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Scarcity as the ‘mother of invention’: can we consume less and still grow?

For over 200 years, since the industrial revolution, we have seen economic growth strongly coupled with the consumption of more and more resources. The more we grew, the more we consumed. This model works…

When resources are scarce, turning rubbish into something productive is a great business model. AAP

For over 200 years, since the industrial revolution, we have seen economic growth strongly coupled with the consumption of more and more resources. The more we grew, the more we consumed.

This model works well in a world without limits; with plenty of resources to go around. But we’re starting to realise that these resources – from ores to phosphates and water to topsoil – are not as plentiful as we once thought.

A report released at the World Economic Forum last year estimated we are already consuming 95% of the existing reliable supply of freshwater on the globe. The same report suggested that by 2030, demand for freshwater will increase by 61% in China alone.

Something has to give.

And what might give is the model that rewards converting as much resources as possible into outputs to drive growth. Instead we might start to see a model where resource scarcity drives many of our choices.

This is a shift from an old mode of operation where we have been harvesting resources that were plentiful and cheap, to one where we are managing resources that are scarce and valuable.

In this future world we might start to decouple economic growth from resource consumption.

But does this mean we will see any less growth in our economy? Not if we rise to the challenge.

In a recent book – “The Sixth Wave: How to succeed in a resource-limited world” – Bianca Nogrady and I identified areas of massive business opportunity that come from focusing on scarcity as an opportunity, not a challenge.

The first place to look for growth without resource consumption is in waste.

If you want to succeed in a resource-limited world, find a major source of waste and develop an innovation that either dramatically reduces that waste or does away with it entirely.

New and old businesses are extracting methane from landfill to generate electricity, turning organic waste from supermarkets into compost and minimising heat and light waste from houses and office buildings.

Many companies are also finding business models that take waste and turn it into something productive, such as the Canadian brewery that found it could use its grain waste to grow Shitake mushrooms.

Car share businesses are finding that as many as ten families are sharing a single car, providing far greater use from a single capital asset.

The second big idea for separating growth from resource consumption is this: sell the service, not the product.

Companies and nations are learning that the best way to create value without consuming resources is through services. This has far-reaching implications for the world economy, the internet and our way of life as we know it.

Do you want a car or do you want mobility? Perhaps a car share service might be good for you.

Do you want energy or do you want heat and light? Woking Borough Council in the UK has found a way to sell “heat” to households and then how to deliver that heat expending as little energy as possible.

Businesses that sell services rather than products quickly find it’s in everyone’s interest to deliver the service with the least consumption possible. Unlike business models based on selling as much product as you can, services have the potential to decouple value creation from resource consumption.

Given the importance of monitoring our natural resources (and how much we are using), more and more devices will emerge that connect the digital and the natural worlds. It will be like having everything around you connected to the net (you already have your digital analogue – the mobile phone).

The whole planet and all of its natural resources will be measured and monitored to the point that everything in the natural world will one day have a digital counterpart. Companies will emerge to manage and take advantage of this rich source of information.

Put these together and you get a fourth idea: information is global, consumption is local.

Reducing the consumption of natural resources will drive everything to do with natural resources to become more local, while services that don’t consume resources will be truly global endeavours.

Energy production will be distributed and localised and resources will be recycled to the point of consumption as possible.

So, what if we are able to decouple incresed resource consumption from economic growth? What will our world look like then?

It will be a world where nothing is wasted and everything has a value. It will be a world in which we don’t think so often in terms of “products”, but of “services”, and a world where resources are mapped and measured to a degree never before seen.

We still enjoy the quality of life that we expect, but we have changed our business models and incentive structures to reward what we really value and get rid of everything else.

James Moody will be speaking at the Innovation Series in Sydney on 21 October.

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7 Comments sorted by

  1. Dale Bloom

    Analyst

    After considering the weight of materials being converted to waste each day in Australia, there have been estimates that the average person in Australia is using 20 times their body weight in materials each day to maintain our current life style.

    Hardly worth it really if our life style is now leading to problems such as obesity, diabetes, increasing rates of STDs, depression and debt.

    I’m not sure if service industries are the eventual answer, as few people would want everything in their life to be provided by someone else.

    There does need to be a figure produced that people can relate to and understand, that runs parallel to GDP, but gives an overall indication of how sustainable our country is.

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  2. Mark Harrigan

    PhD Physicist

    Great to see an optimistic/positive suggestion/approach to this issue rather than the malthusian doom world view.

    Globally the good news is that economic prosperity has been rising faster than direct resource consumption. Between 1980 and 2002, the resources required to produce $1,000 worth of consumer goods fell from 2.1 metric tons to just 1.6 metric tons and global per capita income has increased seven-fold. (Yes - the poor are not getting poorer despite the myths - we are all getting richer…

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  3. Chris Harries

    Environmental consultant

    This issue is really about Hobson's Choice (def: a free choice in which only one option is available)

    These debates pivot around the question: can we choose to grow whilst consuming less? Nice thought, but it appears that the choice part is what is likely to be soon lost to us. In actuality the evidence shows that we have no choice but to reinvent a future that can deliver a reasonable standard of living and a viable economy with much lower levels of consumption – if that is at all viable.

    I haven't…

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    1. paul magnus

      logged in via Twitter

      In reply to Chris Harries

      Great article James.
      Chris, the first think that came to mind was peak oil.
      Your summary of the situation is right on.

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  4. John Barker
    John Barker is a Friend of The Conversation.

    Adjunct Professor at Murdoch University

    While I haven't read the author's recent book 'The Sixth Wave' I think that I can infer from the article that two major and related issues have not been dealt with: First, as I have commented in Tom Rainey's article today on recycled paper, total value-chain and life cycle energy (and resource) analysis is required to assess whether a particular action is a good thing with respect to resource depletion. The 'average energy intensity rule of thumb' that 'if it costs more, it probably used more resources…

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    1. Dale Bloom

      Analyst

      In reply to John Barker

      Perhaps another way of solving the paradox is through company bonus payments.

      If a company is consuming natural resources, (and all companies do to some extent), then a reduction of the consumption of these natural resources could be incorporated into the company's bonus payment system, and this should be done to ensure the medium to long term sustainability of the company.

      On a national scale, there needs to be a detailed audit of what natural resources are left. Then yearly or monthly figures can be produced to show the extent of resource depletion.

      As a member of the public, I don’t get to see such figures, and if they exist, political parties don’t seem to mention them.

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  5. Meg Holden

    Associate Professor of Urban Studies and Geography at Simon Fraser University

    Thank you for a fascinating view of a plausible information-rich, resource-poor future. As someone who has advocated for an end to the "global urban data deficit" for over a decade, I ought to be cheering for this impending injection of whole new reams of information about the inputs, outputs and outcomes of consumption, which, it's true, is already starting to spew. And it's interesting, intoxicatingly so, for those of us who are into that kind of thing. But there is one natural resource not becoming…

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