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Part II: Restructuring sectors and the sectoral balance of the economy

8. Global eco-restructuring and technological change in the twenty-first century
9. Agro-eco-restructuring: Potential for sustainability
10. The restructuring of tropical land-use systems
11. The restructuring of transport, logistics, trade, and industrial space use
12. National and international policy instruments and institutions for eco-restructuring

8. Global eco-restructuring and technological change in the twenty-first century

Population growth and economic growth
Environmental pressures for global change
Scenario analysis and the use of materials
The challenge for eco-restructuring
Concluding remarks

Faye Duchin


Visions about social and material conditions in the distant future are naturally surrounded by a great deal of uncertainty. One reason is that future outcomes depend on public and private decisions among alternatives that could have rather different long-term consequences. This paper describes some of the major, emerging directions of change that are likely to be important in the global economy of the twenty-first century. It attempts to situate within this context the kinds of choices that we face, including those surrounding technological changes that can be stimulated by eco-restructuring, and emphasizes the special role of environmental considerations in conditioning our decisions. The paper also illustrates the contribution of economic analysis in evaluating trade-offs among alternative choices on the regional and global levels.

Over the past few decades the globalization of the world's societies has become a physical reality and one that has relatively quickly become apparent to the general public. The two principal reasons for globalization are attributable to technological advances. Through modern telecommunications, people in all but the most remote locations are exposed instantaneously to the world's crisis situations and familiarized with the day-to-day realities in far-away places; and modern transportation has made it possible to travel, and to trade and shift investments, among distant locations more quickly and more extensively than ever before.

The other major stimulus to global thinking was the ability to view the whole planet from space and to measure and anticipate the possible effects of human activities not only on the water, the soil, and the minerals buried in it but especially on the quintessential global commons, the atmosphere. The desire to "save the planet" reflects a concern that is not just environmental but specifically global.

Eco-restructuring (also called Industrial Metabolism or Industrial Ecology) is an attempt to promote social well-being by designing and implementing technologies in a way that disrupts the bio-geochemical systems of the planet as little as possible. Eco-restructuring is undoubtedly influencing the design considerations and the content of engineering for the twenty-first century, but it is not yet evident what forms this influence will take and how extensive the changes will be.

Economics provides a powerful conceptual framework for describing the world system in terms of the interdependence of human activities and decisions. An economic modelling framework can be used to analyse and evaluate alternative, more or less detailed stories - or scenarios - about the future, based, in part, on alternative initiatives that originate in eco-restructuring. A framework capable of playing this role needs to go beyond the concepts of equilibrium and marginal changes that still dominate economists' thinking and practices today. The framework needs to be guided by a broad conception of economic theory that describes the material structure, as well as the social structure, of the global economy. Scenarios need to be capable of reflecting substantive policy options related to major potential structural changes, and the challenges related to them. The overall structure has to be sufficiently integrated to capture the inter dependencies that characterize this complex and dynamically changing system. I have written in other places about such a conceptual economic framework (see Duchin 1992, 1994, and forthcoming; Duchin and Lange 1994).

l shall first explore the growth of the world population and world economy in the twenty-first century, and then describe some of the major elements of environmental transformation. Projections about the likely future use of primary materials demonstrate the use of an economic model for the systematic assessment of the implications of various assumptions. I take up the production, use, and disposal of a specific material, plastics; and identify the major decisions that will have to be made regarding plastics, in order to demonstrate the kinds of challenges facing eco-restructuring.

Population growth and economic growth

The basic political and economic objective of the modern liberal state is to achieve increased prosperity through economic growth, which in turn is pursued through improvements in efficiency, new technology, and free trade. This outlook has prevailed in the two centuries since the industrial revolution, a period that has experienced accelerated growth of both population and material well-being. With the fall of communism, economic liberalization is virtually unopposed as a global political and economic philosophy. However, as population growth levels off, at least in the affluent societies, it is timely to consider the prospect for a levelling off of economic growth as well and new global agreements and institutions that govern the operation of more or less self-regulating markets.

Economists distinguish three categories of factor inputs needed for the production of goods and services: capital, labour, and land, where "land" is interpreted as shorthand for all categories of inputs from the natural world. For an economy operating with a given set of technologies, growth in the delivery of goods and services to final users requires more factor inputs. Clearly, population growth can generate economic growth with the simple replication of existing methods and a larger labour force, as well as more land and other inputs. Of course, on a per capita basis, consumption might not increase.

Malthus's concern about running out of land and food was at least temporarily put to rest by the enormous increases in yields resulting from new technology. "Artificial manure" proved remarkably successful in assuring "big and ever increasing harvests lasting eternally" (Liebig 1862, quoted in Krohn and Schafer 1976, p. 31). Such confidence in unlimited increases in prosperity already sound dated, however. There is surely the possibility of continued advances and even dramatic breakthroughs in our ingenuity for wresting a living from nature. But there is also precedent for the collapse of entire ecosystems.

In the analysis of actual activities, economists in the twentieth century have focused their investigation of growth almost exclusively on changing inputs of capital and labour both in theoretical discussion and in the "production functions" chosen for most empirical analysis. This emphasis is largely explained by the fact that the extraction of primary materials in agriculture and mining utilizes a very small portion of the labour force in the rich, industrialized economies that have been taken as the model for development, and air and water were considered free of charge. However, demographic and environmental pressures are already shifting the attention of economists to the third factor of production, natural resources. Its operational definition will require attention to the distinctions among the individual energy raw materials that are neither renewable nor recyclable; the numerous mineral resources that are potentially recyclable; and water and soils of different qualities. The different categories of pollution and environmental degradation that are delivered back to the natural world also need to be accounted for as factors of production; they can be viewed as "negative inputs." Although capital and labour obviously cannot be ignored, the primary materials that increasingly occupy economists are also the inputs at the centre of attention in eco-restructuring.

A major reason for the developing countries taking on a new importance in the world economy is that they will continue to be the locus for virtually all population growth over the twenty-first century and therefore offer the easiest targets for the expansion of both production and consumption. The affluent societies can increase per capita consumption further through employing higher-quality factor inputs; the most practical avenue to exploit this option is through the upgrading of the skills and satisfaction of the labour force. New technologies can promote growth by enhancing the "productivity" of factor inputs; but they invariably involve not only a decrease in factor quantities per unit of output but also a change in the quality or at least the mix of inputs. Some consequences include the generation of novel wastes - such as chlorine containing compounds. However, the opportunities for actually implementing new technologies are limited when they are applied to the upgrading of capacity that is already in place (in the industrialized countries) rather than the construction of entirely new facilities to expand capacity (in the developing countries). individuals or firms in the rich countries may be able to generate more profit, if they are free to do so, by supplying the requirements of other countries with faster-growing populations rather than by investing in incremental improvements in production for domestic markets.

The size of the population may level off in the developing countries too in the course of the twenty-first century. With less political pressure continually to "create jobs" for increasing numbers of labour force entrants, concerns about depleting resources or degrading the physical environment could lead to a shift in emphasis from growth to improvements in the quality of life. For the medium term, however, the asymmetry in population dynamics between the rich and poor countries will strongly influence the nature of their interactions.

Environmental pressures for global change

Darwin's identification of competition as the mechanism for natural selection was influenced by the ideas of Malthus. The mutual reinforcement of the dominant role assigned to competition as the mechanism for change in both the biological and economic world views assured its fundamental role in Western thinking over the past century. It is significant that at the present time this view is being substantially moderated in our understanding of both the natural and the social spheres, as these reinforcing changes in perspective will be more influential than either one could be alone. Increasing numbers of contemporary biologists are subscribing to Margulis's view that accommodation through symbiosis is a major mechanism for evolutionary change: life "did not take over the world by combat but by networking" (Margulis and Sagan 1986, pp. 15 and 18). The parallels are striking with the emergence of the global economy.

The global economy is emerging at a time of great transformation as the ideological confrontation of East and West is replaced by economic conflict and negotiation (largely over trade and aid) between North and South.1 The countries in transition to a market economy are aiming to join the ranks of the developed economies over the next several decades as Europe - Central and Eastern, as well as Western - proceeds toward increasing unification along various dimensions. Regional economic blocs, based initially on trade and investment agreements, are also developing in America, in Asia, and among the Pacific Rim countries. The international competition associated with laissez-faire capitalism is if anything more fierce than ever. At the same time, it is undeniably operating within a context of long-term regional integration and emerging global institutional arrangements and constraints.

Environmental concerns about the "global commons" will strongly reinforce other pressures toward global dialogue and negotiation. Only a small number of environmental disputes has so far been brought to court within the international trade community, but it is already clear that these conflicts raise questions far more complex than what conventional trade law can readily resolve. In anticipation of the avalanche of cases to come, the Secretariat of GATT (the General Agreement on Tariffs and Trade) was led to call for discussions about multilateral consensus on environmental objectives in the hopes of bypassing bilateral, case-by-case haggling in instances where new environmental concerns conflict with the older objective of removing barriers to trade to promote growth independently of any other considerations. The tuna and dolphin dispute between the United States and Mexico or the Danish bottle law and the reaction to it in Europe are two early examples (see Lee, 1993, for a brief description of 22 such cases). In surprisingly blunt language, the GATT Secretariat stated that it is "no longer possible for a country to create an appropriate environmental policy entirely on its own" (quoted in OTA 1992, p. 24).

Environmental concerns (coupled with the attempt to protect domestic producers) are leading countries to erect barriers to trade based on the production process and not just on the characteristics of the traded product. (This is true in the tuna and dolphin case or in potential restrictions on imports of electronics components manufactured using CFCs that are being analysed in connection with the Montreal Protocol.) These pressures to provide a product produced using a particular technology are a potent force for the further globalization of technology. There is already a tendency to adopt modern technologies in new manufacturing sectors in developing countries, especially in foreign-owned factories. But the pressures for international use of common techniques are likely to spread beyond manufacturing into areas that have until now been largely shielded from globalization by cultural differences. For example, trade-related requirements about the use of recycled materials affect people's lifestyles because recycling involves common procedures to be followed by individuals in their capacities as citizens and consumers; likewise, legislation governing water pollution is bound to be similar in different societies because it will need to promote compliance with common process specifications.

Other pressures toward uniform social practices can also be observed. One example is a universal concept of human rights; another is the state's assumption of responsibility for social welfare, which today absorbs roughly similar proportions of national income in the rich economies and in the formerly socialist economies but is virtually non-existent in most developing countries.

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