Short-term resource efficiency may hurt economy

Quick-win projects to help organisations make better use of resources may help to secure jobs in some industry sectors, but could damage the wider economy, according to Defra.

New research carried out on behalf of the environment department, reveals that while short-term efficiency projects, such as improved levels of recycling, could help to create cost savings for organisations, they could also result in thousands of job losses in other sectors.

Researchers studied organisations within the food, drink and tobacco sector and the construction sector, and examined how they reacted after embracing efficiency projects.

The study found that the savings equated to approximately 0.9%–1% of costs and can enable businesses in both sectors to benefit from decreased costs, allowing them to lower their prices and stimulate additional demand from consumers.

However, the study found that in the construction sector, the positive impact of this increased demand was not passed down the supply chain.

Quick-win projects such as deconstruction rather than demolition, allowing greater reuse of materials, and re-using excavated soils could potentially cost between 3,000 and 14,000 jobs in the sectors that supply the construction industry, as demand for raw materials drops.

However, the survey’s results do not paint the whole picture, according to Martin Baxter, IEMA’s executive director of policy.

“This study was the first to try and map the effect of individual organisations’ adoption of resource efficiency technology on the wider economy and as such is based on a quite simplistic model.

“For instance, it assumes that all of the inputs into the construction sector are from the UK, forgetting that some are imported and therefore a decrease in demand will not necessary impact our economy.

“Secondly, an improvement in materials efficiency through better recovery and reuse, is also good for the country. There’s a broader picture than the research has been able to evaluate.”

Martin suggests that an analysis that examined the economic impact of efficiency based on materials as they flow through the economy, rather than a sector approach, would proffer a different outcome.

“Furthermore, if you don’t value the country’s natural environment in national accounts terms, then of course preserving it doesn’t get factored into this either.”

To read the report in full visit the Defra website.