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Katariina Mustonen
Critical Appraisal of Decoupling Theory
Metropolia University of Applied Sciences
Bachelor of International Business
European Business Administration
Bachelor’s Thesis
23 April 2019
Abstract
Author Title Number of Pages Date
Katariina Mustonen Critical Appraisal of Decoupling Theory 42 pages + 0 appendices 23 April 2019
Degree Bachelor of Business Administration
Degree Programme European Business Administration
Instructor/Tutor Michael Keaney, Senior Lecturer
Economic growth is the leading reason for climate change. Since the 1970’s environmental sociology scholars have debated on the relationships between economic growth, society and nature, and if economic growth can be decoupled from its negative environmental impacts. Decoupling theory believes economic growth is possible to separate from its environmental impacts. This paper bases decoupling to a wider theory of economic modernization, both assuming further modernisation and technological advancements will help societies overcome climate change. Economic modernization theory and its opponent treadmill of production are introduced to provide a base and critique for better analysis of decoupling theory throughout the paper. Decoupling theory hasn’t been introduced in such a straightforward relation with economic modernization theory before, which is one of the ways this paper contributes to the wider discussion on strategies to fight climate change. To establish a critical and thorough overlook of decoupling theory, the paper will introduce the theory by secondary research methods in the light of four essential aspects that are of controversial nature in relation to sustainability: economic growth, rebound effect, resource problem and international trade. Most of the examples included in these sections are ones of natural resources such as rare earth elements that are essential for green technologies. These sections will help the reader to understand the complex nature of decoupling theory, and make the interrelated connections between technology, sustainability, consumption, and growth clearer. Findings of this paper reveal the uneven environmental burdens of the world and the polluting and scarce nature of some of the green solutions the modern society has come up with such as technologies related to renewable energy. According to decoupling, modernization must continue, and a sustainable future can be obtained through circular economy practices with high-income countries executing absolute decoupling with absolute reductions in consumption, while low-income countries must be secured with a solid social base to execute sustainable development by relative decoupling measures and leapfrogging operations. Overall environmental consciousness and better understanding of global value chains and footprints must be promoted so that realistic green innovation can take place. Most importantly, decoupling does not happen spontaneously but requires active work in policy level, consumer level and as resource efficiency gains.
Keywords Decoupling, Ecological Modernization Theory, Sustainability
Contents
Glossary
1 Introduction 1
2 Theoretical framework 3
2.1 Ecological modernization theory 3
2.2 Key Challenges of EMT 5
2.3 Treadmill of Production 7
2.4 Key challenges of TOP and other critique 7
3 Decoupling theory 9
3.1 Decoupling 9
3.2 Resource decoupling 10
3.3 Impact decoupling 11
3.4 Relative and absolute decoupling 12
4 Definition of growth 14
4.1 Gross Domestic Product (GDP) 14
4.2 Other means of measuring 16
5 Rebound effect 17
5.1 Jevon’s paradox and Paperless office 18
6 Resource problem 20
6.1 Renewable energy 20
6.2 Pricing 22
6.3 Rare earth elements 24
7 International trade 25
7.1 Uneven global burdens 26
7.2 Geopolitical tensions 27
7.3 Applying decoupling in different economies 29
8 Evidence on decoupling 31
Glossary
EEA European Environment Agency
EMT Ecological Modernization Theory
EPA Environmental Protection Agency
IMF International Monetary Fund
IPCC Intergovernmental Panel on Climate Change
IRP International Resource Panel
OECD Organisation for Economic Cooperation and Development
REE Rare Earth Elements
TOP Treadmill of Production
UNEP United Nations Environment Programme
UNFCCC United Nations Frame-work Convention on Climate Change
WMO World Meteorological Organization
1
1 Introduction
Economic activity has had a devastating impact on our globe as the driving cause of
climate change (IPCC, 2014). Environmental sociology is the study of relationships
between economic growth and environmental impacts and how much has this
relationship either decoupled or intensified. Decoupling of the relationship would mean
a separation between the two, whereas an intensifying relationship would mean an even
denser connection between economic growth and negative environmental impacts
(Jorgenson and Clark, 2012).
Contemporary environmental sociology entails two leading contradicting theories
concerning these relationships; the ecological modernization theory and the treadmill of
production. Ecological modernization theory supports decoupling and further
modernization of technology and assumes the economy ultimately reaches
dematerialization through separating economic growth and environmental impacts,
whereas treadmill of production does not support decoupling as economic growth is
scientifically demonstrated to be the leading reason for global warming and thus
inevitably effects the environment (Jorgenson and Clark, 2012). This paper provides a
critical appraisal of decoupling theory which supports the ideas of ecological
modernization but takes on the critique of treadmill of production in various ways.
The work that follows is divided into various parts for the complex nature of decoupling.
The first section provides a theoretical framework for decoupling through an introduction
to ecological modernization theory and treadmill of production to understand the
background and development of the arguments presented in this paper. After this, the
focus is narrowed down to decoupling theory, which is widely covered by six different
sections. First, we will go through the basic theory of decoupling, and distinguish
resource-, impact-, absolute-, and relative decoupling from one another. After the
theoretical base we continue with issues related to economic growth and GDP, and we’ll
introduce alternative, more inclusive ways of measuring progress. The next section
includes a deeper consideration of the relationship between our consuming habits and
technology through rebound effect. Section number six is devoted to natural resources
with a special attention to renewable energy sources, pricing and rare earth elements,
2
as decoupling and climate change are closely related to natural resource usage. Lastly,
we challenge the decoupling theory with global issues related to international trade,
namely the uneven global burdens and geopolitical tensions, and answer these problems
with a closer look on how decoupling is best applied in different economies.
Before the conclusion and discussion, the paper will briefly give real-life examples of
decoupling in policy-making level, consumer-level and as gained resource efficiencies.
The analytical part is spread throughout the paper for the multiple sections it includes,
providing more consistency in the text. For this reason, the last section combines the
discussion and conclusion to one and provides a summary on what we have learned
thorough the paper and how these findings contribute to the current conversation on
climate change.
3
2 Theoretical framework
Decoupling can be linked into a wider theoretical framework of environmental
modernization theory (EMT), which is part of contemporary ecological sociology studies
that try to explain the relationship between economy, ecology and society. EMT was
invented in the 1980’s as a result of significant technological advancements of the time
and the increased conversation around environmental problems. Arthur P.J Mol, Gert
Spaargaren and David A. Sonnenfeld may be considered as the most influential authors
of the theory, which assumes that environmental problems can be overcome with further
modernization of society.
As a reaction to these events, another theory called treadmill of production (TOP) was
born in the same mist with EMT in the 1980’s by an environmental sociologist Allan
Schnaiberg. TOP represents an inherent opponent of modernization and is more
suspicious of the nature of technology, economic actors, and the state. Schnaiberg did
not believe decoupling economic growth from environmental impact is possible, as
empirical data shows how economic growth and further modernization have
systematically harmed nature.
2.1 Ecological modernization theory
Ecological modernization theory was the first to challenge the ideologies of the
predominant ecological theories in the 1970’s, supporting deindustrialization and a
complete reorganization of the capitalist society. In contrast, EMT recognized the
position and power of industry in the production and consumption processes and started
studying ways to leash this power to overcome ecological problems. EMT did not
concentrate itself around the idea of capitalism and growth, rather it tried to change the
current economic order into one that serves the modern society’s needs the best
(Jorgenson and Clark, 2012).
EMT describes that economic development happens in two stages. “Economic
rationality” is used to measure the success and development of an economy in the early
stages of development of a country, usually resulting in negative social and
environmental effects. After a certain level of economic prosperity, an “ecological
4
rationality” should take place where development of the economy is measured in other
ways than that of monetary values. Postmaterialist values arise as people in developed
societies don’t have to be concerned of survival anymore. Economic actors trigger
innovation towards a more sustainable future, where society pressures these actors to
accomplish “ecological rationality”. Ultimately the economy reaches dematerialization
through decoupling the economic growth of its environmental impacts (Jorgenson and
Clark, 2012).
The early debates of human to- nature relationships helped EMT to develop into its
current form, as the idea of humanity being as part of its environment, instead of
something separate from it, was acknowledged. For example, EMT does not speak about
internalizing environmental costs, rather “rationalizing production and consumption”,
making the link between man and nature definite, not as two separate entities that must
be glued together (Mol and Spaargaren, 2000).
Thus, environmental objectives are not given the one and only priority in the society, they
are integrated and anchored into the heart of the production and consumption processes.
This means EMT also takes into consideration the societal problems, which at times
might clash with the environmental ones. Close linkage of these two aspects is crucial
for avoiding distributional inequalities that often arise from ecological reforms as more
efficient technologies and products are usually a product of the rich whilst the poor are
suffering from higher cost of natural resources, such as water. To be able to fully
implement ecological reform, you must even these inequalities through inclusive
innovation so that the ecological reforms do not fall prey to social inequalities (Mol and
Spaargaren, 2000).
The theory recognizes how the market and industry have a big impact on the success of
any environmental reform. Important players in this reform are economic growth,
technological advancements, and environmental consciousness. Through the usage of
lesser resources, the goal is to dematerialize the economies. Thus, ecological
modernization encourages continued modernization of societies and enforces the
postmaterialist values instead of establishing radical changes in organizational and
societal structures. Change to the greener future occurs within the laws of a capitalist
system, as “economic rationality” slowly gives way to “ecological rationality” and gives
5
more space for new green innovations and technologies, opening new markets and
needs for green products that are efficiently decoupled from economic growth. This is
most likely to first happen in developed countries, after which the rationality globalizes
(Jorgenson and Clark, 2012).
2.2 Key Challenges of EMT
One of the core assumptions of EMT is that further modernization will benefit the
environment and lead to a sustainable future. However, critics have questioned if the
modernization has clear benefits for the environment, or if green innovations are just the
society’s response to environmental pressure and reactionary institutional changes. If
modernization truly does lead to more sustainable actions, why are the developed
countries by default polluting more than the developing ones? (York and Eugene, 2003)
For the lack of current, wide empirical evidence supporting the theory, there has also
been critique towards the tendency of EMT scholars to use specific case studies to
emphasize the positive effects of modernization. Even though some nations may show
better ecological progress than others, this doesn’t mean the cause of sustainability is
modernization. The extent to which one analyses modernization greatly effects the
outcome; A study of one developed nation might show a completely different result than
a study including the social and environmental effects of that country’s international trade
(York and Eugene, 2003).
Our climate has warmed up dramatically in a very short medium of time, which raises
questions of the potential of modernization in the name of pace and scope. EMT argues
decoupling is possible by growing efficiency faster than production, but will it outweigh
all the production that comes with modernization? Many developed countries are more
efficient but simultaneously consume the most. The response to technological
improvements is also biased as someone supporting EMT would see even a small
technological advancement as part of something bigger, whereas another would
consider it only as an exception in an unsustainable society (York and Eugene, 2003).
One could divide these opinions to optimistic and pessimistic.
6
EMT often gets criticized as a naïve thought of technology magically curing the world
without big societal or institutional changes. This is understandable because green
technology plays a big role in EMT and was part of why the theory was initially created.
The theory provokes much criticism as ecological movements usually go against
capitalist structures and the growth leading them, whereas EMT does not specifically
criticise growth in all its aspects, rather it focuses on industry, production and
consumption which ultimately are the reason for environmental problems (Spaargaren,
2000).
The theory is not as radical as those of treadmill or deindustrialization, but neither is it
just an “efficiency revolution”. EMT tries to organize industrial life and rationalize the
production and consumption process into a sustainable one through internalizing
environmental costs, promoting principles of circular economy and recycling, green
indices that take into account more than just GDP, and so on (Spaargaren, 2000). More
recent literature on EMT shows how powerful the theory has been in mobilizing cross-
disciplined studies, resulting into environmental policies and management,
environmental strategies for NGOs, international alliances and overall green
development. Ecological modernization is said to have two sides: the academic/
analytical and the normative/policy-oriented model of ecological change. (Mol,
Spaargaren, Sonnenfeld, 2013).
Much of the current critique is being received from the more radical green movements
which are unhappy with the pace and scope of the ecological reform. Similar critique
arises from structural human ecologists, who provide mathematical data through
ecological footprint calculations based on increased affluence, growing population and
environmental harms, concluding how ecological modernization has not proven to keep
up with its eco-modernization efforts (Mol, Spaargaren, Sonnenfeld, 2013). In contrast,
economic growth and increased modernization have proven to be the number one
reason for climate change (IPCC, 2014). In response, scholars of EMT can only point
out the enormous political and technological progress made in the last decade and
question if actually working for solutions or pointing out the desperate situation is better.
7
2.3 Treadmill of Production
As the biggest opponent of the ecological modernization theory, treadmill of production
states how economic growth and environmental impacts are inherently tied together and
cannot be separated from one another. Decoupling is not possible as capitalist societies
need constant growth, which leads to constant input of natural resources and outputs of
waste and pollution. The state is seen as the responsible actor for its decision-making
power that is often used to boost economic activities (Jorgenson and Clark, 2012).
It is acknowledged that in modern societies innovations in technology are fostered, but
only for the reason of lowering the cost of production. This is achieved by decreasing the
usage of energy or a natural resource per output without having environmental
decoupling of these two as its goal. Opposed to that, these advancements make it
possible to produce more products in the same period of time, using even more natural
resources, and possibly leading to a rebound effect to cannibalize any ecological benefits
created by the technological advancement (Jorgenson and Clark, 2012). Technology has
only boosted the industry while externalizing the environmental costs, revealing the true
goal of these technological advancements; profit maximisation.
Modernization has meant more production and more usage of energy and natural
resources, leading into more pollution and emissions. Idea of the ecological treadmill is
the separation of human and environment, where the industry takes natural resources
and leaves waste, pollution and toxics behind. The social treadmill uses the workers to
create more efficient production facilities that will ultimately remove the workers from the
process (Schnaiberg, Pellow and Weinberg, 2000). Producing these externalities for the
sake of cost-reductions and systematically imposing them on nature and society is one
of the characteristics of a capitalist society. Some have described capitalism as “the
economy of un-paid costs” (Foster, 2012).
2.4 Key challenges of TOP and other critique
The biggest shortcoming of TOP is the lack of concrete solutions and actions that can
be easily applied in today’s societies. The theory often gets stuck in criticising the various
8
sides of economic growth without really providing any new tools or options. Specifying
how to make energy usage and production processes green is more efficient and
important in fighting against climate change. As we have built our societies to function
on great amounts of energy, we must change the energy infrastructure built on top of
fossil fuels, or alternatively change the way we live in modern societies to ones that need
dramatically less energy (Pollin, 2018). However, the latter option would require an
unrealistic amount of global cooperation whereas greener technologies have already
been developed.
Even though the scholars supporting TOP are loyal to empirical data, they have their
own methodological shortcomings as most of Schnaiberg’s work is based on data
collected from the United States. The theory is biased by culture and history, which of
course is understandable as every theory is a product of its time and place. However,
capitalism and the treadmill may transform, and depending on how the society is
organized, work in different ways. Nevertheless, the long tradition of the treadmill working
as stated before in the US makes it very unlikely to change. What is more likely is that
the US might use its global financial power to enforce its ways of the treadmill to others
(Schnaiberg, Pellow and Weinberg, 2000). Current example of this is the trade war
between China and the US.
One may fall into the debate of optimism versus pessimism, but as TOP doesn’t really
have any tools to offer, it seems like the theory stays on the level of a devil’s advocate.
Contrary to the treadmill theory, ecological modernization believes in the potential of a
developed economy to overcome this treadmill of production and environmental harm
and thrives for the societies to innovate more. There will always be the ultimate critique
against EMT arguing that ecological rationale is not possible in a capitalist society,
nevertheless scholars from EMT have surpassed this critique on the grounds of
completely different starting points, even labelling the critique as “outdated” (Mol,
Spaargaren, Sonnenfeld, 2013).
9
3 Decoupling theory
Ecological modernization theory studies “how various institutions and social actors
attempt to integrate environmental concerns into their everyday functioning,
development, and relations with others and the natural world“ (Mol, Spaargaren,
Sonnenfeld, 2013). Decoupling may be considered as the increasingly popular way of
international institutions attempting to integrate their environmental concerns into their
actions as can be found from a number of reports made by international institutions such
as United Nations, International Resource Panel (IRP), and Organisation for Economic
Cooperation and Development (OECD). United Nations Environmental Programme
(UNEP) has made an extensive report on decoupling on 2011, while the concept as such
was introduced by OECD in 2001. IRP has multiple reports on their website using
decoupling as one of their keywords.
As with EMT, decoupling assumes a sustainable future can be obtained through
intensified modernization and enforcement of postmodern values in the processes of
production and consumption. EMT has received critique on over-looking the reasons
behind climate change (Mol, Spaargaren, Sonnenfeld, 2013), whereas decoupling goes
right to the core of the problem by looking at resource usage and environmental impacts
(UNEP, 2011). A deeper analysis of decoupling with arguments on the basis of EMT
follows.
3.1 Decoupling
The term decoupling is used to explain the relation between resource efficiency and its
impacts on environmental pressure. Its goal is to “decrease the usage of resources per
unit of economic output and thus reduce the environmental impact of any resources that
are used, or economic activities that are undertaken” (UNEP, 2011). OECD has defined
decoupling as the “separation of the economic ‘goods’ from the environmental ‘bads’”
(OECD, 2002).
The United Nations Environment Programme’s report on decoupling in 2011 defines it
more specifically by dividing it into four different categories: resource decoupling, impact
decoupling, relative decoupling and absolute decoupling. The first two describe what is
10
being influenced in order to lessen environmental harm that derives from economic
activities, whereas the latter two indicate the real outcome of decoupling efforts (UNEP,
2011). However, decoupling is not only a practical tool that helps you calculate empirical
evidence, rather it applies much of the ideas of “ecological rationality”. Decoupling
includes the ideologies of new ways of thinking about economic growth, it mobilizes
political institutions, it looks at global flows, and it is usually represented not only in the
context of environmental problems, but also of social ones (UNEP, 2011). It is yet to be
seen if the scope of decoupling is too wide for one tool, as it is only in the first stages of
being conceptualized.
3.2 Resource decoupling
Resource decoupling refers to resource efficiency. It is achieved by developing new
technologies that decrease the usage of a given resource or energy. Resource
decoupling takes place when resource usage grows slower, stagnates, or decreases
while economic output increases. Resource efficiency is easily measurable and
encourages innovation of new technologies, which makes resource decoupling in this
way quite an efficient and viable tool to be used. Resource decoupling may be calculated
for a given nation either by dividing GDP by Domestic Material Consumption, or by
looking at the relationship between economic output and resource input in a given time
period (UNEP, 2011). For example, you could divide a nation’s coal usage by the GDP
of that economy and analyse the trend over a period of time.
The measures which improve resource usage deal with the scarcity of resources,
decrease the extraction costs of resources, and decrease the unequal depletion of
resources. Most times, resource decoupling results in impact decoupling as the usage
of resources decreases. These strategies are extremely important when it comes to the
usage of resources that are either very scarce such as oil or rare minerals, or when a
resource such as coal poses high environmental risks that cannot be avoided by mere
better usage of the resource (UNEP, 2011).
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3.3 Impact decoupling
Impact decoupling aims to decrease the environmental impacts of economic activities,
often referred to as externalities. These might include waste, emissions, and land
degradation, just to name a few. These impacts arise from extraction of resources,
production, usage, and ultimately, the disposal of products. The goal of impact
decoupling is to decrease ecological harm while increasing economic value. In
comparison to resource decoupling it isn’t as easy to measure, as impacts on
environment resulting from one unit of economic value added might be various, and the
linkage between some economic activities and environmental impacts are not completely
clear. One conceptual framework to estimate impact decoupling is life cycle analysis,
which might be complicated when scaled up to the scope of a nation. (UNEP, 2011).
The ways to achieve smaller impact on the environment are related to the smarter, more
productive and greener usage of different resources, which do not necessarily help with
the problem of scarcity or decreasing the prices of resource extraction. An example of
this are some technologies which are energy-intensive to use but are designed to
decrease ecologic impacts. In essence, the price doesn’t fall, or the effective usage of
the resource doesn’t improve but the environmental impacts decrease. Impact
decoupling becomes increasingly important when a resource has direct and massive
negative impact on ecosystems or when some technological innovation has high
potential in decreasing the risk of these harms (UNEP, 2011).
12
Figure 1. Resource- and impact decoupling (UNEP, 2011)
Figure 1. illustrates the different relationships between the economic activities, resource
decoupling and impact decoupling. The blue line illustrates a situation where resource
usage becomes more efficient and grows more slowly than GDP, demonstrating
resource decoupling in a relative decoupling manner. Resource decoupling may occur
in absolute terms as well. Consequently, the green line demonstrates a situation where
the environmental impacts decrease, causing impact decoupling. Contrary to the figure,
impact decoupling rarely happens in absolute decoupling fashion, as this would indicate
a situation where every increase in economic output would decrease the environmental
impact. Some situations like this do occur when talking about economic activities clearly
directed into decreasing environmental harms, such as reforestation programs (UNEP,
2011).
3.4 Relative and absolute decoupling
In absolute decoupling the environmental pressure or the resource usage decreases or
stays stagnant in relation to the economic activities, whereas relative decoupling refers
to a situation where the environmental pressure or resource usage grows slower than
13
the economic activity related to it (EEA, 2015). Whereas relative decoupling occurs
almost every time with resource decoupling, absolute decoupling is extremely rare.
According to Environmental Kuznets Curve and the “ecological rationality”, the
environmental impact of economic activities decreases after a society has reached a
certain level of prosperity (Jorgenson and Clark, 2012; UNEP, 2011). Relative and
absolute decoupling are illustrated in figure 2, where the growth of resource usage is
compared with the growth of economic output. Decoupling occurs where resource usage
grows slower or declines whilst the economic output increases.
Figure 2. Relative and absolute decoupling (EEA, 2016)
Absolute decoupling is where most of the critique towards the theory lies, as the pace
and scope of it have not been great enough. Relative decoupling has been taking place
aggressively since more efficient technologies have come to markets, whereas absolute
decoupling is still very distant. However, decoupling is still a relatively young concept
which requires a network of global green policies and actions to function correctly. As
stated in the latest report of IRP (2019), “decoupling and a sustainable future will not
happen spontaneously”.
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4 Definition of growth
Decoupling means separating economic growth from environmental pressures. In order
to go any further with the theory, one must provide a sound definition of growth, and most
of all a clear separation between physical growth and economic growth (UNEP, 2011).
Separation between the two is one of the core ideas of decoupling, as the theory
assumes absolute decoupling of economic growth and environmental pressure is
possible.
Economic growth means value added, usually calculated through GDP, whereas
physical growth of an economy means increase in physical assets, area, or material
throughput. This material-intensive growth is often harmful for the environment and is
indeed linked to economic growth. However, growth isn’t necessarily physical and
material, but can be a result of cultural, social, or spiritual achievements (UNEP,2011).
Think of a person growing up; after a certain age the physical growth stops, however the
development and growth of a person isn’t limited to this physical milestone.
Other than for the conceptual significance of economic growth to decoupling, it is an
important issue to investigate as growth is a powerful concept in our societies. Growth
has a lot of symbolic meaning and it is many times used as a tool to measure
effectiveness. Growth has become such a standard way of thinking economic progress
that it has almost become the ends rather than the means. Bad definitions or a disturbed
thought of the significance of growth are dangerous, whereas the negative effects of
growth itself can be questioned (The Post-Growth 2018 Conference, 2018a). Thus,
without the separation of physical and economic growth, it couldn’t be conceptually
possible to decouple growth from negative environmental impacts, and with a proper
separation there is no need for ceasing growth for the sake of sustainable development,
rather it might open new opportunities for sustainable growth.
4.1 Gross Domestic Product (GDP)
GDP is probably the most used economic tool in the world that tries to capture the
economic growth of nations, which is why a closer look at this number in the heart of our
economies is important. Additionally, GDP remains highly important to decoupling theory
15
as it is included in the formula of calculating possible decoupling effects. By the definition
of International Monetary Fund, GDP measures the monetary value of final goods and
services produced in a country in a given period. It is often used as a reference point for
the health and progress of a country’s economy (Callen, 2018). Thus, namely GDP goes
along with the definition of this paper, however GDP is limited in its ability to measure
qualitative growth and progress in welfare, which is crucial for the conceptual framework
of decoupling.
If we understand progress as improvement in one’s wellbeing and happiness in life, GDP
is a poor indicator for it doesn’t separate products and services as ones that increase
wellbeing and others that do not, and it includes many items that indicate a fall in the
wellbeing of a society. It’s clear how GDP is a product of the “economic rationality”, which
increases material wellbeing at the cost of social and ecologic aspects. For example,
government’s increased spending on security or households’ increased expenditure on
health care all increase GDP, whereas in the reality these expenditures might be a signal
of even a dangerous state of a nation (Victor, 2008).
On the other hand, GDP excludes many important items that are essential for human
wellbeing such as clean air and water (Victor, 2008). Generally, the environmental costs
included in economic activities are referred to as externalities, and are excluded from the
calculations (Callen, 2018). Moreover, GDP describes little about the social structure of
the economy as distribution of wealth is not reflected, nor is all the work executed
counted (Victor, 2008). Feminist economists pinpoint the problem of care work being
excluded from GDP as one of the main weaknesses of the tool, as this systematically
lowers the position of women in comparison to men. This is because what is not included
in GDP tends not to be appreciated or concentrated on as much as those variables that
are (Bauhardt, 2014).
It’s also worth highlighting how many products and services of today’s world are
extremely hard to value as they’re intangible and intrinsic. Thus, the data that is the most
crucial in describing the qualitative value and immaterial progress is not included in GDP
in the same way as those transactions including a physical asset (The Post-Growth 2018
Conference, 2018b). This can be seen in the struggle that tax authorities are facing in
16
front of taxing immaterial products of tech companies, which is currently being worked
on under the Base Erosion and Profit Shifting -project (BEPS) (OECD, 2018).
In other words, GDP is not only weaker than usually thought, but also insufficient in
describing the lives of today’s societies and moving on from the economic rationality to
the ecologic one. Products, labour and lifestyles have changed drastically, and the data
being collected does not take it under consideration (The Post-Growth 2018 Conference,
2018b). If the saying “we manage what we measure” holds truth, the shortcomings of
GDP should be taken under serious consideration.
4.2 Other means of measuring
GDP has its pros and cons as a tool; the simplicity and international comparability being
one of the biggest pros, while the insufficient representation of today’s world and the
exclusion of environmental and social aspects being the heaviest cons. These aspects
are recognized and new indices that should be forced into action to complement GDP
have been shaped. Internalizing costs of environmental damage and the benefits of
environmental protection can help to focus policy debate to the extent that our prosperity
and well-being depend on goods and services provided by nature (European
Commission, 2009).
There are different approaches for the measurement of wellbeing. Some establish a set
of indicators which vary in the way that they’re linked to each other. An example of this
is the Human Development Index. Gross National Happiness Index is a subjective and
direct approach which bases on self-reporting questions of happiness or life satisfaction
(Chelli, Ciommi, Gigliarano, 2013). One of the most important indices is that of the Index
of Sustainable Economic Welfare (ISEW) by Daly and Cobb in 1989. What makes it
powerful is how it converts its components into a monetary unit, just like GDP.
Additionally, ISEW fills in those items that are not included into GDP, for example
volunteering and care work, and adds up social and environmental costs to it such as
environmental emissions costs, depreciation of natural capital, crimes, and so on (Chelli,
Ciommi, Gigliarano, 2013). To understand how an alternative index for GDP would be
built up in practice, we shall look at the variables included in ISEW.
17
ISEW slightly alters the items currently included in GDP and adds information by other
items calculating social and environmental aspects:
ISEW = C + G + I + W – D – E – N, where
C = Consumption with adjustment for income inequality calculated with the GINI
coefficient.
G = Government expenditure excluding defensive expenditure, as it does not increase
welfare.
I = Investment including consumer durables.
W = Non-market contributions such as unpaid work, effecting positively to the result.
D = Defence expenditure
E = Cost of environmental degradation and
N = Depletion of natural capital (Chelli, Ciommi, Gigliarano, 2013).
The fact that new indices are being made shows movement towards the ecological
rationality, nevertheless implementation of these tools is unsatisfying in the decision-
making level of nations and companies. This is an important step as effective usage of
more inclusive indicators would potentially enforce theories such as decoupling as their
positive environmental and social effects would be more visible. According to EMT,
recognizing the value of environmental and social aspects would open new markets of
green products and services, creating a new sustainable society (Jorgenson and Clark,
2012).
5 Rebound effect
Increasing energy needs push societies to innovate new technologies which will lower
the amount of resources used, and thus decouple energy production from environmental
harms. Rebound effect helps us to better understand the relationships between
technology and consumption as it reveals how mere technological advancements cannot
save our societies from global warming without consciousness of environmental
problems and questioning our ways of consuming.
To comprehend the phenomenon, the paper will introduce two paradoxes related to the
rebound effect. The most known one of the two is called Jevon’s paradox, which
18
represents a direct rebound effect. The Paperless Office paradox is a modern example
of indirect rebounds effects related to technological development of substitutes that
intentionally or non-intentionally decrease the negative environmental impact of a given
product (York, 2006).
5.1 Jevon’s paradox and Paperless office
More efficient technologies usually incentivise greater usage of certain resources or
products. At times this increased consumption of the resources creates a rebound effect
that overweighs the environmental benefits gained from the technological advancement
(Maxwell, Owen, McAndrew, Muehmel, and Neubauer, 2011). The phenomenon was
first studied by William Stanley Jevons in the context of England’s 1860’s coal industry,
where Jevons noticed that as the efficiency of coal usage improved, the total usage of
coal increased because the production of one product per one unit of coal was
increasingly efficient (York, 2006). Even though production of one product created less
pollution, the increase in consumption and demand of coal together resulted into more
pollution than before.
The phenomenon can be easily reasoned by classical economic theories; when
efficiency of a resource such as coal goes up, the price of this resource goes down. This
decrease in prices incentivises markets to use coal as an energy source, which ultimately
drives producers to innovate new technologies using coal (York, 2006). New innovations
lead to increased need of essential resources and raw materials. Jevon’s paradox
indicates a direct rebound effect, where the efficiency and reductions in costs result in
greater consumption because of the new, lower price (Maxwell et al., 2011). Another
example of direct effects is the increase in total emissions arising from personal driving
regardless of the increased efficiency of fuel, as people drive cars more (EEA, 2015).
Rebound effect also occurs as indirect effects, which include total increase in
consumption for the greater access or availability of money to other goods (Maxwell et
al., 2011). The Paperless Office Paradox demonstrates indirect rebound effects in the
case of product substitution. Richard York identified this modern paradox related to
computers and the usage of paper, which was expected to decrease dramatically now
that one could easily read, communicate and operate all the documents through screens
19
of computers. Nevertheless, commercialisation of computers enabled greater access to
other products such as printers, which in turn increased the usage of paper for the greater
availability and easiness of printing your own material (York, 2006). This example
demonstrates not only the indirect rebound effects but also the complicated and
unpredictable effects new technologies might have.
Rebound effect may occur directly, indirectly and in an economy-wide macroeconomic
level when the total economic productivity and consumption of a nation grows because
of the gained resource efficiencies (Maxwell et al., 2011). Data interpreted by the EEA
from 2000 to 2007 shows how the total domestic material consumption of the EU-28 area
has increased by 10% regardless of green technological advances (EEA, 2015).
According to IPCC (2014), the total anthropogenic GHG emissions have continued to
increase over 1970 to 2010 with larger absolute increases between 2000 and 2010,
despite a growing number of climate change mitigation policies leading to decoupling.
Environmental benefits of these technological advancements encounter rebound effects
because of changes in life styles, consumption patterns and industry level decisions.
Rebound effects are usually stronger in developing countries as developed countries
have reached a saturation point in their ways of consuming. For example, more efficient
cars wouldn’t necessarily lead into more driven kilometres in a developed country
whereas in a developing country this increase in efficiency could mean much more
kilometres driven (Pollin, 2018).
Linear production and consumption processes create rebound effects. Moving from
linear production to circular material flows where materials are not thrown away after
usage but reused, recycled and remanufactured to something new helps avoiding
rebound effects from taking place (IRP, 2017). Decoupling theory takes advantage of the
critiques EMT has received from structural human ecologists (Mol, Spaargaren,
Sonnenfeld, 2013) by using footprint calculations as a tool to analyse and understand
the flows of resource usage better (IRP, 2017).
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6 Resource problem
Most of the emissions that cause global warming arise from careless usage of natural
resources. Carbon emissions are released in large quantities when fossil fuels are
burned, totalling to 76% of all the greenhouse emissions released (IPCC, 2014), where
only the extraction and processing of natural resources make up for almost 50%. Overall
resource usage has increased threefold since the 1970’s, while global population and
energy needs increase constantly (IRP, 2019). Satisfying these needs will be a global
challenge when energy extraction is increasingly difficult in monetary, physical and
political terms as natural resource reserves continue to diminish (Klare, 2012).
To overcome the problems of scarcity and pollution created by exploitation of natural
resources, effective and inclusive implementation of decoupling is necessary. Concrete
ways of doing this include basing our energy infrastructures on renewable energy
sources, setting prices that reflect the true value of resources, and global cooperation.
To analyse the resource problem more deeply, the paper divides the issue into three
parts; renewable energy, pricing, and rare earth elements.
6.1 Renewable energy
Creating an energy infrastructure based on renewable energy is an important factor in
reducing emissions (EIA, 2018), and is one of the most effective ways of achieving
decoupling as energy collected from biomass, hydro, geothermal, wind or solar sources
creates near zero emissions while increasing economic growth and social welfare.
Currently only 13,6% of all the energy produced in the world is generated by renewables,
whereas petroleum and solid fuels still make up more than 50% of energy production.
However, the trend of using renewables is growing; solar and wind power are the current
leading sources of renewable electricity generation in the European Union (European
Commission, 2018). Renewable energy industry employed 10.3 million people worldwide
in 2017, demonstrating the social benefits that change for renewable energy base holds
(IRENA, 2018).
Renewable energy sources and technologies differ in costs, emissions, availability,
efficiency, land usage and social impacts such as noise and visual disturbances, and the
21
capacity of future employment. In general, renewable energy extraction is costlier than
that of non-renewable energy, however it provides independence from price fluctuations
created by fossil fuels (Evans, Strezov, and Evans, 2008). Renewable energy extraction
also requires a lot of energy. The low Energy Return on Energy Investment ratio (EROI)
of renewable energy sources can be explained with the help of figure 3.
Figure 3. EROI analysis of renewable energy sources (Davey, 2017).
Figure 3 demonstrates the vast amount of energy investment required for energy
extraction from renewable sources. Extraction often requires an extensive infrastructure
around itself, starting from the plants including solar panels or wind mills, to the
connecting infrastructure from the plants to the end users. These distances might be
surprisingly long as many times the fruitful areas of solar, water or wind power are located
far away from the cities (Davey, 2017). Long transmission distances are more usual for
renewable energy sources than non-renewables, especially those of wind farms (Evans
et al., 2008). If some efficient locations would be found nearby cities, Not In My Backyard
-effect usually restricts these projects from happening. The extraction and intermittency
require energy, as the energy gathered must be stored for the equal and consecutive
distribution, because nature doesn’t always provide energy. After deducting all these
22
costs related to the extraction of energy, you leave with only a certain percentage of
energy available for usage (Davey, 2017).
Nonetheless, renewable energy outweighs non-renewable energy with its environmental
benefits, which is why investment in green energy is needed. One of the movements
towards clean energy is the Green New Deal, which aims to help economies to shift from
fossil-fuel based economies to renewable, green economies. The global investment
project requires from 1,5 to 2 percent of the global GDP each year, having its focus on
equal distribution of green energy and expansion of green supply chains. The green new
deal has both environmental and social objectives, as it would be efficient enough to cut
emissions whilst creating jobs, as work related to the fossil fuel industries will disappear
(Pollin, 2018). Strong support for people in fossil fuel industries is necessary for avoiding
social inequalities during the ecological reform.
6.2 Pricing
According to conventional economics, price is an important indicator of the value of a
given product in its market. Free market can detect scarcity and quality of any product
or service, as it indicates the relationship between supply and demand (Higgs, 2014).
However, price mechanism is a result of a theory which assumes market actors to have
perfect information and rational utility-maximising behaviour, whereas in reality prices
are a result of interactions between imperfect market actors whose motives can be
anything from immediate satisfaction to speculation for monetary gains.
When a product that is essential for the whole economy to function, such as energy, the
pricing mechanism gets increasingly complicated. In other words, defining the price of a
product in energy markets is completely different from a conventional product, say a can
of beans, as the whole society is dependent on energy (Davey, 2017). Market actors
have very limited and disturbed knowledge on the scarcity, quality or value of energy,
which leads to a malfunctioning price mechanism.
It’s almost impossible for the market to detect what’s going on in terms of resource quality
or scarcity from the visible signal of prices on the market (The Post-Growth 2018
Conference, 2018a). Let us look at a simple figure to illustrate the phenomenon. Figure
23
4 combines big societal events together with oil prices from 1966 to 2016. If the prices
would only demonstrate scarcity of the resource, they would steadily grow as the
resource gets scarcer. Nevertheless, oil prices fluctuate greatly according to societal
events and governmental policies, underlining how the mere scarcity or quality doesn’t
influence the price of an energy resource (Jackson, 2015). Supply chains and markets
of many materials that are strategically important in production processes have become
global, which is one of the reasons their prices reflect world events and global market
structures (IRP, 2019).
Figure 4. Oil prices from 1966 to 2016 (Jackson, 2015).
A study of resource prices made for European Commission (ECORYS, 2012) states the
same problem by saying how completeness of resource price message is distorted as it
does not consider externalities or scarcities of a given resource, thus hiding its true value.
This is partly offset by oligopolistic market structures, financial speculation, and export
restrictions, which increase resource prices (ECORYS, 2012). Internalising
environmental costs could be the first step towards better and realistic resource- and
24
energy prices, pushing economies to innovate more resource efficient products and
helping consumers to better realise the value of natural resources.
6.3 Rare earth elements
Rare earth elements (REE) are essential raw materials especially for clean technologies
that help us to decouple economic growth from environmental pressures, such as wind
turbines and solar panels. REE are used in technologies for their great magnetic,
electronic, catalytic, and optic properties. Catalysts, magnets and other applications are
the largest segments where REE are currently used, and the market is estimated to grow
for higher demand of clean technologies (Chen, 2017).
REE are not that rare in nature but most of the times do not appear in large quantities so
that exploitation of REE would be feasible. REE are difficult to extract cost-effectively
and the exploitation is filled with environmental problems. China represents 85% of all
the REE production, much of it being done illegally. Estimates say 20% of Chinese
mining sites are illegal, meaning neglecting social and environmental rules (Chen, 2017).
Extracting REE require an increasing amount of rock to be extracted and processed,
simultaneously requiring a great amount of energy for the whole process (Davey, 2017).
Even though extraction of REE require a lot of energy and have high environmental
impacts, they’re crucial components of today’s technologies (IRP, 2018). Share of
renewable energy in global energy production is estimated to grow around 10% by 2035.
This includes increasing demand for green power generation technologies and energy-
efficient technologies such as electric vehicles, LED lights, and different batteries (Chen,
2017).
There’s not going to be similar demand for all REE in the future, causing the price to
decrease for most of them. As the exploitation of REE is already barely feasible, this will
create problems in the future markets of REE. Recycling and circular economy are
methods for solving the problem of imbalance (Chen, 2017). Reverse logistics is crucial
for greener supply chains, especially when it comes to electronics which include many
REE that aren’t even nearly recycled to their full potential (Ninlawan, Seksan, Tossapol,
and Pilada, 2010). Less than one third of existing metals is recycled above the rate of
25
50%, and only 1% of REE used in technological appliances are recycled (The Post-
Growth 2018 Conference, 2018a; IRP, 2018).
The relationship between REE and clean technologies is controversial, as mining is an
extremely polluting industry with severe social and environmental issues. Not only the
workers but also the local villages suffer from the toxics released in the process of
extraction as purifying one tonne of REE requires 200 cubic meters of water, after which
the contaminated water is often released into the nature ruining water supplies for
complete villages. The energy reform of clean technology is also being criticised for
blindly switching to another equally problematic dependency from fossil fuels to rare
earth elements (Pitron, 2018).
Indeed, the scarcity and future dependence of REE should be taken into serious
consideration, as REE play a key role in the ecological reform. Many technologies that
generate less emissions require a lot more metals in the manufacturing process. John
Dizard (2019) has made an analysis of the feasibility of the Green New Deal based on
the metal requirements this movement towards green technology and zero emissions
would require. Electronic vehicles are estimated to require from 17 to 109 kilograms more
copper than a vehicle with a fossil-fuel engine. Only to change all the motors of vehicles
to electronic ones we would require more nickel and cobalt than is estimated to exist in
the planet, and most of the copper reserves available. These amounts wouldn’t include
the needed infrastructure for vehicle chargers, and all the infrastructure needed to extract
the green energy these chargers would have to supply (Dizard, 2019). This example
forces us to remember how green technologies also use natural resources and recognise
the physical limits our globe has.
7 International trade
International trade introduces great challenges to decoupling theory, which are exposed
and answered in the following section of this paper. Climate change and problems
related to natural resources are increasingly transboundary, however many of the
problems are divided between developed and developing countries (IRP, 2017). The
reason for this division will be explained through a world-system theory to understand
26
international trade relations and the problems included in it, and further discussion on
geopolitical tensions that resource exploitation creates will be established. How
decoupling theory takes on these international challenges will be discussed the last with
different strategies for establishing decoupling in developed and developing countries.
7.1 Uneven global burdens
Increasing globalisation of supply chains enables more efficient usage of various
resources but divides the world in unethical ways. For decades now, the developing
countries have been responsible for extraction of resources, heavy production, and the
corresponding environmental and social burden of these, while developed countries
enjoy purified resources and ready-made products as imports (IRP, 2017; Pitron, 2018;
UNEP, 2011). High-income nations were the net importers of resources until 2000 and
consumed 10 times more than low-income countries while rest of the world remained as
net exporters (IRP, 2017).
Unequal social and ecological exchange is a central concept to the world-system theory,
which divides the world to core-, semi-periphery-, and periphery nations. Core nations
usually have strong economies with high-tech products, an established military, and
plenty of intellectual property, making them fairly independent from outer pressure.
Periphery nations are the opposite and find themselves stuck at the bottom of the
hierarchy for lack of social and monetary capital, whereas semi-periphery nations are
found in between. International trade deepens the division of labour and commodity
production, whereas unequal ecological exchange highlights uneven flows of energy and
natural resources (Rice, 2007).
Core nations are free of other economies’ influence, but their social organization and
complex infrastructures are dependent on periphery nations’ extraction of natural
resources. Trade of natural resources between these nations enforces a
disproportionate per capita material consumption which is typical of core nations.
Because ecological flows are not valued in monetary terms but excluded as externalities,
the environmental burden of this unequal consumption falls upon the extracting
countries. Moreover, this world system allows core nations to enjoy a disproportionate
27
amount of environment’s carrying and sink capacities that would usually be beyond their
own limits (Rice, 2007).
This theory is embodied in a phenomenon called the resource curse where weak
institutions of periphery nations turn the advantage of having a resource rich land into a
curse, which leads into profound social, ecologic and economic problems. Resource
curse occurs in countries where the abundance of natural resources has overspecialized
the country’s economic activities into mining or resource processing. It tends to increase
the risk of civil conflict, leads into severe ecologic consequences because of bad legal
systems and lack of nature protecting laws, and hampers economic growth. International
trade usually enforces the resource curse by lifting the prices of natural resources and
opening the country to the volatile international markets, which might force the country
to appreciate their currency. Appreciation makes exports more expensive and less
competitive in the international markets, whilst increasing the dependence on cheaper
imports. This volatility in prices and international markets increase economic risks and
hamper the countries from investing into infrastructure or widening their economic
activities (UNEP, 2011; WTO, 2010).
As the usage of natural resources has globalized and includes the problems mentioned
above, national accounts of direct resource usages don’t reflect the reality. Ecological
footprints are used to demonstrate the real resource usage across borders, and they can
be calculated for various types of pressures, for example pollution, emissions, water
usage, or mineral usage (IRP, 2017). In 2017 per capita material footprint for the richest
countries was 27tons, 17tons for the upper-middle income countries, 5tons for lower-
middle income countries and 2tons for the poorest countries. One billion richest persons
on the planet consumed 72% of global resources while 1,2 billion poorest consumed only
1%. Climate impacts of the richest countries are from three to six times greater than
those of low-income countries, however the richest are seen to face the fewest
consequences (IRP, 2019) for their global power and ability to shift ecological burdens.
7.2 Geopolitical tensions
Accessibility to natural resources is increasingly hard in monetary, physical, and political
terms. As all the easily accessible fruitful locations have been emptied for the intensive
28
exploitation that has been taking place after industrialization, the extraction costs are
increasing (Klare, 2012). The remaining reserves are in extremely demanding locations,
requiring vast amounts of energy and even greater investments in sophisticated
technologies to be exploited. Modern societies’ dependence on rapidly diminishing
natural resources creates vast geopolitical tensions as countries that get a hold on
existing reserves simultaneously gain strategic advantage.
Majority of essential raw-materials for clean technologies is produced in politically
unstable countries (ECORYS, 2012). China produces 84% of all the REE in the world
and acknowledges the power that comes with its near monopoly, as global demand
keeps rising at a rate of 3 to 5% a year (Pitron, 2018). At the change of the millennium,
China set demanding restrictions on rare metal exports which caused them to fall from
65,000 tonnes in 2005 to 32,500 in 2018. Chinese don’t want to stay in the raw material
supply but also produce advanced technologies for exports; currently foreign high-tech
companies are allowed free access to Chinese raw materials if the production sites of
these companies are located in China (Pitron, 2018). The world’s largest purified rare
earth minerals area of 470sqkm is expected to be built in Inner Mongolia with special
funding from the Chinese government (Fanbin, 2017).
Whilst satisfying almost 90% of the world’s demand, in 2005 China’s own demand
exceeded 50% of the global needs for the first time. Between 2000 and 2008 China’s
domestic demand tripled, main reason of the exponential growth being the increased
demand and production of clean technologies such as wind turbines and solar panels.
Increasing exploitation has diminished the REE reserves rapidly, and without strict
regulation China’s reserves might disappear in the next 20 to 30 years (Mancheri, 2012).
Rapidly diminishing REE reserves together with the trade restrictions set by China, the
rest of the world has been pressured to explore other locations for REE exploitation as
strategic dependency on Chinese production increases. On April 2018 Japanese
researchers published a report according to which an enormous REE concentration was
found in the Western North-Pacific Ocean of Japanese territory, which could supply the
whole world for hundreds of years (Takaya et al., 2018). However, the concentrations
are 6000m deep in the ocean and current technologies can produce only 1000tons of
29
metal by mining one million tons of mud, making the discovery foreseeably untouchable.
(Kuo, 2018). The Japanese discovery is a perfect example of increasingly hard
accessibility of natural resources by physical and technological means. It is yet to be
seen if these REE concentrations will be exploited in the future as Chinese reserves
diminish and geopolitical tensions increase, and if, on which social and environmental
costs.
7.3 Applying decoupling in different economies
To lay a base to how decoupling should be applied around different economies, we’ll
return to the world-system theory. Let’s look at figure 5 that illustrates four world-system
positions, their average forest footprints per capita in 2000, and their forest cover change
in 1990-2000. Here we see again how the less polluting countries face the biggest
consequences whereas the core countries experience even positive outcomes. It is
unlikely that the low periphery countries’ forest area has degraded on domestic
consumption, rather this must be driven by international trade relations, and by looking
at the forest footprint per capita, core nations are the most likely reason for the
deforestation in low periphery countries (Rice, 2007).
Figure 5. Comparison of four world-system positions in forest footprints and cover change (Rice, 2007).
30
Ecological modernisation theory has been highly criticised as “Ecological Imperialism”,
as the modernisation and dematerialisation are achieved on the social and
environmental cost of others (Foster, 2012). Indeed, it is questionable if core countries
could’ve reached that high level of well-being and increasing dematerialisation without
exploiting others. As we’ve seen with rare metals, green technologies mainly used in the
high-income countries also have a dirty burden over the periphery countries. This unfair
division emphasises the fact how a deeper understanding of value chains and
consequences of consumption must be made more visible and thus, divide the
responsibilities equally to those who have been part of problem.
Current decoupling strategies suggest high-income countries should make absolute
reductions in domestic consumption, aim for absolute decoupling and more equal
distribution of wealth, increase environmental consciousness, and enforce circular
resource flows. This may be done through governmental incentives for research
programmes and business incubators, green regulations and strict environmental
standards, and most importantly including the transborder environmental and social
costs into the products and services (IRP, 2018; UNEP, 2011).
As the position of high-income countries in international trade is dominating, it must be
used as an opportunity to help low-income nations suffering from the resource curse by
adding side notes to international trade agreements that foster the local development of
resource exporting countries, include externalities to the prices of resources and help
the overall direct ecologic impact of international trade by optimizing logistic activities
(UNEP, 2011).
On the other hand, low-income countries must be offered a solid social base with proper
health, educational, and legislative institutions so that there is space for sustainable
development and consideration of decoupling practises. Developing economies are
suggested to follow relative decoupling strategies while they increase well-being and
eliminate poverty as their priority. However, resource efficiency should be supported
even if the net consumption would increase until a decent quality of life is achieved. An
important strategy for developing countries is learning from the mistakes made by
developed economies and leapfrogging straight to the sustainable ways of consuming,
producing and living (UNEP, 2011).
31
To achieve resource efficiency through leapfrogging, developing countries require strong
incentives to decrease their environmental impacts, international assistance and
technology transfers from developed countries. Critics say that leapfrogging’s objecives
are too optimistic and ambiguos in the context of developing countries that are usually
potitically and economically unstable. Additionally, there are doubts if the green
technologies are green enough to be implemented throughout the world. Moreover, one
appliance doesn’t fit every country as there are differences in needs, resources, and
cultures. Overall the requirements of leapfrogging are overlooked, which strengthens the
importance of careful and thorough planning of leapfrog operations (Perkins, 2003).
Appliers of leapfrogging strategies must avoid falling prey to “ecological imperialism” by
enforcing customs or technologies taken from developed countries into the developing
ones (Foster, 2012). Differences in cultures and needs must not be overlooked.
8 Evidence on decoupling
Before entering the discussion part of the paper, some evidence of decoupling that has
taken place recently on a policy level, consumer level and as resource efficiency gains
are demonstrated.
As real life-examples of incentivising decoupling strategies, France, Romania and Africa
have all included tax reductions for R&D activities that promote sustainability. European
Union has set a 2020 strategy that aims for smart, sustainable and inclusive growth, to
which Germany has responded with programmes aimed to improve R&D activities in the
private sector. Belgium in turn offers tax reductions for assets that don’t have an
ecological footprint and/or increases impact decoupling by aiming to minimise
environmental harms. Countries have also introduced greenhouse emission reducing
policies; Canada introduced an exemplary carbon tax in 2008 which not only made the
public organizations carbon free in seven years, but also improved the social situation
by distributing the tax revenues to the low-income families in form of tax reductions (IRP,
2019).
Increase in environmental certifications reflects an increase in the demand for more
sustainable products. Environmental certificates are an efficient way of contributing to
32
the increase in sustainable markets and help consumers make sustainable buying
decisions (IIED, 2013). Report of the state of the sustainable markets in 2018 reveals an
increasing trend of certifications regarding the production of tea, cotton, cocoa,
sugarcane, forestry, and palm-oil and their positive impacts on lowering carbon
emissions and increasing social well-fare in the producing countries. Cotton- and cocoa
certified areas have tripled in past five years, whereas tea- and palm-oil areas with a
certification doubled (Lernoud et al., 2018).
Figure 6. Resource productivity in EU-28 area between 2000-2017 (EEA, 2018)
The development of resource productivity in EU-28 area from 2000 to 2017 is
demonstrated in figure 6. After 2000 there has been positive development of resource
efficiency in the EU. From 2000 to 2008 relative decoupling took place in the EU member
states as the material consumption grew slower than GDP. Absolute decoupling took
place from 2008 to 2013 as material consumption decreased while GDP increased, after
which the development turned back into relative decoupling. European resource
productivity increased 39% from 2000 to 2017, however much of the resource
efficiencies gained during this period were a result of the 2008 crisis which effects
continued to 2013, as material consumption was significantly lower during these years.
It’s also to be mentioned how Domestic Material Consumption doesn’t reflect the reality
33
in its fullest, as it doesn’t include the raw materials extracted from outside EU that are in
the imported products. EU has prepared another index called Raw Material Consumption
(RMC), which presents imports and exports in their raw material equivalents, but it’s still
under development with no published RMC data for EU.
9 Discussion and conclusion
There are two contradicting schools of thought on how modern societies can survive the
challenge of global warming. EMT believes in further modernisation and technological
advancements whereas TOP has very anticapitalistic ideas on what should be done next.
Decoupling is a theory that takes on the base idea of EMT but listens to the criticism of
TOP, resulting into a strategy that truly believes further modernisation will decouple
economic growth from environmental harms, but also understands that the way we
consume and consider well-being and economic growth must change dramatically.
Ecologic modernisation theory and decoupling theory acknowledge that societal and
environmental issues share the number one priority. As seen with the resource curse,
societies cannot make sustainable decisions without good institutions and social
systems. For this, developing countries should be allowed to raise their quality of life on
the basis of decoupling results, as without a good social base there cannot be
environmental change. Adapting decoupling to different cultures, economies and
environments is a necessity for successful implementation. Decoupling strategy
recognises different ecological burdens and adapts according to the income level of the
country.
Environmental consciousness is one of the core necessities for “ecological rationality” to
take place in societies. During the past years there has been a clear shift in attitudes
towards environmental problems but there’s a lack of value chain knowledge that causes
rebound effects and prevents further development. Establishing circular economies
instead of linear helps avoiding rebound effects as circular economies take under
consideration the whole lifespan of products and recycle materials and products
effectively. More knowledge of supply chains in general leads to more consciousness
and less pollution through better buying decisions.
34
High-income countries must face the consequences of their actions to overcome a
psychological barrier that prevents global cooperation and personal awareness in the
fight against global warming. Through that acceptance societies can look forward and
make realistic decisions. Environmental consciousness is not knowing that driving cars
pollutes and taking quicker showers saves water but understanding the world situation,
being aware of those complex global value chains, assimilating what has happened to
the environment in the last fifty years and what does an increase of 2 degrees Celsius
really mean.
After consciousness comes action that requires top-down and bottom-up movement, a
marriage between growth, environment, people and technology. Governments and
policy-makers must be ready when societies are ready to move from the old ways to
new, greener ones, and be able to provide these alternatives. The same idea works both
ways, as people must be ready to embrace and look for the new opportunities that are
available and make conscious buying decisions, even though the new products would
differ greatly in looks, taste, materials, availability, and so on. Humanity as a species is
very good at adapting into new situations, and this quality must be embraced.
The importance of international cooperation grows as natural resources become more
scarce and are only available in certain parts of the world. A common consensus of the
real value of these commodities must be established by internalizing environmental costs
and accounting material footprints on a national level for acquiring realistic decoupling
results. Most importantly, decoupling requires active work as sustainable future won’t
happen spontaneously (IRP, 2018)
Having looked at decoupling from various critical aspects, this paper contributes to the
wider conversation on ways to fight climate change. The objective of this paper was to
make some of the linkages between technology, growth, and natural resources clearer,
as these relationships are extremely complicated and interrelated. Through the analysis
of these linkages we have established further knowledge on the feasibility of decoupling
theory and ecological modernization, respectively. It has been made clear how high-
income nations have the most responsibility in making decisions and taking action
towards a sustainable future for their excessive usage of natural resources, and how
35
circular economy and conscious buying behaviour are necessary to be established in
order to decouple economic growth from environmental pressures.
36
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