EIC calls for more resource efficiency

The Environmental Industries Commission has published a new report calling for the government to do more to improve resource efficiency.

Aside from the fact that this call is based on Defra's £23 billion estimate of potential resource efficiency savings - an estimate with which I disagree - it assumes that resource efficiency is something which will not happen without some form of regulatory intervention.

Personally, I feel that resource efficiency is something for which there are existing incentives in place for economic agents to act. There is a business imperative to improve efficiency over time. This is the basis of much economic growth and something which is likely to happen in the absence of government intervention.

The ONS publishes environmental accounts for the UK, which include official estimates of the total material requirement for the UK economy.

TMR peaked back in 2001 and has fallen by almost a quarter since. Not exactly the stuff of nightmares. In fact, the UK's TMR in 2010 was almost 10% lower than it was way back in 1970.

And when you consider resource productivity, by measuring the amount of materials required per unit of GDP/economic output, we find even more extraordinary gains made by the UK economy.

According to the World Bank, the UK's gross national income increased over 17 times during the period 1970-2010. This means that in 2010 the UK economy was using material resources more than 18 times more efficiently than it was back in 1970 (=TMR/GNI).

These achievements have been driven by markets, growth and technical progress, which will continue to work well into the future. I am therefore less convinced than ever that we need more government intervention to drive resource efficiency.