Understanding your Environmental Impact

In this article we are going to explore what is the resource supply and demand balance. The lecture will help you to understand how can we also improve the balance to achieve sustainability.

The world has plenty of natural resources. Some resources are renewable i.e. they are replenished by nature year on year. Food that we grow is one example. The crops that we plant, the cattle that we stock, the fish that we farm are all examples of renewable resources. Nature replenishes them for us year on year. If these resources are harvested sustainably, then they are simply inexhaustible.

Similarly, there are energy resources that are renewable. These include wind, solar, hydro, wave and tidal energy. We all know that the sun is out every day, the winds blow perpetually and their energy can be harvested. Likewise, flowing water also can provide us with large amount of energy for the life time of the planet. We refer to these resources as renewable energy. In financial terms, they are natures dividend bestowed to us.

Now there are other resources that are not replenished year on year. This second type of resources take thousands of years to form. They are perishable and finite. They include minerals and fossil fuels etc. Once we use them they are gone. They are exhaustible.  In financial terms and in real terms these resources are called nature’s capital. So two types of resources, first are renewable or natures dividend. The other are finite they are nature’s capital.

Let’s imagine that you are running a business. The business gives you some profit month on month. It is obvious that the only way the business would make a profit is when your costs are lower than your earning.

If you live within the profit provided by the business, then you will be able to sustain your business longer. You may even want to reinvest part of the profits to shore up the business, make it more robust and even more profitable.  You would also like to have some savings on the side for a rainy day.

Understanding Environmental Impact

Understanding Environmental Impact

Now let’s imagine an alternate scenario. Your expenses are greater than the profit and you start selling assets not goods from your business to meet your requirements. In this  case, you are bound towards unsustainability. You are making your future vulnerable and you are damaging the very system that is feeding you for a short-term gains.

So financially, the only way to bring sustainability is to reduce the operating costs to the level below the earnings.

Our environment is just like that small business. It operates in the same manner. In recent times, we as human beings particularly in the developed world have started consuming more and more resources. This culture has been intensified because of rampant consumerism.

In many places around the world, we are consuming much more than what nature furnishes to us on an yearly basis. For example, In the UK, three times more resources are consumed on average than what are replenished by nature every year. Many OECD countries are the in the same category.  Even the developing world is moving on the same trajectory.


To fulfil our requirements, we are heavily tapping into nature’s capital. Just to give one example of resource consumption, we are consuming more than 90 million barrels of oil a day. This number is set to grow in the coming decades as our demand for oil grows.

The resources that we consume can be divided into two main categories.

  1. Energy
  2. Goods


The use of energy (gas and electricity) is major part of the modern-day life. We not only require energy to run our appliances but also need it for our comfort (space heating) and transportation.

The second type of resource that we use are goods. Goods is a broad category which includes all that we eat and drink to all that we wear and use.  From consumption of fresh water to using cars. From electronics to furniture to grocery. Our utilization of goods has grown exponentially particularly in the post war era.  Both the use of energy and good requires natural resources which we are extracting not from natures dividends but mostly from natures capital.

Much of our negative impact on the planet is due to our own unsustainable lifestyles. We prefer not to use public transport. We don’t prefer walking even for small distances. We generate tonnes of waste every year. Through the packaging alone for the food and other items we are perpetuating tons of non- disposable plastics and other rubbish.

The energy we use through our gadgets and appliances is all taking a toll on nature. We are buying things that we never or rarely use. In the UK an average food waste by a family accounts for over £700 per year.

Sometimes we do take measures to reduce our environmental impact; however it has been noticed that often, whatever the gains we make are reversed by some of our other actions. For instance, you may switch off your electrical appliances throughout the year rather than keeping them on a standby. This helps in reducing electricity usage and thereby saves CO2 emissions.

However, if you are revving your car engine for a few seconds more than is required or if you are driving your car inefficiently than the gains that you have made are offset.  The CO2 emission reduction that were made by saving electricity are lost.

Nonetheless, one must continue to strive forward in the positive direction. We must focus on all our actions so not to neglect the areas that are more impact-ful than others.  In the case mentioned, one must endeavour to make a holistic effort by switching off the appliances and driving efficiently.  Therefore, it is extremely important to learn what the major causes of negative environmental impact are. So, in case we have to prioritise, we can focus on them.

In every organisation there are emission hot spots or  major areas of negative environmental impact. Identification of these areas will help us make efforts more effectively.

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