ResourceProductivity

CONSUMPTION AND ENVIRONMENT
- TOWARDS INCREASED RESOURCE PRODUCTIVITY

INDEX:

  • The resource cycle
  • Past growth in consumption
  • Population development
  • Future growth in global consumption
  • Required improvements in resource productivity
  • Adjustments of the market economy
  • International policies are required

    • The resource cycle

    The basic reason for the environmental problems, the world is facing, is the considerable growth in global consumption (private material consumption) which has taken place this century - especially during its second half.

    All consumption, but in particular material consumption as opposed to service (immaterial consumption), is associated with a resource cycle. In this natural resources (materials and energy) are extracted from Mother Earth and subjected to a transportation and manufacturing proces during which emissions and wastes are created. Many consumer goods also require resources for their use ( the washing machine: water, electricity and detergents) whereby further emissions and waste are created. Finally the products have to be disposed of, creating further waste and often emissions. Some of the resources are however recycled, decreasing the net use of resources for consumption and therefore also the load on drains.

    When the first Club of Rome report was published in 1972 (Limits to Growth) the limits to both the source and the drain availabilty, we would enevitably face due to ongoing growth in consumption, were of concern and were seen as environmental problems. Since then concern about the source problem has diminished. For instance the report anticipated, that the world would run out of oil already by the end of this century. New prospecting and extracting technologies have pushed this limit much further (to the middle of next century). New material technologies have pushed other limits. But still sustainable development - as regards the resource problem - means, that renewable natural resources should be used only to the extend that they are not depleted - and that non-renewable resources should be used with such limitations, that we will not run out of them before we can be certain that substitutes have been found.

    But the drain problem pointed out by the Club is remaining with us - and has probably grown. And many scientists beleive, that the impact of consumption has reached a level which is at the limit of environmental sustainability - or already above.

    Index

    Past growth in consumption

    Global industrial production (most of which ends up as goods for private consumption) has grown by a factor 30 (note) from 1900 to 1980 . Extrapolating to the end of the century, production will have increased by a factor of about 40. The population growth factor for the century will be about 4. This means that consumption per capita will have grown by a factor 10. Increased consumption per capita, in particular in the industrialized countries, has had a more heavy effect than population growth, but both count.

    In rough figures we in the industrialized countries are responsible for about 3/4 of global consumption, the developing countries for 1/4. Since we are accounting for only 1/4 of global population, we are on an average consuming 10 times as much per capita per year than the populations of the developing countries.

    Index

    Population development

    Global population continues to oncrease strongly. It grows with 80 to 90 millions a year. More than 90% of the growth is taking place in the developing countries. 

    

                                
			 1900   1950   2000   2050   2100
   Indus. countries       0.6    0.8    1.2    1.3    1.3    
   Devel. countries       1.0    1.7    5.1    8.7    9.9      
   World                  1.6    2.5    6.3   10.0   11.2 

	          WORLD POPULATION IN BILLIONS

   See Note on revised population figures

    Up till the middle of next century population in the developing countries will approximately double. That of the industrial countries is already practically stable. The big question is now, what will happen to global consumption up to that time, which is not far off.

    Index

    Future growth in global consumption

    In the following calculation it is assumed, that the consumption in the industrial countries will double. That would be a very low growth over the considered period of 50 to 60 years compared to the past. But perhaps we will se a certain saturation of demands for material consumption or perhaps we might even choose to act in responsibility to the environment. For the developing countries a quadrupling in the consumption per capita is assumed. That may seem high, but corresponds to a growth of only about 2,5% per annum, less growth than we have seen in the past decades, and certainly less than we are seeing presently due to the very high growth in East Asia.It would bring per capita consumption in the developing countries up to 4/10 of our present or 2/10 of our assumed future. Further, without considerably improved living conditions there is no hope, that the population explosion in the developing countries will come to an end.

    In the calculation the present global consumption is put to an index of 100, of which 75% is consumption in the industruialised countries and 25 in the developing. Applying a factor for population growth (1 for the i-countries and 2 for the d's) and then a factor for growth in consumption per capita (2 for the i's and 4 for the d's) global consumption in the middle of next century will be todays multiplied by a factor of 3,5. 

    


		      Index   Popul.   Consump.  Index
                        now   factor   factor    anno 2050
  Indus. countries       75       1       2        150
  Devel. countries       25       2       4        200
  World                 100                        350

	  GROWTH IN GLOBAL MATERIAL CONSUMPTION

  Use the Global Consumption Growth Calculator on this 
  website to make your own estimate of the consumption growth.

    This is defenitely a low side scenario. The factor will probably be at least 4. Many are estimating it higher. In the report of the Brundtland Commission (1987) it is said, that global industrial production is expected to grow by a factor of 5 to 10 until growth may stop at the end of next century.

    Note that consumption in the (present) developing countries will amount to twice the global consumption today. Even assuming zero growth in the i-countries (and maintaining the other assumptions) global consumption would grow by af factor about 3. Of the total growth calculated on the basic assumptions, 70% (175*100/250) will take place in the d's. But still, 30% will come from our rich countries.

    Two conclusion can be drawn. The population explosion and the inevitable (indeed necessary and desirable) improvement of living conditions in the developing countries will - even assuming zero growth in the industrialized countries - lead to a considerable growth in global consumption. Therefore, the sooner the population explosion is brought to end, the less will the environmental (and many other!) problems become. Secondly, if the impact of global consumption is already today at the limit of sustainability, it is imperative, that the growth of material consumption in the industrialized countries should be reduced and that the impact per unit of consumption is reduced by improvements in technology.

    Index

    Required improvements in Resource Productivity

    This improvement must consist in the reduction in the amount of resources used per unit of consumption (net after deduction for - increased - recycling). This must be achieved by technology with improved products, improved processes and improved material technology. Also in many other ways; by improved traffic and transportation systems for instance. This need for improvements can be seen from the socalled 'Paul Ehrlich Equation' (first published in 1974 and dealt with in Paul R. Ehrlich's book "The Population Explosion", 1990). The equation reads:

    I = P * A * T

    where I is the impact on the environmental systems, P is the number of people, A stands for affluence or per-capita consumption, and T for the environmental impact per unit of consumption. This means that T stands for the applied technology in the sence desribed above.

    If it is assumed, that global consumption will increase by af factor 4, the amount of resources used per unit of consumption should be reduced to 1/4 of the present. Doing this over a period of 5 to 6 decades corresponds to an improvement in resouceproductivity of about 2 to 2 1/2% per year. [Use the Global Consumption Growth Calculator to se the required increase in resource productivity for other consumption growth factors - by clicking 'Impact Growth'.] This is the challenge to science and technology.

    Could this be achieved? I belong to those, who firmly believe it could. First of all resource productivity has increased considerably this century, though not at the rate now required. Competition in the market has been driving this proces in parallel with the increase in labour productivity. But mainly I am basing this conviction on the fact, that we have seen tremendous developments in science and technology in this century. We have seen this process accelerate, as knowledge has accumulated. And we are now having a very great number of higly educated scientists and engineers mastering this knowledge as well as numerous adanced reseach facilities.

    To a very great extend it has been the competition in the market economy which has driven these developments, and the market economy could do it again, now going for increased resourceproductivity, if adjusted with a set of additional rules.

    Index

    Adjustment of the market economy

    The market economy, as we have it today, is not driving the development in a direction of sustainability, at least not at all with sufficient force. We have in a way a market failure, because the market does not respond to the environmental problems.

    The main reason for this is, that many prices today no longer are "true". And only with true prices can the market respond rationally. Prices are the main information element in the system. It is on the basis of these that it is decided what and how much should be produced. Also by whom, where and finally how consumption should be distributed. It is therefore important, that prices are true in the sense, that they reflect costs correctly.

    The reason for many prices not being true any longer - true in the sense that they also are reflecting environmental costs - is, that to a great extend costs inproduction and consumption are loaded off on society and future generations. These are the socalled 'external' costs, representing impacts on the environment in numerous ways. To disregard these costs may have been rational enough decades ago, when the total impact of consumption on the environment was much smaller, than today, and nature therefore could recoup itself. But very often this is no langer the case today due to the strong growth in consumption and the resulting increased impact on the environment.

    In order to correct the said market failure, these external costs must therefore become internalized. The obvious way to do this is to charge eco-taxes or green taxes reflecting the external costs. The effect hereof should be to force producers to develop new materials, new productconcepts and new manufacturing processess, now competing on minimizing all cost, including the costs having been internalized. At the same time consumer preference should by such taxes be bend away from material consumption to more service consumption, by taxing labour relatively less and material consumption more. This would as a side effect also help the servicesector to more growth, and it is in this sector, we mainly shall find future employment growth, also resulting in more welfare.

    There are other market economic intruments than eco-taxes. One important is tradable emissionpermits, a system often greatly misunderstood by its critics. Another, and perhaps more important, is take-back-obligations for the producers. They could get a major impact on material selection, product design and assembly techniques, and lead to the development of deassembly techniques and more advanced recycling techniques.

    Such an adjusted market economy, provided it is applied in the grater number of industrial nations, will unleash a major international effort in science and technology to increase resorceproductivity. But the effort has to be driven decentrally in the market economy. No one in Washington or Bruxelles could prescribe what should be done. But they can and should create the rules to drive the proces in the market.

    To install green taxes will be an extremely complicated undertaking. What should be taxed? How do we measure, calculate and monitor? How high should the taxes be? We must have cost/benefit relations in mind in fixing them and also price elasticities. With which speed should they be introduced? It does not make sense to introduce them faster than science and technology can respond to their announcement. And it can be costly to give them full impact in periods shorter than plant or product lifetimes.

    A number of economists are working on econometric models to demonstrate a "Double Dividend" effect of a green tax shift. The aim is to show, that a green tax reform would not only be of benefit to the environment, but would at the same time give a second dividend in some form of improvements in society, for instance better employment conditions. If such a Double Dividend could be credibly demonstrated in a way understandable to policymakers and opinionleaders it could greatly help the efforts to introduce a green tax reform.

    Index

    International policies are required

    But on top of all that we have the major difficulty, that these taxes should be international, introduced more or less simultaneously in all industrial countries. (The developing countries shall have to follow sooner or later of course). Such simultaneous introduction is required to avoid destortions in international competition and plant relocations. But most important, the taxes will not trigger the massive worldwide research and development efforts required, unless all - or most - industrialized countries are participating.

    I must confess, that I do not at all see the international political scene ready to take the measures required. But let me in conclusion give the following quotation by Ernst U. von Weizsäcker, Member of The Club of Rome:

    "Bureaucratic socialism collapsed because it did not allow prices to tell the economic truth. Market economy may ruin the environment and ultimately itself if prices are not allowd to tell the ecological truth".

    If the earth must lose that great portion of its pleasantness which it owes to things that the unlimited increase of wealth and population would exterpate from it, for the mere purpose of enabling it to support a larger, but not a happier or a better population, I sincerely hope, for the sake of posterity, that they will be content to be stationary, long before necessity compels them to it.
    -- John Stuart Mill (1857)