k-$7.5k per year (in $2017; see Fig. 1a, and the Supplementary Information (SI) Supplementary Data sheet 7. for data tables). The damages of the total global top 10% group are $1.7–$5.7tn per year (see Fig. 1b, and the SI Supplementary Data sheet 7. for data tables). There are big differences in the environmental costs of the top 10% between countries. The bill of the top consumers in the USA is consistently the highest, ranging $19k–$63k, equal to 6–20% of their income or 0.8–3% of their wealth. This is in contrast with a bill in India of $410–$1.4k, equivalent to 0.8–2.8% of income or 0.2–0.5% of wealth.
Fig. 1: The environmental bill of the top 10% consumers.The alternative text for this image may have been generated using AI.
The environmental damage bill of the top 10% consumers in 6 countries and globally in 2017, in $2017, a per capita in the top 10%, b for the whole top 10% group. The purple bars are the central estimates; the blue error bars show the lower and upper estimates. Biodiversity (red dashed line) and climate (yellow striped line) financing targets are added as a reference (the orange solid line is the biodiversity and climate targets combined). Note that we have adjusted the prices per country based on GDP per capita (except for CO2 for which all countries have the same prices). Therefore, each country has their own environmental prices and summing the country top 10% bills does not equal the world total.
The total environmental damages of the top 10% are considerable. Both the lower USA and the lower Chinese estimates each already cover the $675 billion gap in biodiversity financing needed by 203020 (in $2017). The central USA estimate surpasses the $993 billion per year for climate action (in $2017) by 2035 agreed upon at the COP3021. The lower world estimate even matches the biodiversity and climate financing targets combined. In other words, the potential revenue of environmental taxes is high and can be used to finance necessary transitions. We could only include planetary boundaries for which top 10% footprints and prices were available and adding the missing boundaries (novel entities, land-system change, ocean acidification, atmospheric aerosol loading and stratospheric ozone depletion) would increase the damage bill. Moreover, our damage bill is based on consumption, while those with a higher income also accumulate savings22 and for the top 10% about half of emissions originate from investments5.
The difference in the bill between countries reflects the inequalities in consumption and emissions. Note that the top 10% consumers in each country are not necessarily in the top 10% globally. More than 60% of the global top 10% are located in the USA and EU while only about 2% are in India7, as reflected in their respective higher and lower bill. We scaled environmental prices to the different countries based on GDP per capita (apart from CO2, for which we use one constant price across all countries). As such, prices are higher in countries with a higher GDP.
Proportionally, the two main components of the total bill are damage to biosphere integrity and climate change. Of the global bill, biodiversity loss constitutes 47–56% and climate change 36-45%, depending on the price estimate used (see Fig. 2 and SI Supplementary Data sheet 9). Third is nitrogen with 6–8%. Water and phosphorus are both less than 2%. For individual countries, the distribution is similar although the exact proportions vary; for some biodiversity loss is the largest contributor, for others climate change. There have been several calls to address biodiversity and climate change together and these estimates only underline this need23,24.
Fig. 2: Contribution of each planetary boundary bill to the total environmental bill.The alternative text for this image may have been generated using AI.
Proportion of each planetary boundary of the total environmental bill, in the central estimates, for the world and six countries. See SI Supplementary Data sheet 9. for the proportions in the lower and upper estimates. MSA loss (biodiversity loss) is displayed in red, CO2 (climate change) in purple, N (nitrogen biogeochemical cycle) in light blue, P (phosphorus biogeochemical cycle) in pink and freshwater use in dark blue.
Prices are more uncertain for biodiversity loss. The indicator is (terrestrial) MSA loss, which is the difference in species abundance of an ecosystem in its current versus its pristine state multiplied by the size of the ecosystem25. The available footprint is in an aggregate form: global MSA-loss hectares. We do not know which biomes are impacted where, while biodiversity loss and its valuation are highly context-specific, dependent among others on ecosystem type, state and location18. Since there is no price for MSA loss in the literature, we converted the Environmental Prices Handbook’s price for PDF which is based on European ecosystems and valuations (see SI Supplementary Methods section MSA loss prices).
It is difficult to establish whether our results are an over- or underestimation of biodiversity loss prices. Valuation is higher when population density is higher—a reflection of recreational values18. For USA and Brazil, which have a substantially lower population density than the EU, the price might be adjusted downward, whereas for India and Germany, as well as China and Egypt, it might be adjusted upward. At the same time, prices are higher for forest and coastal systems compared to freshwater ecosystems, and for smaller ecosystems and those with already lower biodiversity18. As it is not possible for us to assess these factors across countries, it is not possible to determine the direction of these influences. Regardless, it is clear that biodiversity loss is a major impact. Even if we use the lowest biodiversity price with the highest other prices, it accounts for 27% of global the bill (and almost half of the USA’s and Germany’s). As the price mainly represents recreational values, there are many other values that could even further increase the price. Some would argue such approaches are inherently an underestimation of the infinite value of ecosystems26.
The size of the damage bill shows that the top 10% consumers is an important group on which to focus climate mitigation policy. We link the damage to the percentage of income or wealth and financing gaps as a reference, not to suggest that these should become tax rates. Such policies should be considered in (sub)national or regional contextualised schemes.
Environmental pricing or taxation aims to incentivise a shift from polluting to more sustainable consumption. Environmental taxation focussed on the top 10% simultaneously improves equity. Which kind of policies are progressive or regressive, depends on the country-specific context27. In low-income countries, any carbon tax is progressive27,28. In high-income countries, uniform taxation is regressive (if revenues are not recirculated), while higher taxes for luxury consumption rather than basic goods are progressive and reduce inequality28. Usually, revenue is less with luxury taxation but emissions are reduced more, because more price-responsive goods are targeted so households are more likely to forego consumption28. If revenues are redistributed towards lower incomes, then equity improves, but emissions also increase because of re-spending (i.e. increased consumption)28. However, distribution can benefit some of the population without offsetting reduced emissions; the more unequal a country the more redistribution can occur without harming mitigation28.
Public resistance against some environmental taxes such as carbon taxes mainly comes from concerns for low-income households, so distributional effects are also important for policy support29,30. Moreover, if revenues are used for approaches such as green government investments, then public acceptance is generally higher31. Financing climate investments through a wealth tax on the top 1% would decrease wealth inequality (they would then own an estimated quarter of all wealth by 2050) while addressing the unequal burden of climate damages on lower income communities32.
Local conditions are very important for biodiversity loss, so pricing is less straightforward than with carbon taxation and emission trading where the location of emissions is less important for the damage caused. Nevertheless, many pricing mechanisms also exist for biodiversity conservation which can be implemented, adapted to the specific context33.
