California is among a few states drastically overusing its natural resources.
Photograph by Justin Sullivan — Getty Images

California -- in the fourth year of its drought -- is just one of many states to blame, a new report finds.

By Erik Sherman
July 14, 2015

The United States reached a grim milestone on July 14. It officially has an “ecological deficit,” meaning the U.S. has exhausted all the natural resources that can be replenished in a year, according to a new report from two non-profit environmental groups. Everything from now until December 31 is deficit environmental spending.

Despite being the third richest country in the world in terms of natural resources, the United States is using resources nearly twice as fast as they can be naturally sustained, according to the report by Oakland, California-based Global Footprint Network and Tacoma, Washington-based Earth Economics.

That is in large part due to California, which is using resources eight times faster than they can be renewed and in the midst of a severe drought. According to the report, it would take eight Californias to support the state’s large population, voracious appetite for water, and carbon footprint. But Texas and Florida also have high ecological deficits.

In fact, although Texas and Michigan are the two states with the “greatest natural capital wealth,” they are at great risk for drought and water shortages, due to their overall large populations and high demand for energy and other natural resources. Additionally, the report found that only 16 states are currently living within their “means” — their supply of natural resources. New York is the state with the lowest ecological footprint per capita, in large part due to its mass transportation system.

A significant deficit in one resource, like water, can have a profound ripple effect across the economy. California’s four-year drought, for instance, has wreaked havoc on the agricultural industry; farm revenue losses are projected to be $1.8 billion, with 8,550 farm jobs lost. The state’s dairy and cattle industries could lose $350 million in revenue this year, NBC reports.

As a country, “we’re well-endowed but we haven’t paid attention much to those [ecological] constraints,” such as water supply, the ability of plant life to absorb excess carbon, availability of wetlands to help control flooding, energy generation, and food production, Mathis Wackernagel, lead author of the report and president of Global Footprint Network, told Fortune.

Some states are ahead of the curve. Idaho, Washington, Oregon, South Dakota, and Maine are all advanced in moving away from fossil fuels, with each producing 60 percent or more of its electricity from renewables. Maryland has pioneered ways of making capital investment decisions. The state looked at future ecological supply and condition scenarios in the decision process to invest in all-electric fleet vehicles as well as an $18 million investment in 3,000 weatherization measures projected to save as much as $69 million in avoided natural gas, electricity, and carbon emission costs over 20 years.

But other states in an ecological deficit will have to begin addressing the problems soon to avoid a big cost in economic problems and human suffering. “The big misconception is you can adjust very quickly to new realities,” Wackernagel said. “But the way we build our transport infrastructure, urban areas, even agriculture, has very slow response rates. You can’t suddenly rebuild a city or refurbish a transportation system.”

The report was created by measuring state populations’ demand for resources and the state’s available natural resources. Rather than using a typical market view of the resources as commodities, the authors used Earth Economics proprietary software that models a fuller view of the role such resources play. For example, trees aren’t just material for wood-based products but also help retain topsoil, reduce flooding, capture carbon, and help cool areas. Human consumption of natural resources for one set of uses reduces their availability for others and potentially helps put a state into ecological deficit.

Having a fuller view of the value of resources enables authorities to make wiser calculations, according to Earth Economics. For instance, after a hurricane, a community or federal agency might have to choose whether to raise a house higher or move it from the flood plane. Using the Earth Economics software, authorities’ analysis would be broader than simply comparing the immediate costs of both options.

“In looking at the benefits [of moving the house], you can reduce repetitive flooding and damage. You can also increase flood storage in that flood plane,” said David Batker, executive director of Earth Economics. However, because of the typical limited view of ecological value, argue the reports’ authors, those calculations are typically not done. That is why some heavily constrained resources — ground water in California, for example — are not monitored or priced at what a full value might be. “Just as in the 1930s we needed measures of GNP [currently GDP], money supply, and unemployment, we now need measurements of natural capital,” Batker said.

“It’s like we think nature is for free,” Wackernagel said. “It’s like someone saying my house is free because I’ve paid it off. But it’s extremely valuable. If you look at the opportunity cost of not having [the ecological resources], it’s amazing. We squander it.” The U.S., however, is not alone in this regard. The world reaches an overall ecological deficit day on August 13, according to Wackernagel.

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