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Chapter 3: Household consumption

At a glance

Household consumption

Consumption by households affects the environment. Our lifestyle choices, the goods and services we consume, and how these are produced and disposed of all affect the extent and manner of our impact on the environment.

Household purchasing of goods and services is an approximate measure of the pressure households place on the environment through consumption. Therefore, it can be a useful indicator of the impact our lifestyles have on the environment.

Purchasing patterns can change over time. They are influenced by a range of factors such as population size, income, the availability and affordability of goods and services, economic trends, and consumer preferences.

Trends in household consumption expenditure

New Zealand households spent more in 2006 than they spent in 1997. Between 1997 and 2006, real total household consumption expenditure (that is, expenditure adjusted for inflation) 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).

The 39 per cent increase in real total household consumption expenditure compares to an increase in New Zealand's population of around 11 per cent and in real gross domestic product of just over 30 percent for the same period.

Trends in household expenditure across consumption categories

Real household consumption expenditure (expressed in 1995/1996 prices) across each of the seven consumption categories measured increased between 1997 and 2006, in total, and on a per capita, and per household basis.

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 (unadjusted for inflation) total expenditure, expenditure per capita, and per household.

Between 1997 and 2006, most of New Zealanders' spending each year was on housing. In nominal terms, housing was the category on which most money was spent in 2006 (about 18 per cent of total household consumption expenditure, which is a decrease from about 21 per cent in 1997). However, in real terms, in 2006 New Zealanders spent more on food and beverages than on any of the other goods and services categories ($3,262 per person per year in real terms).

Between 1997 and 2006, expenditure on food and beverages and on household goods and services (for example, electricity, major appliances, and furniture) showed the greatest monetary increases (in real terms): $3,908 million ($727 per person) and $3,768 million ($768 per person), respectively. Expenditure on household goods and services, clothing and footwear, and food and beverages showed the greatest percentage increases (in real terms) in the same period (about 60 per cent, 59 per cent, and 41 per cent respectively).

Factors affecting household consumption

Rising consumption in New Zealand is likely to be related partly to population growth and to the growing number of households. However, increased household consumption expenditure can also be attributed to increasing consumption over time; that is, more people buying more things, not just more people buying the same things. Increased consumption can mean greater use of natural resources and generation of waste, both of which have implications for the environment.

Our changing ecological footprint

An ‘ecological footprint’ is one of several tools used to illustrate the pressure placed on the environment by our production and consumption of natural resources.

Between 1998 and 2004, New Zealand’s ecological footprint increased from 19.9 million global hectares to 22.9 million global hectares, including imports but excluding exports.

In 2003, New Zealand had a per capita ecological footprint of 5.9 global hectares. This was higher than the Organisation for Economic Co-operation and Development (OECD) average of 5.1 global hectares, and the sixth highest in the OECD.

In addition, as New Zealand has a significant role in exporting goods and services to overseas markets, we export an ecological footprint equating to 15.5 million global hectares. This means that we contribute to the ecological footprint of other countries.

Present and future management

Today, New Zealanders are increasingly aware of the need to reduce the impacts of consumption on the environment, while at the same time improving our standard of living. In the future, this issue is likely to remain a focus in view of the national and global interest in sustainability.

According to the OECD, ‘de-coupling environmental pressures from economic growth, while satisfying human needs, is a key challenge for OECD countries over the next few decades’ (Organisation for Economic Co-operation and Development, 2002b, p 3).