Tuesday, April 3, 2018

Decoupling Economic Growth and Resource Consumption

The decoupling of resource consumption and economic growth is among the greatest challenges we face. Although it is challenging such decoupling is a sensible approach to a serious problem. As explained by Achim Steiner, the former head of UNEP, "Decoupling makes sense on all the economic, social and environmental dials." .

Recent research exploring resource consumption in the context of respecting planetary boundaries* indicates that we are nowhere near where we need to be. Of the 150 countries studied, none afford resource use at a globally sustainable level.

People have been concerned about resource consumption for a long time. A 2009 book titled, Prosperity Without Growth, by Tim Jackson warned that rich nations need to aggressively decouple their economic growth from increasing rates of resource consumption.

Although a seven year old UNEP report on decoupling gave us some reason for optimism we have since moved in the wrong direction. The 2011 UNEP report indicated that while GDP rose by a factor of 23 in the 20th century resources consumption increased by a factor of 8. However, this trend has since changed and as more nations develop the situation will get worse. UNEP expects that with 9 billion people on earth by 2050 we are likely to see resource consumption triple by mid-century.

This is not just a problem for future generations it is an issue that is already impacting a wide array of economic sectors. A 2012 PricewaterhouseCoopers (PwC) report identified seven core manufacturing industries that are at risk from resource scarcity.

Climate change and sustainability

Climate change compounds the problem of resource scarcity and fuels dangerous feedback loops. We are already experiencing shortages of some essential raw materials and this is increasing emissions. Shortages make us work harder to gain access to increasingly scarce resources and this generates more emissions.

Hopes were buoyed by consecutive years of decoupling between emissions and economic growth. However, this positive trend has recently reversed and this will exacerbate climate change and make the responsible management of resource consumption even more challenging.

The corporate world is struggling with these issues. Companies like Starbucks are dealing with climate change related shortages of coffee beans. Coca-Cola, and Nestlé have been forced to close facilities due to climate related water scarcity.

Industries that offer solutions to the climate crisis are also at risk from resource shortages.  According to the PwC report the renewable energy sector could be hampered by a lack of access to minerals and metals and this could distrupt entire supply chains and economies. Some 79 percent of respondents from the renewable energy sector said they are experiencing instability of supply. Lithium is a key resource for the green economy and it is increasingly scarce. It is used in batteries and wind turbines. Another increasingly scarce mineral is gallilium. It is used in the solar industry.

The scarcity of minerals and metals is referred to a "ticking time bomb". It should come as no surprise that the report predicted that this situation will intensify and lead to supply instability and disruptions.

Macro and micro solutions

The current rate of resource depletion is unsustainable and it demands efforts to curb this perilous trajectory. There are both macro and micro approaches to address the problem. Many companies are implementing sustainability strategies that commonly include reduced resource consumption. Resource efficiency is a logical place to start. Companies like Toyota are leaders in this domain and cities are also onboard. Both Coca-Cola and Dell have agreed to cut their water consumption in half by 2020. NRG Energy has committed to a 90 percent reduction by 2050. Others like Walmart leverage their supply chains to reduce their resource consumption.

There are some promising approaches to managing resource scarcity on the macro level. This level of engagement is key because to be effective resource consumption must be understood as an interrelated global problem.

Resource Based Economic Model (REM) may offer our best hope. This evidence based approach entails responsible resource management, allocation and distribution with the goal of achieving optimized solutions. This socioeconomic model takes a direct technical approach. This is in stark contrast to monetary or political models. As a science based approach REM is premised on incorporating the findings of the latest proven methods.

* Planetary resilience (boundaries): A concept of nine Earth system processes which have boundaries proposed in 2009 by a group of Earth system and environmental scientists led by Johan Rockström from the Stockholm Resilience Centre and Will Steffen from the Australian National University.
  • Stratospheric ozone depletion
  • Loss of biosphere integrity (biodiversity loss and extinctions)
  • Chemical pollution and the release of novel entities
  • Climate Change
  • Ocean acidification
  • Freshwater consumption and the global hydrological cycle
  • Land system change
  • Nitrogen and phosphorus flows to the biosphere and oceans
  • Atmospheric aerosol loading

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