Today I am continuing my examination of whether or not capital is the binding constraint for meeting humanity’s needs. The prior post looked at our needs for calories and nutrients.
Discharge. We also need to get things out of our bodies by expelling processed food, radiating heat and exhaling carbon dioxide. Humans have made a great deal of progress around meeting our discharge needs, such as toilets and public sanitation.
Building public sanitation systems is one of the major contributors to improvements in life expectancy. As Steven Johnson documents in his books “The Ghost Map” (2007) and “Extra Life” (2021) the city of London was hit by repeated Cholera outbreaks until it separated sewage from fresh water delivery. Even back in the mid 1800s London had sufficient capital to build out a large scale sewer system.
In many countries we take this for granted today but there are still places in the world that have insufficient sewage treatment capacity. Globally the number of people without access to proper sanitation has been declining albeit slowly. That’s largely due to the fact that a lack of sanitation exists predominantly in the places with the highest population growth. Still at this point about two thirds of the global population has access to sanitation and the total number of people who do has grown by several billion in the last couple of decades. This has been possible as the overall capital required for achieving sufficient sanitation is relatively low and again has been declining with technological progress.
Sanitation provides another example of how a lack of attention to the right problems puts our ability to meet our needs at risk. Right here in New York City for example during heavy downpours raw sewage spills into the East and Hudson Rivers because of insufficient capacity in the rainwater runoff systems. With the climate crisis accelerating, the frequency of that kind of heavy rainfall is increasing rapidly.
Temperature. Our bodies can self-regulate their temperature, but only within a limited range of environmental temperature and humidity. Humans can easily freeze to death or die of overheating (we cool our bodies through sweating, also known as ‘evaporative cooling’, which stops working when the air gets too hot and humid). We therefore often need to help our bodies with temperature regulation by controlling our environment. Common strategies to meet our temperature needs include clothing, shelter, heating and air conditioning.
We have long had enough capital to provide everyone in the world with clothing. We are strictly faced with a distribution problem here. Some people don’t have the financial resources or live in circumstances, such as homelessness, that make it difficult for them to acquire and maintain sufficient clothing. Conversely in many advanced economies people have piles of unused clothes and the so-called fast fashion industry promotes rapid changes in style that result in massive additional consumption.
But what about shelter? This is a more difficult problem that requires significantly more capital. Here too the evidence suggests that we have sufficient physical capital. For example it is estimated that in 2015 we already had over 220 billion square meters of buildings globally. This amounts to 30 square meters per person. Now of course some part of that is commercial and industrial space, still this shows that as a first approximation we can house everyone. Even more impressive is the rate at which we are adding space. The same report estimates that by 2030 we will be at over 300 billion square meters of buildings. We also have a lot of circumstantial evidence that supports this conclusion. In particular building booms in various parts of the world, including China, the US and the Middle East, created vast local oversupplies of housing. For instance at the height of the China boom enough housing was added annually for the equivalent of two new ten million resident cities.
And yet again we encounter the climate crisis as the biggest threat to our ability to provide adequate shelter to everyone. In the US alone, nearly 15 million housing units are threatened by floods as found by a recently updated federal mapping exercise. That doesn’t count homes threatened by forest fires. Over longer time horizons sea level rise will make large coastal areas around the world uninhabitable. We are already experiencing significant climate refugee movements today. In 2020 alone it is estimated that 30 million people were displaced globally due to storms and floods. The forecasts are that by 2050 as many as 1 billion people may need shelter in a new location.
Can we heat and cool all this space as needed? The capital requirements here are accelerating rapidly at the moment due to the unfolding climate crisis which is increasing cooling requirements globally. This is not just a question of convenience. In hot and humid conditions evaporative cooling via sweat stops working and when that happens people die from overheating. This is now a routine occurrence in many parts of the world and even a relatively northern region such as Europe is affected, with the 2019 heat wave causing over two thousand deaths.
As of 2020 there are an estimated 1.9 billion AC units in the world, adding about 110 million units annually at an accelerating pace. The key constraint here is not capital but electricity to run all of these new units, which will be further exacerbated by the need to switch heating from fossil fuels to electricity. This constraint will be looked at in the energy section in a later post.
