Indeed, these claims are not without precedent. Industry has made huge strides in efficiency in recent years. Across the world economies have become less ‘energy intensive’, driving down the amount of energy used to produce every unit of GDP. The US, for example, used 20,000 BTU (British Thermak Units) of energy in 1950 to produce one dollar of GDP. By 2008 that had been slashed to 8,500 BTU. In addition to technology ‘fixes’, economists have a strong faith in ‘price signals’ and ‘substitution’.
Introductory economics textbooks say that if a resource becomes scarce then its price will rise to the point where users will look for a cheaper substitute. This might make sense in some instances. For example, if a bakery finds refined white sugar hard to source and too expensive then it might search for a cheaper alternative – honey, perhaps, or an artificial sweetener. But what works at the micro level may not work at the macro level. In the case of critical inputs, like oil, a substitute is not so easily available.
The Jevons Paradox
The notion that the economy can be ‘de-coupled’ from material inputs and so continue merrily down the growth pathway is dubious. This is largely due to a little-known hiccough called the Jevons Paradox or ‘rebound effect’. In his 1865 book, The Coal Question, the British economist, W Stanley Jevons, posited that greater energy efficiency produces savings in the short run but in the long run results in higher energy use.
‘It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption,’ Jevons wrote. ‘The very contrary is the truth.’
How can that be? Well, Jevons argued that just because we use energy (or raw materials) more efficiently doesn’t mean we’ll use less of them, especially in an economic system predicated on growth. The Jevons paradox, in a nutshell, says that the benefits of increased technical efficiency are inevitably swamped by increased consumption. Improvements in efficiency translate into lower prices in the short term, which in turn trigger higher consumption. You see this ‘rebound effect’ when the price of gasoline falls and people drive their cars more. Or when savings on energy-efficient light bulbs and appliances are used to buy a new flat-screen TV or another household gadget.
We’re caught in a bind. Ramping up GDP without improving technological efficiency leads to more resource inputs, more energy consumed and environmental damage. Yet improving efficiency triggers more growth – which leads to the same end. Total resource consumption grows even while efficiency improves. Between 1970 and 2000, rich countries saw impressive gains in energy efficiency of up to 40 per cent. But average improvements of two per cent a year were eclipsed by growth rates of three per cent a year or more.
In one study cited by the New Economics Foundation (NEF), environmental economist Toyoaki Washida found a significant ‘rebound effect’ in the Japanese economy that swallowed 35-70 per cent of the efficiency savings.6 According to NEF, ‘even if technological energy efficiency and the uptake of new, more efficient devices increased by 50 per cent over the next 20-30 years with GDP rising by a conservative 2.5 per cent, within 25 years we’d be back where we are now.’
Other researchers confirm that growth eventually swamps efficiency improvements. In a study of the material outflows of five industrial nations, the World Resources Institute found that industrial economies are becoming more efficient in their use of materials, but that waste generation also continues to increase. ‘Even as decoupling between economic growth and resource throughput occurred on a per-capita and per-unit GDP basis, however, overall resource use and waste flows continued to grow. We found no evidence of an absolute reduction in resource throughput.’7
The chart below shows exactly that. Even though ‘material intensity’ (the volume of materials consumed per unit of GDP) has been decreasing since 1980, the total volume of materials extracted continues to increase. We are using fewer resources more efficiently. But it makes little difference if growth and population continue to rise.
Relative de-coupling of economic growth from resource use, 1980-2007
Source: SERI/Friends of the Earth/Global 2000/ REdUSE, Under Pressure, nin.tl/1f5ghgj
This does not mean efficiency improvements are a second-tier priority, as some free market boosters suggest. Critics like the Washington-based Institute for Energy Research (funded by, among others, ExxonMobil Corporation and billionaire Tea Party supporters, the Koch brothers) maintain that the market must be left on its own and that efficiency should not be enforced by government regulation. Directing energy policy through regulation is a ‘folly’, the Institute says. ‘Instead of forcing more energy-efficiency requirements on American consumers, policy-makers and government regulators should allow market prices and disruptive innovations to guide energy use.’8
But it’s not the goal that is wobbly, it’s the context. Efficiency improvements are necessary – but not sufficient. It’s the growth that negates the efficiency savings that is the real issue.
Growth optimists also boast that physical resource limits are irrelevant in our new knowledge-based economy. As economies ‘mature’ and shift from production to finance, insurance and real estate (the so-called FIRE sector), engineering, education and other services, there will be less need for raw materials. As the economy ‘dematerializes’ we will continue to grow as our work-places and homes become greener and cleaner. Unfortunately, there is little evidence of this happening. For the most part advanced industrial economies have simply shifted production overseas where labor costs are cheaper, taxes less burdensome and environmental regulations weak or non-existent. So, as Western countries ‘offload’ production of real goods overseas, the global pollution load actually increases.
High-end service jobs also generally pay more, which inevitably means more consumption. But, while resource-intensive manufacturing has relocated abroad, we in the West are no less addicted to our ‘stuff’ – hi-tech electronic gadgets, sprawling suburbs, new cars and cheap flights to warm places. As our consumption increases, we are merely ‘outsourcing’ the problem. Out of sight, out of mind. We are still chomping through tons of raw materials. It’s just that now the ‘throughput’ is halfway around the globe. All we see are the final results on display in the local mall. As University of British Columbia ecologist William Rees notes: ‘High-income service employees therefore have much larger per-capita ecological footprints than workers in the basic economy; those countries with the largest high-end service sectors have the largest national eco-footprints.’
The overflowing sinks
What goes into the maw of the growth machine must eventually come out the other end as waste. The waste comes in many forms – from household garbage, plastic bottles and construction refuse to slaughterhouse offal, toxic tailings, noxious gases and pesticide residues. All of these find their way into one of Planet Earth’s natural ‘sinks’: the air, the water or the land. Until the last 50 years or so this was not really a problem. Mother Nature could take just about anything we could throw at her. All that has changed. Today the absorptive and assimilative capacities of the Earth can no longer handle the Niagara-like torrents of waste we are disgorging.
The ‘sinks’ are overflowing. The evidence is clear wherever we turn as our rapacious global economy hits the limits. All major ecosystems are being degraded at an astonishing speed. It’s a depressing litany that includes the ransacking of ocean fisheries (12 of the world’s 13 major fisheries are now severely depleted); the continued destruction of tropical rainforests; fertile soils salted with agro-chemicals and converted to industrial agriculture; increasing desertification; the destruction of wilderness; species extinction and the erosion of biodiversity. The list goes on.
Take the case of synthetic chemicals – the hazards of which Rachel Carson, whose pioneering 1962 book, Silent Spring, is credited with launching the environmental movement, first raised over 50 years ago. We continue to pump millions of tons of deadly chemicals into the environment every year and the damage both to humans and nature is no longer in doubt. We are living in a deadly