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19 March 2018 6 min read

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Balancing economic growth and environmental impacts globally

There have been plenty of measures of global economic growth over the years and numerous estimates of how burning hydrocarbons is progressively contributing to climate change.

Understanding commodity flow and its impacts on economies.

What's not so commonly understood, or as widely publicised, is the relationship between the extraction, trade and consumption of materials and the importance for both the environment and the economy.

It seems like a very simple question. When you take natural resources out of the Earth, what are the exact benefits and damages being done? If we know exactly how much the world is consuming – whether it be metal ores, fossil fuels, crops and timber, construction materials, or water and energy – what is the end equation?

From this knowledge, businesses and governments can contribute to make the entire chain of material throughput more efficient to balance economic growth and environmental impact.

Database to understand the flow of global material

The need to decouple economic growth and human wellbeing from ever-increasing consumption of natural resources has become one of the world's most important policy discussions in recent years, and CSIRO is at the heart of trying to put intelligence to this question.

CSIRO's expertise in the flow of global material and its impact on economies has come in the form of a database. This large database can track the inflows and outflows of materials and resources from 1970 until the present day and model the real impact of these activities for every country in the world. CSIRO and its international partners curate it on global material extraction and resource productivity for United Nations (UN) Environment.

CSIRO can help organisations capitalise on future opportunities or prepare for potential threats.

No other scientific organisation has this information at its fingertips and CSIRO team leader, Heinz Schandl, has been instrumental in ensuring the database is the foundation stone of the UN’s Environment Programme’s policy on intelligent resource extraction.

Dr Schandl says that if we can find the right equilibrium of use and extraction, we can then know more about the means to reduce carbon emissions and keep global warming below two degrees Celsius. We can also know more about how to yield higher economic growth and more targeted employment with less detrimental impact.

"The data we provide is different to traditional environmental data," Dr Schandl says.

"Here we are looking at the resource-use consequences of the global economy, which we call pressure indicators. The advantage of the pressure indicators over just knowing the impact is that they are closely related to economic processes.

"We can identify which industries can make the greatest contribution to resource efficiency and get the greatest economic gain."

Leading an international consortium for the United Nations

Dr Schandl explains CSIRO’s role in leading an international consortium that prepares the dataset and provides numbers to the UN International Resource Panel (IRP), whose job is to report on the use of materials and energy and the production of wastes and emissions in the global economy.

It can then see the connections between economic growth and human wellbeing from the global resource patterns.

There are many datasets from which the global material flow database is assembled. Bodies, such as the UN’s Food and Agricultural Organisation, report on crop and timber harvest, while the International Energy Agency offers numbers on the extraction of coal, oil and gas.

"We take their raw data and use it according to internationally agreed standards to create the material flow resource productivity database," Dr Schandl says.

The global material flow database has been the key dataset used by the IRP, which issued an important report in 2016 at the UN High-Level Political Forum revealing the status, trends, structure and dynamics of resource use, including extraction, trade and consumption of biomass, fossil fuels, metal ores and non-metallic minerals.

The report found that global material use has tripled over the past four decades, with annual global extraction of materials growing from 22 billion tonnes in 1970 to 70 billion tonnes in 2010. Global material use has accelerated since the year 2000 during a period of sluggish global economic growth resulting in a declining global material use efficiency and contributing to fast increasing environmental impacts.

Global material flows data shows mining and metals industry will continue to grow

Large mining truck
The Global Materials Flows database encompasses 40 years (1970–2010) of data from every country in the world. ©  iStockphoto

Interestingly, Dr Schandl says that the CSIRO data reveals that the mining and metals industry has been expanding even in periods of economic slowdown that we are supposedly experiencing now.

"The data is telling us that the boom is not over at all."

Since 1970, only the 2008-09 period showed any real decrease in demand, but in all other years the metal industry has been growing and should continue to grow into the future.

"We may be seeing a mismatch between supply and demand, a short-term effect which people might call a downturn. But, this has nothing to do with whether the world economy needs more metals in the future, which it clearly does," Dr Schandl says.

The report also introduced a new material footprint indicator that shows the amount of materials that are required for final consumption in a country. It's shedding light on the true impact of economic growth.

Monitoring progress on Sustainable Development Goals

With the historic adoption of the 2030 Agenda for Sustainable Development in September 2015 in New York, the international community has now committed itself to 17 Sustainable Development Goals (SDGs) to harmonise economic growth, human wellbeing and environmental integrity.

Indicators from the global material flow database are used to monitor the progress countries are making in regard to improving the resource efficiency of production and consumption (SDG target 8.4) and sustainable natural resource use (SDG target 12.2).

Dr Schandl explains that there is still work to be done to improve the database's applications and to expand its use into new areas. The data is being used for policy-making by the Japanese Sound Material Cycle Society law, the Chinese Circular Economy law and the European Union's Sustainable Use of Natural Resources directive.

"In the future, we need to drill this down to make it more relevant to various business sectors and possibly even to individual corporations," Dr Schandl says.

This is done by identifying national hotspots in terms of sectors or products where investment could be focused to create the largest benefits.

This analysis helps to identify economically attractive resource efficiency with large co-benefits for greenhouse gas abatement, pollution reduction and waste minimisation.

"We will be able to show every industrial sector exactly what its resource performance is. We will be able to focus on specific products, processes and industries and ask how their environmental performance – including materials, energy use, waste and emissions – can be improved," Dr Schandl says.

Valuable data for lowering environmental impacts and saving costs

Stefanos Fotiou, the director of the Environment and Development division of the Economic and Social Commission for the Asia-Pacific (ESCAP) region used CSIRO's research for many years to provide technical support to ESCAP members. He believes that the use of the database will multiply in time.

"The more we use the CSIRO database, the more we find value," Dr Fotiou says.

"It will be useful to understand the interlinkages between the economy and the environment, as well as the predictive value this data could have when we try to analyse trends and the impacts of some processes."

Dr Fotiou says the end-game is to know the "breaking points" for a particular industry.

"Ultimately, we need to find answers to questions such as how much coal we use and what will happen if we use more or less. And, do the same for other resources, such as oil, minerals, energy and agricultural products."

He also emphasises that this is not just about the negatives of growth.

"We see our role as the intermediary. We offer simulation tools to show what will happen to your energy mix or what will happen if you increase your energy efficiency by a certain percentage.

"It's not just about how to save the planet – it's about how to save resources and money."

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