Review: OECD Decoupling Indicators and Decoupling for Ecological Sustainability

The OECD defines “decoupling” as ” breaking the link between ‘environmental bads’ and ‘economic goods.'”1 To put it more vividly, this is generally understood as having economic growth happen without increased resource use and its associated environmental damage. An economy could get more decoupled by selling a more fuel-efficient car instead of an inefficient one, or by selling more personal coaching instead of cement.

As with any new economic term, the first order of business is to figure out one (or thirty-one) ways of measuring it. While GDP is the most popular economic growth indicator by far, “environmental bads” are hard to pin on one number.  The OECD report goes wide, listing yes, thirty-one different indicators, basically (environmental bad)/(associated economic good). Like GHG/GDP, methane/agricultural output, or VOC/GDP.

Then comes the hilariously optimistic paragraph:

Although for some environmental pressures little decoupling is occurring, relative decoupling is widespread. Absolute decoupling is also quite common. Moreover, the table suggests that further decoupling is possible, since absolute decoupling was recorded in at least one EOCD country for all but two of the decoupling indicators examined at the national level.

Perhaps this sunny stuff is a result of their definition of relative decoupling: when the growth rate of “environmental bad” is less than the rate of economic growth, which is not that big of a deal because if it’s growth, especially exponential growth, it’s still inherently unsustainable regardless of the rate. That’s something the figure above doesn’t show: the economic output is plotted as a straight line, which makes the decoupling scenario look pretty good, when in reality GDP looks more like this:

Data: World Bank

Here’s another reason to be skeptical: the subtle deception of numbers. If they list 31 indicators, 29 out of 31 sounds pretty good. But what if 1 indicator is actually vastly more important than the rest, and that’s the one where we have no proof of absolute decoupling? For example, the biodiversity indicator (“pressure version of Natural Capital Index per unit GDP”) is marked with the worst, least robust status: “Statistical gaps. Further work required.” Being hard to measure doesn’t make something less important, but that’s how it looks when you focus on the numbers.

You might think the solution is composing a better measurement of the “bads”: something more comprehensive that fills in the “statistical gaps.” In section 1.8 this is acknowledged as a known approach, but then dismissed. “Aggregated indicators are far from being universally accepted” is the reasoning for not using them in the paper. Which…ok, sure. Well, if we don’t use aggregated indicators, how are we going to come to a conclusion on the aggregated data? Some means of comprehending all the data will be used, quantitative or not. You could say the choice of 31 indicators in this report is in itself an aggregate indicator that implicitly weighs each of the 31 about equally, which has the consequences suggested above. It seems that the report just doesn’t want to explicitly take on that responsibility.

Getting down to section 1.6 we find a very mild opinion on the actual usefulness of decoupling indicators (proportional goals) compared to the mighty targets and thresholds (absolute goals). The report suggests they be used as “intermediate objectives of environmental policies” and a “starting point to assess the potential for improved performance.” Given the broader state of the established research field, this doesn’t make a strong case for the usefulness of decoupling indicators. Indeed, there is acknowledgement that decoupling is not a sufficient measurement of environmental progress for many reasons: it doesn’t account for absolute amounts of “bads”, carrying capacities, cross-border externality flow (for national measures of decoupling), etc. Warnings are even given later on:

…decoupling indicators [can] convey a positive message (i.e. relative decoupling) while in reality a country’s ecosystems may be heading towards breakdown.

This suggests that those absolute measurements are perhaps more important. Decoupling is basically a measure of the first derivative of environmental bads versus economic goods. But looking at merely the first derivative over time is only a small snippet of the data: full understanding of a trend, the kind we qualitatively get when we look at a plot, includes the the second derivative and function itself (the integral of the first derivative).

The second order of business is to figure out how to make it happen, which the OECD report basically says is putting a price on environmental damage, like with a carbon tax—and letting the invisible hand do the rest. Sure, most2 seem to find that agreeable. Policy change, however, is dependent on attitudes change in the populace, as it should especially be in the self-proclaimed democracy-loving OECD. How to change attitudes is apparently out of scope of this report, as it tends to be.

To summarize the OECD report in my words:

“Here’s this indicator called decoupling and 31 ways to measure it because we can’t agree how to boil it down to one. It doesn’t anywhere near tell us whether we’re doing good/bad overall in sustainability, but we can use it alongside other indicators to understand what’s going on in our sustainability progress.”

The step that is missing, and that we can now do quantitatively with more decades of decoupling research under our belts, is evaluating what decoupling can accomplish. To examine this, let’s hop forward in time to 2020 with the paper Decoupling for ecological sustainability: A categorization and review of research literature by VadĂ©n et al3. I found this paper in the citations of Tom Murphy’s book.

The introduction is a nice little read. This paper wisely begins with a definition of decoupling, why people care about it, and criticisms. Here are some key points:

  • Decoupling is necessary only when economic growth continues. If economic growth is not happening, like in a steady-state economy, there is no such thing as decoupling
  • Decoupling is generally calculated with respect to GDP, which is not meant to measure wellbeing and should be replaced with something like the Genuine Progress Indicator
  • Decoupling is not concerned with the limits of human activity due to our existence on a finite planet

Then they introduce the three parts of their work: what goal they are evaluating decoupling’s effect on (ecological sustainability), the task of categorizing different types of decoupling studied in literature, and how the literature search was conducted. Here comes the blood-chilling phrase, “We read the 179 articles” (footnote: “One article was left out as it was written in Hungarian which none of the authors can read“).

In the categorization section, VadĂ©n looks at important parameters of decoupling indicators. In line with my comment on the “not a big deal” of relative decoupling, VadĂ©n focuses on absolute decoupling.

  • Geography: The bigger your draw your system boundary, the harder it is to find decoupling. For example, you might find decoupling at a local level because the negative externalities have been exported somewhere else.
  • Time: We’d like to see continuous rather than temporary decoupling.
  • Sector: We’d like to see decoupling of the entire economy, rather than decoupling in one sector by growing the damages of another sector.

Characteristics of a decoupling indicator

Relative OR AbsoluteResource OR ImpactGeography:

VadĂ©n’s Parameters Applied To OECD Report Indicators

Relative and AbsoluteResource Geography: OECD, OECD by continent
Time: 1900-2000
Sector: Various, confined to sector

Why is it important to identify these parameters? Their values say a lot about the usefulness of the indicator for measuring progress towards ecological sustainability. I think this quote sums it up perfectly.

Decoupling is a measure of ecological efficiency, not one of sustainability: even an absolutely decoupled economy can transgress planetary boundaries either through its impacts or its resource use.

Thus, VadĂ©n warns against making an unexamined “abstract claim of decoupling as a policy goal.”

Now that we’ve identified key parameters of a decoupling indicator, it’s time to put them to work on the literature. What has the research shown? Out of the 170 articles, only 11 “present evidence of economy-wide and at least national level absolute resource decoupling.” None of that evidence was “robust”: sufficiently broad scope in geography, time, and sector to provide evidence of advancing ecological sustainability. In the Results section, many of these articles are discussed. Common pitfalls for proving effect on ecological sustainability seem to be:

  • Not accounting for international trade and outsourcing
  • Not choosing an environmental metric that is a “reliable proxy” for sustainability. Just CO2 doesn’t cut it.
  • One-time structural changes, like the collapse of a centrally planned economy that account for decoupling rather than the deeper trends we are looking for.

Some interesting conclusions from the reviewed articles are:

  • Higher income does not reduce source use (Steinberger, 2013)
  • Consumption footprint in the EU has absolutely decoupled from GDP in 2005-2014 (Sanye-Mengual et al, 2019)
  • When trade and consumption are considered, we see a global trend of recoupling material use and GDP in the 21st century (Wood 2018, Krausmann 2017)

The conclusion:

evidence does not suggest that decoupling towards ecological sustainability is happening at a global (or even regional) scale.

Thus, we should not use any of our current decoupling indicators as an indicator or an intermediate goal for sustainability. We should especially not use the decoupling evidence thus far to believe that things are going well. If anything, it shows that things are going badly.

  1. Indicators to Measure Decoupling of Environmental Pressure from Economic Growth. (2002).
  2. Most of people who comprehend climate change, which is unfortunately not a big chunk of our dysfunctional American government
  3. VadĂ©n, T. et al. Decoupling for ecological sustainability: A categorisation and review of research literature. Environmental Science & Policy 112, 236–244 (2020).
  4. Steinberger, J. K., Krausmann, F., Getzner, M., Schandl, H. & West, J. Development and Dematerialization: An International Study. PLOS ONE 8, e70385 (2013).
  5. SanyĂ©-Mengual, E., Secchi, M., Corrado, S., Beylot, A. & Sala, S. Assessing the decoupling of economic growth from environmental impacts in the European Union: A consumption-based approach. Journal of Cleaner Production236, 117535 (2019).
  6. Wood, R. et al. Growth in Environmental Footprints and Environmental Impacts Embodied in Trade: Resource Efficiency Indicators from EXIOBASE3: Growth in Environmental Impacts Embodied in Trade. Journal of Industrial Ecology 22, 553–564 (2018).
  7. Krausmann, F. et al. Global socioeconomic material stocks rise 23-fold over the 20th century and require half of annual resource use. PNAS 114, 1880–1885 (2017)

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