Eco-Economic Decoupling Review: Where to from here?

Eco-economic decoupling (EED) of natural resource use and environmental impacts from economic growth and human well-being is essential in the transition to a sustainable future (IRP, 2019). However, critics insist no change is necessary, disputing a ‘faith-based’ concept as lacking evidence of any meaningful decoupling having been achieved (Barth et al., 2019; Eronen et al., 2020; McAfee, 2019). Conversely, research exists that EED can deliver substantial social and environmental benefits by tackling environmental damage while supporting economic growth and human well-being (United Nations Programme, 2019).

Thesis Statement:

EED is possible but a concerted global effort at government, business, and public levels is essential to achieve the goals required for a sustainable future. Shifting attitudes, uptake in awareness, new measurements and growing innovation will shape continued success.

1. A Collective Approach

Countries have started the necessary changes in policy that impact government and industry practices aimed at decoupling resource consumption and environmental impacts from economic growth (IRP, 2019). Consider, for instance, Germany implemented a programme for the improvement of innovative technologies in biotechnology and sustainable agricultural production aligning domestic action with Europe's 2020 strategy for 'smart, sustainable, and inclusive growth' (KPMG, 2017). Similarly, developing economies like China have implemented a slew of policies to follow circular economy principles such as advanced and applicable technologies for comprehensive utilisation of resources (Berger & Dajian, 2016). Although decoupling is taking place, progress is lagging (Berger & Dalian, 2016; IRP, 2019). However, EED provides scope for more diverse application, such as initiatives related to climate change activities. For example, the Green Economy Initiative (IRP, 2019).

Nevertheless, for continued success further systemic change is required.

Businesses are key enablers in the transition to decoupling and need a decoupled economy for lasting success (UNP, 2019). To illustrate, through smart resource management Natura employs a sustainable business model that promotes biodiversity assets, preserves the amazon forest, and utilises community knowledge. This has generated BRL 1 billion of revenue for their region, provided long-term sustainable employment for thousands, and decreased the risk of deforestation with the goal of sourcing raw materials locally (EMF, 2021).

Similarly, the public can enable change but more initiatives that address issues like rising population demands and consumerism are needed. Cities consume 75% of the world's resources and reassessment of how they are used is critical for sustainability (IRP, 2018). Individualistic consumer culture, including convenience and demand for cheap and affordable goods and the influence of multi-million dollar vested marketing forces, need to change to stave off growing public and corporate-driven consumerism (DeAngelis, 2004; UCTV, 2013). Conversely, such behaviours are often touted as essential competitive advantages for business success (Badhi & Eckhardt, 2015). However, consumption trends counteract these behaviours, for instance, with the reduction in fossil fuels, increase in renewable energy use, carbon offsets, and the "zero waste" movement (McClimon, 2021).

2. Change is Needed

McAfee (2019) argues that growth and environmental sustainability is already happening. Using GDP as a key measurement, he cites that as populations grow, so does prosperity, suggesting no change is needed. Although useful for measuring national income, GDP does not reflect the welfare of a nation as it excludes any consideration for the environment (Green, 2014). Still, countries persist in producing GDP statistics.

McAfee mentions trends in America's agricultural industry since the 1950s which demonstrate decreasing use of fertiliser and water alongside greatly increased crop production. In contrast, increasing environmental and social costs from New Zealand's dairy practices have seen cyclical increases in soil compaction, high nitrate contamination in water supplies, nutrient pollution in waterways, and greenhouse gas emissions (“Dairy farming,” 2017). Current agricultural practices are negatively impacting topsoil and global food production at unsustainable rates, and without topsoil, there is no food (Kopittke et al., 2019).

For the purposes of EED, we need to move away from reliance on GDP and develop more sustainable financing models which include the measurement of factors affecting all stakeholders. For example, the Social Progress Index (SPI) measures 51 indicators categorised under basic human needs, foundations of wellbeing, and opportunity (Green, 2018).

3. Driving Innovation

McAfee (2019) suggests that what is required is not radical change like EED but rather unbridled capitalism which fuels technological innovation. He posits that the digital revolution has afforded us the ability to consume less as it has decreased resource usage while increasing economic growth and human wellbeing. As evidence, vehicles are now lighter and more fuel-efficient, and the smartphone serves functions of multiple traditional products, combining features such as a camera and maps.

Yet, it can be argued that McAfee's research has certain limitations. For instance, he does not factor in the environmental pressures associated with outsourced manufacturing. Outsourcing, although beneficial for individual businesses, has societal implications. It can lead to job losses and reduced salaries in the countries that outsource and intensifies environmental degradation in countries that handle the outsourced tasks, especially those with weaker regulatory frameworks (Choi & Yu, 2018).

Contrasting McAfee's perspective is the viewpoint that capitalism isn't the absolute solution. It falters in the absence of growth, and as Monbiot (2019) states, “perpetual growth on a finite planet leads inexorably to environmental calamity” (p. 1). Therefore, relying predominantly on technological innovations may not be the best approach. For instance, despite breakthroughs in renewable energy sources like wind and solar power, emissions continue to rise at a concerning rate. Addressing broader challenges, such as overconsumption, becomes imperative (Daley et al., 2020).

Conclusion

The progress made towards the ambitions of EED reinforces that decoupling economic growth from resource use and its impact is achievable. However, more research and a fundamental change in global natural resource usage are required. Government policy interventions, environmentally sound technologies, and the use of sustainable financing models combined with improved public-private relationships will support the continued success of EED (Green, 2014; IRP 2019).

References

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