Trends and the understanding of where they will lead us, if not changed, are very important. Even more so when looking at the complex challenges of sustainable development and the ability of society’s so-called leaders – “captains” of industry and political potentates – to come up with efficient answers.
A look at some of the big-picture trends such as our use of resources, of freshwater, our bio-capacity (the capacity of any given biologically productive area to generate an on-going supply of renewable resources and to absorb its spill-over wastes) and fossil fuels, the one thing that becomes painfully obvious is how much the world is relentlessly overusing them apparently without making the slightest real effort to change course. These trends, depicted in Figure 1 clearly show that despite a certain understanding of the existence of resource overuse, we simply have continued increased overusing our resources and accepted that this might eventually destroy human existence as we know it. We do also not recognise how close to a point of no return we already are. The image of a person sawing off the branch upon which he is perched comes to mind.
Other trends are feeding this development. One of the major features of the past century has been globalisation driven by greater mechanisation of transportation. This has resulted in incremental growth of trade between all parts of the world – arguably all civilisations and nations have been global-minded, but their means were far more efficient and left barely any carbon footprint. When we look at the trends of GDP and trade volume (see Figure 2), we realise that trade volume has been growing faster than GDP since 2003. If the trend continues, it will continue to put stress on the global transport systems and available resources. This in turn could become a major impediment to further growth very soon as increased trade volume will translate into increased transport of goods, which has to happen in a limited system of global mobility.
How bad is our current situation, when looking at these trends? Especially, when we have to admit that the negative impact of this overuse of our resources and capacities is still quite limited. A perfect illustration of the danger is what is known as boiling frog syndrome, i.e., a frog will stay in water that is slowly heated till boiling point and, of course, die. If our environment changes very gradually, and hence the negative impacts are very small and easy to oversee, we will fail to take corrective actions when still possible. When we finally realise the gravity of the situation it might be too late, because either we will be too weak to react or the negative impact will no longer be reversible.
The only possible conclusion about the above trends is that all efforts to tackle these issues (and this despite the Club of Rome publication “Limits to Growth” in 1972 and the Rio de Janeiro Earth Summit in 1992) have shown little effect on our continued increase of overuse of resources and capacities. We are still debating over words and global agreements, when the evolution continues. We might very well be very close to a state so weakened that we will no more be able to save ourselves.
To be or not to act
But is it right to assume that we are not ready to revisit our current behaviour with a view to sustainability? The driving force over the last two decades of the 20th century has been competitiveness as the foundation for economic growth, which in turn was to be the fuel for social development. But competitiveness builds, in most cases, on a cheap and fundamentally unlimited access to resources. And exactly this assumption will lead to the above-mentioned overuse of crucial resources. On the other hand the deliberations revolving around green or sustainable growth have become louder and more penetrating and we are now beginning to recognise the need to rethink our growth models. Intellectually, at least. But is this increased interest generating action? Clearly, based on the first analysis of resource overuse, the answer is no.
The reason for this indolence in the face of environmental collapse has been the somewhat political battle between the world of resource preservation, which is addressing resource issues and challenges growth at all cost, and the world of economic development – or business – which is fixated on growth based on competitiveness as the only way to address the challenges of human development. However, the solution cannot be the confrontation between safeguarding of resources, implying to reduce growth, and human development, and maintaining growth. We need to bridge the two. Sustainability must be human, social and ecological, permeating all aspects of our development. Examples for this are the need to understand and implement sustainable competitiveness and sustainable mobility. An attempt to do so is the Competitiveness 2.0 approach codeveloped with Mathis Wackernagel of the Global Footprint Network.
Competitiveness has been at the forefront of the strategy of many countries. This approach suggests that countries should, as the focus of their national strategies, pursue policies that allow their businesses to create high-quality goods to sell at high prices and to embrace productivity growth. This is based on the assumption that the well-being of a nation, measured by its GDP, would be improved through creating the most beneficial national and global regulatory frameworks for business growth. It should be a win–win–win for businesses, governments and citizens, as this approach increases the revenues of companies and increases salaries, which in return boosts tax income. Therefore, a country’s competitive advantage enables it to invest in its social structures and build its social capital. But the economic success of recent decades has translated into higher levels of resource consumption that are no longer sustainable. And the quest for greater profits has also lead to financial and social catastrophes, high unemployment, exploitive labour practices and other socially unsustainable occurrences. As a result, countries’ efforts to improve their competitive advantage could lead to a disaster (see box).
The idea is simple. In a time of growing resource constraints, we need to update national competitiveness strategies. While the elements of traditional competitiveness still hold, it has become clear to many that one key element, national debt, is starting to overshadow other components, and needs far more attention. This is Competitiveness 1.5. But the debt crisis is merely a symptom of a larger structural problem: the fact that resource dependencies and the associated costs and disruption are becoming the key drivers of economic success. In the past it was rational to ignore them, since they were a declining cost-factor. This calls for Competitiveness 2.0 which highlights three key elements of the puzzle:
Down the tubes
The fundamental reasons for the race to disaster are:
- All life requires ecological resources, including water and biomass for survival. Most industrial societies are still highly dependent on easily accessible fossil energy resources. Increased pressures on these resources can lead to non-linear effects, including price volatility and supply disruption, with potentially severe shocks for all participants in the global economy.
- The current metrics for competitiveness and economic performance largely ignore the resource dimension, and its potentially non-linear dynamic ignited by supply gaps. While the global market will be able to smooth over local supply gaps initially through trade, all of the participants in the global market will be exposed to global shortages simultaneously. Such potential system shocks may be accelerated, since many nations with critical resources will focus on securing domestic demand before serving the global market.
In the face of this “race-to-disaster” dynamic, there is a profound and urgent need to find answers to the following questions:
- What does it take for governments to appreciate the economic significance of their resource dependence in the context of the current dynamic?
- Considering the pressure of the resource dependence on countries’ competitiveness and social stability, and the potential endangerment of the country’s survival, what are the opportunities for governments to aggressively manage their resource dependence?
- What competitiveness plans do they have in place to succeed in a resource constrained world?
Article by André Schneider