There’s no escape from the ‘economics of enough’

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

We urgently need to cut our over-consumption of natural resources in Europe. [Shutterstock]

If we want to reduce the use of natural resources and energy in absolute terms, a sufficiency strategy is needed to complement the eco-efficiency and circular economy approaches, write Riccardo Mastini and Leida Rijnhout.

Riccardo Mastini and Leida Rijnhout are resource justice and sustainability campaigners.

Tackling over-consumption of natural resources is a huge challenge for the European Commission and the member states. The lifestyle of most Europeans is dependent on vast quantities of resources being imported from the Global South.

This goes together with environmental damage and threats to the livelihoods of local communities, with resulting conflicts. The 2030 Agenda for Sustainable Development aims to find solutions for these challenges and puts equality and justice high on the agenda. Consequently, we urgently need to cut our over-consumption of natural resources in Europe.

Two EU strategies are dealing with this topic: The Raw Material Initiative and the Circular Economy Package. The first one focuses, among others, on having more raw materials mined in Europe itself, for instance via “urban mining”, and to be less dependent on third countries.

Circular Economy, on the other hand, starts with the concept that waste in general, once adequately treated, can become a resource again, thereby forming a loop in the production-consumption chain.

But the core assumption underlying circular economy is the possibility to decouple natural resource use from economic growth. The term ‘decoupling’ defines the trend by which producing consumption goods progressively uses less energy and raw materials because of increases in efficiency and recycling.

According to proponents of this view, there is no irreconcilable clash between economic growth and environmental preservation: you can have your cake and eat it too. There is, however, a distinction between relative and absolute decoupling. Relative decoupling means using fewer natural resources per each economic good produced.

But this trend also drives down costs enabling producers to make, with the same input quantities, a greater amount of goods that are then sold at lower prices to consumers driving up demand. Basically, part or all of the resources saved through increases in efficiency and recycling are cancelled out by economic growth.

On the contrary, absolute decoupling is brought about when ecological resource use declines in absolute terms over time. This situation is essential if economic activity is to remain within ecological limits. But evidence of absolute decoupling happening anywhere in the world is hard to find.

If we want to be realistic, we have to admit that our economy is ‘entropic’ and cannot possibly be circular because energy cannot be recycled and materials only to a certain point.

This also means that we have to accept the concept of ‘limits to growth’. A research published in PLOS One compared historical data and modelled projections to demonstrate that growth in GDP ultimately cannot be decoupled from growth in material and energy use.

It is therefore misleading to develop growth-oriented policy around the expectation that decoupling is possible. But even more worrying, given the hype that the concept of circular economy currently enjoys among EU policymakers, are the findings published in the Journal of Industrial Ecology pointing to the fact that circular economy activities can actually increase overall production, “partially or fully offset[ting] their benefits”.

This suggests that circular economy suffers from a similar ‘rebound effect’ as energy-efficiency strategies. Just as more efficient production processes can lead to lower prices and therefore higher demand for products, more efficient use of materials can make products cheaper and therefore more appealing.

While technical changes succeed in lowering the per-unit impact, overall the environmental benefit is largely offset by economic growth.

So if we want to reduce the use of natural resources and energy in absolute terms, a sufficiency strategy is needed to complement the eco-efficiency and circular economy approaches that so far have been the main focus of EU policy-making on sustainability.

The term ‘sufficiency’ refers to a strategy of introducing hard limitations to unsustainable trends—in particular to over-consumption—plus an emphasis on distributional justice in order for everyone in this world to have an equal access to natural resources and energy to meet their needs.

If we are serious in reverting the current overshoot of several of the planetary boundaries, there is no escape from accepting the ‘economics of enough’, or in more modern parlance, the ‘doughnut economics’.

This implies a new direction for societies, which would organise and live differently from today. The sufficiency transformation would entail that people work fewer hours in paid employment, share jobs and services in many cases, and lead more convivial and less materialistic lifestyles overall.

Although economic activity would be more localised, the state would have an important role both to limit material and energy use and redistribute income and wealth.

An essential element of a sustainable and equitable economic system: if we limit GDP growth, the only way to increase the monetary income for the less well-off in society is through a process of redistribution by reducing the income and capital share of the richest and shifting it to the poorest.

Subscribe to our newsletters