Decoupling refers to the potential de-linking of economic growth from environmental degradation and resource use (UNEP, 2011a). The concept of decoupling reflects an ecological modernist (or technological optimist) perspective, as it proposes that economic growth can continue by advancing eco-efficiencies and progressively dematerialising the economy (Carolan, 2004). According to Ekins & Lemaire,
“It is only through decoupling that continuing economic growth in the context of finite material, energy and ecosystem resources can be sustained.” (Ekins and Lemaire, 2012, p. 5)
As such, this is a central concept within industrial ecology, which underpins efforts to clean production processes and reduce consumption impacts through product-service systems and the like.
In the 1990s, scientists in Germany and the U.S. proposed that global resource
efficiency would need to be improved by a factor of 4 in order to achieve a sustainable level of consumption (Weizsäcker et al., 1997). Building on this concept, it was determined that developed countries would need to reduce their resource consumption by a factor of 10 in one generation in order to allow developing countries to develop and use their fair share of resources (Schmidt-Bleek, 2000). Nearly a generation later, resource consumption is still rising steadily. Analyses of global resource use against GDP have shown some evidence of relative decoupling occurring for particular materials or pollutants (Jackson, 2009; UNEP, 2011a). ‘Relative decoupling' is where the relationship between material use and GDP growth has been reduced, however, resource use still grows with economic growth over time (UNEP, 2011a).
Krausmann et al., (2008), have observed that dematerialisation is occurring at the rate of 1-2% annually globally, however this is particularly the case in industrialised countries. According to Jackson (2009), there is almost no evidence to suggest that absolute decoupling has occurred. ‘Absolute decoupling' refers to the complete de-linking of material consumption and economic growth, such that GDP grows without the use of raw materials, and resource consumption declines over time (UNEP, 2011a). Global
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energy intensity has decreased 33% since 1970 and global carbon intensity has
decreased from 1kg CO2 per USD in 1980 to 770g CO2 in 2006; however, the growth rate of carbon emissions has been increasing since 2000 (Jackson, 2009). Whilst there appears to be some evidence of relative decoupling in OECD countries, the trends in developing and emerging economies are less consistent (Jackson, 2009). Global
production of cement has doubled since 1990 and the extraction of key metals exceeded GDP growth rates in recent years (Jackson, 2009).
Based on the literature, there is very little evidence of any ‘natural' decoupling occurring through improvements in efficiency and absolute decoupling is not being achieved. Subsidies for fossil fuels, outsourcing polluting industries to developing countries and increasing levels of household consumption are among the reasons for this (Zhao and Schroeder, 2010). Carolan (2004) argues that dematerialisation is an impossible dream, as consumption will always have a material nature (at least partly). Jackson (2009) concludes that decoupling is unlikely to achieve ecological targets, but believes that it is ‘vital', and that we have not yet really tried to achieve it. To enable decoupling, there needs to be major changes to public policies, corporate activity and consumption behaviour or a significant technological shift (Jackson, 2009; UNEP, 2011a).
The Environmental Kuznets Curve
The notion of ‘natural' decoupling is linked to the concept of the Environmental Kuznets Curve (EKC), which is a theory that claims that resource use and
environmental degradation increases during the process of industrialisation, but will decline once a certain level of prosperity is reached and there is a shift towards different types of economies (Panayotou, 2003). In this model, it is assumed that technological changes will bring about efficiencies and reduce environmental impacts. This concept has influenced approaches to sustainable development, where it is anticipated that economic development will also bring lower environmental impacts. This idea is illustrated in Figure 4.
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Figure 4: Environmental Kuznets Curve
Source: (Panayotou, 2003)
This model has been assumed to apply to environmental problems in general, however, studies have shown that the Kuznets curve type pattern only exists for certain pollutants, such as sulfur dioxide, carbon monoxide and suspended particulates in air pollution and these refer primarily to local, rather than national issues (Jackson, 2009; Max-Neef, 1995). A study examining greenhouse gas emissions versus gross domestic product (GDP) for countries party to the Kyoto protocol found that for the group of countries known as ‘economies in transition', the curves exhibited a hockey stick shape, and for the twenty one more developed countries, only seven countries had curves that
supported the EKC theory (Huang et al., 2008). The World Bank's report on Inclusive Green Growth (2012b) also concedes that there does not appear to be a Kuznets curve, as environmental outcomes do not improve with income. Apparent decoupling that has been observed in post-industrial economies is not necessarily from technological
efficiencies. As Schandl & West (2010) and Zhao & Schroeder (2010) have pointed out, this may be largely due to wealthy nations shifting their polluting industries to
developing countries.
In the literature, there are suggestions that developing countries may be able to ‘tunnel through' the EKC by adopting technologies or initiatives from the industrialised world to avoid the peak of the EKC curve and move to a higher income with lower
environmental impacts (Brajer et al., 2008; Culas, 2012; Munasinghe, 1999). However, ‘tunnelling through' may only be possible for a select few pollutants, as the EKC does not appear to exist for most issues of environmental degradation. Despite this,
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developing countries are considered to have opportunities to take an alternative development path. Existing infrastructure in developed countries can create lock-in, whereas developing countries have the opportunity to innovate with infrastructure that will be built in the future (UNEP, 2011a). Schroeder and Anantharaman (2017) argue that “leapfrogging” resource intensive western lifestyles is both possible and necessary in emerging economies. However, creating an alternative development path is expected to require significant government involvement (UNEP, 2011a), and a reconfiguration of social practices (Schroeder and Anantharaman, 2017). The possibility of “tunneling through” or “leapfrogging” a period of major environmental degradation is key premise within this thesis and is explored with regard to collaborative consumption in Paper I.
The rebound effect
While the decoupling literature claims that improving the resource efficiency of production will help to reduce the link between resource use and economic growth, a counter argument suggests that improvements in resource efficiency will simply inspire more production and more consumption, effectively negating the efficiencies gained. Recognition of the rebound effect dates back to 1865 when neoclassical economist William Jevons raised the possibility that improvements in energy efficiency would result in more production and consumption (Gillingham et al., 2013).
In the literature, four types of rebound effects have been identified:
1. Direct rebound effects – assumes that increased efficiency will make a product cheaper and will make people buy more of it.
2. Indirect rebound effects – assumes that efficiency will make products cheaper, so you have more available income to spend on buying other things
3. Economy wide effects – proposes that efficiencies will make products cheaper, leading to readjustments of prices elsewhere in the economy. This is also known as the general equilibrium effect
4. Transformational effects – proposes that technological changes will shift consumer preferences and organisation of production, resulting in changed behaviours (Gillingham et al., 2013; Maxwell et al., 2011).
Rebound effects 1 to 3 all assume that more efficient / environmentally improved goods will be less expensive. If there is no shift in price, then these effects are unlikely to
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occur, additionally, if there is an increase in price, the opposite effect can occur, where the use of a good is further reduced. Transformational effects might apply in the case of service based businesses, where for example, the leasing of goods, rather than owning them could result in significantly more transport of those goods between users.
An extension of the rebound effect is the claim that efficiencies could cause ‘backfire' where the rebound is so large it actually results in a greater environmental impact than initially was the case (Gillingham et al., 2013). A report for the European commission titled “Addressing the rebound effect” found that on currently available evidence, the rebound effect does exist, however it is not sufficient to create a 'backfire' (Maxwell et al., 2011). The report found that the clearest evidence for direct rebound effects were for household energy efficiency for appliances: heating, cooling, personal transport and so on. The rebound effect was found to be between 10-30% in developed countries. Larger direct rebound effects were found for commercial road transport, at 30-80% as a result of fuel efficiencies (Maxwell et al., 2011). Others quote rebound effects of between 5- 30% for energy efficiencies (Gillingham et al., 2013).
In a situation where the price of a good increased due to environmental improvements, such as in the EU meat and dairy industry, a reduction in consumption of 10-100% was observed, highlighting the difference in outcomes when the efficiency/improvement results in higher prices (Maxwell et al., 2011). All of the previous examples relate to direct rebound effects. With regard to indirect and economy wide rebound effects, the EU study found that there were few estimates in the literature and these only related to energy. These estimates however found that economy wide effects for energy efficiency were smaller than direct effects and were estimated at around 10% (Maxwell et al., 2011). The dynamics of macroeconomic rebound effects are hard to predict. An example of a macroeconomic effect could be where national fuel economy standards result in reduced demand for oil, which could drive down the global oil price, and in turn lead to people driving more. However, if demand goes down and the product gets cheaper there may be less incentive to produce it (Gillingham et al., 2013).
The EU report highlights the fact that rebound effect influences vary depending on the product or industry and are not generalizable across different industries. The report also notes that the four types of rebound effects are not additive, as for example a direct rebound (using more of the same thing) means that less money is available to create an
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indirect rebound (using more of something else) (Maxwell et al., 2011). Importantly, there is little evidence for rebound effects with other resources and there remains a gap in knowledge regarding any economy wide effects that may occur for sustainable consumption and production policies (Maxwell et al., 2011). As some authors point out, "rebound effects are small and are therefore no excuse for inaction" (Gillingham et al., 2013, p. 476). Considering the lack of knowledge regarding the existence of the
rebound effect for other resources, it is hardly an excuse not to pursue improvements in resource efficiency and environmental impacts. Potential rebound effects are examined with regard to collaborative consumption business practices in Paper II.
How to approach decoupling?
As has been highlighted by the literature on decoupling and the Environmental Kuznets Curve, there is no convincing evidence to suggest that progressive improvements in technology as a result of economic development will lead to environmental
improvements organically (Jackson, 2009; Schandl and West, 2010). Schandl & West (2010) used the IPAT framework (Impact = Population x Affluence x Technology) to examine the influence of each of these factors on domestic material consumption in the Asia-Pacific region. They found that affluence was overwhelmingly the biggest
contributor to resource consumption; technology had a very minor mitigating role in reducing resource use; and at times has actually contributed to growth in resource consumption (Schandl and West, 2010). Rather than technological improvements, Schandl & West (2010) propose that far more radical changes would be required to reduce environmental and resource impacts; such as major shifts to the organization of the energy, transport and housing sectors to counter the impacts of affluence and rapidly growing populations. In sum,
"There is no reason to believe that rapid change on this scale will arise spontaneously out of market processes. It will instead require conscious effort on the part of citizens and policy makers, to harness and guide market forces towards achieving sustainable development" (Schandl and West, 2010, p. 646)
The UNEP report on decoupling suggests that three types of innovations will be required to achieve a major shift from business as usual, these are: technological innovations; institutional innovations (e.g. incentive policies, rents); and relational
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innovations (e.g. changes to co-operation, social learning, social cohesions etc.) (UNEP, 2011a). Recognising that decoupling and the Kuznets curve are unlikely to occur
organically, and unlikely to be achieved through technology change alone, this study is oriented towards policy interventions and understanding the contextual and
consumption side aspects that are likely to influence resource use. I now move on to the consumption related theories.