Eco-economic decoupling

In economic and environmental fields, decoupling refers to an economy that would be able to grow without corresponding increases in environmental pressure. In many economies, increasing production raises pressure on the environment. An economy that would be able to sustain economic growth while reducing the amount of resources such as water or fossil fuels used and delink environmental deterioration at the same time would be said to be decoupled. Environmental pressure is often measured using emissions of pollutants, and decoupling is often measured by the emission intensity of economic output.
Studies have found that absolute decoupling was rare and that only a few industrialised countries had weak decoupling of GDP from "consumption-based" CO₂ production. No evidence was found of national or international economy-wide decoupling in a study in 2020. In cases where evidence of decoupling exists, one proposed explanation is the transition to a service economy. The environmental Kuznets curve is a proposed model for eco-economic decoupling.

Definition

In 2002, the OECD defined the term as follows: "the term 'decoupling' refers to breaking the link between "environmental bads" and "economic goods." It explains this as having rates of increasing wealth greater than the rates of increasing impacts.

Terminology

Five axes to assess decoupling

There are at least five axes to assess eco-economic decoupling:

Environmental indicators: overall or partial. Overall decoupling refers to cases where decoupling occurs between GDP and all environmental indicators, while partial for cases where it only concerns one or more environmental indicator, but not all of them. This axis is particularly important for cases where decoupling occurs on one environmental indicator, but at the expenses of another one.
Range: relative or absolute decoupling.
Scale: global or local. Local decoupling refers to cases where decoupling is observed between variables relative to a restricted geographical perimeter, while global decoupling corresponds to decoupling between two variables at the planetary scale. This axis is particularly important for cases where decoupling occurs in some countries, but at the expense of increasing environmental stress in other countries.
Durability: temporary or permanent. Continuous economic growth requires a permanent absolute decoupling between GDP and environmental pressures. Yet, economic growth and environmental pressures can re-couple later on, making the decoupling only temporary.
Magnitude: sufficient or insufficient. In order to be effective, decoupling should be large and fast enough to prevent environmental stress from reaching critical environmental tipping points, which lead to de facto irreversible environmental effects.

A more comprehensive checklist to assess eco-economic decoupling can be found in the figure at page 17 in.

Relative and absolute decoupling

, author of Prosperity Without Growth, stresses the importance of differentiating between relative and absolute decoupling:

Relative decoupling refers to a decline in the ecological intensity per unit of economic output. In this situation, resource impacts decline relative to the GDP, which could itself still be rising.
Absolute decoupling refers to a situation in which resource impacts decline in absolute terms. Resource efficiencies must increase at least as fast as economic output does and must continue to improve as the economy grows, if absolute decoupling is to occur.

Jackson points out that an economy can correctly claim that it has relatively decoupled its economy in terms of energy inputs per unit of GDP. However, in this situation, total environmental impacts would still be increasing, albeit at a slower pace of growth than in GDP.
Jackson uses this distinction to caution against technology-optimists who use the term decoupling as an "escape route from the dilemma of growth". He points out that "there is quite a lot of evidence to support the existence of " in global economies, however "evidence for is harder to find".
Similarly, ecological economist and steady-state theorist Herman Daly stated in 1991:

	Relative decoupling	Absolute decoupling
Description	Decline in the resource intensity per unit of economic output	Resource use decline in absolute terms while economic output rise
Example	Increased carbon efficiency	Increased carbon efficiency higher than economic growth
Link with I = PAT	Carbon intensity decline	Carbon intensity decline >
Evidence for carbon emissions	Yes: 34% decrease between 1965 and 2015	No: 300% increase between 1965 and 2015
Evidence for resource extraction	No: resource use increases more than GDP	No: resource use increases overall

Between 1990 and 2015, the carbon intensity per $GDP declined of 0.6 percent per year, but the population grew of 1.3 percent per year and the income per capita also grew of 1.3 percent per year. That is to say, the carbon emissions grew of 1.3 + 1.3 − 0.6 = 2 percent per year, leading to a 62% increase in 25 years. According to Tim Jackson:
On economic growth and environmental degradation, Donella Meadows wrote:

Resource and impact decoupling

Resource decoupling refers to reducing the rate of resource use per unit of economic activity. The "dematerialization" is based on using less material, energy, water and land resources for the same economic input. Impact decoupling required increasing economic output while reducing negative environmental impacts. These impacts arise from the extraction of resources.

Relevance

Historically there has been a close correlation between economic growth and environmental degradation: as communities grow in size and prosperity, so the environment declines. This trend is clearly demonstrated on graphs of human population numbers, economic growth, and environmental indicators. There is a concern that, unless resource use is checked, modern global civilization will follow the path of ancient civilizations that collapsed through overexploitation of their resource base. While conventional economics is concerned largely with economic growth and the efficient allocation of resources, ecological economics has the explicit goal of sustainable scale, fair distribution and efficient allocation, in that order. The World Business Council for Sustainable Development states that "business cannot succeed in societies that fail."
In economic and environmental fields, the term decoupling is becoming increasingly used in the context of economic production and environmental quality. When used in this way, it refers to the ability of an economy to grow without incurring corresponding increases in environmental pressure. Ecological economics includes the study of societal metabolism, the throughput of resources that enter and exit the economic system in relation to environmental quality. An economy that can sustain GDP growth without harming the environment is said to be decoupled. Exactly how, if, or to what extent this can be achieved is a subject of much debate.
In 2011 the International Resource Panel, hosted by the United Nations Environment Programme, warned that by 2050 the human race could be devouring 140 billion tons of minerals, ores, fossil fuels and biomass per year—three times its current rate of consumption—unless nations can make serious attempts at decoupling. The report noted that citizens of developed countries consume an average of 16 tons of those four key resources per capita per annum. By comparison, the average person in India today consumes four tons per year.
Sustainability studies analyse ways to reduce resource intensity whether this be achieved from improved economic management, product design, or new technology.
There are conflicting views on whether improvements in technological efficiency and innovation will enable a complete decoupling of economic growth from environmental degradation. On the one hand, it has been claimed repeatedly by efficiency experts that resource use intensity could in principle be reduced by at least four or five-fold, thereby allowing for continued economic growth without increasing resource depletion and associated pollution. On the other hand, an extensive historical analysis of technological efficiency improvements has conclusively shown that improvements in the efficiency of the use of energy and materials were almost always outpaced by economic growth, in large part because of the rebound effect or Jevons Paradox resulting in a net increase in resource use and associated pollution. Furthermore, there are inherent thermodynamic and practical limits to all efficiency improvements. For example, there are certain minimum unavoidable material requirements for growing food, and there are limits to making automobiles, houses, furniture, and other products lighter and thinner without the risk of losing their necessary functions. Since it is both theoretically and practically impossible to increase resource use efficiencies indefinitely, it is equally impossible to have continued and infinite economic growth without a concomitant increase in resource depletion and environmental pollution, i.e., economic growth and resource depletion can be decoupled to some degree over the short run but not the long run. Consequently, long-term sustainability requires the transition to a steady state economy in which total GDP remains more or less constant, as has been advocated for decades by Herman Daly and others in the ecological economics community.
The OECD 2019 Report "Environment at a Glance Indicators – Climate change" points out that the issue of diminishing GHG emissions while maintaining GDP growth is a major challenge for the forthcoming years.