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State of the environment Environment New Zealand 2007 Online version Household consumption
Current pressures and trends
In terms of the effects of household consumption on the environment, two important aspects of household consumption expenditure are:
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the volume of household consumption expenditure – that is, how much money is spent (as an indication of the volume of consumption)
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household consumption expenditure across consumption categories – that is, spending patterns (the kinds of products and services that are consumed).
Household consumption expenditure, 2006
Between 1 April 2005 and 31 March 2006, New Zealand households spent about $91 billion (in nominal prices) on goods and services (see Table 3.3). Each New Zealander spent about $22,000, and each household spent about $61,700.
The top three consumption categories (excluding the combined recreation and education, and health and medical goods and services category) were food and beverages, housing, and transport.
Table 3.3: Household consumption expenditure in nominal figures, year ended 31 March 2006
| Category | Household consumption expenditure ($ millions) |
Proxy per capita expenditure ($) | Proxy per household expenditure ($) |
|---|---|---|---|
|
Food and beverages |
16,159 |
3,931 |
10,929 |
|
Clothing and footwear |
4,424 |
1,076 |
2,992 |
|
Housing |
17,198 |
4,184 |
11,632 |
|
Household goods and services |
10,248 |
2,493 |
6,931 |
|
Transport |
13,618 |
3,313 |
9,210 |
|
Hotels and restaurants |
7,204 |
1,753 |
4,872 |
|
Other goods and services |
10,018 |
2,437 |
6,775 |
|
Recreation and education, and health and medical goods and services |
15,481 |
3,766 |
10,470 |
|
Total |
91,235 |
22,197 |
61,705 |
Notes:
(1) Numbers are rounded to the nearest dollar.
(2) The categories recreation and education, and health and medical goods and services were calculated as a combined group, because complete data sets for the individual categories were unavailable (see note 2 to Table 3.2).
(3) Household consumption expenditure in each category includes purchasing by New Zealanders and people visiting New Zealand, but excludes New Zealand resident household expenditure while overseas. Figures for total household consumption expenditure do not include expenditure by people visiting New Zealand, but do include New Zealand resident household expenditure while overseas.
Data sources: Adapted from Statistics New Zealand, 2007b; 2007d; Statistics New Zealand, pers comm.
Trends in household consumption expenditure
Total household consumption expenditure has been increasing since 1993, although the rate of change has varied from year to year (see Figure 3.1). Total real household consumption expenditure increased about 65 per cent from 1993 to 2006. However, this increase is smaller on a per capita basis (about 42 per cent), because it takes increases in population into account.
Between 2004 and 2006, the percentage change in per capita household consumption expenditure exceeded the percentage change in per capita gross domestic product (see Figure 3.1).
On average, every New Zealander spent more on household expenditure in 2006 than they did in 1993. This is consistent with what has happened in other OECD countries – according to the Organisation for Economic Co-operation and Development (OECD), ‘per capita private consumption has increased steadily in OECD countries over the last two decades, and is expected to continue to follow GDP growth in the period to 2020’ (Organisation for Economic Co-operation and Development, 2002b, p 3).
Between 1997 and 2006, real total household consumption expenditure increased by $21,532 million (39 per cent). Over the same period, real per capita household consumption expenditure increased by nearly $4,000 (26 per cent), and real per household consumption expenditure by just over $8,700 (20 per cent) (see Table 3.4).
Figure 3.1: Change in total household consumption expenditure, proxy household consumption expenditure per capita, and gross domestic product per capita, 1993–2006 (March financial years, real data)
See figure at its full size (including text description). Trends in household expenditure by consumption category
Real household consumption expenditure (expressed in 1995/1996 prices) across all categories increased between 1997 and 2006 (see Table 3.4 and Figure 3.2).
Table 3.4: Real household consumption expenditure (expressed in 1995/1996 prices), in 1997 and 2006 (March financial years)
In 1997, in real terms, New Zealanders spent most on housing (excluding mortgage repayments or the purchase of houses – see Table 3.2), and the second highest amount on food and beverages. In 2006, that had reversed (see Figure 3.2). The relative ranking of the other categories remained the same.
When the data is not adjusted for inflation, housing remains the category on which most was spent in 2006 (see Table 3.3).
Since 1997, housing (which excludes mortgage repayments and house purchases), transport, and food and beverages have consistently appeared as the top three consumption categories, in terms of both real and nominal total expenditure, expenditure per capita, and per household expenditure.
Between 1997 and 2006, expenditure on food and beverages and on household goods and services showed the greatest monetary increases (in real terms): increases of $3,908 million ($727 per person) and $3,768 million ($768 per person), respectively.
In percentage terms, between 1997 and 2006, New Zealanders’ real total spending increased the most on household goods and services (about 60 per cent), clothing and footwear (nearly 59 per cent), and food and beverages (about 41 per cent) (see Figure 3.3). Housing (which excludes mortgage repayments and house purchases), showed the least percentage increase, with comparatively low increases of 15.6 per cent overall, 5.4 per cent per capita, and 0.2 per cent per household.
Between 1997 and 2006, total real expenditure in each of the categories except housing increased by a greater percentage than did gross domestic product (see Figure 3.3) (although hotels and restaurants was only marginally higher).
In nominal terms the greatest percentage increases in total spending on each category were for hotels and restaurants (about 68 per cent), food and beverages (about 67 per cent), and clothing and footwear (about 66 per cent). Household goods and services, and other goods and services also showed increases of more than 50 per cent.
Figure 3.2: Proxy real household consumption expenditure per capita, in 1997 and 2006 (March financial years)
See figure at its full size (including text description).Figure 3.3: Change in real household consumption expenditure by category, and real gross domestic product, 1997–2006 (March financial years)
See figure at its full size (including text description).Changes in the proportion of spending in each category over time can indicate how New Zealanders’ spending preferences are changing. Nominal data was used to calculate these percentages, so the changes reflect nominal rather than real figures (Statistics New Zealand, 2007d). Overall, the proportion of spending on each category did not change greatly between 1997 and 2006. Generally, between 1997 and 2006, New Zealanders spent the greatest proportions of overall expenditure on housing, food and beverages, and transport.
In 2006, housing comprised 18 per cent of total household consumption expenditure, which is a decrease from nearly 21 per cent in 1997. Housing, transport, and other goods and services are the only categories to have decreased as a percentage of total spending since 1997.
Factors that affect household consumption
A variety of factors can influence household expenditure patterns at individual and national levels, and, consequently, the degree to which our consumption affects the environment. Our purchasing patterns change as our lifestyles change, as the size of our families and homes change, and as our population and economy grows.
Factors that can influence household consumption expenditure patterns include lifestyle changes, emerging technologies, marketing campaigns, and changes in styles and tastes. Other factors, discussed in more detail in this chapter, are:
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population
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the number of households and household size
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the availability and affordability of goods and services
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economic growth and income levels
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individual choices.
Population
Between 1993 and 2006, New Zealand’s population increased about 16 per cent and the estimated number of households increased about 22 per cent. While these increases could be expected to cause household consumption expenditure to rise, total expenditure has been increasing at a comparatively greater rate than the population has been increasing.
Total household consumption expenditure increased about 65 per cent between 1993 and 2006 (see Figure 3.4), suggesting that rising household consumption expenditure is not solely the result of having a larger population or more households. In other words, New Zealanders are spending relatively more now than they were spending 10 years ago.
Figure 3.4: Change in population and real total household consumption expenditure, 1993–2006 (March financial years)
Households and household size
Between 1997 and 2006, the number of households in New Zealand increased, while the average number of people living in each household decreased slightly. Overall, the trend has been towards larger dwellings with fewer occupants (Statistics New Zealand, 2003).
Data from the 2006 census shows that the average number of people per household marginally declined from 1996 to 2006, from 2.8 people per household to 2.7 people per household (Statistics New Zealand, 2007f).
Over the same period, the proportion of one-person households in New Zealand increased from nearly 21 per cent (256,569) to 23 per cent (328,299) of households (Statistics New Zealand, 2007f).
Without any resource-efficiency measures, such as energy-efficient fit-outs and appliances, larger houses can be expected to consume more resources. At the same time, smaller households (fewer people occupying a housing unit) ‘generally use more space, energy, and water, and generate more waste per person’ than do larger households (European Environment Agency, 2005).
Availability and affordability of goods and services
Consumers base their purchasing decisions on a wide range of factors, but the products and services that are available determine what consumers can buy. Over recent years, the variety of goods available for households to purchase has increased, and many goods have also become more affordable. As in other countries, New Zealanders have access to ‘a steadily expanding range of low-priced, mass-produced goods and access to a progressively more global marketplace’ (Organisation for Economic Co-operation and Development, 2002b, p 6).
Such trends can change not only the volume of household consumption, but also the kinds of goods households purchase. For example, in some cases it may become more affordable to buy something new rather than to repair it. As another example, the choices households make regarding transport can be affected by factors such as the price of petrol, or the availability of various transport options. The greater variety of products for consumers to buy is also reflected in an increase in the availability and variety of ‘eco-friendly’ products and services.
Eco-labelling schemes
Labelling schemes that identify products that meet certain 'eco-friendly' criteria can inform consumers’ purchasing choices.
Environmental Choice New Zealand
Environmental Choice New Zealand is a voluntary eco-labelling programme owned by the Government and run independently by the New Zealand Ecolabelling Trust. Products must meet publicly available criteria, based on life-cycle principles, that have been developed to international standards and are designed to indicate ‘environmental preferability’. Products that achieve the appropriate standards are entitled to use the Environmental Choice label (Environmental Choice New Zealand, no date).
Energy
ENERGY STAR is an independent, international label that indicates which products are the most energy efficient in a product category. Products displaying the blue ENERGY STAR mark have to meet stringent energy efficiency standards. At present, the ENERGY STAR mark can be found on the most energy efficient heat pumps, washing machines, dishwashers, computers, imaging equipment, and home electronics. More products will be added over the coming years (Energy Efficiency and Conservation Authority, no date).
Source: Courtesy of the Energy Efficiency and Conservation Authority.
Energy rating label. Consumers can compare the energy consumption of different appliances by the number of stars on the energy rating label (the more stars, the better the efficiency of the model). In New Zealand, it is mandatory to display this label on whiteware (refrigerators and freezers, washing machines, dishwashers, and dryers), and heat pumps (Energy Efficiency and Conservation Authority, pers comm).
Source: Courtesy of the Energy Efficiency and Conservation Authority.
Economic growth and income levels
Economic growth and household consumption growth are closely linked, and have followed similar trends. Higher levels of income mean greater discretionary spending (that is, money available to spend on consumables beyond the basic necessities) and a greater ability to purchase more and/or higher-priced goods. Between 1997 and 2006, New Zealand’s economy grew by just over 30 per cent in real terms (Statistics New Zealand, 2007e) and real household consumption expenditure increased 38.6 per cent (see Table 3.4).
Between 1997 and 2006, total real expenditure in each of the categories, except housing, increased by a greater percentage than gross domestic product (see Figure 3.3) (although hotels and restaurants was only marginally higher).
Individual choices
By making environmentally conscious decisions, such as choosing appliances or vehicles that are more energy efficient, people can reduce the effects of their consumption on the environment. The opposite is true when household activities increase energy consumption or generate more waste that needs disposal.
Even when improvements are made in energy efficiency, reductions in environmental impacts may be offset by the overall increases in the volume of goods and services consumed (Organisation for Economic Co-operation and Development, 2002b).
While using energy-efficient appliances may not necessarily result in reduced energy consumption, it may have benefits such as people’s health improving as a result of living in warmer homes.
Local action to reduce household consumption
Hamilton Energy Blitz
Over the month of May 2007, Hamilton Environment Centre, supported by Hamilton City Council and Environment Waikato, ran what was called an ‘energy blitz’ in Hamilton City – a month of events focusing on encouraging energy efficiency and reducing energy use in the home (Environment Waikato, no date).
Promoting energy efficiency in the home is one way of helping to reduce household energy consumption. (For a discussion of the environmental implications of energy consumption, see chapter 5, ‘Energy’.)
Sustainable Living Programme
The Sustainable Living Programme was developed by eight local and regional councils, led by Marlborough District Council, with involvement from community groups and high schools. The programme now runs evening classes in 20 regions and cities, and has a website with information about practical steps that can be taken to improve sustainability at the household level. The programme is intended to encourage consumers to make informed choices about how their activities and purchases impact on the environment (Sustainable Living Programme, no date).
Green business
Many businesses, such as those in the tourism sector, are starting to take action to become more environmentally sustainable, including by reducing their carbon footprint. They may market these actions as a point of difference from their competitors, or join a recognised eco-labelling scheme (see box, 'Eco-labelling schemes' on the previous page). Such actions by businesses allow consumers to make a more informed choice about what they buy, based on the environmental pressures or impacts of those products and services. Indirectly, the ‘green business’ movement can reduce the environmental impacts of household consumption.
Ecological footprint
An ‘ecological footprint’ is one of several tools that may be used to illustrate the pressure placed on the environment by our production and consumption of natural resources (see box, ‘More about sustainability indices’). The larger a population’s ecological footprint, the more natural resources that are needed to sustain that population’s lifestyle.
An ecological footprint estimates the amount of productive land and sea area2 that is required to support the lifestyle of a particular population (for example, a country, region, or household). This includes the land needed to produce food and fibre and other goods and services, and to support infrastructure and housing. It also includes the area of land that is needed to absorb carbon dioxide emissions (see Figure 3.5).
Figure 3.5: Composition of an ecological footprint
See figure at its full size (including text description).
The ecological footprint can be used to show whether a population’s demand for natural resources exceeds the supply of those resources – that is, whether a population is living within its land’s ecological carrying capacity. In this way, an ecological footprint can be used as a proxy measure of the environmental sustainability of a population’s lifestyle.
More about sustainability indices
The ecological footprint is just one measure of environmental sustainability. Other tools that may be used to measure and aggregate environmental performance indicators include the Environmental Sustainability Index (ESI) and Environmental Performance Index (EPI).
The ESI reports against five indicators: environmental systems, environmental stresses, human vulnerability to environmental risk, social and institutional capacity to respond to issues, and global stewardship.
The EPI records performance against targets in areas such as environmental health, air quality, water resources, biodiversity and habitat, sustainable energy, and productive natural resources, and is narrower in focus than the ESI (Department of Environment and Conservation, 2006).
Table 3.5: Performance of selected countries against selected sustainability indices
View performance of selected countries against selected sustainability indices (large table)
New Zealand’s changing footprint
Population growth is a key influence on the size of an ecological footprint. In addition, as an economy grows, so too does its ecological footprint. The wealthier a country or region is, the higher levels of material affluence and consumption of goods and services it has (Ministry for the Environment, no date).
Between the 1998 and 2004 March financial years, New Zealand’s ecological footprint is estimated to have increased 15.4 per cent, from 19.9 million global hectares to 22.9 million global hectares (Ministry for the Environment, no date). This was accompanied by an increase in the ecological footprint of each of New Zealand’s 16 regions (as defined by regional authority area).
On a per capita basis, New Zealand’s ecological footprint increased from 5.24 global hectares in 1998 to 5.65 global hectares per person in 2004, which is an increase of 7.8 per cent (Ministry for the Environment, no date).
Trade and New Zealand’s ecological footprint
In 2007, the Ministry for the Environment estimated New Zealand’s 2004 biocapacity to be 58.2 million global hectares. With an ecological footprint of 22.9 million global hectares, the New Zealand population uses 39.4 per cent of its available biocapacity. This indicates that New Zealand is living within its ecological carrying capacity, as measured by the ecological footprint tool
However, New Zealand’s ecological footprint does not include the amount of land used to produce goods and services for export. These goods and services are included in the importing country’s ecological footprint.
New Zealand’s ‘ecological balance of trade’ highlights that we are a significant exporter of goods and services to the rest of the world. At 15.5 million global hectares, the area of land used for the production of our exports is just over twice that used for our imports (Ministry for the Environment, no date).
International ecological footprints
The ecological footprint provides a useful tool to compare relative environmental pressures across countries. Figure 3.6 shows that in 2003 New Zealand had the sixth largest per capita ecological footprint within the Organisation for Economic Co-operation and Development (OECD) at 5.9 global hectares. The OECD average at the time was 5.1 global hectares per person.
In 2003, New Zealand’s ecological footprint was larger than the global average per capita footprint of 2.2 global hectares per person3; which is also higher than the earth’s estimated biocapacity of 1.8 global hectares per person (Global Footprint Network, 2006).
Note that the ecological footprint for New Zealand calculated by the OECD differs from that estimated in New Zealand due to different calculation methodologies.
Figure 3.6: Comparison of per capita ecological footprints of OECD countries in 2003, including OECD and world averages
See figure at its full size (including text description). 2 For the purposes of this section, the area of productive land and sea are referred to collectively as ‘land’.
3 This includes the per capita ecological footprints of all countries with populations of 1 million or more for which data is available, including the significantly smaller footprints of developing countries such as Afghanistan (0.1 hectare) and Bangladesh (0.5 hectare) (Global Footprint Network, 2006).
