Top 10% consumers cause $5.7 trn in environmental damage annually: Study

The study found that around 60% of the highest-consuming group lives in the US and the European Union, while India accounts for only about 2%

The world's highest-consuming 10 per cent of people could be causing an environmental damage worth $1.7 trillion to $5.7 trillion a year -- 60 per cent of which live in the US and the European Union (EU), while only about two per cent are in India, a new study has estimated.

About 40-45 per cent of EU's and over half of the US' population falls within the highest-consuming group, findings published in the journal Communications Sustainability show.

Researchers from the universities of Oxford in the UK and Leiden in the Netherlands combined consumption-based environmental footprints with prices from the Environmental Prices Handbook 2024 to estimate the monetary cost of damage across climate change, biodiversity loss, nitrogen and phosphorus pollution, and freshwater use.

 

It looked at six countries -- Brazil, China, Egypt, Germany, India, and the US.

The team found that damage through biodiversity loss makes up 47-56 per cent of the total bill -- the biggest contributor -- followed by climate change at 36-45 per cent.

Further, while the annual damage bill for a person in the global top 10 per cent averaged between $2,300 and $7,500, the figure climbs to $19,000 to $63,000 in the US -- where per-person impacts were found to be the highest.

The US' per-person damage bill is about 6-20 per cent of their income or 0.8-3 per cent of their wealth, the study found.

"This is in contrast with a bill in India of $4101.4k, equivalent to 0.8-2.8 per cent of income or 0.2-0.5 per cent of wealth," the authors wrote.

The costs "highlight the mitigation responsibility of the top 10 per cent and illustrate the potential revenue of environmental taxes if the polluter-pays principle is adopted," the authors said.

Co-author Paul Behrens, professor at the University of Oxford, said, "The top 10 per cent are important not only because they cause the most damage but also because they hold the most leverage to reduce it."  The capital they invest, from pensions to infrastructure, decides which industries expand, the firms they run set the choices for everyone else, and the lifestyles they pursue shape what people consider as normal, Behrens said.

"They often have out-sized agency, not only individually as consumers, but also as investors, employers, trend makers, and market shapers. Their power to cut emissions is even larger than their share of them," the co-author added.

The team said differences in the bills between the countries reflect inequalities in consumption and emissions.

The authors wrote, "We find annual damages owed by the global 10 per cent to be $1.7-$5.7 trillion, equivalent to $2.3k-$7.5k per person (in $2017). This surpasses international climate and biodiversity financing gaps."  "More than 60 per cent of the global top 10 per cent are located in the USA and EU while only about two per cent are in India," the authors wrote.

They said that environmental pricing or taxation is aimed at incentivising a shift from polluting to more sustainable consumption and that a taxation focussed on the top 10 per cent simultaneously improves equity.

The team added that while in low-income countries, any carbon tax is progressive, in high-income countries, higher taxes for luxury consumption rather than basic goods are progressive and reduce inequality.

Mitigation policies directed at the top 10 per cent consumers of the world can help reduce emissions and pollution, raise revenue for sustainability transitions and improve equity simultaneously, the authors said.