What do resource productivities really measure? Julia K. Steinberger, Fridolin Krausmann Marina Fischer-Kowalski, Nina Eisenmenger International Society.

What do resource productivities

really measure?

Julia K. Steinberger, Fridolin KrausmannMarina Fischer-Kowalski, Nina Eisenmenger

International Society of Ecological Economics

Oldenburg/Bremen, GermanyAugust 22-25 2010

2

What is resource productivity?

better is higher input Resource

output GDPtyProductivi :

EconomyOil

EconomyOil

3

Policy goals for resource productivity: European Union

EU Thematic Strategy on the Sustainable Use of Natural Resources, 2005.

4

Policy goals for resource productivity: Japan

Japanese 3R policies based on Material Flow Analysis

Takiguchi and Takemoto, 2008

5

Resource productivity and income

Material Productivity Energy Productivity

International data, year 2000 Domestic Material Consumption: Steinberger et al. 2010

Domestic Energy Consumption: Krausmann et al 2008

Market Exchange Rate GDP: World Bank 2007

R2 = 0.84 R2 = 0.77

Resource productivity:

measure of sustainability –

or higher incomes?

6

Analytic framework: 3 extensive and 3 intensive variables

BrickTestament.com

Oil

2. GDP3. Resources (Energy and materials)

1. Consumption = Resource / Population

2. Income = GDP / Population

3. Productivity = Income / Consumption

Oil

3. Productivity = GDP / Resource

1. Population

= ?

7

Balancing income & consumption: income elasticity

Income elasticity = b

bIncomeanConsumptio

When income increases by 1%, consumption increases by b%

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Elasticity & the Environmental Kuznets Curve

Resource consumption

Income

b > 0

b ~ 0

b < 0

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Consumption, income and elasticity

Material Consumption Energy Consumption

INELASTIC

Proportional

Somewhat inelastic

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Income elasticity vs. resource productivitybIncomea nConsumptio Income elasticity

of consumption

We find that ... productivity depends on income through b!

We now know:

b)(1b

Incomea

1

Incomea

Income

nConsumptio

Income

use Resource

GDP tyProductivi

Which means that if we do some math ...

Oil

11

Oil

Balancing productivity & income: through income elasticity!

dIncomectyProductivi

= 1-b

When income increases by 1%, productivity increases by (1-b)%

d

12

Is productivity-income-elasticity relation real?

Energy ProductivityMaterial Productivity

b = 0.9

b = 0.1

b = 0.4

=> d = 1 - b

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Relation is real: what does it mean?

Productivity of material or energy resource use

1. Behaves like an aggregate: between inelastic biomass and more

elastic fossil fuels, depending on their shares in the aggregate.

2. If there is a significant inelastic share, productivity will increase with

income.

Aggregate productivity does not measure “sustainable” or

“efficient” economies: it measures high income economies.

Using resource productivity as a policy goal is (generally)

rewarding business-as-usual, and does not imply

reductions in resource use.

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Possibility: income-corrected productivity

15

Productivity and dematerialization in the EU-27

Gro

wth

in

pro

du

ctiv

ity

Growth in GDP

Absolute dematerialization

Relativedematerialization

No decoupling at all

Absolute dematerialization

Relativedematerialization

No decoupling at all

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Conclusions

• Resource productivity depends on the relation between

income and consumption: income elasticity of consumption.

• Dematerialization requires increasing productivity faster than

economic growth.

• Which is equivalent to requiring reduced consumption at

higher incomes ....

• ... in other words, requiring negative income elasticity.

• Rather than a policy focus on productivity increases, which

encourages business-as-usual, the focus should be directly

on reducing consumption.

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Thanks for your attention!

• Any questions?