Declaration of the World Resources Forum - Sept. 16, 2009

Resource Governance –

Managing Growing Demands for Material on a Finite Planet


Preamble

The recent financial crisis has dramatically shown how flimsy the banking and investment institutions are that were supposed to be so robust, and how vulnerable they are to false expectations of continued rapid growth and consequent over-exploitation of the monetary and fiscal arrangements that serve as surrogates for the real economy.

What is true of the economic system is also true of the ecosystem. Beyond a critical threshold, the services that the biosphere has evolved and provided over millions of years can breakdown with little warning and with much loss to human, social and economic values.

The underlying deficiencies that can cause failure or collapse of ecosystems are much the same as for economic systems: short term profit maximization, toxic by-products, wrong pricing signals, and the failure by governments to implement precautionary policies because of insufficient controls and inadequate early warning systems. The surprise element is enhanced by the absence of proper accounting methods and the scarcity of requisite skills in systems analysis and management.

The extent to which the economy and material wealth can grow are constrained by the limits set by the Earth’s resource endowments. Technology and innovation can in some cases extend these limits, but rarely by very much.

We, the supporters of this Declaration, strongly believe that economic stability in our finite world depends on how quickly we can introduce low impact production systems that can satisfy human needs and bring quality of life to all people.

Traditional environmental technologies are no longer enough. Decoupling the meeting of human needs from the use of nature’s resources will require radically new infrastructures, goods, services, processes, systems and business models. While some changes in lifestyle, consumption patterns and production systems will certainly be necessary, it is technically possible to achieve this without abandoning the things that we value most.

It is now widely accepted that wellbeing is more than material consumption. Human fulfillment includes factors such as education, health, safety, freedom from violence, environmental quality, social embeddedness, leisure, and equity. Despite huge technological progress, many aspects of human wellbeing have not increased in industrialized countries since the mid 1970s; some are even declining.

We call for a new global strategy for governing the use of natural resources that generates fair access to them for present needs while maintaining their availability for future generations. By combining efficiency and resource productivity targets with sufficiency norms evolved through participative mechanisms, it should be possible to avoid the traditional type of growth rebound effect sometimes experienced.

 

Alarming Signs

Rising global over-use of natural resources (metal ores, fossil energy carriers, biomass, non-metallic minerals, water, and land surface) is beginning to affect the life sustaining ecosystemic services of the earth, which are a prerequisite for human life, and are not replaceable by technical means. Climate change, widespread water shortages, desertification, massive erosion and increasing natural disasters show that several of the environment’s safety thresholds have already been surpassed. And yet, only some 20 percent of humankind enjoy the full benefits of the mainstream economic model, while all people - in particular the poor - have begun to suffer the consequences of its flaws.

There is observational evidence from all continents - and most oceans - that natural systems are being affected by regional climate changes (IPCC 2007). Climate change is only one example demonstrating how inordinate resource flow (in this case of fossil fuels transformed to CO2) can affect human quality of life on earth. Other alarming signs are the loss of the global forest area, which shrank at an annual rate of 0.2 percent between 1990 and 2005 (UNEP 2007) and species extinction rates increasing 50 to 500 times the natural rate (World Watch Institute 2008).

To some degree, different world regions face specific problems resulting from global over-use of natural resources (UNEP 2007): In Africa, land degradation is the main issue of concern; in Asia and the Pacific urban air quality, fresh water stresses, degraded ecosystems, agricultural land use, and increased waste are priority issues; in Europe the still increasing emission of green house gases, biodiversity loss, land-use change, and fresh water stresses are issues of concern. In Latin America and the Caribbean, growing cities create threats to biodiversity and ecosystems, degraded coasts and polluted seas are threatening signs, as is regional vulnerability to climate change.

North America, consuming over 24 % of global primary energy with 5.1% of world population, faces urban sprawl and fast growing freshwater stresses. In West Asia, land degradation, freshwater stresses, degradation of coastal and marine eco-systems, urban management, peace and security are priority issues.

Global resource extraction grew from 40 billion tons in 1980 to about 55 billion tons in 2002 and is expected to grow to 80 billion tons by 2020 (OECD, 2008). If one also takes into account the materials displaced from their natural settings, but not used to create commercial value, this number more than doubles. We should seek to stabilize resource use at 6 to 10 tons per capita per year by 2050 with reductions at the top of global society and catch-up from the bottom. The range of 6 to 10 tons is based on present best estimates and based on the current total resource use divided by the world population. Considerable research has to be invested in order to arrive at more specific policy options.

If we continue with business as usual, development in industrializing parts of the world and population growth will lead to a projected two-and-a-half fold increase in annual global resource extraction with corresponding serious reactions of the ecosphere.

 

Respecting Physical Limits

Satisfying the needs of a growing world population within physical limits is a challenge to economic and environmental policymakers. Globalizing the traditional model of economic growth is rapidly increasing the extraction of limited natural resources, thus augmenting ecological disruption. Current economic and environmental policies have not stopped these trends. As a consequence, we are losing ever more the freedom to shape the future of humanity.

Moreover, key technologies that we will need for the transition to a more sustainable economy depend on chemical elements that are currently being dissipated regardless of their geochemical scarcity. These include antimony, copper, gallium, germanium, indium, lithium, niobium, platinum, ruthenium, selenium, and tellurium, which are particularly important for emerging energy supply technologies as well as for information and communication technologies. Technology cannot replace the life-sustaining services of nature.

However, we can improve the ways in which we make use of these services, creating quality of life for more people with less strain on nature. Eco-Innovation is capable of achieving this goal without loss of end-use satisfaction, but only if economic incentives support such a development (gws Discussion Paper 2009/5 of Prof B. Meyer et al, ISSN 1867-7290; Europe Innova 2008).

Accepting this challenge means that the global average of per capita yearly material resource use should by no means be allowed to rise any further. This means that a process of convergence needs to be initiated in which the wealthy industrialized countries substantially reduce their resource consumption in order to leave space for others to improve their standard of living. Developing countries should not be encouraged to invest in expensive infrastructure without a future, but be supported in leapfrogging the wasteful modes of production and consumption in which the wealthy countries have presently locked in.

 

The Political Challenge

Traditionally environmental policies have focused on specific problems. In certain respects this approach has been quite successful. For instance, this strategy has cleaned up water pollution in rich countries, taken dangerous goods off the market, recycled certain products, and stopped ozone depletion.

But these policies are toothless against the problem of exploding global resource consumption. What we urgently need is economic policies that make the global economic system take into account the inherent limitations and the value of the cost-free life sustaining services of nature. The politically defined economic framework conditions have to be adjusted to protect the global ecosystems, and to preserve resources for future generations – while lowering the cost of labor.

These conditions must include incentives to make planned transitions now, rather than being forced upon us by catastrophes. Major increases in resource productivity would occur if all relevant markets operated perfectly instead of being blind to the environmental costs of growth, and if there were no barriers to entrepreneurial innovation.

However the markets are not operating perfectly, market prices are wrong due to discounted externalities, relevant information is not available to the actors, and innovation barriers exist. No incentives or policies currently exist for a sufficiently resource efficient economy. Adjusting the fiscal framework is therefore the most fundamental and urgent pre-requisite for approaching a sustainable future. Subsidies that increase the consumption of natural resources must be eliminated, and economic instruments should be deployed such as a shift away from overheads on labor and toward taxing raw materials - with the side effect of creating new jobs and redistributing income to developing countries where many of the resources come from - and market creation policies including tradable permits. Instead of applying value added taxation to final goods it may be more effective to tax natural resources at the point at which they are removed from nature or where they enter the industrial metabolism.

However, because of market failures, economic instruments may not work in all cases. Therefore other instruments and measures should be considered too - such as information and coordination instruments, and command and control mechanisms as, for instance, adapting standards. The choice of policy options should depend on the relative desirability of dematerializing goods and services while maximizing employment opportunities, improving international equity and per capita welfare.

 

Call for Action

For the reasons stated above we urge political leaders to adopt a strategy of resource governance consisting of the following elements:

  1. Seek international agreements on world-wide per-capita targets for natural resource extraction and consumption to be effective by 2015 at the latest, the main objective being to bring about an absolute decoupling between economic development and resource use, the implication being less resource inputs for more value.
     

  2.  Introduce effective policy measures to greatly enhance resource productivity as well as curbing demand over time, in the form of standards, higher taxes on resource use with the possibility of reduced taxes elsewhere, cap and trade mechanisms, etc.
     

  3. Introduce with urgency resource use targets in areas of particular concern – like fresh water, marine resources and tropical forests – to put a halt to the rapid destruction of ecosystem services and biodiversity.
     

  4. Focus research and development on the goal of increasing resource productivity. The resulting innovation will create space for economic and social development. As a side-effect, national economies and cities will become less dependent on resource imports, in particular fossil energy carriers.
     

  5. Seek societal consensus by 2012 on ecological and economic indicators (on micro-, meso-, and macro-levels) in tune with the laws of nature and beyond GDP. These indicators must be applied by industry and governments when reporting on the progress attained toward sustainability, and they must become the subject of learning processes at all levels of education.
     

  6. Reshape the framework conditions for the economy to account for the scarcity of natural resources and recognize the need for their extraction and sale to promote the environmental sustainable development of the countries in which they take place.
     

  7. Seek dialog with the business community to help redesign business models where revenues would be increasingly derived from quality of services rather than by selling material products.
     

  8. Initiate process to rethink lifestyles and help develop consumption patterns based on sufficiency and careful use of natural resources. Traditional knowledge, wisdom and spirituality should inspire help frame education and policies.
     

  9. Strengthen education to increase awareness for resource limits, especially among economists, and foster the ability of decision makers to analyze long-term and systemic trends and to implement sustainability-driven innovation.

 

References

 

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