POLICY HIGHLIGHTS

BETTER POLICIES FOR BETTER LIVES

Material resources, productivity and the environment

POLICY HIGHLIGHTS

Overview

Establishing a resource efficient economy is central to achieving

green growth. It involves improving resource productivity and

putting in place policies that ensure a sustainable resource and

materials management building on the principle of the 3Rs —

reduce, reuse and recycle—, and encouraging more sustainable

consumption patterns. Better resource productivity helps to

improve the environment, by reducing the amount of resources that

human economic activity requires and diminishing the associated

environmental burden. It also helps to sustain economic growth by

securing adequate supplies of materials, improving competitiveness

and fostering new technologies and innovation.

To be successful such policies need to founded on a good

understanding of the material basis of the economy, of international

and national flows of materials, and of the factors that drive

changes in resource use and productivity over time, across countries

and in the different sectors of the economy. Some natural resources,

such as water, energy, forests, are monitored internationally,

but information is insufficient to give an integrated view of how

minerals, metals, or timber flow through the economy throughout

their life cycle. In addition, little is known about how this affects the

productivity of the economy and the quality of the environment.

The OECD report Material Resources, Productivity and the

Environment is a first step to fill some of these gaps. It describes

the material basis of OECD economies. It examines how material

resources flow between the economy and the environment, and

the factors that drive changes in resource productivity over time

and across countries. The report uses concepts and tools from

material flow analysis and accounting, and provides a factual basis

to help understand some of the key challenges and opportunities

associated with material resources and resource productivity in

OECD countries.

Improving resource productivity contributes to economic growth and to the reduction of pressures on the environment. The OECD puts “resource productivity” in a welfare perspective. It is understood to contain both a quantitative dimension (e.g. the quantity of output produced with a given input of natural resources) and a qualitative dimension (e.g. the environmental impacts per unit of output produced with a given natural resource input).

Source: 2008 Recommendation by the OECD Council on Resource Productivity.

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“© OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT . 3 2 . © OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT

Natural resources provide essential raw materials, water and other

commodities to support economic activity, and are an important

source of income and jobs. As part of broader ecosystems, they

support the provision of ecosystem services – climate regulation,

flood control, natural habitats, amenities, cultural services – that are

necessary to develop man-made, human and social capital.

The use of materials from natural resources in economic activities

and the related production and consumption processes have many

environmental, economic and social consequences that extend

beyond the borders of individual countries or regions, and that affect

future generations. They have consequences on:

• The rate of extraction and depletion of renewable and non-

renewable natural resource stocks, and the extent of harvest and

the reproduction capacity and natural productivity of renewable

resource stocks.

• The environmental pressures associated with the extraction,

processing, transport, use and disposal of materials (e.g. pollution,

waste, habitat disruption); and their impacts on environmental

quality (e.g. air, climate, water, soil, biodiversity, landscape), on

ecosystem services and on human health.

• International trade and market prices of raw materials and other

goods.

• The productivity and the competitiveness of the economy.

The way natural resources and materials are managed and used

all way through the economy is thus important, not only from an

environmental perspective but also from an economic and trade

perspective.

Natural resources are fundamental to the economy and human well-being

A development pattern that depletes the economy’s natural asset base

without providing secure, long-term substitutes for the goods and

services that they provide is unlikely to be sustainable.

The environmental consequences of the use of natural resources and

materials occur at different stages of the resource cycle and affect

the quantity and quality of natural resource stocks and the quality of

ecosystems and environmental media. The type and intensity of these

consequences depend on the kind and amounts of natural resources

and materials used, the way these resources are used and managed,

and the type and location of the natural environment from where they

originate.

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Graphic 1: The commercial material cycle and the 3Rs - closing the loop

3R and circular economy initiatives aim at closing materials loops and extending the lifespan of materials through longer use, reuse and remanufacturing, and the increased use of secondary raw materials.These initiatives also aim at material substitution: using materials with lower environmental impact, and replacing the environmentally most damaging materials.

Reduce

Recycle Re-manufacture Re-use

Resourceextraction

Processing Manufacture UseFinal

disposal

Releases to the environment (pollution, waste). land use, habitat alteration...

© OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT . 5 4 . © OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT

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Rising material demand presents challenges and opportunities

The last decades have witnessed unprecedented growth in demand

for raw materials worldwide, driven in particular by the rapid

industrialisation of emerging economies and continued high levels of

material consumption in developed countries.

The amount of materials extracted, harvested and consumed

worldwide doubled since 1980, an estimated ten-fold increase since

1900; it reached nearly 72 billion metric tonnes (Gt) in 2010, and is

projected to reach 100 Gt by 2030. Growth has been primarily driven by

global demand for construction materials, fossil fuels, and biomass for

food.

At the same time, international commodity markets have expanded,

with increasing international trade flows, increasing mobility and

fragmentation of production factors, and expanding linkages among

countries and regions. This has been accompanied by increasing and

highly volatile commodity prices and by growing competition for some

raw materials.

Figure 1: Global extraction of material resources, world and world regions

World, 1980-2010 OECD and world, 1990, 2010

Source: SERI and Dittrich, M. (2014). Global Material Flow Database. 2014 Version. Available at www.materialflows.net. OECD (2013). Material flow database.Note: BRIICS: Brazil, Russian Federation, India, Indonesia, China.

Did you know…OECD countries account for:

• Slightly less than half of the global economy (using PPPs) compared to about 60% in 2005.

• Less than one-third of all material resources consumed worldwide compared to 43% in 1990.

Growing demands for materials worldwide and the globalisation of supply chains change the ways in which materials are supplied to the economy and raise concerns as to the environmental impacts of their use create opportunities for new markets and greener growth

0

10

20

30

40

50

60

70

1980 1990 2000 2005 2010

Biomass

Fossil energycarriers

Metals

Construction &industrialminerals

billion tonnes (Gt)% change, 1980-2010

48%

66%

87%

202%

OECD 27%

BRIICS 51%

rest of world 22%

World 2010 material extraction

72 billion tonnes

OECD 43%

BRIICS 34%

rest of world 23%

World 1990 material extraction

43 billion tonnes

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Rising demand for materials affects the ways in

which natural resources are supplied to, and used

in the economy.

• They raise questions about the sustainability

of natural resource use and the negative

environmental impacts of production and

consumption of resources, as well as about

risks of disruptions in materials supply.

• As production and consumption have become

displaced with increasingly complex and

globalised value chains, questions also arise

about the distribution of the environmental

burden associated with material use.

By 2050, the world economy is expected to

quadruple and the global population to grow to

over 9 billion, placing additional strain on the

earth’s material resources and the environment.

Material productivity is improving, but decoupling remains weakMaterial extraction and consumption in OECD countries have increased, but much more slowly than at the global level. Material productivity is improving and there are signs of decoupling of material consumption from economic growth.

Today, OECD countries generate 50% more economic value with one tonne of raw materials than they did in 1990 and 30% more than in 2000. The domestic material productivity of OECD economies rose from 1400 USD per tonne in 2000 to over 1800 USD per tonne in 2011 (in constant prices and PPPs). Decoupling has occurred overall in the OECD area, across all material groups.

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A growing population with higher average income

requires more food, more industrial products, more

energy and more water. This creates formidable

economic and environmental challenges.

Confronting the scale of these challenges requires

ambitious policies to achieve a significant increase

in resource productivity, particularly through

technical change and innovation, and through

more effective management approaches. This will

in turn create opportunities for investment, for

new products and markets, and for employment.

OECD countries generate 50% more economic value with one tonne of raw materials than in 1990

Source: SERI and Dittrich, M. (2014). Global Material Flow Database. 2014 Version. OECD (2013). Material flow database.

Figure 2: Material consumption and decoupling

Material consumption per capita, OECD and world, 1980-2010, kg/cap/day

Decoupling trends, OECD, world1990 -2011 or latest available year

Material consumption per capita, OECD, 2010/11, kg/day

0 10 20 30 40 50 60

World

OECD 2010

2000

1980

50

75

100

125

150

175

200

1990 1995 2000 2005 2010

Index 1990=100

material consumption

GDP

OECD

50

75

100

125

150

175

200

1990 1995 2000 2005 2010

Index 1990=100

material consumption

GDPWorld

10

18

5

13Biomass (food, feed, wood)

Construction & industrialmineralsMetals

Fossil fuels

46 kg per person per

day

Decoupling is breaking the link between “environmental bads” and “economic goods”. Absolute decoupling occurs when environmental degradation or environmental pressures are decreasing while the economy is growing. Decoupling is relative when environmental degradation or environmental pressures are growing, but at a slower rate than the economy

8 . © OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT © OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT . 9

Progress in material productivity can be attributed

to policy action and technological change, as well

as to structural changes, including the rise of the

service sector and the substitution of resource

intensive domestic production by imported goods.

The economic slowdown following the financial and

economic crisis plays an important role in recent

developments due to an important decline in the

demand for materials, in particular construction

materials.

Prior to 2007, there were only a handful of instances

of absolute decoupling of material consumption

from economic growth. Since then, a majority of

OECD countries display an absolute decoupling.

As economic growth resumes, the demand for

materials will increase and will exceed pre-crisis

levels unless countries strengthen resource

productivity policies and measures.

The consumption of material resources to support

economic activity remains high. An average person

living in an OECD country consumes about 46 kg

of materials per day (about 60% more than the

world average), including 10 kg of biomass, 17 kg of

construction minerals, 5kg of metals and about 13

kg of fossil fuels.

Productivity gains have been achieved in recent years, but material consumption remains high and progress is moderate once indirect flows associated with trade are considered

As OECD economies become more service-

based, their reliance on imports is increasing

with resource-intensive production often being

displaced to non-OECD economies. Imports make

up almost one-third of material inputs in the OECD

area, compared to one quarter in 1990. They make

up 40% in OECD Europe and in OECD Asia-Pacific;

and less than 15% in OECD Americas.

Finished and semi-finished products weigh

significantly less than the raw materials from

which they are derived. When accounting for all

the raw materials that are required to produce

a good but that are not physically incorporated

into the traded product, the productivity gains in

countries that are net resource importers are more

modest.

From waste to resources The amount of solid waste generated by economic activity is rising in

line with growing consumption of material resources. Many valuable

materials continue to be disposed of as waste and, if not recovered,

are lost to the economy. But efforts to recycle waste are starting to

pay off, and a generally positive trend can be observed for municipal

waste (representing roughly 10% of total waste).

• The amount of municipal waste generated per year is around 660

million tonnes; per capita generation decreased by 5% (to 530

kilograms per person compared to 560 in 2000), but remains high

compared to other countries in the world, and is still higher than

in the early 1990s.

• Municipal solid waste is increasingly being diverted from landfills

and kept in the economy through recovery or recycling.

• Markets for secondary raw materials are expanding, but have to

cope with volatile commodity prices.

• Recycling rates have increased for a large range of important

materials, such as glass, steel, aluminium, paper and plastics,

reaching levels as high as 80% for some of these materials. There

are however many precious or specialty metals that are not

recycled or for which recycling rates remain very low.

Efforts to move from waste to resources show first results. Recycling rates are high for a number of materials, but many valuable materials continue to be disposed of as waste

Figure 3: Decoupling trends and municipal waste

Source: OECD environmental statistics (database). Note: Data contains estimates.

Decoupling trends, OECD countries, 1990-2011 Municipal waste, OECD countries, 1995-2011

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80

100

120

140

160

1990 1995 2000 2005 2010

GDP

Municipalwaste

//

0 0

100

200

300

400

500

600

1995 2000 2005 2011

560 530520 530560560

19% 25% 33%30%

16% 16% 19%17%

64% 58% 48%53%

Material recovery

Energy recovery

Disposal

Share in % going to :

Amounts in kg per capita

80

100

120

140

160

1990 1995 2000 2005 2010

GDP

Municipal waste

//

0

10 . © OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT © OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT . 11

Urban mines: an important, undervalued source of raw materials

Closing the loop of the material cycle: better policies for greener growth

Resource productivity is essential to future economic growth and

development, and hence to prosperity. In the past ten to fifteen

years, improving resource productivity has become a priority for

governments and businesses alike. Many countries are taking

action and some have set national targets for material productivity.

Sustainable resource use and resource productivity are also high on

the international policy agenda. They have been addressed by the

Heads of State and Government of G8 countries, and are actively

promoted by the OECD, UNEP and the European Commission.

Much more is however needed to effectively decouple the use

of material resources from economic growth so as to reduce the

associated negative environmental impacts and avoid waste of

valuable resources.

This involves scaling-up existing policies, establishing proper

framework conditions, and ensuring that policies are more coherent

and better integrated. Some of the key challenges are linked to the

transboundary dimension and complexity of most supply chains and

the large number of economic actors and government agencies that

need to be involved in such policies.

• It requires measures and investments to support technological

change and innovations, and to promote integrated life-cycle-

oriented approaches, such as 3R policies, sustainable materials

management and sustainable manufacturing. Significant potential

exists for efficiency gains and improved resource productivity in

many sectors, including construction, transport, agriculture and

manufacturing.

• It also requires efforts in policies that affect trade in raw materials

and in certain types of waste, enhanced international co-operation

and capacity development

Sustainable materials management (SMM)...

...is defined as an approach to promote sustainable materials use, integrating actions targeted at reducing negative environmental impacts and preserving natural capital throughout the life-cycle of materials, taking into account economic efficiency and social equity.

The key principles that should be used when developing SMM policies and strategies are: the preservation of natural capital, the life-cycle perspective, the use of the full range of policy instruments and multi-stakeholder approach

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12 . © OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT © OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT . 13

Raw materials are usually extracted or produced from natural

resource stocks. Valuable materials can also be gained from the

recovery and recycling of solid waste by diverting materials from the

waste stream before final disposal. They can further be extracted

from final waste disposal sites such as landfills, where solid waste has

accumulated over long periods. Valuable resources are also found in

the built environment, and in products and appliances in use. These

“urban mines” are an important source of minerals and metals for

industry (e.g. electric and electronic equipment), and a potentially

important domestic source of raw materials in the future.

Estimates quantifying the amount of raw material locked in the

economy indicate that the size of future urban mines could be

significant. Reliable estimates have been made for only a few metals.

For example, the stocks of iron locked in the economy are estimated

between 12 and 18 million tonnes or roughly 15-20% of global iron

ore reserves in 2011. These estimates form a picture of the amount of

material that could one day be available for reuse or recycling free of

technical or economic constraints.

Urban mines

Filling knowledge gaps: better information for better policiesA considerable amount of work has been carried out over the past

ten years to develop the methods to analyse material flows and

to develop appropriate indicators to monitor progress. Almost

all OECD countries have developed initiatives in this area. In

Europe, reporting on materials flows has become mandatory. This

is supported by the adoption at UN level of the System of

Environmental-Economic Accounting (SEEA) as an international

statistical standard.

However, missing information and inconsistencies still limit the

tracking of progress with resource productivity in many countries and

at international level.

Important gaps include the following:

• Material flows that do not enter the economy as transactions, but

that are relevant from an environmental point of view, including

unused materials such as mining overburden and indirect flows of

raw materials associated with trade.

• Material flows of importance to the 3Rs, including flows of recyclable

materials and secondary raw materials, and flows of waste.

Distinguishing between primary and secondary raw materials is

crucial for assessing resource productivity and decoupling trends.

• The size and the value of the urban mine: with the exception of

some of the most common industrial metals, there are insufficient

estimates of stocks of material locked in the economy to form a

reliable picture of their potential to contribute to future supply.

Capitalising on the potential of the urban mine will require not only

better knowledge of its size, but also its dynamics, how it evolves

over time and in relation to virgin stocks.

• Industry-level and material-specific information that is needed to

indicate opportunities for improved performance and efficiency

gains in production and consumption processes along the supply

chain.

• Compatible databases for key materials and substances, including

critical raw materials, environmentally harmful substances and

substances that play a role in global biogeochemical cycles.

Many countries have taken initiatives to measure material flows and resource productivity but significant gaps remain

There is also considerable scope for deeper analysis

of particular resources and materials, and their

interactions. Examples include trade related

resource flows and flows of secondary raw materials,

the way they interact with commodity prices and

recycling markets, and how they relate to innovation

and to natural resource stocks.

Future work will also need to further explore the

environmental impacts and the costs of material

resource use throughout the life-cycle of materials,

as well as the economic and environmental

opportunities provided by improved resource

productivity. An important task is to improve

understanding of the trade-offs that need to be

made.

Better information will also help make a strong case

for policies aimed at improving resource productivity

by showing the full benefits of such policies.

Further reading

• OECD (2014), Material Resources, Productivity and the Environment, OECD Publishing, Paris.

• OECD (2014), Green Growth Indicators 2014, OECD Publishing, Paris.

• OECD (2012), Sustainable Materials Management: Making Better Use of Resources, OECD Publishing, Paris.

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BETTER POLICIES FOR BETTER LIVES

For more information:http://www.oecd.org/env/wastehttp://www.oecd.org/env/waste/material-resources-productivity-and-environment.htm

The OECD works with its member countries and international partners to

further develop resource productivity indicators, and improve information

on material flows, natural resource stocks, and the environmental impacts

and costs of resource use. This is done in collaboration with UNEP and its

International Resource Panel, Eurostat and several research institutes.