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MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT:KEY FINDINGS

Material Resources, Productivity and the EnvironmentKey Findings1. Establishing a resource efficient economy is central to greening growthNaturalresources arefundamental tothe economyand humanwell-beingNatural resources provide essential inputs to production (Table 1). Apart fromproduction, the extraction, processing and ultimate disposal of materials are animportant source of income and jobs in many countries. These activities also impactthe environment to a greater or lesser extent. Natural resources are also part of theecosystems that support the provision of services such as climate regulation, floodcontrol, natural habitats, amenities and cultural services that are necessary to developman-made, human and social capital.The use of materials from natural resources in production and consumption processeshas many environmental, economic and social consequences that extend beyondborders and affect future generations. They have consequences on:The rates of extraction and depletion of renewable and non-renewable naturalresource stocks, and the extent of harvest and natural productivity ofrenewable resource stocks.The environmental pressures associated with the extraction, processing,transport, use and disposal of materials (e.g. pollution, waste, habitatdisruption); and their effects on environmental quality (e.g. air, climate, water,soil, biodiversity, landscape) and ecosystem services and human health.International trade and market prices of raw materials and other goods, andthe productivity and competitiveness of the economy.The way natural resources and materials are managed through their life-cycle affectsall of these activities.Table 1. Economic and environmental significance of selected materials and productsSelected Material/ProductAluminium Environmental SignificanceLightweight (transportation fuel efficiency)Infinitely recyclableEnergy intensive production (GHG emissions)Solid waste (red mud)Economic Significance Widely used esp. in transportation, construction,electricity generation Increasing global demand Price volatility Consumption strongly coupled with economicgrowthCopperIron and SteelRare Earth Elements Infinitely recyclable Energy-intensive production E-waste Phosphorus Paper Widely used esp. in electrical transmission andInfinitely recyclablewell-developed scrap marketsEnergy-intensive productionUsed in clean energy and energy efficiencytechnologiesRecycling extremely challengingChemically-intensive processingE-wasteEutrophicationWaste (phosphogypsum) and emissions (fluorine)Recyclable (with losses)Renewable / recyclable (with losses)Carbon sequestration, habitat (forests)Potential source of energy (wood biomass)Energy- and water-intensive production1constructionIncreasing global demandPrice volatilityMost widely used and traded metal in the worldIncreasing global demandPrice volatilityUsed in wide range of high-tech electronicsLack of substitutesIncreasing global demand, recent supply chainissues Price volatility Food security Supports agricultural production Demand growing esp. in emerging economies Wide variety of products

Current trendsin materialdemandspresentenvironmentaland economicchallenges The last decades have witnessed unprecedented growth in demands for raw materialsworldwide, driven in particular by the rapid industrialisation of emerging economiesand continued high levels of materialDid you know ditymarketshave OECD countries account for:expanded, with increasing mobility of a third of all material resourcesconsumed worldwide;production factors and closer linkages amongcountries and regions. This has been over two-thirds of wood harvesting; nearly half of global exports of raw,accompanied by highly volatile commoditysemi-finished and finished materials.prices and growing competition for some rawmaterials.By 2050, the world economy is expected to quadruple and the global population togrow from 7 billion today to over 9.2 billion. The OECD Environmental Outlook to2050 shows the additional strain that this will place on the earth’s material and energyresources and the environment. A growing population with higher average incomerequires more food, more industrial products, more energy and more water. Thiscreates formidable challenges for sustainable economic and environmentaldevelopment.and createopportunitiesfor newmarkets andgreener growthConfronting the scale of these challenges requires ambitious policies to stimulate asignificant increase in resource efficiency, particularly through technical change andinnovation. The drive for improved resource efficiency will create new products,markets and employment opportunities.Establishing a resource efficient economy is central to green growth. It requiresputting in place policies to improve resource productivity and sustainably managenatural resources and materials, building on the principle of Reduce, Reuse andRecycle (the 3Rs). To be successful, such policies need to be founded on a goodknowledge base of the material basis of the economy, international and nationalmaterial flows, and the factors that drive changes in natural resource use and materialproductivity over time, across countries and in the different sectors of the economy.2. Worldwide use of material resources has been increasing steadilyGlobal trendsGlobalextraction ofmaterialresourcescontinues togrowThe amount of materials extracted, harvested andconsumed worldwide increased by 60% since 1980,reaching nearly 62 billion metric tonnes (Gt) per year in2008 (Figure 1), some 8-fold increase since the early1900s. OECD countries accounted for 38% of domesticextraction of used materials (DEU) worldwide in 2008,while the BRIICS (Brazil, Russia, India, Indonesia, Chinaand South Africa) accounted for 35%. 1 While moreupdated global figures are not yet available, material uselikely remains around 62 Gt today and is projected toreach 100 Gt by 2030.2Growth has been primarily driven by increased globaldemand for construction minerals, biomass for food andfeed, fossil energy carriers. These three material groupsaccount for 80% of total global material extraction.2Domestic extraction used(DEU) measures the flow ofmaterials that originate fromthe environment and entertheeconomytobetransformedintoorincorporated in products.Domesticmaterialconsumption (DMC) providesa measure of the amount ofmaterials directly consumedby economic activities withina country. DMC equals DEUplus imports minus exports.

Figure 1. Global material resource extractionBillions of metric tonnes (Gt)70% change, tals60%Fossil ass (food &feed)01980199020002008Source: SERI (Sustainable Europe Resource Institute) material flows database.Materialsoriginating fromnon-renewablenatural resourcestocksprogressivelydominate thematerial mixOver the last century, resource extraction from non-renewable stocks has grown whileextraction from renewable stocks has declined, reflecting the shift in the global economybase from agriculture to industry. Once accounting for some 75% of global materialextraction, biomass today accounts for less than a third of total extraction. Nonrenewable resource extraction now represents over two-thirds of global materialextraction with construction minerals making up over 30% of global DEU in 2008, fossilenergy carriers 20%, and metal and metal ores 13%. Industrial minerals account foraround 2% of global extraction.Although global material use has been increasing steadily overall, growth has variedacross material groups.MetalsOver the last 30 years, the strongest growth in raw material demand has been for metalores. Global metal extraction more than doubled between 1980 and 2008, rising from3.5 to 8.2 Gt or by 133%, a rate on par with global economic growth. But growth has notfollowed a steady upward trajectory: after declining in the early 1990s, the growth inmetal extraction witnessed a significant upswing from around 2002. This accelerationwas due to high demands from countries entering their energy- and material-intensivedevelopment phase, coupled with high levels of consumption in developed economies.ConstructionmineralsDemand for construction minerals has expanded rapidly, increasing by 8.7 Gt or80% from 1980 to 2008, though more slowly than world GDP. Economic growth and theassociated expansion of the construction sector have a strong influence on demand.Demand construction minerals is also linked to changes in demographics (e.g. amountand type of housing needed) and average wealth (e.g. size of dwellings), as well countryspecific factors (i.e. geography, urban planning, consumer preferences). As with metalores, global extraction of construction minerals began to accelerate in the early 2000s.Fossil energycarriersGlobal extraction of fossil energy carriers expanded by less than constructionminerals, growing by 4.8 Gt or 60% between 1980 and 2008. Throughout the 1990swhen real crude oil prices were relatively low, the extraction of fossil energy carriersstabilised and in some years even declined. But by the early 2000s, as in the case ofmetal ores and construction minerals, extraction began to trend upward again driven bythe expanding global economy.Biomass for foodand feedFrom 1980 to 2008, both the world population and the extraction of agriculturalbiomass for food and feed increased by 50%. Increasing income levels also bringchanges in dietary habits. Meat consumption, in particular, tends to increase with3

income or wealth. More biomass (in terms of feed) is required to support a meat-baseddiet relative to a vegetarian diet.Wood andindustrialmineralsWood harvesting and the extraction of industrial minerals experienced the slowestrates of growth. Wood harvesting grew by less than 20% between 1980 and 2008,significantly lower than population growth. Increased paper recycling and competitionfrom digital media have likely contributed to flat demand for wood fibre. Growth in theextraction of industrial minerals was more volatile than other material groups, anddeclined by almost 30% between 1980 and 2008. However, figures must be interpretedwith caution since this group consists of variety of minerals ranging from phosphate rockto diamonds.Materialextractionincreases by twothirds whenunused materialsare consideredAlong with 62 Gt of material resources that were extracted and entered the economy in2008, an additional 44 Gt of materials were extracted but not used in the productionprocess. These materials – referred to as unused domestic extraction (UDE) – includemining overburden, harvest residues and fisheries by-catch.Unused extraction is important, particularly for some materials; it accounts for around70% of the total extraction associated with fossil energy carriers (due to the largevolume of unused materials associated with coal extraction) and almost half for metals,but only 10% or less for biomass and construction minerals. With unused extractiontaken into account, fossil energy carriers overtake both biomass and constructionminerals as the dominant material resource extracted globally, accounting for over 40%of extraction in 2008.Unused domestic extraction has grown at a faster rate than domestic used extraction,more than doubling between 1980 and 2008 compared to a two-thirds increase in DEU.Increased coal production, particularly in Australia, China, India and Indonesia from2002 onwards is the likely factor behind this strong growth in DEU globally, as isincreased metal ore extraction.Trends in OECD countriesMaterialextraction andconsumption inOECD countriesare growing at aslower pacethan at globallevelMaterial extraction and consumption in OECD countries have increased, butmuch more slowly than at the global level, except for metals. While the global use ofmaterial resources continues to increase, since 2000 there are signs of stabilisation inOECD countries as regards both material extraction and consumption; they levelledoff at around 20Gt and 22Gt respectively, after stronger growth in the 1980s and1990s (Figure 2).3Since 1980, the growth has been driven primarily by the extraction of constructionminerals which accounted for half of the increase, while metal ore extractionaccounted for a quarter (Figure 3).The use of construction minerals has increased across all OECD regions, while growthin metal ore extraction was mainly isolated to Chile and Australia. In Chile, copperore extraction grew from 70 million tonnes (Mt) in the early 1980s to well over 500Mt by 2008. In Australia metal ore extraction grew from under 200 Mt to over 600Mt during the same period, with the extraction of iron ore, copper and zinc more thandoubling. Precious metal extraction increased by a factor of 12. 4Roughly half of all material resource extraction in the OECD area takes place in theAmericas (i.e. Canada, Chile, Mexico and the United States). OECD countries inEurope account for 35% of extraction while member countries in the Asia-Pacific areresponsible for the remaining 15% of extraction. Among OECD countries, the UnitedStates is the single largest extractor of material resources with over 6.5 Gt extracted in2008 – one third of all materials extracted in OECD countries. Australia, Canada,Mexico and Germany follow, each extracting between 1 and 1.5 Gt in 2008.4

Figure 2. Domestic extraction used (DEU),by OECD regionFigure 3. Domestic material consumption (DMC),by material group,(billion metric tonnes)(billion metric tonnes)25251980% change, 19%Fossil energycarriers29%Constructionminerals10%Biomass (food &feed)2015151010550OECD TotalOECD AmericasOECD AsiaPacific0OECD Europe1980199020002008Source: OECD material flows data.Notes: Figures do not include Estonia or Slovenia.Domestic material consumption (