The Environmental Impact of Cash

Finance: Is Credit Cards more eco-friendly than Cash/Notes?

There’s a lot of people debating the pros and cons of living in a cash-free society. I really think that you have great arguments on both sides (which I will get back to later in the article). However, one interesting perspective is to look at the environmental benefits of getting rid of coins and notes.

How much do they really “pollute”?

The Environmental Impact of Cash

Table of Contents

How much physical money does currently exist in the world?

According to Worldatlas, which is the best source that I could find on this topic, there is an estimation of 36.8 trillion USD worth of notes and coins across the globe. Trying to find out how much cash weigh is not an easy job. In some countries, like for example Vietnam, you are using notes for everything. In other countries, like the Scandinavian countries, you have coins that are valued up to 3-4 USD.

In other words: it is nearly impossible to measure the weight, and therefore also the environmental impact, of physical cash – unless you have full statistics over the various currencies. Such statistics do not exist today.

This article from explains why we will always be unable to know exactly how much (physical) money that exists in the world. Quote:

A million dollars in $1 bills is also equal to 1 metric ton but weighs about 1.1 tons by U.S. measure. Each time the denomination of the bills is increased, the weight of a million dollars decreases significantly. When weighed in $100 bills, a million weighs approximately 22 pounds.
Of course, the same is true of how much space a million dollars takes up. U.S. currency is 0.0043 inch thick. A stack of a million dollars in $1 bills would measure 358.33 feet tall, but if you use $20 bills, the stack is only 3.58 feet tall.

There are two things required to determine the physical mass/weight of money: 1) the knowledge of which currencies that are the most “popular” ones and 2) the distribution of different notes values [1USD/5USD/10USD, etc.]. We got neither of those.

Roughly 53.6 trillion USD is being held in accounts. In other words: most of the finances held by private people and companies are (currently) not physical money.

In what way are cash-less eco-friendly than credit cards/mobile payment?

There are two central elements that can be described as having a negative impact on the environment regarding physical cash:

1) Some notes/coins do end up in nature, which is why they can be described as a “natural pollution factor”. Just like empty Coca-Cola bottles, plastic bags, and other trash.

2) The process of making cash leaves a high environmental footprint.

What is the solution?

Again: there are loads of good arguments to keep cash in our society. Elderly people might not be following new technology, there is a security aspect of having all your money in a digital account, certain people feel safer by using cash, etc.

I will admit that the environmental aspect is not the strongest argument to get rid of notes/cash. And I guess there is a reason why scientists have not looked into this specific research question. After all, the debate is about so much more than saving the planet. However, I would really be interested in hearing from anyone that has looked into this specific problem. If you have: please leave a comment in the comment section below.

China: a cash-free society

When I first came to China in 2014, I was surprised by the fact that no shops or restaurants accepted credit cards. You really needed cash in order to get around in society. Luckily, there was an ATM on every street corner.

In 2019, now that I leave China, things have changed dramatically. Literally, no one uses cash anymore. The reason for that? AliPay and Wechat Pay – two Mobile Pay solutions that have definitely revolutionized how payments are made in China.

You can use these two mobile apps to pay your taxi fares, your food, your mobile subscription, your electric fees, your landlord….well….everything and everyone. If you want a humoristic (yet realistic) introduction to how a cash-less society looks like, please have a look at this video:

I believe this is the future.

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