Also at the APSRG debate, the £23 billion Oakdene-Hollins estimates of the benefits of resource efficiency were raised again. (http://randd.defra.gov.uk/Document.aspx?Document=EV0441_10072_FRP.pdf)
These often seem to be used as justification for forcing businesses to do something different, as they are clearly failing to spot money saving opportunities which have instead been grasped by policymakers in Whitehall.
But the report itself recognised that businesses face opportunity costs (referred to in the report as "hidden costs" I think) when implementing resource efficiency measures, in terms of productive investment opportunities foregone. These were not estimated in the report, due to methodological difficulties, but could significantly reduce the actual net benefits realisable to firms.
My personal starting point for an estimate of these hidden costs would be £23 billion. I am sceptical of the superior ability of civil servants to identify savings to businesses and think that if there were significant savings to be found, then they would be realised long before being spotted by bureaucrats.
Showing posts with label APSRG. Show all posts
Showing posts with label APSRG. Show all posts
Friday, 29 June 2012
APSRG debate: the waste sector and the green economy
The Associate Parliamentary Sustainable Resource Group (APSRG) held a debate in Portcullis House on Wednesday on the role of the waste sector in the green economy.
There was the usual mix of unsubstantiated assertion about resource scarcity and the imperative of changing our profligate ways, interspersed with some genuinely interesting examples of resource efficiency in practice. One of the main messages from the panel seemed to be that higher resource prices were changing business models. The waste sector is already being driven by recyclate markets/prices and as these increase over time we will see this effect rise higher up the hierarchy into the delivery of goods as services
I just can't help thinking though that it isn't economics that will determine the waste sector's role in the green economy in the medium term but legislation. We have just been through the biggest commodity boom in history (notwithstanding the fact that the relative prices of resources are still low by historic standards), and although this has undoubtedly driven some resource efficiency measures throughout the economy, it is the landfill tax escalator which has actually delivered the large increases in domestic recycling rates over the past decade.
Economic fundamentals are likely to continue to lead to lower resource costs relative to labour costs throughout the global economy. Resource prices on their own are never likely to drive the sorts of fundamental shift in consumption and production patterns which environmental policy protagonists think will be necessary.
Instead, a more interesting question for the long term might be whether global factor price equalisation will lead to the future repatriation of more manufacturing activity. If so, then we may in the future find that domestic industry is able to provide output destinations for the recyclate which currently has to be exported overseas.
I find this a more likely route to a circular economy than the more commonly presented alternative, but it is one which is likely to be quite a few decades away, which no doubt is not the sort of pace of change felt necessary in environmental circles.
There was the usual mix of unsubstantiated assertion about resource scarcity and the imperative of changing our profligate ways, interspersed with some genuinely interesting examples of resource efficiency in practice. One of the main messages from the panel seemed to be that higher resource prices were changing business models. The waste sector is already being driven by recyclate markets/prices and as these increase over time we will see this effect rise higher up the hierarchy into the delivery of goods as services
I just can't help thinking though that it isn't economics that will determine the waste sector's role in the green economy in the medium term but legislation. We have just been through the biggest commodity boom in history (notwithstanding the fact that the relative prices of resources are still low by historic standards), and although this has undoubtedly driven some resource efficiency measures throughout the economy, it is the landfill tax escalator which has actually delivered the large increases in domestic recycling rates over the past decade.
Economic fundamentals are likely to continue to lead to lower resource costs relative to labour costs throughout the global economy. Resource prices on their own are never likely to drive the sorts of fundamental shift in consumption and production patterns which environmental policy protagonists think will be necessary.
Instead, a more interesting question for the long term might be whether global factor price equalisation will lead to the future repatriation of more manufacturing activity. If so, then we may in the future find that domestic industry is able to provide output destinations for the recyclate which currently has to be exported overseas.
I find this a more likely route to a circular economy than the more commonly presented alternative, but it is one which is likely to be quite a few decades away, which no doubt is not the sort of pace of change felt necessary in environmental circles.
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