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## Stockholm Environment Institute

Showing the strain, by Brian Smithson / CC BY 2.0

# Decoupling: A closer look

This article examines what it takes to decouple economic growth from resource use and negative environmental impacts, including changes needed in public policy and business practices as well as available technologies and techniques.

The rapid economic and population growth of the 20th century was enabled by a roughly eightfold increase in the extraction and consumption of natural resources, with substantial impacts on the environment. Yet over time, economic growth has outpaced resource use: Globally, about 25% less material input was required to produce one unit of real GDP in 2002 compared with 1980.

Accelerating this “decoupling” of economic growth and environmental impacts is crucial for sustainability. The International Resource Panel (IRP) set out to define the key issues and challenges, drawing on peer-reviewed research and experience at multiple levels. It found decoupling is feasible and is already happening, but further innovations are urgently needed to better support sustainable development. More transformative change is required to meet the size of the challenge.

The IRP focused on two dimensions of “decoupling”: resource decoupling, to reduce the resource use needed per unit of economic activity, and impact decoupling, to maintain economic output while reducing negative environmental impacts. In both cases, relative decoupling of resources or impacts means the growth rate of the economy outpaces that of resource use or environmental impacts – so resource productivity is rising. Absolute reductions of resource use are achieved when resource productivity grows faster than the economy.

The IRP examined four classes of material resources: construction minerals, ores and industrial minerals, fossil fuels, and biomass. Together, they are extracted at a rate of nearly 60 billion tonnes per year, and extraction rates are steadily increasing. Decoupling will require significant changes in government policies, corporate behaviour, and consumption patterns by the public. Ideally, every stage of products’ life cycle should be accompanied by appropriate policies promoting decoupling. Some share of the resource efficiency gains will be offset by increased consumption: the “rebound effect”.

## Decoupling technologies, opportunities and policy options

Current patterns of resource use are leading to soaring resource prices, increased price volatility and resource scarcity – not to mention environmental impacts. For example, since 2000, metal prices have risen by 176%, and energy, by an average of 260%. Food prices rose by 22.4% from 2000 to 2012, compared with 7.7% from 1990 to 1999. Some project a potential rise of 120–180% by 2030.

But many decoupling technologies and techniques that could reverse this trend are already available. Gains of 60–80% in energy and water efficiency are technically possible and commercially viable in sectors such as construction, agriculture and industry. Farmers in several countries have shown that sub-surface drip irrigation systems can reduce water withdrawals (not necessarily water consumption) by 30–70% and raise crop yields by 20–90%. Overall, decoupling technologies could save US$2.9–$3.7 trillion each year until 2030.

Some decoupling occurs “naturally” as countries’ economies mature, overcome inefficient techniques, and also shift from extraction- and production-based economies towards service industries. Countries can also shift the burden of resource-intensive activities to others, importing materials and goods. Genuine decoupling, however, involves a paradigm shift in development, underpinned by technological and institutional innovations, resource-efficient infrastructure, and changes in attitudes and behaviours.

Decoupling can be hindered by “lock-in” caused by past policy decisions and biases against innovation in resource productivity. Developing countries may have a relative advantage in this aspect because they are not yet so strongly locked into by resource-intensive consumption and productions patterns.

Policy-makers wishing to promote decoupling can find examples of successful approaches taken around the world. One approach, for example, is to use taxation or subsidy reduction to move resource prices upwards in line with documented increases in resource productivity. Recycling revenues back into the economy can accelerate progress. There is some risk, however, that industries may just give up or emigrate in response to strong price signals. This can be addressed by steadily increasing the price signal as resource productivity rises.

#### Sources:

International Resource Panel (2011). Decoupling Natural Resource Use and Environmental Impacts from Economic Growth. United Nations Environment Programme, Paris.

International Resource Panel (2014). Decoupling 2: Technologies, Opportunities and Policy Options. United Nations Environment Programme, Paris.