One comment that went down well during a St. Georges Consultation at Windsor on the Future of Health last week was based on drawing parallels with energy consumption.
The Energy Ladder (see left) which plots GDP per capita growth against energy consumption per capita is a long standing favourite in the oil and gas world as it shows that as we all get wealthier, we generally all consume more and more energy.
While some countries (e.g. the US and Australia) clearly consume more energy per capita than others, largely due to a combination of climate, geography and behaviour, it also shows that there comes a point where demand levels off – there is a threshold at which we can continue to grow economically without consuming more and more energy. The fact that Japan has leveled off consumption around the point at which EU per capita demand stopped growing and both of these are way below US and Australia gives people hope that we can be better in the future. In a world of climate change, constrained supply and rising energy prices ‘better’ here is seen as both China and India leveling off at or below EU / Japan’s levels of consumption and generally bringing Western demand down.
Given the success of the energy ladder model in maintaining focus on the core issues for oil and gas companies as well as governments around the world, at Windsor I suggested that similar graphs of protein consumption, water consumption and, most relevant to the discussion taking place, healthcare spend per capita may help to highlight the challenges.
So, using World Bank data, here is an initial view of how the principles of the energy ladder look when you plot healthcare spending per capita against GDP per capita.
What is clearly in common is that China and India are just at the start of the journey with a linear relationship between the two. We can also see that Brazil and South Africa are following the same trajectory albeit a bit further down the line and both nations now spending around $1000 per person on healthcare each year.
What is however most concerning as you look at the US, Australia, Japan and three major European nations (France, Germany and the UK) is that there is no apparent leveling off taking place. Indeed, for all, as the economies have grown the steepness of the curve has increased. Even during the clearly visible 2007/8 dip in GDP growth, healthcare spending in all six sample countries continued to rise. In the healthcare world we can evidently see growing unsustainable demand outstripping the capacity of nations to afford to match supply. Seen through the eyes of the energy sector, this pattern is potentially disastrous at economic and policy levels.
As we continue to explore the commonalities between the energy, food, water and energy challenges over the next few months, we shall start by unpicking some of the underlying causal relationships. Maybe faster aging, rising obesity, sedentary populations or another factor is the most influential. Just as drivers such as cheap oil, big cars and pervasive air-conditioning have largely fueled energy demand in the West, there may be more parallels to explore both in terms of causality and potential solutions to the systemic shocks on the horizon?