A Less Consumptive Economy

8/14/2019 A Less Consumptive Economy

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State of the World 2004

Moving Toward aLess Consumptive

EconomyMichael Renner


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Moving Toward a LessConsumptive Economy

Overview:1. Consumption as a Way of Life

2. Government Toolbox

3. Lean and Clean

4. Take It Back!

5. Rethinking Products andServices

6. Public Consumption andSustainable Credit

7. Escaping the Work-and-SpendTrap

8. New Dynamics and Values


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Consumption as a Way of Life

Our enormously productive economy

demands that we make consumption a

way of life We need things consumed,

burned up, worn out, replaced, and

discarded at an ever-increasing rate

- U.S. marketing analystVictor Lebow, in 1950


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Modern economies can produce huge quantities ofgoods at very low cost, BUT

- cheap raw materials do not reflect true cost of

extracting resources (fuels, minerals, timber, etc.)

- workers in developing world are paid extremelylow wages that have fallen below subsistence


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Global consumer class consists of1.7 billion

people and growing

Planet cannot bear the burden ofeveryone in the

developing world owning as many consumer

goods as Americans, Europeans or Japanese


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Current model ofendless economicgrowth driven by unbridled consumption

not sustainable

Mass-production, mass-consumption, andmass-disposal inevitably lead to

- depletion of resources

- spreading of dangerous

pollutants

- undermining ofecosystems

- disruption of planets climaticbalance


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Governments Toolbox

Governments can make use of a number of tools tofacilitate the transition

To achieve sustainability, environmentalprotection, and social equity, we must movetoward a less consumptive economy


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Governments Toolbox

1) Subsidy phaseouts- Government subsidies allow the prices of resources

to be far lower than they would otherwise be,encouraging greater consumption

Estimates of Global Environmentally Harmful Subsidies

0 100 200 300 400 500

Road transportation

Agriculture

Fossil fuels, Nuclear energyWater

Fisheries

Forestry

Billion Dollars

260

10050

25

14

Source: Myers and Kent (2001)

Total: $849 billion

400


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Governments Toolbox

Destructive subsidies should be phased outand a portion of these funds should be shifted to

- renewable energy

- efficiency technologies

- clean-production methods

- public transit


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Governments Toolbox

2) Environmental tax shifting

- By taxing carbon emissions, nonrenewableenergy, virgin materials, landfills, and other forms

ofwaste and pollution, market prices wouldreflect the full environmental costs ofeconomic activities


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Governments Toolbox

Revenues from green taxes could lighten the taxburden now falling on labour, encouraging job creation

0

100

200

300

1980 1990 2001

% of all taxes

and social

contributions

Environmental Tax Revenue, EU

Billion

Euros

237.7

Year

130.4

54.6

6.5 %

6.2 %

5.8 %

Source: OECD


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Governments Toolbox

3) Procurement

- From the federal to the local level,governments in industrial countriesspend trillions of dollars on

public purchases every year

- By buying environmentally preferableproducts, governments can influence

- how products are designed

- how efficiently they function

- how long they last

- whether they are handled responsibly at the

end of their useful lives


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Governments Toolbox

4) Product Standards

- Governments can impose national standards tosave energy and water, such as household

appliance efficiency programs

- These regulations requiremanufacturers to meet

minimum requirements


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Governments Toolbox

5) Ecolabeling Programs

- Ecolabels provide consumers with the requisiteinformation to make responsible purchasingdecisions

- Labeling schemes have been developed for manyproducts, including appliances, electricity, wood,and agricultural products

- Ecolabels encourage manufacturers to design andmarket more eco-friendly products


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Lean and Clean

Industrial economies mobilize enormousquantities of fuels, metals, minerals, constructionmaterials, and forestry and agricultural rawmaterials

Most material flows never actually pass throughthe hands of any consumer and serve no purposewhatsoever

These hidden flows include

- waste materials from mining andother industries

- dredging materials

- carbon dioxide and other emissions


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Lean and Clean

Given broadly comparable living standards betweenthe U.S., Germany, and Japan, the U.S. economy

could stand to be leaner

United States Germany Japan

Tons

Material Requirements Per Person (1996)

62

30

10

86

43

21

Domestic output

for consumption

Hidden Flows

Source: Matthews et al. (2000)

0

20

40

60

80

100


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Lean and Clean

To shrink hidden flows, destructive activities need tobe downsized by

- improving energy and materials efficiency

- boosting recycling and reuse

- lengthening the useful lifetime of products

Another approach is to reduce the environmentalimpact of goods and services delivered to

consumers


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Reducing the EnvironmentalImpact of Products

Dematerialization- Reducing the amount of rawmaterials needed to createproducts (i.e., lighter cars, thinner

paper) and cutting the amount ofenergy needed to operate them

- Reducing the reliance on toxicmaterials in manufacturing,preventing air and water pollution, aavoiding hazardous waste

generation

Clean Production


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Reducing the EnvironmentalImpact of Products

Zero-waste closed-loop systems- Conventional system is cradle-to-grave: after

raw materials are extracted and processed, leftoversubstances become unwanted waste

- Alternative system is cradle-to-cradle: thebyproducts and waste from one factory become the

feedstock of another

- Modeled after the regenerative cycles of nature,

cradle-to-cradle materials circulate in closed-loopcycles, providing nutrients for nature or industry


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Take It Back!

Extended Producer Responsibility (EPR) Laws

- Require companies to take back productsafter their useful life

- The goal is to induce manufacturers to

eliminate unnecessary parts

forgo unneeded packaging

design products that can easilybe disassembled, recycled,

remanufactured, or reused


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Take It Back!

Several countries in Europe, Asia, and Latin Americahave implemented EPR legislation for a wide rangeof products, including

- packaging

- electric and electronic equipment

- vehicles

- tires

- batteries

- office machinery

hi ki d


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Rethinking Productsand Services

Many consumer products are intended to bethrowaways repair and replacement of parts isoften impossible

Merchandise should be designed and manufactured

to be durable, repairable, and upgradeable

By working to extend usefulproduct life, companies cansqueeze better performance out of

the resources embedded in theirgoods

R hi ki P d


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Recycling and remanufacturingkeep materials outof landfills and incinerators, and save energy

Energy Savings Gained by Switching from

Primary Production to Secondary Materials

Aluminum

Copper

Plastics

Steel

Lead

Paper

Source: Bureau of International RecyclingPercent Savings

0 20 40 60 80 100

95%

85%

80%

74%

65%

64%

R thi ki P d t


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A new business model: quality retail

Instead of merely selling goods, manufacturerswould retain ownership, and lease or rentproducts

Manufacturers would remain responsible for theirproducts and provide service to their customersby advising them on

- upkeep of products- how to extend usefulness with the least amountof energy and materials use

- upgrades and other changes

P bli C ti d


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Public Consumption andSustainable Credit

Improving consumption patterns is not enough,moderation in overall consumption is required

Several measures can be taken to discourageexcessive consumption

R d i E i


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Reducing ExcessiveConsumption

Overcoming Infrastructure of Consumption

- current infrastructure makesenvironmental choices difficult, ifnot impossible (e.g., sprawling,car-oriented settlement patterns

discourage walking or biking)

Public vs Private Consumption- organized sharing reducesmultiplication of goods on a grandscale (i.e., car-sharing programs,

community tool-sharingarrangements)

R d i E i


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Reducing ExcessiveConsumption

Tackling Consumer Credit- advertising and the easy availability

of credit cards compel people tomake purchases beyond their means

- U.S. consumers debts are nowgrowing twice as fast as their incomes

Feebates

- governments could offer taxrebates for environmentally- benignproducts, while taxing those thatfall below standards$

E i th


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Escaping theWork-and-Spend Trap

Greater disposable income translates into greaterconsumer purchases

Benefits associated with reducing work hours,and trading income for time:

- increase in quality of life

- creation of more jobs

Americans are working increasingly longer hours,while Europeans enjoy more leisure time, due to

time credit systems, paid leaves, and jobrotation schemes


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New Dynamics and Values

To move toward a less consumptive economy,

we must abandon the outdated assumption that

quantitative growth is unconditionally desirable,

and instead embrace the notion ofqualitative

growth


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New Dynamics and Values

In a sustainable economy, corporate revenuesand profits would be associated with deriving the

most service and best performance out of a

product, minimizing energy and materialsconsumption, and maximizing quality


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About the Author

Michael Renner is a Senior Researcherat the Worldwatch Institute andDirector of the Institutes Global

Security Project


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More information onState of the World 2004

at www.worldwatch.org

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A Less Consumptive Economy