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