(00:01):
Well I'm in over my head. No one told me trying to keep my footprint ball was harder than I thought it could be. I'm in over my head. What do I really need? Trying to save the planet over someone, please save me, trying to save the planet over someone. Please save me.

(00:25):
Welcome to In Over My Head. I'm Michael Bartz. So over the summer, I've been reaching out to potential guests for the upcoming season, and a lot of them have been on holidays and it's slow production. In the meantime, I thought I'd shared this special conversation with you. It ties in with my talks on money and what's to come. I hope you enjoy it.

(00:47):
My guest today is Ravi Shankar Chaturvedi. Ravi is the co-founder and director of research of digital planet. An interdisciplinary research platform dedicated to measuring the impact of digital innovations on the world and providing actionable insights. He's written several widely cited and influential articles and business and international fair publications and advised governments and companies around the world. On the digital transformation. Trave has provided commentary to the media on issues such as digital competitiveness of nations, digital financial inclusion, and digital innovations and transformation. He's extensive experience in emerging markets strategy and business management and the payments industry. Welcome to In Over My Head Ravi.

(01:27):
Thank you for having me here today, Michael, it's such a great pleasure to be here.

(01:32):
So with my conversations about money, one thing I wasn't able to squeeze in was the carbon footprint of money itself, whether this was paper or digital transactions or cryptocurrency, you supervised the research paper titled how green is the greenback. So I think you're the perfect person to educate me on this topic. Let's start with cold, hard cash. This has an environmental impact because resources like water and electricity are used for manufacturing. And then there's the transportation storage and even cleaning of our money. So generally, what is the carbon footprint of cash?

(02:00):
That's such a terrific question. Our team of analysts here at digital planet, we looked at this very question in the paper that we published titled how green is the greenback, where we compared the environmental costs of cash with that of crypto assets. Our approach for this was we looked at a life cycle view. What does that mean? We looked at three stages, the production stage, the operations and usage stage and the end of life. So if you were to kind of think of all those three and add them all up, that gives you a bit of a sense of an end-to-end if you will cost imposed by any of these instruments on the environment. So that was the approach that we took, but the United States has an aggregate of about 50 billion notes in circulation in 2020 alone, the United States printed about 5 billion new cash notes.

(02:51):
And the cost for each of these stages taken together for cash is about $2.20 per paper note. And if you were to break this down, it turns out that between production operations and end-of-life operations is about 98% of the cost. And what does the cost of operation entail? It is moving money around. So think about money once printed, once created, moving from the mint to the banks, from the banks to the ATMs, from the ATMs to the merchants, to the consumers, between the merchants and consumers between the consumers and consumers and the cycle goes on and on that is the shall we say the highest cost to the environment of cash.

(03:33):
And so if in the moving around and storage and transactions of our money is where the biggest environmental impact comes from. How long is the average? Let's say US bill in circulation for?

(03:44):
So an average US bill is in circulation for about eight and a half years. The US dollar is also, there is the currency of the world, which means that at any given point in time, there are a lot of US dollar bills circulating worldwide.

(03:59):
Yeah. So that makes me think about our money here. I'm in Canada. And if we think about Europe, for example, our paper money has a lot of plastic in it. And I would assume that it also increases the durability. Would that help with the environmental impact of our cash?

(04:14):
In a sense, yes. So if we were to compare the production and the materials that go into producing these bills, the US dollar primarily is made of cotton. Whereas the Canadian dollar, the British pound and the Euro bills have a mix of polymer and cotton, which what it does is it extends the life. However, it's a bit like whack-a-mole in the sense that in the operation stage, it extends the life of the bill and it's in circulation longer. And as our research shows, 97% of the costs are really in operations.

(04:48):
That's a very good point. And with things going to tap and touchless transactions, I obviously think of credit cards or debit cards. What sort of impact do those have on the environment?

(04:59):
That's a very good question. And that is an area that needs more research. As we said in our paper, no mode of transaction is cost less environmentally speaking. The pandemic has done much to advance contactless transactions and payment card-based transactions and so on and so forth and mobile waste payments, but fact remains that cash is to pay cash remains the major form of payment. In spite of all the advances that payment card-based and or digital wallet-based transactions have made. There's definitely a need to study the environmental footprint of these digital payments as well. Consider for example, a coffee you buy at Starbucks. There are at minimum digital records in five places in your email or on your mobile phone. If you use an app at the merchant, the merchant's bank, your bank, and the payment network that has intermediate this transaction. So there are digital records being stored on the cloud in at least five places. And all of this storage of our receipts and transaction records is not costless. All of this is using up space on the cloud, which isn't exactly costless environmentally speaking. There's a need to study this at an ecosystem level and find ways to reduce these environmental election externalities.

(06:17):
Yeah, absolutely. I think cuz obviously people have to purchase things in their daily life and whether they do it with cash or with a credit card it's gonna happen. So even though there is that digital accounting, I'd still wonder if that is better than me handing you a piece of paper that's in circulation for eight years.

(06:35):
Well, there aren't easy answers, right? The approach that we've taken, at least in trying to compare the environmental footprint of cash paper money with that of crypto assets is our method does a like to like, so we looked at the life cycle assessment, which is production operations usage and end of life. So there is a similar approach that one can take in studying the environmental footprint of digital payments, mainstream digital payment, shall we say it is possible? It is just that we haven't done that yet. And there is a way to get to a lifelike comparison.

(07:07):
You touched on cryptocurrencies or assets as you called them. And that's something that's often in the news because from what I've read, it has a huge environmental impact because of the storage portion and how much energy that costs. So let's talk a bit about crypto and its environmental impact.

(07:22):
Absolutely. It's a personal bug where that for any instrument we call a currency, it needs to satisfy three properties. It needs to be a store of value, a unit of account and a medium of exchange. Now crypto can at best be described as a store of speculative value. They aren't yet a viable unit of account or a viable medium of exchange, not to say that they can never be, but they definitely aren't yet. So I hesitate to call them currencies. I think it is better to think of them as crypto assets to avoid any kind of confusion. So knowing that a us bank note costs about $2, 20 cents to the environment is more useful when you compare it with another source of value. So in this case, crypto and crypto make for a relevant comparison because of it's increasing appeal among investors. So according to our analysis on a perfect client basis, mining, which is production and transactions are estimated to cost about $70.

(08:21):
Now a single Bitcoin transaction uses roughly about 707.6-kilowatt hours of electrical energy, which is equivalent to the power consumed by an average us household for about 24 days, according to the economics and Bitcoins annual transactions at the current rate, the average Bitcoin is transacted at, at about five and a half times a year. Now the reason is it is fairly clumsy it's time taking it is not friction-free in the same way that your contactless card base payments are. It's fairly effortful. And it takes a lot of shall say tenacity on the, on the part of, of the user to transact, nevermind the changing value by the second. So a Bitcoins annual transactions, if you were to just look at transaction cost to the environment at current rates, which is about, you know, five and a half times per year equal to about $27 and 10 cents of carbon produced comedy separate use annual anyway. So in several ways where crypto assets are environmentally questionable, still are both at the production stage and in the transaction stage.

(09:25):
Yeah. And in what you're talking about there, it seems like where with cash or other various transactions, we do day to day, it's very frequent. We do multiple ones a day. And from what you said about crypto it's as an asset, it's more like an investment and it sounds like it's not being transacted as much. So overall, does it have a, a higher environmental impact than our other daily transactions?

(09:48):
So again, depends on how you look at it at an aggregate level, given that there are at least in the US context about 50 billion pieces of paper in circulation, the aggregate cost life cycle cost to the environment is roughly 13 billion on an annual basis. Whereas Bitcoin, given its current size, is roughly about 1.3 billion, obviously because there's more cash and circulation, its environmental cost per bill is about $2 20. It's a lot of bills and circulation times a smallish cost gives you a larger number. Whereas when you look at Bitcoin while the aggregate number looks small, the per unit costs are extremely unviable. So it depends on how you look at it. Proponents of cash would like to show the unit costs to the environment. Whereas Proponents of Bitcoin would like to show the aggregate cost to make their cases look good.

(10:41):
So I guess if we move away from cash and more to those digital payments and maybe crypto in the future, would that increase the environmental impact or is it about making the actual cryptocurrencies? Let's say net zero with renewable energy or things like that.

(10:56):
But possibly crypto put it to be deemed environmentally viable or at least to be on par with the dominant manifestations of, you know, instruments and money. As we know them, crypto has to work both on reducing production costs and the transaction and operational costs on a transaction basis. You know, if you were to just think of the production costs and the operational cost, the operational costs are lower than the production costs. However, I think when people ask that question, we need to rethink the question of all the things that we desperately need renewable energy for, to me, the real question is whether this is energy spent well spent. And that's a question of priorities. I personally don't think it is. There are several other areas that need renewable forms of energy, things that we can't live without.

(11:46):
No, that's, that's a good point about priorities and tackling the things that are the most effective. And along those lines, this show is about empowering citizens to take action on the climate crisis. And when it comes to our money, what can people do to have an impact and lower their environmental footprint?

(12:02):
And that's such a terrible question. And unfortunately what tends to happen is the decisions of what to do to preserve the environment, get trickled down to consumers a lot more. I mean, we spend more time sorting our trash. Whereas the biggest polluters are not doing their fair front and consumers end up given the fact that we all have a conscience. We end up bearing the burdens. If you will being mindful of the footprint of our consumption and the way we pay for our consumption is always a good thing. And this is commendable. The major payment network, MasterCard has carbon calculator initiatives that empower and enable conscientious consumers to track their footprints. So as the saying goes, you can't improve what you don't measure. So in some sense, measuring tracking one's own consumption for banks can help consumers be aware of it. There are carbon-calculated initiatives and there are several other tools out there. And just being aware of the fact that there are costs that no payment instrument is cost less to the environment and demanding better of the purveyors of set payment instruments, their banks, their margins, their payment networks, ask them to do more, ask them to do better. I think that is how we can probably get you a better place.

(13:21):
Yeah, I would agree with that. Absolutely. I think that's some good advice. So this has been a very rich conversation, Robbie, so thanks so much for coming on the show.

(13:28):
Thank you so much. It was good to be here.

(13:31):
Well, that was my talk with Robbie. I found it so interesting that when it comes to our cash, the circulation portion actually has the biggest environmental impact. That was new to me. And whether it's cash or digital transactions, it sounds like it's about asking more of the people responsible. That's how we're gonna make the biggest change. Well, that's all for me. I'm Michael Bartz. Here's the feeling a little less over our heads when it comes to saving the planet. We'll see you again soon. In Over My Head was produced and hosted by Michael Bartz original theme song by Gabriel Thaine. If you would like to get in touch with us, email info@inovermyheadpodcast.com. Special thanks to Telus STORYHIVE for making this show possible.

(14:11):
Trying to save the planet. Oh, will someone please save me?