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close this bookIndustrial Metabolism: Restructuring for Sustainable Development (UNU, 1994, 376 p.)
close this folderPart 1: General implications
Open this folder and view contents1. Industrial metabolism: Theory and policy
Open this folder and view contents2. Ecosystem and the biosphere: Metaphors for human-induced material flows
Open this folder and view contents3. Industrial restructuring in industrial countries
Open this folder and view contents4. Industrial restructuring in developing countries: The case of India
Open this folder and view contents5. Evolution, sustainability, and industrial metabolism

(introduction...)

Robert U. Ayres

What is industrial metabolism?

The word metabolism, as used in its original biological context, connotes the internal processes of a living organism. The organism ingests energy-rich, low-entropy materials ("food") to provide for its own maintenance and functions, as well as a surplus to permit growth and/or reproduction. The process also necessarily involves the excretion or exhalation of waste outputs, consisting of degraded, high-entropy materials. There is a compelling analogy between biological organisms and industrial activities - indeed, the whole economic system - not only because both are materials-processing systems driven by a flow of free energy (Georgescu-Roegen, 1971), but because both are examples of self-organizing "dissipative systems" in a stable state, far from thermodynamic equilibrium (Ayres, 1988).

At the most abstract level of description, then, the metabolism of industry is the whole integrated collection of physical processes that convert raw materials and energy, plus labour, into finished products and wastes in a (more or less) steady-state condition (fig. 1). The production (supply) side, by itself, is not self-regulating. The stabilizing controls of the system are provided by its human component. This human role has two aspects: (1) direct, as labour input, and (2) indirect, as consumer of output (i.e. determinant of final demand). The system is stabilized, at least in its decentralized competitive market form, by balancing the supply of and demand for both products and labour through the price mechanism. Thus, the economic system is, in essence, the metabolic regulatory mechanism.


Fig. 1 The world of the market

Industrial metabolism can be identified and described at a number of levels below the broadest and most encompassing global one. Thus, the concept is applicable to nations or regions, especially "natural" ones such as watersheds or islands. The key to regional analysis is the existence of a well-defined geographical border or boundary across which physical flows of materials and energy can be monitored.

The concept of industrial metabolism is equally applicable to another kind of self-organizing entity, a manufacturing enterprise or firm. A firm is the economic analogue of a living organism in biology.' Some of the differences are interesting, however. In the first place, biological organisms reproduce themselves; firms produce products or services, not other firms (except by accident). In the second place, firms need not be specialized and can change from one product or business to another. By contrast, organisms are highly specialized and cannot change their behaviour except over a long (evolutionary) time period. In fact, the firm (rather than the individual) is generally regarded as the standard unit of analysis in economics. The economic system as a whole is essentially a collection of firms, together with regulatory institutions and worker-consumers, using a common currency and governed by a common political structure. A manufacturing firm converts material inputs, including fuels or electric energy, into marketable products and waste materials. It keeps financial accounts for all its external transactions; it is also relatively easy to track physical stocks and flows across the "boundary" of the firm and even between its divisions.

The materials cycle

A third way in which the analogy between biological metabolism and industrial metabolism is useful is to focus attention on the "life cycle" of individual "nutrients."

The hydrological cycle, the carbon cycle, and the nitrogen cycle are familiar concepts to earth scientists. The major way in which the industrial metabolic system differs from the natural metabolism of the earth is that the natural cycles (of water, carbon/oxygen, nitrogen, other words, the industrial system does not generally recycle it trients. Rather, the industrial system starts with high-quality mat' (fossil fuels, ores) extracted from the earth, and returns them to nature in degraded form.

This point particularly deserves clarification. The materials c in general, can be visualized in terms of a system of compartments containing stocks of one or more nutrients, linked by certain flows. For instance, in the case of the hydrological cycle, the glaciers oceans, the fresh water lakes, and the groundwater are stocks, while rainfall and rivers are flows. A system is closed if there are no e nal sources or sinks. In this sense, the earth as a whole is essentially, closed system, except for the occasional meteorite.

A closed system becomes a closed cycle if the system is al steady state, i.e. the stocks in each compartment are constant an changing, at least on average. The materials balance condition plies that the material inputs to each compartment must be e, balanced (on average) by the outputs. If this condition is not m. a given compartment, then the stock in one or more compartments must be increasing, while the stocks in one or more other compartments meets must be decreasing.

It is easy to see that a closed cycle of flows, in the above sense only be sustained indefinitely by a continuous flow of free en This follows immediately from the second law of thermodynamics, which states that global entropy increases in every irreversible process. Thus, a closed cycle of flows can be sustained as long external energy supply lasts. An open system, on the contrary, herently unstable and unsustainable. It must either stabilize or lapse to a thermal equilibrium state in which all flows, i.e. all physical and biological processes, cease.

It is sometimes convenient to define a generalized four-box model to describe materials flows. The biological version is shown in figure 2, while the analogous industrial version is shown in figure 3. Reverting to the point made at the beginning of this section, the nature tem is characterized by closed cycles, at least for the major nutrients (carbon, oxygen, nitrogen, sulphur) - in which biological processes play a major role in closing the cycle. By contrast, the industrial system is an open one in which "nutrients" are transformed "wastes," but not significantly recycled. The industrial system, exists today, is therefore ipso facto unsustainable.


Fig. 2 Four-box scheme for bio-geo-chemical cycles

At this stage, it should be noted that nothing can be said at least) with respect to any of the really critical questions. These are as follows:

  1. Will the industrial system stabilize itself without external interference?
  2. If so, how soon, and in what configuration?
  3. If not, does there exist any stable state (i.e. a system of closed materials cycles) short of ultimate thermodynamic equilibrium that could be reached with the help of a feasible technological "fix"?
  4. If so, what is the nature of the fix, and how costly will it be?
  5. If not, how much time do we have until the irreversible collapse of the biogeosphere system makes the earth uninhabitable? (If the time scale is a billion years, we need not be too concerned. If it is a hundred years, civilization, and even the human race, could already be in deep trouble.)

It is fairly important to try to find answers to these questions.


Fig. 3 Four box scheme for industrial material cycles

Needless to say, we do not aspire to answer all these questions in the present volume.

It should also be pointed out that the bio-geosphere was not always a stable system of closed cycles. Far from it. The earliest living cells on earth obtained their nutrients, by fermentation, from nonliving organic molecules whose origin is still not completely understood. At that time the atmosphere contained no free oxygen or nitrogen; it probably consisted mostly of water vapour plus some hydrogen, and hydrogen-rich gases such as methane, hydrogen sulphide, and ammonia. The fermentation process yields ethanol and carbon dioxide. The system could only have continued until the fermentation organisms used up the original stock of "food" molecules or choked on the carbon dioxide buildup. The system stabilized temporarily when a new organism (blue-green algae, or cyano-bacteria) appeared that was capable of recycling carbon dioxide into sugars and cellulose, thus again closing the carbon cycle. This new process was anaerobic photosynthesis.

However, the photosynthesis process also had a waste product: namely, oxygen. For a long time (over a billion years) the oxygen generated by anaerobic photosynthesis was captured by dissolved ferrous iron molecules, and sequestered as insoluble ferric oxide or magnetite, with the help of another primitive organism, the Stromatolites. The resulting insoluble iron oxide was precipitated on the ocean bottoms. (The result is the large deposits of high-grade iron ore we exploit today.) The system was still unstable at this point. It was only the evolutionary invention of two more biological processes, aerobic respiration and aerobic photosynthesis, that closed the oxygen cycle as well. Still other biological processes - nitrification and denitrification, for instance - had to appear to close the nitrogen cycle and others.

Evidently, biological evolution responded to inherently unstable situations (open cycles) by "inventing" new processes (organisms) to stabilize the system by closing the cycles. This self-organizing capability is the essence of what has been called "Gaia." However, the instabilities in question were slow to develop, and the evolutionary responses were also slow to evolve. It took several billion years before the biosphere reached its present degree of stability.

In the case of the industrial system, the time scales have been drastically shortened. Human activity already dominates and excels natural processes in many respects. While cumulative anthropogenic changes to most natural nutrient stocks still remain fairly small in most cases, the rate of nutrient mobilization by human industrial activity is already comparable to the natural rate in many cases. Table 1 shows the natural and anthropogenic mobilization (flow) rates for the four major biological nutrients, carbon, nitrogen, phosphorus and sulphur. In all cases, with the possible exception of nitrogen, the anthropogenic contributions exceed the natural flows by a considerable margin. The same is true for most of the toxic heavy metals, as shown in table 2.

On the basis of relatively crude materials cycle analyses, at least, it would appear that industrialization has already drastically disturbed, and ipso facto destabilized, the natural system.

Table 1 Anthropogenic nutrient fluxes (teragams/year)

  Carbon Nitrogen Sulphur Phosphorus
  T/yr % T/yr % T/yr % T/yr %
To atmosphere, total 7,900 4 55.0 12.5 93 65.5 1.5 12.5
Fossil fuel combustion and smelting 6,400   45.0   92      
Land clearing, deforestation 1,500   2.6   1   1.5  
Fertilizer volatilizationa     7.5          
To soil, total     112.5 21 73.3 23.4 15 7.4
Fertilization     67.5   4.0   15  
Waste disposalb     5.0   21.0      
Anthropogenic acid deposition     30.0   48.3      
Anthropogenic (NH3, NH4) deposition     10.0          
To rivers and oceans, total     72.5 25 52.5 21 5 10.3
Anthropogenic acid deposition     55.0   22.5      
Waste disposal     17.5   30.0   5  

a. Assuming 10 per cent loss of synthetic ammonia-based fertilizers applied to land surface (75 tg/yr).

b. Total production (= use) less fertilizer use, allocated to landfill. The remainder is assumed to be disposed of via waterways.

Table 2 Worldwide atmospheric emissions of trace metals (1,000 tonnes per year)

Element Energy
production
Smelting,
refining, and|
manufacturing
Manufactur-
ing processes
Commercial
uses
waste
incineration,
and transportation
Total anthro
pogenic
con
tributions
Total contribu-
tion by natural
activities
Antimony 1.3 1.5 - 0.7 3.5 2.6
Arsenic 2.2 12.4 2.0 2.3 19.0 12.0
Cadmium 0.8 5.4 0.6 0.8 7.6 1.4
Chromium 12.7 - 17.0 0.8 31.0 43.0
Copper 8.0 23.6 2.0 1.6 35.0 6.1
Lead 12.7 49.1 15.7 254.9 332.0 28.0
Manganese 12.1 3.2 14.7 8.3 38.0 12.0
Mercury 2.3 0.1 - 1.2 3.6 317.0
Nickel 42.0 4.8 4.5 0.4 52.0 2.5
Selenium 3.9 2.3 - 0.1 6.3 3.0
Thalium 1.1 - 4.0 - 5.1 29.0
Tin 3.3 1.1 - 0.8 5.1 10.0
Vanadium 84.0 0.1 0.7 1.2 86.0 28.0
Zinc 16.8 72.5 33.4 9.2 132.0 45.0

Source: Nriagu, 1990.

Measures of industrial metabolism

There are only two possible long-run fates for waste materials: recycling and re-use or dissipative loss. (This is a straightforward implication of the law of conservation of mass.) The more materials are recycled, the less they will be dissipated into the environment, and vice versa. Dissipative losses must be made up by replacement from virgin sources.

A strong implication of the analysis sketched above is that a longterm (sustainable) steady-state industrial economy would necessarily be characterized by near-total recycling of intrinsically toxic or hazardous materials, as well as a significant degree of recycling of plastics, paper, and other materials whose disposal constitutes an environmental problem. Admittedly it is not possible to identify, in advance, all potentially hazardous materials, and it is quite likely that there will be (unpleasant) surprises from time to time. However, it is safe to say that heavy metals are among the materials that would have to be almost totally recycled to satisfy the sustainability criterion. The fraction of current metal supply needed to replace dissipative losses (i.e. production from virgin ores needed to maintain a stable level of consumption) is thus a useful, if partial, surrogate measure of "distance" from a steady-state condition, i.e. a condition of long-run sustainability.

Most economic analysis in regard to materials, in the past, has focused on availability. Data on several categories of reserves (economically recoverable, potential, etc.) are routinely gathered and published by the US Bureau of Mines, for example. However, as is well known, such figures are a very poor proxy for actual reserves. In most cases the actual reserves are greater than the amounts actually documented. The reason, simply, is that most such data are extrapolated from test borings by mining or drilling firms. There is a well-documented tendency for firms to stop searching for new ore bodies when their existing reserves exceed 20 to 25 years' supply. Even in the case of petroleum (which has been the subject of worldwide searches for many decades), it is not possible to place much reliance on published data of this kind.

However, a sustainable steady state is less a question of resource availability than of recycling/re-use efficiency. As commented earlier, a good measure of unsustainability is dissipative usage. This raises the distinction between inherently dissipative uses and uses where the material could be recycled or re-used in principle, but is not. The latter could be termed potentially recyclable. Thus, there are really three important cases:

  1. Uses that are economically and technologically compatible with recycling under present prices and regulations.
  2. Uses that are not economically compatible with recycling but where recycling is technically feasible, e.g. if the collection problem were solved.
  3. Uses where recycling is inherently not feasible

Generally speaking, it is arguable that most structural metals and industrial catalysts are in the first category; other structural and packaging materials, as well as most refrigerants and solvents, fall into the second category. This leaves coatings, pigments, pesticides, herbicides, germicides, preservatives, flocculants, anti-freezes, explosives, propellants, fire retardants, reagents, detergents, fertilizers, fuels, and lubricants in the third category. In fact, it is easy to verify that most chemical products belong in the third category, except those physically embodied in plastics, synthetic rubber, or synthetic fibres.

From the standpoint of elements, if one traces the uses of materials from source to final sink, it can be seen that virtually all sulphur mined (or recovered from oil, gas, or metallurgical refineries) is ultimately dissipated in use - for example, as fertilizers or pigments or discarded as waste acid or as ferric or calcium sulphites or sulphates. (Some of these sulphate wastes are classed as hazardous.) Sulphur is mostly (75-80 per cent) used to produce sulphuric acid, which in turn is used for many purposes. But in every chemical reaction the sulphur must be accounted for - it must go somewhere. The laws of chemistry guarantee that reactions will tend to continue either until the most stable possible compound is formed or until an insoluble solid is formed. If the sulphur is not embodied in a "useful" product, it must end up in a waste stream.

There is only one long-lived structural material embodying sulphur: plaster of Paris (hydrated calcium sulphate), which is normally made directly from the natural mineral gypsum. In recent years, sulphur recovered from coalburning power plants in Germany has been converted into synthetic gypsum and used for construction. However, this potential recycling loop is currently inhibited by the very low price of natural gypsum. Apart from synthetic gypsum, there are no other durable materials in which sulphur is physically embodied. It follows from materials balance considerations that sulphur is entirely dissipated into the environment. Globally, about 61.5 million tonnes of sulfur qua sulphur - not including gypsum - were indicated schematically in figure 4. Very little is currently used for structural materials. Thus, most sulphur chemicals belong in class 3.


Fig. 4 Dissipative uses of sulphur, 1988 (millions of tonnes)

Following similar logic, it is easy to see that the same is true of most chemicals derived from ammonia (fertilizers, explosives, acrylic fibres), and phosphorus (fertilizers, pesticides, detergents, fire retardants). In the case of chlorine, there is a division between class 2 (solvents, plastics, etc.) and class 3 (hydrochloric acid, chlorine used in water treatment, etc.).

Chlorofluorocarbon refrigerants and solvents are long-lived and nonreactive. In fact, this is the reason they pose an environmental hazard. Given an appropriate system for recovering and reconditioning old refrigerators and air-conditioners, the bulk of the refrigerants now in use could be recovered, either for re-use or destruction. Hence, they belong in class 2. However, CFCs used for foam-blowing are not recoverable.

Table 3 Examples of dissipative use (global)

Substance 106T Dissipative uses
Other chemicals    
Chlorine 25.9 Acid, bleach, water treatment, (PVC)
solvents, pesticides, refrigerants
Sulphur 61.5 Acid (H2SO4), bleach, chemicals,
fertilizers, rubber
Ammonia 93.6 Fertilizers, detergents, chemicals
Phosphoric acid 24.0 Fertilizers, nitric acid, chemicals
(nylon, acrylics)
NaOH 35.8 Bleach, soap, chemicals
Na2CO3 29.9 Chemicals (glass)
Heavy metals    
Copper sulphate
(CuSO4 - 5H2O)
0.10 Fungicide, algicide, wood preservative, catalyst
Sodium bichromate 0.26 Chromic acid (for plating), tanning, algicide
Lead oxides 0.24 Pigment (glass)
Lithopone (ZuS) 0.46 Pigment
Zinc oxides 0.42 Pigment (lyres)
Titanium oxide (TiO2) 1.90 Pigment
TEL ? Gasoline additive
Arsenic ? Wood preservative, herbicide
Mercury ? Fungicide, catalyst

Table 3 shows the world output of a number of materials - mostly chemicals - whose uses are, for the most part, inherently dissipative (class 3). (It would be possible, with some research, to devise measures of the inherently dissipative uses of each element, along the lines sketched above.) Sustainability, in the long run, would imply that such measures decline. Currently, they are almost certainly increasing.

With regard to materials that are potentially recyclable (classes 1 and 2), the fraction actually recycled is a useful measure of the approach toward (or away from) sustainability. A reasonable proxy for this, in the case of metals, is the ratio of secondary supply to total supply of final materials: see, for example, table 4. This table shows, incidentally, that the recycling ratio in the United States has been rising consistently in recent years only for lead and iron/steel. In the case of lead, the ban on using tetraethyl lead as a gasoline additive (an inherently dissipative use) is entirely responsible.

Table 4 Scrap use in the United States

  Total consumption
(million short tons)
% of total consump
tion in recycled scrap
Material 1977 1982 1987 1977 1982 1987
Aluminium 6.49 5.94 6.90 24.1 33.3 29.6
Copper 2.95 2.64 3.15 39.2 48.0 39.9
Lead 1.58 1.22 1.27 44.4 47.0 54.6
Nickel 0.75 0.89 1.42 55.9 45.4 45.4
Iron/steel 142.40 84.00 99.50 29.4 33.4 46.5
Zinc 1.10 0.78 1.05 20.9 24.1 17.7
Paper 60.00 61.00 76.20 24.3 24.5 25.8

Source: Institute of Scrap Recycling Industries, 1988.

Another useful measure of industrial metabolic efficiency is the economic output per unit of material input. This measure can be called materials productivity. It can be determined, in principle, not only for the economy as a whole, but for each sector. It can also be measured for each major "nutrient" element: carbon, oxygen, hydrogen, sulphur, chlorine, iron, phosphorus, etc. Measures of this kind for the economy as a whole are, however, not reliable indicators of increasing technological efficiency or progress toward long-term sustainability. The reason is that increasing efficiency - especially in rapidly developing countries - can be masked by structural changes,7 such as investment in heavy industry, which tend to increase the materials (and energy) intensiveness of economic activity. On the other hand, within a given sector, one would expect the efficiency of materials utilization or materials productivity - to increase in general.

Useful aggregate measures of the state of the environment vis-is sustainability can be constructed from physical data that are already collected and compiled in many countries. To derive these aggregates and publish them regularly would provide policy makers with a valuable set of indicators at little cost.

It is clear that other interesting and useful measures based on physical data are also possible. Moreover, if similar data were collected and published at the sectoral level, it would be possible to undertake more ambitious engineering-economic systems analyses and forecasts - of the kind currently possible only for energy - in the entire domain of industrial metabolism

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Policy implications of the industrial metabolism perspective

It may seem odd to suggest that a mere viewpoint - in contradistinction to empirical analysis - may have policy implications. But it is perfectly possible. In fact, there are two implications that come to mind. Both will recur more than once in the papers that follow. First, the industrial metabolism perspective is essentially "holistic" in that the whole range of interactions between energy, materials, and the environment are considered together, at least in principle. The second major implication, which follows from the first, is that from this holistic perspective it is much easier to see that narrowly conceived or short-run (myopic) "quick-fix" policies are very far from the global optimum. In fact, from the larger perspective, many such policies can be positively harmful.

The best way to explain the virtues of a holistic view is by contrasting it with narrower perspectives. Consider the problem of waste disposal. It is a consequence of the law of conservation of mass that the total quantity of materials extracted from the environment will ultimately return thence as some sort of waste residuals or "garbo-junk" (Ayres and Kneese, 1969, 1989). Yet environmental protection policy has systematically ignored this fundamental reality by imposing regulations on emissions by medium. Typically, one legislative act mandates a bureaucracy that formulates and enforces a set of regulations dealing with emissions by "point sources" only to the air. Another legislative act creates a bureaucracy that deals only with waterborne emissions, again by "point sources." And so forth.

Not surprisingly, one of the things that happened as a result was that some air pollution (e.g. fly ash and SOx from fossil fuel combustion) was eliminated by converting it to another form of waste, such as a sludge to be disposed of on land. Similarly, some forms of waterborne wastes are captured and converted to sludges for land disposal (or, even, for incineration). Air and water pollution were reduced, but largely by resorting to land disposal. But landfills also cause water pollution (leachate), and air pollution, owing to anaerobic decay processes.

In short, narrowly conceived environmental policies over the past 20 years and more have largely shifted waste emissions from one form (and medium) to another, without significantly reducing the totals. In some cases, policy has encouraged changes that merely dilute the waste stream without touching its volume at all. The use of high stacks for coal-burning power plants, and the building of longer sewage pipes to carry wastes further offshore, exemplify this approach.

To be sure, these shifts may have been beneficial in the aggregate. But the costs have been quite high, and it is only too obvious that the state of the environment "in the large" is still deteriorating rapidly. One is tempted to think that a more holistic approach, from the beginning, might have achieved considerably more at considerably less cost.

In fact, there is a tendency for sub-optimal choices to get "locked in" by widespread adoption. Large investments in so-called "clean coal" technology would surely extend the use of coal as a fuel - an eventuality highly desired by the energy establishment - but would also guarantee that larger cumulative quantities of sulphur, fly ash (with associated toxic heavy metals), and carbon dioxide would be produced. The adoption of catalytic convertors for automotive engine exhaust is another case in point. This technology is surely not the final answer, particularly since it is not effective in older vehicles. Yet it has deferred the day when internal combustion engines will eventually be replaced by some inherently cleaner automotive propulsion technology. By the time that day comes, the world's automotive fleet will be two or three times bigger than it might have been otherwise, and the cost of substitution will be many times greater.

The implication of all these points for policy makers, of course, is that the traditional governmental division of responsibility into a great number of independent bureaucratic fiefdoms is dangerously faulty. But the way out of this organizational impasse is far from clear. Topdown central planning has failed miserably, and is unlikely to be tried again. On the other hand, pure "market" solutions to environmental problems are limited in cases where there is no convenient mechanism for valuation of environmental resource assets (such as beautiful scenery) or functions (such as the UV protection afforded by the stratospheric ozone layer). This is primarily a problem of indivisibility. Indivisibility means that there is no possibility of subdividing the attribute into "parcels" suitable for physical exchange. In some cases this problem can be finessed by creating exchangeable "rights" or "permits," but the creation of a market for such instruments depends on other factors, including the existence of an effective mechanism for allocating such rights, limiting their number, and preventing poaching or illicit use of the resource.

Needless to say, the policy problems have economic and sociopolitical ramifications well beyond the scope of this book. However, as the Chinese proverb has it, the longest journey begins with a single step.

References

Ayres, Robert V. 1988. "Self Organization in Biology and Economics." International Journal on the Unity of the Sciences 1, no. 3.

Ayres, Robert U., and Allan V. Kneese. 1969. "Production, Consumption and Externalities." American Economic Review 59, no. 3: 282-296.

- 1989. 'Externalities: Economics and Thermodynamics." In: F. Archibugi and P. Nijkamp, eds., Economy and Ecology: Towards Sustainable Development. Dordrecht: Kluwer Academic Publishers.

Georgescu-Roegen, Nicholas. 1971. The Entropy Law and the Economic Process. Cambridge, Mass.: Harvard University Press.

Nriagu, J. O. 1990. "Global Metal Pollution." Environment 32, no. 7: 7-32.

Rogner, Hans-Holger. 1987. "Energy in the World: The Present Situation and Future Options." In: Proceedings of the 17th International Congress of Refrigeration August 24-28, 1987.

(introduction...)

Rudolf B. Husar

Introduction

Long-term sustainable human development requires an understanding of the interaction between human activities and natural processes (Clark and Munn, 1986). Displacement of materials by industrial and agricultural activities causes the most severe human stress on the natural system. Hence, the understanding of human-induced material flows and comparison of those to natural flows is a major step toward the design of sustainable development schemes.

A major component in the understanding of human-induced material flow is the identification of the key players and driving forces involved, i.e. the building of a conceptual model. Initially, such a model does not need to be predictive; it is sufficient for it to have explanatory power for the existing human-nature interactions. In formulating and explaining such conceptual models, it is helpful to use known existing systems as a guide, and by applying metaphors and analogies to transfer existing knowledge and concepts to the new system under consideration. Natural systems have demonstrated their capacity for sustained development and provide a rich choice of desirable metaphors for the description of human activities.

Industrial metabolism is a powerful metaphor for the illumination of the processes that mobilize and control the flow of materials and energy through industrial activities. As in nature, industrial "organisms" consume "food" for the maintenance of their functions and cause the exhalation of waste products (see chapter 1 of this volume). The industrial metabolism metaphor has the organism as its main biological entity, and industrial organizations as its human analogues. These are proper entities for the study of the internal workings of metabolism within these organisms. However, both the causes and the consequences of metabolism lie beyond the confines of an organism. These depend on the external world, which includes other organisms as well as the physico-chemical environment.

This chapter builds on the strength of the industrial metabolism metaphor and discusses the possible applicability of the ecosystem and the biosphere as extended biological analogues for human activities. The goal here is to offer multiple, complementary points of view to describe, by means of analogues, the same topic: the human-induced mobilization of materials. Hopefully, this will contribute to the illumination of this fascinating, multifaceted, and important process.

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The ecosystem analogue

An ecosystem is biotic assemblage of plants, animals, and microbes, taken together with their physico-chemical environment (e.g. Kormondv, 1969). In an ecosystem the biological cycling of materials is maintained by three groups: producers, consumers, and decomposers (fig. 1a). The producers are plants and some bacteria capable of producing their own food photosynthetically or by chemical synthesis. The consumers are animals that obtain their energy and protein directly by grazing, feeding on other animals, or both. The decomposers are fungi and bacteria that decompose the organic matter of producers and consumers into inorganic substances that can be reused as food by the producers; they are the recyclers of the biosphere. Nature is capable of sustaining the producer-consumer-decomposer cycle indefinitely, with the sun as the energy source. The smallest such entity that is self-sufficient is an ecosystem.


Fig. 1a The movement of chemicals and materials through the natural ecosystem


Fig. 1b The movement of chemicals and materials through a system resulting from human activity (anthroposystem)

Functionally, human activities that perturb the natural environment can also be divided into three similar components (fig. 1b). Producing activities include energy production (fossil fuels), manufacturing (non-fuel minerals), and growing food. The consumers are humans and their domestic animals. Decomposing or recycling activities include treatment of waste water and recycling of metals. However, whereas an ecosystem relies on its decomposers for a complete recycling of its elements, the system created by human activity lacks such efficient decomposers and recyclers. As such, manufactured materials that are no longer needed and the waste by-products of industrial activity are disposed of into the physical environment. The process of adding unwanted material to the environment is called pollution. The waste products are taken up by the atmosphere and the hydrosphere, and delivered to the biological and geochemical receptors. In this sense, the anthroposystem, as defined above, is more of an open system, as discussed by Ayres in chapter 1 of this volume.

Ecosystem-anthroposystem comparison

The producer-consumer-recycler model provides a convenient framework for comparing ecosystems to anthroposystems. The flow of material in both systems is illustrated qualitatively by the arrows in figures la and lb. In an ecosystem most of the material is transferred from the producers (plants) to the recyclers (bacteria); only a small fraction is passed through the consumers to the recyclers. The decomposes (recyclers) return most of the material to the producers for reuse.

In the anthroposystem the flow from the producers to the recyclers is small (or even non-existent), since it would be pointless to produce (mobilize) material and immediately recycle it without a consumer in the loop. In the anthroposystem much of the mobilized material is transferred to the rest of the external environment by the producer or by the consumer. Hence, it mostly an open system, with recycling accounting for only a small fraction of the mobilized matter.

In an ecosystem, recycling and sustained development (evolution) is facilitated by a close physical proximity and functional matching between the producers and consumers. The physical proximity of producers, consumers, and recyclers in an ecosystem (e.g. plants, animals, and bacteria in a forest) assures that very little energy is required for the physical transport of matter between the plant and its symbiotic bacterial population. Also, the physical proximity allows a reasonably fast mutual adjustment if there is a perturbation in the system.

In the anthroposystem, with consumers playing a more significant role, there is usually a significant physical displacement between the producer and the consumer. The global flow of oil products is the most dramatic example. Accordingly, a significant amount of energy is required to transfer the matter back to the producer or to a recycler. This physical separation of consumers, producers, and recyclers appears to be a major difference between the ecosystem and anthroposystem.

The producer-consumer-receptor-based model is a suitable framework for economic models which study the driving forces of the material flows. It is self-evident that the economics - i.e. the allocation of material resources - will depend on production (availability), consumption (demand), and on the cost at the receptor.

The above ecosystem, i.e. the producer-consumer-receptor-based material flow model, can also be used to formulate physico-chemical models based on mass conservation principles. The next section presents such a formulation.

Ecosystem-based material flow system

The flow of matter from producers to consumers and subsequently to receptors is depicted schematically in figure 2. Most of the production of potential pollutants begins with mining, that is, the removal of a substance from its long-term geochemical reservoir. The amount of pollutant mass, fzMi, mobilized by mining (tons/yr) is the production rate Pi (tons/yr) of the raw material (coal, oil, smelting ore, etc.) multiplied by the concentration c; (gram/ton) of the impurity (sulphur, mercury, lead, etc.): MiciPi.


Fig. 2 Key matrices in the flow of materials from producer to consumer to receptor

Matter is transferred from the producer to the consumer by transportation, including railroads, trucks, and ships. Functionally, transportation redistributes the mobilized substances over a large geographical area and to a multiplicity of consumers. Any producer, i, may deliver its product to any consumer, j. Mathematically, this producer-consumer transfer is characterized by a surface transfer matrix, sij.

The amount of matter, Uij, originating from producer i and used at consumer j is sijMj. The total amount of matter reaching consumer j is the sum of the matter produced by all producers multiplied by their respective surface transfer matrix elements.

The next transfer occurs between the consumer, or emitter, and the environmental receptors. The consumer is located where the combustion or smelting occurs, and the receptor where the pollutant is deposited following its atmospheric or hydrologic transit. Again, consumer j can transfer matter through the atmosphere to any receptor, k, Hence, the matter received at receptor k that originated at consumer (emitter) j, Rjk, is the product of the use rate Uj times the atmospheric or hydrologic transfer matrix, ajk, from emitter j to receptor k. The total amount of matter deposited at receptor k is the sum of the use rates, Uj, at each emitter weighed by its atmospheric/ hydrologic transfer matrix element.

In this chapter, the numeric values of Mi, ci, and sij are discussed in detail, while discussion of the atmospheric transfer matrix, ajk, is beyond the scope of this report.

The release of a trace substance at any given emission site Uj (tons/yr) is calculated as follows: Uj = sijciPi. It has to be noted that in this simplified formulation, the releases are not broken down by media, i.e. air, land, and water. A general approach to include the transfer through all environmental media is presented in the next section, the Environmental Spheres Analogue. An illustration of such a model is given in Husar (1986), as applied to the mobilization and transfer of sulphur in the United States, from its geochemical reservoirs (by mining) to the consumers at the power plants and subsequently to the receptors and receiving geochemical reservoirs.

Shortcomings of the ecosystem analogue

The ecosystem model of nature and of human activities has a major shortcoming in that it pays little heed to the physical transfer of mobilized matter. It does not answer the question of where the redistribution has occurred. Also, in that model, much of the anthroposystem had to be left open since many of the flows were out of the system as waste products. The next section is an attempt to extend the ecosystem analogue by "closing the system." In such a scheme, material is accounted for regardless of where it goes after leaving a given open system.

The environmental spheres analogue: Atmosphere, hydrosphere, lithosphere, and biosphere

Chemicals on earth are distributed among four major environmental compartments or conceptual spheres: atmosphere, hydrosphere, lithosphere, and biosphere. While such a compartmentalization of nature is rather arbitrary, it helps in organizing our existing knowledge on the distribution and flow of chemicals. A schematic representation of the four environmental compartments and their interrelationships is shown in figure 3.

The circles represent the spheres and the curved arrows the flow pathways of matter. These are used instead of boxes and straight-line connections to emphasize the close, dynamic, inseparable, organic coupling among the environmental compartments; if one compartment or linkage changes, all other compartments respond.

In this conceptual frame, every sphere has a two-way linkage to every other sphere, including itself. The two-way linkage signifies that matter may flow from one compartment to another in both directions; the two-way transfer within a given compartment indicates movement of the substance from one physical location to another without changing the sphere. Since matter cannot be created or destroyed, the question one seeks to answer is the location and chemical form of the substance at a given time.

The four spheres

The atmosphere is best envisioned as a transport-conveyer compartment that moves substances from the atmospheric sources to the receptors. Its storage capacity for matter is small compared to the other spheres, but it has an immense capability for spatially redistributing matter.

The hydrosphere may be envisioned as two compartments: a conveyor (river system) collects the substances within the watershed and delivers them to the second hydrologic compartment, oceans.


Fig. 3 The four environmental spheres

The lithosphere is the solid shell of inorganic material at the surface of the earth. It is composed of soil particles and of the underlying rocks down to a depth of 50 kilometres. The soil layer is also referred to as the pedosphere, and is a mixture of inorganic and organic solid matter, air, water, and microorganisms. Within the soil, biochemical reactions by microorganisms are responsible for most of the chemical changes of matter. However, soil and rock are mainly storage compartments for deposited matter.

The biosphere is the thin shell of organic matter on the earth's surface. It occupies the least volume of all of the spheres but it is the heart, or the chemical pump, of much of the flow of matter through nature. Weathering through the hydrological cycle, wind, and volcanic releases are the other mobilizing agents. The biosphere is responsible for the grand-scale recycling of energy and matter on Earth. The mobilization of matter by biota is by no means restricted to small geographic regions. The periodic burning of forests and savannas, for example, not only changes the chemical form of matter, but also results in long-range atmospheric transport and deposition. Some of the biologically released chemicals, including carbon, nitrogen, and sulphur, have long atmospheric residence times, resulting in redistribution on a continental and a global scale.

Man and the biosphere

Human activities most closely resemble the function of the biosphere. In more than one way, humans are part of the biosphere. Humans and biota are responsible for grand-scale redistribution of chemicals on earth - once again with major similarities and differences. Fires and other forms of combustion result in an oxidation of both biogenic and anthropogenic elements. In nature, living plants tend to reduce their metabolized chemicals, thus ensuring a cycling of the chemicals that make up living matter.

Once again, the anthroposystem has no built-in mechanisms for reducing oxidized compounds. Man-induced oxidation products have instead to rely on biota for reduction, i.e recycling. Given the limited reduction capacity of the biosphere, many of the combustion products remain in stable oxidized form and are ultimately deposited in another long-term geochemical reservoir.

The atmosphere and the hydrosphere (rivers) are effective conveyors of matter. Consequently, many of the anthropogenic chemicals are transferred to the land oceans where they are subsequently incorporated in these long-term geochemical reservoirs. Much of the environmental damage is done in the atmosphere, hydrosphere, lithosphere, and the biosphere during the transit from one long-term geochemical reservoir to another.

Summary and conclusions

In the "industrial metabolism" metaphor, industrial organizations are likened to biological organisms that consume food and discard waste products. This chapter builds on and extends this metaphor beyond the biological organisms to an entire ecosystem. The human analogue of the ecosystem is the anthroposystem, consisting of producers, consumers, and recyclers.

Using these components, both ecosystem and anthroposystem are described by a conceptual material flow model that is also a suitable framework for an economic model. It is noted that the current anthroposystems differ from ecosystems mainly in that they lack efficient material recyclers that allow sustainable development. In this sense, the anthroposystem is an open system and the analogy with the ecosystem is incomplete.

The environmental spheres analogy extends the ecosystem analogy further by considering the flow of matter in all environmental compartments or conceptual "spheres" - air, land, water, and biota. This extension allows a closing of the system by following the flow and fate of matter regardless of the location and medium of transfer. It is concluded that human activities most closely resemble the role of the biosphere in the mobilization of matter.

The current work could be extended in several ways, in particular by combining the ecosystem and the environmental metaphors into a single "model." In principle, the multimedia "spheres" approach to material flows lends itself to rigorous mathematical formulation using basic conservation laws. In fact, it could incorporate all the features of the ecosystem approach. The resulting model could encompass the complete, end-to-end flow analysis, from the point of "production" i.e. removal of the matter from one geochemical reservoir - to its fate in the receiving reservoir. Such a multimedia physical model would also be a suitable framework for environmental economic analysis.

References

Clark, W. C., and R. E. Munn, eds. 1986. Sustainable Development of the Biosphere. Cambridge, Mass.: Cambridge University Press.

Husar, R. B. 1986. "Emissions of Sulfur Dioxide and Nitrogen Oxides and Trends for Eastern North America." In: National Research Council, Acid Deposition Longterm Trends. Washington, D.C.: National Academy Press. Husar, R. B., and J. D.

Husar. 1990. "Sulfur." In: B. L. Turner et al., eds. The Earth as Transformed by Human Action. Cambridge, Mass.: Cambridge University Press.

Kormondy, E. J. 1969. Concepts of Ecology. Englewood Cliffs, N.J.: Prentice-Hall, Inc.

(introduction...)

Udo E. Simonis

Introduction

Until recently, the role of economic or industrial change as a driving force for environmental change has not been widely explored.) This may be due in part to the difficulty of collecting suitable data and indicators with which to describe the impacts of an economic structure on the environment. In part it may be due to the fact that the level of economic development or the growth rate of the economy was thought to be more important for explaining the changes occurring in the natural environmental.

The present chapter approaches the links between the various sectors (or industries) of the economy and the overall economic performance and addresses the possible delinking of polluting sectors (or industries) from the gross domestic product (GDP); it thus views restructuring as one way towards a more efficient industrial metabolism.

Such an examination could take place on the level of the individual sector (or industry) or the aggregate level of all sectors (or industries), but also at the regional level. It should at least be undertaken for those sectors (or industries) whose environmental effects are rather certain (structural environmental impacts). This would imply a mesoeconomic, not a micro-economic, approach to understanding environmental change. Such an examination may make it possible to assess current structural changes in economies and, on the basis of their environmental implications, may suggest future directions for environmentally benign structural policies.

The expression "structural change" or "restructuring" is generally used to characterize the decline or increase over time in certain sectors, groups of industries, or regions (and, sometimes, technologies) as regards gross national/domestic product. One may also think of structural change in terms of a transformation in the mix of goods and services produced; or one may refer to a broader set of changes in the economy, not only in its products and employment, but also in the social relations of production (e.g. unionization, part-time v. full-time jobs), the means of production (handicrafts, robotics), and the forces of production (market demand, profits).

Clearly, not all possible classifications and groupings are helpful or of interest for purposes of structural research. One either has to make an explicit choice, or one has implicitly made one in using or referring to a well-known, long-established concept of structural change. In this chapter, we will use one of several concepts of structure in economics, namely the sectoral production structure - i.e. the share of sectors in the economy and their relation to gross domestic/net material product.

Economic restructuring thus subsumes industrial restructuring, though the terms are often used interchangeably. Any restructuring of the sectors (or industries) in an economy is, of course, linked to more profound changes in other realms. For our purposes, and within this concept, we will deliberately select sectors whose environmentally destructive potential is beyond question. Thus we will not consider the regional structure, the employment structure, and the investment structure, even though all of these might be quite relevant in explaining the given environmental situation of a country, or its change over time.

Regarding the temporal dimension of structural change, there is, as we will see, a differentiation to be made between discontinuity and gradualism. There is economic restructuring as a discontinuity, or a break in development, and there is gradualism as an evolutionary or slow transition. Discontinuity may be the outcome of subterranean historical processes, but gradualism is the everyday reality of change. Clearly, the two are not mutually exclusive, but rather two sides of the same coin.

As regards impacts, we use the term "structural environmental impact," which means the environmental stress (or burden) that results from a given sectoral production structure, irrespective of pollution-control measures in the form of end-of-pipe treatment.

Identifying indicators of environmentally relevant structural change

It is not so long ago that sheer quantity of output was considered to be an indicator of a nation's economic success; in some circles this still seems to be the case. In Eastern Europe the importance attached to this criterion led to "tonnage ideology." In Western societies steel production and railways tonnage were once considered to be central indicators of economic success; currently housing starts, energy consumption, and the number of cars produced play this role. This accounts for the importance of the motor industry in the political arena. For a number of reasons, however, indicators of energy and materials consumption must be understood as indicators of economic failure.

Particularly in times of high or increasing costs for energy and materials, a high consumption of such inputs may turn out to be uneconomic. And countries that have drastically reduced their specific energy and materials use are today at the top of the international list of economic performance; resource use efficiency (or "materials productivity") has a major contribution to make in evolving new strategies towards sustainable development.

No wonder, then, that economists, planners, and engineers are seeking solutions to the problem of how to modify or restructure the existing patterns of energy and materials use, to switch from "high-volume production" to "highvalue production."5 At the same time, this reorientation reflects new and potentially strong environmental priorities. The hope of a "reconciliation between economy and ecology" and the envisaged "industrial metabolism" relies on the premise that a reduction in the energy and material input of production will lead to a reduction in the amount of emissions and waste, and will help to facilitate the potential for recycling and promote the option of intentionally closing cycles in industrial society.

The industrial system as it exists today is ipso facto unsustainable (R.U. Ayres). While the natural cycles (of water, carbon, nitrogen, etc.) are closed, the industrial cycles (of energy, steel, chemicals, etc. ) are basically still open. In particular, the industrial system starts with high-quality materials (like fossil fuels and metal ores) and returns them to nature in a degraded form.

On the basis of materials cycle analysis, it would appear that industrial society has drastically disturbed, and still is disturbing, the natural system. Ayres proposes two main criteria or measures of an approach towards (or further away from) sustainability, the recycling ratio and materials productivity. In the form of policy suggestions, this means (1) reducing the dissipative losses by near-total recycling of intrinsically toxic or hazardous materials, and/or (2) increasing economic output per unit of material input.

In this chapter, we will use a somewhat different, but comparable, approach in focusing on structural change in the economy and its environmental impact. To assess the empirical dimensions of the harmful or potentially benign environmental effects of structural change, we need suitable information concerning the material side of production. This by itself is not an easy task, especially if we look for cross-national comparisons. Resource conservation, materials productivity, and environmentally significant structural change are not appropriately described by the monetary values used in national accounts, although national accounts and, particularly, input-output tables offer some information. An alternative is to select indicators that act as synonyms for certain characteristics of the production process.

Certain indicators have been in the forefront of the environmental debate since it began, and the availability of data on the emission of various (representative) pollutants has grown considerably.10 Our present interest, however, is on environmentally relevant input factors.

Given the state of research and data availability, only a few such indicators can be tested in a cross-national comparison of Eastern and Western economies. The results of this test thus cannot give a precise picture of the real world, but can at least offer some patterns of environmentally relevant structural change from which hypotheses could be derived for further research. We use four such factors whose direct and indirect environmental relevance is indisputable: energy, steel, cement, and the weight of freight transport.

Energy consumption in general is accompanied by more or less serious environmental effects, and energy-intensive industries in particular pose environmental threats. Energy consumption thus is probably the central ecological dimension of the production pattern of a country. For similar reasons steel consumption is also a general indicator of structural environmental stress, in that it reflects an important part of the material side of industrial society. Cement consumption is in itself a highly polluting process, and cement represents to some extent the physical reality of the construction industry. (For reasons of data availability, in the following we use the production statistics of cement only.) The weight of freight transport can be understood as a general indicator of the volume aspect of production, as nearly all kinds of transport are accompanied not only by high materials input but also by a high volume of hazardous emissions. (In the following, we use data for road and rail transport only.)

The empirical investigation covers the period from 1970 to 1987 and includes 32 countries from the East and West, i.e., nearly the whole industrialized world. As is well known, certain methodological problems arise when comparing data on the national (domestic) product of Eastern and Western economies. For the purposes of this study, we relied on the data given in the National Accounts of OECD Countries, on data from the Statistical Office of the United Nations, and on other well-established data series, as specified in table 1.

Table 1 Data sources

Energy consumption International Energy Agency (IEA), Energy Balances of
OECD Countries 1970-1985 and Main Series from 1960;
Department of International Economic and Social Affairs
of the United Nations, Energy Statistics Yearbook, Year
book of World Energy Statistics, and World Energy Sup
Plies
Steel consumption Statistical Office of the United Nations, Statistical
Yearbook;
Statistical Bureau of the United States, Statistical
Abstracts of the United States
Cement production Statistical Office of the United Nations, Statistical Yearbook
and Monthly Bulletion of Statistics
Freight transport Economic Commission for Europe of the United Nations,
Annual Bulletin of Transport Statistics for Europe; Inter
national Road Federation (IRF), World Road Statistics;
International Railway Federation (UIC), International
Railway Statistics
Population Organisation for Economic Cooperation and Development
(OECD), Labour Force Statistics 1965-1985; Statistical
Office of the United Nations, Demographic Yearbook
Domestic product United States Statistical Yearbook, Comparative Internation
al Statistics; Statistical Bureau of the United States, Statis
tical Abstracts of the United States; Organisation for Eco
nomic Cooperation and Development (OECD), Main
Economic Indicators and National Accounts of OECD
Countries

Structural change as environmental relief

The harmful as well as the benign environmental effects of structural (or industrial) change and the significance of a structurally oriented environmental policy have been cited in recent literature. According to this insight, environmentally benign effects of structural change are to be expected by actively delinking economic growth from the consumption of ecologically significant resources, like energy and materials. Such delinking, achievable in particular by decreasing the input coefficients of these resources (dematerialization, re-use, recycling) or by increasing their effectiveness (energy and materials productivity) through better use,

- would result in a decrease in resource consumption and probably also in production costs, at least in the long term;
- would mean ex ante environmental protection, which is cheaper and more efficient than ex post installation of pollution-abatement equipment (end-of-pipe technology);
- would be environmentally more effective, since end-of-pipe technologies normally treat only single, "outstanding" pollutants, whereas integrated technologies touch upon several environmental effects simultaneously; and
- would open up a broad range of options for technological innovation or would itself be the result of such innovation.

For certain types of pollution, the effectiveness of structural change has been verified empirically. For example, structural change with respect to energy consumption had more benign environmental effects than endof-pipe protection measures, especially as regards such emissions as SO2 and Nox. Several OECD reports on the state of the environment reflect this fact for a number of countries. Changes in the energy structure, for instance, led to greater environmental protection effects than the installation of desulphurization plants. In Japan, energy conservation (and also water conservation) has been particularly successful; conventional environmental protection has been superseded by technological and structural change.

Examples like these may support the rapid introduction of market instruments, like resource taxes and effluent charges - a policy that would accelerate structural change and lead to economic advantages as well as to environmental relief.

Continue

Environmentally relevant structural change: Empirical analysis

Environmental benefits of structural change

Before dealing with the option of accelerating environmentally benign structural change in the economy, it is necessary to consider ways to describe such processes, especially with respect to international and intertemporal comparisons.

Structural change as a continuous shift of labour, capital, and skills to more intelligent uses can also be conceived of as a process of successive delinking: the contribution of traditional factors to the national product decreases whilst the contribution of other factors increases - i.e. they tend to change or lose their function over time. This chapter is concerned with the environmentally relevant factors (sectors) in this process.

Focusing on the four factors described above, figure 1 illustrates such delinking from the growth of the gross domestic product (GDP), taking the Federal Republic of Germany as a first example. The delinking of energy and weight of freight transport from the GDP became apparent by the end of the 1970s, while for cement this process began in the early 1970s; for steel consumption, delinking had already begun in the 1960s.

In the Federal Republic of Germany, structural change generated environmentally benign effects in various ways:

- The growth of the service sector of the economy was environmentally beneficial (if transport activities are excluded from consideration), at least to the extent that it added economic value at relatively little cost in terms of energy and materials.
- The stagnating consumption of primary energy made a reduction in emissions possible, in spite of a comparatively sluggish clean-air policy in this period; the desulphurization and denitrification of the power plants came into full swing only in the second half of the 1980s. The effect of energy saving could have been even more impressive if there had not been a further increase in the consumption of electricity.
- The decrease in steel consumption accounts for a considerable reduction in emissions as far as production and processing are concerned. The drop is especially noticeable, and is partly due to an increased recycling ratio. However, such benign environmental effects may have to be compared with the harmful effects of an increased use of steel substitutes such as plastics and other materials and their inherent environmental risks.
- The fall in cement production represents a direct environmental gratis effect as far as the emissions from cement factories are concerned. With regard to the environmentally disputed construction industry, this decrease reflects a trend away from new construction towards modernization of the housing stock. (Again this trend may be reversed owing to the large construction programmes launched since the unification of Germany.)
- From the development of the weight of freight transport it can be concluded that in the period under investigation the volume of materials employed declined rather than increased, i.e. materials productivity has risen. (Germany being a transit country, the European Single Market might possibly reverse the trend again and lead to a drastic increase in freight transport.)


Fig. 1 Structural economic change in the Federal Republic of Germany, 1960 1987 (1960 = 100) (Source: Janicke et al., note 8)

Each of the sectors discussed above would of course need to be examined in greater detail, a step that cannot be undertaken here. One of the ensuing methodological questions is whether or not a different set of indicators would offer a more thorough understanding of environmentally relevant structural change in the economy. 18 The international comparison of the energy and materials side of nearly all the industrial countries, as well as the intention to establish a respective typology, however, seems to justify our concentration on the four indicators chosen for this study.

Environmental protection through resource economy

Figure 2 shows that some delinking was also taking place in the (former) German Democratic Republic (GDR), though it was different in scope and time.

Unlike the FRG, the GDR long continued to rely on the industrial sector, particularly on polluting heavy industry, as the main source of economic growth, while the development of the service sector was woefully neglected. Regarding energy and steel consumption, a slow process of delinking had begun in the early 1970s, but structural change in terms of a "materials economy" was modest. While, according to political rhetoric, increased energy and materials productivity was considered to be the "most important way of reducing the burden on the environ ment," practice fell short in implementing this concept.


Fig. 2 Structural economic change in the German Democratic Republic, 1970-1985 (1970 = 100) (Source: Jcke et al., note 8)

In addition, the genuine relief of environmental stress can occur only if an absolute reduction in the relevant energy and materials inputs is achieved. The reduction in the GDR was not very significant, even in relative terms.

Changes in structural environmental impacts: East-West comparisons

The differing scales of GDP and of energy and materials consumption within the national economies have not yet been considered in this chapter. This, however, is important since a process of active delinking would generally be achieved more easily where energy and materials consumption were already at a high level. For active delinking, three aspects (or types) of environmental impacts of production and consumption have to be differentiated: (a) absolute environmental impact; (b) impact per capita; and (c) impact per unit of gross domestic product (GDP).

With regard to the absolute impact (a), it is the change over time that is of interest. Without reference to the size of a country, its population and output, however, the absolute impact does not lend itself to international comparisons. Such comparisons only become feasible if one uses the per capita impact (b) and/or the impact per unit of GDP (c).

In a first round, we computed an aggregated environmental impact index, consisting of the per capita impacts of consumption of primary energy and crude steel, freight transport weight and cement production for all the countries under investigation. In computing the index, equal weight was given to the four indicators, marking the deviation from the mean value of all countries for 1970 and 1985. Thus the relative position and the patterns of change of the countries can be observed. The results of the computations are presented in figures 3, 4, and 5. (The abbreviations used are the international signs for motor vehicle licences.)

As figure 3 shows, in 1970 there was a significant relationship between a country's per capita GDP and the structural impacts on its environment regarding the four selected indicators (sectors). The correlation coefficient for the aggregated environmental impact index and the per capita GDP was 0.76 for all the countries considered. This means that around 1970 the national product of the industrial countries was still strongly based on "hard" production factors (high volume production).


Fig. 3 Index of structural environmental impacts per capita* and economic performance level (1970= *) and regression line (Y = 0.000170x - 1.23615/R = 0.756) (Source: Jcke et al., note 8)


Fig. 4 Index of structural environmental impacts per capita* and economic performance level (1985 = +) and regression line (Y = 0.000046x - 0.39506/R = 0.312) (Source: Jcke et al., note 8)


Fig. 5 Index of structural environmental impacts per capita* and economic performance level (1970 = */1985 = +) and change (--->) (Source: Jcke et al., note 8)

Countries with high environmental impacts per capita (see figure 3) were Sweden (S), the United States (USA), the Federal Republic of Germany (D), Czechoslovakia (CS), Canada (CDN), Norway (N), Switzerland (CH), Japan (J), Belgium (B), and even Finland (SF). In the lowest third of the scale were Hungary (H), New Zealand (NZ), Romania (R), Spain (E), Greece (GR), Ireland (IRE), Yugoslavia (YU), Portugal (P), and Turkey (TR).

During the 1970s and the early 1980s, this relationship between economic performance (GDP) and structural impacts changed considerably. The correlation coefficient in 1985 was at only 0.31, significantly below that of 1970; figure 4 shows the new picture. This means that the process of structural change in several countries reduced the importance of the "hard" factors (high volume production) in the economy.

Accordingly, the position of several countries has improved over time. This was especially true of Sweden, but also of the Federal Republic of Germany, France, the United Kingdom, and the United States. In contrast, the placing of several other countries has deteriorated. This was especially true of Greece, but also of Bulgaria, Romania, the USSR, and Czechoslovakia. The group with the highest structural environmental impacts by 1985 was led by member states of the (former) COMECON, namely Czechoslovakia, the USSR, the German Democratic Republic, and Bulgaria; Western industrialized countries showed up in the second (Canada), sixth (Greece), seventh (Finland), and eighth (USA) position, respectively. Japan, despite its improved position, was still in the top half of the scale.

The dynamics and the international pattern of structural change from 1970 to 1985 are indicated in figure 5, which is derived from figures 3 and 4. The main message here is the variation in the direction of change. In the group of low- and medium-income countries (among the industrial countries), two different patterns emerged: increasing environmental impacts, on the one hand, and stabilizing or decreasing environmental impacts on the other (see figure 5).

The fact that economically advanced Western industrial countries occupied leading positions as regards per capita environmental impacts in 1970 may not be so surprising as it seems at first glance. At that time, Sweden, the USA, and Japan, being confronted with high pollution loads and partly with environmental crisis, had to recognize the need for sweeping environmental protection measures. The fact (by contrast) that Czechoslovakia was "leading" in 1985 indicates the problematique of that country's economic structure. At that time, Czechoslovakia's energy consumption per unit of GDP was more than 50 per cent higher than in most other countries, and specific steel consumption was actually twice that of countries with comparable levels of GDP.

Typology of environmentally relevant structural change

As was explained above, the shifts in the international position of countries listed in figures 3 to 5 relate to structural per capita impacts only - i.e. no account is being taken of the individual country's economic growth rate. For example, the shift in Norway's position coincided with a high rate of economic growth (see table 2) so that the environmentally benign effects of structural change were partly neutralized. To be sure, the absolute (per capita) environmental impacts are of the utmost importance for the environmental policy debate. However, structural change in relation to the growth of the economy is also relevant for the environmental situation of a country. There may be no structural improvement in absolute (per capita) terms because high growth rates neutralize the otherwise positive effects of structural change.

To differentiate the patterns of change, the following typology may be useful:

1. Absolute structural improvement, i.e. an absolute (per capita) decline in production factors (sectors) causing high environmental impacts.
2. Relative structural improvement, i.e. a relative decline in production factors (sectors) causing high environmental impacts compared to the growth of the economy.
3. Absolute structural deterioration (which includes relative deterioration), i.e. a disproportional increase in production factors (sectors) causing high environmental impacts compared to the growth of the economy.

Environmental gratis effects may be defined as those effects that occur when (ceteris paribus) the rate of usage of those factors (sectors) having an impact on the environment remains (considerably) below the growth rate of the GDP (type 1 and 2).

In table 2 16 countries out of the whole sample of industrial countries investigated are grouped according to these three different de velopment patterns. Again, we use here the above indicators of an energyand materials-intensive mode of production, i.e. consumption of primary energy and crude steel, weight of freight transport, and cement production.

Table 2 Environmentally relevant structural change: percentage changes 1970/1985

Country Consumption of  
Cement
pro-
duction
Weight of
freight
transport
GDPa
Primary

energy

Crude

steel

Group 1: Absolute structural improvement

Belgium 7.1 - 24.5 - 17.6 - 2.2 42.7
Denmark -2.7 - 15.6 - 33.2 20.1 40.8
France 30.3 - 34.8 - 23.4 - 14.5 51.6
FRG 13.4 - 26.3 - 32.8 4.4 38.4
Sweden 26.4 - 37.9 - 41.2 - 21.4 32.7
United Kingdom - 2.3 - 43.5 - 28.7 - 18.2 32.4

Group 2: Relative structural improvement

Austria 32.1 - 33.9 - 6.0 21.3 54.3
Finland 39.6 14.8 - 11.2 12.2 65.7
Japan 37.3 - 2.3 27.4 7.5 90.2
Norway 51.1 - 21.6 - 40.3 34.7 87.5

Group 3: Structural deterioration

Bulgaria 74.9 24.9 42.3 77.5 37.3
Czechoslovakia 31.5 22.5 37.3 62.9 33.9
Greece 119.3 67.3 162.9 43.1 69.1
Portugal 89.0 34.2 133.1 27.4 69.0
Soviet Union 76.3 33.4 35.9 70.2 47.7
Turkey 218.8 184.4 173.2 118.6 118.2

Source: Jcke et al. (note 8).

a. Calculation of the Gross Domestic Product percentage changes on the basis of constant (1980) US dollars. Bulgaria. Czechoslovakia, and Soviet Union data refer to percentage changes between 1970 and 1983 in the Gross National Product.

b. Transport data only take railway transport data into account.

Of all the industrial countries studied, Sweden (see figure 6) is the environmentally most positive case. Although the growth rate of industrial production was very low after 1973, Sweden increased its GDP quite considerably, primarily through an expansion of the service sector. The drastic reduction in cement production (-41.2 per cent), the decreasing consumption of crude steel (-37.9 per cent), and the decrease in the weight of freight transport (-21.4 per cent) add up to notable overall environmental gratis effects.

Also in the United Kingdom, the four structural impact factors decreased by between 2.3 per cent and 43.5 per cent but, in contrast to Sweden, these reductions were connected with, or induced by, high mass unemployment.


Fig. 6 Structural economic change in Sweden, 1970-1985 (1970 = 100) (Source: Jcke et al., note 8)

In Denmark, too, structural change in the economy decreased the importance of the energy- and materials-intensive sectors quite considerably. Between 1970 and 1985, the GDP grew by some 40.8 per cent, while three of the four impact factors decreased by between 2.7 per cent and 33.2 per cent.

In Japan (see figure 7), the process of delinking was partly neutralized by the rapid growth in overall industrial production and thus only resulted in relative structural improvement (see group 2 in table 2). The conclusion can be drawn that a forced rate of industrial growth interferes with the environmental relief of structural change. Countries with high growth rates must therefore undertake stringent remedial environmental protection measures in order to achieve a net relief for the environment.

In Czechoslovakia (see figure 8), no real delinking of economic growth from the four impact factors took place; some of them even increased. After the oil price hike of 1979 the economy entered a crisis. The development profile of Czechoslovakia, which had undertaken no structural change at the time under investigation, was representative of the economies of Eastern Europe. Group 3 of the countries (see table 2) consists for the most part of industrial latecomers, then in an early stage of industrialization. But Czechoslovakia was a relatively old industrial economy that (in 1985) ranked at the top among the countries suffering from high structural environmental impacts per capita.

This leads at least to two specific questions: (1) do all late-comers have to go through stages of increasing environmental impacts; and (2) what prevents old industrial countries from taking an environmentally friendly development path? A third, more general, question is, of course: What is to be learned from past experience, and under what conditions can economic restructuring become a strategic variable, or point of departure, for sustainable development?

Specific conclusions

First of all, the method used in this study leaves room for refinement.21 Certain problems remain as regards data, particularly the differences in computing the national (domestic) product in East and West. The question of substitution processes (steel/plastics, for example) is of high relevance and should be further investigated.22 Additional information is needed if, for instance, industrial and not overall consumption of energy, or the specific impacts of energy production (such as lignite v. gas), are taken into consideration. The international trade in wastes and the transfer of polluting industries and technologies from developed to developing countries need further study, etc. That means that economic structural change is about not only quantity of energy and materials inputs, but also, and increasingly, about quality, transformation, and interrelations.


Fig. 7 Structural economic change in Japan, 1970-1985 (1970 = 100) (Source: Jcke d al., note 8)


Fig. 8 Structural economic change in the CSSR, 1970-1985 (1970 = 100) (Source: Jcke et d., note 8)

Beyond these analytical limitations, however, the advantages of comparing the development patterns of individual countries become evident:

- Restructuring, in the sense of delinking energy and materials inputs from economic growth, was significant in many of the industrial countries. In the period under investigation, less than half of these countries clung to the traditional modes of quantitative growth in physical output per se. Countries that did so were the low-income Western countries and most of the countries of Eastern Europe.
- Certain Western countries enjoyed environmental gratis effects as a result of structural change. In some cases, especially in Sweden, these beneficial effects were quite considerable.
- In other Western countries, the possibly beneficial environmental effects of structural change were levelled off by the rapid economic growth pursued. This was especially true in the cases of Japan and Norway.
- The relationship between the scale of the economy (GDP) and environmental impacts from energy- and materials-intensive production, still evident in 1970, had weakened by the 1980s. The economically advanced countries underwent fairly rapid structural change.
- In the low- and medium-income countries among the industrial countries, distinct development patterns emerged. There were cases of rapid quantitative growth and also cases of qualitative growth, i.e. economic growth with constant or decreasing energy and materials input.

All in all, it is, unfortunately, not yet possible to speak of one dominant development trend among the industrial countries towards dematerialization, recycling, improved industrial metabolism, or sustainable development.

General conclusions

The differences between these development patterns should be of particular interest for future environmental and economic policy in general, and structural policy in particular. It seems that the reasons for such differences and their consequences deserve further attention.

Economic or industrial restructuring is more than an economic phenomenon, particularly if it is understood to convey a break in energy and materials intensity and in pollution trends, that is, a shift towards a significantly different environmental impact pattern. Structure is the key to many theoretical problems; industrial restructuring can be a key to solving present and preventing future environmental problems. Structure is both a comforting and a disturbing notion; restructuring should be made a less uncomfortable, more environmentally friendly strategy.

By implication, the temporally uneven development of the economies studied (discontinuity and gradualism) manifests itself in uneven spatial and social patterns. Our concern here was with the environmental impacts involved in and induced by structural change. The better the environmental impacts of industrial structures are understood, and the earlier they are taken into consideration, the easier it should be to channel industrial development in a direction that is consonant with environmental protection, and thus to improve on industrial metabolism.23

In this sense, the "economic late-comers" need not fall into the environmental trap that most of the "economic forerunners" ended up in. By the same token, there is enough evidence that some of the "economic forerunners" could do more to escape from being "environmental latecomers." This, however, would require not only proactive structural change in the economy but also a preventative environmental strategy. This means that environmentally benign market forces would have to be stimulated by structurally innovative policies.

(introduction...)

Rajendra K. Pachauri, Mala Damodaran, and Himraj Dang

Industrial metabolism and sustainable development

This chapter focuses on the attainment of energy conservation and efficiency as part of a process of industrial restructuring towards sustainable development. The specific case of Indian manufacturing industry is considered in some detail to show the potential for, and implications of, restructuring in industry in developing countries in accordance with the principles of "industrial metabolism."

Since the appearance in 1987 of the World Commission on Environment and Development's report Our Common Future, sustainable development has become the objective of development strategies and policies worldwide. Yet, six years later, the factors that would contribute to sustainable development and the methods to operationalize them are still undetermined. Without doubt, the need to minimize the throughput of resources while maintaining the system of production is central to any concept of sustainable development. However, the notion that the economic subsystem may have approached the finite biophysical limits of the global ecosystem has yet to gain currency, in spite of the writings of such prominent economists and scientists as Vitousek (1986), Daly and Cobb (1989), Goodland (1991), and Meadows et al. (1992).

Two answers emerged from Our Common Future. One was "growth as usual," albeit at a reduced rate. The other was to define sustainable development as "development without growth in throughput beyond environmental carrying capacity." Daly (1990), one of the pioneers of "steadystate economics," has provided an alternative definition of sustainable development, which we think may be useful for this chapter: a process in which qualitative development is maintained and prolonged while quantitative growth in the state of the economy becomes increasingly constrained by the capacity of the ecosystem to perform over the long-run two essential functions: to regenerate the raw material inputs and to absorb the waste outputs of the human economy.

The recognition of an optimal scale of the economy is central to sustainable development as per Daly's definition. Beyond such an optimum, growth becomes "anti-economic growth." Goodland (1991) suggests that the environmental constraints to growth have already been reached: witness the high volume of human biomass appropriation (nearly 40 per cent), the looming threat of global warming, the rupture of the ozone shield, pervasive land degradation and the threat to the world's biodiversity from continued growth in the scale of the world economy . . .

The restructuring of industry towards sustainability in the developing countries would have simultaneously to take into account existing constraints and growth compulsions. For instance, for a number of reasons it may not be possible for a developing country to do away with aluminium production just because of energy scarcity, if all the other conditions requiring the establishment of the industry are satisfied. However, what may be possible is the achievement of higher energy efficiency levels in the industrial sector, reducing the throughput of raw materials and natural resources in general, and energy in particular, for a given level of output (Gross National/Domestic Product).

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Industry and sustainable development

The industrial base of developing countries is undergoing diversification and moving into more capital-intensive areas such as metal products, chemicals, machinery, and equipment. Heavy industries, traditionally the most polluting, have grown in relation to light industries (World Commission on Environment and Development, 1987). The expected growth in these industries foreshadows rapid increases in pollution and resource degradation unless care is taken to control pollution and waste (especially hazardous wastes) and to increase recycling and re-use. However, these options have to be economically viable for them to be adopted. In several industrialized countries efforts at recycling have not been successful, because the large quantum of energy used and the other costs involved in the recycling process render these possibilities economically unattractive. This is in line with Georgescu-Roegen's view that since dissipated matter is inevitably lost, only "garbo junk" is recycled (GeorgescuRoegen, 1980). Further, recycling tends to be labour-intensive, and for most industrialized countries labour costs are high. Also, pollution-control measures often require heavy capital investments at the initial stage. In most developing countries, with constraints in access to capital resources, these measures are often not acceptable even when they are economically viable.

Industry has an impact on the natural environment through the entire cycle of raw materials exploration and extraction, transformation into products, energy consumption, waste generation, and use and disposal of products by the final consumers. If industrial growth is to be sustainable over the long run, it will have to change radically in terms of its quality. This does not necessarily suggest a quantitative limit to industrialization in developing countries. However, governments and international funding agencies could encourage those industries and industrial processes which are more efficient in terms of resource use, which generate less pollution and waste, which are based on the use of renewable rather than non-renewable resources, and which minimize irreversible adverse impacts on human health and the environment.

With the emergence of new process technologies that reduce the length of process chains, the possibilities of efficiency in resource use are enormous. The developing countries could take advantage of improvements in the efficiency of resource use already achieved in industrialized countries, and by adapting them to local conditions could not only reduce environmental costs but also "stretch" the resource base.

The increasing pressure on non-renewable resources (petroleum, copper, etc.), as well as the increasing constraints on sinks (ozone depletion, deforestation, dumping of solid wastes, etc.), suggest that throughput in the world economy has reached the global biophysical limits, and partially even surpassed them (Meadows et al., 1992). Yet it is neither ethical nor efficient from an environmental point of view to expect the developing countries to cut or arrest their industrial growth, which has the potential to absorb the large and growing population of the South. In the future, however, more growth for the poor must be balanced by negative throughput growth for the rich.

Resource utilization

While such a posture would address the political concern for development in the South, it does not address the problem of depletion of non-renewable natural resources. The concept of "sustainable development" does certainly not preclude the mining of nonrenewables. A sustainable industrial policy for non-renewables, however, has to employ a different method of project appraisal. Since resource depletion may be treated as a social cost, a certain portion of the revenues from industrial projects should be invested in the creation of renewable substitutes, leaving aside an appropriate portion as disposable income. The income component would be higher either for a nonrenewable asset with a longer life expectancy or for a faster growing substitute (higher discount rate).

This principle, enunciated by El Serafy, does not imply a rejection of the notion of income as defined by Hicks. The idea is that even for industrial projects the net present social value (NPSV) may be calculated to take account of the depletion of non-renewables (Mikesell, 1991). In fact, such a novel measure of appraisal of industrial projects is still in its infancy, though industrial strategy may be built around this principle in the future.

For renewable resources, industrial projects should seek to maximize productivity of resource stocks over the long run. This means, for instance, that, to sustain pulp and paper industries in the long run, in addition to wellmanaged forests reserves of pristine forest are essential as reservoirs of biodiversity. The same goes for industries based on fisheries and biotechnology, and so on. In sum, sustainable societies would have to use the flows of resources rather than mine the stocks. This would help delink economic growth from the intensive use of environmentally significant resources - a process that has begun in some industrialized countries like Sweden and Germany (see Udo Simonis, chapter 3 of this volume).

Industrial material recycling, as discussed above, can perhaps best be seen as a process wherein the short-term throughput of virgin raw materials is minimized without sacrificing output. In the following, we will concentrate on short-term measures that are feasible, of which improvement in energy efficiency is an important and representative example.

Energy efficiency: An overview

The interdependence between energy and industrial growth is crucial in formulating policies for sustainable development. Industry is a major market for energy, and the pricing and availability of energy closely affect industrial growth. Conservation of energy is possible through short-term measures in the industrial sector, but major changes in the structure and mode of transportation also become necessary if significant gains are to be made. But as the economic life of vehicles is relatively short, a transition in the road transport sector can be implemented more easily than in the case of rail transport, where replacement of existing capital stock is slower.

The major technical measures for energy conservation in industry include the recovery of heat from exhaust gases, the introduction of integrated energy systems, the recycling and re-use of materials, and automatic control, as well as the search for more advanced equipment and processes. Energy conservation in industry has led to improvements in overall energy efficiency in many countries over the last 15 years. In the United States, for instance, industrial energy use declined by 17 per cent between 1973 and 1986. This occurred in spite of a 17 per cent increase in industrial production during the same period. Structural changes and the replacement of open-hearth furnaces by more efficient basic oxygen furnaces has cut energy needs by half in the steel industries of most industrialized nations. Co-generation has grown rapidly in the United States and may surpass the share of nuclear energy by the end of the century.

Seen globally, these gains from decreased energy and materials intensity in the industrialized world may well be offset by the growing industrialization in developing countries. It is therefore imperative that the frontiers of technology shift along with the movement of many energy-intensive operations in the developing countries.

The iron and steel industry exemplifies the progress made in energy conservation and at the same time shows the potential for further improvements. With 6 per cent of the world's commercial energy consumption, the steel industry is a highly energy-intensive sector. Table 1 shows, however, that use of energy per ton of steel produced in India and China is more than twice as high as in Italy and Spain. The two latter countries have turned to the electric arc furnace, which uses 100 per cent scrap and as a result requires only two-thirds of the energy needed to convert the ore to the final product. The world recycling rate could easily be doubled or even tripled (Brown et al., 1985) from the present levels. In the United States, investments in energy conservation could cut the energy required per ton of steel by a third by the turn of the century. In China and India, investments to upgrade from the open hearth furnace would save at least 10 per cent of energy use. A World Bank study estimates that such investments could pay for themselves in less than a year (quoted in Brown et al., 1985). Further conservation could be effected in developing countries which plan to expand capacity, such as Brazil.

Table 1 Energy use in steel manufacturing in major producing countries, ranked by efficiency, 1980

Countrya Production
(MMT)
b
Energy used per ton
(gigajoules) GJ
c
Italy 25 17.6
Spain 12 18.4
Japan 107 18.8
Belgium 13 22.7
Poland 18 22.7
United Kingdom 17 23.4
Brazil 14 23.9
United States 115 23.9
France 23 23.9
Soviet Union 150 31.0
Australia 8 36.1
China 35 38.1
India 10 41.0
World 700 26.0
Best technology    
Virgin ore   18.8
Recycled scrap   10.0

Source: Brown et al., 1985.

a. These 15 countries account for 84 per cent of world steel production.

b. Production figures represent averages for the years 1978-1981.

c. Energy totals are for crude steel-making, including ironmaking.

The aluminium industry provides another case of an energyintensive industry where there is high potential for energy conservation. As table 2 shows, there are still wide disparities in electricity use for aluminium smelting. Energy intensity could be further reduced in this industry to 46.27 GJ/t, using currently available technology (Brown et al., 1985). Recycling can cut energy requirements by over 90 per cent, but recycling rates worldwide averaged only 28 per cent in the early 1980s (Brown et al., 1985).

Table 2 Electricity use in aluminium smelting in major producing countries, ranked by eficiency, 1981

Country Share of world
production
a|
(thousand tons)
Electricity
use per ton GJ
Italy 300 47.88
Netherlands 300 47.88
France 450 48.60
Brazil 300 50.40
Fed. Rep. Germany 800 52.24
Japan 700 53.64
United States 4,300 55.44
Australia 400 57.96
Norway 700 64.80
Soviet Union 2,000 64.80
Canada 1,200 72.00
World 15,900 59.40
Best technology  
Virgin ore   46.80
Recycled scrap   1,600b

Source: Brown et al., 1985.

a. Average primary production for years 1980-1982.

b. Electric energy equivalent.

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Energy use in Indian industry: A case-study

Structural change in the economy

An examination of trends in energy use in India may typify the trends in "industrial metabolism" in developing countries. When looking at structural change in industry, India differs markedly from countries like Austria, Belgium, Denmark, France' Germany, Finland, Norway, Sweden, the United Kingdom, and Japan. In these countries, economic growth after 1970 has, in absolute or relative terms, been progressively delinked from the use of natural resources (see Udo Simonis, chapter 3 of this volume). This process of delinking has been associated with:

- a decrease in resource depletion and environmental pollution;
- the use of ex ante environmental protection measures; and
- the adoption of less polluting (cleaner) technologies in industry.

Structural change in India was different, as illustrated in figure 1:

- The growing consumption of primary energy has led to an increase in pollution.
- The increase in the production of steel and cement also represents an increase in pollution.
- The increase in the weight of freight transport indicates that material demands have increased.


Fig. 1 Structural economic change in India

The growth in factors with negative environmental effects in India occurred faster than the growth in GNP. This trend is without doubt contrary to recent experience in the more highly industrialized countries (see chapter 3).

In India, the annual average growth rate for energy production has exceeded 7.5 per cent since 1983, increasing to about 10 per cent in 1985. Gross domestic consumption has grown at a fluctuating rate, varying from 6 to 6.5 per cent. The higher growth rate of energy production suggests structural changes, with a build-up in energy-intensive sectors. This is a process which could continue into the next century, as per capita energy consumption in general is still rather low (9.8 TJ in 1989). For the Indian economy as a whole, energy demand has increased because of the increasing energy-intensity of production in both agriculture and industry.

Manufacturing industry

The manufacturing sector is the largest consumer of commercial energy in India. In producing about a fifth of India's GDP, this sector consumes about half the commerical energy available in the country. Six energy-intensive industries- aluminium, iron and steel, cement, pulp and paper, fertilizers, and textiles - that account for over 60 per cent of the energy consumed within this sector have been considered for this case-study.

Aluminium

The demand for aluminium is likely to increase in India owing to the rapid development of the electrical and transport sectors. On average, the specific energy consumption of the Indian aluminium industry is about 27 per cent higher than in industrialized countries, as table 3 reveals. In this case, measures of energy conservation offer the only possibility of restructuring, as there is no alternative to the Bayer-Hall process for primary aluminium reduction.

Table 3 Comparison Of energy consumption in the aluminium industry, 1984

Type of energy
(GJ/T)
Indian industry
(A)
Industry in
industrialized
countries (B)
B/A(%)
Thermal 46.73 34.25 36.4
Electrical 66.07 54.56 21.10
Total 112.80 88.81 27.0

Source: Tata Energy Research Institute, 1989.

Table 4 Energy consumption per unit output of the process centre and its variations for the period 1982/83 to 1986/87 vis-is British steel plants' performance in 1986 (unit: GCAL/tp)

Sl.
No.
Process
centre
consumption,
1982-
1986/87
Variation
of
energy
  British
Plant Plant Plant Plant Plant Plant Steel
I II III IV V VI 1986
1 Sinter Max. 0.72 0.88 0.96 0.93 0.94 NEa 0 553
    Min. 0.68 0.74 0.85 0.91 0.96 NE  
2 Coke oven Max. 2.16 2.35 2.31 3.5 2.28 2.5 1.549
  (net energy) Min. 1.92 2.29 2.16 1.64 1.41 2.18  
3 Blast furnace Max. 4.32 4.58 5.89 5.18 7.91 6.11 3.35
  (net energy) Min. 3.98 3.95 5.39 4.59 6.1 4.43  
4 Open-hearth Max. 1.1 1.28 - NE 2.19 2.30 NE
  furnace Min. 1.08 1.07 - NE 1.88 1.86  
5 LD convertor Max. 0.51 0.29 0.52 0.29 NE NE 0.32
  (net energy) Min. 0.39 0.38 0.39 0.26 NE NE  

Source: Tata Energy Research Institute, 1989.

a. NE = Non-existent. There is no LD gas recovery except in Tata Iron and Steel Company.

Iron and steel

A high rate of growth for iron and steel is expected, as per capita consumption in India in 1986 was 19 kg of crude steel compared with 578 kg of crude steel per capita in Japan. Energy accounts for about a third of the total cost of finished steel. Specific energy consumption varies within a range of 36.4-62.8 GJIT of crude steel. The comparable figure for industrialized countries is substantially lower, at 16.725.1 GJ/T. A comparison of the actual performance of Indian units with that of British steel is summarized in table 4.

Nearly 37 per cent of Indian steel is produced by the technically outmoded open-hearth furnace, which is no longer used in industrialized countries. Even in plants where the basic oxygen process is used, plant efficiencies are relatively low. Higher efficiencies also possible through improvements in the quality of coking coal. Energy efficiency improvements of 20 to 30 per cent for fuel use and 12.5 to 22 per cent for electricity use are expected by 2025 in India.

Cement

Specific energy intensities for cement produced in India are 261 kg coal/tonne, and 406 kg coal/tonne for the dry and wet processes respectively. The dry process is more energy-efficient and a shift to this process would be profitable. If by the year 2010 either (a) more dry process operations and/or (b) more efficient (current world's best) techniques were chosen, total energy demand, and hence pollution, could be reduced drastically. Specific energy intensities for India and the world's best for the wet and dry processes are given in table 5.

Opting for the best available technology would lead to a reduction of around 12.0 tonnes of coal consumed per tonne of cement produced in the year 2010, i.e. from 48 to 36 tonnes. This defines savings in terms of both coal requirements and pollutant emissions. (The calculations are based on 0.18 kg/MJ coal consumption and a calorific value of 20.94 MJ.)

The above presentations serve as an indication of the extent of savings possible within an industry solely through energy-efficiency measures. Improvements in coal consumption rates would also reduce pollution. Further process improvements and a sectoral shift, i.e. from energy-intensive production to services, would have a bearing on the fuel mix and hence the energy consumption levels in the country. What becomes apparent is that energy-efficiency improvements are of great importance, although other improvements will be needed as well.

Table 5 Specific energy intensities for cement manufacturing

  Thermal GJ/T Electrical GJ/T
World's best India World's best India
West 5.0 7.0 0.25 0.41
Dry 2.9 3.7 0.39 0.55

Source: Tata Energy Research Institute, 1989.

Table 6 Comparison of Indian and international specific energy consumption in the cement industry, 1983/84

  Electrical
(KWh/tonne of OPC)
Thermal
(Gcal/tonne of OPC)
  Indiana International Indiana International
Wet 0.41 0.25 - 0.37 6.9 5.0 - 5.4
Semi-dry 0.44 0.32 - 0.34 4.2 3.1 - 3.4
Dry 0.55 0.39 - 0.4 4.2 3.1 - 3.4

Source: Tata Energy Research Institute, 1989.

a. Weighted average, where weights used are actual production.

Table 7 Expected decline in energy intensities in the paper manufacturing industry (percentages)

  High-emission
scenario
Low-emission
scenario
Decline in fuel intensity 10 20
Decline in biomass intensity 5 5
Decline in electricity intensity 10 15

Source: Tata Energy Research Institute, 1989.

Significant energy savings are possible in the manufacture of cement in India, as shown in table 6. Technological innovations such as pre-calcination systems and suspension pre-heaters could be incorporated in the dry process which is currently used for the manufacture of over 64 per cent of the total cement production of India.

Pulp and paper

The installed capacity for paper production in India is 2.7 mt and is expected to rise to 4.25 mt by the turn of the century. In India, the energy efficiency of a typical large mill is much lower than that of its counterpart in an industrialized country. Even a relatively modern mill in India consumes 70 per cent more heat and 7 per cent more electrical energy to produce a tonne of paper than does a typical Scandinavian mill, for instance. Further, the Indian mill is likely to purchase more fuel and power since the co-generation potential of Indian units has not yet been exploited. As this industry will continue to grow, driven by increasing literacy and the demand of the packaging industry, energy intensity is likely to decline, as indicated by table 7.

Fertilizers

Chemical fertilizers have recorded a phenomenal increase in the past in India, and this growth might continue, driven by the demand for foodgrains. However, the efficiency of fertilizer use can be improved. Gas-based fertilizer plants are more energy-efficient than those based on naptha or fuel oil, and India is increasingly shifting to the natural gas option. It is estimated that energy efficiency per tonne of fertilizer produced could easily be raised by 20 per cent.

Textiles

Textile mills are major users of steam for washing, bleaching, and dyeing cloth. More than 50 per cent of the steam-generating systems in textile plants in India are over 35 years old, with "first law" efficiencies of only 50 per cent. "First law" efficiency is a single ratio of heat output to the heat value of fuel input. However, it is not a good measure of the potential for energy conservation. To estimate that potential, it is necessary to use "second law" efficiency. This is the ratio of fuel heating value needed to produce the end product (hot water for washing, in the case of textile mills) by the most efficient measure, to the amount of fuel actually used. One may suggest that the second law efficiency in this case is unlikely to be more than 10 per cent; but with basic retrofits fuel efficiency could be raised to 65 per cent.

Energy efficiency

In a recent study carried out by the Tata Energy Research Institute (TERI), the impact of restructuring in the industrial and transport sectors of the Indian economy was assessed against the overall background of energy sector developments up to the year 2010.

At the national level, one could project two future scenarios up to 2010: a business-as-usual (BAU) path, with the economy growing at an annual average rate of 5 per cent per annum, and an alternate path (ALT) in which strict energy conservation is pursued. The energy-by-fuel-type consumption estimates under these two alternate approaches are presented in table 8.

Under the ALT strategy, natural gas is the only energy source whose rate of growth is more or less constant. This is important from an environmental point of view, since natural gas emits the least CO2 and particulates per unit combusted. Further, since combustion conditions can easily be regulated, Nox formation is controlled. The most affected fuel source would be oil, whose rate of growth under an energyconservation scenario would be 4.75 per cent as compared to 6.34 per cent under a BAU strategy; coal use would go down to 5.08 per cent from 6.01 per cent. Overall, the strategy has ramifications for the environment, given that coal is the most polluting energy source. Electricity also has an impact on the environment, depending on the fuel source of the electricity, i.e. coal, gas, or hydro. Accordingly, the environmental damage incurred would vary.

Table 8 Energy growth scenarios for India for the year 2010

  BAU Rate(%) ALT Rate(%)
Electricity (PJ) 2.49 6.41 2.21 5.99
Coal (PJ) 13,516.3 6.01 11,338.88 5.08
Oil (N) 7,450.73 6.34 5,514.81 4.75
Natural gas (PJ) 2,290.52 10.03 2,286.85 10.02

Source: Tata Energy Research Institute, 1991.

Under the ALT scenario, energy consumption in the transport and industrial sectors was considered. In the transport sector, all existing buses were assumed to be phased out with the introduction of new urban buses. The additional cost was taken as US$0.5 billion, with operation and maintenance (O&M) costs at 5 per cent of the capital cost and assuming a life of 20 years.

For the shift from road to rail, the investment of US$50 billion was assumed, in a manner similar to the strategy for road improvements. The life of the system was assumed to be 35 years and the O&M cost 2.5 per cent of the capital requirement.

The metro option supposes an average investment of US$1.3 billion for each city. Interest during construction was assumed to be 12 per cent. Further, the metro was assumed to start functioning in 2000 or 2001 and to displace 10 per cent of the cars and three-wheelers, 45 per cent of the twowheelers and 35 per cent of the buses in each of the nine cities considered. The life of the metro was assumed to be 35 years, with O&M at 5 per cent of capital costs.

Given the above assumptions for the conservation measures to be implemented in the transport sector in the country, the annualized costs per unit of energy saved in the transport sector are as shown in table 9.

In all cases, the cost per unit of energy saved is lower than the economic cost of energy. Hence, they are all viable options.

In the industrial sector, conservation measures were considered for the iron and steel, petrochemicals, and cement industries. O&M costs for process changes were assumed to be 2.5 per cent of capital costs, and the life was taken as 20 years. On the basis of these assumptions, the annualized cost per unit of energy saved in the industrial sector is as shown in table 10.

Table 9 Annualized cost per unit energy saved in the transport sector

  5% of growth rate        
Fuel saving
(mtoe)
$/kgoe saved
Urban buses 140.81 (3.29)    
Road improvements 346.23 (8.107) 2.8 x 10-9 (0.118)    
Shifts from road to rail 516.38 (12.091) 1.7 x 10-9 (0.072)     
Metro system 116.12 (2.719) 2.5 x 10-9 (0.106)     

Source: Tata Energy Research Institute, 1991.

Table 10 Cost of energy conservation investments per unit saved, in US$/joule

Iron and steel Chemicals and petrochemicals Cement
2.6x 10-9 2.6x 10-9 7.0 x 10-6
(0.11 S/kgoe) (0.12 $/kgoe) (0.03 $/kgoe)

Source: Tata Energy Research Institute, 1991.

The incremental annualized investment for the transport and industrial sectors of India has been estimated at US$1,752.77 and 2,135.93 million (TERI, 1991).

In terms of energy savings, following from the various strategies outlined above, a brief summary is presented in table 11.

A further exercise was carried out on the basis of alternative locations for new industrial units and costs of pollution control related to these locations. The economic implications of these were evaluated accordingly. The major pollutants from industry are a function of the process employed, but owing to lack of data only air pollution resulting from the combustion of fuels was considered. Air pollution from the following Indian industries was examined: textiles, chemicals and petrochemicals, aluminium, integrated iron and steel, mini-mills steel, cement, fertilizers, paper, sponge iron, and machinery. Estimates of emissions from high-speed diesel, light diesel oil, fuel oil, lowstock high-sulphur fuel, coal, naptha, natural gas, and petroleum products used in the industrial sector are given. Emissions from the industrial sector under the BAU and ALT scenarios are presented in table 12. Three zones were categorized: Zone I implies heavily polluted areas, Zone II moderately polluted areas, and Zone III relatively clean areas.

Table 11 Cost of industrial energy

  Business-as-usual
(BAU)
Alternative path
(ALT)
Electricity (PJ)
Industry
Transport
 
1,279.09 (359.4 TWh) 1,218.94 (342.5 TWh)
46.27 (13.0 TWh) 116.38 (32.7 TWh)
Coal (PJ)
Industry
Transport
 
3,869.33 (184.9 Mt) 3,113.88 (148.8 Mt)
79.52 (3.8 Mt) 238.56 (11.4 Mt)
Oil (PJ)
Industry
Transport
 
1,443.51 (33.8 Mt) 1,311.12 (30.7 Mt)
3,818.04 (89.4 Mt) 2,340.37 (54.8 Mt)
Natural gas (PJ)
CNG
Industry
 
    208.57 (5.7 BCM)
874.54 (23.9 BCM) 805.02 (22.0 BCM)

Source: Tata Energy Research Institute, 1991.

Table 12 Emissions from industrial sector in India

  SOx (000 t) CO (000t) NOX (000 t) TSP (000 t)
1 2 3 1 2 3 1 2 3 1 2 3
All India, 2010  
BAU scenario 1,216 274 180 31 6 4 1,113 154 134 28,820 1,692 1,298
HLT Scenario 1,134 148 221 28 3 5 1,063 105 140 27,954 1,658 862

Source: Tata Energy Research Institute, 1991.

Under the ALT scenario, a deliberate attempt has been made to locate new projects in environmentally relatively clean regions, thereby alleviating/stabilizing the environmental stress that has emerged in the other areas. The newly declared industrial policy in India could result in a move to a more efficient utilization of energy, with optimization of material use as well as a reduction in waste generation, since it introduces greater competition through deregulation and opening of the public sector to private ownership. However, to ensure that the new industrial policy is successful, a pricing policy that reflects the true economic and environmental cost of production, an environmental policy that regulates without undue impediments, and a fiscal policy that induces the right kind of investments are essential. Tentative steps in this direction have been made, but a lot remains to be done.

Table 13 Levelized annualized cost of pollution control

Discount rate (cost/unit in cents/J (cents/kWh)) pollutant

  3%   5%   12%  
TSP 9.1 x 10-10 (0.039) 1.1 x 10-9 (0.047) 1.9 x 10-9 (0.08)
Nox 1.3 x 10-8 (0.590) 1.4 x 10-8 (0.600) 1.5 x 10-8 (0.65)
SOx 4.6 x 10-8 (1.970) 4.7 x 10-8 (2.010) 5.1 x 10-8 (2.21)

Table 14 Some characteristics of different energy scenarios, 1985-2025

 

Scenarios

1985 I (high) II (low)
Population (millions) 766.1 1,691.6 1,691.6
GDP (1986 US$ million) 191,306 1,346,792 1,346,792
Industry sector share (%) 29 37 37
GDP per capita (1986 US$) 250 796 796
Primary energy supply (PJ) 9,055 42,505 33,911
Energy intensity (MJ/1986 US$) 47.3 31.6 25.2
Energy consumption per captia (GJ) 9.2 17.6 15

Source: Tata Energy Research Institute, 19X9.

Estimates of the levelized annualized cost of pollution control for some pollutants at various discount rates are given in table 13.

The control measures considered are electrostatic precipitators for particulate matter (TSP), selective catalytic reducers for Nox, and flue gas desulphurizers for SOx. The estimates have been made for thermal power plants only. They may, however, serve as an indicator of the costs involved in environmental protection, determined in terms of damage avoided.

Improvements in capacity utilization and the availability of power could greatly reduce the energy-intensity of all Indian industries. Long-term projections from the STAIR (Services, Transport, Agriculture, Industry, Residential) model suggest that even under the pursuance of a rather modest energy strategy, energy-intensity in India would decline drastically by 2025. The details of the projections are listed in table 14.

It has been estimated that India has an energy conservation potential of at least 10 per cent in the industrial sector during the course of the eighth Five-Year Plan, rising to 15 per cent in the next plan. The Interministerial Working Group on Energy has calculated that with the installation of new equipment the savings from coal-based, oil-based, and electric power-generation machines are approximately 20, 20, and 15 per cent, respectively.

Improved housekeeping in industries in the short-term, the training of personnel, and energy audits could save India some 151.61 PJ with an investment of only Rs. 4,000 million (approximately US$160 million). In the medium term, investments in installation for waste heat recovery systems, the replacement of inefficient boilers, the introduction of instruments and control systems, and better technology could save India 190.05 PJ with a financial investment of $1,150 million. In the long run, investments in co-generation, energy-efficient technologies, and computerization of process control operations could save India 132.39 PJ on a financial investment of $1,917 million (Government of India, 1983). Figure 2 shows the potential for energy conservation in various industries in India.

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Conclusions

In this chapter we have looked at industrial restructuring options in terms of improving energy efficiency in a developing country. We have drawn largely from the example of India because it is not only a poor developing country but has a high rate of industrialization, and thus offers a wide spectrum of possibilities for improvement in efficiency and energy savings. One can assume that what is applicable to India will to a certain degree also hold for all other developing countries. Also, what is applicable to energy consumption in the industrial sector (including transport) will in some respects also be applicable to other raw materials and natural resources.

In general, energy-conservation measures have a positive environmental effect by reducing the volume of pollutants discharged from the energy-conversion process as well as by reducing the throughput of raw materials. However, their effect will depend on the type of measure, the type of industry, and the quantity of energy saved.

The qualitative environmental effects of energy conservation in four energy-intensive industries in India are presented in table 15. These measures have particular relevance for developing countries undertaking major industrial projects as, subject to financial con straints, they can bypass outmoded technologies. This is what has been called the "advantage of the late-comers."


Fig. 2 Potential for energy saving, selected industries in India (Source: Energy Management Centre)

Table 15 Energy-conservation measures in major Indian industry subsectors and environmental impact

Industrial
subsector
Pollution Major energy-conservation
measures
Impact on environment
Iron and steel Coke ovens: sulphur dioxide in air; ammonia steel wastes and light-formed coke oil decanter wastes containing phenols, ammonia, cyanides, chlorides and sulphur compounds Substitution of metallurgical coke
by formed coke
Easier accommodation to pollution control
Dry quenching helps in reduction of pollution from the quench tower
Blast furnace: particulate emissigns in off-gases; H2S and SO2 in air; suspended solids; cyanides, in water; a solid waste as slag Direct reduction and electric furnace melting Need for metallurgical coal is voided along with attendant pollution problem
Steel-making processes: fumes
from furnaces; suspended soils
in water
Basic oxygen steel-making Reduction in energy
consumption.
Better control options on pollution than with open-hearth furnace
Steel-rolling and furnishing: air
borne scale, lubricating oils,
spent pickle liquor, and pickling
rinse water
  Continuous casting; heat conservation; gas cleaning
Cement Rotary kiln: SO2, Nox, and particulates Wet process to dry process Owingto significant impact upon energy requirements, there is a
reduction in airborne pollution
Grinding: particulates   Discharge of water from wet process cement plants is absent in dry-process cement manufacture
Precalciners The generation of nitrogen oxides is reduced by both the low
temperature and the short time
combustion gases he stay in the burning zone, relative to conventional kilns.
Use of pozzolanic cements and slag cement The increased use of these cemeets would provide beneficial
and economic use of such waste
materials as blast furnace slag
or fly ash, thereby tending to reduce the environmental prob
lems associated with these waste materials
Aluminium Pollution associated with burning
of coal to raise steam for alumina plant and electricity for both
alumina and aluminium plants.
Fluoride emissions from electrolytic cells
Aluminium chloride electrolysis process
to coal saving and reduction
related coal-burning
Reduction in electrial energy consumption by 30 per cent leads
Hard metal cathode made of titanium carbide or titanium dibromice replacing carbon cathode Reduction in electrical energy is with y 20 per cent, attendant
reduction in coal
consumption and hence in pollution from
coal-buming

Source: Pachauri and Sambasivan, 1989.

In summarizing, the policies of developing countries for the industrial sector should:

- increase awareness about the needs and benefits of energy conservation;
- develop technical expertise through training at various levels;
- provide fiscal incentives/disincentives to implement energy-saving schemes;
- institute a nodal organization to coordinate energy-conservation efforts in industry;
- encourage manufacturers to coordinate energy-conservation efforts in industry;
- encourage manufacture of energy-efficient equipment, devices, and instruments; and
- strike a balance between energy use, energy conservation, and pollutionabatement measures.

What applies to energy consumption naturally also applies to other material inputs, as well as to waste disposal. It seems to us that the pursuance of a conservation strategy such as the one outlined above, motivated by various environmental and economic incentives, constitutes the industrial restructuring agenda for a sustainable development path in developing countries.

The process of industrialization is far from satisfactory in developing countries. There are persistent shortages of basic industrial products such as iron and steel and low per capita availability of these products, in spite of an abundance of natural resources. This being the case, the consumption of raw materials and the production of wastes are probably going to increase further. However, industrial restructuring to reduce the throughput of energy and materials in the industrial system can also occur simultaneously with the process of industrial growth that is under way in developing countries. The potential for this restructuring and, implicitly, for an improved "industrial metabolism" is enormous, as the preceding sections should have demonstrated.

References

Ayres, R. U. 1989. "Industrial Metabolism." In: J. Ausubel and H. Sladovic, eds., Technology and Environment. Washington, D.C.: National Academy Press.

Brown, L. R., et al. 1985. State of the World. A Worldwatch Institute Report on Progress toward a Sustainable Society. Washington, D.C.: W.W. Norton & Co.

Daly, H. E. 1990. "Toward Some Operational Principles of Sustainable Development." Ecological Economics 2.

Daly, H. E., and J. Cobb. 1989. Towards the Common Good: Redirecting the Economy towards Community, the Environment and a Sustainable Future. Boston, Mass.: Beacon Press.

Georgescu-Roegen, N. 1980. "Energy, Matter and Economic Valuation: Where Do We Stand?" In: Daly and Umana, eds., Energy, Economics and the Environment. AAAS Selected Symposium 64.

Goodland, R. 1991. "The Case that the World Has Reached Limits." In: R. Goodland, H. Daly, and S. El Serafy, eds., Environmentally Sustainable Economic Development: Building on Brundtland. Washington, D.C.: World Bank.

Government of India. Interministerial Working Group on Energy. 1983. Report on Utilization and Consumption of Energy.

Meadows, D. H., D. L. Meadows, and J. Randers. 1992. Beyond the Limits. Post Mills, Vt.: Chelsea Green Publishing.

Mikesell, R. F. 1991. "Project Evaluation and Sustainable Development." In: Goodland, Daly, and El Serafy, eds., Environmentally Sustainable Economic Development: Building on Brundtland. Washington, D.C.: World Bank.

Pachauri, R. K., and G. Sambasivan. 1989. "Energy Conservation." In: UNDP, Drylands, Wetlands, Croplands: Turning Liabilities into Assets. New Delhi.

Tata Energy Research Institute. 1989. Long-term Energy Scenario for India: Using the STAIR Model. New Delhi.

- 1991. Environmental Considerations in Energy Development. Report submitted to Asian Development Bank, Manila.

Vitousek, P. M., et al. 1986. "Human Appropriation of the Products of Photosynthesis." BioScience 34, no. 6.

World Commission on Environment and Development. 1987. Our Common Future. Oxford: Oxford University Press.

(introduction...)

Peter M. Allen

Introduction

Today many people realize and fear the possible impacts that past, current, and future industrial activities and technologies may have on the natural systems in which they are embedded.) Anthropogenic causes seem to be the main factor in widespread erosion and soil degradation, river, lake and oceanic pollution, the production of acid rain, and threats to groundwater quality through nitrate and pesticide leaching from farming and from the burying and dumping of toxic and radioactive wastes. The rate of extinction of numerous plant and animal species seems still to be accelerating and there is some consensus on the view that the increased levels of CO2 resulting from man's activities may be causing drastic climatic change.

And all this is occurring as a result of the kind of economic growth that has characterized the West, and which by and large is the goal of most developing countries. It seems, therefore, that some major rethinking is required if industrialization is to occur throughout the world (Clark and Munn, 1986). Somehow, we must find ways of reducing the impacts of human activities on the environment, but of still maintaining and improving the quality of life, which is, after all, the avowed principal aim of development.

This book is part of this attempted rethinking. The title, Industrial Metabolism: Restructuring for Sustainable Development, suggests the important process-based vision of industry as part of an ecological structure. Traditionally, the view has been that industry takes high-grade resources and uses energy to transform them into products for human utilization, with of course some waste and pollution going into the "environment." However, this simple, traditional view is not sustainable. In reality, not only is one man's environment another man's system, but the global environment itself is being modified by the accumulation and build-up of wastes. The only sustainable systems that we so far know of are those which nature has evolved and which we call natural ecosystems. The crux of this chapter is, therefore, an examination of the underlying organizational principle of ecological structure.

As we shall see, this is related to the workings of the evolutionary process, and from this discussion we shall establish what is meant by sustainability in natural systems, and what the lessons of this are for mankind. In particular, it will be shown why the issues of adaptability and diversity are fundamental. Another critical idea that arises concerns the basic choice between the spatial dispersion of pollutants and wastes or their concentration. Again, the comparison with natural evolution will be made and the importance of recycling stressed.

In this chapter we trace the roots of our present environmental problems to the underlying concepts of traditional science. Its basic reductionist perspective is inappropriate for understanding the emergence and evolution of living systems, and has, therefore, tended to alienate us from nature. Next, a new perspective concerning evolutionary, open systems, which provides a deeper conceptual framework than the "mechanical system" for our understanding of the human condition, is set out. This new, evolutionary view shifts our focus from that of "maximized" exploitation to that of the maintenance of adaptability and diversity, and of framing legislation and policies to this end. It also provides a new basis for decision support tools, which help to explore possible futures, including the responses of the natural and human systems affected.

The new ideas explored here also concern the manner in which collective structure and conditions are affected by individual decision-making and values, and how in turn these are fashioned by evolution. Clearly, new issues of equity and responsibility arise between the aspirations of individuals, nations, and the global community. These are, of course, perennial problems that have always been present in social systems. How should the conflict between the rights and the responsibilities of individuals be resolved? There is no simple answer to this, nor any objective basis on which to formulate one. What must be worked out is a complicated compromise between the developed and the developing nations, such that the global situation is taken into account and given sufficient importance, that the future of the planet is not sacrificed by the selfish actions of its separate parts. As set out theoretically in the Brundtland Report, sustainability must be the aim for each region. But, as we shall see, the concept of sustainability is a complex one, and will require a change not only in environmental regulations but in the underlying values of our socio-economic systems.

The problem is urgent since levels of destruction of ecosystems and the exploitation of raw materials have reached record levels, reducing the biological potential and the capacity to sustain humans over large geographical areas. Anthropogenically modified ecological systems seem increasingly vulnerable and quite clearly unsustainable, with a strong possibility that as the intensity of exploitation of the remaining raw materials and areas of fertile land increases, so in turn the destruction of these will accelerate, leading to a potentially catastrophie runaway process.

These issues pose a tremendous challenge to us all. We must find ways of achieving a high quality of life using new approaches and technologies which do not lead to the irreversible consumption or destruction of their own input factors. In short, we must move away from a "slash-and-burn"" mentality to some greater vision of "cultivation."

The issue can no longer be avoided by simply talking about the need to limit population growth in developing countries, or by hoping that market prices reflecting progressive destruction will finally lead to some miraculous, technological response. Neither can we necessarily afford to wait for absolute scientific proof of the precise chains of causality that are involved. Wisdom is not identical to science. Instead it is related to how you choose to use the limited knowledge you have, and is clearly a mixture of caution and adventure.

Technical progress and reductionism

The first issue that it is important to reflect on is the underlying reason why the application of scientific knowledge to solve problems - the traditional view of technology - must inevitably create other problems in the process. The ultimate reason is the adoption of reductionist views and values in traditional science. This becomes clear if we consider carefully the proposition that before any deliberate action may be taken, it must be shown that the expected consequences will be good for the universe the ultimate precautionary principle. Now, this would appear to outlaw any action at all, since one could not even define what "good" meant for the universe, let alone prove that good would follow from an action. But, if the "universe" is too large a sphere of evaluation, what is the right one? How do we justify our actions? What are the values that drive "improvements" in technology?

The answer is that we reduce the "system" we are considering until it can be interpreted as a mechanism. It has inputs, outputs, and some working parts. Within this narrow view, simple values can then be brought to bear on the problem. The mechanism can be said to "do something," that is, to transform inputs into outputs. We can then judge whether by some modification this "job" could be done more quickly, more cheaply, with less labour, less skill, fewer raw materials, etc. And so, technological progress leads to local, partial improvements of the system, based on narrow values and the roles and job descriptions of people within that system.

But, of course, the comfort obtained through wearing mental blinkers may be quite false. This is because only a small part of the whole system has been considered, and an individual with a particular role has used his own values to justify his action. In general the costs of any such action will necessarily be pushed out beyond whatever boundary marked the actor's concern. Inevitably, there will as a consequence be changes to and impacts on whatever was not included in the actor's evaluation, though it is in reality connected to his system. These could either be viewed as "unintended consequences" of his actions, or, perhaps more correctly, as "part of their consequences," and ones which follow naturally from his limited frame of reference.

In other words, many environmental problems are simply a necessary consequence of the myopic vision inherent in the roles that our system has allowed to evolve. That this has happened is, of course, partly due to their apparent short-term "effectiveness." Our system has evolved value systems and processes that not only degrade the environment but make it difficult for actors to do otherwise.

Such a laissez-faire attitude might possibly be justified if it could be shown that the continual improvement of the subsystems of a system would lead necessarily to an improvement of the whole system. This is the view put forward by Adam Smith, and clung to by most classical and neoclassical economists, whereby the separate pursuit of wealth by individuals is said to result in gain for the whole through the working of the "invisible hand." However, as we begin better to understand the behaviour and evolution of complex systems, this seems incredibly naive, or at best overoptimistic. It is just part of the ideology underlying Western economic thinking, and is, in reality, a myth.

However, such ideas are deeply rooted in the scientific rationality that has driven our thinking over the last few centuries. This is based on the view that understanding is arrived at by the study of how a particular set of mechanisms functions. And this merely requires analysis, which goes deeper and deeper into the underlying components of the system, creating disciplines and domains of expertise as it goes. Not only is reductionism the basis of traditional science, but it is also the basis of scientific credibility.

But if we are to deal successfully with the real world, the problem remains: What is the explanation of a particular system? Why is it as it is? And this is not at all the same question as: "How does it function?" The two questions only converge for isolated systems, or for systems that have reached an equilibrium with their environments. Prediction for such systems was remarkable, and this traditional scientific knowledge was used in the development of machines which characterized this new and powerful thing called technology.

But living systems are open to flows of energy, matter, and information. Living cells, organisms, people, populations, cities, and socio-economic and socio-technical systems are all open. That is why, as a metaphor, the "industrial metabolism" is more appropriate than the industrial machine.

The material realization and maintenance of such systems requires flows of energy and matter across the boundaries of whatever set of variables it is proposed to consider. Thus, the reductionist view which sees explanation in terms of functional mechanism is an incomplete description from which change, adaptation, and evolution are necessarily excluded. The initial (unnatural) interpretation of sustainable development, based on this false analogy, has been that of seeking a state of "maximum sustainable yield" for an exploited natural system, as if it were a "machine" that could be pushed to the limit, neglecting the adaptive responses that such evolved systems will have, and discounting the future according to the dictate of current interest rates.

In order to understand better the concept of sustainability, we must first show clearly the shortcomings of the mechanical vision characteristic of traditional science. Then, based on the manner in which evolutionary systems structure and organize themselves in nature, we can establish a new conceptual framework for the discussion.

The mechanical paradigm

The basis of scientific understanding has traditionally been the mechanical model (Prigogine and Stengers, 1987; Allen, 1985, 1988). In this view, the behaviour of a system could be understood, and anticipated, by classifying and identifying its components and the causal links, or mechanisms, that act between them. In physical systems, the fundamental laws of nature such as the conservation of mass, momentum, and energy govern these mechanisms, and determine entirely what must happen. This was such a triumph for classical science, that it was believed (erroneously) that analogous ideas must apply in the domains of biology, ecology, the human sciences, and particularly, of course, economics (Arrow and Debreu, 1954). It is exactly this vision that underlies Adam Smith's idea of an "invisible hand" working collective improvement through the self-seeking behaviour of individuals.

But in such a vision the problem of change remains unsolved. If we study a system over time, we find that its structure changes. Any system developed at a given time somehow transforms itself over time. In order to anticipate the changes that will occur in the system we must try to understand how this creative self-transformation can possibly occur. Obviously, it is not contained in the set of mechanical equations that characterize the system at any one time. It is clearly beyond the behaviour of a closed system.

In human systems what happens depends very strongly on what decisions are taken. Although, of course, the natural laws always work, they no longer suffice to determine what must occur. Systems open to flows of energy and matter can attain varying degrees of autonomy, where it is the interplay of nonlinear interactions that decide how the system structures and evolves.

In the traditional scientific view, the future of a system is predicted from the mathematical equations which govern the "motion" of its components. But in order to write down the equations of motion for a real system it is always necessary to make approximations. The assumption that must be made is that the elements making up the variables (molecules in a structure, individuals within a population, firms in a sector, etc.) are all identically that of the average type. In this case, the model reduces to a "machine" which represents the system in terms of a set of differential (perhaps non-linear) equations which govern its variables.


Fig. 1 At any different time we may analyse the components and functioning of the system, but this remains fixed while reality changes

This shows us the paradox underlying the scientific approach. At any given time, we can always analyse a system, and imagine that we have "understood" its structure and constituent mechanisms. From this, we may feel that we can even make predictions, and use it as a base for our policies and actions. However, the very act of formulating the structure as a set of mechanisms actually excludes the non-average individual microdiversity, which will be responsible for structural change and the qualitative evolution of the system.

In other words, the elements that will lead to invention and innovation are precisely what is excluded from the traditional scientific description of an economic or even an ecological system. The interactions of economic sectors, described through input-output relations, are comparable to the interacting population dynamics of an ecosystem, but neither contain the mechanisms of their own selftransformation. This is the paradox: in order to know the future, we use an analytic tool that throws away the factors that are important in creating that future.

The attraction of rational analysis is strong, and the scientific reader will certainly be using it in order to assimilate this paragraph and chapter, but clarity is bought at the expense of vital details, and it is the dialogue between the apparent structure and the deviations from it that provides the power of self-transformation and emergence in systems. The Newtonian vision of the world as a collection of "clockwork mechanisms" that can be laid out and examined is fine for the actual machines that humans produce, but is an inadequate representation of the world in which these are embedded. Real systems are in fact coupled in a multiplicity of ways with factors in their environment, through flows of matter, energy, and information, and although in vitro experiments can be useful in understanding some simple physical systems, the essential behaviour of ecosystems arises in vivo, through the visible and invisible dialogue with their environment. It is this science-inspired tendency to separate the "inside" of a system from its "outside" that is at the root of environmental problems.

Equally, it is this separation of inside from out, together with the mechanical description, that has produced a methodology in technology and engineering which is often characterized by "optimized" solutions under fixed conditions. But this fails to allow for the fact that information flows, learning, and change are all taking place and that in the real world the inside is co-evolving with the outside.

From the discussion we see that evolutionary change must result from what has been removed in the reduction to the deterministic description, that is, the non-average. Systems evolve through the interplay of two kinds of terms. First there are deterministic average mechanisms operating between typical components, whose identity and nature are revealed by rational, scientific analysis. Second, however, there is what has been suppressed in the rational picture, the non-average behaviour and detail which probes the stability of the existing structure and on occasions can be amplified and lead to qualitative structural changes and a reorganization of the average mechanisms.

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The evolution of ecological structure

In recent years there has been some talk about the ecological restructuring of industry. But before we can discuss this coherently, we need to know what precisely ecological structure is. What is the organizational principle which underlies it? If we cannot answer this, then we surely cannot hope to organize human systems in an "ecological" manner. So, first, let us consider the only example that we have of sustainable structure: an ecosystem.

The key issues concern such questions as why the ecosystem is as it is. Why this number of populations? Why not more or less? Why these connections and not others? What would happen if we interfered with the system? Are the feeding relationships necessary, or do they merely reflect proximity and convenience?

None of these questions can be answered from the flow diagram of figure 2. Not only that, but, if we build a model based on the appropriate mechanisms of birth and death which change the numbers of each population, we might imagine that we could then use a computer to predict the behaviour of the system and perform simulations for policy analysis.

Unfortunately, this is not the case. When we run our computer model, it simplifies down to just a few species, because there are parallel paths through the system. Some of these are more "effective" than others; this leads to the elimination of apparently inferior paths through the action of (un)"natural selection."

But, in reality this does not occur. The system remains complex. Some source of diversity successfully opposes the tendency to simplify down that is apparent in our computer simulation. And this is the key to the understanding of ecological structure, the evolutionary process, and sustainability itself. The organizing principle that underlies sustainable systems is the presence, the maintenance, and the production of microscopic diversity in the system! These ideas have been developed in a series of recent papers (Allen and McGlade, 1987a, 1989; Allen, 1990; Allen and Lesser, 1991).

Ecological structure results from the working of the evolutionary process, and this in turn results from the nature of ecological structure. We can understand the ecological structuring of human activities by considering a "possibility space" representing the technologies and options that could potentially arise. In practice, of course, this is a multidimensional space of which we would only be able to anticipate a few of the principal dimensions. Ecological structure emerges over time, as the types of behaviour present in our possibility space increase and become more complex over time, and this is what we have successfully modelled.

The possibility space will be explored if the methods or techniques that firms use are influenced by new scientific knowledge and new ideas or by information and perceptions concerning others. New no tions must be either generated within a company or may be copied or miscopied from others. Either way, cost and effort are expended in finding, filtering, and adapting ideas. New ideas still involve an element of risk when implemented. Physical constraints automatically ensure that some techniques do better than others, and so there is a differential rate of survival and of profitability.


Fig. 2 The Crystal River estuarine ecosystem (Source: Homes and Kemp, 1983)

The possibility space is filled with an "evolutionary landscape," with hills representing high performance. Our simulations show how behaviours that include "exploration" in possibility space, although loss-making in the short term, will in the longer term eliminate behaviours that are fixed. Although exploration is costly in the short term, a small fraction of the initiatives tried are better then previous practice, and it is the gradual amplification of these, and the suppression of the less successful tries, that allow an adaptive progress to higher performance.

It is the presence of variations in the behaviour which, though costly, provides the capacity to "climb" the hills of the adaptive landscape as a result of the differential success and failure of different variants. The landscape expresses the pay-off that would be experienced by an actor or company in competition with the behaviours used by its competitors at that time. But, of course, the landscape is not really fixed, because as soon as a new technology or technique is found to be successful, and a firm moves up a hill, the other firms will respond and change their behaviour, moving the hill away again. In addition, improvements in competitors' technology will also have the effect of pushing any given participant with fixed behaviour lower down the slope.

This means that, over the longer term, evolution favours populations that retain the ability to climb hills, that is, to learn, rather than those that can perform optimally in any given circumstances. We begin to discern the nature of survivable organizations, and of sustainability itself..

This perspective on evolution shows us the error involved in the traditional "equilibrium" view that has been current. If each technology were sitting on a hilltop, then no advantage could be gained from exploration. Evolution would be "over" and there would be nowhere better to evolve to, and nothing to learn. Complicated equations in possibility space would be unnecessary, and rational analysis would be able to optimize a firm's behaviour without evolutionary adaptation. In short, life would be simple but boring.

Fortunately, or unfortunately, we need not worry about this possibility, because this would only be true if evolution were really over. In the real world, competitors, allies, clients, technologies, raw materials, costs, and skills all change. Any group or firm that fixed its behaviour would sooner or later be eliminated, having no adaptive or learning capacity with which to respond.

The landscape in possibility space reflects the advantage to be gained from any particular option, and depends on the techniques and behaviours that happen to be present at a particular moment. The peaks of the landscape represent the present performance goals of the firm or group in question, whose decisions and innovations will try to move up the slope. However, the other actors of the system will continue to modify the landscape as they also adapt and change in pursuit of their goals. The goals of each type of actor coevolve with those of the others present.

These experiments show that a mixture of exploratory diffusion paths in some behaviour or technology space, and their differential success, makes the difference between what is merely mechanical and what, on the contrary, contains the capacity for adaptation and creativity. It is the latter that might be called "organic." It is this vision of ecological structure as a temporary balance between exploration and constraint that is at the core of our new understanding.

Computer models have been developed that show explicitly how these adaptive landscapes are generated by the mutual interaction of behaviours or technologies. In the space of possibilities, closely similar products are mostly in competition with each other, but there is some "distance" in this space, some level of dissimilarity, at which two products or technologies do not compete with each other.

If we begin with a single type of product, then it will grow until it reaches the limits set by the competition either for underlying resources or for customers. At this point, the pay-off for explorers and entrepreneurs switches from negative to positive, as they can now escape somewhat from competition. We see that any successful behaviour eventually digs a hole in the landscape, until there is a hill to climb on either side and exploration is rewarded. Growth is restricted initially because of the "competitive shadow" of the original behaviour, but at a certain distance the products are sufficiently different from the original type; they begin to reach another market and require different resources.

In its turn, this new behaviour or product increases in volume until it too is limited by internal competition for the limiting resource; and once again there is a pay-off for innovation, particularly for those on the outside of the distribution, as they climb another slope towards new regions of possibility space. An evolutionary tree develops, branching as it grows. However, there are also moments when completely novel options emerge spontaneously during the simulation, and an ecology of interdependent behaviours emerges.


Fig. 3 The evolutionary landscape of untried options. Costly experimentation leads to better performance

The ecology that emerges is dynamic, since the identity of each behaviour is maintained by the balance between a continual diffusion of innovators outwards into the space of untried options and the competitive field that exists around it owing to the others. In fact, it would not be possible to anticipate the final range of technologies or products that will inhabit the system, because random events which occur during the "filling" process will affect the emerging pattern of new technologies or products. Instead of the system simply filling pre-existing market niches, the whole process is a creative one, which would be different if repeated from the same initial conditions.

This model offers us a non-reductionist, scientific basis for discussing the interaction of individuals and their collective structures. Such a system operates beyond the mechanical paradigm, because its response to external interventions can involve changes in structure and in the nature of the behaviours or technologies in the system. Suppressing particular components of such a system, perhaps as a result of changing market conditions or environmental regulations, will provoke a complex response from the system, as other behaviours adjust.

Although the "inventiveness" of the system is constantly present, as there is diffusion into the possibility space, it is fascinating to see that our research shows that only at certain moments in time does this lead to structural change. In other words, the system evolves in phases of apparent stability, separated by periods of instability and fairly rapid reorganizations, although the pressure of exploration and creativity is relatively constant.

Such a picture may eventually explain such phenomena as the cycles of growth and stagnation that seem to characterize our economic systems, a phenomenon that has been linked to "economic long waves" and the patterns of innovation and change.

Discussion

The evolutionary models described above tell us that change is really the result of non-average behaviour exploring untried options, which, at certain moments, encounters mechanisms of positive feedback that lead to its amplification and self-reinforcement. Once a new option emerges it drives the system in the direction of its own amplification, irrespective of the objective or external value of these changes for the system as a whole. In other words, something doesn't have to be "good" for the overall system, or the environment, in order for it to happen; it only has to find self-amplifying mechanisms in its own immediate surroundings. Clearly, this exposes the root of the problem concerning the balance between collective and individual responsibilities and rights. The survival of the whole system may depend on the system's effective adaptation to external events, while the survival of the individuals of which it is comprised may require success in the internal adaptive processes.

As evolution proceeds, it gradually switches from introducing adaptations which deal with the external world to adaptations which succeed within the internal environment. The landscape of advantage ceases gradually to reflect the technology of the primary sector, dealing with the extraction and treatment of raw materials and energy, and gradually becomes increasingly concerned with techniques within techniques, with services to these and then to themselves. This is just the normal process of the development of ecological structure. And this principle applies not only to the balance of internal and external relations, but also to each organization within that structure.

Our evolutionary simulations begin to reveal the universality of myopic values in complex systems, whether they be natural or manmade. In natural ecosystems, each species too will be concerned with the solving of problems of its own, local survival and will not be thinking about planetary good. But if our situation is not intrinsically different from that of natural evolutions, why should we worry, and why should we change? The answer is that natural systems have taken a long time to evolve and explore the coexistence of different populations, and have suffered many local catastrophes and extinctions in the process. We should not forget that more than 90 per cent of species that have existed on the earth have become extinct. Throughout the millions of years of evolution, most of the forms that nature has tried have flowered briefly and then disappeared. We should, therefore, be most wary about assuming that nature's way is the best for us. We now have a conceptual framework of evolutionary systems which allows us a new basis of reflection, even upon the wisdom of nature itself!

The Industrial Revolution only started in earnest some 300 years ago, and was based on technologies that were clearly unsustainable. Despite our capacity to switch our appetite for fossil fuels and raw materials from one source to another, the growth in world population and in material expectations makes the present trajectory still quite clearly unsustainable. What mankind must do is to attempt to substitute reflection and anticipation for the actual experience of catastrophe, in order to learn about the obvious. This book is a step in this direction.

Quite naturally, then, self-amplifying mechanisms within industrial and postindustrial societies take the focus of evolution in human systems away from adaptations concerning the harmony of man and nature, and the sustainable use of the environment and natural resources, towards a multitude of ephemeral values and ends, whose consequences and effects for the collective system are largely unknown.

Many examples of these kinds of positive feedback "attractors" exist in the history of industrial development (Arthur, 1988), starting with the use of steam power to drive pumps in coal mines in order to provide coal for steam power. Similarly, the growth of industrial complexes required the development of railways and roads, while the development of the latter required industry. So, positive feedback loops led to the emergence of spatial concentrations of complementary activities, of pools of skilled labour. They also led to cities, where the different and multiple factors - from technology, through public infrastructure, to finance and investment - were available and working together in an emergent evolutionary "complex." Simulation models exploring the working of such structuring principles on settlement patterns, urban form, market systems, and learning processes have been developed over the past 15 years or so (Allen, 1985, 1988, 1990; Allen and Sanglier, 1978, 1979, 1981).

As this evolution progresses, additional technologies are developed to cope with the unintended consequences of existing technologies which "create" markets through environmental damage. This process of technological "fix" is a measure of the hidden inefficiency of the shortterm optimization of industry. A recent comparison of UK and German industrial development shows the Germans to be much more successful in industrial restructuring that begins to address sustainability, in part because of the longer time-scales that are acceptable in decisionmaking.

Instead of regarding human progress as following some steady path towards a better quality of life, meaning the gradual improvement of man's relationship with the natural world, we see the emergence of change driven by the values of an internal game. Imitation, economies of scale, learning by doing, perceived complementarities of behaviour, and the growth of interdependences all lead to the emergence of an artificial world, cut off from nature and yet of course embedded within it, and therefore potentially ripe for environmental catastrophe.

In human society, fashions, styles, and cultures may rise and fall without necessarily expressing any clear functional advantages with respect to the natural world in which they reside. Indeed, it may be informative to view culture not so much as being the best way of doing things somewhere, but more as resulting from the exclusion of knowledge concerning other ways of doing things. Ritual and shared ideology emerge and serve as the identity and focus of a social group, irrespective of the precise merits or truth of the ideology itself. So much of human attention is focused on playing a role in groups where values are generated internally, and the physical world outside is largely irrelevant.

It is therefore naive to believe that underneath the rich tapestry of life there is a rational scheme within which the complexities of the world would appear as being necessary and unavoidable. Instead we have what Margalef has called "the baroque of nature," but here we would include man. Evolution is creative beyond reason, and in that lies its resilience, since it is not framed to respond to any particular limited scheme.

In Europe, from initially agricultural societies, through the various accidents of history and the ebb and flow of ideas, religions, and authority, evolution moved away from its concerns with crops and live stock and developed new, internal and local values with which to define "successful" technologies and processes. Greatly increased scientific knowledge, together with urban growth and the gradual isolation of the bulk of the population from the realities of their relationship with natural resources, meant that the external consequences (ecological and social) of progress gradually dropped out of the consciousness of society.

Indeed, it became something of a new dogma that if something could be produced and sold at a sufficient profit, then it should only be suppressed if it were contrary to the law. The "burden of proof" has rested with the public or public authorities, and it was rather glibly assumed that the "law" would somehow know what it was wise to inhibit. But this is obviously not the case. Once we begin to understand how complex systems evolve, we see that we can only have an imperfect understanding of the consequences of our actions.

This brings us to the "precautionary principle." If it is difficult to prove that some product or technology is causing harm, then it is probably equally difficult to prove the contrary. But both positions reflect a view based on the concepts of traditional science, that such propositions have definite answers. Despite the attraction of a clear and definite stance, we must try instead to recognize the real complexity of such matters, and move to a new position, involving a mixture of both caution and risk. However, it appears clear that we should at least examine the size of the risk involved, and shift the debate from one in which "scientific proof" is the central focus, to one in which the gains and risk to society are assessed. To destroy mankind for the sake of some new ice-cream or cosmetic would seem to most people to be too high a price to pay, even for the upholding of the principle of individual freedom.

To achieve sustainability we need to understand what the implications of the proposed ecological restructuring of industry might be. The first point concerns the short- and the long-term view. As we have shown above, the qualities which are good in the short term for optimal efficiency are not those which lead to long-term survival. Indeed, they are the opposite. It is equally true, however, that failure in the short term will preclude the chance to show how good something would have been in the long term. In any case, "optimality" can only be defined if measured in certain terms; the measurement system of efficiency is in reality quite complicated, and judgement and wisdom often feature more than economists would suggest. Actual decisionmaking processes in industry are a curious mixture of formal economic accountability to the external capital system and what might be called common sense, much of which reflects human centred, longterm views and sensitivity to environmental issues. The role of government in determining the shape of the external environment is therefore absolutely crucial to sustainable industrial structures.

In general, then, sustainability will result from a balanced strategy corresponding both to fairly efficient average behaviour and to a permanent exploration of possibility space. The adaptability of the whole system results from the adaptability of its component parts, and instead of simply trying to outcompete others in a given domain, creativity and originality can allow a company to move into new areas with less competition. And the power to do this resides in the microscopic diversity of the system, which now can be seen to be vital for two reasons. First, it is the motor of creativity and adaptation, and, second, cultural and technological diversity tend to encourage a wide range of different activities and requirements and hence spread the stress on natural resources and the environment.

However, sustainability also requires that we affect local internal value systems and decisions so as to make them take into account their externalities and their collective effects. Mathematical models capable of providing real information about the evolution of the system as a whole will therefore be valuable in bringing the unconsidered consequences of a decision into view, and making them part of an evaluation. They can also provide vital information concerning the kinds of attributes that are related to survival and sustainability.

Another important point concerns the other properties of ecological systems that we observe. In mature ecosystems, for example, recycling is a major phenomenon, so that a carbon atom, in entering the ecosystem of figure 2, is actually recycled about 15 times as it goes through the system. This clearly is related to sustainability, as the evolutionary principle has a tendency to englobe and then recycle the factors that it requires as inputs. In other words, it evolves in such a way as to expand the organic, living, organized parts into the physical boundaries of the system, and then to retain and re-use materials in the system. At every stage, outputs are being tested as potential inputs for new processes.

This brings us to an important underlying principle in our whole thinking about industrial metabolism, the ecological restructuring of industry, and the problems of waste and pollution. Our evolutionary model shows us that when some successful innovation occurs in the system, some new source of positive feedback has been discovered. Now, in natural ecosystems, this would result in the 'success" of some population for a time, during which its prey would decline in numbers and its wastes would build up. However, in the natural example, after some time, some variant of another population would discover that it could "use" this newly successful population and its accumulations of waste. This is because any spatial concentrations of matter having high free energy are potential sources of food for other populations. After a further period, the initial innovative population would have been reincorporated into the ecosystem, and the challenge that it offered initially would have been met from the internal diversity of the populations of the ecosystem.

In the case of the human population, why therefore are our wastes not recycled as part of the ecosystem? Why are we worrying so much about protecting the environment?

The first reason may simply be one of time. There simply is not sufficient time for an ecological response, particularly as we keep changing what we are dumping on the environment. The second reason, however, is that we are tending to use dispersion as our method of getting rid of wastes. So, instead of accumulations building up and becoming a potential source of raw material for some unknown future process, we are dispersing our wastes into the soils, the oceans, and the atmosphere. Clearly, part of the solution to such problems would be for each new technology to be obliged to provide the "antidote" to itself, that is, the mechanisms necessary to break down the new wastes that have been created. The stimulation both of clean technologies and of recycling should therefore be considered along with such ideas as a carbon or raw materials tax.

This does raise a very general point. Obviously, there are two choices in dealing with wastes: one is dispersion, and the other is concentration. While concentration can appear to be very dangerous in the case of toxic wastes and should require special costly permits, this approach does offer the future possibility that new processes or organisms may be found which can use waste materials, so that they will then become part of an ecological recycling process. In the longer term dispersion may be far more dangerous, since it gradually leads to a shift in the basic parameters of the biosphere, and to a potentially irreversible global change.

The new vision of an industrial metabolism requires not only that we control dispersion as a means of waste treatment, but that mechanisms should be foreseen for making concentrations of wastes part of an alternative ecology. Instead of disrupting the ecological structure and producing zones of accumulation with no known outlets, we must try only to allow technologies that can demonstrate how they can fit within an ecological pattern of flows.

Such changes, however, require vision. And the existence of a strong need for a radical shift in the functioning of the industrial system does not guarantee at all that industry itself will respond. Indeed, the internal games played within the various large companies, often multinationals, that dominate most markets today may well mean that once again concern for the external world will always in fact be a secondary matter.

New taxes on environmental damage, carbon, or raw materials, for example, may well lead to shifts towards more sustainable behaviour, but it may also require quite a sophisticated study for the real effects to be anticipated. In reality, we do not know the environmental damage that we are doing when we destroy some local ecosystem, since we do not understand precisely the source of its resilience and adaptability. Merely setting a price on such actions may therefore simply allow the wealthy to continue to do whatever they like.

There is, however, a place for governmental and international action. It is up to the political process to set the framework within which industry should operate. When Voltaire visited England in the eighteenth century, he remarked that political considerations had been subordinated to commercial ones in England, contrary to the case elsewhere in Europe, and that this was the reason for English prosperity. Perhaps it is time now to re-examine this idea, and to subordinate commercial interests at least to some restrictions concerning the natural environment.

We must begin to face up to our responsibilities, and consider the whole metabolism of modern society and its industrial motor. We must set about the difficult task of finding policies and regulations that will lead to the evolution of "earth-friendly" technologies and industry. One important strength in this is that the nations and companies that stimulate this kind of technological evolution will become the new industrial leaders, since environmental concern and regulation can only grow over the next decades as increasing cognizance is given to the external effects of internal processes.

The question is how we can change industrial culture, and again we may see what evolutionary theory and ecology have to suggest. This transition requires that we step outside any narrow disciplines and try to understand the overall evolution of the physical, socio-economic, demographic, technological, and cultural systems that are the objects of concern. It is not sufficient to ask "experts" what to do, since in some ways they are already part of the problem. It is the narrow values of experts that we are attempting to escape from. We need to construct a systemic view of our society, using as a basis the kind of evolutionary models referred to in this chapter, which can be used quantitatively to integrate the information of experts in the different fields.

This chapter is really about a research agenda concerning the implications for mankind of the conceptual framework of evolutionary processes and ecological structure. The identification of attributes related to survivability and adaptiveness is clearly key, and the links to cultural and social diversity require examination. The development of holistic methodologies and respective tools for policy evaluation and decision support seem also to be urgent. Similarly, methods with which to assess the size and scale of risks involved in the growth or continuation of technological processes seem equally pressing, together with drafting of some precautionary principle that will limit the possibility of trivial aims putting large parts of humanity at risk. In short, our research agenda is one which tries to reintegrate creativity and adaptability into scientific thinking, and man back into nature, providing thereby the understanding necessary to mankind for the development of sustainable strategies.