Living in a dematerialised world: The slowing growth of resources

Are we reaching max?

New research suggests that we can have economic growth without an endless increase in the resources we pull out of the planet. The signs are already here.

All over the world, people believe the same thing about the planet’s resources: that we must use more of them to keep the economy growing. From Peak Oil projections to warnings that any checks on mining will undermine economic growth, doomsayers rely on the idea that without more “stuff”, we’ll go backwards.

The gloomiest of them fear that at some point, humanity will hit the limits of the earth’s capacity to support further growth and prosperity, giving rise to a dystopian world of ecological decline and violent conflict over access to ever-scarcer resources – George Miller’s Mad Max world made real.

When researchers look more closely, though, they are finding a very different story.

Using fewer resources

Contrary to expectations, the demand for many resources in major economies such as the US, Japan and Europe has plateaued. In some cases, it is actually falling.

Whether it be wood to build and heat houses, oil to fuel cars, nitrogen to fertilise crops, electricity to power cities or cement to pave roads, rich economies such as the US are using fewer resources, even as they continue to grow.

The Organisation for Economic Co-operation and Development (OECD) estimates that the quantity of material resources used and consumed to produce each dollar of global output fell from 1.3kg per US dollar in 1980 to 0.9kg per dollar in 2007 – a 30 per cent drop. Within the G8 economies, where GDP doubled in the 27 years to 2007, consumption of materials barely rose at all.

“Changes in behaviour and technology liberate the environment.” Jesse Ausubel, Rockefeller University

This breaking of the nexus between resources and economic growth is called “decoupling” – or, a little more futuristically, “dematerialisation” – and, according to University of Queensland economist Professor John Quiggin, it is challenging deeply ingrained ideas about economic expansion.

“It is changing the way we think about growth,” he says, pointing to a move away from the “industrial model” of ever-increasing demands on resources to a far more efficient and information-rich economy.

Commodity oddities

Thanks to new technologies - and contrary belief - consumption of commodities such as timber, steel, paper and oil has peaked or is actually declining.Jesse Ausubel, an industrial ecologist at Rockefeller University, has for decades been investigating the way modern societies use resources to operate and expand, and he has no doubt a process of dematerialisation is under way.

The US economy, he says, “no longer advances in tandem with exploitation of land, forests, water and minerals. American use of almost everything except information seems to be peaking, not because resources are exhausted, but because consumers changed consumption and producers changed production. Changes in behaviour and technology liberate the environment.”

In a soon-to-be-published paper, Ausubel and two colleagues, Iddo Wernick and Paul Waggoner, have undertaken a detailed study of the use of 100 commodities in the US between 1900 and 2010.

Their findings are intriguing. They have identified 36 commodities whose use, in absolute terms, has peaked and is declining, including timber, steel, phosphate, paper, aluminium, lead, copper and even plastic.

Even more startling, they argue that demand for electricity, petrol, cropland, water and cement, along with 48 other resources, has peaked and is poised to fall. 

Of all the commodities considered in their survey, Ausubel and his colleagues have identified just 11 whose use is still growing in both relative and absolute terms. As unlikely as it may seem, the most notable of these are chickens, which Ausubel puts down to the great efficiency with which they turn grain into meat. Other commodities still on the growth path include the chemical elements gallium and indium (used to make transistors), semiconductors, LED lights and other electronic parts.

Cynics might argue that this slowdown is temporary and that it will disappear as the effects of the global financial crisis wear off and economies begin growing more quickly. Research by Ausubel and others, though, shows that changes in the resource intensity of production have, in many instances, been underway for a lot longer than that.

In the early 1970s, even as the Club of Rome was issuing its infamous warning that humanity was on track to exhaust the world’s resources within a century, global use of wood for construction and heating was in decline and farming of arable land in the US had peaked.

Fuelling change

Macroeconomist and former Reserve Bank of Australia board member Professor Warwick McKibbin says the oil shock of the early 1970s was a pivotal event, setting off a wave of changes that continue to resonate.

As the oil price surged higher, businesses and consumers searched for other, cheaper sources of energy and better ways to use existing fuel. Drivers demanded smaller cars and more efficient engines, while firms changed the way they operated to reduce their reliance on oil.

As a result, says McKibbin, in the US the link between growth and oil consumption was severed, never to return. For instance, even as the number of cars on US roads has continued to climb, per capita consumption of petrol is 1000kg less than it was in the 1970s, and 500kg lower than in 2000.

A better way

Such a process is not without historical precedent. Through the ages, technological advances have opened the way to much more efficient use of resources. 

Huge numbers of trees were spared the woodcutter’s axe when wooden ships were replaced by ironclads, and large swathes of farmland were freed up from producing fodder for horses with the advent of trains and cars.

More recently, PCs, smartphones and broadband communication have transformed the world again. These incredible technologies rely on a little electricity and a relatively small quantity of common elements such as silicon, aluminium and lithium, plus an even tinier quantity of less common metals and rare earths (which, despite their name, aren’t that rare).

Furthermore, a single smartphone can replace the function of dozens of other devices, including phones, cameras, alarm clocks, calendars, maps, televisions, radios and newspapers. Few other goods make it so obvious that economic growth ultimately relies not on resources but on human ingenuity.

Peak Oil advocates and other groups concerned about a future of diminishing resources are being outflanked by the rapid advances in technology and efficiency, according to Ausubel, who argues that even as the global population surges toward nine billion, it is being outpaced by gains in efficiency.

“There is a race between growth and population and affluence on one side, and improvements in technology, efficiency and changes in consumer behaviour on the other,” he says.

“Many of us would argue that consumer behaviour and technology can progress faster than the pressure of population growth.”

Now the much-hyped arrival of the paperless office may be underway. Figures compiled by the United Nation’s Food and Agriculture Organization show that, after decades of remorseless growth, global production of pulp and paper has levelled off in the past 10 years and has begun to dip.

This has occurred even as the rate of publishing and information growth has spiralled. According to Quiggin, more than a million new books are being published every year, and the volume of information being generated is growing by 50 per cent each year.

Increasingly, this is being produced and consumed electronically – through emails, electronic books, online newspapers and so on. The struggles of Australia Post as it grapples with a dramatic slowdown in the volume of mail being sent through its network are testament to the transformation that’s now happening.

Ausubel believes sharing technologies, such as GoGet and Airbnb, could achieve similar efficiencies in transport and hospitality. Where the average privately owned car in the US is used for about an hour a day, a car-share service means it could be on the road for eight or more hours.

Related: 5 ways your commute will improve by 2020 

The evolution of driverless cars will result in even greater efficiencies, he says – not only are they likely to be more fully utilised, they are less likely to have downtime from getting lost or being involved in accidents.

The price of progress

While technology is providing increasingly effective ways of doing things, the real engine of the transformation to less resource-intensive production is price.

Rather than any single breakthrough innovation, Ausubel sees the move to ever-greater efficiency as the aggregate outcome of myriad decisions being made by businesses to cut costs.

“Broadly speaking, sparing [resources] comes from business owners trying to shave costs here and there,” he says.

“If I can use a bit less material, a bit less land or a bit less labour to make something, my costs can come down a little and my profits can go up.” 

The process is given added impetus by globalisation and the pressures created by competing in an international market.

Importantly, these pressures go both ways, meaning that the drive for greater efficiency is felt not only by producers and consumers in major developed economies, but also by their counterparts in the developing world.

But the suspicion of some is that dematerialisation is primarily a rich-world phenomenon. After all, the rich world is where per capita resource use is greatest and where advances in technology are most readily available.

In 2008, the world’s eight largest economies consumed about a quarter of all the materials used around the world, and the OECD estimates that an average person living in a G8 country consumes about 50kg of materials a day, two-and-a-half times that of people living elsewhere.

The OECD says that although efficiency gains by rich-world businesses and consumers account for most of the decline in their use of commodities, some is due to the fact that more products are being imported from elsewhere, shifting the pressure on resources onto other countries.

Ausubel says the effect should not be overstated and should not obscure the fact that countries such as China and India have access to technologies that will enable them to speed through many of the most resource-intensive stages of development and rapidly catch up to the efficiency of the rich-world producers.

For instance, if China embraces services such as Uber and technologies such as the self-driving car, it might develop a wholly new model of vehicle ownership and usage that avoids many of the inefficiencies that plague private vehicle transport in the West.

Similarly, the advent of 3D printing technology is set to transform established production processes and global trade flows. Production of many goods may become highly decentralised, eliminating the need for large factories and extensive logistics networks.

Politics aside

Given the importance of well-functioning markets to dematerialisation, scholars such as Ausubel, McKibbin and Quiggin are understandably nervous about the potential for governments to interfere and derail the process.

Governments of all political stripes indulge in policies that impede markets and muffle price signals. In the US, Japan and Europe, farmers receive massive subsidies, while in developing countries, governments often subsidise fuel and other basic commodities and slap hefty tariffs on imports.

Yet even with the global population expected to swell another 30 per cent to more than nine billion by the middle of the century, these experts are optimistic that the process of dematerialisation will help curtail humanity’s impact on the environment. 

There are no guarantees we will avert disaster – but it is not inevitable, either.

For the greater good

Because of enormous gains being made in how efficiently resources are used, it appears that tackling climate change by reducing carbon emissions need not come at the expense of material wealth.

The process of dematerialisation could mean that we don’t have to compromise on our prosperous lifestyles in order to protect the environment. 

But macroeconomist Warwick McKibbin warns that, like any change, there will be winners and losers. Just as the advent of the internet has thrown thousands of journalists and printers out of work and disruptive services such as Uber are putting the jobs of taxi drivers at risk, technological innovations that improve efficiency will also threaten livelihoods while creating opportunities. 

McKibbin, who has several decades of experience in public policy, fears that progress toward a more efficient and ecologically friendly future will be hampered by politicians. When change looms, governments have a bad habit of trying to protect existing jobs, thus delaying transformations that may create greater employment and prosperity in the longer term. Instead, McKibbin counsels that they should concentrate on fostering efficiency-enhancing change and providing compensation to those adversely affected.

Hope you like chicken

KFCFor all the fanfare about Wagyu beef and the importance of fish in our diet, the meat of the future increasingly appears to be chicken.

Despite their love of barbecues and spare ribs, American consumers are increasingly munching on drumsticks and chicken nuggets at dinner time.

Of 100 commodities tracked by Rockefeller University industrial ecologist Jesse Ausubel and his colleagues, chicken was one of only 11 whose use was continuing to grow in the US. Drawing on figures compiled by the US Department of Agriculture, they found that the market share of beef and pork has largely plateaued in the past 30 years, while the use of chicken has soared.

“Chickens are winning, not because of KFC but because they are extraordinarily efficient meat machines.” Jesse Ausubel, Rockefeller University

For Ausubel, the reason has little to do with taste and almost everything to do with economics and efficiency.

US farmers have realised that chickens are highly efficient “machines” at converting feed into food – they need less land, less water and less grain. 

“Farmers are not stupid,” says Ausubel. “Chickens are winning, not because of KFC but because they are extraordinarily efficient meat machines.” 

He says fish are even more efficient at producing meat, but farming them is still a relatively underdeveloped industry, and much of the seafood consumed by Americans comes from the wild, which is depleting fish stocks and harming the ecology of the oceans.

Expect to see more chicken on your menu.

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June 2016
June 2016

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