October 22, 2012
The resource efficiency agenda aims at merging two narratives that at times were perceived as opposing each other: economic growth and environmental protection. Indicators need to make for a compelling joint narrative. Accordingly, resource efficiency indicators must be based on a clear definition of the system under evaluation. Indicators to evaluate overall (national) resource consumption/ efficiency, and indicators to evaluate industry resource consumption/efficiency must be strictly separate.
The selection of indicators should be led by a set of criteria to ensure that the guidance derived from the indicators is not biased. The Commission already defined a rather comprehensive set in its consultation document, such as: RACER (relevance, acceptability, credibility, easiness, robustness), as well as timeliness, suitability for policy-making, consistency, coverage. These criteria should be adhered to. In addition, data availability should be used as a criterion to measure feasibility and applicability of indicators. Indicators need to be measured by reliable databases that entail data produced under agreed standardization processes on data measurement. Finally, the strongly developed environmental part of the Commission’s indicators proposal needs to be balanced with an economic part.
A need for a lead indicator?
The proposed lead indicator GDP/DMC (Domestic Material Consumption) brings about wrong conclusions for environmental policies: it does not directly measure impact decoupling and actually tells us little about the environmental pressure that economic activity exerts. It also leads to wrong conclusions for industrial policies underestimating the resource use of imports. DMC is consumption oriented, whereas DMI (domestic material input), for instance, would also evaluate the import of materials. The proposed indicator would ‘reward’ economies that generate GDP through financial services rather than manufacturing, as it ignores the importance of imported materials. It also does not give any guidance on the importance of domestic production in the context of resource independency.
A GDP/DMC indicator is blind towards the economic interdependencies of a modern economy, as well as the environmental impacts of economic activity outside a country’s borders. It therefore provides only an incomplete, very inward looking EU-centric picture. It is also blind towards some or all social, health, environmental, economic implications, because it considers all material as equal with its focus on weight/mass. Moreover, it is blind towards the crucial differences between recycled and virgin materials, and fails to see that renewable and non-renewable or hazardous and non-hazardous materials have differing characteristics. It would make much more sense to focus on non-renewable resources used.
Therefore, don’t use GDP/DMC as a lead indicator. It is said that “we do not manage what we do not measure”. The flipside of the coin is that we mismanage what we measure wrongly. The risks for misinterpretation inherent in establishing such a lead indicator are too high. If GDP/DMC is used a lead indicator this will send a wrong signal to countries and regions outside of the EU, who are turning to the EU for best environmental policy practices and will assume that the indicator is an accepted measure that can be adapted in other regions.
Rather, focus directly on the dashboard indicators, at least until a more comprehensive, carefully thought-through and proven lead indicator is available. One option would be to instead focus directly on the four macro-indicators. If the Commission is absolutely set on using only one indicator, this indicator would need to be adjusted in such a way that the above-mentioned criticism is remedied. And, create indicators that provide information about what the EU can control, because “we should not manage what we cannot influence”.
The DIGITALEUROPE response to the Commission consultation can be found here.
This blog-post was penned by Sylvie Feindt, Director Environmental Policy, DIGITALEUROPE