Decoupling Demystified

by Joshua on February 3, 2010 · 15 comments

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Can We Separate GDP Growth And Ecological Limits?

Next time you run into a classically trained economist (happens all the time, right?) start talking with him/her about ecological limits. They might squirm a little, but probably respond as trained: with some zombie-like responses about “decoupling.” What is decoupling? Basically, it’s a concept of being able to continue growing economic output without a corresponding increase in environmental impact.

The overall idea is that improvements in production efficiency allow you to make more with less. Theoretically we can increase our efficiency and make more stuff using the same amount of resources and/or generating the same amount of pollution.

Applying this concept to renewable resources would be incredibly beneficial. We could use wood, for instance, in a more sustainable fashion if we decoupled the economic growth from resource use and did so under the ecological limits of forest regeneration.

As you might have already guessed, there are quite a few flaws with this concept. You might have also noticed that it seems at first glance to have a broad definition. In general, however, there are two types of economic decoupling: relative and absolute. The first type appears to have a cursory chance of working, the latter is fundamentally impossible.

Relative decoupling refers to a decrease in environmental intensity per unit of economic output. This means the impacts on resources decline relative to GDP, but they don’t decline completely – just grow slower than GDP. Absolute decouple occurs when ecological intensity declines in “absolute terms,” or an overall decrease as GDP increases.

Relative Decoupling

Inputs in production (aka, resources and natural capital) are costs to the producer. So it seems reasonable to argue that in a free market economy producers will push to reduce costs by increasing their efficiency. This leads one to believe that over time we should use less materials to produce more – relative decoupling. One example of this is found in the amount of energy needed to produce each unit of economic output, which globally has fallen over the last 50 years.

However, this tread is only apparent in some developed nations. Outside of the US and Europe this number has been less consistent, in many cases increasing. This makes it difficult to say for certain that a free-market, growth-centered economy will lead to reduced energy intensity, or relative decoupling.

As one might think, as the overall energy intensity of the global economy has decreased, so has our emission intensity (remember, this is per unit or per dollar of GDP). Unfortunately, this tread has begun to falter, and in the last decade has been slowly increasing. This is disconcerting to those fearful of continuing economic growth in a finite world. As Tim Jackson puts it in his book Prosperity Without Growth,

“For decoupling to offer a way out of the dilemma of growth, resource efficiencies must increase at least as fast as economic output does. And they must continue to improve as the economy grows, if overall burdens aren’t to increase. To achieve this more difficult task, we need to demonstrate absolute decoupling. Evidence of this is much harder to find.”

Absolute Decoupling

In the face of the overall decrease of energy intensity, we must remember that our total economic output has increased – the growth economy is the whole reason this blog exists! Taking the example of emissions we can see that in general our emission intensity per unit has decreased over the last half century, yet our total emissions have steadily increased. Even in the face of arguable relative decoupling, our growth has seriously outpaced improvements in efficiency.

Today’s global emissions are 40 percent higher than the Kyoto base year, 1990, and 80 percent higher than 1970 levels. While we claim emission cuts in some developed nations, these results are deceiving at best. The decrease in emissions is always connected to simply moving production out of the country, along with the pollution it generates. European countries that have decreased their emissions have failed to account for increased imports and the carbon emissions associated with them.

This leads us to a critical point: the important thing is the global statistic. Worldwide our resource use has increased. In the case of cement production it has doubled; structural metal extraction is increasing quicker than GDP. While some argue that developed economies make improvements in air pollutants like sulphur dioxide, they seem ambivalent to other indicators like CO2 emissions or species lost.

The overwhelming truth is that for every unit of growth we use more resources and create more waste – decoupling is not happening, nor does it appear to have any hope of ever happening.

Something Doesn’t Add Up

Economic equations can be a bit of a drag, but there are some that don’t completely suck. One in particular has been around for 40 years, developed by Paul Ehrlich and John Holdren. The Ehrlich-Holdren Equation states that impact of human activity is the product of three factors: population, affluence, and a technology factor (the impact per dollar spent). It’s a simple equation: I = P*A*T.

In order to sustain a growing population and growing affluence (economy) we force ourselves to rely on decreasing T, our impact per dollar (or increasing our efficiency). This is where the “simple equation” gets tough. In order to reduce, for instance, our carbon emissions to stabilize atmospheric CO2 at 450ppm (a weak target) with a growing population and economy we’d need to make some seriously unprecedented technological improvements to efficiency.

Assuming population growth slows, and the economy only grows at a low rate, we’d still need to improve efficiency some ten times faster than we have been doing in the past. That is a low-end estimate, if population and/or economic growth expand faster than expected we could need up to 21-times current efficiency improvement rates – or more. Unfortunately, the latter is more likely necessary as there is virtually no political will behind stabilizing population or economy for the most part.

Here’s another crux to the idea that we can continue to improve efficiency and save our precious growth economy: the second law of thermodynamics. We are physically constrained by the fact that efficiency cannot increase forever. We can only get so efficient. Even if you can get past the historical precedence showing efficiency can’t keep up, and you are willing put all your eggs in the basket of a miraculous technological increase, you still will have to face the  laws of nature in the end.

Absolute decoupling is not supported by the history. Even relative decoupling is founded in false statistics. Without decoupling growth from environmental impact we will be forced to face the limits of our finite planet. If we fail to adjust our course, the Earth will take care of it for us. And no one will like that outcome, so let’s try an make a peaceful, amiable transition to a stable economy and sustainable society.

The answer is to seek out a society with a stable population, a stable economy, and increasing technological efficiency (as far as we can push it) to decrease environmental impacts. This will make a better world for those living in it. We can pursue what Tim Jackson calls “a credible vision of what it means for human society to flourish in the context of ecological limits.”

A major source for this post was Tim Jackson’s amazing work Prosperity Without Growth. I highly recommend reading it. If you don’t have time for 215 pages, then download the free report. If you’re attention span is even shorter at least read the summary of the report!

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