Download Ecological economic policy for sustainable development Potentials

Ecological economic policy for
sustainable development
Potentials and domains for intervention for
delinking approaches
Aldo Femia, Friedrich Hinterberger and Fred Luks
Nr. 1, November 1999
ISSN 1729-3529
Sustainable Europe Research Institute (SERI)
Schwarzspanierstrasse 4/8, 1090 Vienna, Austria
Tel.: +43-1-9690728-0, Fax: +43-1-9690728-17
www.seri.at, [email protected]
The authors
Aldo Femia works at the Italian Statistical Office (ISTAT) in Rome, Italy.
Contact:
Aldo Femia
via A. Rava' 150
00142 Roma, Italy
e-mail: [email protected]
Friedrich Hinterberger is senior researcher at the Sustainable Europe Research Institute (SERI).
Contact:
Friedrich Hinterberger
Schwarzspanierstrasse 4/8
1090 Vienna, Austria
e-mail: [email protected]
Fred Luks works as researcher and lecturer at the Hamburg School of Economics
and Politics.
Contact:
Fred Luks
Von-Melle-Park 9
D-20146 Hamburg, Germany
e-mail: [email protected]
SERI Working Papers are the outcome of ongoing research activities at the Sustainable Europe Research Institute (SERI). They present preliminary results,
which are open for debate and improvement for publication in scientific journals.
All comments and suggestions are warmly welcome.
Each SERI Working Paper is reviewed by a member of the scientific advisory
board of SERI. This Working Paper has been reviewed by Wolfgang Sachs from
the Wuppertal Institute for Climate, Environment and Energy.
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Abstract
Due to the increasing environmental problems, conventional environmental policy will
not suffice to secure a development path that can be sustainable on a global scale.
The greenhouse effect, holes in the ozone layer and losses in biodiversity are only
some of the most striking damages that have increased in the past decades. This
article explores general strategies to reach the goals of ecological sustainability and
individual well-being. The linkages between environmental impact, material input,
income/production, the amount of services utilised, and well-being are analysed and
explained in simple terms. It is clear that current environmental policies, based on a
rather narrow, reductionist view of the man-nature relationship, will not suffice. We
investigate under which conditions a dramatic dematerialisation of the industrialised
economies - which is often claimed as being a necessary condition for reducing
global environmental threats - can be achieved without decreasing the individual wellbeing by de-linking material flows from individual well-being. Dematerialisation aims
at such a delinking and is therefore a practical approach to the reconciliation of the
goals of ecological sustainability and individual well-being.
Keywords: Dematerialisation, ecological economics, growth, sustainable development, well-being
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1 From environmental policy to ecological economic policy
There are theoretical and empirical aspects to the "delinking" of environmental pressure and economic activities. The empirical debate on the economy-ecologyrelationship has recently been dominated by the so-called Environmental Kuznets
Curve (EKC), i.e. the idea that environmental pressure increases with rising income
and then, after a certain plateau, starts to decline (see World Bank 1992;
Grossman/Krueger 1996). The idea is that "economies would pass through 'stages of
development,' in which at least some aspects of environmental quality first deteriorate and then improve" (Selden/Song 1994, 147). For some authors, the debate
about the EKC is as important as the discourse about the limits-to-growth in the early
1970s. Indeed, the EKC-case is of fundamental importance, since if it holds, economic growth must be viewed as a positive long-run factor of environmental quality
and not as a cause of unsustainability.
This paper reflects on delinking potentials and not so much on the search for
empirical Kuznets-curves. Our investigations can, however, shed some light on how
a delinking that eventually leads to a declining environmental burden can be
achieved.
Our analysis is organised in four main sections. Section 2 asks (once again)
“what does it mean for a development to be sustainable?“. Our answer is that it is
mainly the quantity and the quality of material inputs to economic production and
consumption that endangers the stability of our ecosphere, so that a dramatic reduction of material inputs is seen as necessary for a development which is ecologically
sustainable. Section 3 discusses the need to delink the increase in material input
from economic growth and the limits to such efforts; some empirical results derived
are also presented. Section 4 asks to what extent GDP can be delinked from individual well-being and how well-being can still grow if GDP decreases. We finally identify
(in section 5) five different intermediate targets of a "strategy for sustainability" aimed
at the dematerialisation of the economy.
We develop the approach of an "ecological-economic policy" (Hinterberger/Luks/Stewen 1996), which is based on "the systems-oriented management of
matter-energy-flows, sound investment in technologies, infrastructures, goods and
services." (Schmidt-Bleek 1994, p. 28; our translation) Ecological economic policy
includes all measures and instruments of economic and environmental policy which
aim at a dematerialisation of the economy. It is part of the general economic policy
(see Hinterberger/Luks/Stewen 1996, 271). It concentrates on the one hand on the
sources of matter-energy-flows, as opposed to the emphasis on sinks (emissions) of
the environmental policies currently in practice. On the other hand, it stresses a
broad view of well-being rather than a maximisation of economic value. Accordingly,
the effect of ecological economic policy will be a very far-reaching structural change
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of the economy. This aims at taking into account the interests of future generations,
global aspects and is concerned with the long term stability of the ecosphere.
2 What is ecologically sustainable? Material input as a
proxy for the ecological impact potential
It is now generally recognised that sustainable development has at least three
dimensions: ecological, social and economic. It is derived from an inter-generational
equity rule and comprises a sustainable use of resources as well as care for the resilience of eco-systems and. But how can a development path that does not proceed at
the expense of future generations be achieved? Or, more fundamentally, why and
how are the opportunities of future generations to live well endangered by our current
economic development? The main reason is the fear that we are approaching the
limits of the carrying capacity of the ecosphere. In this view, it is not only the availability of renewable and non-renewable resources as parts of the stock of "natural capital" that has to be sustained, but the buffering capacity of nature for anthropogenic
impacts. This capacity is not a "resource" in the traditional economic sense. Unfortunately, our knowledge about what affects the stability of ecological equilibria is very
limited. Environmental impacts are related to both exhaustion of resources and to the
emission of wastes into air, water and soil. The case of CO2 emissions and the
greenhouse effect is only a very recent and dramatic example of what was considered completely harmless and "natural" and eventually turned out to jeopardise the
well-being of billions of future Earth inhabitants. With respect to the buffering capacity, substitutability between natural and man-made capital, often assumed by environmental economists, is a very special case if at all a plausible hypothesis (Hinterberger/Luks/Schmidt-Bleek 1997).
Most ecological impacts of economic activities are induced by material flows.
In a concept developed at the Wuppertal Institute for Climate, Environment, Energy,
material input is a general expression for material flows from nature into the economy/technosphere (see Schmidt-Bleek 1994; 1998). It comprises energy carriers,
minerals, fuels, sand and gravel, soil, water, air and overburden. In principle, we take
into account all masses moved by technical means. All these material flows induce
ecological changes, which cannot be fully predicted by any scientific effort. Quantity
and quality of outputs from our technosphere to the environment, such as waste,
emissions, sewage etc., depend crucially on the inputs, much of which remain unconsidered if we do not count the "hidden flows" (Adriaanse et al. 1997) or „ecological rucksacks“, such as drainage water, overburden etc., which are inputs and outputs at the same time, but clearly have an ecological impact. These flows do not actually enter the products but can be considered as input in an economic sense; they
are activated for production and consumption processes.
If we denote the overall impact of economic activities with I, the material input
of the economy with MI, the de-linking of I from MI can be thought of as a a shift from
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particularly "dangerous" and/or "scarce" components to less harmful and less scarce
(e.g. renewable in biological times) ones. The simplest formulation for this is given by
the tautological expression that the environmental impact is the product of the
amount of MI and the environmental impact intensity of material inputs I/MI:
I=
I
--- MI
MI
(1)
This formulation highlights the fact that we face a problem which is related to both
scale (the lower MI the smaller the environmental impact) and structure (the composition of materials used affects the environmental impact intensity and, hence, I)(see,
among many others, Huber 1995).This relation can be affected by the choice of materials for production processes (using those with less impact) and by so-called endof-the-pipe-technologies (reducing the environmental impact of MI), i.e. by strategies
of reduction of the environmental impact intensity I/MI, to which we usually refer as to
cleaner production and cleaner product strategies. It is clear however, that if MI
grows, reducing I/MI does not necessarily imply reductions in I.
It must also be considered that cleaner product(ion) strategies, aimed at delinking I from MI, presuppose a sufficient knowledge of the relation between the two
variables. Unfortunately, we know very little about it - for example about the actual
impact intensity of some 100.000 different man-made chemicals - so that it is impossible to quantify and qualify I/MI. As a matter of fact, our knowledge about actual ecological impacts is very limited, and little can be said about this function. Two examples for this are climate change and deforestation. Climate changes worsen with increasing use of fossil fuels, and the environmental degradation of the Amazon
speeds up with increased mining and harvesting of hard wood or burning down of
rain forests for agricultural production. Therefore, in addition to a shift between material flows, a general reduction of MI seems to be necessary in order to reduce the
environmental impact potential.
As is well known, the consumption of industrialised countries with a share of
some 20 percent of the world's population currently accounts for about 80 percent of
the use of resources and the burden put on natural sinks (e.g., the atmosphere),
while the "Third World" with 80 percent of the world's population living there makes
up for 20 percent of the use of the environment. Hence, a drastic reduction of global
material inputs is necessary, with special responsibilities on the side of the industrialised world. This goal is based on a precautionary principle, acknowledging the ignorance about the ecological impacts of human (economic) activities as well as an equity principle as regards the global use of resources.
As is well known, the consumption of industrialised countries with a share of
some 20 percent of the world's population currently accounts for about 80 percent of
the use of resources and the burden put on natural sinks (e.g., the atmosphere),
while the "Third World" with 80 percent of the world's population living there makes
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up for 20 percent of the use of the environment. Hence, a drastic reduction of global
material inputs is necessary, with special responsibilities on the side of the industrialised world. This goal is based on a precautionary principle, acknowledging the ignorance about the ecological impacts of human (economic) activities as well as an equity principle as regards the global use of resources.
In the following, we will discuss the possible domains of intervention and the
options for reducing material flows in industrialised countries. In so doing, we will
analyse the issues of economic growth and individual well-being. We will argue that it
is possible to reach ecological sustainability, but that it will be necessary to accept
what has been called "limits to growth" but that this need not lead to a reduction of
individual well-being.
3 Delinking the material input from GDP
Economic growth, i.e. growth of the GDP, is an almost universally accepted
political and "societal" goal. The World Bank, the IMF, OECD, the European Commission or the European Central Bank put economic growth on the top of their economic policy agenda. However, considering the environmental consequences associated with growth so far, the question arises at least for industrialized countries
whether growth is still necessary and desirable. Without structural change and technical improvements, GDP-growth implies an increase of the material input. For long
periods in history, growth meant - empirically - indeed more material input and hence
an ever increasing burden put on the environment. The debate about the links between the growth of GPD and that of the use of materials is a rather old one, starting
with the empirical studies by Malenbaum, Jaenicke and others to the current debates
about the EKC (see above). It seems a well-established fact that for individual countries, the intensity of use of specific refined materials first grows and then declines
through time, due both to technological and structural factors, so that the most highly
industrialised countries find themselves in the stage of declining intensity (i.e. the use
decreases in relative terms) for most materials, and in a stage of absolute decline for
some materials,. This does by no means imply that we are confronted with an actual
tendency toward dematerialisation in the sense here adopted. Dematerialisation
should not be thought of as a positive concept or a tendency, but rather as a normative concept, an explicit objective which must be aimed at by an ecological policy. It is
therefore obvious that this kind of growth can by no means be sustainable in the long
run, since an ever increasing amount of matter-energy-throughput used in the industrial metabolism cannot be sustained in a finite environment.
Given the national production Y, measured in terms of GDP, and the material
input MI, we get MI/Y as the material input intensity of the national production. Vice
versa, we get the material productivity of the economy as Y/MI. Analogous to (1) the
amount MI of materials moved can be expressed in terms of (a) the material intensity
of production and (b) the production (GDP):
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MI
=
MI
---- Y
Y
(2)
Again, we face a problem of scale (high GDP implies, ceteris paribus, high material
flows) and a problem of structure (the composition of products determines material
flows). In other words, a reduction of MI can be achieved by reducing MI/Y and/or Y.
In 1994, for example, 2.09 kilograms of physical inputs were used per DM of GDP
(Adriaanse et al. 1997, 39). The material intensity can be reduced by technical (intrasectoral) change using less material intensive processes for given products and/or
(intersectoral) structural change towards products and services which are less material intensive or more material productive. These two options will be discussed in the
following. If, all other things equal, the contribution of low-material-intensity activities,
such as services, to GDP rises, and the contribution of material-intensive sectors,
such as copper production decreases, the material intensity of GDP will decrease.
A recent study breaks down the relationship between economic and ecological
indicators to 55 sectors of input/output tables for the German economy. Moll et al.
(1998) analyse the changes in level and structure of economic indicators and material throughput of the German economy between 1980 and 1990. While material
flows (TMR) increased by 0.8 % in that period, GDP grew by 25 %. If we isolate the
effect of growth on MI, this would have increased TMR by 13% while structural
changes forced TMR to decrease (by 22 %). Moreover, resource extraction technologies became more inefficient (which, again ceteris paribus, would have increased
TMR by 8 %). Together with some other (but minor) effects that lead to keep TMR in
fact nearly constant (+0.8%) (Moll et al., 1998, p. 28).
A similar picture results from a look at the changes in final demand. Increasing
demand for non ferrous metals and non ferrous metal products was an important factor for increasing material demands of the economy: The TMR of this sector increased by 70.9%. The production of road vehicles used 24% more TMR in 1990
than in 1980. Other sectors that contributed to an increase of TMR are electric power,
steam, hot water (49.7%), musical instruments, toys, sports equipment, decoration
(47.1%), electrical machinery and equipment (28.7%) and chemical products
(19.9%). On the other hand, however, the TMR of coal and products of coal mining
declined by 69.4%, iron and steel by 20.2%, building and civil engineering work and
installation and building completion works (14.4. and 18.9%, respectively), products
of mining (excluding coal, petroleum, and gas) (46.6%) and foundry products
(33.3%). The accountability of different sectors of the economy has important political
implications, because knowing the composition of overall material use means knowing where ecological economic policy should intervene in order to change the environmental burden of economic activities (see Moll et al., 1998, 31f.).
Summarising equations (1) and (2) we get:
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I
MI
I = --- * --- * Y
MI Y
(3)
The environmental impact depends on the economic activity in terms of Y, the material input intensity of economic production MI/Y and the environmental impact intensity of material inputs I/MI. So far we discussed why a considerable reduction in material flows is ecologically necessary and how it can be achieved by delinking production from material flows. If a reduction of the environmental impact is to be achieved
by a reduction out of material flows (accompanied by a reduction in the share of
those material flows which are particularly known as harmful to the environment) this
is compatible with growth of GDP if and only if the de-linking of MI from Y exceeds
the reduction-factor of MI/Y by the amount of the growth rate (that is the increase of
Y). These are, of course, very aggegated considerations, hiding the technical and
structural changes implied on the micro and meso levels. Nevertheless, they reveal
the necessary direction of any development towards sustainability.
4 The "well-being" intensity of production/income
If limiting economic growth and changing technologies appear to be necessary
in order to decrease the environmental impact, the question arises whether economic
growth is really necessary to increase well-being. In the following we show under
which circumstances welfare can rise while GDP decreases; in other words: how a
"de-linking" of gains in well-being from economic production is possible.
4.1 More services from FEWER products
The starting point of our considerations is that it is not the GDP what we actually need in order to satisfy our "wants". In the current path of development, GDP is
the main means of welfare generation and has therefore gained a high symbolic
value for both policy and individuals. It is still viewed by many as a measure of welfare, which it is clearly not (although there is some correlation). Only to the extent that
the commodities produced are actually used, they provide a "service". Here service is
defined somewhat differently from the usual meaning of the word referring to "immaterial goods", such as transport, banking, haircuts etc. To a certain extent, consumers
are not interested in a product itself but in the service delivered; therefore it is the
service that creates the utility of a product. Products here are thought as of "service
delivery machines" (Schmidt-Bleek 1994, p. 183). Considering this, it is neither the
production nor the stock of products a society has access to but the utilisation of
products that makes up the standard of living (Hinterberger et.al. 1994).
Our notion of services as utilisation of products makes sense especially if we
compare the provision of similar services by different products, such as driving by car
and using a train. We can then express how many service units, for example miles
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per person, we get from spending one Euro or $ or using a ton of material. It depends
on the service intensity of products whether we get much or little well-being from a
given production. Once again, we face a problem of structure (which kinds of services from given products) and scale (how many products). In other words, we can
express S, the services derived from using products for consumption purposes, as a
product of the service intensity of production (S/Y) and the production (Y):
S =
S
--- * Y
Y
(4)
Here, service S is understood in a very general sense, which cannot be operationalized (on the macro level) for empirical investigation. Nevertheless, it presents a rhetoric argument that shows why GDP growth is an intermediate goal rather than an ultimate one. If a given set of services can be obtained from less production (other
products) this would at the same time mean less monetary income per capita. This
could also mean that a given amount of services might be produced with less input of
labour.
If the ideas presented here in a theoretical way would spread out among the
populations of Western societies, new life styles could emerge in which less products
are "needed" while the services to which the population has access remain the same
(or even grow). People would not only purchase products of the same kind which live
longer, but newly emerging products appearing in the markets would be of higher
quality and longevity in the first place.
We can go one step further and let well-being enter the picture. If we explicitly
take well-being into account, we can see quite clearly that there is another crucial
"delinking mechanism" that can be put at work to reach sustainable development.
4.2
More well-being THROUGH less consumption?
Let us assume that more and more people in industrialised countries will find
that they can obtain more "well-being" (W) even from fewer service units, for example
by increasing their leisure, having more time to contemplate, to communicate with
their friends and families etc. From this point of view, W depends not only on the
number of services, but also on the kinds of services and their relation to other aspects of life. In other words, service is a quantitative concept while well-being is a
qualitative one. Nevertheless, for exposition purposes it is useful to express this
qualitative relationship with another simple identity (see also Malaska 1998):
W=
W
--- * S
S
(5)
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W/S may be termed the well-being intensity of the services we get from the products
that we use and consume. This refers to what some authors call "sufficiency", that is
to the issue of how much is enough for a "good life" (Sachs 1993). It is obvious that
the issue of sufficiency is a field in which political, social and, last but not least, cultural creativity is needed. Such a transition will probably be the most difficult part to
achieve. It is hardly compatible with most of the consumers' current preferences. But
preferences change as a result of new insights of individuals as well as of socioeconomic processes induced by certain groups in the civil society.
Together with other works pointing into the same direction, the arguments presented in this paper should contribute to the knowledge about the potential to increase W even without economic growth. Summarising formulae (4) and (5) we get:
W =
W
--S
S
--- Y
Y
(6)
Given economic production/income, well-being depends on the service intensity of
production and the well-being intensity of services. Increasing eco-efficiency (in terms
of S/MI needs a sufficiency component in order to move in the right direction (Sachs
1993, p. 69). If a reduction in Y is necessary for ecological reasons (as discussed in
section 3) we need to find strategies to increase these intensities in order to maintain
the level of well-being.
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The scope of ecological economic policy
If the ecological system shall be sustained, an absolute reduction of material
flows is necessary. Since substantial reductions in well-being will not be accepted, a
delinking is necessary between the exploitation of nature and the "production" of well
being. Moreover, if W is allowed to grow, delinking must be large enough to meet the
requirements of an absolute reduction of environmental impact plus the absolute
growth in well-being increasing gap in order to establish a sustainable path of development. It seems obvious that it is impossible to rely on either pure efficiency or pure
sufficiency strategies to reach the desired result. We need both.
Summarising our discussion, we get
W S Y
MI
W = --- * --- * ---- * --- * I
S Y MI
I
(7)
This also shows that MI, Y, and S are only of indirect and partial importance for human well-being (W) and for the environmental impact of human activities (I). Nevertheless they are strategic variables for an policy, which aims at a substantial delinking
of I from W. I and W are the essential variables we are interested in; they represent
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"real" environmental damage and "real" well-being. The problem of both environmental and economic policy is that they cannot be directly controlled. Empirical paths
of growth and development, however, exhibit a close link between I, MI, Y, S and W.
Hence, if we want further growth of well-being and at the same time a considerable
reduction of global environmental problems in order to reach a sustainable path of
development, we need to look toward de-linking I from W, and, hence a delinking of I
from MI, MI from Y, Y from S and S from W. Of course, these variables are on different levels. Moreover, I and W cannot be measured as MI, Y and - with difficulties - S.
Strictly speaking, then, we cannot speak of a delinking in the usual sense. We see,
however, a very high heuristic value in our tautological considerations
It follows from (7) that well-being W can be kept constant, while I is substantially reduced if we increase
(A)
(B)
(C)
(D)
the "well-being intensity of services",
the "service intensity of income/production",
the "material productivity of income/production", and/or reduce
the environmental impact of a given use of materials.
As shown by the preceding discussion, all four should be considered as intermediate objectives of strategies that aim at reducing environmental pressure. At all
stages we encounter a structural aspect (changing the composition of material inputs,
products and services) and a scale aspect (changing the amount of material inputs,
production and services). It is crucial to realise that a drastic reduction of environmental impact can be achieved by the synergy between relatively little advances in
each of the elements of equation (7) as long advances are achieved in every element: cleaner production (delinking of I from MI), technological and structural change
(more efficient use of resources and switch to less material-intensive products), diffusion of eco-efficient services (more efficient "social transformation", which would allow reductions in the scale of production of material goods) and a greater sufficiency
(reduction of demand tout-court). Mathematically, the factors achieved for every element multiply to the overall factor of reduction. The political problem is, of course,
how to give to economic development a direction which is needed for sustainable
development.
In a market economy, a policy for delinking must therefore be economic policy:
an ecological economic policy, which integrates environmental policy into economic
policy. The most crucial point will be to come to grips with the industrialised economies' endogenous tendency to grow and the so-called rebound effects which could
induce further growth. Even if a real reduction in services wanted by the households
in industrialised countries is unlikely and a major reduction is unnecessary, such a
policy needs to create limits or boundaries to be imposed in order to prevent industrialized economies from ever increasing MI and I even if there is some de-linking of MI
from S. In the discourse on ecological problems, "limits" (to growth, consumption,
etc.) was and still is a central term (see Norgaard 1995; Luks 1998, ch. 8) The concept of dematerialisation represents not only a limit (to the use of the environment)
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but also a space which allows to form and shape living conditions for human beings.
It seems possible to live with dramatically reduced material flows, it can be a new
way of a good life.
It has been shown that there are opportunities to substantially reduce the environmental burden of economic activities without reducing human well-being. This potential, however, is limited in the long run - which is what sustainability is all about. A
ecological "ceiling" to economic growth (as understood in the traditional sense) would
not necessarily imply a reduction of well-being per se. In other words, we suggest
that an "either/or-type" discourse on sustainability, well-being and growth is too pessimistic, because there is some scope for a reconciliation of these objectives. What is
needed is a policy that stimulates the potentials described here, and a discourse on
sustainability that is characterised neither by "growthmania" nor by dogmatic arguments from growth opponents, but by rethinking some traditional linkages which are
not at all necessary linkages.
Acknowledgments:
The ideas presented here were first developed by the authors while working on the
project „Sustainable Europe“ for Friends of the Earth Europe. An earlier version of
this paper was presented in October 1994 at the Energy and Resources Colloquium,
University of California, Berkeley. We are grateful to Liesbeth Bakker, Peter
Bartelmus, Faye Duchin, Udo Mandler, Stephan Moll, Richard Norgaard, Martin
O‘Connor, Joachim Schwerd, Udo Simonis and Joachim Spangenberg as well as the
"Quergruppe Ökologischer Strukturwandel" at the Wuppertal Institute and two
anonymous referees for helpful comments, discussions and encouragement. Fred
Luks would like to thank the Friedrich-Ebert-Foundation for financial support. The
authors express their own opinions and knowledge and not those of the institutions
they are affiliated with.
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