Can we decouple growth from consumption of resources?
Guest post by: James Bradfield Moody
Co-Author, The Sixth Wave: How to Succeed in a Resource-Limited World
Over the last 200 years, since the industrial revolution, we have seen economic growth strongly coupled with the consumption of more and more resources. The more we grew, the more we consumed.
This model works well in a world without limits, with plenty of resources to go around. We’re starting to realise however that these resources, from ores to phosphates and water to topsoil are not as plentiful as we once thought.
For example, a report released at the World Economic Forum last year estimated that we are already consuming 95 per cent of the existing reliable supply of freshwater on the globe, yet also forecasting demand for freshwater to increase by 61 per cent to 2030 in China alone. Something has to give.
And what might give is the model that rewards the conversion of as much resource as possible into outputs to drive growth. Instead we might start to see a model where resource scarcity drives many of our choices. This is a shift from an old mode of operation where we have been harvesting resources that were plentiful and cheap to one where we are managing resources that are scarce and valuable.
In this world we start to decouple economic growth from resource consumption.
But does this mean that we will see any less growth in our economy? Not if we rise to the challenge. Indeed, our recent book ‘The Sixth Wave: How to succeed in a resource-limited world’ identified areas of massive business opportunity for companies and countries that come from focusing on scarcity as an opportunity, not a challenge.
The first place to look for growth without resource consumption is in waste. If you want to succeed in a resource-limited world, find a major source of waste and develop an innovation that either dramatically reduces that waste or does away with it altogether. New and old businesses are extracting methane from landfill to generate electricity, turning organic waste from supermarkets into compost or minimising heat and light waste from houses and office buildings.
Many companies are also finding business models that take waste and turn it into something productive, such as the Canadian Brewery that found it could use its grain waste to grow Shitake mushrooms. Car share businesses are finding that as many as 10 families are sharing a single car, making much more use out of a single capital asset.
The second big idea for separating growth from resource consumption is this: Sell the service, not the product. Companies and nations are learning that the best way to create value without consuming resources is through services, which has far reaching implications for the world economy, the internet and the way of life as we know it. Do you want a car or do you want mobility? Perhaps a car share service might be good for you. Do you want energy or do you want heat and light? Woking Borough Council in the UK has found a way to sell ‘heat’ to households and then works out how to deliver that heat through as little energy as possible. Businesses that sell services quickly find that it is in everyone’s interest to deliver the service with the least consumption possible.
With more value in monitoring our natural resources, more and more devices will emerge that connect the digital and the natural worlds. Think of this as having absolutely everything around you connected to the net (you already have your digital analogue – the mobile phone). The whole planet and all of its natural resources will be measured and monitored to the point that everything in the natural world will one day have a digital counterpart, and many companies will emerge to manage and take advantage of this rich source of information.
Put these together and you get a fourth idea: Information is global, consumption is local. Reducing the consumption of natural resources will drive everything to do with natural resources to become more local, while services that don’t consume resources will be truly global endeavours. Energy production will be distributed and localised and resources will be recycled as close as possible to the point of consumption.
If we do decouple resources from growth, what will our world look like? It will be a world where nothing is wasted and everything has a value. It will be a world in which we don’t think so often in terms of ‘products’, but of ‘services’, and a world where resources are mapped and measured to a degree never before seen. We still enjoy the quality of life that we expect, but we have changed our business models and incentive structures to reward what we really value and get rid of everything else.
Dr James Bradfield Moody (@jamesbmoody) is Executive Director of Development at CSIRO and co-author of The Sixth Wave; How to succeed in a resource-limited world (www.sixthwave.org) with Bianca Nogrady (@SixthWaveBook).