Decoupling resource consumption and economic growth?

We take as our text this morning a recent report from the UN, which says that on current trend global resource consumption will nearly triple by 2050. The report discusses various constraints on resource extraction, including scarcity, steadily decreasing ore quality (which thus requires more energy and water to extract), the accompanying increase in local environmental impact, and global environmental impact (chiefly climate change), and emphasizes the need to take steps to ‘decouple’ continued economic growth from resource use. This decoupling appears to happen naturally to an extent; while over the last hundred years resource use has increased dramatically, economic growth has significantly outpaced it, so the ‘resource intensity’ of the economy has decreased, despite generally downward trend in (inflation-adjusted) resource prices. But despite growing slower than the global economy, steadily increasing resource use will eventually bump up against the constraints of a finite planet, and we see evidence of this happening in the last decade or so, with commodity prices reversing their century-long downward trend:

Two questions come to mind – first, how far is it possible to go in terms of reducing the material inputs to the economic sphere, while still improving (or at least maintaining) something that most people would recognize as economic wellbeing? And second, assuming that it is possible to substantially decrease resource consumption while maintaining or increasing economic activity, will a meaningful fraction of the world’s economies actually execute that trajectory?

The data on resource consumption vs per capita GDP above (from the same UN report) show a definite relationship, but I would characterize it differently than the log curve that they’ve overlaid. I’d say that up to $10k/person/year, there is a strong dependence, driven by the basic limitation that if you only have access to a few dollars per day, you just can’t cause a huge amount of production to happen – you will spend most of your income on basic necessities, and you can only eat so much food (a couple of pounds per day). Also, in countries that poor, it seems likely that a lack of basic stability would discourage the sort of capital investments that lead to significant material production. But above $10,000 per capita GDP, it’s not obvious that there’s any relationship at all (I think Bill McKibben made a similar point in a book I read a few years back). The highest GDP countries are by no means the highest in resource consumption. Western Europe and Japan would appear to live remarkably well on relatively little resource use, and a lot of countries are substantially poorer despite nearly double the consumption. It’s interesting to note that many of the low-consumption outliers are islands (Puerto Rico, Polynesia, Bahamas, Britain, Japan), though there are plenty of islands (New Zealand, Cyprus, Ireland) on the opposite side of the trend. The report says that high population density seems to correlate with more efficient use of resources. I wonder also if population growth at the time the data was taken is also a factor – creating new buildings takes a huge amount of raw material, and the building stock of western Europe is decades or centuries old, whereas e.g. Ireland may have been in the midst of a building boom when the data was taken. Another caution (which is noted in the report) is that developed countries can ‘export’ a lot of resource consumption and associated environmental damage to developing countries; for example the US can buy relatively light finished goods from China, and thereby be responsible indirectly for the consumption of a much larger mass of ore, coal, etc.

The spread in consumption among countries with high standards of living is generally encouraging, but it has played out naturally in a world with rapidly rising resource use overall. But how far could a country like the US go, if it took it as a goal to channel economic growth into less resource-intense directions? This is not a crazy thing to do; e.g. for decades the cost of gas in Europe has been raised artificially by taxes, thereby encouraging dense populations, rapid transit, efficient vehicles, etc. Energy is the resource I’m most familiar with, and it enables most other resource use (try mining and smelting metals, producing concrete, or even growing food without fossil energy!). Energy use breaks down into very roughly equal thirds between transportation, industrial, and residential/commercial use. Now, as individuals we can relatively straightforwardly decrease our personal use of resources, for example by methods that have been discussed extensively on this blog. We can arrange our lives so we drive less or not at all, we can move to smaller, better insulated homes within biking distance of work and invest in energy-efficient appliances, we can reduce or eliminate animal products from our diet and eat lower on the food chain, and we can decide to buy less stuff and shift our discretionary activities in less resource-intensive directions. But to be meaningful, lifestyle changes have to be assessed on a quantitative basis, since there are some counter-intuitive effects. For example, in college I calculated that at least half of my energy use went into weekend trips from Boston to the White Mountains to go hiking, which is nominally a ‘green’ activity – similar could be said of transporting a bike or canoe by car, etc. And the climate and resource benefits of a year of bike commuting and thoughtful eating can be erased with just a couple of intercontinental airplane trips. My experience is that gardening and local food also have an outsized place in most peoples’ imagination when it comes to reducing impact – there are very few people (other than professional farmers) who are in a position to grow anything approaching a significant fraction of their family’s caloric intake, and some local foods (like the Canadian tomatoes that are available in New England 12 months of the year) are clearly not netting reduced environmental impact.

Personal choices are one thing, but transforming an entire economy to dramatically lower resource consumption is entirely another, subject to the Paradox of Thrift. One thing that the actions of the last paragraph have in common is that they are bad for the economy. If an isolated individual or a small minority implements all the steps above and dramatically reduces their consumption, they will rapidly accumulate savings, but otherwise things will just hum along as before. But if everybody does those things all at once, a lot of people will suddenly be out of work, from so much less buying. How can people still make lots of purchases (as necessary to employ their fellow citizens, and keep the economy going), without consuming lots of material resources? One obvious answer is getting people to pay for services and experiences instead of stuff – apparently a daily yoga class improves some peoples’ quality of life significantly, since there are professional yoga instructors. I can imagine that a single small-group yoga session (taught out of someone’s home or an off-hours commercial space) could provide each participant about as much value as (say) a bouquet of flowers air-shipped from Colombia, for about the same price, but with much less environmental impact. I think there’s also a significant role for skilled craft – the process of learning to play fiddle has been fantastically rewarding to me, and that sort of thing can be resource- and energy-efficient. A couple of pounds of spruce, maple, and glue can become the focus of literally thousands of hours of enjoyable, resource efficient pastime – in Cambridge I could bike or take the train to Harvard Square for group classes given by skilled instructors; each lesson cost perhaps $15. What all this points to is the idea that people don’t actually value economic growth directly, they value freedom, rewarding experiences, and good personal relationships – i.e. quality of life. There’s no question that individuals can live a very rewarding, low-resource-use life, but the predisposition to value that sort of life is a matter of a particular cultural background. The thing I don’t have a handle on is, can The American Way of Life be transformed so that this type of service/experience activity is dominant? And, if it was, would the economy still function in qualitatively the same way as it does now, and, is that sort of an arrangement consistent with stable economic growth?

(h/t Stuart Staniford)


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