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January 2019

Investing in resource efficiency – the economics and politics of financing the resource transition

Jun Erik Rentschler's picture
Photo by Tom Fisk from Pexels
Photo by Tom Fisk from Pexels

“Moving towards a more responsible and efficient use of natural resources is key, not only to address resource scarcity, wastage, and the associated environmental effects, but also for incentivising innovation and modernisation towards a circular economy. Resource efficiency essentially means doing more with less, as it allows us to create more value using fewer natural resources. This transition can contribute to sustainable economic growth that generates welfare, while limiting harmful impacts on the environment and hence future generations.” Ángel Gurría, Secretary General, OECD (from Preface, Flachenecker & Rentschler, 2018)


The need for more resource efficient and circular economies

High and volatile resource prices, uncertain supply prospects, rising demand, and environmental impacts – various factors are putting increasing pressure on policy makers, researchers, firms, and investors to explore pathways towards sustainable and efficient resource management. 

Moreover, rapid technological transitions that are changing our lives for the better are also adding to the challenge. The significant increase in renewable energy technologies such as solar power, the increasing proliferation of electric vehicles, and the rapid increase in smart-phone use are some of the trends that are improving people’s lives. Yet, while these developments are in line with the Sustainable Development Goals, they are also driving up demand for critical natural resources.

Resource efficiency could offer one solution to these challenges, yielding substantial benefits, both economically and environmentally.

And yet, while resource efficiency investments could yield both economic and environmental benefits, global resource efficiency has increased by a mere 1% per year over the past three decades. This is insufficient to counterbalance ever increasing resource demand. Even declared champions of the resource efficiency agenda, including the European Union, have yet to deliver on their ambitious goals. Overall, despite high-level attempts to mainstream the resource efficiency agenda, policy measures still lack a coherent, systematic approach and large-scale implementation.

Our children’s planet: What does their education have to do with climate change?

Christopher Thomas's picture
 Khasar Sandag / World Bank
Photo: Khasar Sandag / World Bank

Our world is very different than our grandparent’s. In 1950, there were about 2.5 billion people; today, there are more than 7 billion. Overall, people are healthier, wealthier, and more secure.

But this has come at a cost. The stress on our planet has been immense. Human beings have dramatically altered the climate, changed the chemistry of the oceans, and triggered mass extinctions. The impact has been so great as to define an entirely new geological era – the Anthropocene, turbo charged by a “great acceleration” of population, economic growth and natural resource consumption since the 1950s.

So what will the world be like for our children? By 2050, the population is projected to top 9 billion. People will probably live better and longer lives. Global GDP will likely triple; natural resource consumption will double. And the effects of climate change–some now inevitable–will be felt more strongly than they are today. Sea levels will be higher, weather more erratic, biodiversity less, and water and natural resources likely scarcer. People who live in poverty will be especially vulnerable to natural disasters, land degradation, water shortages, and shocks in food production.