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3
Broad Context for Material and
Energy Flows Information
he benefits of material flows accounting are more understandable
if the historical and current context is clear. At the end of the nine-
teenth century, the United States economy was based primarily on
agriculture, extractive industries, and manufacturing (Figure 1.1~. Since
then, developed economies have evolved to become primarily service
economies. Although the overall shift of employment and revenue gen-
eration has been from the agricultural and extractive industries to the ser-
vice sector, the overall scope of manufacturing activity has not declined
significantly. This is especially true in the global economy, with manufac-
turing shifting to developing economies over time and expanding because
of growth in global economic activity.
Service economies partially decouple material consumption from rev-
enue generation, in the sense that total material requirements per unit
gross domestic product decline in countries such as the United States as
the economy evolves (Figure 3.1~. However, such economies do not de-
materialize completely. Every service whether a fast food restaurant, a
medical treatment, a retail store, or the Internet requires a physical plat-
form based on the use of materials and energy. Thus, although the pat-
terns of materials use become much more complex in service-oriented
economies, materials of all kinds remain foundational to economic evolu-
tion and the quality of life (Sidebar 3.1~.
GLOBALIZATION OF THE ECONOMY
The international political structure also has an effect on material
flows and it has been evolving as well. The relative simplicity of interna-
33
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34
120 -
1 1 0 -
100 -
11
90-
a)
80 -
70 -
60 1 1 1 1
1975 1978 1981 1984 1987 1990 1993
MATERIALS COUNT
(5 yr. average)
Germany Japan
Netherlands - - - - United States
FIGURE 3.1 Overall material intensity (total material requirements per gross do-
mestic product) index. SOURCE: Adriaanse et al., 1997. Copyright permission
granted by World Resources Institute.
tional governance systems dominated by nation-states has given way to
much more complicated networks of power, particularly in areas such as
trade, human rights, and environment. The result has been a shift toward
a more complex structure, including not just nation-states, but also multi-
national firms, nongovernmental organizations of all types, and commu-
nities, both traditional and, increasingly, based in cyberspace. This devel-
opment has had several important implications for material use patterns.
First, it increases the number of issues and stakeholders associated with
material extraction, processing, and management. Whereas a mining firm
previously had to deal only with the national government in a developing
country where it operated for example, it may now find itself negotiating
with local communities and developed-country human rights and envi-
ronmental campaigners. Second, global markets may be affected by non-
governmental organizations' campaigns regarding a company's manage-
ment of its products and waste streams in jurisdictions around the world.
Many nongovernmental organizations focus on a "single issue." Thus,
they may be concerned about only one dimension of corporate perfor-
mance and ignore the economics of material extraction, processing, and
management. The potential for adversarial relationships and conflict in-
creases as the number of stakeholders increases. Material flows accounts
cannot resolve the confusion of a more complex governance system, but
they can help decrease the potential and scope for such conflict by provid-
ing an objective basis for dialogue.
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BROAD CONTEXT FOR MATERIAL AND ENERGY FLOW INFORMATION 35
These trends illustrate the globalization of economic activity, which
itself creates important needs for material flows accounts. Globalization is
the process by which systems previously described by national or regional
boundaries have become globally coupled and interconnected, creating
more complexity. The implications of globalization for materials are sig-
nificant. Most obviously for the United States, its complex economy has
grown to rely heavily on material imports. The United States imports 100
percent of several commodities and significant proportions of other criti-
cal materials (Figure 1.2~. These patterns of material use clearly suggest
that any materials accounting methodology should extend beyond na-
tional boundaries to be truly systemic and ensure the capture of impor-
tant information. Such material source data could, for example, indicate
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36
MATERIALS COUNT
to firms or countries that, although absolute physical scarcity of a particu-
lar material is unlikely to be a short-term economic problem, the availabil-
ity of important materials may be compromised by political or institu-
tional factors.
This should not be surprising: in terms of commodities from food to
fuel to materials of various kinds history indicates that shortages most
often arise from institutional deficiencies and factors, rather than absolute
scarcity. A classic example is the availability of minerals, where a particu-
lar mineral becomes scarce cyclically as the selling price and margin vary
over time. With a higher price, the margin grows and so does exploration
to expand reserves of the minerals and increase its availability. Thus, an
important function of materials and energy information for firms and so-
ciety as a whole is to provide the foundational data upon which material
security and availability studies may be based (including, for example,
identification of potential substitutes for materials controlled by possibly
hostile governments). One of the reasons that DuPont uses material flows
analysis is to avoid being significantly impacted by a supplier crisis (see
Chapter 4) (! Carberry, DuPont, personal communication, 2002~. In this
sense, material flows accounts are important mechanisms supporting the
economic resiliency of firms and of the U.S. economy as a whole.
SUSTAINABLE DEVELOPMENT
There are social trends that are just as broad as the evolution of the
service economy and that also urge the need for material flows accounts.
Most obvious, perhaps, is the concept of sustainable development. This
idea was brought to the world's attention by the World Commission on
Environment and Development, also known as the Brundtland Commis-
sion, in 1987 in its report Our Common Future (World Commission on En-
vironment and Development, 1987~. There it was defined as "develop-
ment that meets the needs of the present without compromising the ability
of future generations to meet their own needs." It represents an effort to
integrate economic development with stewardship of natural resources,
quality of the environment, and human equity, especially the right of poor
countries to develop. Recent discussions in the United States, the Organi-
zation for Economic Cooperation and Development, the World Bank, and
elsewhere relate sustainability to the maintenance or improvement of
stocks of various forms of capital such as built infrastructure and facili-
ties, productive capital, natural resources, and the quality of the environ-
ment. The idea of sustainability is important in many policy, environmen-
tal, and scientific communities. The value of material and energy flows
information for supporting and adding substance to studies of sustain-
ability across broad areas of economic activity is apparent. Indeed, it is
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BROAD CONTEXT FOR MATERIAL AND ENERGY FLOW INFORMATION 37
difficult to see how any reasoned discussion of sustainability can take
place in the absence of information regarding the stocks and flows of
materials and energy within economies and natural systems. Importantly,
as sustainability issues are addressed in the future, the full cost accounting
of policy options should be considered, and material flows accounting,
coupled with various derived indicators, will give insight on the impact
of the options. Some policy makers indeed believe that the market will
not operate correctly and sustainability will not be achieved until full
cost accounting is achieved.
TECHNOLOGY EVOLUTION
As the above factors indicate, the modern world is far more complex
than that of the late nineteenth century, when the United States first be-
gan gathering material flows data. Rates of change of technologies, indus-
trial sectors, and economic structures are, if anything, increasing partially
as a result of the autocatalytic effect of technological evolution. Such com-
plexity obviously poses challenges to material and energy flows analysis
methodologies how, for example, should material flows data systems
be designed to ensure that they are both up-to-date and reflective of tech-
nological evolution as it occurs? It also emphasizes the need for struc-
tured accounts for material and energy data, so that basic patterns of ma-
terial and energy production, consumption, and disposal can be identified;
the changes in those patterns tracked as technology changes; and that in-
formation, in turn, provided to numerous stakeholders from corpora-
tions to nongovernmental organizations and governments to inform and
improve their decisions.
BIOGEOCHEMICAL CYCLES
More broadly, as a result of the Industrial Revolution and consequent
technological, economic, and demographic evolution, the dynamics of
most natural systems, such as the carbon and nitrogen cycles, the climate
and hydrological cycles, and biological systems at many scales, are now
increasingly impacted by human activity. Continued economic progress
and stability of these human and natural systems will require the ability
to better and more rationally engineer and manage them in a highly inte-
grated fashion. It is apparent that rational action in such a complex envi-
ronment, characterized by highly integrated and convolving human and
natural systems, requires a basic knowledge of the material patterns that
underlie it. Without such knowledge it would be impossible to under-
stand what the economic, social, and environmental impacts of various
choices may be. This observation has methodological implications as well.
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38
MATERIALS COUNT
Most importantly, material and energy cannot in such a world be limited
just to "human" or "natural" components of stocks and flows; they should
encompass both. Moreover, beyond materials of economic interest to hu-
mans, material flows accounts should also embrace material systems that
are perceived to be "non-human" especially the four so-called grand
cycles: nitrogen, carbon, sulfur, and phosphorus.
The connection among traditional ecology, industrial ecology, and
material flows provides opportunities for holistic analyses of interactions
that could lead to better public policy making, founded on strong
multidisciplinary research and studies. Ecology is built on the premise
that everything is connected to everything else. The biologist who ignores
the connection between ecology and material flows is as short-sighted as
the engineer that misses the connection. For example, the degradation of
air, land, and water resources will never be fully understood or reversed
unless the flow of materials impacting them is well understood, in both
quantity and composition. Discovering and addressing the underlying
cause of the decline of stratospheric ozone, for example, required an un-
derstanding of material flows. Limiting the exposure of children to lead
required material flows analysis. Ultimately, addressing the solid waste
problem will be dependent upon a much better understanding of material
flows. Thus, public policy making based on linkages among material flows
information with biological and physical information can be more robust
and must necessarily be founded on multidisciplinary research in this
area.
SUMMARY
The changing nature of economies, the complexity of products and
services, the global nature of markets, the increasing human impact on
natural cycles, and the international political structure have heavily im-
pacted the magnitude and flows of materials, which have been evolving
in complexity as well. These developments have had several important
implications for material use patterns and have increased the number of
issues and stakeholders. Moreover, the United States is dependent on
other countries for 100 percent of several commodities and significant pro-
portions of other critical materials. One potential important use of mate-
rial flows accounting, therefore, is the identification of potential substi-
tutes or the creation of stockpiles for materials controlled by possibly
hostile governments.
The idea of sustainability is important in many policy, environmen-
tal, and scientific communities. Material and energy flows information is
important for supporting and adding substance to studies of sustainability
across broad areas of economic activity.
Representative terms from entire chapter:
flows accounts
