Of mice, men and elephants

In most prevailing sustainability narratives, increased efficiency is a prominent component. It is a prerequisite for the supposed possibility to combine decreasing pressure on natural resources with economic growth. Through improved resource efficiency we can continue to consume as before, without harming the planet, the story goes. That this story is dubious to say the least is ascertained by a massive body of evidence. Rebound effects will in most cases not lead to absolute reduction in resource use. 

In this article, I want to take the discussion a step further by discussing how scale impacts resource use, because I believe this has not been sufficiently considered. In a recent paper by Jason Hickel and Giorgios Kallis write:

“Another fundamental reason why efficiency might be coupled with scale is that as we know from biology and ecology, the metabolism of a larger organism, say an elephant, is more efficient than that of a smaller one, say a mouse, but this is because the elephant is bigger… It is true that relative resource or energy decoupling often accompanies the growth of an economy – but this might simply be an artifact of scale.”

An elephant weighs more than 200 000 times than a mouse, but needs only 10,000 times more food per day.  An elephant’s metabolism is thus some 20 times more efficient.  But clearly the elephant is not better adapted to its environment than the mouse and a mouse is more adaptable to shifting environments than an elephant. In a wider sense, being a mouse is more sustainable than being an elephant, despite its lower metabolic efficiency.

In the following I will continue to discuss energy use. Energy is a powerful proxy for resource use. After all, most energy under human command is used to extract, move or transform resources into things.  There are examples of that the use of one resource shrinks despite increasing use of energy, but mostly that is a result of substitution for another resource. By and large there is strong correlation between energy use and use of other natural resources.

Following the mouse and elephant track, I came across The Metabolism of a Human-Dominated Planet (a chapter in the book Is the Planet Full?) wherein Yadvinder Mahli describes the development of human civilization in the framework of societal metabolism, expressed in energetic terms. While hunter-gatherers used just a tiny fraction of the total biome metabolism, agricultural civilizations used between 3-6 percent of the biome metabolism and biomass still supplied almost all energy use. Modern industrial society expanded the metabolism at least four times per person, mainly through the use of fossil fuels. As the population grew at the same time the total metabolic rate of the modern industrial civilization is now some 50 times bigger than during the agricultural civilization. While the share of biomass in the metabolism has been reduced the total use of biomass has increased eightfold.

In terms of energy use each human now use more energy than an elephant. Of course the energy use is not equal for all humans. There is a huge divide between the poor and the rich countries and people. But there is also a giant divide between different trades and industrial sectors. One single large container ship can use 200 ton of diesel per day. With a crew of twenty, this means that the daily use of fossil fuels (and this emissions) per sailor is more than the yearly use of two average Americans. This is probably the most extreme example, but farmers, loggers, truck drivers, miners and construction workers all command energy resources which are very big compared to averages.

Energy use is also very closely linked to the labor efficiency, often called productivity. In most processes, increased labor efficiency is accomplished through the use of technologies of various sorts. All of them are powered by energy resources, one or the other. In many cases, labor efficiency and resource efficiency go hand in hand, when measured per unit produced. When measured per man-hour, things look a different, however.

The modern farmer is incredibly efficient in man-hours per unit of production. When farms get bigger, tractors and combines also get bigger. They have, normally, much higher labor efficiency than smaller machinery. In addition, they are almost always more energy efficient than earlier smaller models. So by and large they result in “saving energy”. This is correct, but only if you limit the analysis to the use of energy per kg produce or per hectare. Meanwhile, energy and resource use per man-hour has increased tremendously. One person can almost single handedly run a 500 hectares of grain farm, but she will use some 50 tons of diesel per year, roughly the same amount of energy needed to power 25 elephants. In addition she uses energy resources embedded in artificial fertilizers, machinery, buildings, roads etc. Essentially the farmer has gone from being a metabolic horse to fifty metabolic elephants. Apart from energy our 50-elephant farmer also use much more steel, water, concrete, ecosystem services and minerals than her predecessor.

Palm oil plantation Riau, Indonesia, photo:Gunnar Rundgren

Does it matter? It certainly does. This is precisely why scale is inherently linked to resource usage.

To understand how and why, we need to expand our analysis from the single farm to the whole economy wherein our gargantuan elephant farmer is operating. The farmers that were left over in the mechanization of farming are now busy in other trades; some have become sailors on a container ship, others industrial workers, nurses or order pickers at Amazon, cogs in the huge metabolic system which we call society. And in most occupations similar economies of scale apply. Increasing efficiency is harder in services which also mean that they do not demand as many resources as manufacturing, but this is also the reason for why scale isn’t so important in services or why services often are organized in franchises or other kind of networks and in decentralized structures. On a system level, one can’t really separate most services from the flow and production of goods as they are part of those flows, which makes the talk of a service economy into a smokescreen, hiding its material basis.

The net result is that the industrial society will, simultaneously, use less resources per unit produced; produce more units per hour worked; and in total increase resource use as we all become obese elephants. A solid link exist between increased labor productivity, increased scale and total resource use in the economy. That would perhaps be fine if we simultaneously reduced our numbers to those of large mammals. But instead, we are approaching the total number of mice on the planet. And I do believe most people will understand that a landscape can support many more mice than elephants.

Is the Green Deal a card shuffle trick?

(NOTE; this is not an analysis of the US New Green Deal, it is about the "green growth" narrative with the European Green Deal as the point of departure.)

The European Green Deal is a ”growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use.” 

There are reasons to discuss if the vision of the European Green Deal is desirable: why should it be a goal to be “competitive” or ”modern”? But let’s buy into the narrative and ask: is the vision possible? Is ”green growth” as expressed in the Green Deal or the Sustainable Development Goals even possible?  

John George Brown (1831-1913), painterunidentified engraver / Public domain

 

In a recent paper in New Political Economy, Jason Hickel and Giorgios Kallis do a good job in illuminating many of the discussions and concepts involved in the Green Growth debate. Their overall conclusion is that ”green growth theory – in terms of resource use – lacks empirical support”.  They note three caveats of their own conclusions. First, it is possible that ”it is reasonable to expect that green growth could be accomplished at very low GDP growth rates, i.e. less than 1 per cent per year”. Second, conclusions are based on the existing relationship between GDP and material throughput, but one might argue that it is theoretically possible to break the existing relationship between GDP and material throughput altogether. Third, the aggregate material footprint indicator obscures the possibility of shifting from high-impact resources to low-impact resources. Meanwhile, Hickel and Kallis also point out that material footprints needs to be scaled down significantly from present levels; to be truly green, green growth requires not just any degree of absolute decoupling, but rapid absolute decoupling.

In this article, I want to get closer to the ground and discuss the various concepts which are normally associated with green growth. But first let’s clear some definitions.

When I write about “economic growth” I mean that which is measured by the GDP. It is important to understand that the GDP is not a measure of development or quality. If a company makes better products this is not reflected in the GDP; that my computer is (at least) 100 times more powerful than the computer I had 20 years ago has no impact on the GDP as long as the price is the same (the impact on the GDP, if any, comes from any increase in my productivity rather than from the price of the computer). “Development” is also not necessarily a result of economic growth. The world can become a better or worse place to live in with economic growth and it can be a better or worse place to live in without economic growth.

The Gross Domestic Product (GDP)

GDP is the total market value of the goods and services produced within a defined economy in a year. A more elaborated definition is that:

GDP = Consumer spending + Investments + Government spending + Export - Imports

This calculation of the GDP is the expenditure method. One can also calculate the GDP as the sum of the added value of all formal market based economic activities (the output method) or as the sum of income (the income method). In theory, all three measures should give the same result. The added value of an economic activity is the sales price minus the inputs in the production. If you make potato chips, the added value is the price minus the cost of the potatoes, the oil, salt packaging, electricity etc. Profit, depreciation and labor cost are part of the added value.

The work people do at home, e.g. cooking, cleaning, child care or growing potatoes for own consumption is not included in the GDP. Pro bono work, volunteerism or household sales of used products are also not included. Financial profits, e.g. sales of shares or real estate are not part of the GDP, but the fee of agents and others involved in the process will contribute to the GDP. Gifts, taxes or government subsidies and similar transactions are not part of the GDP as they do not create  any new value, but are essentially transfers between various actors.

See more e.g. on Economics Online 

“Green” in the context of green growth mostly refer to less use of natural resources and less pollution. Pollution is hard to measure and it is especially hard to make any kind of composite measurement for it, as we are talking about 350,000 chemical compounds released in modern human civilization. Therefore, the use of materials is more commonly the indicator used to measure the resource intensity of the economy. Domestic material consumption (DMC) is used by the European Union while others prefer the concept of material footprint. The DMC reports the actual amount of material in an economy while the material footprint measure the amount required across the whole supply chain to service final demand. A country can, for instance have a very high DMC because it has a large primary production sector for export or a very low DMC because it has outsourced most of the material intensive industrial process to other countries. The material footprint corrects for both phenomena. 

Apart from an empirical approach to the green growth debate, one can have a theoretical approach. I believe there are theoretical reasons for why green growth actually is impossible, at least in a capitalist market economy. I have written about it earlier and plan to come back to the issue soon again. There is also a middle way to approach the issues and that is to look at what the various concepts and ideas that dominate the green growth agenda will lead to. How will they impact resource use as well as the factors which make up the GDP, i.e. market price, consumed and produced volumes, investments etc? It is only if a concept simultaneously delivers economic growth and lower absolute resource use that it can be considered as a part of a green growth strategy.

Services as green engines for growth

The value added in services is big and in most developed economies its share of the economic value added is two thirds or more. Services do, however, use more resources than most people believe. The travel industry is a very good examples where air travel, hotels and cruise ships all are much more resource demanding than many industries. Other services are actually a direct part of industrial production, mining, forestry or farming. In most industries big chunks of the work have been outsourced to service contractors. When a job is done within a manufacturing firm it is seen as part of manufacturing, but when the same job is bought in externally (i.e. outsourced) it is classified as services. Finally, a big portion of services is trade and distribution and their link to resource use is quite obvious as it is the huge flow of goods that necessitates all those services. After all, it is only because Walmart, Carrefour or Amazon sell a lot of stuff that they can employ a lot of people.

Personal services, such as household cleaning, hairdressing or massage, constitute a very small share of services. It is apparent that such services are dependent on wage inequality as it is basically impossible for most of those who provide personal services to buy personal services themselves. In relation to growth, personal services contributes very little to  economic growth and it is quite easy to realize that there will be no growth in an economy made up of personal services.

One can therefore not claim that services in general are less resource demanding than manufacturing. There is also no relationship between a country’s material footprint and the share of services in the GDP. Services constitute 77 percent of the GDP of the USA and 66 percent of the GDP of Sweden, while the material footprint of the American economy per capita is considerably bigger. In China, services doubled their share in the economy from 1970 to 2013 while its resource use per capita increased nine times.

Reuse, recycle, longer lasting product and circular economy

While a circular economy certainly is commendable, it is very hard to see how it could contribute to economic growth.

If a household sell used products to other households there is no economic growth, and there is no value added, money and goods just change hands. The household selling will perhaps use the money to buy new stuff and the household buying may perhaps use the money “saved” by buying something cheaply to buy other things as well. That may drive growth, but it equally drives resource use. It works quite similarly with longer lasting products. For GDP growth it is negative that consumer products last long. Meanwhile, the money saved will lead to more consumption so the overall effect on resource is neutral at best.

If recycling of materials in the industry is easy and cheap it will reduce the cost of production and if competition works as it should it will also reduce the price and the effect on GDP will be none. The main effect is that consumers get more cash to use for other consumption, which can grow GDP as well as resource use. Meanwhile, the company producing virgin raw materials will close or reduce its production and lay off people, which reduces the GDP unless they get a new job in which they will use other resources. If recycling is complicated and costly, things will play out differently, but also in this case it is likely to either be neutral or negative for economic growth.

A circular economy is needed and desirable and it can surely be profitable for certain economic agents. But there are neither convincing theories nor examples showing how it also can generate or sustain economic growth. Notably, the economy before the industrial revolution and global capitalism was mostly circular and mostly stagnating. It was (linear) resource use, such as mining and colonialism that gave the impetus for growth.

The sharing economy

There is rapid growth in the sharing economy segment. But that rapid growth sis no indicator of that a sharing economy supports economic growth across the economy. If 100 persons refrain from buying a car/an electric drill/a sailboat and instead share it with 10 others, hopefully, the same needs have been fulfilled, but clearly the GDP will be reduced and less people will manufacture these items. It is most likely that they will get new jobs in the production of something else which will both contribute to the GDP – and use more resources. Also from the consumer side the effect is likely the same. People sharing stuff will have more money left to consume more stuff (resources).  

Increased efficiency

The impact of improved resource efficiency is a much discussed theme in the center of the debate on green growth. It is closely linked to discussions on rebound and Jevon’s paradox. In a working market economy, improved resource efficiency will inevitably lead to lower prices.  This will lead to increased consumption of the goods in question or increased consumption of something else, often a combination of both. If people increase consumption linearly, i.e. their spending is direct proportional to the increased efficiency, there will be no saving in resources and if labor productivity remains the same, more people are needed to produce the same value, hardly a recipe for economic growth. If consumption remains the same, people will have more money to spend on other things, i.e. other industries will grow and with that both the GDP and the resources used will grow.

Increasing labor productivity works a bit differently. Also in this case, prices will fall. If consumption increases the resource use will also increase at the same rate and there is growth but no green growth. If the consumption remains the same labor will be redundant, but this also mean that unless they will be long term unemployed they will engage or be engaged in other economic, and resource demanding activities. As a matter of fact, improved labor productivity (as a result of various factors but mostly with use of energy and technology of many kinds) is the primary driver of economic growth. But the mechanism is not that which most people believe. To produce more with the same effort and costs doesn’t create growth per se. It is actually the opposite as the firm’s contribution to the GDP is the value added in the production, and the added value per unit of production falls when labor cost per unit falls. In rare cases, in new industries, improved labor productivity doesn’t lead to falling prices but to higher profits for the firm. This will create growth.  The effect on resource use is uncertain, but most likely the profits will be invested in new production, used for increased consumption of goods or taken by the government as tax. In all three cases resource use will also increase.

The main mechanism by which improved labor productivity creates growth is that labor is freed up for other remunerative activities. Agriculture provides an excellent example of this. Nowadays, in most developed countries only a couple percent of the labor force is engaged in farming, compared to more than 70 % some 100 years ago. Measured as yield per hectare (area use efficiency) farming has increased productivity with a factor of 2-5. Meanwhile labor productivity has increased with a factor of 100, or even much more.  Despite this enormous productivity, the contribution to the GDP (i.e. the value added) from farming has remained more or less the same for a long period as prices have dropped. But all those people who earlier toiled in the fields have been employed in other industries, many of which didn’t even exist hundred years ago.

Digitalization

Because of the rapid increase in digital services and the abnormal valuations of some tech companies, one could be (mis)led to believe that they contribute much to the DGP. But if we talk about the services oriented to consumers that is normally not the case. Those services are normally just an interface between producers and consumers, quite similar to the work of agents or shops. That kind of digitalization save few resources. The main effect is that prices fall as a result of increased price competition, and consumption (resource use) increases. Another form of digitalization is dematerialization, e.g. audiobook instead of a printed book or streamed music instead of CDs. I guess that these services do reduce resource use (although some figures show that streaming takes a huge share of the world’s electricity). But these services also reduce the value considerably. The value of the music industry is now one third of what it was just 20 years ago, despite rapid increase in population.  By definition, this doesn’t contribute to the GDP.

Digitalization within industries has the main effect of saving work and is thus just another version of labor rationalization, which I discussed above.  

Investment in green technologies

This part of the green package is hardest to asses. Clearly there are possibilities to replace some use of fossil fuels with solar panels or shift air traffic to high speed trains. As investments are part of the GDP they will increase the GDP in the short term. They will, however, also considerablyincrease resource use as investment in new infrastructure is among the mostresource demanding economic activities (think cement and steel industries). Their long-term net effect on resource use is quite uncertain.

Summing up

Neither empirical evidence not the application of green technologies or practices discussed in this article support that economic growth can be combined with reduced resource demands. It is therefore irresponsible of institutions like the European Union, United Nations and the World Bank to promote green growth as a pathway for humanity. What is even more disturbing is that the same institutions claim that that economic growth is needed in order to reduce resource consumption and reach other environmental goals.

One can of course argue that the use of the GDP as an indicator is a problem in itself. Many have suggested other sets of indicators or indexes to measure human development (HDI, GPI) etc. I also believe that the GDP is quite inappropriate as a measure for human development. However, as a measurement of the activities within a market economy, the GDP is highly relevant as it measures exactly what the market economy is all about. Any critique against the prominence of the GDP must therefore also extend to a critique of the market economy. It is the market economy that drives growth and not the GDP. But this is the topic of a coming article. 

What a milk carton can tell us

On the package of organic milk from Coop (Sweden) I can read the plastic cap is made out of oil. For some reason they can’t use biodegradeable plastic made from renewable sources. Instead they “support the production of the same quantity of renewable plastic somewhere else”. In addition they claim that they through this can reduce the use of fossil raw materials. This is supposed to make me feel good.  

In this way, the package of milk illuminates two common phenomena in how modern businesses handle, or not, environmental challenges. The first is the notion of “compensation”, i.e. that we can compensate an ill by doing something good somewhere else. The prime example is of course climate compensation or carbon offset, which it often is called. But there are other examples such as habitat banking whereby you pay someone to provide ecosystems or species which you have destroyed. And now plastic compensation. There are many things to say about the notion that you can compensate for destruction. It leads to financialization and privatization of nature (read this excellent article by Sian Sullivan) and it often means that poor peoples’ environment will be used to compensate rich peoples lifestyle (e.g.. when you compensate your flight with tree planting in developing countries).

Instead, let me instead probe the other message of the milk package: That you can “save” or “reduce use” of fossil fuels using renewable plastics. In the case of my organic milk this is greenwashing in its purest shape. Before Coop introduced the plastic cap, the package had no cap, but the carton could easily be opened and closed. By introducing a cap of made out of oil Coop clearly increases the use of fossil fuels.  But they look at the situation differently. They see that they use a fossil cap and by supporting the production of renewable plastic for something else, say the plastic grocery bags, they reduce the use of fossil fuels.

As a matter of fact this way of reasoning is widespread. The US department of energy tells us that buying an electric car will reduce pollution and greenhouse gas emissions. But will it? I will not take up the discussion of how big the carbon footprint of an electric car is. There are things to say, but overall the carbon footprint of driving an electric car is in most cases considerably lower than from a gasoline or diesel car. But even so, can one really claim that you will reduce pollution and climate impact by buying a Tesla or a Nissan Leaf? Well, if you had no car earlier you will undoubtedly increase emission and pollution by buying and driving an electric car. If you have a combustion engine car and sell it to someone else that will drive it, total emissions will also go up compared to the situation before, unless that person already had a car before, which will be scrapped. It is only if your old car is demolished or replace another car that is scrapped that one could, possibly (it also depends on how old your car is and how much you drive), claim that emissions are reduced by you buying an electric car. There is thus a difference between that you will reduce your emissions and that you will reduce emissions.

In addition, the use pattern of an electric car is not the same as a combustion engine car. The marginal cost of driving an electric car will in most countries be considerably lower than driving a combustion engine car. In the case of Sweden the operational cost for driving a combustion engine car is more than five times higher. A person with an electric car is therefore likely to drive a lot more. It also means that the electric car will replace long train rides for families as it is much cheaper. More car traffic means more roads, more garages, more tires and more of everything linked to car travel. It also means less bicycles, less busses and trains, all transport means with much lower emissions than electric cars.

Even on a very basic level, the concept of “saving” or conserving resources is transient or illusive.  Some years ago I visited pastoralists in Northern Uganda where I could observe the construction and use of wood saving stoves. I asked a woman if she through the use of the stove could spend less time collecting firewood every morning. She responded, “Oh, I collect the same amount of wood as before, I just sell the wood I don’t need”. This was ironic as the reason for the introduction of wood-saving stoves was to save trees, not generating income.

If we look at land use for agriculture we can see that arable land per capita went from 0.45 ha to 0.21 hectare from 1961 to 2016. Still food consumption per capita increased from just above 2000 kcal to just below 3000 kcal in the same period. Isn’t this a prime example of how increased efficiency results in considerable savings of a resource, in this case land? At first sight perhaps, but when looking at it more closely it is apparent that the more efficient use of land is coupled to a tremendous increase in the use of energy, fertilizer and water as well as the loss of biodiversity, carbon in soils and environmental, social and economic resilience.

In addition, the increased productivity of labor led to lower prices and increased consumption of crops. Not only humans consume more crops, but more crops are used for animal feed and biofuels. And consumers now buy much more food than they need, resulting in increasing waistlines as well as mountains of food waste. In the end, despite the enormous productivity gain per hectare, more crop land is used today than 1961. This is caused by the double growth: the economic growth and the growth of the global population.  

My milk package, the electric cars, agriculture land use and the wood saving stoves are all examples showing why overall reduction in resources use or emissions (absolute decoupling) through substitution and efficiency is a pipe dream in a growth economy. Those are all real world examples, but one can also ascertain that from a purely theoretical standpoint that total resource use is bound to increase in a growth economy. I have explained this earlier but will have another try in a coming post.

P.s. I have posted little lately on this blog. I do spend a lot more time interacting in the Swedish food and agriculture debate and it simply leaves less time and energy for the global arena. In addition, my partner, Ann-Helen, and I recently launched a book, Kornas planet, and we have been quite busy with the launch of that book (I hope that it will be published in English in the future). Thanks for reading me.