International Society for Ecological Economics ISEE Conference June 2012, Rio de Janeiro ECOLOGICAL ECONOMICS AND RIO+20: CONTRIBUTIONS AND CHALLENGES FOR A GREEN ECONOMY GUANABARA I Models of Green Growth Chair: Helen Suich / Roxana Juliá [952] RESOURCE EFFICIENCY AND DECOUPLING GDP GROWTH FROM NATURAL RESOURCE USE: INTEGRATING ECONOMIC AND ECOSYSTEM APPROACHES Jean-Louis Weber, Jock Martin, European Environment Agency, Copenhagen - Denmark

“resource efficiency” means doing the same thing or more with less resource and less damages resulting from resource use. The first aspect is generally referred as decoupling (of GDP from resource use). The second aspect is by analogy named “second” decoupling (of GDP from environmental impacts).

“first decoupling” First decoupling indicators measure resource efficiency from the point of view of the economy, with the assumption that alleviation of pressures results in improvement of the environmental conditions. Such indicators are compiled by OECD as outcomes of MFA (material flows analysis) and measurements of green growth the EU has chosen the indicator Direct Material Consumption/GDP as headline indicator of the “flagship initiative” for a resource efficient Europe by 2020.

limitations of “first decoupling” indicators A first and well known limitation of “first decoupling” is that the relative improvement of the ratio GDP/resource use can be upset by a faster increase of GDP and result finally in an increased burden on the environment. Even in the case of a reduction of resource use (absolute decoupling is a difficult target considering economic development and population growth), degradation may continue if thresholds have been bypassed as it is the case in several fisheries around the World. There are in addition issues with the format of indicators based on “economy wide” material flows accounts.

A stylised map of materials of particular importance for accounting Source : Steurer A. and Radermacher, W., 1996

materials are not equivalent regarding uses and impacts First remark: the land resource is excluded because it has no weight Second remark: the water resource is excluded because “the flows of water would be so large that data on all other materials would be of negligible size” In the middle of the oval the materials which make 99% of the total flow coexist such as fossil fuels and carbon, biomass products and sand and gravel. In fact, the consumption of fossil fuels and biomass product results ultimately in combustion (and CO 2 ) when sand and gravel are moved from one place (e.g. quarry) to be incorporated into durable infrastructures (e.g. buildings). Fossil fuels and biomass products are internationally traded when sand and gravel are mostly of local use. Sand and gravel (often named “non-metallic minerals”) represent in Europe more than 40% of the domestic material flow. The addition of carbon material with san and gravel in one single aggregate can lead to ambiguities and mis-interpretations.

An additional issue with the use of the GDP/DMI indicator DMI = Domestic Extraction Used (DEU) + Imports – Exports or DMI = DMI – Exports DMI is a consumption indicators and should be compared to Final Demand, not to GDP DMI (the Direct Material Input = DEU + Imports) is more relevant for comparisons with GDP. (Ideally, DMI should be adjusted for those products which are only imported for re-sale, without transformation in the country and the embedded consumptions in the exporting countries)

Illustration… In the case of Norway which GDP is to a large extent made of exports of oil and gas, the GDP/DMI indicator which excludes exports gives a wrong picture of resource efficiency. GDP/DMI would be a more correct measurement.

Measuring the ‘second decoupling’ with ecosystem capital accounts Ecosystem capital accounts are developed as a second volume of the UN SEEA. Pilot accounts are implemented in Europe by the European Environment Agency Ecosystem capital accounts measure the degradation of all ecosystems resulting from economic activities. They measure the resource which is accessible without degradation and compare it to economic sectors’ use. The ecosystem capital degradation virtually embedded into international trade of commodities is added to the ‘territorial’ degradation in order to calculate the ‘total consumption of ecosystem capital’ The measurement unit is a single currency which reflects the intensity of use of accessible biomass, water and landscapes and the qualitative direct and indirect impacts (contamination, losses of biodiversity…). This currency is named ECU for ‘Ecosystem Capability Unit’. It is used to adjust the biomass/carbon account from direct and indirect degradations. The ‘total consumption of ecosystem capital’ measured in ECU can be used to measure the ‘second decoupling’ (of GDP growth from ecosystem impacts)

Integrating ‘first’ and ‘second’ decoupling The total carbon balance can be the pivot account of economic material flow accounts as well as ecosystem accounts. It is sufficiently general to work as surrogate of the whole economy-ecosystem relation: fossil energy and biofuels extraction and use, food and fiber materials, GHGs emissions, ecosystem carbon pools…

GDP Fossil energy Sand, gravel Water Biomass/ Carbon Metal Chemicals Landscapes/ Biodiversity Water Atmosphere/ Climate Biomass/ Carbon Sea TEC Air TEC Sea DMI Carbon TEC Land Biomass/carbon acccounts (agriculture, forestry, …) CO2 DMI Sand/ gravel DMI Water DMI other Water accounts Conventional DMI Total Ecosystem Capacity in ECU Total Material Input Import-Export Decoupling (1) from material/energy inputs Decoupling (2) from environmental impacts Resource efficiency: « 1 »: DMI-Carbon « 2 »: Total Ecosystem Capacity

Thank you! Jean-Louis Weber