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Visions

Visions for Industrial Ecology

Preface to the Special Section

Gjalt Huppes and Masanobu Ishikawa

This special feature on visions for industrial ecol-ogy originates from the Third International Con-ference on Eco-Efficiency, held in the Nether-lands, 9–11 June 2010. For the final day of theconference, a number of people were invited tocontribute a vision on key directions for the de-velopment of the domain of industrial ecologyin general and on the role of eco-efficiency inparticular. The results—not all presented at theconference but prepared for it—together form aspecial section of this issue of the Journal of In-dustrial Ecology, diverse and, we hope, inspiring.

The subject of eco-efficiency may be seen as atechnical one—as a goal in itself. It is not. It isone key to improved environmental performanceof society. Combined with improved economicperformance in the form of productivity growth,it may tell in which direction we are going, ormight, or should go. If absolute decoupling of en-vironmental impact from economic growth is thegoal, we should know whether policies and inno-vations are getting us on the right track. Will un-leashing resource productivity get us on the righttrack and avoid the Jevons paradox? Should wefocus on fiscal reform to get us there? Is the inno-vation entry to sustainable development powerfulenough, and what is driving innovations and theirimplementation? If degrowth, for increased hap-piness and environmental quality, is the goal andwe wish to deviate from the unsustainable routeof ever-expanding production and consumption,the same question has to be answered: Are weon the right track? “We” here refers to societyat large, from a global perspective, in principle.And we know that not just marginal, small im-provements are to be realized. We need more

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basic improvements, with a different mode ofanalysis.

Discussions on weak and strong sustainabil-ity seem to avoid a full integration of “all rel-evant aspects” from a normative point of view,as economists advocate by quantifying external-ities in market terms. Some integration is al-ways required for an overall judgment, not onlyin terms of, for example, climate effects, butalso in terms of a broader set of environmen-tal effects viewed together. Such approaches tointegration are implied in sustainability judg-ments, and they had better be explicit. Ofcourse, such explicit judgments should always becontested.

We may first define eco-efficiency at the mi-cro level of specific products and activities andtheir environmental effects and economic value.The question next is how changes—intendedimprovements—work through the system andhow they work out for society at large. Brilliantcost savings with substantial environmental im-provements seems like a win-win. It sounds nice,but is it? The environmental improvement for theproduct or technology domain may be substan-tial. But if the brilliant innovation contributes toeconomic growth, it might be more than eatenaway by the volume growth of the economy. Wemay become more affluent but with decreasingenvironmental quality, which is not win-win atall.

Let us start modestly and fit the analysis to thequestion being asked. A simple life cycle assess-ment (LCA) or broadened life cycle sustainabilityassessment (LCSA) may in many cases indicatea quite confident outcome. Nontoxic weed re-moval in agriculture, at the same cost? LCA isgood enough for this. But when system changeswill occur, the simple LCA becomes a step-ping stone, with more elaborate reasoning andmodeling needed to approach a more relevantanswer.

Several contributions in this special featurefocus on this micro-macro linkage, involving hy-brid analysis that uses input-output analysis and

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better linking material flows, as in recycling, tothis still static framework.

The linkage of natural science, social science,and normative analysis remains a fundamentallyunresolved issue in industrial ecology. There aredangers of physical reductionism, on the onehand, and disregard for social causalities, on theother, with free will and more general autopoieticcultural mechanisms unduly squeezed by both.

Clearly, the visions differ in many respects andcannot be combined into one overarching viewof the industrial ecology cathedral. Quite somework is still to be done, at all levels of analysis.

Acknowledgements

The Eco-Efficiency Conference Series hasbeen supported by grants from EBARA Com-pany, in Japan, and the Royal Dutch Academy ofSciences (KNAW), in the Netherlands.

About the Authors

Gjalt Huppes ([email protected]) is aresearcher at the Center of Environmental Sci-ence (CML) at Leiden University in Leiden,the Netherlands. Masanobu Ishikawa is a pro-fessor in the Graduate School of Economics atKobe University in Kobe, Japan. They orga-nized the 2010 International Conference on Eco-Efficiency, from which the Visions contributionswere drawn, and served as editors for this specialfeature.

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Social Metabolism and HybridStructures

Marina Fischer-Kowalski and Julia K. Steinberger

What are the most promising (or necessary) di-rections for an integrated socio-environmentalscience capable of facing the challenges of sus-tainability? Our research findings at the Instituteof Social Ecology in Vienna suggest there is aneed for a new epistemological paradigm that al-lows the re-connection of the fields that havebecome separated by the “great divide” (Snow

1959) in the course of the evolution of academicdisciplines. This new paradigm can be outlinedby the following general principles.

1. Respect the qualitative differences be-tween biophysical realities and thecultural/social/economic realm of mean-ing, the latter dominated by commu-nicative interconnectedness, rather thancausal relationships. Simply merging thetwo realms currently situated on differentsides of the divide leads to a reduction-ism that will be rejected by both intel-lectual traditions. Separation implies mu-tual non-substitutability; blindly applyingideas from ecology or other natural sci-ences to social systems inevitably leads tofatal oversimplifications, the most famousexample perhaps being Hardin’s Tragedyof the Commons. Conversely, the socialdomain is often tempted to borrow ideasfrom natural sciences as metaphors, whichtoo often only serves to creatively ob-scure reality. A truly integrated social andenvironmental science requires opennessand a healthy dose of skepticism: ideasand concepts should be tested, contrasted,pitted against each other, so that new,better ideas and paradigms can emerge.Complexity should be acknowledged with-out being fetishized.

2. Maintain a thorough understanding of theglobal biogeochemical cycles and the var-ious types of physical interdependenciesthey imply. We know that biogeochemi-cal cycles are connected, though in no waysubstitutable. But this understanding needsto become foundational to our integratedscience, to avoid simple mistakes with pro-found implications, such as the notion thatbiofuels can substitute fossil fuels, or thathectares are an appropriate way to measurecarbon emissions. Taking stock of interde-pendency and non-substitutability requiresmoving beyond simple air-soil-water cat-egorizations, to the ecosystem level, andalso beyond individual sectors of the econ-omy. Grand cycles remind us to transcendterritorial boundaries, and include glob-alization and trade in our analysis. The

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biogeochemical cycles and their anthro-pological perturbations are the evidenceof an integrated earth, and it is impera-tive that our science rise to the task ofexplaining the interconnected social andcultural activities which have such globalimplications.

3. Respect the diversity of geographic loca-tions and scales, while avoiding the pit-fall of local studies which often equatesocial system boundaries with a cer-tain area and fail to detect larger func-tional patterns. Recognize the decisiverole of interconnectedness between re-gions, through trade, migration, commu-nication, and, crucially, through history,as well as through the grand cycles men-tioned above.

4. Respect the directionality of time and thesystem-specificity of time horizons. Dealwith path dependencies and long-term ef-fects in both directions (sustainability isa long-term issue—and has been in manyearlier societies). Be prepared to learn fromlonger time horizons than the post WWIIera, not just in terms of environmentalchallenges, but also of social upheavals.

5. Focus on hybrid structures (Latour 1993)that mediate between the two realms,and mediate between past and futureacross time. Hybrid structures are struc-tures molded both physically and cul-turally, in which the rules of the tworealms are somehow superimposed uponone another. Such hybrid structures in-clude technologies, infrastructures, andphysical stocks of social systems; in ourview, these also encompass the humanpopulation. Traditional sciences, both nat-ural science and the humanities, cannotappropriately deal with such hybrid struc-tures: they perceive only one aspect butfail to recognize the others. These hybridstructures have to be reproduced cultur-ally/socially/economically as well as phys-ically. This is where the notion of socialmetabolism takes hold, as the system ofsocially governed physical flows that arerequired to reproduce society’s hybridstructures. Future research lines should

identify sustainable societal directionsthrough their hybrid structures, but alsoexplicitly deal with the legacy of currenthybrid structures, which will continue toinfluence society and the environment farinto the future.

6. Be aware of the autopoietic character ofeconomic cycles: in the end, money willbuy you physical objects (or set in motionphysical work). And in the end, efficiencywill not buy you physical resource savings,but instead drive growth (Ayres and Warr2009; Polimeni et al. 2008).

7. Pay attention to the human population,its size, demographic structure, and well-being. This should be obvious, but is toooften forgotten in favor of economicallyfocused analyses. The economy’s functionis symbolic valuation and prioritization,and although it is not fully disconnectedfrom human wellbeing, studying humanwellbeing should be a separate, and possi-bly more important, focus of sustainabilityresearch. An integrated sustainability sci-ence should be informed by the fields ofdemography and public health, and grap-ple with the issue of defining a fulfilling,meaningful life, given the diversity of hu-man experience and potential.

References

Ayres, R. U. and B. Warr. 2009. The economic growthengine: How energy and work drive material pros-perity. Cheltenham, UK and Northhampton MA,US: Edward Elgar.

Latour, B. 1993. We have never been modern. Harlow,UK: Harvester Wheatsheaf.

Polimeni, J. M., K. Mayumi, M. Giampietro, and B.Alcott. 2008. The myth of resource efficiency. TheJevons Paradox. London: Earthscan.

Snow, C. P. 1959. The two cultures. New York:Cambridge University Press.

About the Authors

Marina Fischer-Kowalski ([email protected]), the corresponding au-thor of this contribution, is professor of socialecology at Alpen-Adria Klagenfurt Universityand director of Institute of Social Ecology atthe Faculty for Interdisciplinary Studies (IFF) in

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Vienna, Austria. Julia K. Steinberger is a lecturerin ecological economics at the Sustainability Re-search Institute of the University of Leeds in theUK; at the time of writing, she was at the Instituteof Social Ecology.

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Resource Efficiency

Five Governance Challenges Towarda Green Economy

Raimund Bleischwitz

The European Union (EU) has selected resourceefficiency as one of the seven flagship initiativesfor its 2020 strategy.1 It aims to bring majoreconomic opportunities, improve productivity,drive down costs, and boost competitiveness—while also supporting a low-carbon economyand sustainable growth. In a similar spirit, theOrganisation for Economic Cooperation and De-velopment (OECD) and the United NationsEnvironment Programme (UNEP) promote re-source efficiency in their campaign for “greengrowth” and a “green economy.” Research isneeded to assess the merits of different strate-gies and to identify suitable policies and leversfor action, especially to minimize risks. I arguethat industrial ecology can indeed provide valu-able insights. A probably even more importantaspect is the need to strengthen research on in-novation and transition management. This willrequire collaborative research that allows actorsand institutions to be centrally addressed. Thefollowing sections explore key opportunities andrisks associated with resource efficiency and drawconclusions on five central challenges. The def-initions in this short article follow the OECDhandbook on measuring resource productivity aswell as related work by the Wuppertal Institute(Bringezu and Bleischwitz 2009).

Opportunities: Cost Reductionand Process Innovation in theManufacturing Industry

Given that material purchasing costs are rele-vant for business, a number of studies have identi-

fied a remarkable potential to save these materialcosts using resource efficiency tools. Data on therelevance of material costs in industry exist butare not yet commonly available. A recent Euro-barometer survey shows that more than half ofEuropean companies in the manufacturing, con-struction, water, food services, and agriculturalsectors spend at least 30% of their total costson materials. Almost 90% of the enterprises sur-veyed expected prices to rise even further in thecoming years. The resulting opportunities for in-novation are just emerging. Around 45% of ac-tive eco-innovating companies were able to re-alize savings between 5% and 39%, whereas ina few cases material reductions of 40% or even60% were achieved.

Our conclusion is that the evidence for suchopportunities is robust but that there is a needfor more research into “net material costs,” asdistinct from added labor costs of suppliers (deBruyn et al. 2009, 27), information deficits, andother barriers to dissemination at the level ofbusiness, industries, and countries. Other oppor-tunities, such as system innovation and long-termreduction of primary materials, require more in-depth research that captures patterns of change,technology pathways, and their socioeconomiclevers.

Risks: What if Only SelectedBusiness Opportunities AreBeing Exploited?

A resource efficiency strategy has to be com-prehensive, both from an environmental andfrom an innovation-oriented point of view. Be-cause Europe and many other regions import largepercentages of their resource requirements, thereis a real risk of shifting environmental burdensabroad. International trade aggravates this riskthrough exports of used goods, such as cars andelectronic devices, causing their end-of-life pro-cessing to occur in developing countries, whereenvironmental standards tend to be lower than inthe industrialized world. In an analysis of physicaltrade balances, Dittrich (2009) showed that be-tween 1960 and 2005, the growth of traded goodsincreased about 3.5-fold (in terms of weight),whereas the ecological rucksacks (or hidden flows)of these traded goods increased by a factor of


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nearly 4.8. This indicates that Europe was able toachieve progress in domestic resource efficiencyat the expense of other regions. Reducing boththe materials leakage and the environmental im-pacts associated with production and consump-tion on a life cycle basis is thus a key requirementfrom a sustainability perspective.

EU projects on indicators (e.g., INDI-LINK,CALCAS, Sustainability A-Test, MATISSE,FORESCENE) can be used as starting points forthe development of indicators of resource effi-ciency that capture all levels and scopes of activ-ities. Again, this work needs to be complementedby institutional analysis of issues such as theestablishment of material stewardship comple-menting product responsibility in internationalvalue chains.

Another risk in this regard is the demand forcritical materials resulting from the low-carboneconomy and other new technologies. Method-ologically, economy-wide material flow analysis(ew-MFA) has very much focused on highly inte-grated flows, whereas specific flows have receivedless attention and may require a combined ew-MFA/substance flow analysis approach.

Strategic green technologies, such as e-mobility, hydrogen and fuel cells, photovoltaicpower, and other renewable energies, require asupply of critical metals that (1) is far from be-ing available given current supply patterns, (2)requires stability in exporting countries and oninternational raw materials markets, and (3) mayactually also aggravate current conflicts in thosedeveloping countries that are envisaged to bene-fit from international donors. Possible risks maybe illustrated for lithium, gallium, neodymiumand other rare earth metals, tantalum (includ-ing coltan from Central Africa), and platinum,but copper and nickel and other metals used intechnology are also problematic. This entails twotypes of risk: (1) a resource curse and civil war inthose vulnerable countries—especially in Cen-tral Africa and Central Asia—that are hardlyable to manage mining in a sustainable manner(including the social and economic dimensions),and (2) dependence on strategically behavingstates with market power, such as China.

These problems are compounded by risksstemming from the “Jevons Paradox,” also calledthe “rebound effect”: Increasing efficiency reduces

the resource cost per unit of final consumption,which provides incentives for increased use. Thiseffect is well known and the subject of muchdebate in energy research but is far less fully ex-plored in research on resource productivity. Theindirect macroeconomic effects will be particu-larly important if demand switches to other ap-plications and if other economies benefit fromdemand reduction in pioneering countries. Thisis where institutions matter—for instance, to in-troduce new products and negotiate wages foremployees as a result of increasing productivity.

Moving away from fossil-fuel based energy sys-tems thus requires careful analysis of resourceconstraints and dematerialization strategies. Howindustry, economies, and societies take up thesechallenges will become a major issue for collabo-rative research.

Factor Five—GovernanceChallenges for Research

Although resource efficiency may come aboutby private action, a long-term transition poses atleast five governance challenges for research:

1. Going beyond the “low-hanging fruits” ofprocess innovation toward “material flowinnovation”2 on a life cycle basis

2. Managing the minimization of burdenshifting

3. Managing the minimization of rebound ef-fects

4. Managing the minimization of risks asso-ciated with critical metals

5. Overcoming the deficits of internationalmarkets and establishing internationalmechanisms for sustainable resource man-agement.

Overcoming these challenges will requiremore collaborative research between industrialecology and social sciences, such as innovationresearch, institutional analysis, and internationalrelations (Bleischwitz et al. 2010; Grin et al.2010).

Notes

1. http://ec.europa.eu/resource-efficient-europe/2. See the EU’s Eco-Innovation Observatory here:

www.eco-innovation.eu.

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References

Bleischwitz, R., P. Welfens, and Z. X. Zhang, eds.2010. Special issue: The international economicsof resources and resource policy. International Eco-nomics and Economic Policy 7(2–3).

Bringezu, S. and R. Bleischwitz, eds. 2009. Sustainableresource management: Trends, visions and policies forEurope and the world. Sheffield, UK: Greenleaf.

De Bruyn, S. et al. 2009. Resource productivity, com-petitiveness and environmental policies. Ministry ofHousing, Spatial Planning, and Development.Delft, the Netherlands: CE Delft.

Dittrich, M. 2009. The physical dimension of interna-tional trade, 1962 − 2005. In Sustainable growthand resource productivity: Economic and global pol-icy issues, edited by R. Bleischwitz et al. Sheffield,UK: Greenleaf.

Grin J., J. Rotmans, and J. Schot. 2010. Transitionsto sustainable development: New directions in thestudy of long-term transformative change. New York:Routledge.

About the Author

Raimund Bleischwitz ([email protected]) is codirector of the Material Flowand Resource Management research group at theWuppertal Institute, Germany; senior lecturer atthe University of Wuppertal; and visiting profes-sor at the College of Europe in Bruges, Belgium.

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Metabolic Side Effects ofTransitions

An Industrial-Ecology-Based Exploration

Ester van der Voet

In the young research field of industrial ecol-ogy, methods are being developed to analyzeparts of the world or, rather, parts of the tech-nosphere. One such method, material flow ac-counting (MFA), investigates the material basisof society. Another method, substance flow anal-ysis (SFA), is used to model flows of one specificsubstance, which is a useful way to link envi-ronmental problems to their sources in society

and to forecast future scarcity, waste, and emis-sions. A further method is life cycle assessment(LCA), which quantifies all extractions from andemissions to the environment of service systems,to compare functional equivalents or to assesshotspots in a cradle-to-grave chain. These indus-trial ecology methods can be linked to certain ar-eas of policy, such as product policies, chemicalspolicies, or general dematerialization policies.

A strong point of these methods is that theyallow the detection of problem shifting withinthe realm of society’s physical metabolism. MFAshows, for example, that the transition repre-sented by the industrial revolution implies a shiftfrom biomass to fossil fuels and minerals (Fischer-Kowalski and Haberl 2007). SFA, conversely,enables us to detect problem shifting from oneemission to another, from one waste stream toanother, or from the present to the future, andLCA detects shifts from one environmental im-pact category to another. The use of these meth-ods has taught us that in efforts to solve an envi-ronmental problem, side effects virtually alwaysoccur. All these methods have their own typicalway to show metabolic side effects, depending onthe system boundaries they use (Bouman et al.2000).

The insight that all methods have their valuebut also their limitations indicates the need for amore comprehensive approach. The combinationof LCA with input-output analysis to achievea hybrid LCA has enabled the LCA system tobe expanded to include “background processes”(Suh 2004) and so to link micro-level servicesystems to the macro system of which they arepart. Linking models to more comprehensiveones is one possible way forward. Another is usingcombinations of different methods and models.Analyzing a system with different methods canlead to seemingly conflicting outcomes, whichare actually additional findings (Hertwich et al.2010).

Both routes for the development of meth-ods and models are being explored further andwill lead to new and more relevant results. Thereal-world consequences of these mechanismsof metabolism-related problem shifting are stillpoorly understood, however, especially as regardslarge-scale developments. Some preliminary ex-plorations of this issue show that they are of major


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importance and that they may influence the effec-tiveness of policies at a global scale. For example,although current energy policies focus on a tran-sition to a nonfossil energy society to abate cli-mate change, alternative sources of energy havetheir own problems. Energy from biomass requiresmassive land and water resources, which conflictswith the world’s food production. Solar and windenergy involve a large material requirement, in-cluding some scarce metals whose supply maybecome problematic. And there may also be feed-back loops: Because the remaining metal ores areof lower grades, it takes ever more energy to mo-bilize these metals, and the increasing energy re-quirement in turn demands more metals. We stillleave out the complex dynamics within societyas pictured to some extent in economics, politi-cal science, and sociology, which lead to differ-ent feedback mechanisms of a behavioral nature,some covered under “rebound mechanisms.”

The implication for the sustainability chal-lenges we face is that we must develop and ex-plore future pathways for society’s technospherewith an open mind, taking into account the sideeffects as well as the effectiveness of potential so-lutions, not in a partial and local sense but at theglobal level. Recognizing and quantifying thesemetabolic linkages between resources is essentialfor such explorations (Graedel and Van der Voet2010). Only a few have already been identified,and an attempt to quantify them has been madefor even fewer. Many more exist, and quantifica-tion is seldom straightforward.

Next, the dynamics of one resource must becoupled with those of all relevant others, andthere may be dynamics in the interactions as well.The fact that metal mining involves huge energyrequirements will somehow affect mining again,through the energy constraints, whereas land andwater use will act as an important constraint onbioenergy development. Models need to be de-veloped and databases established for relationsbetween resources as well as for the resourcesthemselves.

One area that is important for all types of re-sources is the development of scenarios to exploreoptions for the future. Scenario development forenergy is well established, with time paths spec-ified, with rich details, and with some links toother areas. In the field of nonrenewable materi-

als, not demand but supply is the starting point:If we continue to mine copper at the presentrate, for how many years can we supply the worldwith copper? Variations exist only with regard tospecific technical aspects: ore grade quality, min-ing and processing techniques, recycling activi-ties, and so on. By contrast, worldwide scenar-ios for water are not well developed, and thosethat are use a similar supply-based approach.The constraint on land is the most obvious—the global land surface does not change—buttranslating different requirements into areas isnot straightforward. The most obvious link, thatbetween land and energy, has been signaled,and the consequences for the world’s food pro-duction are being investigated. There are manymore interlinkages that require investigation,however.

There are large benefits from harmonizing sce-nario development between resources:

• Harmonization of scenario developmentacross resources could incorporate impor-tant improvements

• Starting from demand instead of supply:People need certain basic services ratherthan fossil fuels, square meters of land, orcopper, so substitution is also an importantissue

• Including ecosystem services in the equa-tion: If these are impaired, they will have tobe replaced by manmade systems with theirown energy and materials requirements.

Specifying systemwide interlinkages allows foranalysis of specific improvements that are beingconsidered, with a focus on those whose positiveeffects outweigh their negative effects.

References

Bouman, M., R. Heijungs, E. van der Voet, J. C. J.M. van den Bergh, and G. Huppes. 2000. Ma-terial flows and economic models: An analyticalcomparison of SFA, LCA and partial equilibriummodels. Ecological Economics 32(2): 195–216.

Fischer-Kowalski, M. and H. Haberl, eds. 2007. Socio-ecological transitions and global change: Trajectoriesof social metabolism and land use. Advances inEcological Economics Series. Cheltenham, UK:Edward Elgar.

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Graedel, T. E. and E. van der Voet, eds. 2010. Link-ages of sustainability. Strungmann Forum Reports.Cambridge, MA, USA: MIT Press.

Hertwich, E., E. van der Voet, S. Suh, A. Tukker,M. Huijbregts, P. Kazmierczyk, M. Lenzen, J. Mc-Neely, and Y. Moriguchi. 2010. Assessing the en-vironmental impacts of consumption and production:Priority products and materials report of the work-ing group on the environmental impacts of productsand materials to the International Panel for Sustain-able Resource Management. Paris: United NationsEnvironment Programme (UNEP).

Suh, S. 2004. Materials and energy flows in industry andecosystem networks: Life cycle assessment, input-output analysis, material flow analysis, ecologicalnetwork flow analysis, and their combinations forindustrial ecology. PhD thesis, Leiden University,Leiden, the Netherlands.

About the Author

Ester van der Voet ([email protected]) is an associate professor of industrial ecol-ogy at the University of Leiden in Leiden, theNetherlands.

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Sustainable Consumption andSupportable Investment

Roland Clift

By bringing together a number of different butrelated research agendas, including sustainableconsumption and transition to a low-carboneconomy, the third International Conference onEco-Efficiency (EE3) highlighted ways the prob-lems facing human society are interconnected,which led to the conclusion, accepted among in-dustrial ecologists but not sufficiently recognizedin the more established academic disciplines, thatsingle-discipline analysis is insufficient for the re-search and policy agenda. Mentioning sustain-able consumption necessarily brings in the be-havioral sciences, because it requires a deeperunderstanding of human behavior than is usualin economic debate. A truly low-carbon econ-omy requires not only low-carbon energy sourcesand more efficient energy use but also demate-rialization through systematic use and reuse ofmaterials—the kind of system that is known in in-

dustrial ecology as a “closed-loop economy” (Cliftand Allwood 2011).

Further questions requiring transdisciplinaryapproaches can be articulated. A closed-loop system emphasizing remanufacturing ratherthan primary manufacturing would need majorchanges in the scale and distribution of industrialplants, in the industrial skill base, in the rela-tionship between industrial organizations, and soforth. Ecometrics can help with starting to thinkabout these changes, but, clearly, simple eco-nomic (and environmental) metrics are not suffi-cient to address what is one of the most “wicked”of all problem areas: a complex system with multi-ple geographical and time scales, whose behaviorcan be chaotic so that some large perturbationsmay have almost no effect but some small pertur-bations can cause large and irreversible changes.

The sustainability agenda also requiresdeeper analysis of the environmental impacts—particularly, but not limited to, the climatechange impacts—of different economic activi-ties. As an approach to influencing consumptionpatterns, there is a strong current interest in at-taching carbon labels to consumer purchases; theurgency here is to establish a generally acceptedmethodology, so that action is not delayed byargument over accounting protocol and we canmove on to recognizing and promoting more sus-tainable lifestyles. After all, the health of theplanet is barely affected by people’s preferencefor any particular brand of potato chips, but ma-jor changes in consumption patterns could re-ally “make a difference.” Attention is now mov-ing on to other impacts, starting with “virtualwater”—that is, the dissipative water use associ-ated with products and services—and likely thento extend to land use, including impacts on bio-diversity. It is also notable that labeling requiresprocess-based life cycle assessment (LCA); input-output analysis is (and probably always will be)too aggregated to distinguish between function-ally similar products and services, so its role inlabeling is, at best, provision of background datafor hybrid LCAs (British Standards Institution2008). These are mainly “current account” ap-proaches, however. For investment, it is nec-essary to estimate not only the greenhouse gas(GHG) emissions associated directly with theeconomic activity itself but also the effect of the


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investment in changing future GHG emissions.Changes in economic activity brought about by,for example, changes in the tax base must be ex-plored in terms of their effect on, among othermeasures, consumption and investment, not justaggregated gross domestic product (GDP). Thisraises the question of what discount factor to usefor future environmental impacts (see below), aquestion that has already been highlighted bythe Stern Report (Stern 2007) and responsesto it. Input-output analysis can be deployed torepresent possible future scenarios, by changingthe parameters in the input-output model, justas prospective LCAs use hypothetical estimatesfor the performance of future technologies, butthe problem of finding an agreed approach toassessing the significance of future changes re-mains: Current approaches to comparison thatuse simple ecometrics are not well adapted for thispurpose.

Assessing future GHG emissions resultingfrom current economic activities involves anumber of unresolved methodological questions.These are already recognized in attempts to de-velop a standard approach to carbon labelingfor products and services allowing for delayedemissions of greenhouse gases. There are ques-tions, raised by labeling and also in other sectors(including transport), over whether the currentapproach to assessing contributions to global cli-mate change is adequate. For example, estima-tion of the significance of noncarbon dioxide(non-CO2) emissions from aircraft movementsdepends on whether a time cutoff or discountingis used as the evaluation basis (and, of course,on the discount rate assumed), and the questionof whether to retain the conventional time cut-off or to go to an approach of discounting futureactivities has already been raised in the Inter-national Civil Aviation Organization (Dorbianand Waitz 2010). This is an example of a com-mon concern that arises in two fields that arenormally not connected—in this case, aeronau-tics and flight management, on the one hand, andconsumer product design and waste management,on the other. It highlights a general need: “hori-zon scanning” to identify research issues that ariseindependently in different fields but for which acommonly accepted approach is essential.

System models may have difficulty in deal-ing with constraints, and LCA is no excep-tion: For example, the conventional, simplisticway of weighting abiotic resource use by scarcityvalue is too crude to deal adequately with lim-ited availability of land and certain key ele-ments. The scarcity problem is linked to theissue, already embedded in industrial ecology,of estimating the quantities of scarce materi-als already in use in the economy and poten-tially available in historical waste, particularlyin landfill. Some researchers have argued thatcurrent approaches to assessing scarcity fail toaccount adequately for long-term value or toprovide an adequate basis for comparing alter-native uses, including the choice between usingscarce resources for consumer or capital goods.The kind of consequential analysis of land usewhich has come to the fore in assessment of thesustainability of biofuels, arguably should be ex-tended to other scarce resources. Methodologi-cally, this is unfamiliar territory. It needs contri-butions from system analysis, industrial ecology(including LCA and material flow analysis), eco-nomics, sociotechnical studies, and even ethicalphilosophy.

Clearly, this reinforces the point that theresearch agenda in sustainability lies outsidethe confines of any single academic discipline;to pursue it will require even more transdisci-plinarity in research than has developed overthe last few decades. Some research communi-ties that aspire to transcend disciplinary bound-aries have already emerged; ecological economicsand industrial ecology are two examples thatwere well represented at the EE3 conference.The scientific societies that try to representthese new intellectual communities have suc-ceeded in bringing together a range of traditionalacademic disciplines by focusing on relativelyspecific questions and problems (Robinson2008). The broader agenda will require some-thing different and probably more difficult,however: multidisciplinary approaches to con-ceptual problems rather than specific issues.Combined with the need for “horizon scanning”across all disciplines, this suggests that a newapproach to developing transdisciplinary think-ing is needed, aimed at defining research agendas

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that cannot even be articulated within a singlediscipline.

References

British Standards Institution. 2008. Specification for theassessment of the life cycle greenhouse gas emissionsof goods and services, PAS 2050: 2008. London:BSI.

Clift, R. and J. M. Allwood. 2011. Rethinking the econ-omy. The Chemical Engineer March: 30–31.

Dorbian, C. and I. Waitz. 2010. Estimating the ratioof non-CO2/CO2 climate impacts of aviation. Pa-per presented at the ICAO Colloquium on Avi-ation and Climate Change, 21 May, Montreal,Canada.

Robinson, J. 2008. Being undisciplined: Transgressionsand intersections in academia and beyond. Futures40(1): 70–86.

Stern, N. 2007. The economics of climate change. Cam-bridge, UK: Cambridge University Press.

About the Author

Roland Clift ([email protected]) is the ex-ecutive director of the International Societyfor Industrial Ecology and an emeritus pro-fessor at the Centre for Environmental Strat-egy at the University of Surrey, Guildford,UK.

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Lifestyles and Well-Being Versusthe Environment

Manfred Lenzen and Robert A. Cummins

Although people naturally strive for personalwell-being, this aspiration may, unfortunately,conflict with overarching societal goals. A re-cent example is the calls for the general pub-lic to change its lifestyle, away from affluentconsumerism and toward long-term sustainabil-ity. As recent negotiations about measures tostem greenhouse gas emissions demonstrate, suchsuggestions for lifestyle changes sometimes meetwith widespread opposition, presumably becausethey are perceived as having profound negative

consequences for people’s convenience, comfort,and well-being.

Research supports the above narrativethrough the well-documented knowledge-concern-action paradox: Although people’sknowledge about climate change seems to causeconcern, concern does not usually translateinto personal abatement action. In developedcountries, even environmentally minded andenvironmentally active people often consumefar beyond their fair share of global emissions.This paradox has been explained by a number offactors, such as the following:

• the dominance of convenience and finan-cial constraints over moral imperatives

• peer and status pressure to consumeresources

• the perception that an individual can-not effectively instigate noticeable, lastingchange

• people’s lack of agency and trust in author-ities

• general shortage of abatement opportuni-ties, such as public transport

The lack of consistent individual action dove-tails with governments’ reluctance to target con-sumerism in environmental policies. Such gov-ernmental inaction reflects the understandingthat improved policy measures, even combinedwith institutional and technological progress,will not be able to meet environmentally mean-ingful emissions constraints without significantchanges to consumer lifestyles (Trainer 2010).This has led some commentators to argue thatgovernments have an obligation to interfere withunsustainable lifestyles, because both individ-ual and political priority settings will fail tocounteract the long-term consequences of cli-mate change (see an assessment of the pub-lic’s “carbon capability” by Whitmarsh et al.[2011]).

Given the imperatives of individual conve-nience, comfort, and affluence, it is essential totake subjective well-being into account when de-signing strategies to foster environmentally sus-tainable consumption and lifestyles. Policies thatwould improve environmental sustainability butworsen subjective well-being have little chance of


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success. Hence, the challenge for decision makersin introducing lifestyles into the climate debate isto convince the public that although householdexpenditure would decrease, individual happinesswould not.

There is a general dearth of information onthe connection between an individual’s subjec-tive well-being and his or her environmental im-pact (Ferrer-i-Carbonell and Gowdy 2007). Ex-isting studies have focused on the relationshipbetween well-being and attitudes toward the en-vironment or between well-being and the stateof the environment. For example, a study byZidansek (2007) investigated happiness and en-vironmental sustainability at the national leveland found a strong positive correlation. The studydid not, however, take into account socioeco-nomic and demographic variables that may ex-plain common underlying traits, such as grossdomestic product (GDP) and (un)employmentrates. The publication also includes a graphshowing a negative correlation between hap-piness and emissions intensity (carbon dioxide[CO2] emissions per unit of GDP). Even if thisrelationship could be verified as causal, however,it would be largely irrelevant in terms of envi-ronmental conservation. Even in the face of de-creasing emissions intensity, the absolute envi-ronmental impact of pollution is likely to increasedue to the rising volume of human activity. As aresult, GDP growth has so far outpaced efficiencygains in many countries.

We are not aware of any study in the interna-tional, peer-reviewed literature that directly linkssubjective well-being and the negative environ-mental impact of household consumption. Webelieve that such a study would be a valuable re-source to guide decision making toward fosteringlifestyle aspects that offer the double dividends ofincreased well-being and reduced environmentalimpact. To our knowledge, there are no surveydata available that supply overlapping informa-tion on subjective well-being and consumption,so the latter could be translated into environ-mental impact.

On the basis of the above arguments, we pro-pose the active development of a major futureinterdisciplinary research stream that links en-vironmental science, economics, and psychol-ogy. We have just embarked on work (Lenzen

and Cummins 2010) that breaks new groundby integrating two separate databases—theAustralian Unity Wellbeing Survey and the Aus-tralian Household Expenditure Survey. Thesetwo surveys, in combination with a number ofother databases as well as sophisticated math-ematical techniques, allow us to quantitativelyreveal for the first time the relationship betweensubjective well-being and the environmental im-pact of consumption. In particular we aim to

• identify socioeconomic and demographicdrivers

• analyze potential trade-offs in terms of atti-tudes to accepting change that support sub-jective well-being

• derive recommendations for policies thatsupport lifestyle changes with double divi-dends of increased well-being and reducedenvironmental impact

Although these surveys will allow a novel andunique integration of social and environmentalsciences, they are still deficient in a number ofways. First, they are not drawn from identicalpopulations. Second, they do not contain infor-mation about respondents’ environmental andpolitical attitudes that would reveal ways ofachieving the above aims. This will require newsurvey data.

References

Ferrer-i-Carbonell, A. and J. Gowdy. 2007. Environ-mental degradation and happiness. Ecological Eco-nomics 60(3): 509–516.

Lenzen, M. and B. Cummins. 2010. Happiness vs theenvironment: A case study of Australian lifestyles.Sydney, Australia: ISA, School of Physics,University of Sydney. www.isa.org.usyd.edu.au/publications/Lenzen & Cummins_HappinessVsTheEnvironment_MainDoc.pdf. Accessed 15July 2011.

Trainer, T. 2010. Can renewables etc. solve the green-house problem? The negative case. Energy Policy38(8): 4107–4114.

Whitmarsh, L., G. Seyfang, and S. O’Neill. 2011. Pub-lic engagement with carbon and climate change:To what extent is the public “carbon capable”?Global Environmental Change 21(1): 56–65.

Zidansek, A. 2007. Sustainable development and hap-piness in nations. Energy 32(6): 891–897.

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About the Authors

Manfred Lenzen ([email protected]), the corresponding author for this con-tribution, is Professor of Sustainability Researchat the University of Sydney in Sydney, Australia.Robert A. Cummins holds a personal chair inpsychology at Deakin University in Burwood,Australia.

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Harmonizing Science and PolicyPrograms for a Decent andSustainable Life for All by theMid-Millennium

Arnold Tukker

Introduction

Many scientific research fields and policyagendas aim at greening our economy. Some ad-dress the problem from an economic angle, othersfrom a natural resource use angle, and still othersfrom a policy-instrument or business angle. Theresult is a large number of approaches that seem tooverlap or may conflict or compete for the samebudgets.

Global Sustainability Challenges

This situation can be ill afforded given thesustainability challenges the world is facing. TheIntergovernmental Panel on Climate Change(IPCC), the Millennium Ecosystem Assessment(MEA), and other authoritative sources all sug-gest that the current economic system is alreadyjeopardizing planetary limits (Rockstrom et al.2009). In addition, the global economy still hasto grow by a factor of 2 or 4 to provide all futureglobal citizens with a basic quality of life. Therewill be 9 billion people by 2050. The global mid-dle class, currently with an income of US$40,000to US$50,000 per year, will double from thepresent 1 billion in Organisation for EconomicCo-operation and Development (OECD) coun-tries by the advent of another billion from fast-developing economies such as China and India—which implies a total income of US$100 tril-

lion for this group alone (cf. WBCSD 2009).Lowering this income or stopping this trend isnot politically viable. With regard to the other7 billion people, statistical evidence shows thata per capita gross domestic product (GDP) ofUS$10,000 or less results in relatively low lifeexpectancies and human development indexes(Jackson 2009). Merely meeting poverty eradica-tion goals as set in the Millennium DevelopmentGoals will thus require roughly another US$100trillion in income. Providing the rich with a po-litically viable income and the poor with at least adecent life requires US$200 trillion, which meansa quadrupling of the global economy by 2050(Tukker 2011). Because at the same time abso-lute impact reductions are required, the carbonintensity of the economy needs to be reduced bya factor of 10 or so.

Scientific and PolicyApproaches to Face theChallenge

Fortunately, there is no shortage of scientificresearch fields and related policy programs inves-tigating how such sustainability goals can be met.Examples include the following.

1. Inspired by the field of ecologicaleconomics, the United Nations (UN)launched a Green Economy Initiative(GEI) in 2008, with the aim of investigat-ing the long-term societal costs and ben-efits of action and inaction in the field ofsustainability.

2. Related to the field of industrial ecology, aUN Resources Panel (RP) has been set upthat looks at the sustainable use of naturalresources to achieve a sustainable world.Just like IPCC and MEA, others also aimto provide authoritative insights into envi-ronmental pressures and related planetarylimits.

3. Also relevant are the UN EnvironmentProgram (UNEP) and the UN IndustrialDevelopment Organization (UNIDO) Re-source Efficient and Cleaner Production(RECP) program, which sees cleaner pro-duction as the way forward and relates to


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scientific research in fields such as eco-design and cleaner production.

4. Finally, both UNEP and the EuropeanUnion are pursuing a program on sustain-able consumption and production (SCP),in which key roles are played by consumerresearch, research into the effectiveness ofpolicy instruments, and, to a lesser extent,systemic analyses.

At this stage, one is sometimes left with theimpression that each of these individual programsis being presented as the most overarching andmost relevant one. There thus seems to be a dan-ger that such programs could end up in an un-productive struggle for scarce resources, for dom-inance of the overall sustainability agenda, andfor global policy support.

Suggesting a Sum that isGreater than its Parts

In my view, it is possible to organize all thesepolicy programs and related science agendas in acoherent framework using the following simple,four-step approach to build legitimacy and criticalmass for action (cf. EEB 2009).1

1. What—What goals do we want toachieve?This “what” question seems noncon-troversial. The Millennium DevelopmentGoals and other generally accepted goalsadopted by the UN imply that the problemis how to create decent lives for the 9billion future world citizens while stayingwithin planetary limits.

2. Why—Why can we not achieve this goalwith business as usual? Why do we need tochange direction?Society tends to be inert, and a con-vincing sense of urgency is essential tocreate willingness to change. The wayforward obviously involves the provisionof authoritative information by prominentscientific bodies about planetary limits andeconomic benefits of change, combinedwith appropriate stakeholder engagementand informed negotiation about such“facts.”

3. How—How could we change direction?The question of planetary limits is difficultenough to answer scientifically. But how tochange is probably a policy question ratherthan a scientific question. The best wayforward is probably by creating science-informed joint visions on pathways forchange through smart deliberation andcollaboration.

4. Proof—Is there proof such ideas work?Can we help others to follow goodexamples?At this level, there is a clear needfor showcase examples indicating novelpaths that work, to mobilize and legitimizechange.

This framework also indicates the role thateach scientific field and related policy programcould play in terms of answering the remaining“what,” “how,” and “proof” questions.

• The “why” question can be answered byprograms such as the Green Economy Ini-tiative (which provides a macroeconomiccase for sustainability) and bodies such asthe Resources Panel (which examines thecase for change from the perspective of con-straints with regard to the economy’s natu-ral resource base).

• The RECP and SCP programs could workat a more operational level, and answerthe “how” question—each focuses on majorparts of the economic system (e.g., RECPfor production and SCP for consump-tion and governance structures). In addi-tion, they can provide “proof”: inspiringexamples that mobilize and legitimize actorspursuing change, such as World WildlifeFund’s One Planet Future program, whichshowcases inspiring examples, such as theMazdar ecocity.

Such efforts should not be seen or promoted ascompeting paradigms that could each dominatethe sustainability agenda. Each effort is capable ofproviding its own unique contribution, which canlead to a sum that is (much) greater than its parts.The magnitude of the sustainability challenge isso huge that the only productive way forward iscollaboration rather than competition between

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such different strands of sustainability researchand related policy agendas.

Note

1. I am indebted to Professor Mike Young, at the Uni-versity of Adelaide, for suggesting these four ques-tions during an informal discussion in November2009 in Geneva on the UNEP Green Economy Ini-tiative and the Ten-Year Framework of Programs onSustainable Consumption and Production (UNEPGEI-SCP). The analysis of the contribution of eachpolicy program to these questions is mine and waspresented during another UNEP GEI-SCP work-shop, held in Paris in March 2010.

References

Fedrigo, D. and A. Tukker. 2009. Blueprint on Euro-pean sustainable consumption and production. Brus-sels, Belgium: European Environmental Bureau.

Jackson, T. 2009. Prosperity without growth: Economicsfor a finite planet. London: Earthscan.

Rockstrom, J., W. Steffen, K. Noone, Å. Persson, F.S. Chapin, III, E. F. Lambin, T. M. Lenton, et al.2009. A safe operating space for humanity. Nature461(7263): 472–475.

Tukker, A. 2011. Towards a green $200 trillion globaleconomy in 2050. Submitted for publication tothe Journal of Cleaner Production.

WBCSD (World Business Council for Sustainable De-velopment). 2009. Vision 2050: The new agendafor business. Geneva, Switzerland: WBCSD.

About the Author

Arnold Tukker ([email protected]) isprogram manager in sustainable innovation atTNO Built Environment and Geosciences inDelft, the Netherlands and professor of Sustain-able Innovation at the Industrial Ecology Pro-gram at NTNU, Trondheim, Norway.

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Sustainable Degrowth

F. Schneider, J. Martinez-Alier, and G. Kallis

Sustainable degrowth is defined as an equitabledownscaling of production and consumption that

increases human well-being and enhances eco-logical conditions (Schneider et al. 2010, 512).We envision a future with societies that livewithin their ecological means, with open, local-ized economies and resources more equally dis-tributed through new forms of democratic institu-tions. Such societies will no longer have to “growor die.” Material accumulation will no longerhold a prime position in the population’s cul-tural imagination. The primacy of efficiency willbe substituted by a focus on sufficiency, and in-novation will no longer focus on technology fortechnology’s sake but will concentrate on new so-cial and technical arrangements that will enableus to live convivially and frugally.

Efficiency and technological improvementsalone do not suffice to avoid ecosystem destruc-tion and resource depletion: Efficient technolo-gies have to be carefully selected, and the scale ofthe economy has to be reduced (Jackson 2009).After years of post-Brundtland deliberations, theonly absolute decline in carbon dioxide (CO2)emissions that has been achieved came with therecent economic crisis. We should focus on mak-ing ecologically beneficial economic degrowthsocially sustainable.

Economic growth is no longer economical(Daly 1996). That is, income has a limited influ-ence on subjective well-being throughout one’slifetime (Easterlin 1974). Although growth yieldsdiminishing returns, we are stuck with an imper-ative to grow, simply so as not to collapse. Noother entity in the physical world is programmedto grow indefinitely; our economic systems are ananomaly that needs to be corrected.

Sustainable degrowth is not equivalent toeconomic recession or depression—that is, un-planned and involuntary economic degrowthwithin a growth-driven system—as this has dev-astating social implications to which we are notoblivious. Sustainable degrowth denotes an in-tentional process involving a smooth and “pros-perous way down” (Odum and Odum 2001),through a range of social, environmental, andeconomic policies and institutions, which ensuresthat while production and consumption decline,human welfare improves and is more equally dis-tributed. This process leads us toward a societyin which use-value stems from relational and


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convivial, rather than positional and material,goods (Latouche 2009).

Various concrete and practical proposals arebeing debated that could enable such a degrowthtransition (see www.degrowth.eu). These includeboth policy-institutional changes within the cur-rent system—such as drastic changes to finan-cial institutions, resource and pollution caps andsanctuaries, infrastructure moratoria, eco-taxes,work-sharing and reduced working hours, and ba-sic income and social security guaranteed for all—as well as ideas for creating new spaces outside theexisting economy, such as eco-villages and co-housing, cooperative production and consump-tion, various systems of sharing, and community-issued currencies. New questions are being raisedconcerning the efficacy of such institutions andthe conditions for a successful degrowth transi-tion, and industrial ecologists have an importantrole to play in the emerging research agenda.

Industrial ecology, along the line set out byAyres, has shown how (conventionally mea-sured) economic growth depends on energy andmaterials inputs. Yet the discipline continuesto operate with implicit assumptions concern-ing the desirability and possibility of continu-ous growth—for instance, by focusing on con-cepts such as decoupling or efficiency in relationto gross domestic product (GDP). Absolute de-coupling has not materialized, and, due to theuncertainties brought about by the macro re-bound effect, even relative decoupling remainsquestionable, in view of the limitations of thesystems analyzed. Many limits were “solved” onlyby shifting costs in space and time. Future genera-tions will have to find a way to live with a greatlyaltered climate and nuclear waste graveyards un-der their feet.

Efficiency remains an important conceptalongside sufficiency. Yet it should be measuredas a ratio of physical outputs versus physical in-puts, not as a ratio of GDP, as this impedes theintroduction of indicators that are useful for thecrucial degrowth debate that needs to take place.This also implies that the efficiency of the appro-priate system should be measured.

Many industrial ecologists envision a way outof this conundrum through a form of demateri-alizing “green growth” based on efficiency andnew, environment-friendly technologies. Yet ef-

ficiency gains are generally reinvested for furthergrowth; consumption tends to “rebound”: Leanercars travel faster and over longer distances. Writ-ing in the era of steam-fired coal engines, theeconomist Stanley Jevons noted how technolog-ical efficiency improvements led to much more,rather than less, coal use. On the macro-scale,the savings made by efficiency improvements inthe use of one resource can be reallocated to theconsumption of other resources, and, similarly,even the economic wealth gained from expertiseand knowledge can be eventually reallocated tophysical goods.

The physicist and economist NicholasGeorgescu-Roegen (1971) noted that althoughentropy degradation cannot be averted, its pacecan be reduced by shifting timely and smoothlyfrom stock to flow sources. Even renewable tech-nologies, however, do not escape the laws ofphysics; they also use energy and resources (e.g.,rare metals), and they occupy space. There arelimits to the flows, too. Renewable sources havemuch lower energy return on energy investment(EROI) than the oil and gas sources whose sur-pluses provided the “invisible labor” of the In-dustrial Revolution. A solar and wind future ispossible, but it will be a simple one: a degrowthfuture, indeed.

The current economic system, programmed asit is to continue to expand, does not acknowledgeentropy and limits. Its reaction to limits has beenthe fictitious expansion of credit; live now, andlet the future pay. As explained by the chemistand Nobel laureate Frederick Soddy in the 1920sand 1930s, debt creation should not be mistakenfor real wealth creation, as the latter is limitedby material factors. The current financial crisisis a reality check. Rich countries have to findways to live well without growth. In turn, gov-ernments of countries in the Global South shouldlisten to those voices from their own populationsthat ask them to “keep the oil in the ground”(as in Yasunı in Ecuador), “ban bauxite mining”(as in Niyamgiri Hill in India), and chart theirown endogenous and autonomous socioeconomicpaths, decolonized from the unsustainable West-ern model.

Degrowth is not about going back to thepast. It is about introducing innovations, but in-novations to consume and produce less (frugal

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innovation, innovations that integrate the exis-tence of limits), instead of innovations dedicatedto suppressing limits to growth, which leads torebound.

There can be no doubt that a voluntary de-growth path is politically and socially difficult.Nevertheless, it is imperative to consider it, be-cause the alternative is catastrophic. It is up to us,scientists and citizens, to find the ways to makethe inevitable degrowth socially sustainable.

References

Daly, H. 1996. Beyond growth. Boston: Beacon Press.Easterlin, R. A. 1974. Does economic growth improve

the human lot? In Nations and households in eco-nomic growth: Essays in honor of Moses Abramovitz,edited by P. A. David and M. W. Readers. NewYork: Academic Press.

Georgescu-Roegen, N. 1971. The entropy law and theeconomic process. Cambridge, MA, USA: HarvardUniversity Press.

Jackson, T. 2009. Prosperity without growth. London:Earthscan.

Latouche, S. 2009. Farewell to growth. Hoboken, NJ,USA: Wiley.

Odum, H. T. and E. C. Odum. 2001. A prosperous waydown. Boulder, CO, USA: University of ColoradoPress.

Schneider, F., G. Kallis, and J. Martinez-Alier. 2010.Crisis or opportunity? Economic degrowth for so-cial equity and ecological sustainability. Journal ofCleaner Production 18(6): 511–518.

About the Authors

Francois Schneider ([email protected]), the corresponding author for this con-tribution, is an associate researcher at theInstitut de Ciencia i Tecnologia Ambientals(ICTA), Autonomous University of Barcelona(UAB), Spain. He is also a member of Re-search & Degrowth, an organization dedicatedto research and events around sustainable de-growth. Joan Martinez-Alier is a professor ofeconomics and economic history and deputy-director at ICTA. Giorgos Kallis is an ICREAprofessor (Institucio Catalana de Recerca iEstudis Avancats) at ICTA-UAB.

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Life Cycle Sustainability Analysis

Framing Questions for Approaches

Jeroen B. Guinee and Reinout Heijungs

Over the last three decades, environmental lifecycle assessment (LCA) has developed into astandardized method for mapping the environ-mental burdens of products over their whole lifecycle. LCA developed from mere energy analysisto a comprehensive environmental burden anal-ysis in the 1970s. Full-fledged life cycle impact as-sessment methods were introduced in the 1980sand 1990s. Finally, LCA was standardized by theSociety of Environmental Toxicology and Chem-istry (SETAC), the International Organizationfor Standardization (ISO), and, recently, theEuropean Union (EC 2010). Despite and dur-ing this standardization, it became evident thatthere is no such thing as a “standard” LCA in thesense of one well-defined method, and divergencein LCA approaches has become evident, partic-ularly during the past decade. The divergencefirst manifested itself in different approaches toallocation and the related system boundaries,different impact assessment methods (midpoint,endpoint/damage, exergy, etc.), and spatially dif-ferentiated LCA. Later on, interest increased inlife cycle costing, social LCA, market-based andconsequential LCA, hybrid LCA, LCAs linkedto other types of economic models (e.g., environ-mental input-output LCA [EIO-LCA]), dynamicLCA, and risk-based LCA; methods are still be-ing debated.

All of these developments are compatible withISO’s statement, “There is no single method forconducting LCA.” Nevertheless, some of thesedevelopments constitute significant deviationsfrom “standard” LCA practice. What the dif-ferent approaches have in common is their lifecycle basis; what they differ in is their method-ological elaboration and the questions theyaddress.

In adding relevant knowledge domains andanswering broader questions, we leave the realmof well-defined, traditional LCA and enter a morecomprehensive life cycle sustainability analysis(LCSA). Recently, a new framework for LCSAwas proposed that links life cycle sustainability


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Figure 1 Transdisciplinary integration framework for life cycle sustainability analysis (adapted from Guineeet al. 2011). IOA = input-output analysis; ISO-LCA; LCC = life cycle costing; SLCA = social LCA.

questions to the knowledge needed to addressthem, identifying available knowledge, relatedmodels, and knowledge gaps and defining re-search programs to fill these gaps (Guinee et al.2011). The framework (see figure 1) broadensthe scope of current LCA from mainly addressingonly environmental impacts to covering all threedimensions of sustainability (people, planet, andprosperity); it also broadens the scope from pre-dominantly product-related questions (product-oriented) to questions that are related to sectors(meso-level) or even involve the entire econ-omy (economy-wide). On top of this, it deep-ens current LCA so it includes other than justtechnological relations, such as physical relations(including constraints of resources and land),economic relations, and other behavioral rela-tions (e.g., rebound effects). The term “frame-work” is used here instead of the term “model”;unlike with LCA, we expect LCSA to be a trans-disciplinary integration framework of models andnot a model in itself.

The new framework for LCSA is intended toguide practitioners in selecting the most appropri-ate life-cycle-based models for a given life-cycle-based question. Guinee and colleagues (2011)

concluded that specifying this LCSA frameworkinto consistent sets of practical methods for ad-dressing life cycle sustainability questions is amajor challenge. A vast amount of research isstill needed to achieve this—for example, in rela-tion to the choice of attributional, consequential,and scenario-based modeling and in the decisionabout how to deal consistently with the time-frames involved.

The debate about attributional LCA versusconsequential LCA is a good example of thechallenges researchers face when specifying theLCSA framework. Since the beginning of thepresent century, consequential LCA has signifi-cantly grown in terms of the number of case studyapplications. Consequential LCA is a modelingapproach that aims to describe the consequencesof a decision and often models various scenariosto examine possible consequences. Consequen-tial LCAs include unit processes in the productsystem to the extent that they are expected tochange as a consequence of a change in the de-mand for the product (Weidema et al. 2009).This change is modeled not over time but as acomparison of the situation with and without aspecific demand; various product-related future

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scenarios are actually modeled. Future scenariosimply forecasting and thus include large uncer-tainties, which increase as the term of the fore-cast becomes longer. Such uncertainties are in-herent in modeling the future, no matter whatapproach is adopted. Attributional—as opposedto consequential—LCA aims to describe the en-vironmentally relevant physical flows to and froma life cycle and its subsystems as they are, were,or are expected to be.

In consequential LCA, consequences in termsof carbon dioxide (CO2), land, water, and re-source uses are all modeled from a single product’sperspective. Although consequential LCA is par-ticularly suitable for mapping the impacts of pro-cesses indirectly affected by a decision, the total ofall single-product consequential LCAs (bottom-up approach) is not likely to result in sensi-ble estimations of total system consequences andmay easily exceed sustainability levels. Maybe weshould instead consider exploring ways to back-cast normatively defined sustainability levels forCO2, land, water, and resource uses to global life-cycle-based scenarios for agriculture, energy pro-duction, transport, and so forth (cf. Graedel andVan der Voet 2008) and to relevant LCA sce-narios (Hojer et al. 2008). This top-down ap-proach might be indicated as back-casting LCA(BLCA).

Research methods and practical examples inthis area still need to be developed. Furthermore,guidance is needed for linking approaches toquestions and vice versa. Which question is bestaddressed by which type of LCA—attribution,consequential, and BLCA—or which approachis most appropriate to address which question?Specifying practical methods for BLCA and fram-ing questions for approaches are just two of themajor challenges referred to above.

References

Graedel, T. E. and E. van der Voet, eds. 2008. Link-ages of sustainability. Cambridge, MA, USA: MITPress—Strungmann Forum Reports.

Guinee, J. B., R. Heijungs, G. Huppes, A. Zamagni, P.Masoni, R. Buonamici, T. Ekvall, and T. Rydberg.2011. Life cycle assessment: Past, present and fu-ture. Environmental Science & Technology 45(1):90–96.

Hojer, M., S. Ahlroth, K.-H. Dreborg, T. Ekvall, G.Finnveden, O. Hjelm, E. Hochschorner, M. Nils-son, and V. Palm. 2008. Scenarios in selectedtools for environmental systems analysis. Journalof Cleaner Production 16(18): 1958–1970.

EC (European Commission). 2010. ILCD handbook:General guide for life cycle assessment—provisionsand action steps. Ispra, Italy: European Commis-sion, Joint Research Centre, Institute for Environ-ment and Sustainability. http://lct.jrc.ec.europa.eu/pdf-directory/ILCD-Handbook-General-guide-for-LCA-PROVISIONS-online - 12March2010.pdf. Accessed 3 February 2010.

Weidema, B. P., T. Ekvall, and R. Heijungs.2009. Guidelines for application of deepenedand broadened LCA. Deliverable D18 of theCALCAS project. www.leidenuniv.nl/cml/ssp/publications/calcas_report_d18.pdf Accessed 7April 2011.

About the Authors

Jeroen B. Guinee ([email protected]), the corresponding author of this contribu-tion, is a researcher in the Department of In-dustrial Ecology at Leiden University in Leiden,the Netherlands. Reinout Heijungs is assistantprofessor at Leiden University.

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Stepping Stones From Life CycleAssessment to AdjacentAssessment Techniques

Bo P. Weidema

This contribution points out the shared featuresand links that provide stepping stones from lifecycle assessment (LCA) to the other methodsand disciplines presented in this special sec-tion, and thereby outlines the possible gains fromintegration.

Stepping Stone 1: Life CycleAssessment to Input-OutputAnalysis

The core of LCA has always been the detaileddescription of interlinked human activities, theirproducts, and their direct flows from and to the


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environment. Interlinking the activities allowsresearchers to aggregate exchanges with the en-vironment over all activities in the chain of pro-duction, consumption, and disposal, caused bythe production and consumption of each indi-vidual product. The researcher may then subjectthese aggregated data for exchanges with the en-vironment to an impact assessment step to pro-vide comparable assessments of different choices.The calculation procedures are identical to thoseused in environmentally extended input-outputanalysis (EE-IOA). Recently, Suh and colleagues(2010) showed that the system models knownas attributional and consequential in LCA areidentical to those known in input-output analysis(IOA) as industry and commodity or by-producttechnology models. The data used in IOA can bestructured in the same format as LCA data, forintegration of investments, use, and end-of-lifeinto the core technology matrix. Both LCA andIO data can be measured in parallel in monetaryand physical units.

The main difference between IOA and LCAis thus not the structure and calculation of themodel but the route by which the data aresourced. Both types of data originate from reportsby individual enterprises, but whereas the IO dataare communicated to statistical agencies wherethey are balanced and aggregated, the LCA dataflow into the models more directly and with lessaggregation. The result is the well-known trade-off between highly aggregated but complete IOdata and more detailed but less complete LCAdata. The current solution to overcome this trade-off is the so-called hybrid LCA, which embeds thedetailed LCA data into the framework of the IOdata, thus adding the detail of LCA data to thecompleteness of the IO databases.

The most recent modeling concepts for LCA1

introduce market activities for each product asindividual activities between each of the pro-duction activities, using the production-volume-weighted output from the producers in basicprices as their input, adding transport and tradeactivities and net product taxes, and providingconsumption mixes in purchasers’ prices as theiroutput. This avoids the valuation tables appliedin IOA to translate between basic prices and pur-chasers’ prices, and introduces new options formodeling of market mechanisms (average sup-

pliers, marginal suppliers, constrained markets,elasticities) while keeping the underlying pro-duction functions constant.

Stepping Stone 2: Life CycleAssessment to Material andSubstance Flow Analysis

The completeness and geographical resolu-tion achieved by embedding LCA into theIO framework also allows the resulting hybriddatabases to be used for material and substanceflow analysis. This is facilitated through specifi-cation of several properties of each flow (e.g., drymass, wet mass, content of specific substances,price, and lifetime), which allows parallel,economy-wide, balanced tables to be obtainedfor each property, essentially resulting in high-resolution monetary or physical IO tables. InISO-14044-compliant LCA modeling, mass andelementary balances are maintained for each ac-tivity and throughout the systems being mod-eled, due to the consequential (by-product tech-nology) model that avoids allocations throughsubstitution (Weidema and Schmidt 2010). De-scribing waste and additions to stock as physicalflows allows material-specific mass balances to bemaintained, also for waste treatment and recy-cling activities.

Stepping Stone 3: With LifeCycle Assessment into theFuture: Forecasting, SocialDrivers, and Large Changes

Embedding LCA data into the IO frameworkalso provides a solid basis for scenario forecast-ing. The IO framework allows a consistent mod-eling of changing consumption patterns, produc-tion functions, efficiencies, and geographical lo-calization of production over time, where totalproduction and consumption are balanced foreach activity and product and overall resourceconstraints are respected. The detail providedby the LCA data allows the different, internallyconsistent scenarios to be explored in great de-tail. Large changes can be modeled with the ex-plicit changes in market trends that they mayentail. Data sets can be linked over time, whichenables long-lived products and capital goods

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to be linked to the waste treatment system inthe specific future year in which they becomewaste.

Stepping Stone 4: Life CycleAssessment and ImpactAssessment of BiophysicalExternalities

There is an increasing understanding that im-pact assessment cannot be clearly separated fromthe modeling of the flows in the technosphere.2

The impact pathways can be modeled in thesame way—and represented in the same extendedmatrix—as the causal flows within the techno-sphere. Linking activities across time (e.g., link-ing car driving to the changing supply of fuel overthe lifetime of the car and to the disposal activi-ties at the time of disposal of the car) can ensurethat impacts are recorded at the point in timewhen they occur, so that changes in backgroundconditions and concentrations can be taken intoaccount. This also allows the explicit introduc-tion of discounting of future impacts.

Stepping Stone 5: Life CycleAssessment and EconomicExternalities

The costs and benefits of a product can be di-vided into the costs internalized in the price ofthe product (and therefore captured by life cy-cle costing) and the external costs and benefits(biophysical, economic, or social externalities).The biophysical externalities were dealt with inthe preceding section, and the social externalitiesare discussed in the next section. There is no dif-ference between cost-benefit analysis (CBA) andLCA in the way biophysical and social external-ities are accounted for at the boundary betweenthe technosphere and the environment. Nor isthere a theoretical difference in the subsequent im-pact assessment, although CBA tends to requiremonetarization, which remains a seldom appliedoption in LCA.

As a minor difference with current CBApractice, LCA seeks to internalize any economicexternalities (monetary costs paid or monetarybenefits received by parties not operating or incontrol of the reported activities and not part

of the price of the products) directly into thephysical system models. For example, a freepublic service, such as road infrastructure, ismodeled as an input to the transport activities.The physical relationship (causality) is thennot matched by a direct economic relationship.When an economic externality is internalized,the activity that originally paid for the good orservice is relieved of this cost, which instead addsto the total intermediate costs of the activity thatpreviously received this input for free. The eco-nomic balances of the activities are maintainedthrough adjustment of the primary productionfactors (net taxes) of the activities, which isequivalent to modeling a subsidy from one activ-ity to the other. These subsidies are equivalent tothe monetary part of the externalities reported ina CBA. Thus, there are no barriers for a seamlessintegration of LCA and CBA.

Stepping Stone 6: Life CycleAssessment and SocialExternalities

The same product system that gives rise tobiophysical and economic externalities may alsocause social externalities—that is, changes in so-cial pressures that may affect human well-beingbut are not of a biophysical or economic nature(i.e., not covered as use of natural resources, emis-sions, or transfer of monetary costs and benefits).Social externalities can be modeled in full paral-lel to the biophysical externalities. This is some-times referred to as social LCA (Andrews et al.2009).

Examples of social externalities are occupa-tional health issues (work days lost), excess work(hours worked in excess of 48 per week), work-place stress, unorganized labor, and injuries (notlimited to work-related injuries). Examples ofpositive social externalities include provision ofaccess to pensions and social security, where thesebenefits are not provided by the public authori-ties; efforts to alleviate poverty by providing prod-ucts specifically intended for the poor; recruit-ment of workers from long-term unemployment;and support to terminated workers.

In contrast to the economic externalities, so-cial externalities are not paid for or provided byother activities. For example, the lost work days


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are not compensated but are simply lost. This im-plies that the same issue can sometimes be aneconomic externality and sometimes be a socialexternality. For example, education provided forfree can be an economic externality, because it ispaid for by someone and provided by a specific ac-tivity, whereas lost education opportunities (e.g.,due to child labor) can be a social externality.

Stepping Beyond Life CycleAssessment: DistributionalAnalysis and Power Analysis

The above description has pointed out thatLCA shares many features with its adjacent toolsand that there is much to gain from furtherintegration. But even then, LCA will remainincomplete as a decision support tool. At leasttwo important dimensions are missing: a dis-tributional analysis (who is affected?) and apower analysis (who has an interest in the re-sult and the power to take and implement thedecisions?).

Notes

1. See figure 5 in Guidelines for Applications of Deepenedand Broadened LCA. Deliverable D18 of workpackage 5 of the CALCAS project available athttp://fr1.estis.net/includes/file.asp?site=calcas&file=7F2938F9-09CD-409F-9D70-767169EC8AA9.

2. See, for example, A Scientific Framework for LCA.Deliverable D15 of work package 2 of the CAL-CAS project available at www.estis.net/includes/file.asp?site=calcas&file=631CC8B9–1C62-49FC-A2FD-AE82940D0C82.

References

Andrews E. S., L.-P. Barthel, T. Beck, C. Benoıt, A.Ciroth, C. Cucuzzella, C.-O. Gensch, et al. 2009.Guidelines for social life cycle assessment of prod-ucts. Nairobi, Kenya: United Nations Environ-ment Programme.

Suh, S., B. P. Weidema, J. H. Schmidt, and R. Hei-jungs. 2010. Generalized make and use frameworkfor allocation in life cycle assessment. Journal ofIndustrial Ecology 14(2): 335–353.

Weidema, B. P. and J. H. Schmidt. 2010. Avoiding al-location in life cycle assessment revisited. Journalof Industrial Ecology 14(2): 192–195.

About the Author

Bo P. Weidema ([email protected]) is a seniorconsultant at 2.-0 LCA Consultants, Aalborg,and professor at Aalborg University.

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Hybrid Input-Output Analysis as aTool for Communication AmongScientists of Different Disciplines

Experiences With Metallurgy andMaterials Science

Shinichiro Nakamura

The Need for a GeneralMathematical Platform andFramework in IndustrialEcology

Coming into industrial ecology (IE) frommathematically oriented and data-intensivebranches of economics and econometrics, Ihave been and still am fascinated by the ever-increasing possibilities of the productive inter-disciplinary research work that IE can provide.Nonetheless, I notice a marked difference inprocedures between IE and economics. This dif-ference concerns the lesser use of (or lesser at-tention to) formal mathematical modeling inthe IE community. Whereas economists usuallystart by introducing general equations and thenproceed to their implementation using data, in-dustrial ecologists tend to work with numericaltables and suchlike from the very beginning,without being bothered by mathematical repre-sentations and derivations. For the sake of fair-ness, I should point out that the situation in lifecycle assessment (LCA) has changed significantlysince the introduction of input-output analy-sis (IOA). In the area of material flow analysis(MFA), however, this approach still seems to beprevalent.

Mathematics can be regarded as the best formof scientific communication. It is equitable (thereis no native mathematician), logical, and trans-parent. I consider it a good strategy to work

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toward the creation of a general mathematicalframework in IE, something that I currently findlacking. Such a framework will be extremely use-ful to facilitate interdisciplinary collaboration,which is vital for the further development ofthe IE community. If this framework, or com-mon language, is to be widely accepted, I be-lieve it to be essential that it satisfy the followingconditions:

1. Simplicity: It should be simple to learn butrobust in nature.

2. Transparency: It should be logically con-sistent, without the need to resort to adhoc solutions.

3. Realism: It should, particularly, respectmass balances.

4. Flexibility: It should be flexible in termsof the degree of resolution, the subjects tobe studied, and the disciplines that are ofrelevance.

Among the arsenal of mathematical toolsavailable to economics, hybrid IOA satisfies allthese requirements. It is simple, as it is a sys-tem of linear simultaneous equations that is guar-anteed to have positive solutions under generalconditions. It is transparent, as it has no blackbox. Its representation of a production process isformally identical to that of process-based LCAand hence satisfies mass balances between phys-ical inputs and outputs, including waste, by-products, and emissions. I address the issue offlexibility below in some detail on the basis ofmy experiences with waste input-output analysis(WIO; Nakamura and Kondo 2009), a species ofhybrid IOA distinguished by its consideration ofwaste and waste management.

Another example of economics tools that arefrequently used to analyze the interface betweenan economy and the environment is the com-putable general equilibrium (CGE) model. Al-though a CGE model can be useful when suitablyimplemented in appropriate situations, it doesnot meet Conditions 1 and 2 above, because ofthe black-box nature it demonstrates regardingthe specification of a production process based ona constant elasticity of substitution (CES) func-tion. Furthermore, a CES function is, in general,not consistent with mass balances because of itsnonlinear nature (Nakamura and Kondo 2009).

Contribution of WasteInput-Output Analysis toCommunication AmongScientists of DifferentDisciplines

Understanding the physical flows of materialsassociated with human activities requires knowl-edge about the relevant subjects. For instance,basic knowledge of metallurgy is a necessary pre-condition for IE research involving the produc-tion and recycling of nonferrous metals (Verhoefet al. 2004). Characteristics of nonferrous metalproduction include the interdependence amongmetal species, such as copper, lead, and zinc, andthe generation of many types of by-products andwaste. With WIO, it is a straightforward matterto accommodate the occurrence of by-productssuch as gold and silver as negative entries of theseproducts in the relevant processes where they areobtained as by-products and to accommodate theflow of residues such as sludge and the activityrequired for their treatment and recycling, underfull consideration of the mass balance (Nakamuraet al. 2008).

In contrast to LCA, matrix calculations areseldom used in MFA, which may reflect the factthat MFA has mostly been descriptive ratherthan analytical. In LCA, one is often concernedwith the environmental effects of scenarios in-volving different technologies, which have im-plications for the flow of materials as well. Forinstance, the introduction of lead-free solderscan result in a substantial change in the flowof lead and silver in the entire economy. MFAusually does not consider the intermediate flowbetween different producing and fabricating sec-tors and processes. An explicit consideration ofinterindustry interdependence is needed to copewith this type of problem, however. This callsfor the use of an analytical model for an MFA aswell.

The fact that a publicly available IO table is inmonetary units has been a major obstacle to theapplication of IOA in MFA, as the latter is exclu-sively concerned with mass, not money. To copewith this obstacle, we developed a scheme (WIO-MFA) to convert a monetary IO table into a phys-ical flow of materials of concern Nakamura andKondo (2009). This scheme has been applied,


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for instance, to the MFA of individual speciesof plastics and the flow of lead and silver afterthe introduction of a lead-free solder (Nakamuraet al. 2008).

Avoiding double counting is an important is-sue in any MFA study. The automatic avoidanceof double counting in WIO-MFA, thanks to itsexplicit consideration of the degrees of fabrica-tion, can be considered another beneficial featureof using a formal mathematical model rather thanan ad hoc one.

Adoption of a formal mathematical model willalso be beneficial for a further extension of IEtools in a mutually consistent fashion. Exploitingthe duality between quantity and cost IO mod-els will enable us to derive a model of life cyclecosting as the economic cost counterpart of anLCA (Rebitzer and Nakamura 2008). Adoptionof a rectangular technology matrix that allows forthe presence of alternative technologies will re-sult in a linear programming model, as consideredby Azapagic and Clift (1998). Spatial extensionto deal with regional symbiosis can be achievedwith regional IOA (Nakamura and Kondo2009).

References

Azapagic, A. and R. Clift. 1998. Linear program-ming as a tool in life cycle assessment. Inter-national Journal of Life Cycle Assessment 3(6):305–316.

Nakamura, S. and Y. Kondo. 2009. Waste input-outputanalysis: Concepts and application to industrial ecol-ogy. Dordrecht, the Netherlands: Springer Sci-ence + Business Media.

Nakamura, S., S. Murakami, K. Nakajima, andT. Nagasaka. 2008. Hybrid input-output ap-proach to metal production and its appli-cation to the introduction of lead-free sol-ders. Environmental Science & Technology 42(10):3843–3848.

Rebitzer, G. and S. Nakamura. 2008. Environmentallife cycle costing. In Environmental life cycle cost-ing, edited by D. Hunkeler et al. Boca Raton, FL,USA: CRC Press.

Verhoef, E.V., G. P. Dijkema, and M. A. Reuter.2004. Process knowledge, system dynamics, andmetal ecology. Journal of Industrial Ecology 8(1–2):23–43.

About the Author

Shinichiro Nakamura ([email protected])is a professor of industrial ecology at both theGraduate School of Economics at Waseda Uni-versity in Tokyo and the Ecotopia Science Insti-tute at Nagoya University, in Nagoya, Japan.

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The Price Mechanism andEco-efficiency

The Role of Green Fiscal Reform

Paul Ekins

System Conditions forEco-innovation

Achieving the kinds of environmental improve-ments that are now required for environmentalsustainability requires huge investments. Withcurrent public sector deficits, most of these invest-ments will need to be made by the private sector.The private sector will not make them, however,unless private companies can make normal profitsand investors can make normal returns.

Low-carbon/environmentally beneficial tech-nologies are more expensive than their least-cost alternatives. These technologies thereforeneed subsidies and support if they are to be de-ployed. For low-carbon technologies, this supportmay come through a carbon price or be tech-nology specific. Both may be needed and opti-mal (the carbon price because of the environ-mental externality; technology support becauseof the innovation externality). The carbon priceshould rise over time, to give a pervasive signalfor eco-innovation and eco-efficiency through-out the economy. This will also choke off therebound effect and will change behavior towardlow-carbon lifestyles.

Such a carbon price may be implementedthrough environmental tax reform and greenfiscal reform. Modeling the effects of such a re-form requires an integrated energy-environment-economy model of a kind that could find multi-ple uses in other analyses of concerns and issuesrelated to industrial ecology, including the flow

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of materials, both resources and pollutants otherthan carbon, through industrial sectors and theeconomy as a whole. The modeling reported be-low is an example of how such analysis may becarried out.

Experience With and Analysisof Green Fiscal Reform

A number of recent relevant projects havebeen conducted on environmental tax reform(ETR) (or green fiscal reform [GFR]), the defi-nition of which is “the shifting of taxation from‘goods’ (like income, profits) to ‘bads’ (like re-source use and pollution)’ (Ekins et al., forth-coming).” The European Union (EU) projectCOMETR (conducted in 2007) explored thecompetitiveness effects of environmental tax re-forms (see www2.dmu.dk/cometr/). The Anglo-German Foundation project PETRE modeleda large-scale tax reform for Europe. Resultsare available at www.petre.org.uk. Finally, theUK Green Fiscal Commission (GFC) pub-lished its final report in October 2009 (seewww.greenfiscalcommission.org.uk).

So far, six EU countries have implementedETRs: Denmark, Finland, Germany, the Nether-lands, Sweden, and the United Kingdom. Theoutcomes—environmental and economic—havebeen broadly positive: Energy demand and emis-sions are reduced; employment is increased;effects on gross domestic product (GDP) arevery small. Effects on industrial competitive-ness have been minimal (Andersen and Ekins2009).

The hypothesis of ETR is basically that ETRcould bring about greater human well-beingthrough both environmental and economic im-provement. The environmental improvementderives from higher prices for pollution and re-source use, which reduce their extent; the in-creased output may come from higher employ-ment through reduced taxes on income and alsoif the ETR stimulates innovation or new indus-tries that generate exports.

The PETRE project used two macroecono-metric models to explore a number of scenar-ios involving a large-scale ETR at the Euro-pean level that caused the EU carbon reduction

targets to be met. The key to these scenarios is asfollows:

• S1(L)—ETR with revenue recycling de-signed to meet unilateral 20% EU 2020greenhouse gas (GHG) target (low energyprices)

• S1(H)—ETR with revenue recycling de-signed to meet unilateral 20% EU 2020GHG target (high energy prices)

• S2(H)—ETR with revenue recycling de-signed to meet unilateral 20% EU 2020GHG target (high energy prices)—that is,the same as S1(H) but with a proportionof revenues being spent on eco-innovationmeasures

• S3(H)—ETR with revenue recycling de-signed to meet the 30% 2020 GHG re-duction target (high energy prices), in theevent of international cooperation on mit-igating climate change

Table 1 shows the carbon dioxide (CO2) pricein 2020 (it gradually increased to that level in thepreceding years), which meets the GHG reduc-tion targets in the scenarios, and the resultingchanges from the baseline in GDP, employment,and productivity in that year. It may be seen thatsuch an ETR increases employment and produceseither increases or decreases in GDP, dependingon the model. In most cases the changes are small(within the margin of error in GDP estimates)and so would not be discernible ex post. Evenwhere GDP losses are larger (a maximum of 3%),current climate science suggests that this wouldbe a worthwhile expenditure to reduce the risksof substantial climate change. The modeling alsosuggests that if other countries implement similarpolicy measures, global carbon emissions could bestabilized by 2020 (see Ekins and Speck 2011 fordetails).

The UK GFC was an independent body withhigh-level representation from the worlds of pol-itics, business, and nongovernmental organiza-tions (NGOs) that was formed in May 2007. Itsobjectives were as follows:

• to break the political logjam on environ-mental tax reform


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Table 1 Macroeconomic implications at 2020 of a large-scale environmental tax reform (ETR) in Europethat meets its carbon targets

CO2 price GDP % change Employment % Labor productivity %Scenario Euro 2008/t from baseline change from baseline change from baseline

S1(L)E3ME 142 0.6 2.2 −1.6GINFORS 120 −3.0 0.0 −3.0

S1(H)E3ME 59 0.2 1.1 −0.9GINFORS 68 −0.6 0.4 −1.0

S2(H)E3ME 53 0.8 1.1 −0.3GINFORS 61 −0.3 0.4 −0.7

S3(H)E3ME 204 0.5 2.7 −2.1GINFORS 184 −1.9 0.8 −2.6

S1(L), S1(H), S2(H), S3(H) refer to the scenarios defined on the previous page. E3ME and GINFORS are the namesof the two macro-econometric models used for the modeling.

• to prepare the ground for a significant pro-gram of green fiscal reform in the UnitedKingdom through- Creation of evidence- Raising awareness of evidence—

communications and engagement• to understand the social, environmental,

and economic implications of a major pro-gram of environmental tax reform

The GFC carried out substantial research,which involved the modeling of a substantial taxshift at the UK level and work on public attitudesto GFR. One of its main conclusions was that thepolitics of GFR is difficult and there is therefore aneed to develop a compelling narrative for GFR.

The GFR Narrative

The need for GFR is driven by the impera-tive to reduce GHG emissions. The United King-dom has legally binding targets for 2020 which itneeds to meet through a combination of renew-ables, energy efficiency, and demand reduction(because new nuclear and carbon capture andstorage [CCS] will not be implemented in thistimescale).

The current rate of emissions reduction istoo slow—so new policies are required. Substan-tial evidence indicates that energy use increases

with income, so energy efficiency alone is un-likely to deliver the targets; an increasing energyprice reduces demand, and an increasing fossilfuel price also promotes renewables and energyefficiency.

The prices of fossil fuels might be increasedthrough government intervention (e.g., carbontaxes) or autonomously by the world market.Both approaches reduce the demand for such fu-els and increase demand for low-carbon alter-natives, but green taxes keep revenues from thetax-induced price rises in the domestic economyand generate tax receipts that allow other taxesto be reduced.

The GFC modeling showed that a large-scaleGFR in the United Kingdom could meet thecountry’s stringent carbon reduction targets whileincreasing employment and having a negligibleeffect on GDP. If a similar energy price increasecame about through world market prices, UKGDP would be reduced by 6%.

This and other evidence suggest that GFRshould lead to widespread aggregate economic,environmental, and welfare benefits, but the pub-lic appears unconvinced. People seem to dislikegreen taxes more than other taxes, because theyaffect highly valued forms of consumption, be-cause they are not related to ability to pay, andbecause people think that green taxes shouldchange behavior rather than raise revenue. They

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also do not believe in the tax shift—they thinkthat green taxes are extra rather than replace-ment taxes, affect business competitiveness neg-atively, and are unfair. Any attempt to implementGFR must take these points into account.

Public acceptability of GFR seems to requirea strong public awareness of

1. the need for emissions reduction (andtherefore an acceptance that carbon tar-gets must be met)

2. the fact that a large price increase is neces-sary to achieve emissions reductions (andtherefore an acceptance of strong policymeasures)

Other public concerns about GFR may requirethat

1. fiscal neutrality is monitored by an inde-pendent body

2. the needs of vulnerable economic sectorsand households are addressed

3. some revenues are spent on improvedenvironmental measures (which thenrepresents a departure from fiscal neu-trality that would need to be acknow-ledged)

In addition, a range of accompanying measuresand clear messages are needed that

• reward perceived good behavior• raise awareness of people’s energy use and

its impacts (meter, labels, etc.)• address infrastructural barriers to behav-

ioral change• use regulatory policies to reduce energy use• stress that energy prices will increase over

time to meet carbon targets and drive low-carbon investment

• emphasize that, when taxes need to beraised (e.g., in a situation where pub-lic deficits need to be reduced), it isbetter to raise green taxes than othertaxes

• make the point that green taxes will sta-bilize energy markets and promote energysecurity and stability

Finally, the whole approach should be pre-sented in a context that stresses that doing

nothing is not without costs—in particular, thereis no high-carbon, resource-intensive growth,high-welfare future available. This fact providesmuch of the rationale for industrial ecology’sapproach to resource utilization generally, as wellas for ETR.

References

Andersen, M. S. and P. Ekins, eds. 2009. Carbon-energytaxation: Lessons from Europe. Oxford, UK: OxfordUniversity Press.

Ekins, P. and S. Speck, eds. 2011. Environmental taxreform: A policy for green growth. Oxford, UK:Oxford University Press.

Ekins, P., et al. Forthcoming. The implications forhouseholds of environmental tax reform (ETR)in Europe. Ecological Economics.

About the Author

Paul Ekins ([email protected]) is a professorat the UCL Energy Institute, University CollegeLondon.

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Beyond Current Practices

The Role of the External Costs ofCarbon in Climate Decision Making

Anil Markandya and Ramon A. Ortiz

The literature on the external costs of carbonprovides a range of estimates, depending onthe model used and the discount rate appliedto future damages. Markandya and colleagues(2010) surveyed the literature and noted that thelower estimates of marginal damage costs rangefrom €4 per ton of carbon dioxide (tCO2) in2000 to €8/tCO2 in 2030. The upper estimatesrange from €53/tCO2 in 2000 to €110/tCO2

in 2030. The central estimate, taken from theEXIOPOL project ranges from €23/tCO2 in 2000to €41/tCO2 in 2030 and is the average ofthe means from the FUND and PAGE models.1

Other studies, however, have presented estima-tions with wider ranges.

A number of scholars have objected to thesefigures, especially at the lower end, saying that


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they fail to capture the risks associated with cli-mate change. Notable among these are Weitzman(2009) and also, to some extent, Stern (2006).Stern came up with higher values by using a lowerdiscount rate, whereas Weitzman’s objections arebased to a larger extent on the uncertainty ofimpacts. He stated that a “fat tail” in the distri-bution of possible impacts makes it impossible toapply cost-benefit analysis to define the appropri-ate level to set climate policy. He argued that thisis the case even if we allow for risk aversion. If heis right, the exercise of estimating the externalcosts of carbon has no value in policy terms.

We argue that Weitzman’s (2009) positionstill allows a role for the kind of external costestimates presented above, but they have to beused with care. First, we note that in many otherareas, externality valuation can be applied andcan be helpful in policy making without the hugeproblems of uncertainty and long time horizonsthat characterize climate change. Examples aredecisions relating to the control of local air pol-lutants and control of nonpoint pollution to landand water.

Second, Weitzman’s (2009) argument reallyapplies to the “big” decision—that is, the ex-tent to which we should control greenhouse gasesover the next 50 years and beyond—and, as hasbeen noted, is only valid under certain condi-tions (Nordhaus 2009). A study we are workingon uses a modified version of Nordhaus’s (2009)RICE model and, by running it for a range of dam-age and other parameters, calculates a volatilitypremium that is added to the mean damage cost.A similar calculation is made for the mean abate-ment cost. The model then gives an optimal solu-tion in which concentrations of carbon dioxide(CO2) equivalent stabilize at around 480 partsper million (ppm), which is much closer to thelevels that scientists have argued to be appropri-ate on precautionary grounds than estimates fromother integrated assessment models (Ortiz et al.2010).

As regards the discount rate, there is consid-erable disagreement among researchers. We takethe view that a low rate, close to the one adoptedby Stern (2006), or one that declines with timeis appropriate, on the grounds that long-termgrowth cannot be guaranteed. Other approaches,

such as hyperbolic discounting, are attractive insome respects but also raise problems of timeconsistency.

One could argue that we do not need these ex-ternal costs when we can obtain the right answerby other means. Why waste money and researchtime on externalities when you can reach thesame conclusion through “scientific consensus,”as the latest IPCC report and the subsequent po-litical debate at Copenhagen have done? In ouropinion, such a view is mistaken. First, the scien-tific consensus is influenced by data on potentialdamages, including the monetary value of thesedamages. This is the case even if the damagesare distributed over a wide range. Second andmore important, climate policy needs to be main-streamed into decisions in many spheres, such astransport, infrastructure, power generation, andfood and agricultural policy. These decisions in-volve investments and policies at a far more mi-cro level. If alternative forms of investments areto be appraised with proper attention to climatechange, we need to include a “shadow price” forcarbon or other greenhouse gas emissions. Theprice to be used should be based on estimates ofthe relevant external costs.

Some have argued that external cost estimatesare always too low to fully capture the “true” costsof technology decisions (Ackerman 2009). Wedo not agree with this view. Estimates of damagefrom air pollution, for example, have turned outto be substantial and have influenced decisionsto tighten regulations. The same applies to es-timates of damage from lead or from chloroflu-orocarbons (CFCs) and other ozone-depletingsubstances.

In summary, we believe external cost esti-mates have a role to play. Of course, they haveto be made with the best techniques available,and account must be taken of uncertainties, butthis is feasible. The issues are wider than justthose of risk aversion, and other approaches,perhaps those adopted in industrial ecology,may help to find a solution to the challengespresented.

Note

1. In July 2011, the conversion rate was $1.41 to €1.

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References

Ackerman, F. 2009. Comments on EPA and NHTSA“Proposed rulemaking to establish light-duty ve-hicle greenhouse gas emission standards and cor-porate average fuel economy standards” EPADocket EPA-HQ-OAR-2009–0472. Federal Reg-ister 74(186): 49454–49789.

Markandya, A., A. Bigano, and R. Porchia. 2010. Thesocial costs of electricity: Scenarios and policy impli-cations. Northampton, MA, USA: Edward Elgar.

Nordhaus, W.D. 2009. An analysis of the Dismal theorem.Cowles Foundation Discussion Paper No. 1686.New Haven, CT, USA: Yale University.

Ortiz, R. A., A. Golub, O. Lugovoy, A. Markandya, andJ. Wang. 2010. The DICER model: Methodologicalissues and initial results. BC3 Working Paper Se-ries 2010–11. Bilbao, Spain: Basque Centre forClimate Change (BC3).

Stern, N. 2006. The economics of climate change.http://webarchive.nationalarchives.gov.uk/+/http://www.hmtreasury.gov.uk/stern reviewreport.htm. Accessed 22 August 2011.

Weitzman, M. L. 2009. On modeling and interpretingthe economics of catastrophic climate change. Re-view of Economics and Statistics 91(1): 1–19.

About the Authors

Anil Markandya ([email protected]), the corresponding author for thiscontribution, is a professor at the University ofBath in Bath, United Kingdom, and Ikerbasqueprofessor at the Basque Center for ClimateChange (BC3) in Bilbao, Spain. Ramon ArigoniOrtiz is a research professor at BC3.

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The “ExternE” Methodology forAssessing the Eco-efficiency ofTechnologies

Rainer Friedrich

Assessing the eco-efficiency of a technology re-quires determining the environmental perfor-mance of producing and using the good orservice provided, then comparing the environ-mental performance or eco-friendliness of differ-ent alternatives for providing and consuming this

good or service. The environmental performancethen has to be related to cost differences to as-sess which alternative will maximize welfare. Ifthere is no alternative in which all inputs (ofcapital, human, and natural resources) and un-intended outputs (e.g., emissions of pollutants,waste, and land use change) per unit producedare lower than those of all other alternatives, theassessment requires weighting—that is, findingout whether the disadvantages outweigh the im-provements and benefits.

How can we find these weighting factors? Thefirst principle is that it is not possible to directlyassess (weigh) primary nonmonetary inputs andoutputs, such as pressures on the environment(e.g., resource extractions and emissions). Forinstance, is three kilograms of nitrogen oxides(NOx) emitted better or worse than one ton ofcarbon dioxide (CO2) emitted? These emissionsare not direct impacts; they cause impacts aftera series of physical, chemical, and physiologi-cal processes. Obviously, an assessment is onlypossible if we know the impacts of these pres-sures. Thus, it is necessary to estimate the damage(to human health, flora and fauna or ecosystems,crops, or materials) or the damage avoided, as aresult of changes in the environmental pressuresbefore they can be weighed.

Attempts to do so, however, reveal that thedamage caused by a particular release of sub-stances depends on the site and timing of therelease. A kilogram of PM2.5 (particulate mat-ter with a diameter of less than 2.5 mikrometer)emitted in the center of Paris causes much greaterhealth damage than the same amount emitted innorthern Finland, as population densities are verydifferent. A kilogram of a nonmethane volatileorganic compound (NMVOC) emitted on a rainywinter’s day causes much less ozone productionthan the same amount emitted on a sunny sum-mer’s day. Hence, the impacts vary with the timeand site of the pressure on the environment, sothe assessment should also vary with time andsite.

A methodology to estimate the impacts of en-vironmental pressures on human health, ecosys-tems, materials, and crops has been developedwithin the ExternE project series funded bythe European Commission (EC) (Bickel andFriedrich 2005). It starts by setting up a scenario


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for the use of the technology to be assessed. Thepressure on the environment caused by the tech-nology (including life cycle pressures) is then es-timated, including emissions of pollutants, green-house gases, and noise and land-use changes. Thenext step models the transport of the pollutantsthrough the environmental media, which resultsin concentrations or intake of pollutants. Impactson human health, ecosystems, and materials arethen quantified through exposure-response rela-tionships.

The assessment of these impacts is done in twosteps:

• Step 1: Nontolerable risks should beavoided at any cost; safe minimum stan-dards should be maintained. For instance,certainty or high probability of health im-pacts on an individual is not acceptableand should thus be avoided at any cost.Large-scale, irreversible damage to ecosys-tems should also be avoided; Damocles risks(very low probability, very high damage)might also fall in this category. Policy mak-ers use command and control measures totake this into account (e.g., by setting con-centration thresholds or banning technolo-gies or substances), but not always in a sys-tematic and consistent way.

• Step 2: People are obviously willing to ac-cept small risks if there is a certain bene-fit in return. There is, however, no naturallaw that can be used to find out whethercosts are higher than benefits. Althoughin a representative democracy, politiciansare elected to decide, these decisions or theweightings leading to the decisions are nottransparent, frequently inconsistent, andtherefore often not fully accepted. Thereis thus a need for a framework that sup-ports decision making by (1) estimating ad-vantages and disadvantages (risks, costs) ina quantitative and consistent way and (2)providing weighting factors based on thepreferences of the affected population, tomake it possible to demonstrate that ben-efits outweigh costs and the decision willincrease welfare. (Of course, such a frame-work cannot address all possible relevantcriteria, so nonquantified criteria should

also be taken into account in decisionmaking.)

Assessing impacts and generating weightingfactors thus requires measuring the preferencesof the affected, well-informed population. Thisimplies that available information should be ex-plained before the preferences are measured.

Weighting factors are expressed as monetaryvalues (e.g., €2010). This is not absolutely nec-essary but has some advantages. It allows thetransfer of values measured in one study to otherstudies, as the monetary unit is defined regardlessof the study context. Furthermore, the units areconceivable: Whereas it is immediately clear howmuch €1000 is, how much is a utility value dif-ference of 1,000 points? Finally, monetary valuescan be directly used to estimate eco-efficiency orapplied in a cost-benefit analysis. Of course, us-ing nonmonetary weighting factors would givethe same results, but as soon as one of the indi-cators has a monetary value or price, the respec-tive weighting factors can be transformed intomonetary values, so why not use monetary valuesdirectly?

There are several well-established methods tomeasure monetary weighting factors for risks andimpacts. “Stated preference” methods includeasking for the amount that respondents wouldbe willing to pay to avoid a particular risk orwilling to accept to tolerate a risk (contingentvaluation). In attribute-based choice modeling,respondents choose which of two options, dif-fering only by two indicator values, they wouldprefer. Another option is to use participatory ap-proaches. “Revealed preference” (RP) methodsare used to observe behavior. The hedonic pricemethod analyzes the percentage of prices (e.g., forbuildings) that can be attributed to an intangiblegood (e.g., the noise level). Other RP methodsinclude the averting behavior method (expendi-tures for goods that reduce risks) and the travelcost method.

In most cases, assessing an impact does notrequire conducting a new survey; instead, theresults of existing studies determining monetaryvalues can be used. State-of-the-art benefit trans-fer methods can transform the monetary valuefrom the context of the available valuation studyto the context of the new assessment.

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Scenarios of activities

PressuresReleases of substances, noise, heat, radiation

Concentrations of substances in air, water, soil, plants, food; levels;

Exposure, deposition, intake, climate change

Health risks (mortality, morbidity);Biodiversity loss (PDF);

Material and crop damage;depending on time and site of pressure

Monetary values, if risks are tolerable

Figure 1 Impact pathway approach to assessingenvironmental pressures. PDF = the potentiallydisappeared fraction of the number of species in anecosystem.

The assessment thus follows a full chain or im-pact pathway approach (figure 1). This methodis already widely used for policy support—for in-stance, to support the design of all EC directivesconcerned with air pollution and to appraise newlarge-transport infrastructure.

The method already covers many importantpathways, including the impacts of releases ofPM10, PM2.5, NOx, sulfur dioxide (SO2), am-monia (NH3), NMVOCs, heavy metals, pesti-cides, dioxins and furanes, and various carcino-genic substances as well as noise, greenhousegases, and land-use change. The model used forpersistent organic pollutants and heavy metalsis a long-term multimedia fate model. The im-portance of further substances not yet includedcan be screened with life cycle impact assessment(LCIA) methods to estimate disability-adjustedlife years (DALYs) and the potentially disap-peared fraction of the number of species in anecosystem (PDF), for which monetary values areavailable.

The depletion of nonrenewable resourcesis currently not included, as, according toHotelling’s rule of depletion of finite resources,the scarcity of the resources is already includedin the price of the resource. It has been argued,however, that a social instead of an individual dis-count rate should be used, which could be takeninto account through estimation of the change inprice resulting from a lower discount rate.

Another criticism is that the precautionaryprinciple is not taken into account—that is, po-tential types of damage that cannot be quanti-fied due to lack of knowledge should neverthelessbe included. An example might be damage dueto climate change. This could be addressed withthe standard price approach. This means that ifthere is societal consensus that a particular en-vironmental aim should be met (e.g., that theaverage temperature at the earth’s surface shouldnot rise by more than 2◦C), the marginal avoid-ance costs to achieve this aim could be used asa weighting factor instead of marginal damagecosts. The fact that catastrophic impacts—evenif very unlikely—cannot be completely excludeddoes not necessarily justify a more restrictiveobjective. In many spheres of life, catastrophicimpacts cannot be excluded, so initiating evengreater new efforts to mitigate climate changewould need to be justified by more concrete im-pact scenarios and estimated frequencies result-ing in risk estimates that are higher than for otherevents. Thus, further research on climate changeimpacts is obviously needed.

Estimating monetary values involves large un-certainties, which reflects the uncertainty of ourknowledge and of the models used. We can dealwith this by first carrying out sensitivity analysesto find out whether the decision to be supportedchanges if we vary the results within the uncer-tainty range. If this is the case, politicians haveto decide in conditions of uncertainty, but theuncertainty would be much larger without theassessment.

In summary, a methodology for inte-grated environmental assessment (the Ex-ternE methodology) has been developed, whichcould be used to assess the eco-efficiency ofa technology, of whole sectors, or of thewhole economy. More information is available


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from the websites www.externe.info andwww.integrated-assessment.eu.

References

Bickel, P. and R. Friedrich, eds. 2005. ExternE: Exter-nalities of energy: Methodology 2005 update. Lux-embourg: Office for Official Publications of theEuropean Communities.

Hotelling, H. 1931. The Economics of exhaustible re-sources. Journal of Political Economy 39: 137–175.

About the Author

Professor Dr. Rainer Friedrich ([email protected]) heads the Depart-ment of Technology Assessment and Environ-ment at the Institute for Energy Economics andRational Use of Energy of the University ofStuttgart, in Stuttgart, Germany.

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Further Extension ofEnvironmentally ExtendedInput-Output Analysis

Descriptive Accounting andAnalytical Modeling

Yasushi Kondo

A research agenda is proposed for environmen-tally extended input-output analysis (EEIO) inthis contribution. Input-output analysis (IOA),particularly EEIO, is in widespread use as a basictool in the field of industrial ecology. One of theimportant advantages of IOA is its transparency,as the basic input-output model is well devel-oped and based on matrix algebra with a stan-dardized database. An input-output table (IOT)is being maintained for many countries and re-gions. This enables researchers and practitionersto easily reproduce IOA results using a commondatabase. In addition, as the diffusion of hybridmethods indicates, information on individual in-dustrial processes can be fully utilized in a con-sistent manner in an IOA framework. Promotingsustainable consumption and production, how-ever, requires extending the IOA accounting sys-

tem and analytical model by conducting inter-disciplinary studies. Here, I briefly explain threeapproaches, categorizing them from a method-ological perspective.

Closing Models

The first approach involves endogenizationof the first and third quadrants (final demandand value-added sectors) of the IOT, whereasin the basic model only the second quadrant(industry-by-industry part) is endogenous. Re-searchers have endogenized international trade(export and import), which has been studied mostactively and successfully, by developing a multire-gional input-output (MRIO) analysis frameworkand compiling databases (MRIO tables), suchas EXIOPOL (a new environmental accountingframework that uses externality data and input-output tools for policy analysis) and the WorldInput-Output Database (WIOD), both fundedby the European Commission, and the GlobalTrade Analysis Project (GTAP). Further devel-opment of simplified analytical methods (e.g., theGLIO model [Global Link Input-Output Model];Nansai et al. 2009) is still advisable, as peri-odic compilations of MRIO tables are not yetavailable.

To analyze the environmental impact oflifestyle and the rebound effect due to the as-sociated change in earned income, it is desirableto endogenize both consumption and labor in-put. The economics literature on endogenizationof consumption is vast and dates back to at leastthe 1960s. Most economics studies do not explic-itly consider the material flow associated withconsumption, however, although such consider-ation is indispensable from an industrial ecologyperspective. There is therefore a need for furtherdevelopment of an environmentally extended so-cial accounting matrix (SAM) and consistent an-alytical models evaluating the environmental im-pact of lifestyle and rebound effects. Note that thephrase “rebound effect” is used loosely here, as itsdefinition varies across authors. IOA provides anappropriate framework for evaluating impacts ofthe so-called income effect, a type of reboundeffect, including the consumption of other com-modities that are not of main concern even if con-sumption and labor input are not endogenized.

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Taking account of the effect of productionequipment in life cycle assessment (LCA) mayrequire endogenization of investment, as in dy-namic IOA. Whereas a huge number of eco-nomics studies have addressed investment andcapital stock in monetary terms, material flows as-sociated with investment, including replacementof retired equipment followed by waste gener-ation and recycling, have not been adequatelyanalyzed in the economics literature. This meansthat we need to develop databases and modelsfor analyzing investment as well as material flow.In addition, industrial technologies representedby input (direct requirement) coefficients are in-separably linked to the investment history—thatis, to available equipment. Formulating an ex-tended IO model as a mixed integer programmakes it possible to take account of this link andstill fully utilize detailed information on engi-neering processes. Linear programs may be usedto take account of this link if the scope of astudy is economy-wide and if individual binarydecisions on investment can be approximated bycontinuous variables representing the amountsinvested.

Note that more endogenization does not al-ways lead to a better analysis, because overcom-plicated modeling spoils the primary merit ofIOA, its transparency. Hence, appropriate tech-niques should be developed or selected, depend-ing on the purpose of the analysis.

Interdependence of Coefficients

The second approach involves explicit con-sideration of the interdependence among com-ponents of coefficient matrices, which representtechnologies of industrial sectors in IOA. Forinstance, we can estimate the carbon dioxideemissions by each sector by linking fossil fuelconsumption by sector to a chemical model thatexplains a relationship between consumption andemission. Because fuel consumption constitutes aportion of the industry-by-industry part of theflow matrix, carbon dioxide emission coefficientsand input coefficients of fuel should be deter-ministically related, which is consistent with thechemical model used to estimate carbon dioxideemissions.

Because a naive application of structural de-composition analysis might be misleading if de-pendence among IOA coefficients is ignored (seeDietzenbacher and Los 2000), it is desirable todevelop a database and analytical models thatappropriately consider interdependence amongtechnological coefficients in IOA. An exampleof such a database and model suite is waste input-output analysis (WIO; Nakamura and Kondo2002). In WIO, a waste management serviceis consumed by industrial sectors, as in a stan-dard EEIO. In reality, the amount of the wastemanagement service consumed depends on theamount and composition of the waste generatedby sectors that have a demand for the service.This dependence is properly taken into accountin WIO due to its suitable accounting system andmodel. Collaboration between the engineeringand economics disciplines is indispensable if ex-tensions are to consider interdependence amongtechnological IOA coefficients.

More on Consumption

The third approach involves a detailed ex-tension of models of household consumption,which is one of the main elements of final de-mand sectors in a standard IOA. An industrialactivity is constrained to some degree by pro-duction technologies, which are materialized asmachinery and equipment, but it is difficult todetermine what factors motivate consumer be-havior, in part because a standard IOT has onlyone column sector for consumers, or households,whether consumers are endogenized or not. Theper capita consumption pattern obtained from anIOT represents the lifestyle of an “average” con-sumer. It is much easier and more meaningful,however, to interpret, for example, the behaviorsof an office worker and a college student than tointerpret the behavior of an imaginary “average”consumer who is a half-and-half mixture of officeworker and college student. There is therefore aneed to develop a database and model that enablean analysis in which consumer behavior is struc-turally decomposed through the application ofknowledge provided by various disciplines (e.g.,economics, sociology, psychology, and homeeconomics). Examples are geographical and


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socioeconomic decompositions of households(Druckman et al. 2008) and explicit consider-ations of time use (Jalas 2005). In all three ap-proaches, consistent combinations of descriptiveaccounting and analytical modeling based on in-terdisciplinary collaboration are indispensable.

References

Dietzenbacher, E. and B. Los. 2000. Structural decom-position analyses with dependent determinants.Economic Systems Research 12(4): 497–514.

Druckman, A., P. Sinclair, and T. Jackson. 2008. Ageographically and socio-economically disaggre-gated local household consumption model for theUK. Journal of Cleaner Production 16(7): 870–880.

Jalas, M. 2005. The everyday life context of increasingenergy demands: Time use survey data in a de-composition analysis. Journal of Industrial Ecology9(1–2): 129–145.

Nakamura, S. and Y. Kondo. 2002. Input-output anal-ysis of waste management. Journal of IndustrialEcology 6(1): 39–63.

Nansai, K., S. Kagawa, Y. Kondo, S. Suh, R. Inaba, andK. Nakajima. 2009. Improving the completenessof product carbon footprints using a global linkinput-output model: The case of Japan. EconomicSystems Research 21(3): 267–290.

About the Author

Yasushi Kondo ([email protected]) is pro-fessor of econometrics in the Faculty of PoliticalScience and Economics at Waseda University,Tokyo, Japan, and a visiting professor in the In-dustrial Ecology Programme at the NorwegianUniversity of Science and Technology, Trond-heim, Norway.

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Innovation for SustainableDevelopment as a Topic forEnvironmental Assessment

Rene Kemp

Even though the broader goal of industrial ecol-ogy (IE) is to stimulate large-scale system-levelchanges, current IE tools, such as life cycle assess-ment (LCA), environmentally extended input-

output analysis (EE-IOA), and material flowanalysis (MFA), are not very good at copingwith the dynamics of such system changes. Al-though innovation researchers have studied sys-tem changes in mobility, energy, and agro-food,the greater sustainability of such systems is too of-ten merely assumed. This essay proposes to com-bine the different types of research.

Sustainability as a Label forTechnologies

Fossil fuel technologies are generally viewedas nonsustainable because they rely on depletableresources (gas, oil, coal) whose combustion pro-duces greenhouse gases as well as other emissions.In the case of stationary sources, however, carbonemissions can be captured and stored for reuseat a later time, so the existing carbon cycle canbe altered in ways that make the use of fossilfuels less problematic in terms of carbon emis-sions and depletion. Although renewable energytechnologies are commonly referred to as sus-tainable energy technologies, wind turbines killbirds, and energy crops are grown in ways thatare not environmentally benign. Production ofpresent-generation photovoltaic power systemsis relatively energy-intensive because of materi-als requirements and involves the use of scarceor toxic substances. During operation, moduledamage or fires may lead to the release of haz-ardous substances (Nieuwlaar and Alsema 1997).All of this suggests that “sustainability” shouldbe used not as a label for particular technolo-gies but rather as an evaluation point to identifyentities that are problematic from a sustainabledevelopment point of view, to focus attentionand channel investments to solutions to theseproblems (Kemp 2010). The transition to a low-carbon economy really consists of two challenges:reducing carbon emissions, and limiting the sideeffects of low-carbon energy technologies.

In applying metrics, one should also look atbehavior and dynamic effects. A relevant issue inthis respect is what is done with the old product.For example, when people buy a more energy-efficient refrigerator, what do they do with the oldone: Is it scrapped, or do they keep it? The newrefrigerator may also be bigger than the old one.The assessment should look into this question as

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well as assess rebound effects from cost savingsand profits.

The Contribution FromInnovation Studies

Innovation studies, as a multidisciplinary fieldof research based on a sociotechnical systemsperspective, could be married to environmen-tal assessment methods. Innovation studies canassist environmental assessment and sustainabil-ity assessments by examining possibilities for in-novation, identifying feasible system innovationconfigurations, and identifying interaction effectsfor innovations. The example of electric vehiclesmay illustrate the point. Battery electric vehicles(BEVs) have no emissions at the point of use.They are called zero-emission vehicles by propo-nents but “emission-elsewhere vehicles” by oth-ers, who point to the emissions associated withpower production. Such BEVs have implicationsfor the power sector, not just in terms of requir-ing power but also in terms of creating a demandfor green power and for keeping grid frequencyat a stable level (frequency regulation). How canBEVs be assessed from a sustainable developmentperspective? I propose to assess them in threeways:

1. on the basis of today’s system configura-tions, in which electricity is produced fromvarious fossil fuels, nuclear fuels, and re-newables using today’s technology

2. for future system configurations consistingof old systems with new elements (e.g., car-bon capture and sequestration), improvedproducts (plug-in vehicles with greaterrange), and completely new systems withdifferent products and behavioral changes

3. from an interaction point of view, by assess-ing how a particular innovation will or mayinteract with other innovations and devel-opments and what this means in terms ofsociotechnical scenarios.

Whereas the first analysis shows limited soci-etal benefits of a switch to BEVs and hybrid elec-tric cars, the second type of analysis can show thatthere are large societal benefits to be gained if theelectricity supply changes, if BEVs are used forpower storage in vehicle-to-grid configurations,

and if cars are used in combination with publictransport rather than as a substitute. The thirdstep identifies transitions toward a low-carbon en-ergy and transport system. This might reveal thatplug-in electric vehicles are an enabling technol-ogy for wider change (toward smart grids, electricbikes, and product service systems, e.g., organizedcar sharing).

Combining Innovation Analysisand Environmental Assessment

I can see great potential in combining inno-vation analysis with environmental assessment,with environmental assessment being used toevaluate sociotechnical system configurations inenvironmental terms and with results guidinginnovation research and policy for sustainabledevelopment. Environmental assessment can re-veal areas that require innovation, and innova-tion research can highlight options, with fur-ther research homing in on these options. Suchan analysis would be considerably broader thanLCA, because it looks at broader systems andfeedback loops as part of a dynamic multilevelanalysis.

A method that combines innovation re-search with sustainability assessment is inte-grated sustainability assessment (ISA; Weaverand Rotmans 2006). ISA is a proactive, strate-gic, and potentially transformative tool to instillan explicit sustainability orientation into policymaking and help local actors find novel, context-sensitive solutions with sustainability benefits.Methodologically, ISA consists of a “cyclical,participatory process of scoping, envisioning,experimenting, and learning through which ashared interpretation of sustainability for a spe-cific context is developed and applied in an in-tegrated manner in order to explore solutionsto persistent problems of unsustainable devel-opment” (Weaver and Rotmans 2006, 3). ISAis an interactive model that enables useful, us-able, and applicable knowledge to be “copro-duced” by scientists, stakeholders, and decisionmakers.

National decision makers who are responsiblefor decoupling will require other methods, takingmore economic perspective, rather than a com-plex set of functions, as a point of reference. I can


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see great potential for the use of environmentalassessment in innovation policy, just as I can seegreat potential for the use of innovation researchin environmental assessment. All of this leadsme to the conclusion that the cooperation be-tween innovation researchers and environmentalassessment experts is a potentially fruitful one.

Acknowledgement

I thank Gjalt Huppes and the reviewers foruseful suggestions and comments.

References

Kemp, R. 2010. Sustainable technologies do not exist!Ekonomiaz: Revista Vasca de Economia 75: 2–17.

Nieuwlaar, E. and E. Alsema. 1997. Environmentalaspects of PV power systems. Report (Matisseproject working paper) on the IEA PVPS Task1Workshop, 25–27 June 1997. Report no. 97072.Utrecht, the Netherlands.

Weaver, P. M. and J. Rotmans. 2006. Integrated sus-tainability assessment: What is it, why do it, andhow? International Journal of Innovation and Sus-tainable Development 1(4): 284–303.

About the Author

Rene Kemp ([email protected]) is a professorial fellow at UNU-MERITand professor of innovation and sustainable de-velopment at ICIS, Maastricht University, theNetherlands.

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On the Roles of Individuals asSocial Drivers for Eco-innovation

Armin Grunwald

Thinking about eco-innovation and sustainabledevelopment requires ideas about ways to achievesocietal resonance and to mobilize social drivers.Some approaches have favored the political sys-tem as the main actor in this field, in particu-lar in the course of the United Nations’ (UN’s)Rio process, whereas others have favored theeconomy—for example, by postulating a “green-ing” of industry by more sustainable production

patterns and more sustainable products offeredin the marketplace. Shortcomings of both ap-proaches have led others to consider the roles ofindividuals, who should adopt the ideals of “sus-tainable consumption” (Jackson 2006; Tukker etal. 2008). The economy would then have to fol-low and provide “green” products on the basis ofeco-innovation. In this line of thought, individ-ual consumers would be the key social drivers foreco-innovation.

This last approach currently dominates themedia and the public debate on sustainable de-velopment, as is particularly clear in the caseof climate change. Mass media reporting aboutclimate change is closely linked to appeals forchanges in awareness and behavior. In this con-text, changing behavior concerns, on the onehand, activities of everyday life, such as auto-mobile use, long-distance holiday flights, foodhabits, and energy and water savings. On theother hand, changing behavior concerns con-sumption patterns—that is, the way customersbuy the products they need, from food to auto-mobiles and from clothing to electric devices.Due to this new emphasis on individual con-sumption behavior as the assumed key to eco-innovation, parts of society have entered a modeof continuous self-observation, monitoring theircarbon dioxide (CO2) balance in almost all areasof life.

This approach is, however, greatly oversim-plified, as it does not take into account the com-plexity of modern, highly differentiated societies(Luhmann 1989). Several severe shortcomingsand problems are associated with approachingsustainable development mainly through indi-vidual consumption behavior (Dauvergne 2008).The first is that it is an essential point in lib-eral societies that individuals are free to de-fine their consumption patterns. Forcing or per-suading individuals to “green” their consump-tion behavior limits the highly valued indi-vidual freedom, so restrictions to that freedomrequire a clear justification, a democratic legit-imization, and a political decision rather thanmoral appeals.

The second problem is that consumption pat-terns depend on lifestyles, which are volatileand vary considerably over time. It is hard toimagine that individual consumer behavior could

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create a stable and continuous transition to moresustainability.

Third, the aggregated outcome of individualbehavior is influenced by complex causal rela-tions and loops, so individual green behaviormay not lead to actual positive environmentaleffects. Consider, for example, the case of savingelectric power. The simplistic argument is thatsaving energy in private households should di-rectly contribute to the mitigation of greenhousegas emissions—lower consumption of energy im-plies lower CO2 emission. In a time of emissiontrading, however, matters are much more com-plicated. For example, energy-intensive produc-tion plants could benefit from individual behav-ior and compensate the saving effects achievedby the individuals. In modern society, individualbehavior does not share a direct interface withthe natural environment (Luhmann 1989). In-termediary societal (e.g., economic) mechanismsand (perhaps) societal systems logics can modifyor even reverse the intended effects of individualbehavior. Emission trading is such a mechanism,translating individual behavior into systemic ef-fects in an unforeseeable way. This “translation”systematically hampers a direct influence of in-dividual behavior on natural ecological systems(Dauvergne 2008).

The fourth point concerns a psychological as-pect. Ecologically conscious people sometimesfear that green individual behavior could per-petuate unsustainable states and processes—forinstance, by lowering the urgency to changesustainability-relevant processes and boundaryconditions of the economy or of certain so-cial sectors. Sustainable consumption could (notmust) contribute to “sustaining the unsustain-able” (Bluhdorn 2007) and thus prevent neces-sary systems transitions.

The fifth and last point addresses the well-known prisoner’s dilemma and the fact that ifmany people adhere to the principles of sus-tainable consumption, there will be space forothers to cling to their own (unsustainable) con-sumption patterns. This situation could createproblems of justice and might weaken the ac-ceptance of sustainable consumption principlesamong the population.

Consequently, hoping for a greening of in-dividual consumption behavior as a key driver

for eco-innovation is misleading. This means,however, neither (1) that individuals can-not do anything nor (2) that individuals donot have any responsibility toward sustainableconsumption.

1. Any transition to greater sustainability byeco-innovation should not be left to in-dividual consumers but instead has to bedecided on at a political level—because ittouches the polis. Individuals potentiallyhave a strong position if they become po-litically engaged, if they overcome theirfragmentation and try to act as organizedgroups—for instance, as nongovernmentalorganizations (NGOs) or as groups withinpolitical parties. Sustainability policy is afield in which the boundary conditions forconsumption are defined—the boundaryconditions within which individuals arefree. These boundary conditions are essen-tial for a transition to sustainable devel-opment, and they are political. The role ofindividuals is, therefore, to engage them-selves in shaping green boundary condi-tions for individual behavior. For exam-ple, individuals can try to compensate CO2

emissions caused by long-distance flightsby buying green certificates—this seemsto compensate for their moral qualmsabout undertaking such flights. My argu-ment is, however, that individuals shouldengage in changing the boundary con-ditions for air transport—for instance,by a worldwide introduction of taxeson aircraft fuel that takes into accountthe external environmental effects of airtransport.

2. Sustainable consumption will not be able,as I argued above, to create and sustaina transition to a more sustainable society.If individuals took the above-mentionedrole as political actors and citizens seri-ously, however, this would also have con-sequences for their consumption patterns,because of the postulate of pragmatic con-sistency: Humans could only work politi-cally toward sustainable development in atrustworthy and authentic way if they prac-ticed principles of sustainability in other


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fields of life as well, including those ofconsumption and individual environmen-tal behavior.

The resulting message is that sustainable con-sumption and behavior by individuals will notprompt society’s transition to sustainable devel-opment; instead, this transition will need politi-cal engagement by larger parts of the population.Sustainable consumption is part of the game, butit is not the entire game.

References

Bluhdorn, I., 2007. Sustaining the unsustainable: Sym-bolic politics and the politics of simulation. Envi-ronmental Politics 16(2): 251−275.

Dauvergne, P. 2008. The shadows of consumption: Con-sequences for the global environment. Cambridge,MA, USA: MIT Press.

Jackson, T. 2006. The Earthscan reader on sustainableconsumption. London: Earthscan.

Luhmann, N. 1989 (German original 1986). Ecologicalcommunication. Chicago: University of ChicagoPress.

Tukker, A., S. Emmert, M. Charter, C. Vezzoli, E.Sto, M. Andersen, T. Geerken, U. Tischner, andS. Lahlou. 2008. Fostering change to sustain-able consumption and production: An evidencebased view. Journal of Cleaner Production 16(11):1218−1225.

About the Author

Armin Grunwald ([email protected])is a professor of the philosophy of technology atKarlsruhe Institute of Technology and directorof the Institute for Technology Assessment andSystems Analysis (ITAS), Karlsruhe, Germany.

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Challenges for Industrial Ecologyin Practice and Theory

Creating a Sustainable World for NineBillion in 2050

Gjalt Huppes, Masanobu Ishikawa, andGert Jan Kramer

Challenges

A practical challenge for industrial ecology(IE) is to help accommodate nine billion mod-estly affluent citizens on this planet by 2050. Thetheoretical challenge is how to develop the mostrelevant analysis. Theory development in indus-trial ecology is hampered by unresolved issues re-lating to the conceptual duality of the domain—that is, linking social science and natural science.The solution in IE modeling has mainly been toossify causalities of the past in fixed input-outputratios, implicitly. But when it comes to develop-ing applied solutions, core questions need to beanswered, which relate to economic growth andits limits and to the potential of core technologyensembles. Answering these questions requiresviews on dynamics, which brings the causalityissue to the front, explicitly. A comprehensivetheory is well beyond the horizon. Still, we canenvisage a framework to provide better answers tosome major questions and formulate some majortasks ahead.

Conceptual Duality

Industrial ecology, as an empirical science, hasa conceptual duality at its core. It incorporatesnatural science concepts relating to physical re-ality and causality and social science concepts re-lating to symbolic reality, with a different type ofcausality. Natural scientists tend to assume deter-mined systems, with only lack of detailed knowl-edge of starting conditions leading to nondeter-mined systems. In theory we could tell where aleaf, swept up by the winds, will fall, but in prac-tice we cannot. On the social science side, wemay hold similar views when analyzing the in-teractions among all actors and their motives, asin game theory and agent-based modeling. Butwe simply do not know all the actors, so predic-tions on such complex systems cannot be realis-tic. There is a more fundamental difference, how-ever. Goal-oriented, normative action is based onreflexive learning and continuously creates newfeedback loops. We possess free will and intel-ligence. Where the social and physical systemsmeet—that is, in the red box in figure 1—is alsowhere the causalities meet, with economy cover-ing the social science and technosphere covering

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V I S I O N S

LivingSystems &

Health

EarthSystemServices

Energy & MaterialResources

Environment, as Physical System

Society as Symbolic System

EconomyCulture

Institutions Polity

Technosphere

Production &Consumption

Figure 1 Social science and natural science to becombined in IE.

the physical part. This unresolved epistemologi-cal duality was discussed in Wiener Kreis’s mani-festo of 1929, nearly a century ago.

Causality Ossified

The unresolved conceptual duality has led tosolutions in IE that avoid the clash. All pastcausalities together are fixed, ossified, in their re-sults. They form proxies for future causality, as so-phisticated extrapolations. Material flow analysis(MFA) uses the conservation of mass relation;mass in = mass out + accumulation, for a givenelement, compound, or material. Constant trans-formation ratios are then mostly used to representthe behavior of the system. Input-output anal-ysis with environmental extensions uses mone-tary relations: Money in = money out, with mostinput-output ratios assumed to be constant. Lifecycle assessment (LCA) uses technical require-ments for function fulfillment, assuming thesetechnical relations to be largely constant, againas fixed input-output ratios. These constant ratiosmake IE models manageable. Thermodynamicsshows what is possible and what is not in termsof useful work and heat for society, but appliedanalysis has a largely similar fixed coefficient na-ture. These basic models of IE are a prerequisitefor serious analysis but ignore real-life dynamicsand causality.

Core Questions to Answer

One core question relates to the nature of lim-its to growth. Are there physical constraints thatwill stop economic growth, given natural sciencepreponderance? Or are they limits we prefer notto cross, for practical and normative reasons? Thecorresponding views on depletion of material re-sources differ fundamentally. Are we running outof oil, with the peak perhaps just passed, or arewe soaking ourselves in abundant fossil fuels andcarbon dioxide (CO2), too cheap to allow alter-native energy to conquer the market and replacefossils? Are we stuck with material scarcity, or is itjust a matter of scaling up mining efforts and shift-ing toward other materials, products, and tech-nologies? Similarly, in the biofuel debate, LCA-type analysis has supported policy development inthe European Union and the United States. Wemay add causal mechanisms. Large-scale biofuelproduction increases staple food prices and landprices, leading to destruction of natural habitatsand political unrest in the cities of the develop-ing world. Choosing such mechanisms withouta clear epistemological basis allows virtually anyposition to be supported. Framing the questionwill dictate the answer.

Reducing Complexity

Adding more mechanisms and more detailwith ever-improving corroboration and data sup-port will definitely build our knowledge but willalso increasingly preclude an overarching judg-ment on “where to go.” Somehow, we need toreduce complexity. Assuming a layered reality,with higher layers being simpler, seems one wayout, like emergent properties in agent-based mod-eling. Linking general concepts, such as steadystate and sustainability, to an underlying realityremains elusive.

A Framework for AnsweringQuestions

Leaving the anything goes domain requires acomprehensive view of the combined symbolicand physical systems (described in figure 1 infunctional terms). The framework for answeringquestions would have the comprehensive systemas a starting point. One logic might be to have


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culture drive institutions, policy, and economy;policy drive institutions and economy; and in-stitutions drive the economy. The physical do-main would play a double role, that of imposingreal constraints and that of the quality of thenatural environment we would like to preserveor achieve. The more basic option remains todevelop overarching concepts for the integratedanalysis, probably to be approached in an evolu-tionary process.

Tasks Ahead for IndustrialEcology

Solutions to the duality problem in causalityseem hard to come by. Philosophy of science is asyet too far removed from IE. And a further majorissue is to combine free choice—with a normativecore—with empirical relations.

Clarifying the conceptual level of relevantcausal mechanisms is the first task and mustuse first-round solutions to the duality problem.Taking rebound as a core concept, for example,seems an incorrect, atheoretical road, as insightshave already been developed into various specificmechanisms, such as rigid constraints, market ef-fects, income effects, and parts of consumptiontheory.

By linking specific mechanisms in a frameworkcovering the whole of society and environment—all activities, sectors, and regions—such a morepartial analysis would find a reference for inter-pretation. Without such an interpretative con-text, much of current IE research should be la-beled as “not yet fit for policy advice.”

Reference

Kries, W. 1929. Wissenschaftliche Weltauffassung derWiener Kreis. [The scientific conception of theworld: The Vienna Circle.] http://depressedmetabolism.com/pdfs/viennacircle.pdf. Accessed 18July 2011.

About the Authors

Gjalt Huppes ([email protected]), thecorresponding author for this article, is a re-searcher at the Center of Environmental Sci-ence (CML) at Leiden University in Leiden,the Netherlands. Masanobu Ishikawa is a pro-fessor in the Graduate School of Economicsat Kobe University in Kobe, Japan. Gert JanKramer is a professor at CML and managerof energy futures at Shell in Amsterdam, theNetherlands.

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