Dematerialization (economics)

Last updated

Dematerialization is a term in economics and the social sciences that describes the process of making more goods with less material. [1] The term itself possesses multi-accentuality, which allows it to be diversely explained by different fields of social science, such as Mainstream economics, which puts focus on the aspects of technological evolution and market demand shifts, and Ecological economics, which emphasizes the effect of dematerialization on the natural environment.

Contents

In economics, dematerialization refers to the absolute or relative reduction in the quantity of materials required to serve economic functions in society. [2] In common terms, dematerialization means doing more with less. This concept is similar to ephemeralization as proposed by Buckminster Fuller.

Origin

Dematerialization is a phenomenon occurs simultaneously with technological advancement, especially in the Third Industrial revolution products. Miniaturization and optimization of products are enabled by the improvement of wafer fabrication and battery production. Internet supported the digitalization of products (Online newspaper, Media Streaming, eBook). Servitization of products is due to the Industrial transformation in developed economies, from retailing to rental services. [3]

In 1972, the Club of Rome in its report The Limits to Growth predicted a steadily increasing demand for material as both economies and populations grew. The report predicted that continually increasing resource demand would eventually lead to an abrupt economic collapse. Studies on material use and economic growth show instead that society is gaining the same economic growth with much less physical material required. Between 1977 and 2001, the amount of material required to meet all needs of Americans fell from 1.18 trillion pounds to 1.08 trillion pounds, even though the country's population increased by 55 million people. Al Gore similarly noted in 1999 that since 1949, while the economy tripled, the weight of goods produced did not change. [4]

By most measures, quality of life improved from 1977 to 2001. While consumer demand is constantly increasing, consumers demand services such as communication, heating and housing, and not the raw materials needed to provide these. As a result, there is incentives to provide these with less materials. Copper wire has been replaced with fiber-optics, vinyl records with MP3 players while cars, refrigerators and numerous other items have gotten lighter. [4]

The three essential ways to dematerialize a product [5]
MeaningExamples
OptimizeReducing the product massReduction of mobile phone weight
DigitizeChange into digital productsPaper → Laptop, eBook
ServitizeSell the product as a serviceMass production → Customization

Bicycle selling → Rental bicycle

Explanations

Mainstream economics

Digital economist Andrew McAfee noted that the two fundamental forces that cause Dematerialization are: thriving Capitalism and technological progression. The technologically advanced products enable the improvement of living standards while consuming fewer natural resources. In the late 18th century, the Industrial Revolution can be seen as the peak of human raw material consumption due to capitalism's expansion. Since then, the progression of technology started to prompt the disuse of obsolete products. As the demand for advanced products increased, the outdated products supply decreased. The economy grows simultaneously with the reduction of material quantity requirements, causing a cycle of "More from less." [6] The three consequences of dematerialization according to Andrew McAfee:

  1. Enhancement of human living standards as well as the natural environment. Poverty is decreasing, as is the rate of child mortality. Knowledge, education, food, and sanitation are spreading rapidly.
  2. When more production is produced by fewer factories, capital concentrates over time. Capitalism and technological progress are combining to allow us to achieve more with less, but this also implies that more profits are going to fewer people.
  3. The decline in the quantity of interpersonal interactions and bonds over time. There are numerous reasons for the reduction of social capital. One of them has to do with concentration: as farms and factories close, the work connections that they created wither.

Ecological studies

The Dematerialization route The dematerialization route.png
The Dematerialization route

In terms of ecological research, dematerialization is the improvement of social metabolism. Unlike traditional environmental protection measures, it facilitates a market and industrial transition from non-renewable to renewable resources, which might fundamentally alleviate environmental challenges. [8] [9] Word processing software, for example, can take the place of paper notes, reducing the demand and supply of non-renewable paper pulp, and slow down the process of deforestation. Dematerialization, on the other hand, is frequently hampered by the issue of reproduction rate. Renewable items will lose their price competitiveness in the market if their reproduction rate cannot exceed that of non-renewable products. Thus, Ecologists mostly suggest for government incentives for renewable energy development.

Dematerialized Industries

Agriculture

Since the 1970s, crop tonnage has quadrupled in the United States, and the agricultural region has fallen from 472 million to 390 million hectares by the 2010s. The environmental footprint of livestock production in the United States has been lowered as a result of productivity advances in animal agriculture. In Europe, Latin America, and East Asia, similar losses in acreage have been observed, accompanied by huge gains in productivity.

Logging

The majority of industrialized economies are now in the midst of a "forest transition," in which governments are reclaiming forest land. Forestry has improved in efficiency, and wood consumption has decreased. Electronic wording applications have replaced paper, and ships and structures are no longer made of wood. Since the 1960s, the global use of wood for fuel and building has decreased dramatically, and the imprint of human activity on the planet has shrunk.

Mineral Industry

Steel had virtually no competition in 1900 for many of the exacting, durable, or heavy-duty applications for which it had been developed. With large-scale production of aluminium and its alloys, as well as reliance on other metals for some critical applications, this has changed a century later. Titanium has been used in alloys with aluminium because it is 45 percent less dense than steel but has a 20 percent lower ultimate tensile strength. [10]

Mineral usage is likewise dropping in the United States. Steel usage has decreased by 15%, aluminum consumption by 30%, and copper consumption has decreased by 40% in the United States since the late twentieth century, according to the US Geological Survey. Cars now weigh 30% less than they did in the early 1960s, while aluminum soda cans are six times lighter than they were then. By using reinforced concrete, steel framing, and stronger and lighter glass, the consumption of cement, stone, sand, and gravel in construction has been minimized. For more than a decade, the US has maintained a steady level of energy consumption. Similar trends may be seen in the UK, which began lowering its raw material usage in 2001 and 2003. [11]

Criticisms

There is not much evidence that industries around the world are under dematerialization. The international extraction of six minerals (bauxite, the platinum group, magnesium, cobalt, molybdenum and nickel) and the production of cement grew faster than GDP from 1960 to 2019. Although GDP growth and technological advancement maintains a decent rate, the market demand of non-renewable materials didn’t fall. [12] A reason why we are not seeing a global dematerialization but a regional one is because advanced economies outsourced the production of material-intensive goods to the developing countries.

Despite society's best efforts at recycling and dematerialization, primary metal production is expected to rise in the future due to rising global demand for consumer goods. Like other industrial sectors, the mining, mineral processing, and metal production sector is under increasing pressure to reduce the amount of energy it consumes and the amount of greenhouse gases it emits. [13] Because of the growing population and huge unmet demand for steel in low- and middle-income countries in Asia, Latin America, and Africa, there is no immediate prospect of global dematerialization: there may be temporary declines, but global steel consumption will continue to grow in the long run. At the same time, relative dematerialization will continue, allowing societies to derive more value and enjoy higher living standards with decreasing steel inputs. [10]

While we may be using fewer materials, we are still consuming raw materials. In the United States, for example, except for aluminium, the use of metals has decreased significantly over the last century, whereas the use of paper and plastics has increased. According to the same study, the US is replacing less dense materials like timber and steel with aluminium and plastics. The vast majority of research appears to suggest that any potential for the world to become greener and cleaner through dematerialization is conditional on our ability to make this practise universal. To put it another way, when we stop using a material, it appears that we are simply replacing old, less dense materials with new, less dense materials. [14] [15]

See also

Related Research Articles

<span class="mw-page-title-main">Resource depletion</span> Depletion of natural organic and inorganic resources

Resource depletion is the consumption of a resource faster than it can be replenished. Natural resources are commonly divided between renewable resources and non-renewable resources. The use of either of these forms of resources beyond their rate of replacement is considered to be resource depletion. The value of a resource is a direct result of its availability in nature and the cost of extracting the resource. The more a resource is depleted the more the value of the resource increases. There are several types of resource depletion, including but not limited to: mining for fossil fuels and minerals, deforestation, pollution or contamination of resources, wetland and ecosystem degradation, soil erosion, overconsumption, aquifer depletion, and the excessive or unnecessary use of resources. Resource depletion is most commonly used in reference to farming, fishing, mining, water usage, and the consumption of fossil fuels. Depletion of wildlife populations is called defaunation.

<span class="mw-page-title-main">Uneconomic growth</span> Economic growth that reflects or creates a decline in the quality of life

Uneconomic growth is economic growth that reflects or creates a decline in the quality of life. The concept is used in human development theory, welfare theory, and ecological economics. It is usually attributed to ecological economist Herman Daly, though other theorists may also be credited for the incipient idea, According to Daly, "uneconomic growth occurs when increases in production come at an expense in resources and well-being that is worth more than the items made." The cost, or decline in well-being, associated with extended economic growth is argued to arise as a result of "the social and environmental sacrifices made necessary by that growing encroachment on the eco-system."

<span class="mw-page-title-main">Ecological economics</span> Interdependence of human economies and natural ecosystems

Ecological economics, bioeconomics, ecolonomy, eco-economics, or ecol-econ is both a transdisciplinary and an interdisciplinary field of academic research addressing the interdependence and coevolution of human economies and natural ecosystems, both intertemporally and spatially. By treating the economy as a subsystem of Earth's larger ecosystem, and by emphasizing the preservation of natural capital, the field of ecological economics is differentiated from environmental economics, which is the mainstream economic analysis of the environment. One survey of German economists found that ecological and environmental economics are different schools of economic thought, with ecological economists emphasizing strong sustainability and rejecting the proposition that physical (human-made) capital can substitute for natural capital.

Overconsumption describes a situation where a consumer overuses their available goods and services to where they can't, or don't want to, replenish or reuse them. In microeconomics, this may be described as the point where the marginal cost of a consumer is greater than their marginal utility. The term overconsumption is quite controversial in use and does not necessarily have a single unifying definition. When used to refer to natural resources to the point where the environment is negatively affected, it is synonymous with the term overexploitation. However, when used in the broader economic sense, overconsumption can refer to all types of goods and services, including manmade ones, e.g. "the overconsumption of alcohol can lead to alcohol poisoning". Overconsumption is driven by several factors of the current global economy, including forces like consumerism, planned obsolescence, economic materialism, and other unsustainable business models and can be contrasted with sustainable consumption.

Industrial ecology (IE) is the study of material and energy flows through industrial systems. The global industrial economy can be modelled as a network of industrial processes that extract resources from the Earth and transform those resources into by-products, products and services which can be bought and sold to meet the needs of humanity. Industrial ecology seeks to quantify the material flows and document the industrial processes that make modern society function. Industrial ecologists are often concerned with the impacts that industrial activities have on the environment, with use of the planet's supply of natural resources, and with problems of waste disposal. Industrial ecology is a young but growing multidisciplinary field of research which combines aspects of engineering, economics, sociology, toxicology and the natural sciences.

<span class="mw-page-title-main">Jevons paradox</span> Efficiency leads to increased demand

In economics, the Jevons paradox occurs when technological progress increases the efficiency with which a resource is used, but the falling cost of use induces increases in demand enough that resource use is increased, rather than reduced. Governments typically assume that efficiency gains will lower resource consumption, ignoring the possibility of the paradox arising.

A green economy is an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politically applied focus. The 2011 UNEP Green Economy Report argues "that to be green, an economy must not only be efficient, but also fair. Fairness implies recognizing global and country level equity dimensions, particularly in assuring a Just Transition to an economy that is low-carbon, resource efficient, and socially inclusive."

<span class="mw-page-title-main">Steady-state economy</span> Constant capital and population size

A steady-state economy is an economy made up of a constant stock of physical wealth (capital) and a constant population size. In effect, such an economy does not grow in the course of time. The term usually refers to the national economy of a particular country, but it is also applicable to the economic system of a city, a region, or the entire world. Early in the history of economic thought, classical economist Adam Smith of the 18th century developed the concept of a stationary state of an economy: Smith believed that any national economy in the world would sooner or later settle in a final state of stationarity.

Post-capitalism is in part a hypothetical state in which the economic systems of the world can no longer be described as forms of capitalism. Various individuals and political ideologies have speculated on what would define such a world. According to classical Marxist and social evolutionary theories, post-capitalist societies may come about as a result of spontaneous evolution as capitalism becomes obsolete. Others propose models to intentionally replace capitalism, most notably socialism, communism, anarchism, nationalism and degrowth.

Anthropogenic metabolism, also referred to as metabolism of the anthroposphere, is a term used in industrial ecology, material flow analysis, and waste management to describe the material and energy turnover of human society. It emerges from the application of systems thinking to the industrial and other man-made activities and it is a central concept of sustainable development. In modern societies, the bulk of anthropogenic (man-made) material flows is related to one of the following activities: sanitation, transportation, habitation, and communication, which were "of little metabolic significance in prehistoric times". Global man-made stocks of steel in buildings, infrastructure, and vehicles, for example, amount to about 25 Gigatonnes, a figure that is surpassed only by construction materials such as concrete. Sustainable development is closely linked to the design of a sustainable anthropogenic metabolism, which will entail substantial changes in the energy and material turnover of the different human activities. Anthropogenic metabolism can be seen as synonymous to social or socioeconomic metabolism. It comprises both industrial metabolism and urban metabolism.

In energy conservation and energy economics, the rebound effect is the reduction in expected gains from new technologies that increase the efficiency of resource use, because of behavioral or other systemic responses. These responses diminish the beneficial effects of the new technology or other measures taken. A definition of the rebound effect is provided by Thiesen et al. (2008) as, “the rebound effect deals with the fact that improvements in efficiency often lead to cost reductions that provide the possibility to buy more of the improved product or other products or services.” A classic example from this perspective is a driver who substitutes a vehicle with a fuel-efficient version, only to reap the benefits of its lower operating expenses to commute longer and more frequently."

Industrial metabolism is a concept to describe the material and energy turnover of industrial systems. It was proposed by Robert Ayres in analogy to the biological metabolism as "the whole integrated collection of physical processes that convert raw materials and energy, plus labour, into finished products and wastes..." In analogy to the biological concept of metabolism, which is used to describe the whole of chemical reactions in, for example, a cell to maintain its functions and reproduce itself, the concept of industrial metabolism describes the chemical reactions, transport processes, and manufacturing activities in industry.

Sustainable consumption is the use of products and services in ways that minimizes impacts on the environment.

Degrowth is an academic and social movement critical of the concept of growth in gross domestic product as a measure of human and economic development. Degrowth theory is based on ideas and research from a multitude of disciplines such as economics, economic anthropology, ecological economics, environmental sciences, and development studies. It argues that the unitary focus of modern capitalism on growth, in terms of the monetary value of aggregate goods and services, causes widespread ecological damage and is not necessary for the further increase of human living standards. Degrowth theory has been met with both academic acclaim and considerable criticism.

Material input per unit of service (MIPS) is an economic concept, originally developed at the Wuppertal Institute, Germany in the 1990s. The MIPS concept can be used to measure eco-efficiency of a product or service and applied in all scales from a single product to complex systems. The calculation takes into account materials required to produce a product or service. The total material input (MI) is divided by the number of service units (S). For example, in case of a passenger car, the number of service units is the total number of passenger kilometres during the whole life span of the vehicle. The lower the material input per kilometre, the more eco-efficient is the vehicle. The whole life-cycle of a product or service is measured when MIPS values are calculated. This allows comparisons of resource consumption of different solutions to produce the same service. When a single product is examined, the MIPS calculations reveal the magnitude of resource use along the life-cycle and help to focus efforts on the most significant phases to reduce environmental burden of the product.

<span class="mw-page-title-main">Green growth</span> Economic growth that is environmentally sustainable

Green growth is a concept in economic theory and policymaking used to describe paths of economic growth that are environmentally sustainable. It is based on the understanding that as long as economic growth remains a predominant goal, a decoupling of economic growth from resource use and adverse environmental impacts is required. As such, green growth is closely related to the concepts of green economy and low-carbon or sustainable development. A main driver for green growth is the transition towards sustainable energy systems. Advocates of green growth policies argue that well-implemented green policies can create opportunities for employment in sectors such as renewable energy, green agriculture, or sustainable forestry.

<span class="mw-page-title-main">Social metabolism</span> Study of materials and energy flows between nature and society

Social metabolism or socioeconomic metabolism is the set of flows of materials and energy that occur between nature and society, between different societies, and within societies. These human-controlled material and energy flows are a basic feature of all societies but their magnitude and diversity largely depend on specific cultures, or sociometabolic regimes. Social or socioeconomic metabolism is also described as "the self-reproduction and evolution of the biophysical structures of human society. It comprises those biophysical transformation processes, distribution processes, and flows, which are controlled by humans for their purposes. The biophysical structures of society and socioeconomic metabolism together form the biophysical basis of society."

<span class="mw-page-title-main">Eco-economic decoupling</span> Economy able to grow without corresponding increases in environmental pressure

In economic and environmental fields, decoupling refers to an economy that would be able to grow without corresponding increases in environmental pressure. In many economies, increasing production (GDP) raises pressure on the environment. An economy that would be able to sustain economic growth while reducing the amount of resources such as water or fossil fuels used and delink environmental deterioration at the same time would be said to be decoupled. Environmental pressure is often measured using emissions of pollutants, and decoupling is often measured by the emission intensity of economic output.

<span class="mw-page-title-main">Post-growth</span> Beyond optimum economic growth

Post-growth is a stance on economic growth concerning the limits-to-growth dilemma — recognition that, on a planet of finite material resources, extractive economies and populations cannot grow infinitely. The term "post-growth" acknowledges that economic growth can generate beneficial effects up to a point, but beyond that point it is necessary to look for other indicators and techniques to increase human wellbeing.

<span class="mw-page-title-main">Ecomodernism</span> Environmental philosophy

Ecomodernism is an environmental philosophy which argues that technological development can protect nature and improve human wellbeing through eco-economic decoupling, i.e., by separating economic growth from environmental impacts.

References

  1. Aktaş, Can Baran (2022). "Dematerialization: Needs and Challenges". Handbook of Sustainability Science in the Future: Policies, Technologies and Education by 2050: 1–13. doi:10.1007/978-3-030-68074-9_4-1.
  2. Rosenberg, Nathan (1982). Inside the Black Box: Technology and Economics . Cambridge, New York: Cambridge University Press. p.  72. ISBN   0-521-27367-6.
  3. Coyle, Diane (1998). The weightless world : strategies for managing the digital economy. Cambridge, Mass.: MIT Press. ISBN   0-585-28558-6. OCLC   45734040.
  4. 1 2 Bailey, Ronald (September 5, 2001). "Dematerializing the Economy". reason.com. Retrieved September 2, 2014.
  5. "Dematerialization". Circular Economy, Practitioner guide. Retrieved April 3, 2023.
  6. McAfee, Andrew (2019). More from less : the surprising story of how we learned to prosper using fewer resources--and what happens next (First Scribner ed.). New York, NY. ISBN   978-1-9821-0357-6. OCLC   1112803704.{{cite book}}: CS1 maint: location missing publisher (link)
  7. Gâf-Deac, Ioan; Otilia, Ciutacu (2016-12-16). "Dematerialization of the economy and environmental impact". Romanian National Institute for Economic Research.
  8. "Dematerialization, degrowth, and climate change agenda". World Bank Blog.
  9. Petrides, Demetris; Papacharalampopoulos, Alexios; Stavropoulos, Panagiotis; Chryssolouris, George (2018). "Dematerialization and Environmental Sustainability: Challenges and Rebound Effects". Procedia CIRP. 72: 845–849. doi: 10.1016/j.procir.2018.03.131 .
  10. 1 2 Smil, Vaclav (2016-01-01), Smil, Vaclav (ed.), "Chapter 10 - Looking Ahead: The Future of Iron and Steel", Still the Iron Age, Boston: Butterworth-Heinemann, pp. 203–228, ISBN   978-0-12-804233-5 , retrieved 2022-05-24
  11. Lorek, Sylvia (2014). Dematerialisation, Degrowth: Vocabulary for a new era. New York: Routledge.
  12. Hannesson, Rögnvaldur (2021-05-11). "Are We Seeing Dematerialization of World GDP?". Biophysical Economics and Sustainability. 6 (2): 4. doi: 10.1007/s41247-021-00086-7 . ISSN   2730-7204. S2CID   236383938.
  13. Haque, N.; Norgate, T. (2015-01-01), Lu, Liming (ed.), "20 - Life cycle assessment of iron ore mining and processing", Iron Ore, Woodhead Publishing, pp. 615–630, ISBN   978-1-78242-156-6 , retrieved 2022-05-24
  14. Environment, Annie Granger categories (2022-04-26). "Can Dematerialization Help Build a More Sustainable World?". Utopia. Retrieved 2022-05-27.
  15. Kallis, Giorgos (2017). "Radical dematerialization and degrowth". Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences . 375 (2095): 20160383. Bibcode:2017RSPTA.37560383K. doi: 10.1098/rsta.2016.0383 . PMID   28461444.