Introduction

Our economic growth has long been coupled with declining resource prices – until recently. In the last decade, the increasing affluence and size of the world's population appears to have reversed the trend of falling resource prices. An ongoing path of ever greater consumption of resources is meeting constraints in stable, secure availability of some resources. We see unsustainable over-use of environmental resources and increased price volatility in several markets.

Already, many countries and businesses have responded to these megatrends. Like them, the has EU recognised the essential role in economic stability and growth played by both mineral and environmental resources - including rare earth metals, water, climate, fish, biomass, fertile soils, clean air and ecosystem services.

So as an over-arching goal – set in the Europe 2020 Strategy - the EU has chosen to move to an economic system that is efficient in the way that it uses all resources. We now face choices on the pace of change and how to best manage transition. Good policy offers short and long-term economic, social and environmental benefits from efficiency gains. It need not create net additional costs. But there will be winners, and losers.

Noting the progress already made in resource-efficiency, this Staff Working Paper sets out the evidence behind the Roadmap to a Resource Efficient Europe. It identifies the barriers to the market delivering on its own and how to remove those barriers.

TABLE OF CONTENTS

Introduction. 1

1........... Challenges and opportunities for Europe. 3

1.1........ Why is economic transition needed?. 3

1.2........ Challenges and Risks for Europe. 6

1.3........ Opportunities for the EU.. 9

1.4........ International, Business and other Stakeholder viewpoints. 9

2........... Costs and Benefits of the Transition to a Resource-Efficient Europe. 11

2.1........ Potential benefits of improved Resource Efficiency. 12

2.2........ Potential Costs around Transition. 15

3........... Making Europe resource efficient 19

3.1........ Several problems hold back the EU economy. 19

3.2........ Policy Objectives in the transition to a resource-efficient, low-carbon economy. 22

4........... Transforming the economy. 24

4.1........ Actions in an interconnected world. 24

4.2........ Target Areas for Action. 25

5........... Governance and Monitoring: A new pathway to action on resource efficiency. 26

5.1........ Consequences of Existing Governance Arrangements. 26

5.2........ Governance change for facilitating transition. 27

5.3........ Other key areas of governance. 31

1. Challenges and opportunities for Europe 1.1. Why is economic transition needed? 1.1.1. Global resource use is increasing

Global demand for resources is increasing, driven by population growth and improving standards of living. In the 20th Century, the world experienced a 4 fold growth in population and a 23 fold increase in economic output. We increased our fossil fuel use by 12 times, our fishing catches by 35, and our water use by 9. Globally, extraction of material resources grew by a factor of 8, ores and minerals by 23 times. Materials are now harvested at a rate of 47-59 billion metric tonnes a year.[1]

Almost all predictions are that resource demand will continue upwards, given the underlying trends driving demand. In particular, the world's population grows by 200,000 people a day[2] and is expected to exceed 9 billion by 2050, and by 2030, there will be 3 times the current number of people with ‘middle class’ consumption levels in the now-developing world[3].

As a result, demand for food, feed and fibre could increase by 70 % by 2050.[4] Some predict that global food prices will increase by 120-180% by 2030, accelerating past trends in price rises.[5] Global demand for energy and water is expected to rise by 40 % over the next twenty years, if no major policy changes are implemented. If present trends continue, 1.8 billion people will be living in water-scarce regions in 2025 and two thirds of the world population could be subject to water stress.[6]

More detail on past trends in resource use and their drivers are set out graphically in Annex 7.

As a consequence, after decades of growth based on declining real resource prices, there are indications that the world has entered a new phase, of increasing real resource prices - see Figure below.

1.1.2. European and global resource use is interlinked

In the globalised economy, the EU is increasingly impacted by global changes in resources, including climate, material availability and food prices. We use 16 tonnes of materials per capita/year in the EU, more than 8 billion tonnes/year[7], of which one-fifth is imported – often the higher value, less bulky resources.

Global scarcity, volatility and shocks are transmitted to the EU economy – as illustrated by component supply concerns after the 2011 Japan earthquake or price volatility in global commodity markets. Systematic figures are not available for the importance of resources to business but as an illustration 40% of total German manufacturing costs relate to material inputs, whilst the energy share of those costs is around 2%[8].

The growth in the EU economy is also contributing to pressure on other countries (our 'footprint').[9] Additionally, every kg of imported products is responsible for 3 to 6 kgs more materials outside the EU, amplifying pressures.

1.1.3. These global megatrends are unsustainable

We can only grow infinitely in a finite material world by reduction in the material we use to grow. Several scenario exercises back this view. However, existing trends in resource efficiency are not sufficient to reduce the material intensity of our economy, even in the EU. Measured purely by mass of material, the EU’s economy’s resource efficiency has improved at a rate of between 1 and 2% a year, so below the rate of economic growth.

One result is the unsustainable depletion of environmental resources (fish, timber, water, fertile soils, clean air, biomass, biodiversity) and the environmental systems of which they form part. Some resources are already beyond their global sustainable limits or tipping points.[10]

Crossing of thresholds can bring about sudden changes in ecosystems (for example, in forest collapse, climate systems or fish stock collapse). This can lead to similarly non-linear constraints on growth.

60% of the world’s major ecosystem goods and services - which underpin livelihoods - have been degraded or used unsustainably.[11] In these, economic growth has come by running down natural assets faster than the stocks can regenerate. In the absence of action, the rate of global biodiversity loss is not expected to slow. It may get worse as climate change increases pressures in some regions. For example, changing Mediterranean rain patterns will put more pressures on water resources and so biodiversity in the region.

Figure : Global environmental thresholds

Earth-system process || Control variable || Boundary value || Current value || Boundary crossed || Preindustrial value

1. Climate change || Atmospheric carbon dioxide concentration (ppm by volume) || 350 || 387 || yes || 280

Change in radiative forcing (W/m2) since the start of the industrial revolution (~1750) || 1.0 || 1.5 || yes || 0

2. Biodiversity loss || Extinction rate (number of species per million per year) || 10 || > 100 || yes || 0.1–1

3. Biogeochemical || Anthropogenic nitrogen removed from the atmosphere (millions of tonnes per year) || 35 || 121 || yes || 0

Anthropogenic phosphorus going into the oceans (millions of tonnes per year) || 11 || 8.5–9.5 || no || -1

4. Ocean acidification || Global mean saturation state of aragonite in surface seawater (omega units) || 2.75 || 2.90 || no || 3.44

5. Land use || Land surface converted to cropland (percent) || 15 || 11.7 || no || low

6. Freshwater || Global human consumption of water (km3/yr) || 4000 || 2600 || no || 415

7. Ozone depletion || Stratospheric ozone concentration (Dobson units) || 276 || 283 || no || 290

8. Atmospheric aerosols || Overall particulate concentration in the atmosphere, on a regional basis || not yet quantified

9. Chemical pollution || Concentration of toxic substances, plastics, disruptors, heavy and radioactive contamination into the environment || not yet quantified

Source: "A safe operating space for Humanity", Rockstrom, et al (2009)

1.2. Challenges and Risks for Europe

Both the economy and environmental resources form part of systems in which imbalances present risks, and we now know of some severe imbalances affecting resources. These include  a mismatch between the use and regenerative capacity of natural systems. Noting this, the OECD has identified risks of major systemic collapse in growth[12] due to changes in resources:

· Reduced competitiveness of firms, or sectors, subject to price rises, security of supply or volatility in their resource inputs, where competitors are more resource efficient.

· Increasing supply security implications, with future scarcity in basic resources, including water, food, climate services and soil being a threats to international stability, ie through immigration, and social unrest.

1.2.1. Volatility, Security of Supply and Price rises

Increasing scarcity in resources can lead to price volatility in globally traded markets. Even for resources where there may not be geological resource scarcity, then scarcity may reflect reduced availability due to political issues, and closed or contracted sales of resources. This scarcity can make global markets shallower, and more susceptible to price volatility, exposing EU companies to economic shocks.

In particular, there are risks for some critical raw materials that are essential components for key industries in the EU, such as the ICT and aerospace and "green technologies"[13] [14]. For example, platinum is needed for catalysts in vehicles, yet most of the world’s supply of this critical element is found in South Africa. Other examples are gallium, indium, Rare Earths (e.g. neodymium, platinum and tungsten). Their short to mid-term availability is limited, providing good grounds for distortion of the market, particularly as demand growth may be very high - for rare earth metals neodynium or germanium demand is predicted to increase more than 5 times by 2030.

Source: "Natural Resources Consumption and Sustainable Industrial Development", S. Suh, Sustainable Industrial Development, Fall Issue 2008. Price volatility is shown for different key elements

The Figure above illustrates both the volatility and the annual price increase for certain key materials. The one below shows expectations of future prices[15]. In the past five years, 75% of European businesses have experienced an increase in material costs[16].

A fuller overview of the risks associated with certain materials can be found in Annex 7

1.2.2. The Scale and Nature of the transition required

The scale of improvements in resource efficiency needed in the EU to respond adequately to global trends is very large. Whilst different resources have different trends, indications of the scale of change can be made by references to resources in aggregate:

· The World Business Council on Sustainable Development, points to the need for an increase in resource efficiency of factor 4 to 10 by 2050 (which implies that each unit of production is produced using respectively 25% and 10% of its current resource inputs).[17]

· Scientists researching resource trends point to similarly strong innovation needs, for example, pointing to a Factor 5 improvement[18] by 2050 (20% of today's material usage/unit of production).

This level of improvement requires a step change in innovation in resource productivity. This change may be one of the future drivers of global growth. One popular view of the world economy sees growth as a series of 'Kondratieff cycles'[19]: periods of long-term prosperity arising from structural change. The structural change comes as a response to new conditions or new technologies. Some commentators believe environmental technology/resource efficiency to be one of the drivers of profound global structural change that will bring in the next long-term period of growth.

1.3. Opportunities for the EU

Megatrends in resources also bring opportunities. They will bring relative competitive advantage for those states and those firms that adapt fastest, most fully and most efficiently.  Resource Efficiency is one route to adaptation. It involves the spread of technologies, business models and behaviours that allows the production of greater value for the EU with fewer resource inputs.

Definitions

Resources: are all the resources that are inputs into our economy - metals, minerals, fuels, fish, timber, water, soil, clean air, biomass, biodiversity and land and sea. (See Annex 7)

Resource efficiency: is a way to deliver more with less. It increases aggregate economic value through more productive use of resources over their life cycle. It requires using those resources in a sustainable way, within the planet's long-term boundaries. This includes minimising impacts of one resource's use on other resources, including the environment.

Resource efficiency can allow the EU to reduce vulnerability to future resource volatility or scarcity, whilst reducing costs through productivity savings. Many of the win-wins from improved resource efficiency arise from the inter-linkages between different resources that are frequently ignored.

For example, McKinsey Global Institute looked at the strong linkages between resource use and greenhouse gas emissions. They estimate that resource productivity improvements in land, water, energy (excluding any changes in primary energy mix) and steel would achieve in 2030 around 50% of the gap between our current GHG emission path and the path needed to keep atmospheric concentrations to 450ppm.

1.4. International, Business and other Stakeholder viewpoints 1.4.1. International

The EU is one of many to identify the benefits of a transition to a more resource-efficient economy. At the international level:

· the OECD's Green Growth Strategy[20] states how economic growth can be combined with avoiding unsustainable pressures on the quality and quantity of natural assets.

· the G20 has committed to phasing out inefficient fossil fuel subsidies as a way to reduce budget deficits, deliver growth and reduce environmental harm.

· the United Nation's Environment Programme (UNEP) Green Economy Report[21], makes the case for investing two per cent of global GDP in greening ten central sectors of the economy in order to shift development onto a low-carbon, resource-efficient path.

At the national level too, many countries have launched strategic plans that put resource efficiency as their major priority. For example:

· Japan has introduced a number of visions and laws that represent a conceptual turn from a throwaway society in order to become a Junkangata Shakai (sound material-cycle society)[22] and has reduced its resource use by 14% from 2000-05 on top of previous periods of reduction.

· China's latest Five Year Plan (11th) represents a change in development philosophy, aiming for an ecologically viable society, with greater industrial efficiency. China's investment in the green economy has been estimated by some to be greater than that of the US and EU combined.[23]

· The Republic of Korea's 'Framework Act for Low Carbon Green Growth' establishes a legal framework to foster green technology and industries, to create new green jobs, to respond to climate change, to control energy targets, to promote a green lifestyle for citizens and to promote sustainable development.

In Europe, several Member States have set out strategies and goals for improving resource efficiency. Several reports summarise the wide range of resource efficiency strategies and policy actions taken.[24] [25] [26]

1.4.2. Business Action

Corporate action highlights the belief of companies in greater resource efficiency to generate financial savings, and reduce exposure to future risks of scarcity. Many multinational companies have set ambitious goals regarding resource efficiency and eco-innovation. For example:

· one consumer goods multinational has committed to halving the resource impacts of its products over the next 10 years and source 100% of its agricultural supplies from sustainable sources.[27]

· a large retailer expects to save $3.4 billion from its 5 year plan to reduce packaging.[28]

· two international chemical firms have estimated that, respectively, they have saved $9 billion over 15 years and $5 billion over 20 years from energy efficiency.

However, many businesses are not fully aware of the potential risks of potential advantages from natural resource scarcity on their futures.

The World Business Council for Sustainable Development (WBCSD) and the World Economic Forum are representative of many leading international business organisations. These organisations see resource efficiency as a strategic response with short-term benefits. The WBCSD Vision's for 2050 (see Annex 1) sets out the steps for transition businesses need, with significant changes by 2020.

1.4.3. Stakeholders' views on resource efficiency expressed to the European Commission

The Commission sought and received the views of many businesses and interest groups during the development of its Roadmap, through position papers, personal interactions, debates and a public internet consultation. Broadly, the views of stakeholders are:

· Resources are under pressure: the exact nature of this pressure varies from resource to resource, including the groups affected and whether the impacts are local, national or global.

· Pressures are increasing: there is wide recognition that growing demands and threats to supply make this a timely moment to have a more strategic view of Europe's resource performance.

· Resource efficiency is central to many objectives: different stakeholders put the stress on different issues though, business of the potential for it to improve competitiveness, NGOs on the potential for it to improve environment.

· Industry groups are concerned about the access to raw materials and proper management of primary and secondary resources. Businesses called for the development of a sound knowledge base, more policy coherence, indicators to measure progress and the application of a full life cycle perspective.

· Different stakeholders recognise different possible synergies and different possible trade-offs, in particular business is wary of possible impacts on current business plans of environmental policies. However, there is broad consensus that more coherent policy can be beneficial for meeting a wide range of policy objectives.

· Many of the policy tools are already in place or in the pipeline, and focus is needed on improving their operation and cross-cutting gap-filling and consistency.

More details can be found in Annex 2.

2. Costs and Benefits of the Transition to a Resource-Efficient Europe

The benefits and costs of the transition depend on how smoothly the EU economy adapts to the changing megatrends and how the speed of response compares to international competitors. For example, waiting for sudden or forced change, induced by crisis, or slower adaptation than competitors would be likely to impose more costs than gradual change.

Our economy is in constant change as innovation introduces new technologies, consumer preferences change and competition encourages some firms to grow at the expense of others. The EU's Industrial Policy for the Globalised Era discusses how the technologies, firms and sectors which are most successful now will not all be those which are most successful in the future. A transition to a resource-efficient, low-carbon Europe is part of this ongoing process of renewal.[29] 

To assess the benefits and costs of a transition to resource efficiency, we have to make comparisons between different growth paths, any of which has costs from continuous renewal and competition in the economy.

2.1. Potential benefits of improved Resource Efficiency

In the short to medium term[30], a resource efficient growth path would bring:

1.           Improved productivity: as businesses reduce costs and so improve their competitiveness.

2.           Growth and job creation: a faster pace of technological and organisational change will benefit the EU and open new global markets, supporting new jobs.

3.           Environmental benefits and resilience: improved management of resources can, for example, be an efficient way of reducing carbon emissions at the same time as strengthening EU resilience to the effects of climate change.

4.           Macroeconomic stability: by reducing security of supply issues, market volatility in important resources and so reducing pressures from asymmetries within the Eurozone. It can also support fiscal reform.

2.1.1. Improved productivity

There is significant untapped potential for resource efficiency to quickly increase the productivity of the economy by cutting costs for businesses and consumers. The values of such gains vary from resource to resource, from business to business. Given this, the potential can only be shown based on examples:

At the level of individual countries:

- UK business could save around £23bn per year from resource efficiency measures that are either no or low cost[31]. The majority of these savings come from using raw materials more efficiently and generating less waste (c. £18 billion). The sectors with the greatest potential identified were chemicals / minerals (c. £4 billion), metal manufacturing (c. £4 billion), power and utilities (c. £3 billion), construction (c. £3 billion) and road freight (c. £2 billion). A further £33bn per year of annual savings could be realised from expenditure with payback periods of longer than 1 year.

- Empirical evidence suggests that a 10-20% reduction in resource and energy use in Germany is possible, with annual cost savings of 20-30%[32]. The payback period was one year in the case of materials, with estimated increase in resource productivity of 2.9% per year. For materials, this saving would be worth up to €160bn/year in Germany alone.

At the European level:

- The Union's energy efficiency target of saving 20% of energy by 2020 could cut consumers’ bills by up to €1000 per household a year and improve Europe’s industrial competitiveness creating up to 2 million new jobs by 2020.

- 20-40% of Europe’s available water is being wasted. Losses of water in the supply network are often substantial in water-scarce regions in Europe. For example, in France and Spain up to 34% of water is lost before it reaches the consumer, but in Denmark only 7%. Water efficiency might be improved by nearly 40% through technological improvements alone.

Resource efficiency is an important issue for EU industries, and a study found that some industries have improved substantially in recent years, although there is still room for improvement, though the ease of these improvements varies.[33] Many of the gains from resource efficiency for businesses and consumers can be achieved at low or zero cost or where there are costs they are not large investment costs. For gains with longer-term payback periods, investments would be necessary. The absence of available finance is one of the barriers addressed in Annex 3.

2.1.2. Growth and job creation

Resource efficiency that encourages (or is based on) eco-innovation and improves the productivity of the economy will improve growth and job prospects at the macroeconomic level.[34] For example:

- estimates of the impact of improved resource efficiency in Germany suggest that the economic benefits would include a creation of more than 1 million jobs and an improved growth rate.[35]

- economic modelling[36] points to the possibility of policy measures bringing about resource efficiency that could eventually boost GDP by 4% (after 15 years) and significantly reduce unemployment.[37]

Particularly high employment growth potential has been identified in construction, ecosystem and resource management, renewable energy, and recycling sectors. In order to build a sustainable future growth, employment in these sectors needs to be of high quality and move away from precarious and low-paid working conditions. In this respect, jobs created in sectors linked to sustainable growth are often more secure, with high potential for exports and economic value creation.

First-mover advantage in resource efficiency can capture growing markets. The EU holds roughly one third of the world market for environmental technologies. Currently, the global market for six market segments in eco-industries has been estimated at €1.7 trillion per annum,[38] and is growing by around 5% per annum[39].

The nature of this advantage is continually shifting. For example, the EU used to be the dominant producer of solar cells but now China's solar cell industry is the world's largest. According to a recent report by the World Wildlife Fund for Nature, China's green technology sector growth is outstripping all other nations. While Denmark earns the biggest share of its national revenue from clean technologies, China's sector has grown by 77% a year. China earns more than 44 billion Euros each year (more than any other country), or 1.4% of its gross domestic product from clean technology.

This creates competition, but also particularly strong export markets as China and other developing countries move to better manage their resources. Parts of the EU have moved up the value chain: for example, exporting the equipment used to make thin-film solar cells rather than the cells themselves, as in the past.[40]

2.1.3. Environmental Benefits and Improved Resilience

Improving resource efficiency will help safeguard the environment, and reverse the unsustainable trends documented in Europe's State of the Environment Report 2010[41]. It will reduce pressure on our 'natural capital': such as biodiversity and ecosystems, which provide goods and services that benefit the global economy and are essential for key economy sectors, for example food and drink, raw materials, medicine, cosmetics. For a number of other resources (mainly renewable resources), resource efficiency can help reverse unsustainable trends, for example from pollution.

Decreased material use reduces harm to environmental resources, and therefore improves the resilience of ecosystems and ability to cope with natural hazards. This will have economic benefits, as Member States' exposure to future fiscal risks depends on the resilience of the natural and man-made infrastructure to extreme events (flooding, storms and sea-level rise) amongst other factors.[42]

Protecting these resources does not necessarily mean lost short-term opportunities:

- In Scotland, the public benefits of protecting the Natura 2000 network of protected areas are estimated to be more than three times greater than costs, including direct management and opportunity costs.

- A programme to restore several wetlands in Danube (37 sites in the Lower Danube Green Corridor) will cost €183 million but will retain vital adaptive functions of the ecosystem and will likely lead to earnings of €85.6 million per year. Without restoration, the 2005 flood damages were €396 million.

Much EU eco-innovation should stimulate greater resource efficiency outside the EU (for example through the sale of technologies) and so reduce the depletion of global resources. PBL[43] estimate that global energy use could be reduced by over 30% in 2050 without major changes in consumer habits through such dissemination, halving the gap between baseline greenhouse gas emissions and the 450 ppm CO2-eq mitigation scenario.

On the other hand, increased productivity from technology also frequently leads to a 'rebound effect' as improved efficiency translates into higher demand for resources. Without a well-designed policy mix this offsets the environmental benefits (and those from reduced resource exposure) (see Annex 5 ).

2.1.4. Macroeconomic stability

Terms of trade and resilience

Decoupling economic growth from the use of natural resources improves the terms of trade and eases current account pressures. A shift to energy and commodity-efficient production patterns would also strengthen the resilience of the EU towards price shocks in commodity markets.

Single Market and Eurozone tensions

It can also reduce the impact on the single market and eurozone of commodity price developments asymmetrically affecting European economies due to the different weight of energy and food in EU Member State's expenditure.

Security of supply and market volatility

Resource efficiency is a route to tackling security of supply issues and market volatility in important resources, including critical metals and minerals, fresh water, fish and food commodities. These issues affect many sectors of industry, including manufacturing, water and energy supply and their customers and place strain on the single market and eurozone through asymmetric impacts of resource price developments.

Productivity gains and support for fiscal reform

As well as such relatively direct benefits for growth from productivity gains, resource efficiency can also support fiscal reform and help balance public finances by finding new sources of revenues and promoting employment.[44] This can occur both through providing a new source of revenues, and through the reforming of subsidies cutting public expenditure.

2.2. Potential Costs around Transition 2.2.1. Costs of slow or retarded transition

If the EU economy adapts too slowly, costs arise from exposure to the risks and volatilities of resource scarcity. Competing firms or countries with relatively better resource productivity or resilience to resource shocks will gain competitive advantage, which may slow EU growth. Developing countries may develop strategic advantage over the EU, as they are less locked into physical infrastructure and institutional rigidities based on old growth models.[45]

Slow transition now suggests more sudden transition later, in response to crisis or lack of competitiveness which is likely to incur greater transition costs. Slow change presents increased damage to environmental resources, making their recovery more difficult. The opportunities mentioned above are lost.

The OECD has argued the processes of economic restructuring ultimately strengthen the competitiveness of economies. As part of this, new industries will grow at the expense of others, implying a reallocation of resources from old industries to new industries.

2.2.2. Costs of the process of change

Adaptation to resource megatrends over time will involve structural economic change. Structural change brings costs from frictions in people or capital investments moving from one activity to another. It involves updating of technologies, innovation, skills.

The costs of transition will also crucially depend on three factors: how well change is predicted, the pace of change, and the flexibility of the economy.

A)        How well the economy predicts and meets change

If businesses and economies are able to predict changes, they can reduce costs by avoiding investments that are soon obsolete. Instead, they can pick investments that will thrive in the changed conditions. An example of a stranded investment would be energy infrastructure that did not factor in future switches in energy sources. There are short-term actions that are relatively risk-free, but long-term investments depend on a good understanding of future resource prices and constraints.[46]

B)         Pace of change

Overly-fast rates of change can exceed capacity to adapt and innovate, leaving firms or countries stranded with mismatching assets and skills to the new conditions. The ideal rate of adaptation is one that matches the capabilities of the economy as a whole to adapt.

C)        Flexibility of the Economy

If an economy is more flexible – if it can more easily move workers and investments into new ways of production – it suffers lower costs from change than economies that have more inbuilt rigidity. Flexibility comes from many factors: including labour markets, modernity of infrastructure, the degree of entrepreneurship and the ability to finance investments.

Box : Transition costs in labour markets

The transition to a low-carbon and resource-efficient economy will involve change as:[47]

(1) Substitution of employment will take place, for example due to shifting from fossil fuels to renewable energy sources  or from waste land filling to recycling;

(2) Particular jobs may be eliminated without direct substitution (e.g. when the use of certain packaging materials is discouraged and their production ends);

(3) Additional jobs will be created in several areas, such as in the manufacturing of pollution-control devices which are added to existing production equipment;

(4) Many existing jobs (i.e. plumbers, electricians, metal workers, and construction workers) may need changed skills due to changed best practice working methods.

The net effect is expected to be either no or a slight positive impact on the employment level. However, the overall impact could be negative if structural employment increases due to workers' existing skill sets not matching future needs.

The costs from structural unemployment will depend significantly on:

· How well workers and firms look at future skills needs and train for their future opportunities. 

· Whether change in any region or sector is gradual, allowing progressive adaptation of skills by individuals or whether the labour market is suddenly flooded with redundant workers[48]; and

· How easy it is for workers to re-train or move to different employment.

Where economies face costs, governments can choose to reduce these by helping in any of these areas, for example: easing of transitions and the support of workers during transition. Policies should focus on preserving employment in the economy, not particular jobs.[49] [50] They can, for example, anticipate future skills needs for green and greener jobs and adapt education and training systems accordingly.

2.2.3. Comparison with the past and other potential futures

The costs from adaptation through greater resource efficiency need to be compared against the costs to the economy from structural change in the past, and compared to other realistic scenarios of future growth.

Structural change is an ongoing process. Any economy is in constant change with growth and relative decline of different sectors and skill sets, generating constant costs from change. Past structural change has shown that new jobs associated with new businesses are generally more productive than those that have been lost as a result of new ideas and adaption to market demands.[51]

The table below illustrates this trend of structural change by showing how labour has shifted between the primary, secondary and tertiary sector between 1980 and 2008. Over the same period the aggregate size of these economies increased substantially, with annual average growth rates in GDP or 1.5-2.5%. This indicates that the 'business as usual' of an economy is not to stay static, but to undergo change, and the costs that come with it.

Table:  Sectoral Structural Change in Selected Economies (% of Gross Value Added)[52]

Selected economies || 1980 || 2008

Agriculture || Industry || Services || Agriculture || Industry || Services

Poland* || 8.2 || 39.4 || 52.0 || 3.7 || 32.0 || 64.2

Spain || 6.3 || 37.0 || 55.7 || 2.6 || 28.4 || 69.0

UK || 2.0 || 40.7 || 57.2 || 0.9 || 23.6 || 75.2

Germany || 2.4 || 41.1 || 59.9 || 0.9 || 29.8 || 69.3

US || 2.9 || 33.3 || 63.7 || 1.3** || 21.8** || 76.9**

The ‘baseline’ levels of adjustment could be taken as the levels that have been seen in past decades – for example, in the UK some 25% of private sector jobs are lost every year but another 25% are created[53].

Whether the costs of adaptation to resource trends are higher or lower than the costs of continuous structural change in the past will depend on the factors mentioned in 2.2.2 above. Yet, it seems likely that the transition to resource-efficiency could be achieved through a change in the focus of innovation in the economy, rather than in the rate of structural change. 

2.2.4. Identifying winners and losers

In any growing economy there are winners and losers. Policy makers can help facilitate transition by identifying potential winners and losers, to help target policy. Potential losers are likely to be particularly visible, seeking to preserve the status quo to postpone short-term costs:

"The short-term negative consequences of structural change, i.e. those enacted through the downsizing (or closure) of enterprises, are relatively identifiable, publicly visible and often strongly concentrated in particular sectors. The positive effects of structural change, both in terms of new companies and the expansion in existing companies, are generally less visible, much less publicised and more evenly spread throughout the economy"[54].

The potential losers from the transition to resource-efficiency can not be easily grouped by sector.  In any sector, winners will be those firms that adapt successfully. This will often include those that make investments in innovation earlier rather than later, even where this implies short-term costs. 

For example, greater efficiency in the use of metals (eg, in construction) in the economy may reduce the mass of a metal sold but simultaneously make the metal more valuable, as it achieves its purpose (for, instance structural support) with less. Those firms which adjust to capture the added value will thrive at the expense of those that have a mass based business model.

In general, the losers will be those firms or individuals who have heavily invested in capital that is not well adapted to a resource efficient economy, either in terms of their production processes, infrastructure or the products and services that they offer.

In terms of individuals or regions, those facing short-term losses will be immobile employees without the skills sought in the future economy, and regions which have invested in resource intensive industry and which do not have a suitable policy mix to support adaptation. Policies for managing transitions may require particular support for low-skilled workers.

At the same time, the aim of being more resource efficient is not to drive resource intensive sectors out of Europe. On the contrary, it is important to keep industry and its supply chain in Europe to maintain growth and jobs. Policy can respond to changing conditions by altering the distribution of costs. For example, removing artificially low resource prices provides the right incentives for productivity gains, but creates winners and losers between competitors within an economic sector. It changes the basis of competition – giving added advantages to those firms which adapt best.

3. Making Europe resource efficient

Some progress on resource efficiency is already happening as businesses, households, Member States and international institutions are taking action. Resource productivity has improved by around 2% per annum (if measured by Euros per kg of Domestic Material Consumption); in many contexts we have relative decoupling of economic growth from environmental harm; and we are reducing our reliance on fossil fuels by increasing energy efficiency and developing alternatives.[55]

Yet there are a number of problems that reduce the economic system's ability to predict change and its flexibility to respond to that change. These artificially slow the EU's rate of transition to greater resource efficiency. They constrain the EU's natural ability to respond to changing conditions: either to seize the new opportunities and avoid the costs and the risks to growth, security and future well-being identified above.

3.1. Several problems hold back the EU economy 3.1.1. Constraints on the ability to predict

Knowledge gaps about future risks constrain firms and policy makers from planning for the future. For example, there are significant uncertainties how environmental systems (like weather-linked water supplies) will change and the impacts they will have. Many firms are not aware of risks up their complex, global supply chains.

Consumers, firms, policies and parts of the economic system (e.g. financial markets) are often shaped by short-termism in decision making. Firms and households can have short pay-back periods for investments, which could lead to underinvestment for the future. For example, one study found that in a particular context firms are so risk averse that returns on investment must be perceived to be ‘air-tight’[56] with figures of 27% needed[57]. Policies often focus on short-term goals.

Ability to Predict + Respond - Policy incoherence - Market failures: externalities, missing markets, not pricing scarcity

Figure: Resource inefficiency: barriers, threats and impacts

3.1.2. Constraints affecting the ability to predict and respond

Market Failures

Market economies are good at making the right purchases and investments when they are working well, for example, when the price of a good matches its real cost. Surprisingly often, there are still barriers - market failures - that hold back markets from working well. This is particularly the case for decisions or purchases which affect quality of life in the future, or direct or indirect effects on environmental resources (like climate or ecosystems). The globalisation of resource supplies has made many impacts and risks more remote, so less well reflected by markets.  These include:

· Failure to reflect future scarcity of resources in prices, leading to unsustainable use.

· Misalignment of incentives along a value-chain. For instance, the landlord-tenant problem, where the person responsible for investments (landlord) will not benefit from any increases in energy or resource efficiency, so will under-invest. This can also apply within supply chains.

· Indirect costs or 'externalities': Where there are indirect consequences of resource use, they are often not considered in public and private decisions. Many resources are economically valuable, but under-priced and usually off firms' balance sheets. This leads to the mis-management of these resources, with weak incentives to improve efficiency of their use or management.[58] Many of these are the impacts from the life-cycle (eg. extraction, processing, use, waste) of one resource on another (for example of metals on the climate system, or of agriculture on water availability.

· Problems with management of open access or shared resources, or 'missing markets'. There are resources with unclear property rights (e.g. fish stocks, forests) where people have very weak incentives to collectively manage the resource well for the future.

This mean that market signals, particularly price, often point decisions away from resource efficiency.

Policy Inconsistency

Some policy interventions do the same, whilst inconsistency between policies reduces predictability. Policy – made for good reasons in one field - can have unintended consequences that holds back efficient use of resources, for example:

· Subsidies that promote resource use can be very large and have significant indirect impacts.

· Market rules and regulatory structures can unintentionally hold back innovation. For example, bidding systems for power sales that are conducted one-day ahead hinder the participation of wind-power generators, who can more reliably predict their output around 3 hours ahead.[59]

As external conditions change, policy is sometimes hard and slow to reform, leading to policies that hold back transition. For example, tax policies put in place for one reason, may have increasingly costly distortions on the market that slow adaptation, but these indirect effects are often not considered by segmented policy-making governmental structures.

Policy inconsistency often also arises from the complexity of trying to remove market failures, which can cause high costs of intervention. It also comes from policy being shaped in favour of groups for whom policy change bring short-term loss of income, rather than longer time period, more diffuse but larger income gains.

3.1.3. Constraints affecting the ability to respond

Economies have a tendency to respond slowly to some changes, because they (and the firms and consumers that form them) are partly 'locked-in' to paths determined by past investment decisions, existing economic structures and prevailing institutions. In addition, firms and people tend to be risk-averse, which can constrain the ability of firms, consumers and societies to adopt new innovations[60]. Some examples are:

· Technological lock-in when established technologies have a price advantage over innovations, or where the technology forms part of a physical or social system of which the other parts are not changing. Examples are technologies linked to infrastructure, as with transport (eg. electric vehicles lacking charging points) or networks (the advantage of communication technologies is their ability to communicate with the technologies that other people already have).

· Lock-in to consumption and behavioural patterns (eg. food choice, or waste disposal behaviour). Behavioural studies observe that people tend to stick to habits, social norms or past behaviours. This holds back diffusion of product and organisational or social innovation, hindering the creation or expansion of new markets.[61]

· Skills and business models may continue to be strongly based on techniques and information learnt in previous years.

· Insufficient incentives for innovation in resource efficiency on the scale required in particular to stimulate greater financial and human resources in these areas

3.2. Policy Objectives in the transition to a resource-efficient, low-carbon economy 3.2.1. The Europe 2020 Strategy

To secure smart, sustainable and inclusive growth into the future, EU governments have agreed on an economic strategy to take the EU to 2020. The Europe 2020 strategy recognises that a good transition to resource efficient Europe requires policy to remove the barriers described above. Across the EU, a very wide range of policies aiming at improving resource efficiency are already in place[62] [63] However, even with these policies, current trends – e.g. in the environment - are failing to meet EU objectives.[64]

The OECD argues that leadership is needed from finance and economic ministries, without which the transition goals will be impossible to achieve, although environmental policies play a central role.[65] To help deliver the necessary policy change, one of the Europe 2020 Strategy's key initiatives[66] established resource efficiency as the guiding principle for EU policies on energy, transport, climate change, industry, commodities, agriculture, fisheries, biodiversity and regional development.

3.2.2. Objectives of the Roadmap to Resource Efficient Europe

The Roadmap aims to remove the barriers holding back transition that are not yet tackled by sectoral policy. It also aims to create a framework that improves coherency across existing and new policies.  This is partly done by agreeing the long-term goal set out in the Roadmap:

By 2050 the EU has grown in a way that respects resource constraints and within planetary boundaries, thus contributing to global economic transformation. Our economy is competitive, inclusive and provides a high standard of living with much lower environmental impacts. All resources are sustainably managed, from raw materials to energy, water, air, land and soil. Climate change milestones have been reached, while biodiversity and the ecosystem services it underpins have been protected, valued and substantially restored.

The Roadmap aims at removing the following barriers:

Barriers to the ability to predict

· Deliver research to fill the gaps in our knowledge and provide the right information.

· Creating clear milestones, indicators progress in resource efficiency and targets to provide guides on the future direction of the economy and policy.

· Increasing the flow of information on resource risks and cost-effective efficiency opportunities between commercial partners in supply/value chains that leads to the uptake of new sustainable practices and stimulates breakthroughs in innovation.

· Encouraging more long-term innovative thinking in business, finance and politics, including information exchange within government develops that forward thinking, cost effective regulation.

Barriers that hold back both the ability to predict and respond

· Removing market failures, including improving management of open access resources.

· Reduce uncertainty on future returns through providing clear, consistent, credible market signals on direction of relevant policies.

· Promoting exchange of information between government ministries toward common goals, to improve policy coherence, find synergies between policy goals and resolve trade offs.

· To tackle lock-in to existing consumption patterns and behaviours through policy that take into account most recent science on the influences on consumer behaviour.

Barriers to the ability to respond

· Addressing taxes and subsidies that distort the real costs of resource use.

· Increase public and private investment in technological innovation, including through increasing the priority and funding for research and innovation on resources.

· Increase flexibility in labour markets, supporting training in the right skills.

· Ease short-term adaptation cost concerns, with complementary, transitionary policy measures to facilitate policy reform, - including international short-term competitiveness concerns of less-adaptive firms and costs for particular social groups - and seeking a consensus with international partners to move in a supportive direction.

4. Transforming the economy 4.1. Actions in an interconnected world

Very large opportunities for cost savings coupled to reduction in resource use and impacts remain, despite past progress towards more resource efficient supply. Seizing these opportunities could allow the EU to transform its economy whilst improving competitiveness.

The Resource Efficiency Roadmap covers a wide range of areas - energy, transport, climate change, industry, commodities, agriculture, fisheries, biodiversity and regional development. The solutions are proposed to be taken at all levels of society, by individual businesses, business associations, consumers, regions, Member States and, where there is added value, at EU level.

The majority of areas already have some targets or objectives that are the product of longstanding policy discussions between stakeholders. The Roadmap sets out actions to help these objectives to be met more easily (i.e. at lower social cost), more quickly or with less chance of failure.  Many of the means to do this lie in exploiting synergies inherent in the inter-connections between economic sectors and policy areas.

There are interlinkages across the economic system, the use of resources and environmental impacts: supply is related to demand, investment is related to perceived opportunities, prices for one resource depend on prices of its potential alternative. Indirect impacts and feedbacks create complex relationships. The box below illustrates one example, of the important interlinkages between resources and the economy.

One of the main conclusions in EEA’s State of the Environment Report 2010 states: ‘environmental challenges are complex and can’t be understood in isolation’. This applies equally to most issues around transition to resource efficiency.[67] Within the web of interconnections, changing one resource (or policy) may either cause other consequences - e.g. unexpected impacts elsewhere, or achieve little change to the system. This leads to many potential synergies:

· a number of feasible dematerialisation strategies such as increased recycling, lean manufacturing and prolonging product lifetimes could save up until 5162.5 PJ of energy. These energy savings would not only entail a reduction in the EU's GHG emissions of 15.6%, they would also reduce the need for water for energy generation, reduce the need for land to produce biofuels, and reduce the pressures on biodiversity from acidification and eutrophication.[68]

· a number of strategies including reducing food losses, improving agricultural practices and reducing power savings in farming could lead to a reduction of 25% of global warming and respiratory organics, a reduction of aquatic ecotoxicity of 68% and a reduction of 31% of acidification and terrestrial eutrophication.[69]

· mitigating climate change would halt adverse effects on ecosystems, whereas undisturbed ecosystems have been proven to play a crucial role for climate change mitigation and adaptation.[70] 

Many of the interlinkages can also lead to trade-offs:

· the production of biofuels: on the one hand the production and use of biomass can lead to greenhouse gas savings and have potential benefits to the environment, but on the other hand it can also increase other environmental pressures.[71]

· deployment of 'green' vehicles reduces the use of fossil fuels but increases the demand for electricity and certain raw materials, some of which are subject to supply restrictions and concentrated in a few geographical areas (e.g. rare earth elements for electronic components and fuel cells, lithium for batteries).

· land used to produce food may compete with land use for energy and both may compete with land which supports biodiversity or provides ecosystem services such as absorbing carbon from the atmosphere.

· some additives used in plastics can extend the preservability of packaged food, but pose serious challenges to plastics recycling.

4.2. Target Areas for Action

The actions to help smooth transition can be grouped into 6 areas for easier explanation, corresponding to the main barrier they seek to remove. This can tend to hide the inter- very significant connections between them. These areas of action are:

· Improving products and changing consumption patterns

· Boosting efficient production

· Turning Waste into a Resource

· Supporting Research and Innovation

· Phasing out inefficient subsidies

· Getting prices right

Issues between resources differ. The application of these actions is particularly needed on the where the existing barriers have the greatest effects.  In Annex 3 to this Staff Working Document, the rationale for areas of action and their application to key resources are described. These are:

· Ecosystem Services

· Biodiversity

· Minerals and Metals

· Water

· Air

· Land and Soil

· Marine Resources

Co-ordination of actions becomes important because each action has direct and indirect effects that pass further through the economic and environmental systems.[72] For example, a change in consumer purchasing has effects on suppliers' behaviour and, in turn, on their input suppliers. As these indirect effects can be very significant, bringing coherence would need the most important of these indirect effects to be considered in policy making.

In economic systems, the primary flow of interactions runs up and down from the final consumer through intermediary economic actors to raw materials suppliers. (This is sometimes called the 'value chain'.) Consideration of interactions in these value chains is a necessary step to finding synergies and new ways to remove long-standing barriers. The Roadmap considers what would be needed for three key areas of economic value:

· Food and Drink

· Buildings

· Mobility

Annex 3 describes the rationale behind working with these value chains.

5. Governance and Monitoring: A new pathway to action on resource efficiency 5.1. Consequences of Existing Governance Arrangements

Uncertainty around future policy and incoherence between policies are one of the barriers that hold back the economy's ability to predict change in resource scarcity and in its ability to respond. Weak coordination can lead policies to be working against each other. This can happen where policy is formed on the basis of different information or different prioritisation of political interests, and can leave business and citizens facing contradictory policy and market signals.[73] Several policy bodies have pointed to the removal of these barriers as essential. At EU level, the Council has called for integrated approaches working over the life-cycle of products and materials from extraction to end of life.[74]

The OECD in its 'Towards Green Growth' strategy refers to broad recognition that further progress can only be achieved if governments turn to more integrated policy approaches[75]. Business stakeholders have called for clear, unambiguous, credible and reliable market signals to give security to investment. Experience with existing structures for integrated policy development at EU level suggests that a change is needed to steer the transition to a resource efficient economy.

Weak coherence has been found to come from:

· 'Silo-based' policy making arrangements - policy responsibilities relating to the economy's transition to resource efficiency are spread among different departments with governments and decentralised to the appropriate level.[76] Departments or regional administrations can form divergent objectives.

· Political emphasis on short-term, direct effects, particularly reactions to negatively perceived change.

Together, these reduce the predictability of change for firms, weakening belief in announced strategic policy and the implementation of the policies which would deliver it. These factors also affect the scope of relevant knowledge within policy making bodies. Knowledge of the existing and future potential for greater efficiency between sectors in value chains often falls outside the expertise of policy makers. The focus on particular areas and direct effects tends to reduce knowledge of indirect effects on systems and the optimal rate of change for area of the economy.

5.2. Governance change for facilitating transition

Governance arrangements are a key factor in the level of policy. The Roadmap sets out actions to change governance in 3 areas:

5.2.1. Sharing information on future opportunities, milestones and targets

Bringing together information from different parts of the supply/value chain can identify short-term win-wins that each sector or organisation could not realise without the co-operation of other parts of the value chain. It can also provide information for policy makers that allow them to identify the packages of policy that would need to be provided to give the right market signals and incentives to support further opportunities.

The Roadmap considers structures that would bring business representatives from across supply/value chains together with policy makers. These platforms would facilitate information exchange about resource supply risks, possibilities and barriers for greater efficiency. The exchange of information can help set commonly agreed goals for the optimal rate of transition in any particular area of the economy and identify the most appropriate set of policy reforms to drive innovation.

The discussion of potential common objectives, for 2020 and beyond, and knowledge of the potential of increased innovation to achieve them may help change expectations of future markets (e.g., for innovation) and to lead to increased investment by reducing barriers to predictability. It can also serve to bring policy makers with different expertise together in the formation of common goals.

Within Europe, many organisational structures have been set up which attempt to improve policy coherence and exchange with business with varying success. In Member States' policies some transition is taking place to integrated resource-efficiency policies (e.g. in Finland) from past segregated policies (energy efficiency, water, waste, etc.) A few Member States apply a holistic approach to focus on greening the whole economy, instead of giving attention to particular resources (e.g. United Kingdom) In a few cases, the whole life-cycle is considered and impacts abroad are taken into account, through e.g. focusing on sustainable trade (the Netherlands) or the impacts of consumption (Sweden).

There are many examples, at EU and MS level, of structures to shape policy and business action through co-ordinated discussion. For example: CARS 21 (an EU level grouping of the vehicle supply chain and policy makers), Member State transition platforms (eg. in the Netherlands which brought together 5 ministries[77]), civil society initiatives (eg. the European Re-Building Forum[78]). Positive and negative experiences with the reform of environmentally harmful subsidies have demonstrated the importance of this approach.[79] The successful Covenant of Mayors, which has driven energy efficiency in over 2000 cities and regions, can expand its scope to realise the synergies between energy efficiency and wider resources efficiency in urban settings.

International round tables bringing together the wide range of relevant stakeholders to promote resource efficiency along the life-cycle have been established for several internationally traded goods, notably palm oil, soy, and cocoa.

At EU and MS level, existing structures can be used, with changes where needed. The nature or participation and engagement in these organisational structures defines their success. For instance, the technological and organisation potential for efficiency gains is often outside the knowledge for some companies, in particular of SMEs[80].  For this reason, the World Business Council for Sustainable Development (WBCSD) points to the importance of making new alliances to bring trust between government, academia, business consumers and civil society).[81] It uses the example of the construction industry, where developing energy efficient buildings on a large scale needs the co-ordination of professionals along the value chain.

Small, progressive businesses are likely to be under-represented as they do not have the time to invest in such processes, but their voice is essential for an understanding of the potential opportunities. Views from business associations may tend to represent a consensus view influenced by the least progressive companies. Information on the existence of barriers to change is also needed, so that these can be reduced.

Agreed targets would take time to discuss. In the meantime predictability can be increased by the formation of strategies that indicate the direction and pace of transition. Milestones within these strategies – such as the Roadmap – provide guidance on appropriate stages for a smoother transition.

5.2.2. Economic governance

The effect of policy strategies in reducing uncertainty and incoherence is dependent on their credibility. This credibility rests on a number of factors, including their political strength, their incorporation into existing governance arrangements and their monitoring. 

Member States have the lead in defining their economic strategies for greater resource efficiency. To support those strategies, the Commission will highlight progress in resource efficiency within its surveillance of economic governance of Member States. This 'European Semester' monitoring of Member State policy reforms can help strengthen co-operation with Member States, increasing chances of policy change and the adoption of appropriate governance structures at Member State or regional level. It will focus initially on prioritising sustainable growth friendly expenditure and savings.[82] [83]

Agreements on goals and setting up of governance structures are not a panacea to overcoming obstacles to reform[84] and experience with the Sustainable Development Strategy and Lisbon Strategy points to the need for complementary policies and political leadership if policy reform is to be successful. However, an additional benefit from EU governance change derives from one of the barriers to progress. A lack of co-ordination between Member States has given rise to perceived competitiveness concerns for those who act first. Improving discussion and analysis can help to overcome this perceived barrier.

As part of its efforts, the EU will add a review of a small, suitable, selection of indicators for resource efficiency into the European Semester monitoring exercise during 2012 for full use in the Annual Growth Survey. Those indicators will complement the existing carbon transition targets.

5.2.3. Indicators

The identification of indicators enabling Member States and others to measure progress in how resource efficiency contributes to economic goals would support political action and goal setting on resource efficiency. Major barriers to policy integration are strongly rooted in differing stakeholder perceptions of the issues involved and indicators can help harmonise understanding. The indicators will provide additional information on the competitiveness of European nations.

Resource productivity can be estimated by GDP/DMC[85] (euro/tonne). However, as an indicator this has some shortcomings: for example it measures resources by weight, whilst the economic value, scarcity and environmental impact of some natural resources is only not strongly correlated to their weight. It also takes a national production perspective, which implies that it is insensitive to changes in environmental pressures that occur outside the national borders. In addition,

Resource Efficiency covers many different uses of different resources with different economic and environmental impacts. High level aggregate indicators must be based on assumptions on that aggregation, and therefore any single indicator has some weaknesses. The recommendations of the Stiglitz-Sen-Fitoussi Commission[86] point to the benefits of complementing a headline indicator with a concise dashboard of macro-indicators on water, land and carbon. A range of thematic indicators can also provide additional information. Further work on indicators would allow agreement on an indicator on natural capital and environmental impacts of resource use. A technical discussion of indicators that Commission proposes to use can be found in Annex 6.

In addition, progress to resource efficiency would be supported by the use of complementary measures of societal and economic progress in political and economic debate. The Commission, several Member States and international commentators have pointed to the need to complement GDP (which measures only some aspects of the economy). Further integrating environmental externalities into national accounting and developing a composite index on environmental pressures to help complement GDP would help align political goals with the policy needed to remove barriers to transition.

5.2.4. Factoring knowledge of interactions into policy decisions

Many economic policy decisions are informed by modelling results. A review of models carried out for the Commission highlights the need for economic models that better factor in (1) the impacts of limits to stocks and (2) the kind of large scale change or unexpected shocks that the EU faces from changes in resources in the rest of the world. In particular, given the interactions between resources, models tend not to factor environmental change into economic growth, for instance though the feedbacks from climate change, water shortage or air pollution.

Often, computable general equilibrium (CGE) models are not well set up to model the dynamics of transition.[87] Whilst some models link energy production and use, agriculture and land use and related GHG and air emissions[88], and whilst the two way linkages between the economy and energy demand are common in economic models, most models do not factor in material demand in the same way. This requires greater understanding of the linkages from land use, climate and material use back into the economy.

These models of interactions will be able to be improved through increased scientific knowledge about resources, how environmental systems respond to pressures, potential thresholds and interactions between resources. They can use different modules that treat specific sectors in detail, perhaps using a common interface. Work can be developed by the research and development programmes including international, European, national and industrial programmes, as well as the European Environment Agency (EEA), the Joint Research Centre and Eurostat.

Improved models will assist firms and policy makers to shape policies for the transition to resource efficiency. The Commission's most recent work on this, including a 2011 study by PBL[89] is described in Annex 8.

5.3. Other key areas of governance

The application of more integrated governance is a key factor in finding solutions to barriers in the areas of: finance, skills, policy action outside the EU and good implementation of existing policy. Action in these areas is needed as part of the policy mix.

For example, in finance: UNEP estimates that the annual financing needs for making the world economy more resource efficient are between US$1.05-2.59 trillion - around 10% of annual global capital investment[90]. In the EU, and elsewhere, this financing will need to come mainly from private sources[91]. Yet, for the scale of financing necessary, the current financial systems bias towards the short-term would have to be reversed, and some unfamiliarity with investments in resource efficiency would need to be reduced. Public and private sector action to achieve this may be identified from discussions with EU, and Member State level, round tables on finance.

Meanwhile, the costs of current environmental legislation not being fully implemented are estimated at around €50 billion per year. [92]

The significance of barriers and solutions in finance, skills, international action and implementation is described in Annex 3.

[1]               "Decoupling natural resource impacts from economic growth", International Resource Panel (2011)

[2]               http://www.grida.no/publications/rr/food-crisis/page/3559.aspx

[3]               WBCSD, Vision 2050,          http://www.wbcsd.org/templates/TemplateWBCSD5/layout.asp?type=p&MenuId=MTYxNg&doOpe

[4]               Food and Agriculture Organisation

[5]               "Expanding Food Price Scenarios towards 2030", Willenbroekel et al, 2011

[6]               "The European Environment – State and Outlook 2010", EEA,2010

[7]  http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tsdpc230

[8]               "International economics of resource productivity – Relevance, measurement, empirical trends, innovation, resource policies", R. Bleischwitz in International Economics and Economic Policy, 2010,

[9]               "The European Environment – State and Outlook 2010", EEA,2010

[10]             "A safe operating space for Humanity", Rockstrom, et al (2009) in Nature 461, p. 472-475.

[11]             "Millennium Ecosystem Assessment, Ecosystem and Human Well-being synthesis", 2005

[12]             "Green Growth Strategy Synthesis", OECD, 2011

[13]             COM(2011)25, The Commission's Communication on Commodities Markets and Raw Materials

[14]             "Critical raw materials for the EU: report of the Ad-hoc Working Group on defining critical raw materials", Fraunhofer ISI report for DG Enterprise and Industry, 2010,.

[15]             Eco-Innovation Observatory (EIO), The Eco-Innovation Challenge: Pathways to a resource-efficient Europe, report for DG Environment, 2010

[16]             Eurobarometer survey, see http://ec.europa.eu/public_opinion/flash/fl_315_en.pdf

[17]             "Vision 2050", WBCSD, 2010

[18]             "Factor Five", Von Wiezsacker et al, 2009

[19]             "As Time Goes By. From the Industrial Revolution to the Information Revolution", Freeman C, Louçã, 2001

[20]             OECD, Towards a green growth strategy, forthcoming

[21]             UNEP, Towards a green economy - Pathways to sustainable development and poverty eradication, 2011

[22]             "Dematerialisation and resource efficiency in Japan", Wüppertal Institute

[23]             "Systemic Tools for an EU Resource Efficiency Roadmap", The Resource Efficiency Alliance 2011

[24]             "Economic Analysis of Resource Efficiency Policies", COWI 2011

[25]             http://www.eea.europa.eu/themes/economy/resource-efficiency/resource-efficiency

[26]             "Analysis of key contributions to resource efficiency", Bio Intelligence Service 2011

[27]             http://www.growingforthefuture.com/index.php

[28]             http://walmartstores.com/pressroom/news/5951.aspx

[29]             "Impacts of Structural Change: Implications for transition to the Green Economy", GHK, 2011

[30]             The impacts (positive and negative) will be felt over time, and there is a natural blurring between what are sometimes termed short-term (direct) and medium-term (indirect) impacts.

[31]             "Further Benefits of Business Resource Efficiency", Oakdene Hollins, 2011

[32]             Distelkamp, M., Meyer, B., Wolter, M.I. (2005) in: Aachener Stiftung Kathy Beys (Hrsg.) Ressourcenproduktivität als Chance, and MaRess Final Report, Wuppertal et al 2010

[33]             "Competitiveness of European Companies and Resource Efficiency", Ecorys, 2011

[34]             "Studies on Sustainability Issues – Green Jobs; Trade and Labour", GHK, 2011

[35]             Fischer, H., K. Lichtblau, B. Meyer and J. Scheelhaase (2004), ‘Wachstums- und Beschäftigungsimpulse rentabler Materialeinsparungen [Growth and employment impulses of profitable material savings]’, Wirtschaftsdiens, 84 (4), 247-254.

[36]             The EU Commission funded MOSUS project: http://www.mosus.net/

[37]             Other modelling results are summarised in 'The Economic Benefits of Environment Policy', GHK, 2009

[38]             "Green Tech Survey", BMU, 2009

[39]             Roland Berger Consultancy

[40]             Economist, 3/2/2011

[41]             "The European Environment – State and Outlook 2010", EEA, 2010

[42]             "The fiscal implications of climate change adaptation" CEPS and ZEW, 2010

[43]             PBL (2011). EU Resource Efficiency Perspectives in a Global Context: A fast track analysis. Forthcoming, will be available at: http://ec.europa.eu/environment/enveco/studies.htm

[44]             A permanent one percentage point reduction in the average tax burden on labour is estimated to increase the employment rate by about 0.4% in a typical country. OECD 2006.

[45]             International Resource Panel (2011) Decoupling report

[46]             "Competitiveness of European Companies and Resource Efficiency", Ecorys, 2011

[47]                    "Environment and labour force skills", Ecorys, 2008

[48]             "Employment in Europe 2009" European Commission, 2009

[49]             "Green Growth Strategy Synthesis", OECD, 2011

[50]             "Studies on Sustainability Issues – Green Jobs; Trade and Labour", GHK, 2011

[51]             "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?", Foster, L., J. Haltiwanger and C. Syverson in American Economic Review 2008,

[52]             Note: The three sectors do not add up to 100%, due to minor errors in original data. *Polish data are for 1992 not 1980.**Data is from 2007, no data is available for 2008 (Source: OECD Factbook, 2010 (World Bank data)

[53]             "Job creation and destruction in the UK: 1998-2008", Anyadike-Danes et al., 2011 (forthcoming)

[54]             "Restructuring and employment in the EU: Concepts, measurement and evidence", European Foundation for the Improvement of Living and Working Conditions, 2006

[55]             "Competitiveness of European Companies and Resource Efficiency", Ecorys, 2011

[56]             "Maintaining a Strong Innovation Culture During a Downturn", Arthur D. Little 2008

[57]             http://www.bankofengland.co.uk/publications/quarterlybulletin/qb940308.pdf

[58]             "Green Growth Strategy Synthesis", OECD, 2011

[59]             OECD Smart Grids and Renewable Energy, Competitition Committee Roundtable 2010

[60]             OECD Green Growth Synthesis 2011

[61]             "Lags in the EU Economy's Response to Change", Ecorys, 2011

[62]             "Economic Analysis of Resource Efficiency Policies", COWI, 2011, and "Review of the Natural Resource Thematic Strategy", BIO Intelligence Service, 2011

[63]             http://www.eea.europa.eu/themes/economy/resource-efficiency/resource-efficiency

[64]             "The European Environment – State and Outlook 2010", EEA, 2010

[65]             "Green Growth Strategy Synthesis", OECD, 2011

[66]             "A Resource Efficient Europe", COM(2011) 21

[67]             "Globalisation the environment and you", EEA, 2011

[68]             "Links between dematerialisation and energy use", Bio Intelligence Services, 2010

[69]             "Environmental Improvement Potentials of Meat and Dairy Products (IMPRO)", B.P. Weidema et al., JRC, 2008

[70]             "The European Environment – State and Outlook 2010", EEA,2010

[71]             "Climate change impacts on water quality and biodiversity", European Topic Centre, 2010; "The European Environment – State and Outlook 2010", EEA,2010

[72]             "Green Growth Synthesis", OECD, 2011

[73]             "Green Growth Synthesis", OECD, 2011

[74]             December Council conclusions on Sustainable Materials Management: Council Document 17495/10

[75]             "Green Growth Synthesis", OECD, 2011

[76]             "Making reform happen: Lessons from OECD countries", OECD, 2010 - P. Ekins, Chapter 5

[77]             The Dutch government put in place 'transition management' as national policy in 2001, with five ministries jointly developing transition polices for mobility, food production, energy and biodiversity. Referenced in "Towards Resource Efficient Economies in Asia and the Pacific", Asian Development Bank

[78]             http://www.epe.be/Default.aspx?p=112&n=134

[79]             "Competitiveness of European Companies and Resource Efficiency", Ecorys, 2011

[80]             "Competitiveness of European Companies and Resource Efficiency", Ecorys, 2011

[81]             Vision 2050, WBCSD, 2010

[82]             Areas such as research and innovation, education and energy; eliminating environmentally harmful subsidies or tax exemptions; "green tax reforms“; exploiting the EU's first mover advantage on competitive environmental goods and services.

[83]             One tool the EU can use to do this is the indicator-based assessment framework iGrowGreen, currently being developed by the Commission with Member States. It examines the shift to a competitive and greener economy by evaluating Member States’ performance in domains reflecting the key links from environmental performance to macroeconomic and fiscal considerations. Quantitative results are qualified by country-specific qualitative information. Detailed information is provided at: http://ec.europa.eu/economy_finance/db_indicators/igrowgreen/index_en.htm

[84]             "Fostering structural reforms in industrial countries", IMF, (World Economic Outlook Chapter 3), 2004

[85]             Domestic Material Consumption

[86]             "Report of the Commission on the Measurement of Economic Performance et Social Progress", 2009

[87]             European Economy. Economic Papers 413. June 2010.

[88]             See for examples the modelling work done by the Joint Research Centre and others for COM(2011)112/ SEC(2011)288, or the work on linkages between different models done by the EU funded European Consortium for Modelling of Air Pollution and Climate Strategies (www.EC4MACS.eu)

[89]             "EU Resource Efficiency Perspectives in a Global Context: A fast track analysis", PBL,  2011

[90]             "Green Economy Synthesis", UNEP, 2010

[91]             "Green Growth Synthesis", OECD, 2011

[92]             "The costs of not implementing the environmental acquis", COWI, 2011 (forthcoming)

TABLE OF CONTENTS

Annex 1: The World Business Council for Sustainable Development vision 2050................ 7

Annex 2: Summary of the Resource Efficiency Public Consultation and other Stakeholders inputs        8

1........... Public online questionnaire.............................................................................................. 8

2........... Public Policy – Instruments to overcome barriers towards a more resource efficient economy   10

3........... Position papers and written contributions....................................................................... 11

3.1........ Companies/business associations................................................................................... 12

3.1.1..... Creating the right framework conditions......................................................................... 12

3.1.2..... Improving governance................................................................................................... 12

3.1.3..... Competitiveness concerns............................................................................................. 12

3.2........ NGOs and think tanks.................................................................................................. 13

3.3........ Governmental organisation............................................................................................ 13

Annex 3. Target Areas for Removing Barriers to Resource Efficiency............................... 14

1........... Transforming the Economy............................................................................................ 14

1.1........ Improving products and changing consumption patterns................................................. 14

1.1.1..... Specific barriers to transition......................................................................................... 14

1.1.2..... Policy Actions.............................................................................................................. 14

1.1.3..... Analysis of strengths and weaknesses............................................................................ 15

1.2........ Boosting efficient production......................................................................................... 16

1.2.1..... Specific barriers to transition......................................................................................... 16

1.2.2..... Actions......................................................................................................................... 17

1.2.3..... Analysis of strengths and weaknesses............................................................................ 17

1.3........ Treating Waste as a Resource....................................................................................... 19

1.3.1..... Specific barriers............................................................................................................ 19

1.3.2..... Actions......................................................................................................................... 20

1.3.3..... Analysis of strengths and Weaknesses........................................................................... 21

1.4........ Supporting research and innovation............................................................................... 23

1.4.1..... Specific Barriers........................................................................................................... 23

1.4.2..... Actions......................................................................................................................... 24

1.4.3..... Analysis of strengths and weaknesses............................................................................ 25

1.5........ Phasing out inefficient subsidies..................................................................................... 26

1.5.1..... Specific Barriers........................................................................................................... 26

1.5.2..... Actions......................................................................................................................... 27

1.5.3..... Analysis of strengths and weaknesses............................................................................ 27

1.6........ Getting prices right........................................................................................................ 28

1.6.1..... Specific Barriers........................................................................................................... 28

1.6.2..... Actions......................................................................................................................... 29

1.6.3..... Analysis of strengths and weaknesses............................................................................ 29

2........... Key Natural resources.................................................................................................. 31

2.1........ Ecosystem services....................................................................................................... 31

2.1.1..... Interlinkages, Significance, Risks................................................................................... 31

2.1.2..... Specific Barriers........................................................................................................... 32

2.1.3..... Actions......................................................................................................................... 32

2.2........ Biodiversity.................................................................................................................. 33

2.2.1..... Interlinkages, Significance, Risks................................................................................... 33

2.2.2..... Specific Barriers........................................................................................................... 33

2.2.3..... Actions......................................................................................................................... 33

2.3........ Minerals and metals...................................................................................................... 33

2.3.1..... Interlinkages, Significance, Risks................................................................................... 33

2.3.2..... Specific Barriers........................................................................................................... 34

2.3.3..... Actions......................................................................................................................... 34

2.4........ Water........................................................................................................................... 34

2.4.1..... Interlinkages, Significance, Risks................................................................................... 34

2.4.2..... Specific Barriers........................................................................................................... 35

2.4.3..... Actions......................................................................................................................... 36

2.5........ Air............................................................................................................................... 37

2.5.1..... Interlinkages, Significance, Risks................................................................................... 37

2.5.2..... Specific Barriers........................................................................................................... 38

2.5.3..... Actions......................................................................................................................... 39

2.6........ Using land and preserving soils...................................................................................... 40

2.6.1..... Interlinkages, Significance, Risks................................................................................... 40

2.6.2..... Specific Barriers........................................................................................................... 42

2.6.3..... Actions......................................................................................................................... 43

2.7........ Marine resources.......................................................................................................... 43

2.7.1..... Interlinkages, Significance, Risks................................................................................... 43

2.7.2..... Specific Barriers........................................................................................................... 44

2.7.3..... Actions......................................................................................................................... 46

3........... Key Sectors................................................................................................................. 47

3.1........ Addressing food........................................................................................................... 47

3.1.1..... Significance.................................................................................................................. 47

3.1.2..... Opportunities for Resource Efficiency............................................................................ 49

3.2........ Improving buildings....................................................................................................... 53

3.2.1..... Significance.................................................................................................................. 53

3.2.2..... Opportunities for Resource Efficiency............................................................................ 54

3.3........ Ensuring efficient mobility.............................................................................................. 56

3.3.1..... Significance.................................................................................................................. 56

3.3.2..... Opportunities from Resource Efficiency......................................................................... 57

4........... Application of Governance to Other Key Areas............................................................ 58

4.1........ Investing in the transition............................................................................................... 58

4.2........ Supporting resource efficiency internationally................................................................. 59

4.3........ Removing skills bottlenecks and mitigating social costs................................................... 60

4.4........ Improving implementation of EU legislation.................................................................... 61

Annex 4: Representative European Ecological Footprints.................................................... 62

Annex 5: The rebound effect and odd price effects............................................................... 63

1........... Definition...................................................................................................................... 63

2........... Evidence and significance.............................................................................................. 63

3........... Implications for policy................................................................................................... 64

Annex 6: Resource efficiency indicators and targets............................................................ 66

1........... Introduction.................................................................................................................. 66

2........... The approach............................................................................................................... 66

3........... Lead indicator and dashboard of complementary macro indicators................................. 66

3.1........ The Lead Indicator....................................................................................................... 66

3.2........ The dashboard............................................................................................................. 67

3.3........ Baselines, latest values and trends................................................................................. 68

3.4........ Further developments................................................................................................... 69

4........... Theme specific indicators.............................................................................................. 69

4.1........ Transforming the economy............................................................................................ 70

4.1.1..... Improving products and changing consumption patterns................................................. 70

4.1.1.1.. Supporting Green Public Procurement (GPP)................................................................ 70

4.1.1.2.. Promoting green buying................................................................................................. 70

4.1.2..... Boosting efficient production......................................................................................... 71

4.1.2.1.. Measuring, managing and improving European companies' resource efficiency................ 71

4.1.2.2.. Registering and substituting harmful chemicals................................................................ 71

4.1.3..... Turning waste into a resource........................................................................................ 72

4.1.3.1.. Ensuring full implementation of waste legislation, in line with the waste hierarchy.............. 72

4.1.4..... Supporting research and innovation............................................................................... 73

4.1.4.1.. Increasing investment in research and innovation on resource efficiency.......................... 73

4.1.5..... Phasing out inefficient subsidies..................................................................................... 73

4.1.4.1.. Phasing out Environmentally Harmful Subsidies (EHS)................................................... 73

4.1.6..... Getting the prices right.................................................................................................. 74

4.1.6.1.. Increasing the share of environmental taxation................................................................ 74

4.2........ Natural capital and ecosystem services.......................................................................... 74

4.2.1..... Ecosystem services....................................................................................................... 74

4.2.3.1.. Mapping and assessing the state and value of ecosystems and their services................... 74

4.2.3.2.. Maintaining and enhancing ecosystems and their services............................................... 75

4.2.2..... Biodiversity.................................................................................................................. 76

4.2.3.1.. Halting the loss of biodiversity and ecosystem services in the EU and restoring them as far as possible  76

4.2.3..... Minerals and metals...................................................................................................... 76

4.2.4..... Water........................................................................................................................... 77

4.2.4.1.. Ensuring good quality and quantities of water................................................................. 77

4.2.5..... Safeguarding clean air................................................................................................... 77

4.2.5.1.. Achieving air quality with no significant negative impact on health and the environment.... 77

4.2.6..... Land and soils.............................................................................................................. 78

4.2.6.1.. Reducing the anthropogenic pressure on ecosystems from land take............................... 78

4.2.6.2.. Reducing soil erosion.................................................................................................... 78

4.2.6.3.. Maintaining soil organic matter levels............................................................................. 79

4.2.6.4.. Identifying and remediating contaminated sites............................................................... 79

4.2.7..... Marine resources.......................................................................................................... 80

4.2.7.1.. Ensuring fish and shellfish are within maximum sustainable yield...................................... 80

4.2.7.2.. Achieving good environmental status in all EU waters..................................................... 80

4.3........ Key sectors.................................................................................................................. 81

4.3.1..... Addressing food........................................................................................................... 81

4.3.1.1.. Making food consumption healthier and more sustainable............................................... 81

4.3.2.1.. Reducing food waste.................................................................................................... 81

4.3.2..... Improving buildings....................................................................................................... 82

4.3.2.1.. Promoting green buildings............................................................................................. 82

4.3.3..... Ensuring efficient mobility.............................................................................................. 83

4.3.3.1.. Transforming transport.................................................................................................. 83

4.4........ Governance: New pathways to action on resource efficiency.......................................... 83

4.4.1..... Financing resource efficient innovation and investments.................................................. 83

Annex 7: Trends in Resource Use.......................................................................................... 93

1........... Introduction.................................................................................................................. 93

2........... Material Use in the EU.................................................................................................. 93

2.1........ Domestic Material Use and Import Dependency............................................................ 93

2.2........ Global Stocks and Imports of Materials........................................................................ 98

2.3........ Waste and recycling.................................................................................................... 100

3........... Key natural resources................................................................................................. 102

3.1........ Water......................................................................................................................... 102

3.2........ Biodiversity................................................................................................................ 103

3.3........ Fish............................................................................................................................ 104

3.4........ Land use.................................................................................................................... 105

3.5........ Air............................................................................................................................. 106

4........... Interactions between Resources.................................................................................. 107

5........... Drivers....................................................................................................................... 110

5.1........ Global Trends and Drivers.......................................................................................... 110

5.2........ Population Growth...................................................................................................... 111

5.3........ Economic Development.............................................................................................. 112

5.4........ Productivity................................................................................................................ 113

Annex 8: Modelling for the Roadmap to a Resource Efficient Europe.............................. 114

1........... Existing resource modelling – approaches & tools........................................................ 114

2........... Developing a new modelling framework...................................................................... 115

3........... Modelling EU Resource Efficiency.............................................................................. 116

3.1........ An Example of an integrated modelling of resource efficiency....................................... 116

Annex 1: The World Business Council for Sustainable Development vision 2050

Annex 2: Summary of the Resource Efficiency Public Consultation and other Stakeholders inputs

On 26 January 2011 the European Commission adopted a Communication on a resource-efficient Europe, a Flagship initiative of the Europe 2020 Strategy which sets the framework for a series of initiatives to be adopted in 2011 and 2012.

The planned 'Roadmap for a resource-efficient Europe' will be one of the main initiatives proposed. A public online consultation was launched with a press release and an announcement on Your Voice in Europe website on 22 February 2011, with a closing date of 22 April 2011. The online consultation asked for informed opinions and suggestions on how to best achieve the transition towards a resource-efficient Europe.

1. Public online questionnaire

Out of the total 126 responses on behalf of organisations, the majority came from companies/business associations (72), followed by NGOs (27), public authorities (10), "others" (7), think-tanks (5), academic organisations (2) and one response from a consultancy (see Figure 1).

Most of the respondents felt that impacts of resource consumption will affect us both in the short and in the long-term (see figure 2). They felt strongly that unsustainable natural resource consumption will only affect us in the long-term (76% thought so) but that the price of materials will affect us significantly in the short-term (76% also thought so).

54% of respondents believe resource efficiency has the potential to help in the long-term. 62% believe it will help creating jobs in the short-term with fewer respondents believing it will relieve pressures on environmental resources in the short term.

Overall, the current use of resources was rated not efficient (food, fossil fuels, water, biotic materials, ecosystem services and energy), or only more or less efficient (metals and minerals, construction materials and chemicals).

Responses reflect that the policies with the highest potential to help make the European economy more resource efficient were in the fields of agriculture and rural development, climate change, energy policy, environmental policy, industrial policy, maritime and fisheries policy, regional policy, research and innovation policy and transport policy. Consumers and health policy, employment policy, and trade policy were rated as having some potential as well.

In terms of barriers preventing us from developing a more resource efficient economy, there were differing perspectives towards where these were relevant. They felt strongly that inadequate market signals for RE had a global significance for them as well as consumers purchasing decisions not reflection long term sustainability. They felt that there is a lack of information (on alternative options) and this affects institutions also at a global level.

Other issues of global importance are lack of long-term thinking in decision making (for example these could be awareness of new technologies, working methods and processes among managerial staff), a large dependence on existing technologies and the current business models.

Of EU level importance are the feeling that there is insufficient public funding/incentives for investment and innovation promoting resource efficiency, limits in existing infrastructure (e.g. energy, transport and communication), unhelpful existing EU regulation and lack of targets and indicators at EU level (and to some extent at a global level too). It is also felt that there is a lack of prioritisation at EU level and that there is insufficient R&D funding and investment. Skills gaps in the workforce and sub-optimal functioning of the labour market were only perceived to have national relevance.

2. Public Policy – Instruments to overcome barriers towards a more resource efficient economy

Respondents concluded that the most effective ways to promote long-term thinking and planning in the private sector would be, at a European level to focus on a mix of policies, from R&D support to binding targets.

A similar mix of policy tools should be employed also at national level.

When looking at ways of boosting investment in innovation for resource efficiency and what measures would be the most effective, respondents felt that most measures could and should be adopted at a European level (as opposed to nationally or globally).

In responding to how effective different measures would be in ensuring private investment in a resource-efficiency infrastructure, the respondents felt that measures would be effective at either national or European level. For example, market-based instruments and subsidies were seen as something relevant at a national level by the majority of institutions. Of national relevance were also the development of demand-side management strategies in parallel with any major infrastructure projects, and public-private partnerships.

Cap and trade-type quotas combined with economic incentives were seen as something relevant to EU level by approximately 40% of the institutions, even though an equal percentage felt that they were not effective.

Current Business Models

The factors seen as very significant barriers to adopting new business models/organisational innovation by private companies that could contribute to more resource efficiency were the excessive perceived risks, lack of funds and long payback periods for investments compared to short term investors' expectations, as well as uncertain market demand. They also felt that regulations do not proved the right incentives, that there is a lack of qualified personnel and a lack of adequate infrastructure.

More or less significant are limited access to information, and knowledge, lack of suitable business partners and a lack of technological and management capabilities. Market domination by established firms was seen as not being significant.

Shifting Business Behaviour

In order to shift business behaviour to resource efficient business models, respondents felt that market-based instruments (e.g. energy and resource taxes/incentives in support of resource efficient business models) would be very effective. Education and training of employees and binding technical regulations and standards would also be very effective.

Enabling access to investment/R&D and innovation funding, trade measures, as well as introducing a requirement for public procurement to comply with sustainability and ecological standards were seen to be potentially very effective. Cap and trade quotas were seen to not be effective.

3. Position papers and written contributions

In addition to the responses to the online questionnaire, the Commission received also some more extensive contributions and 34 position papers: 25 from industry groups or companies, 6 from NGOs or think-thanks and the 4 from governmental organisation.

3.1. Companies/business associations

The points raised by companies and business associations can be organised along three broad lines: 1) Creating the right framework conditions, 2) Improving governance and 3) Competitiveness concerns related to resource efficiency.

3.1.1. Creating the right framework conditions

Many companies and business associations highlighted the importance of investing in R&D. One association considered that Europe's main weak point is the commercialising of innovations, whereas some others also insisted on the importance of more public funding for R&D and innovation policy. One business association stated that boosting innovation is also about creating new business models and targeting the key stages of the value chain simultaneously. Finally some companies also suggested putting more effort into researching substitution materials and recycling technologies.

Other points raised were the need to ensure access to finance, designing SME-friendly support instruments and setting up SME research networks that would enhance research cooperation.

3.1.2. Improving governance

One concern that is widely resonated by business is that the Roadmap to a resource efficient Europe should introduce an integrated approach to policy making to ensure improved policy coherence. Some industry stakeholders raised the point that there is still room for improvement with regard to reducing bureaucracy.

Many companies and industry associations also find that, with regard to resource efficiency, it is important to consider the entire value chain and to adopt a life-cycle perspective to avoid that policy measures would just shift the environmental impacts from one phase to another.

With respect to regulation not all views were unanimous. Whereas most contributions suggested that more regulation is not necessary or desirable, two companies argued for more regulation, arguing that this would increase policy certainty and hence a climate favourable to investments and the creation of new markets. In general, many respondents invite the Roadmap to a resource efficient Europe to set out a long-term vision of resource efficiency and to present a cost-effective step-wise approach towards this long-term objective.

A majority of business organisations pointed to the need for developing a sound knowledge base, and some also suggested that this would include the development of appropriate resource efficiency indicators. Two representative organisations argued against binding numerical targets.

3.1.3. Competitiveness concerns

Many of the contributions received also insist on the importance of ensuring access to raw materials. Better management of both primary and secondary materials as well as ensuring free trade and avoiding monopolistic or oligopolistic market structures are considered to be key in this regard. A significant number of business associations also expressed their concern about the recent volatility of resource prices.

One business association also expressed its concern about the fact that there is limited consumer awareness about resource efficiency issues.

Many in the business sector expressed the need to have regard to short-term competitiveness. In particular, some business and industry associations express concern that resource taxation – if applied only at the EU level – would negatively affect industry's competitiveness in the short or even mid-term. One stakeholder stated that there is a need for more tax harmonisation at the global level.

3.2. NGOs and think tanks

Nearly all respondents from think tank and non-commercial interest groups called for Commission proposals for resource efficiency indicators in its Roadmap, with some demanding that these indicators would lead to binding resource efficiency targets. Many respondents called for more effective waste policies.

A couple of NGOs found that the EU's product policy needs to be strengthened as to ensure that our production and consumption does not negatively affect Europe's resource base. One association adds that both the supply and the demand side should be equally addressed. It also points to the importance of taking into account the findings from research on consumer behaviour. Another association further suggests that green consumer choices should be made more affordable.

One NGO specifically pointed to investment related issues of resource efficiency policies, such as avoiding lock-in in large infrastructure works, urban planning and cohesion policy. One think tank insisted that the Roadmap would address the underlying drivers of increasing resource use. It also pointed to the importance of policy integration and developing a better understanding of the links between the different resources and the environmental impacts.

3.3. Governmental organisation

The Commission also received 4 position papers from governmental (national or international) organisations. Several of them stressed the need for global governance, addressing the geopolitical and development dimensions of resource use. Other points raised are the need for a coherent and integrated approach, the need to involve MS and private actors and the need of addressing the rebound effect.

Annex 3. Target Areas for Removing Barriers to Resource Efficiency

Introduction

This Annex provides the rationale for actions in particular areas of the economy, their application to particular resources and governance problems.

1. Transforming the Economy 1.1. Improving products and changing consumption patterns 1.1.1. Specific barriers to transition

Behavioural studies show that people often stick to their previous behaviours and purchasing habits. They are influenced by social conventions, lock-in to existing, familiar technology and the set of information available to them.

As consumption is the prime driver of production patterns and some innovation, these issues slow response to changing conditions. It weakens markets for innovations and traps consumers and organisations into inefficient resource use (e.g. in energy consumption in buildings) even if prices rise. New business models such as car-sharing or 'product service systems' can be slow to expand.

Many of the barriers come from the way people are influenced by marketing information on products, much of which fails to accurately convey the fully life-cycle costs of production and consumption. This can partly be attributed to knowledge gaps on the life-cycle impacts, and partly to the way that purchasers wrongly interpret the information is presented (e.g. getting confused by green claims).

1.1.2. Policy Actions

· Practically applicable knowledge of full life-cycle impacts can come from creating agreed methodologies for life-cycle impacts (or environmental footprint) and increasing applied research. This can be used for consumer information, supply chain improvements and policy.

· Markets for products or services with lower life-cycle impacts can be increased through changes to labelling and marketing that, in practice, help consumers choose. Bearing in mind that issues of trust and image are often more influential than information, greater diffusion of scientific research into drivers of consumer choice would support this. Other options to increase market rewards for these products include incentives.

· Incorporating life-cycle considerations into public procurement can increase markets and stimulate innovation. Joint public and private procurement can be used to cost-effectively buy innovations that would not otherwise be able to break quickly into commercial markets.

· Setting minimum environmental performance standards for products as part of integrated policy – under the Eco-Design Directive – can boost diffusion and markets for more resource efficient products, by removing the least resource efficient. Including a wider range of products and looking at recycled content and durability of products could reduce the market demand for resource-heavy products, promoting recycling markets. New business models for products that promote recycling could be promoted by extension of producer-responsibility.

1.1.3. Analysis of strengths and weaknesses

Strengths

· Consumption is a very significant driver for change (or lock-in)[1] because it is the fundamental driver of up-stream production activities and the resulting resource use[2]. 54% of income is spent in final consumption; public procurement accounts for roughly 17% of the EU's GDP. It can change firms' behaviour.

· Greener public and private procurement can create markets and greater rewards for innovative products and production changes. For example, actions on private, public or joint procurement can remove blocks to investment in innovation by creating market certainty, reducing technological lock-in. This can overcome barriers to innovation. Removing least efficient products from the market increases the market rewards for innovation in more efficient products and services.

· Actions encouraging broader lifestyle changes can bring significant benefits only be encouraging less-resource intensive patterns of consumption[3].

· Changing purchasing and behaviours has significant cost saving potential for consumers and public authorities through life-cycle efficiency gains, often with short payback periods. For example:

· A 2011 report of the Dutch Ministry of Infrastructure and the Environment[4] concludes public sector energy consumption would be reduced by 10% and 3 million tonnes of CO2 would be saved if all Dutch public authorities applied the national sustainable public procurement criteria. NOx and fine particle pollution would drop 1%. The UK found it would save £40.7 million (€47.2 million) if proposed Green Public Procurement furniture criteria are applied[5].

· A 2009 study found that using a Life Cycle Costing approach for procurement reduced costs by 1 %, even if initial costs were higher[6].

· These actions would be able to overcome some of the policy and market failures that can not be tackled by measures affecting price. For example, many of the resource impacts of consumption happen outside the EU, during production. (Annex 4 shows the Ecological Footprint, a measure of global resource impacts of EU consumption.) Change in consumption would also bring changes in global supply chains, bringing benefits outside the EU's usual policy scope[7].

· Using evidence from behavioural science, policy on consumer choice can counter lock-in biases with more effective policies, and can boost markets for green products by applying this knowledge to limit any green claims that wrongly mislead consumers.

Weaknesses

· The rebound effect may offset benefits if not tackled: as efficiency of a technology improves (and thus lowers the life-cycle cost), then usually consumers respond to that saving by consuming more (as seen with energy use). Annex 5 discusses this more.

· Adequate life-cycle information on resource impacts on many products and services is not yet available, and will require additional resources for development on top of existing EU, MS and private sector programmes. Decisions will only be able to be taken on the basis of these estimates, ignoring some of the diversity.

· Knowledge of how consumers actually respond to alternative policy measures (like billing information or forms of marketing, e.g. labelling) is limited.

· Changing government procurement practices – even to promote choices that save public money will in many cases involve change in procedures and practices (for example in single-year budgeting) and therefore training and understanding of the benefits of change.

1.2. Boosting efficient production 1.2.1. Specific barriers to transition

(a) Lock-ins to existing areas of business focus

Scarcity of both management time and accessible expertise holds back efficiency. This particularly applies where resource use is not the core business area, even though it may be an essential part of the process. There is an opportunity cost of engaging in efficiency. However, the judgement on where to spend management time is often based on past behaviour and current norms, even where external conditions or resource scarcity are changing[8].

(b) Suboptimal exchange of information on efficiency potentials

Firms in one part of a supply chain may not be able to improve the resource efficiency of their production without the co-operation of other parts of the supply chain[9]. However, inter-actions along the supply chains to find mutually beneficial efficiency savings, though frequent, are not the norm. Firms with wastes that could be inputs for other firms tend not to have the means to find buyers.

(c) Difficulty of comparing resource impacts between firms

The range of different methodologies for reporting resource impacts makes comparison between firms difficult – and this holds back the usefulness of resource measures as guides for firms looking to improve, or investors.

(d) Short-term focus at the expense of long-term competitiveness

Many companies fail to economise on longer-term resource use because of a short-term horizon encouraged by current corporate reporting practices and investor pressure. Access to finance and lack of knowledge and information on opportunities are further barriers. This holds back success of resource-efficient innovation, in turn weakening investment in development of beneficial innovations.

1.2.2. Actions

Firms can become more aware of change and savings possibilities, for them and in their supply chain. Member States and the Commission can assist by: improving the availability of expert advice for SMEs and helping companies work together to realise synergies, for instance in the sale of waste and by-products as inputs for others – 'industrial symbiosis'.

A methodological guide for corporate resource footprints, coupled with good incentives for suitable reporting of resource use (eg. specific measures to get prices right) could increase comparability on efficiency between firms. Establishing benchmarks of good performance would increase managers and investors ability to compare relative performance.

Avoiding, wherever possible, the use of dangerous chemicals can help protect key resources like soil and water, and make others, like materials, safer, easier and less costly to recycle and reuse. For example, the approach to chemicals management promoted by REACH will help identify opportunities for improvement, particularly in the substitution of dangerous chemicals with safer and technologically and economically viable alternatives.

New innovative technologies and solutions for sustainable raw materials supply can increase the options for businesses. The candidate Innovation Partnership Raw Materials for a Modern Society can stimulate commercial development of these technologies.

1.2.3. Analysis of strengths and weaknesses

Strengths

· Businesses will find it easier to seize the short-term efficiency savings that present easy win-wins, within their operations and across their value chains. This will create the conditions that facilitate innovation. Business consultants report that even providing nothing more than technical advice to companies in the processing sector could bring savings of around 20% of material costs[10].

· Putting in place market and policy incentives that reward business investments in efficiency by 2020 will stimulate the spread of new innovations in resource efficient production methods.

· A number of schemes show the benefits of increased information flows, and the pay-back from providing advice or bringing firms together in National Industrial Symbiosis Platforms:

· Based on the performance of the UK Industrial Symbiosis Programme, improving the re-use of raw materials through greater 'industrial symbiosis' (where the waste of some firms is used as a resource for others) across the EU could save €1.4bn a year and generate €1.6bn in sales[11].

· Vienna Ecobusinessplan, sent resource-efficiency advisors to 680 enterprises. These saved about €47.1 million, 114 912 tonnes reduction of solid waste output, 1 214 tonnes reduction of toxic wastes, 175.3m kWh energy savings, 51 470 tonnes of GHG emissions avoided, 85.8 m km reduction of total transport mileage.

· EnWorks (A scheme in NW England) has delivered, on average: 9% reduction in energy costs, 16% reduction in water costs, 20% reduction in waste management costs. For every £1 spent in the scheme, there are 920 kilograms of materials, 40 kilograms of carbon dioxide and 450 litres of water saved, and the business saves £11.25.

· €1 spent on the resource-efficiency advice scheme 'Stimular' in the Netherlands can save €13.50 in costs (energy etc) for the SMEs[12].

· Improving interactions along supply chains is one of the most effective ways to create further improvements in resource efficiency[13]. It also helps avoid lock-in to existing patterns of production. It allows producers lower in the supply chain to innovate and reduce resource use with support for firms closer to the consumer, who can better influence consumer demand.

· Use of information tools, like reporting, have the power to bring about change in firms’ investments and processes without heavy handed regulation, facilitating light-touch change. By coupling these with the provision of information to the financial markets, providing comparable standards for resource use impacts will allow financial market to better support investments in resource efficiency.

·           EU level supporting actions can be particularly valuable where supply chains are international, with resource impacts and risks outside the EU. Co-ordinated action by firms active across the Single Market coupled with EU-led discussions on international agreements can facilitate change where national initiatives may not have sufficient leverage. The EU's action here will support the Rio+20 Summit in June 2012.

· These actions would complement the actions to get prices right and help consumers factor in (and reward) efficient resource use in purchasing decisions, increasing the mutual effectiveness of all the actions.

Weaknesses

· The scale of benefit depends significantly on the scale of Member State action in assisting firms. To set the level of action at the right level, the benefits to growth and employment of these interventions need to be compared to other public expenditure and subsidies on business.

· Benefits also depend on business mindsets. An important route for change in business norms around resource management is through peer networks. Business action on improving their supply chains will depend on how sectoral and cross-sectoral initiatives are formed by business themselves and business organisations.

· At EU level, discussions between representative organisations from EU sectors or multi-national corporations can only provide one part of the story. Representation by companies promoting faster rates of innovation and SMEs needs particular attention. For full effectiveness, transition platforms need to be set up at Member State level and must include small, innovative businesses.

· These actions will work best when combined with changes to the relative prices facing firms, as these draw attention to the savings opportunities.

1.3. Treating Waste as a Resource 1.3.1. Specific barriers

'Waste' is already a resource in many sectors, particularly easily recyclable metals. Industrial structures exist for the collection and reprocessing of waste. Yet, barriers prevent much of the EU economy from expanding the re-use, recycling and recovery of the valuable materials in the 3 billion tonnes of waste that is thrown away each year[14].  Much of the value of which is lost overseas.

On average only 40% of our solid waste is re-used or recycled, the rest going to landfill or incineration. These materials are available from municipal waste, construction and demolition waste, to sewage sludge. Our waste streams are increasing[15]. Yet, in some Member States more than 80% of waste is recycled, indicating the possibilities of securing EU materials. Also, in many cases valuable raw materials are lost due to low quality 'downcycling' of waste.  Those barriers arise from:

Mixed waste streams: valuable material is lost to recycling and re-use through mixing with other waste in general waste collection and disposal (rather than being collected as separate streams), from retention in homes even at end of life (eg. mobile phones), or from illegal trade in waste taking the end-of-life products and scrap waste outside the EU. The EU recycling and manufacturing industries view this as a significant loss of resources for the EU – particularly in those metals where the EU faces insecurity of supplies, for instance the elements defined as critical to the EU economy, including rare earth metals, where the level of recycling remains low[16].

Limits to the recycling ability and capacity in Member States: cost-effective recycling depends on technological facilities for the separation of different valuable elements out of waste streams and processing to obtain clean material. Whilst technology has improved to make this possible for many elements and waste streams in the past decades (for example, for plastics), many Member States do not have access to modern facilities and technologies for some waste streams remain unavailable or costly. Separate collection often depends on either market actors or public authorities offering the service, and the current limits and incentives of both authorities and market actors hold back collection.

Incomplete markets for secondary materials: weak demand for some recycled resources limits the investment in innovation, collection and diffusion in a ‘chicken and egg’ problem – lack of investment in supply can leave potential buyers uncertain of secure high-quality supplies, weakening demand for those considering investments.

Environmental harm from waste treatment: the recycling of some waste streams (for example waste electrical and electronic equipment containing greenhouse gas refrigerants) can have environmental impacts if not recycled to good standards, as required by EU legislation. These requirements save costs for society (from environmental damage) but raise costs for recycling. In some cases, avoidance of the legislative requirements is frequent, distorting markets and disadvantaging legal businesses.

Implementation of waste legislation: Legislation plays a key role in market creation and technology diffusion. However, waste policies are not well implemented in all EU Member States — 19 % of all new environmental infringement cases in 2006 and 2007 were registered in the area of waste policies (Zamparutti et al., 2009) — and better implementation of current waste policies is needed to fully capture the benefits that could result from them[17].

1.3.2. Actions

Resolving these will need a combination of policies, such as product design integrating a life-cycle approach, better cooperation along all market actors along the value chain, better collection processes, and incentives for waste prevention and recycling.

Shortage of supply of material for recycling can be boosted by facilitating the exchange of best practice on collection and treatment of waste among Member States. Member States can set minimum targets through their national waste prevention and management strategies and work in the EU and with international partners to eradicate illegal waste shipments would boost the legal market.

Legislation on the various waste streams could be aligned to improve coherence and support good implementation, as could measures to combat more effectively breaches of EU waste rules. The existing prevention, re-use, recycling, recovery and landfill diversion targets can provide the push for the move towards an economy based on re-use and recycling, with residual waste close to zero, if properly reviewed.

The introduction of minimum recycled material rates, durability and re-usability criteria and extensions of producer responsibility for key products could be one action, amongst others, that stimulated the secondary materials market and demand for recycled materials. Economic incentives and developing end-of-waste criteria would also support the markets.

Public funding, including the EU budget, can play a key role through public investments in modern facilities for waste treatment and high quality recycling, boosting innovation by giving priority to recycling plants over waste disposal.

1.3.3. Analysis of strengths and Weaknesses

Strengths

· Waste reduction remains the optimal way to increase resource efficiency, and deliver the greatest economic and environmental savings. Improving waste management makes better use of resources and can open up new markets and jobs, as well as encourage less dependence on imports of raw materials and lower impacts on the environment.

· The potential opportunities are very large, particularly if innovation in recycling methods is considered.

· It is estimated that 6-12% of all material consumption (including fossil fuels) is currently saved or avoided due to recycling, waste prevention and eco-design policies – with a maximum potential with existing technology estimated between 10 to 17%[18]. Doing so would have an estimated CO2eq saving potential of 148 million tonnes (equivalent to taking around 47 million cars off the road per year), and a monetary value of €5 billion[19].

· Within waste are materials that constitute a significant loss of resources for the EU – particularly in those metals where the EU faces insecurity of supplies, for instance the elements defined as critical to the EU economy, including rare earth metals, where the level of recycling remains low[20]. This resource can be 'mined'.

· For example, the EU produces around 24kg of electrical and electronic waste per citizen per year. This waste contains many needed metals for the high tech industries, like Gold, Copper, Indium, Lithium, Palladium. It is increasingly clear that through improved recycling we can satisfy at least part of the demand for such important metals. Waste electrical and electronic equipment alone is expected increase by roughly 11% between 2008 and 2014.

· To show the possibilities, China has many 'city mines' - its largest is capable of producing 1 million tonnes of copper each year, twice as much as the largest primary mine.

· By working with markets, these actions have the potential to stimulate much greater investment in innovation and uptake of new practices than legislation alone. By aligning market incentives for recycling, including the costs of harm to other (particularly environmental resources) within the calculations of private actors has the potential to stimulate much faster rates of innovation, and hence secure a greater share of material flows for EU supply.

· Recycling has significant potential for reducing environmental impacts and harm to other resources – mainly from the avoidance of the life-cycle impacts (eg. in extraction and refining) of the virgin materials that are substituted by recycled materials. Benefits also come from avoidance of impacts from alternative treatment or disposal routes, e.g. avoided methane emissions from landfilled biodegradable waste.

· The EU is one of the world leaders in recycling technologies. Further stimulation of the market for recycling, together with public R&D support can drive innovation in this area to position EU producers even more favourably in growing world markets.

· Targets for recycling and waste prevention (for example for specific waste streams) have been effective at stimulating changes in collection and partnerships for recycling. Reviewed targets are also likely to stimulate organisation change and new technological development.

· The spread of best-practice in waste implementation and enforcement across the EU should assist Member States to achieve more and at lower cost.

Weaknesses

· For success, by 2020, waste must be seen and used as a resource. This requires a mind-shift in business and local authorities, in addition to the creation of economically attractive functional markets for secondary raw materials.

· Given the rate of global increase in demand for materials, recycling – even at much higher rates – is not a sufficient strategy to solve predicted problems of relative scarcity or security of supply. Taking steel as an example, between 2000 and 2020 China will produce as much steel as the US did during the last 120 years. If aggregate global production continues at its average growth rate over the period 1950-2007, i.e. 3.5% annually, in 135 years production would have increased by 100 times, so that even high recycling rates of existing stocks would be marginal compared with new production[21].

· This option requires significant public action – for instance in public, or publicly funded capacity for knowledge in recycling markets and collection. Whilst that is an opportunity for job creation in sectors of the future, public spending may be constrained due to the results of the financial crisis. Policy will be needed that uses the market to provide sources of finance whilst fairly distributing costs and benefits between consumers, producers and recyclers - for example through well-designed producer take-back schemes.

· Equally, the maintenance of strong market signals requires a belief in effective enforcement and the avoidance of illegal free-riding from operators working in the grey or black markets. This will require capacity in Member States authorities.

1.4. Supporting research and innovation

The ability of the economy to adapt is closely related to its rate of innovation. This change can be made by developing new technological and non-technological solutions, new approaches to the way we run business or the way we consume and use goods and services.

1.4.1. Specific Barriers

The current rate of eco-innovation is suboptimal because of certain barriers. Both radical and incremental innovations would be needed, and, as they work together, behavioural, organisational and systemic innovation would be as important as technological[22].

(a) Path dependency in areas for investment

Investors and entrepreneurs have started realizing the business potential of eco-innovation in the area of resource efficiency, but there is more to be done. Path dependency from the current dominance of certain technologies and systems can make commercial success of innovations very difficult[23].

Greater innovation would particularly be needed in: environmentally friendly material extraction, recycling, re-use potentials, substitution of environmental impacting material, technologies and design for less material and energy use, green chemistry (reducing the use of other resources) and improved and biodegradable plastics. Diffusion of innovation in water conservation and sustainable agriculture would also be required.

Innovation does not only rely on technologies but also on "softer" innovations such as those related to new business models or new process for example. Although the understanding and policy support to such types of innovation are less developed, they also have a significant potential, for example in delivery of the circular economy, as testified by the successful case of the National Industrial Symbiosis Programme[24].

(b) Lack of certainty about future markets

A particular challenge comes in creating market certainty about the demand for innovation by bringing together the stakeholders across value chains within the economy. Co-ordination must also allow the design and application of integrated policy mixes based on an appropriate understanding of innovation trends in the areas of resource efficiency identified as strategic (given the very horizontal and heterogeneous nature of the resource efficiency concept). Developing such knowledge base often represents a challenge.

(c) Under-investment in the relevant areas of knowledge

There is a mismatch between the areas of need highlighted in the Roadmap and the research funding in these areas, particularly around: so

· innovative solutions for environmentally friendly material extraction, for recycling or re-use, and for substitution of environmental impacting material, for example on smarter design, green chemistry and improved and biodegradable plastics;

· knowledge on the natural tipping points and ecosystems' resilience thresholds;

· knowledge on changing consumption behaviour for delivering resource efficiency and on the likely economy-wide rebound effects from policy interventions.

At European level, this knowledge gathering would build on the work of the EEA, Research Framework Programmes, as well as Earth observation policies (GMES, Galileo, INSPIRE, SEIS). Additional research would mainly take place under the cooperation specific programmes of the Research Framework Programmes, which are already paying growing attention to eco-innovation, for example, through public-private partnerships for 'Energy efficient buildings' and 'Green cars'. From 2014 onwards, resource efficiency would become a main theme, a "grand societal challenge" of the next framework programme.

1.4.2. Actions

Action will be needed to overcome the barriers by bringing together the actors, the policy framework and the incentives to boost innovation in the key areas for resource efficiency. The Innovation Partnerships and Joint Technology Initiatives under the EU's Innovation Union Strategy can do this, if designed to meet resource efficiency goals. EU research funding can be focused on the key resource efficiency objectives through its funding instruments - in particular, Horizon 2020 These actions provide specific funding "windows" for eco-innovation and tackle some of the specific problems holding back eco-innovation, both on the supply and demand side. The Eco-Innovation Action Plan can help with by reducing the barriers to innovation, in technologies and behaviours.

1.4.3. Analysis of strengths and weaknesses

Strengths

· Scientific breakthroughs and sustained innovation efforts could bring about by 2020 dramatic improvements in efforts to reduce, reuse, recycle, safeguard and value resources.

· The actions set out in the Roadmap will provide a coherent framework for policy action in these areas of innovation, to develop a strategic, long-term plan to accelerate the development and deployment of solutions. A wide range of policies will contribute, including the Innovation Union, the Eco-Innovation Action Plan, the Strategic Energy Technology Plan (SET Plan) and assistance with EU-wide technology verification[25].

· 'Innovation Partnerships' can provide the interactions between potential innovators and policy makers that facilitate the policy framework, funding and clarity of direction needed to meet resource efficiency goals. These are being developed on water, raw materials, ecosystem services, smart cities, agricultural productivity and sustainability, sustainable fisheries, and green chemistry.

· Joint Technology Initiatives designed to pool national research efforts into key areas can provide the critical mass of research and investments that enhances the rate and success of innovation in different Member States and markets.

Weaknesses

· The drivers of innovation are complex, and a wide range of supply and demand side measures are needed to respond. Whilst the Innovation Union and the actions set out above will contribute, they will need careful co-ordination and to be complemented by other measures (such as price signals).

· The allocation of clean technologies venture capital to resource efficient technologies has increased from 17% in 2006 to 45% in 2010[26]. The percentage can be taken, even if very roughly, as a proxy indicator of the type of eco-innovation that is being marketed and that might become mainstream in the near future. Even if the figure looks reassuring it has to be noted that energy efficiency plays the lion share in such trends while only a marginal role is played by technologies in areas such as bio-materials, water conservation, smart production and sustainable agriculture.

· The current levels of R&D in the EU fall well below the headline target of 3% set in the context of Europe 2020. Reaching this target and making sure that resource efficiency issues are mainstreamed into the resulting innovation push, will be necessary to successfully deliver the desired eco-innovation boost.

1.5. Phasing out inefficient subsidies 1.5.1. Specific Barriers

Distorting price signals, hiding future change

Subsidies for resources that lead the economy away from greater resource productivity are those which artificially lower the costs of using resources. Subsidies deter firms and consumers from adopting efficiency behaviours and technologies that would be cost-effective in the absence of subsidies. For example, in fishing, subsidies have led to the creation of global fishing capacity twice as large as current fish stock's ability to reproduce, resulting in lost global economic benefits of US$50bn/year (around half the value of the global seafood trade)[27].

These distorted price signals make it difficult for firms and consumers to predict future resource scarcities and adapt accordingly[28].

Holding back the pace of change

The size of this kind of inefficient subsidy greatly reduces the incentives for innovation and so retards the EU's pace of change. It also leads to reduction in the capital assets – including environmental resources - that the EU relies on, reducing our growth potential. The table below illustrates the scale of the barrier[29]:

Table: Aggregate subsidy estimates for selected economic sectors [30]

Sector / Region || Region

Agriculture OECD: || US$ 261 billion/year (2006-8) (OECD 2009)

Biofuels: || US, EU and Canada US$ 11 billion in 2006 (GSI 2007; OECD 2008b)

Fisheries World: || US$ 15-35 billion (UNEP 2008)

Energy World: || US$ 500 billion/year (GSI 2009a) US$ 310 billion in the 20 largest non-OECD countries in 2007 (IEA 2008)

Transport World: || US$ 238-306 billion/year – of which EHS US$173-233 billion (EEA 2005)

Water World: || US$ 67 billion – of which EHS US$ 50 billion (Myers and Kent 2002)

The cost of the subsidies to the public budget exacerbates macro-economic imbalances, increasing tax burdens or preventing investment in alternative investments that would have a greater growth and innovation benefits or social effects. EHS lead to higher levels of waste, emissions, resource extraction, or to negative impacts on biodiversity[31].

Hindering the economy's flexibility

Short-term, individual or sectoral interests in preserving subsidies lock-in past policy decisions, holding back the economy from responding to change. Fears of sudden losses of competitiveness of firms and job losses from the abrupt removing of subsidies without mitigating measures block discussion of appropriate reforms. Political and bureaucratic interests can also be an internal governmental barrier to reform, whilst our frequent sectoral approach to policy making does not prioritise the indirect benefits and longer-term from subsidy reform.

1.5.2. Actions

Member States are invited to prepare plans and timetables to phase EHS out as part of their National Reform Programmes.

The Commission will monitor the phasing out of EHS in the European Semester as of 2012; organise exchange of best practices on the reform of EHS between the Member States as of 2012; and will assess in the future revision of the environmental State aid rules as of 2013 how measures aiming at increasing resource efficiency have been implemented and to what extent aid for resource efficiency objectives is necessary.

1.5.3. Analysis of strengths and weaknesses

Strengths

· The potential economic pay-off of reform is very high, corresponding to the level of these subsidies. A study by the OECD found that ending fossil fuel subsidies could reduce GHG emissions by 10% by 2050[32]. At their September 2009 summit in Pittsburgh, the Leaders of the G-20 officially recognized the harmful effects of fossil fuel subsidies. They agreed to “phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest"[33].

· The direct savings and long term economic gains from subsidy reform can be significant. An example of the possible direct impacts comes from estimates that reforming subsidies for company cars could save up to 0.5% of GDP/year[34].

· Phasing out environmentally harmful subsidies by 2020 will deliver public budget savings at a time of public spending pressure, at the same time as improved productivity and, in the long run, economic, social and environmental benefits.

· The social goals behind these subsidies can often be achieved more cost-effectively by other measures that do not run counter to resource efficiency.

· Where subsidies affect internationally traded goods and services, worries of cross-border competition often need mitigation through co-ordination between Member States, which the EU can support.

· Many EHS are off-budget, and require investigation to identify and quantify. Assessment of the harmfulness of subsidies is sometimes not unambiguous. EU action can support Member States in carrying out investigation.

Weaknesses

· Reform of the subsidies has been identified as part of the reforms under the Europe 2020 Strategy. The OECD has developed an integrated assessment approach on the assumption that better policies will result when there is an explicit understanding of the distribution of costs and benefits, and when this information is made available. This requires systematic analysis of all costs and benefits, winners and losers, intended and unintended effects (environmental, economic, social) and highlighting where trade-offs exist. However, despite much rhetorical support, significant resistance to change remains.

· Successful reform needs to either review the initial purpose of the subsidy or find ways to deliver that goal in an economically more efficient way. The lack of co-ordination between Member States gives rise to perceived short-term competitiveness concerns for those who act first. The arguments that reform boosts competitiveness need more advocacy.

· Progress on reform will depend on Member State willingness to tackle political resistance. Distributional and short-tem sectoral competitiveness concerns are the major factors withholding member states from introducing market based instruments[35]. Mitigating arrangements may be necessary for the most affected regions, economic sectors or social groups within policy packages that ease transition by creating market rewards for greater efficiency.

1.6. Getting prices right 1.6.1. Specific Barriers

Distorting price signals, preventing the market's prediction of future conditions

Markets can only bring about efficient use of resources where the prices match the true cost of the resources used. Prices that do not match true costs lock in inefficient technologies and business structures, and hinder investment in clean energy and other green technologies.

In macroeconomic terms, resources and labour are often substitutes – and if resources are relatively cheap compared to labour prices, decisions are made to use more resources in place of labour. The incidence of the burden of taxation significantly affects these relative prices – and so frequently current tax policy distorts market prices away from resource efficiency. In microeconomic terms, the cost of externalities can still remain unreflected in prices, which leads to unsustainable exploitation of some resources.

Reduced flexibility through slow-moving tax policy

Mainstream tax policy often does not consider the effects of the burden of taxation on the nature of innovation in the economy, and this slows the ability of policy to match changing conditions. For example, the trend in the proportion of environmental tax revenues is not promising: broadly on the decline in the EU27[36]. The potential to reverse this trend and for further rebalancing by Member States is shown in the figure below by the considerable variation in taxes on pollution and resources with Denmark generating 2.3% of its tax take through these (and almost 10% from environmental taxes more widely).

Figure: Environmental taxes as a percentage of total tax revenue (2009)[37]

1.6.2. Actions

· The Commission will facilitate greater exchange and co-operation at EU level between the Member States on taxation issues: in particular, through engagement with Member State Ministries responsible for taxation reform for resource efficiency, for example under the Market Based Instruments Forum.

· Member States can assess the relative burden of taxation on labour compared to resources, making this ratio an analytical tool for policy effectiveness.

1.6.3. Analysis of strengths and weaknesses

Strengths

· Well designed tax shifts can be extremely effective at inducing behavioural change. Shifting the average share of environmental taxation in public revenues to more than 10% (in line with the best performing Member States) by 2020 would create a level playing field and support the economy to achieve greater resource efficiency. There is evidence[38] that raising energy taxation could drive forward substantial increases in innovation. Some positive examples of environmental tax reform:

· Sweden’s introduction of a NOx emission tax led to a dramatic increase in firms using existing abatement technology – from 7% to 62% in the year following the tax and a large number of patents for new technical solutions[39].

· Modelling of a Norwegian tax of 15% on plastic and paper virgin materials, (far below the external effects) pointed to a reduction in the use of these materials of 11%[40].

· Experience in the UK shows that heavier taxation of virgin materials improves recycling levels for construction and demolition waste so that virgin resources are saved.

· Properly taxing resources (including pollution) should provide revenues that can either be used to cut labour taxes, and so generate higher employment; or to relieve pressure on public budgets. The OECD has estimated that a permanent one-percent reduction in average burden on labour may increase the employment rate by 0.4% over the long run[41]. Another option is recycling revenues to industry to invest in innovation.

· Currently, most environmental tax revenue comes from energy (particularly petrol and diesel transport fuels), with significant potential for taxes on pollution and resources. Revenues from carbon pricing alone may raise 1-3% of GDP by 2020 depending on the circumstances of each country[42].

· The highlighting of these reforms within the European Semester monitoring of Member State reforms will help strengthen co-operation between Member States, likely to facilitate more policy change.

· Improving discussion and analysis will help to overcome this perceived barrier, and so the Commission will bring together experts and representatives of Member States to discuss and share best practice (at minimal administrative cost) in particular areas.

Weaknesses

· Progress on reform will depend on Member State action, but this will be subject to political resistance. Distributional and short-term sectoral competitiveness concerns are the major factors withholding member states from introducing market based instruments[43]. Attention therefore needs to be paid to anticipate and mitigate against any negative impacts on growth, employment and competitiveness. Success will depend on compensatory measures for socially disadvantaged groups and the use of fiscal reform within packages of policy that ease transition by creating market rewards for greater efficiency.

· Those concerns were also raised during a symposium on "Growth and green tax shifting in an era of fiscal consolidation" organised in 2010 by the Belgian Presidency, where Hungary and Belgium explicitly said that resource taxes would harm their countries competitiveness, given their existing economic structures. They stated that coordination among EU-Member States and potentially beyond would be crucial to avoid relocation and competitiveness concerns, deal with cross-border policy issues and to avoid distortions of the internal market.

· Before any reform, worries are voiced about putting a greater burden on existing industry, e.g. the risk of ‘carbon leakage’ to countries outside the EU, and the uncertainty that market based instruments could create for businesses, and the uncertainty about the strength of the new industry created (as is the case of carbon price in ETS). Without strong analysis of the positive effects of change and the transition costs for the structure of the economy, these arguments can block progress.

2. Key Natural resources

The resources below all play an important role in economic growth and determining the environmental impacts of our resource use. They form a part of the EU's 'natural capital'. This section describes some of the particular problems which slow our adaptation to managing the resources efficiently. This indicates where the actions above to transform the economy should be prioritised or complemented. These resources are part of the economic and environmental system, with use of one linked to use of others. Increasing efficiency in one can have multiplier effects. Climate is a key resource: specific challenges of progressing to a low-carbon economy are addressed in detail in the Commission's Roadmap for moving to a competitive low carbon economy[44] and the forthcoming Energy Roadmap 2050.

2.1. Ecosystem services 2.1.1. Interlinkages, Significance, Risks

Ecosystems provide a number of services that contribute directly and indirectly to human well-being, including provisioning services (e.g. food, water, fuel), regulating services (e.g. flood and disease control), supporting/habitat services (e.g. nutrient cycling) and cultural services (e.g. recreation). These services are of benefit locally, nationally or globally[45]. The magnitude of global business opportunities related to natural resources is estimated to be up to $2-6 trillion by 2050[46].

Depending on the spatial scale of ecosystem services, it can affect people in the neighbourhood of ecosystems, as well as local authorities and businesses, affect EU citizens as a whole, or have global consequences. Some business sectors are particularly affected, as they depend on ecosystem services, either directly or indirectly, including fisheries, forestry (wood products), agriculture (dependent on services such as pollination, biological control, soil formation, water availability and genetic diversity), water supply, pharmaceuticals and cosmetics, chemicals, agro-food, and growing parts of the tourism sector.

Nature-based solutions (green infrastructure) can be more cost-effective than purely man-made infrastructures for delivering public and private benefits – for example, green spaces providing cooling in cities enhancing resilience, for instance by using forest and wetland ecosystems for flood control and water purification. This investment in Green Infrastructure and the 'restoration economy' offers enhanced growth potential.

Yet, 60% of the Earth's ecosystems have been degraded in the last 50 years[47]. In the EU, only 11% of protected ecosystems are in a favourable state[48]. 88% of fish stocks, for example, are fished beyond maximum sustainable yields[49].

2.1.2. Specific Barriers

The TEEB report[50] highlights some of the key barriers holding-back resource efficiency:

· Often the benefits of ecosystems accrue to a wide range of stakeholders over a wide geographical area. These wider benefits are hard to integrate into decisions taken by individuals or localities, which tend to focus on immediate, direct winners and losers.

· Economic incentives – e.g. prices – play a major role in influencing the use of natural capital but in most cases prices do not take account of the full value of ecosystem services.

· Conventional measures of national or businesses' economic performance and wealth fail to reflect natural capital stocks or flows of ecosystem services that they rely on. So these are often not factored into decision making – leading to policy, production and investment decisions that degrade or ignore eco-system services.

· There is often a lack of familiarity with investment in maintaining, restoring or enhancing services provided by ecosystems, as alternatives to man-made infrastructure (such as wastewater treatment plants or dykes). This holds back financing and investment decisions.

2.1.3. Actions

Member States, regions and firms can better factor in the value of ecosystems by mapping and valuing the ecosystems they rely on. Changes in these values can be included within accounting and reporting to allow the assessment of wealth, risks and facilitate investment.

The use of innovative financial instruments can be developed, including payments for ecosystems services and other market based instruments: at national, EU and international level. The EIB and public private partnerships can usefully be involved. Giving those services their appropriate value would induce economic actors to integrate the external impacts of their activities on the ecosystems. Public authorities can create policy frameworks that promote investments in natural capital.

2.2. Biodiversity 2.2.1. Interlinkages, Significance, Risks

Beyond ethical arguments for protecting biodiversity for its intrinsic value, there are also economic arguments. Biodiversity underpins many of our ecosystems and is vital to their resilience. Its loss can weaken an ecosystem, compromising the delivery of ecosystem services and making it more vulnerable to environmental shocks.

It has been estimated that by 2050, the global business opportunities dependent on biodiversity and the ecosystem services it underpins, could have a value of between $800-2.300 billion per year. However, 30% of species are threatened by overexploitation[51] The EU has failed to meet its previous target of halting biodiversity loss by 2010.

2.2.2. Specific Barriers

· Many of the barriers for ecosystem services are also present for biodiversity management. The true value of biodiversity is only starting to be taken into account in decisions.

· Biodiversity is often damaged by the result of the accumulation of many small indirect, harmful acts. So action to halt biodiversity loss will need to cover a wide range of policy areas, and a high degree of complexity will be unavoidable. The demands on integration and mainstreaming place a heavy burden on policy making and institutions, and explain many of the difficulties in meeting the earlier target of halting the loss of biodiversity by 2010.

2.2.3. Actions

The EU has agreed a target of halting the loss of biodiversity and restoring them as far as feasible to preserve and increase its value. The 2020 EU Biodiversity Strategy summarises the key actions to be taken to reach the target, many of them implementing EU commitments under the Convention on Biological Diversity (CBD).

2.3. Minerals and metals 2.3.1. Interlinkages, Significance, Risks

Global trends appear to indicate that an era of declining resource prices may be over, driven by increasing demand. On the supply side easily accessible high-grade ore deposits tend to be depleted, leaving less accessible, lower-grade ore, that requires more energy and risk to extract. Depending on the resource, the impacts on supply prices are mitigated by increasing innovation in extraction technology.

Volatility of market prices – for those materials that are internationally traded has increased for some resources and presents an economic risk. Stocks, availability and market volatility of minerals and metals differ greatly between each other, even within groups of related elements, like 'rare earth metals'. The volatility may increase from increasing contractual arrangements between states and between monopolistic mineral supply markets that limit the size of the traded market – with this 'shallowness' leaving markets more susceptible to shocks. Some aggregate trends and indications of recycling rates are given in the separate Annex 7.

In general, there are only a few elements with geological scarcity. However, there can be scarcity (in the sense of reduced availability) for other reasons. The supply risk is linked to the concentration of production in a handful of countries, often with low political or economic stability. This risk is in many cases compounded by low substitutability and low recycling rates. For instance, the Commission has identified 14 critical raw materials at EU level that display a particularly high risk of supply shortage in the next 10 years and which are particularly important for the value chain.

In many cases, a stable supply is important for manufacturing competitiveness, and often for climate policy objectives and for technological innovation. For example, rare earths are essential for high performance permanent magnets in wind turbines or electric vehicles, catalytic converters for cars, printed circuit boards, optical fibres, electronic and photonic components, LED lighting products and high temperature superconductors. The EU is completely dependent on imports, with China accounting for 97% of world production in 2009.

2.3.2. Specific Barriers

There is significant lock-in to existing ways of using materials, for example in construction, where the introduction of more resource-efficient building elements may require new knowledge by architects and builders.

Declining price trends in the past have led to weak innovation in ways to use materials more efficiently, and in recovering valuable material from mixed waste streams. Recycling of some metals and minerals increases, but global economic growth is now so large that recycling can only make a small, though significant impact on demand.

2.3.3. Actions

The actions mentioned in Section 4 to promote greater innovation in materials, substitution, efficiency of design and increased values of recycling can mitigate the barriers to optimal use and management of minerals and resources.

2.4. Water 2.4.1. Interlinkages, Significance, Risks

Water is an essential resource for many sectors, such as agriculture, tourism, industry, energy and transport, as well as a fundamental need for citizens. Reduced water availability has a direct negative impact on citizens and economic sectors. For instance, water is needed in power stations for cooling, as well as hydropower.

By 2020, Europe's water should be of good quality, efficiently used and available in sufficient quantity but with water abstraction, as a rule, below 20% of available renewable water resources. While water is generally abundant in Europe, demand for water can exceed availability. When water is scarce, meeting human demands can mean reducing availability to ecosystems. Where this over-abstraction occurs, it is causing low river flows, lowered groundwater levels and the drying-up of wetlands, with detrimental impacts on freshwater ecosystems[52]. This erodes the natural capital and the services (e.g. recreational fishing) that are provided. Many European river basins and waters have been altered by water abstraction, land drainage and dams, leading often to major adverse ecological effects, poor quality water and limited space for natural habitats[53].

Water availability varies hugely between regions, and over time. At least 11% of the European population and 17% of its territory have been affected by water scarcity to date, particularly in the south with its relative lack of, and high demand for, water. A comparison of the impacts of droughts in the EU between 1976–1990 and 1991–2006 shows a doubling in both area and population affected[54]. Similarly, global groundwater depletion has increased from 126 (±32) km3/year in 1960 to 283 (±40) km3/year. In Europe, the main groundwater depletion hotspots are south-east Spain and the lower Danube[55].

Under a "business-as-usual" development, water withdrawals could increase by more than 40%. Climate change is also projected to exacerbate these impacts, with more frequent and severe droughts projected for many parts of Europe. In addition, demand for electricity increases during hot, dry periods, when air conditioning is used – and this corresponds to the time of increased risks of water scarcity or increased river temperature, leading to risks of black-out.

As well as water quantity, water quality remains an issue across Europe, with implications for public health and bio-diversity. Pollution remains a concern for water users and the need to supply clean water in sufficient quantity and at a reasonable cost remains a challenge EU wide.

For many European countries much of the 'water footprint' of its consumption is indirect, occurring in use wherever production takes place (virtual water), causing potential water stress abroad.

2.4.2. Specific Barriers

Policy simulations show a water saving potential of 65%, and that an ambitious environmental policy could keep the vast majority of EU river basins out of water stress[56]. 20% to 40% of Europe’s water is wasted and water efficiency could be improved by 40% through technological improvements alone[57]. Changes in land use, in production and water consumption patterns could increase savings further in a cost-effective way and contribute to ensure both water quality and availability.

There are several reasons why this potential has not yet been achieved by policy or markets:

· Water resource management in Europe has tended to focus investment on ensuring availability through supply side measures[58]. Demand management requires change of more actors, with more coordination.

· Water scarcity, droughts, floods and water quality problems affect most European river basins, the most important of which – like the Danube and the Rhine – are transboundary and cover the majority of the European territory. Solutions need to take the entire water cycle into consideration often needing transboundary action.

· True costs of water are often not reflected in prices, reducing the benefits of investment in water efficiency. One user does not naturally take into account the impacts of his use on the availability of water for others. Even where prices are right, water costs can be a small part of total costs for any individual, and outside of core business activities, so not taken into account.

· Sustainable management of water resources would require integration into agriculture, transport and energy policies; and the application of fair water pricing policies. (For example, water pricing in agriculture should be closely related to actual volume of water consumption rather than a fixed amount per irrigated hectare.)

· Water leakages from distribution networks are as high as 50% in certain areas of Europe, with big differences across Member States. However, in some parts of Europe, for example, Germany and Denmark, leakage rates are less than 10 % and close to what is technically and economically feasible[59]. The difference is partly explained by lack of prioritisation of investment, due to under-pricing of the true costs of water.

2.4.3. Actions

These costs and benefits of economic activities and water resources management need to be reflected in prices to allow water users to make the right choices about efficiency. Further implementation of the cost-recovery principle, enshrined in the Water Framework Directive and highlighted in Water Scarcity and Droughts strategy, will be essential.

Fostering the integration of water and other policies and managing trade-offs covering both water quantity and quality are needed to give clear signals for changing behaviours. Life-cycle measurement of water use (within and outside the EU) by companies for the products they produce can identify water risks and opportunities. Labelling and certification schemes can enhance market rewards for reduced life-cycle consumption. Member States can also aim at estimating the right balance between market instruments and public funding to finance the recovery of environmental and resource costs.

Water efficiency can be improved by properly examining the allocation of water resources in the medium and longer term. There is a great potential for increasing the availability of water in a basin through reuse and recycling of water through land use change that restore water cycles. Leakage reduction programs, and setting cost-effective targets for leakage reduction can direct investment to where the costs/benefit ratio is strong.

The River Basin Management Plans under the Water Framework Directive offer a process to better understand the costs and benefits of both economic activities and water resources management, and so manage trade-offs. Multi-purpose natural water retention measures, a component of Green Infrastructure, are under-exploited. They could also provide cost-efficient responses to extreme events. Redundancies, overlaps and gaps in legislation can be addressed to give the right frameworks.

Additional analysis will provide a more accurate picture of the vulnerability of water resources in the medium and long term and the pollution of surface and groundwater. On the basis of new information on estimated future gaps between water demand and supply for 2020 and 2050, indicative targets could be set at EU, Member State and river basin level that would help change policy, behaviours and technology.

2.5. Air 2.5.1. Interlinkages, Significance, Risks

The quality of air is a key factor in quality of life and in lowering economic costs. The EEA SOER estimates that current concentrations of fine particles cause 500,000 premature deaths in Europe a year and that exposure to particulate matter and ozone is linked to other significant effects such as acute and chronic respiratory and cardiovascular effects, impaired lung development in children and reduced birth weight[60].

These concerns were echoed in the latest World Health Organisation health and environment progress report for Europe which states that "urban air pollution, especially particulate matter, causes significant health problems throughout the region, reducing the life expectancy of residents of more polluted areas by over one year”[61].

Other studies have shown that the number of working days lost due to air pollution induced illnesses is higher than the working days required to pay for additional pollutant abatement measures.

Significantly, ecosystems and agriculture also suffer damage from airborne impacts such as acidification, eutrophication and ozone damage to vegetation. The annual economic cost in 2020 has been estimated at €537 bn. Whilst the EU is well on track to resolving the problem of ecosystems damage due to acid deposition, biodiversity remains under threat due to excess nutrient deposition (eutrophication) or high levels of ground-level ozone.

There are very strong synergies, and some trade-offs, between air pollution and climate change policies[62]. Certain measures (e.g. those reducing black carbon), may also yield important short-term benefits for climate change[63]. For example, future large scale uptake of electric vehicles could lead to significant benefits from the displacement of air pollutants from urban to rural areas (where fossil-fuelled power stations often are) so lowering population exposure. Electricity sourced from non-combustion renewable sources would lead to further benefits.

Up to 62% of Europe's urban population remains potentially exposed to ambient air concentrations of fine particle matter (PM 10) in excess of the EU limit value set for the protection of human health. Several air quality standards are widely exceeded in the EU[64]. Even though, since the nineties, air emissions have been reduced significantly for almost all pollutants identified at the time as problematic. For example, compared to 1990 emission levels, sulphur dioxide emissions came down by almost 80%, those of heavy metals by between 60-90%, and nitrous oxides by almost 40%.

Cost-effective options to move beyond the present objectives agreed for 2020 as contained in the 2005 Thematic Strategy on Air Pollution have been identified. Preliminary analysis suggests a revision of the National Emission Ceilings (NEC) Directive[65] aiming at meeting the 2020 objectives of the Thematic Strategy on Air Pollution would deliver major health and environment benefits, with the monetised health benefits 12 to 37 times larger than the costs.

Many Member States will likely miss at least some of their emissions obligations for 2010 under the national emissions ceilings directive. Meeting the EU's interim air quality standards by 2020, including in urban hot spots, will contribute to achieving levels of air quality that do not cause significant impacts on health and the environment.

2.5.2. Specific Barriers

· Clean air is a shared 'public' good, without ownership or a market. So it can not be managed effectively by the market and legislation is needed to optimise the health and economic benefits. However such policy, even where it has net economic benefits in addition to health benefits is often held-back by distinct political groups who may suffer short-term costs. This retards the predictability of change and the market economy's flexibility, holding back innovations.

· Thanks to policy, the EU has held a leading position in developing and marketing "green technologies" to control air pollution, a growing global market. This position is increasingly under pressure from such countries as Japan and Brazil. Whilst this may reduce competitiveness of EU air pollution control technologies firms, it should allow for more cost-efficient policy[66].

· Ongoing evaluation suggests that many compliance problems in Member States are related to a number of factors such as the overestimation of the expected emission reduction of EU-wide measures (e.g. EURO standards for vehicles) or the misjudgement of the effectiveness of national measures. Other important factors are the late development and/or implementation of the Member States’ national programmes.

· Complexity hinders evaluation of harm and potential benefits from any individual reduction measure. The figure below shows how several pollutants contribute to the same environmental impact, and how a broad range of sectors are responsible for the emissions of atmospheric pollutants, except for ammonia, whose agricultural activities are the predominant source (94%).

2.5.3. Actions

Better implementation of existing legislation and new, science-based standards would help address these problems and steer innovation. With appropriate lead-times, these can ensure air quality benefits from transition to a low-carbon economy, and by other actions in this Roadmap, for example through reductions in waste, through more efficient production methods, as well as action in agricultural policy and the transport sector. Air pollution policy can be reviewed to find the synergies with other benefits.

Model-based scenario analysis has shown that reducing GHG emissions in 2020, 2030 and 2050 will further reduce emissions of PM2.5, SO2 and NOX in the EU compared to the reference case. An effective decarbonisation can reduce air pollution cost (of both damage and air pollution control) by some €11 billion in 2020, €29 billion in 2030 and €85 billion in 2050[67].

2.6. Using land and preserving soils 2.6.1. Interlinkages, Significance, Risks

Land

Available productive land is itself a natural resource, whether used to deliver agricultural produce or eco-system services. Changes in land-use may be the best use of the land. However, for this to be the case, the current and future public and private benefits of alternative uses of the land need to be taken into account.

Current EU land cover is 4.2 million km² of which roughly is 40% forests, 44% agriculture, and 4% built up areas[68]. The SOER notes that "land-use specialisation (urbanisation, agricultural intensification and abandonment plus natural afforestation) is still a very strong trend and is expected to continue in the future".

On urbanisation, more than 1,000 km² are taken every year for housing, industry, roads or recreational purposes. About half of this surface is actually 'sealed'[69], meaning that, at this pace, every ten years we pave over a surface area equal to Cyprus. Much of the land being converted is highly agriculturally productive, due the historical location of cities at the centre of agriculturally productive areas. Current land take results in a potential food production loss of 440,000 tonnes of wheat per year[70].

The loss of joined up habitat through fragmentation is also serious.

Intensification is problematic where the impacts of high stocking numbers, inadequate crop rotation and high water use are not controlled – inputs of nitrates and pesticides into water, ammonia into air and water stress can result.

Agricultural abandonment is also an issue: potentially 12 million hectares[71], with 8.6% abandoned by 2020[72]. This can have undesirable consequences for biodiversity, especially related to the loss of extensively grazed grasslands.

Some of these land use risks vary between regions, and here subsidiarity is important. However, issues such as pressure on agricultural land or soil sealing are present in all but the most isolated parts of the EU, and the policy drivers are often from the EU if not international level.

EU policy also has an impact worldwide. The ongoing work on Indirect Land Use Change in the context of biofuels suggests a relatively responsive model whereby additional demands on agricultural output translate into undesirable land use change mainly outside of the EU (deforestation, ploughing up of grassland).

Soil

Soil provides us with food, biomass and raw materials. It serves as a platform for human activities and landscape and as an archive of heritage and plays a central role as a habitat and gene pool. It stores, filters and transforms many substances, including water, nutrients and carbon.

Soil captures about 20% of the world’s manmade carbon dioxide emissions, giving good soil management significant cost-effective potential for mitigating climate change. Europe's soils contain an estimated 73 to 79 billion tonnes of carbon in the form of organic matter. Even a tiny loss of 0.1% of that carbon emitted into the atmosphere is the equivalent to the carbon emission of 100 million extra cars on our roads – an increase of about half of the existing car fleet. Conversely, an increase in soil carbon of the same small amount would be worth some €1.6 billion[73]. It is important to note that about 20% of the European soil carbon stock is in peatlands, despite the fact that they only cover 8% of the EU-27 surface area[74].

Soil quality and water issues are linked – soil organic matter can hold 3-5 times its weight in water, when it is preserved.[75] In addition, a fully functioning soil reduces the risk of floods and protects underground water supplies by neutralising or filtering out potential pollutants and storing as much as 3,750 tonnes of water per hectare[76].

In 2006, the Commission evaluated that soil degradation in EU-25 was costing the EU economy some €38 billion per year[77], with the EEA estimating a cost of agricultural land loss of €53/ha/year.

Europe has a problem of soil contamination, particularly historical contamination. It is estimated that 3.5 million sites may be contaminated, with 500,000 sites being really contaminated and needing remediation[78], at a cost of €17.3 billion per year[79]. Once contaminated, soil functions may be impaired and human as well as ecological health and food quality may also be prejudiced.

17.5% of the soil is at risk from water erosion of more than 1 t/ha/y[80]; Economic effects due to erosion-induced on-site income losses (e.g. tourism, land abandonment) have been estimated at 10 – 90 €/ha/y (2006 value)[81].

The Commission’s 2050 vision foresees that the soil resource is sustainably managed. One measure of the health of soils is the level of organic matter. To make the most of the potential of this resource, degraded EU soils would have to increase their levels of soil organic matter. Soils which have lost organic matter to a large degree have the greatest potential gains for fertility, erosion reduction and carbon sequestration from increasing organic matter. The Commission has already indicated that around 45% of soils in Europe have a low or very low organic matter content, taken to be less than 2% organic carbon, or 3.5% organic matter. Thus, by 2020, soil organic matter levels should not be decreasing overall and should increase for soils with currently less than 3.5% organic matter.

2.6.2. Specific Barriers

Land

As land-use change is frequently long-term, and often practically irreversible, or costly to reverse (e.g. conversion of natural/agricultural land into transport infrastructure), decisions made now may not be optimal over time.

The use of land is nearly always a compromise between social, economic and environmental needs including additional housing to deal with an aging population and improved infrastructure to facilitate economic development.

Yet many individual decisions often do not consider the cumulative effects of land-take and longer-term, strategic goals. Most land is in private ownership and owners, within planning and other legal limits, and decisions do not consider the indirect or public benefits of land-use. One of the challenges for land use policies is successful engagement of the interested parties.

For example, if we are to reach a state of no net land take by 2050, following a linear path, we would need to reduce land take to an average of 800 km² per year in the period 2000-2020.

Although identification of contaminated sites and their subsequent remediation would facilitate land use, only a minority of Member States has a proactive policy in this field. Even with significant increases in activity, only a fraction of the identified sites will be remediated by 2020.

Some land use risks vary strongly from region to region, and here subsidiarity is important. With regards to fragmentation and sealing of land, significant infrastructure decisions are increasingly being taken at the EU level, which means that EU level checks and balances are required. Much land use change is being driven by EU legislation - mainly the Renewable Energy Directive.

Soil

Natural soil formation is very slow: it can take more than 500 years to form two centimetres, so soil losses over 1-2 t/ha/year are in practice irreversible.

Longer-term and public benefits from soil are often not factored into to private decision making.

Member States have a key role in taking action on soils. However, very few Member States have soil monitoring schemes in place allowing a quantified evaluation of soil conditions changes in time[82]. Partially as a result, there is unequal progress among Member States in addressing soil contamination.

2.6.3. Actions

Developing the knowledge-base on biotic material, land-use trends and spatial planning can inform decisions. Research can discover where high erosion rates take place, as this can identify the most cost-effective measures. (For example, the EU Strategy for the Danube Region[83], looks to reduce the surface area where erosion exceeds 10 t/ha/y, by 2020.) The EU can gather estimates of Europe’s consumption globally, including impacts at global level, and highlight best policy practices in the Member States.

The Innovation Partnership on Agricultural Productivity and Sustainability can help halt the loss of soil functionality, for example, by ensuring that EU agricultural land susceptible to water and wind erosion is managed by practices of conservation farming. It can assist Member States in the development of organisational and behavioural innovation on soils, by improving the information flow.

EU level checks and balances can integrate strategic, long-term and environmental aspects into EU decisions affecting land. This includes indirect land use change from renewable energy, TEN-Ts, TEN-Es, regional initiatives such as the Danube Strategy and specific projects. Ongoing CAP reform will continue to play a key role in supporting the sustainable management of land.

The EU and Member States can improve consideration of land as a resource in policy and planning processes, including the operation of the Environmental Impact Assessment Directive. Changes in trading arrangements, such as the proposed MERCOSUR agreement can have a very large influence on indirect land.

Setting goals that accelerate the current downward trend in per capita land take would support an evolution of national policies in this direction. This would respect subsidiarity whilst assisting in reducing the pressures from the EU level. The identification of contaminated sites and their subsequent remediation would enhance resources at risk from contamination and facilitate land use.

2.7. Marine resources 2.7.1. Interlinkages, Significance, Risks

Marine ecosystems have an important natural regulatory function and constitute the resource base that underpins the economic prosperity of many coastal regions. Overexploitation of natural resources reduces the economic yield that could be derived, e.g. from fisheries. The European Union represents about 4.6% of global fisheries and aquaculture production[84], and fisheries, aquaculture and food processing account for around 0.5 million jobs with a turnover of 32 billion Euros per year[85]. Achieving good environmental status of all EU marine waters by 2020, and by 2015 fishing within maximum sustainable yields would put the EU fishing industry on a sustainable basis, and ensuring that marine resources are managed effectively and are not left at risk.

In addition to sustainable fisheries, the marine environment holds many economic opportunities stemming from living resources -e.g. in pharmaceuticals and biotechnology - from mineral resources and both renewable (wave, wind, ocean energy) and fossil energies (oil, gas). A recent report[86] underlines the economic importance, assessing the sustainable benefits related to marine ecosystems in the Mediterranean in 2005. The benefits assessed fall into three groups of ecosystem services: production services (production of food resources of marine origin), cultural services (amenities and support for recreational activities) and regulatory services (climate regulation, mitigation of natural hazards (coastal erosion) and waste processing). At regional level, the benefits are assessed at over 26 billion Euros for 2005, more than 68% of which comes from the provision of amenities and recreational supports. The benefits relating to the production of food resources account for only 11% of the overall estimated benefit.

The global market for Marine Biotechnology products and processes is currently estimated at € 2.8 billion with annual growth of 4-5%. Some estimates predict that annual growth in the sector could exceed 10 in the coming years, revealing the huge potential, if properly encouraged and facilitated[87].

2.7.2. Specific Barriers

There is sub-optimal management of marine resources. The depletion of fish stocks has severe economic and social consequences for coastal zones and contributes to biodiversity loss by disrupting systems.

(a) Fish stocks below maximum sustainable yield

In the EU, about 1/3 of the assessed stocks are being fished outside their safe biological limits[88]: of the assessed commercial stocks in the NE Atlantic, 8% (Baltic Sea) to 80 % (Irish Sea) are outside safe biological limits. For the other areas in the NE Atlantic the percentages of stocks outside safe biological limits vary between 25% and 55%. In the Mediterranean the percentage of stocks outside safe biological limits ranges from 44% to 73%[89].

EU catches have declined since 1993 at an average rate of 2 per cent per year. The lower productivity of EU stocks means that fishing is becoming an increasingly costly enterprise. The amount of effort and fuel needed to land one tonne of fish is higher than it needs to be, and higher than it would be if stocks were at a sustainable level. It is estimated that UK trawlers invest 17 times more effort than they did 118 years ago to land an equivalent catch[90].

Fishery discard practices constitute a waste of valuable living resources, which plays an important role in the depletion of marine populations. Based on Eurostat data, it can be estimated that in European fisheries 1.7 million tonnes of all species are discarded annually, corresponding to 23% of total catches.

On a global level, the United Nations Food and Agriculture Organization (FAO) reports that around 28 per cent of stocks are overexploited or depleted, with another 52 per cent fully exploited[91]. Around the world 27 per cent of fisheries were judged to have collapsed by 2003, meaning that their annual harvests had fallen to less than 90 per cent of their historical maximum yields[92].

(b) Increasing reliance on imports

The EU is one of the world’s top three importers of fishery and aquaculture products, importing US$23 billion worth of fish and fisheries products in 2007[93]. Imports account for around 60 to 70 per cent of the EU’s consumption of fish.[94] The EU is increasingly reliant on imports, as domestic production is falling, and has reduced its self-sufficiency for fish by 12 per cent compared to the year 2000[95].

(c) Under-exploitation of other marine resources

Beyond fisheries and marine ecosystems, the oceans hold a host of valuable resources. Sand and gravel, oil and gas have been extracted from the sea for many years. In addition, minerals transported by erosion are mined from the shallow shelf and beach areas. These are increasingly attractive economically to exploit.

Until now, the expansion of renewable energies, such as wind and solar power, has mainly taken place onshore. However, now the production of environmentally friendly energy from the oceans is being promoted worldwide: it is hoped that wind, waves and ocean currents will meet a substantial share of the world’s electricity needs. Experts estimate that offshore wind power could in future supply about 5000 terawatt-hours (TWh) of electricity a year worldwide – approximately a third of the world’s current annual electricity consumption. Offshore wind energy plants (WEPs) in Europe alone should supply about 340 terawatt-hours a year by 2015[96].

Marine Biotechnology, which involves marine bioresources, either as the source or the target of biotechnology applications, is also becoming an important component of the global biotechnology sector.

(d) Pollution

Challenges posed by pollution and climate change (e.g. acidification), are threatening marine resources. For example, over 1 million birds and 100,000 marine mammals and sea turtles die each year as a result of plastic waste[97]. Factors such as marine litter and urban waste water treatment seriously aggravate pollution in some seas around Europe. Nearly 1 in 10 fish collected in the Pacific Ocean during a recent study contained plastic debris, as one sign of the significant amount of plastic entering the global food chain[98].

(e) Inertia in policy and decision making

Management of EU fishing, whilst generally supported, is seen as threatening fishing communities. This can slow down or block reform, for example, of subsidies, as there are concerns over the concentrated impact of changes in local communities that do not have easy access to other jobs.

The difficulties of managing EU fish stocks in a sustainable way indicate the size of the challenge for the global fish stocks that the EU increasingly relies on, and which are a significant source of income and food for coastal communities in many developing countries.

2.7.3. Actions

The reform of the Common Fisheries Policy to eliminate all fisheries subsidies which do not improve the sustainable management of marine resources would help align economic incentives with sustainable fishing. Greater use of consumer sustainability labelling, and the use of sustainably caught fish by food producers could also create greater rewards for sustainable fishing, providing incentives for stock management. The creation of more protected marine areas can provide the biodiversity needed for strong sustainable fish stocks.

Good implementation of the Marine Strategy Framework Directive by Member States through policy measures on management and planning as well as support for knowledge and demonstration projects would safeguard natural coastal and marine capital. Member States can promote eco-system based strategies and integration of climate risk into maritime activities, whilst collaboration between Member States bring measures that tackle marine litter.

3. Key Sectors

Much of the potential for resource efficiency comes from interactions through the value chains that links consumers to raw materials, which are best addressed through a focus on key sectors of the economy. Analysis by EIPRO[99] identified food, mobility and consumption as the final services that are responsible for 70 to 80 per cent of environmental impacts.

3.1. Addressing food 3.1.1. Significance

The food and drink industry has a turnover of €917bn[100]. It employs more than 4 million people in around 310 000 companies. Judged by consumer expenditure, purchases of food and catering services are the most important items for consumers[101]. The EU's production and consumption of food and drink has global resource implications through trade. In 2007, trade in both raw and processed agricultural products accounted for approximately 6% of total EU trade with non-EU countries[102].

It is dependent on the resources which are subject to the greatest risks. For its inputs it is dependent on natural systems (including clean water, fertile soil, ecosystem services from biodiversity), petrochemicals and other mineral inputs (eg. phosphates). Problems with these resources can send ripples through global markets that have particularly high impacts on people in developing countries and lower income groups.

It is also one of the largest contributors to unsustainable use of natural resources, in the EU and in our global footprint. The relationship between consumption and food and drink and resource use and depletion is described in the Figure below, looking along the life-cycle. Resource depletion includes eutrophication, habitat change, climate change, water use, soil erosion and pollution[103]. The size of these impacts is on an upward trend. Along the whole life-cycle, consumption of food and drink in the EU causes 18% of the EU's material use[104].

Estimates of impacts on environmental resources vary, but are consistently high:

· One estimate is that around half of all environmental impacts are attributable to food and drink[105]. This includes 18% of our greenhouse gas emissions[106] or approximately 2 tonnes CO2- equivalents of greenhouse gases per capita. (equivalent to the quantity which Europeans will need to budget for all their activities in the long term if we are to meet the European Commission’s 2050 target of an 80% reduction in GHGs)[107].

· According to a study by the European Topic Center[108] some 15-30% of all key environmental pressures can be allocated to eating & drinking.

EU consumption has impacts elsewhere, through the global markets. For example, EU meat production, which equals about 15-18 % of global meat production and which is almost exclusively consumed within EU, requires large amounts of high quality protein feed. With only a minor domestic production, the major share of this feed is based on soybeans and soybean cake which imported from countries like Brazil and the United States. The imported amount corresponds to an area of more than 20 million ha of cropland and shows how European consumption patterns contribute to land use change elsewhere[109].

Globally, agricultural production accounts for 70% of global freshwater consumption, 38% of the total land use, and 14% of the world’s greenhouse gas emissions[110]. The fossil energy embedded in food is significant.

3.1.2. Opportunities for Resource Efficiency

The value brought by food and drink can be realised with lower resource inputs and resource depletion if steps are taken along the value chain on: food waste, food choices, production techniques and phosphorous management.

Food Waste

According to FAO figures, roughly one-third of food produced for human consumption is lost or wasted globally, which amounts to about 1.3 billion tons per year[111]. Annual food waste generation in the EU-27 is approximately 89 million tonnes representing 179 kg per capita[112].

Reductions in the wastage of food can allow the EU economy to meet citizens' desires for food and drink with significantly fewer inputs. These cost savings for producers and manufacturers could either boost their profits or be passed on to consumers. Reduction in food waste would also cut the resource impacts of unnecessary production and costs of collection, treatment and elimination of waste food. To illustrate the scale of potential benefits - food waste represents about 3% of the GHG emissions of the EU-27, i.e. 170 Mt CO2 eq./year, in which households contribute 45%.

Food waste occurs at different stages of the supply chain, not only during final consumption. It is affected by interactions along the supply chain – for example, contractual relations, timings of delivery, or labelling by retailers. Policy actions that promote interactions in the supply chain to reduce food waste can manage resources more efficiently[113]. Catering and retail sectors, responsible for part of food waste (14% and 5% respectively) could often avoid this wastage relatively easily.

Considerable improvements can be achieved through prompting behavioural change for all the actors of the food chain. A study carried out in the UK[114] shows that 60% of the food wasted by households could be avoided, saving more than €500 per year per household. Significant benefits could come from small, smart changes many of which can be realised at low costs through awareness and nudges to behavioural change. For instance, the UKstudy found out that poor comprehension of date labelling, notably the difference between "use-by" and "best before" dates, is responsible for about 20% of the avoidable food waste.

The UN has pointed to a target of reducing avoidable food waste by half by 2020[115].

Food Choices

People's selection of the food and drink they consume has a significant effect on resource use. Different products have considerably different impacts on resources. In particular, consuming animal products has much higher impacts than a similar nutritional level of plant based products. Diets that are high in meat, eggs, milk and cheese has a relatively large life-cycle impact on resources. The selection of fish also impacts on sustainability of fish stocks.

The greater impacts of animal products come from:

· Land degradation: The production of 1 kilogram of meat requires several kilograms of vegetable products, depending on the livestock product. As a result, the livestock sector accounts for 70 percent of all agricultural land and 30 percent of the land surface of the planet[116]. This magnifies agricultural impacts. In addition, the livestock sector may be the leading player in the reduction of global biodiversity through its demand on land, for example, as the major driver of deforestation, as well as of climate change. Its resource demand also leads to overfishing, sedimentation of coastal areas and facilitation of invasions by alien species[117]. In Europe, pastures are a location of diverse long-established types of ecosystem, many of which are now threatened by pasture abandonment or intensification[118].

· Greenhouse Gas emissions: The livestock sector contributes 18 percent of greenhouse gas emissions measured in CO2 equivalent looking at life-cycle impacts[119].

· Higher Water Footprint: The livestock sector accounts for over 8 percent of global human water use, mostly for the irrigation of feedcrops. It is probably the largest sectoral source of water pollution, contributing to eutrophication, “dead” zones in coastal areas, degradation of coral reefs, human health problems, emergence of antibiotic resistance[120].

· The consumption of meat and dairy products contributes on average 24% of the global environmental impacts from the total final consumption in EU-27[121].

The Figure presents the percentage contribution of meat and dairy products to the environmental impacts of EU-27 total consumption.

However, given current levels of environmental impact from animal products, these consumption levels are not sustainable in the face of global trends. Growing global populations, with increasing dietary intakes and changing food preferences, are rapidly increasing demand for livestock products. Production of meat and milk is projected to more than double from 1999/01 to 2050. These consumption trends are not sustainable.

In the EU animal product consumption are increasing, as incomes grow although EU citizens consume more meat than necessary from a health point of view (in 2007 the average protein consumption in the EU-27 (FAO 2010) was 70% more than WHO standards[122] [123]).

Having widespread incentives to healthier and more sustainable food production and consumption by 2020 would drive a 20% reduction in the food chain's resource inputs.

Production Techniques

The same food and drink can be produced using different methods, using more or less resources, during agricultural production, manufacturing processes or as waste treatment. The selection of agricultural impacts can be significantly influenced by the market – through consumer preferences either acting directly or through influencing intermediary buyers (e.g. wholesalers and retailers). Co-operation along the value chain can bring innovation in farming practices that otherwise wouldn't take place, through the diffusion of information and provision of incentives. These market incentives can be supported by development of a methodology for sustainability criteria for key food commodities, which increases information along the value chain.

In the EU, the Common Agriculture Policy has a very significant effect on choices and value chain impacts. Ensuring that agricultural production in the EU lowers environmental resource impacts may sometimes conflict with the other objectives (such as increasing production). The reform Communication of December 2010 sets out the potential for environmental improvements in a number of areas, notably in terms of water consumption and pollution, soil and habitat conservation, preservation of ecosystem services. Changes made under the new Multiannual Financial Framework should help improve agricultural production.

Changes in the EU are also only part of the issue, given the impacts on global agriculture and land use. Working to shape incentives along value chains can reach beyond the EU.

Phosphorus Management

Phosphorus is one of the essential nutrients for plants. There are also numerous animal illnesses associated with inadequate phosphorus intake, including milk fever in high yielding cows. Between 120 and 170 million tonnes of phosphate rock are used every year. Nearly 90 % of phosphorus use is in agriculture, mainly as fertilizers[124]. There are two major opportunities from efficiency gains in phosphorus use:

· Reducing risks from security of supply - most of the world's current known and accessible phosphate resource is under Moroccan control in the Western Sahara. Two thirds of the current mining comes from 3 countries (Morocco, China and the US). There are additional known resources in areas with difficult access (e.g. Alaska, Amazon forest)[125]. There has been some evidence of recent short term scarcity – very high capacity utilisation rates in existing facilities, price spikes etc. In 2007–2008, phosphate rock and fertilizer demand exceeded supply and prices increased by 700% in a 14-month period[126]. Against this, the demand for phosphorus is predicted to increase by 50–100% by 2050.

· Reducing pollution of soils and water - Phosphorus is, along with nitrogen, a major contributor to eutrophication due to over use leading to runoff from agricultural land. Also, as cheap and cleaner resources of phosphate rock are used up, dirtier sources with higher cadmium contents will be accessed, which will risk cadmium pollution of soils.

Globally, we are mining five times the amount of phosphorus that humans are actually consuming in food, showing scope for efficiency gains. Estimates suggest that through resource efficiency, global fertilizer phosphorus use from primary sources can be reduced by 18%, compared to currently envisaged policies. Total global phosphorus demand could reduce an additional 8% by banning its use in detergents[127].

There is no single ‘quick fix’ solution to phosphorus issues, but there are a number of technologies and policy options that exist today at various stages of development that together could make a significant difference and deliver other environmental co-benefits on water quality. These include more efficient use of P-fertilizers and manure in agriculture.

3.2. Improving buildings 3.2.1. Significance

By improving resource efficiency in constructing and use of infrastructure and buildings, the EU can influence 42%[128] of its final energy consumption, about 35% of its greenhouse gas emissions and more than 50% of all extracted materials, and save up to 30% water.

Economically, construction is one of Europe’s largest industrial sectors, with an annual turnover exceeding 1200 billion Euros, and activities that account for 10.4% of the EU GDP. 7.2% of the EU workforce is directly in the building and construction sector[129].

The aggregated impacts of housing and infrastructure account for around 15-30% of all environmental pressures of European consumption. Housing and infrastructure contributes approximately 2.5 tonnes of CO2 equivalent of greenhouse gasses per capita per year. 40% of these GHG emissions are directly associated with heating and hot water for private households. The construction of buildings and other infrastructures contributes another 30% of the total emissions[130].

The resources used along the value chain of construction are shown in the figure below.

3.2.2. Opportunities for Resource Efficiency

If buildings and infrastructure are renovated and constructed to high resource efficiency standard, then the resource impacts could be significantly reduced. The economic value of the resource savings over the life-time of the building can be captured by the construction sector, with increased demand and greater value added. Improvements in buildings (particularly energy efficiency) have a very large potential for cost savings with simultaneous reductions of fossil fuel use and greenhouse gas emissions[131], estimated at around 40% cost-effective savings to 2020.

Whilst the sector has been hard hit in some Member States during the financial crisis, this could provide an opportunity for re-orientation of construction: for example, the Commission estimates that 2 million jobs could be created in renovation of existing building stock.

These opportunities exist because the building sector has particular characteristics which act as barriers to greater resource efficiency:

· Buildings are one of the most long-lived products, meaning that decisions made now lock-in consumption patterns (e.g. of energy) for decades to come, with adjustment of the initial choices carrying additional costs.

· Consumers and investors frequently discount future pay-offs from investment choices, and focus on the short-term, sometimes because of uncertainty of future returns. This means that investments in efficiency with positive net benefits do not get made.

· Blocks to the flow of information between constructors, sellers or buyers/renter prevent the market from delivering investments in efficiency and uptake of available innovation. For consumers, housing choices are rarely taken, and knowledge about the relative performance of buildings or components are low.

· In renovation, consumers frequently rely on the advice of professionals. However, the building sector is characterised by SMEs, many of whom do not have the resource to innovate and keep up with innovation. 99.9% of construction enterprises are SMEs, 92% have less than 10 employees[132]. Both in construction and renovation this slows the adoption of new technologies and processes[133].

· Investments in efficiency are also hindered by the principal-agent problem. In rented buildings, often investment in efficiency measures must be done by landlords, who cannot recover savings from tenants, and vice versa. Data from the UK found that 31% of owner-occupied dwellings were in the top efficiency quartile, only 8% of dwellings with private tenants indicate a similar performance[134].

Significant improvements in resource and energy use are possible during construction and demolition, through use of existing techniques, and greater investment and diffusion of innovation. For example, changes delivering water are estimated to be able to deliver savings of a potential greenhouse gas emission saving of 1% of the EU's total. Whilst, research and development is taking place into new forms of concrete, which can deliver the same or improved properties with greatly reduced life-cycle greenhouse gas impacts.

Policy already points the way to some improvements, with, for example, all new and renovated buildings to be nearly zero-energy[135], the existing building stock to be refurbished[136] at a rate of 2% per year; and 70% of non-hazardous construction and demolition waste will be recycled[137].

Further policy measures can reach more SMEs, by using market signals as a driver for innovation. This would require a life-cycle approach to be widely applied. Such demand facilitates increased investment in innovation by building firms (if other blocks are removed). For instance:

· Creating increased market demand for more efficient ‘greener’ buildings. This can be done through public procurement, in particular through the uptake of life-cycle costing methodologies by public procurers that take better account of future running and maintenance costs.

· The convergence of building codes across the EU (where appropriate) can increase the market rewards for innovation, both in products and process.

· Similarly, ensuring market prices of building materials and energy reflect their real costs, relative to labour, will act as a stimulus to innovation. A shifting of taxation from labour as part of this realignment would be likely to increase employment.

An important part of stimulating demand is freeing up financing for more resource-efficient new buildings and renovation of existing buildings. This can be helped by the formation of financial vehicles that increase the awareness of steady returns from resource savings in buildings.

Best practice from Member States indicates that bringing together firms and policy makers across the value chain of construction, will facilitate change in practices and technology that is otherwise locked in to existing patterns[138]. This can be supported by increasing the availability of information on the resource efficiency of building components and alternative construction processes.

Increasing investment, both at EU and Member State and regional level, in training in the skills needed for creation and renovation of more resource efficient buildings, would remove current skills gaps and so lower costs.

Facilitating growth of innovations in the use of ‘green infrastructures’, as part of integrated spatial planning, increases the performance of buildings, infrastructure and urban environments. For example, the use of green roofs has been shown to reduce temperatures in cities. Measures to increasing awareness, skills and acceptance would reduce barriers to diffusion of these techniques.

3.3. Ensuring efficient mobility 3.3.1. Significance

A modern, resource efficient mobility system, serving both passengers and freight can contribute to competitiveness and sustainability through reduced resource dependency, and reduced impacts from pollution, land use, and noise on climate change, biodiversity and ecosystems, health and safety. Increasing efficiency in the transport sector by 2020 could deliver greater value with significantly reduced needs for resources like raw materials, energy, land use, and impacts such as climate change, air pollution, noise, accidents, and ecosystem degradation.

The Figure below shows the relationship between resource depletion and transport.

Exploitation of these synergies can offer additional routes to the achievement of goals given the extent of resource efficiency and decarbonisation needed by 2050. These interactions appear likely to reduce costs of achievement of those goals, compared to existing scenarios.

3.3.2. Opportunities from Resource Efficiency

The Transport White Paper[139] aims to increase mobility, dramatically reduce Europe's dependence on imported oil and cut carbon emissions in transport by 60% by 2050. This involves moving to more resource efficient transport system in Europe, notably:

· Developing and deploying new and sustainable fuels and propulsion systems, for example, halving the use of ‘conventionally-fuelled’ cars in urban transport by 2030; phasing them out in cities by 2050 and achieving essentially CO2-free city logistics in major urban centres by 2030[140].

· Optimising the performance of multimodal logistic chains, including by making greater use of more energy-efficient modes.

· Increasing the efficiency of transport and of infrastructure use with information systems and market-based incentives, including: (a) the deployment of the modernised air traffic management infrastructure (SESAR12) in Europe by 2020 deployment of equivalent land and water transport management systems and (b) moving towards full application of “user pays” and “polluter pays” principles.

The Commission will seek to ensure that the initiatives under the Transport White Paper are implemented consistently with resource efficiency objectives including by moving towards particular through internalisation of external costs.

The OECD points to the complexity of this area, particularly the indirect effects as a cause for low levels of integration. This also leads to difficulties of modelling the complex interactions between all the aspects of the economy, which also has a tendency to exclude examination of these aspects within model-driven climate, energy and transport policy.

Whether synergies are fully realised depends on the extent of integration and policy co-ordination, at EU, Member State, value chain and company level. The structures for co-ordination, information flow and governance contained in this Roadmap should facilitate this integration.

4. Application of Governance to Other Key Areas 4.1. Investing in the transition

UNEP estimates that the annual financing needs for making the world economy more resource efficient are between US$1.05-2.59 trillion - around 10% of annual global capital investment[141]. In the EU, and elsewhere, this financing will need to come mainly from private sources[142]. This will require a combination of well-designed policies creating the right market conditions and an evolution of the perspectives on opportunities held by private investors.

The startling growth of global financing for clean energy shows how this shift in mindset is possible. In 2010, annual clean energy investment exceeded investment in traditional energy sources for the first time, exceeding US$230bn. These flows are still small compared to the volumes required, but show how the right policy mix (for example emissions trading) can stimulate change. For the investments in the medium term transition, greater flows of assets will be needed from public and private institutions that can invest in the long term, whose liabilities are not due for short-term payment, including pension funds, development banks, sovereign wealth funds and insurance funds.

These institutions are increasingly seeing the advantages of investments that reduce future environmental, social and governance risks and moving some of their assets into portfolios that deliver these profiles. One key element of successful mobilisation of finance is the development of comparable measures of corporate resource efficiency and exposure to resource scarcity to assist institutions. Regulation of investments and accounting may, in some cases, need to be changed to facilitate greater long-term market investment.

Yet, for the level of financing necessary, the current financial systems bias towards the short-term would have to be reversed. Investment in the infrastructure needed for transition can offer the long-term yields with weak correlation to other economic sectors that could form greater shares of the portfolio of e.g. pension funds (who currently, in most countries, invest 1% in infrastructure)[143]. The Commission estimates annual EU investment needs for a move to a low-carbon economy to be around €200 billion over the longer-term, with both the building/infrastructure/construction and the transport sector comparatively accounting for the highest investment needs[144].

Eco-innovation needs also to be supported, in particular as lots of SMEs are active in this field. A faster pace of eco-innovation and market penetration is hampered by the lack of risk finance and support for demonstration. Support is needed for the development of innovative solutions and new technologies, for testing, but also for entering these technologies in implementation and use phases.

Finance for resource-efficient product innovation and investment in efficiency savings should become available on equal or better terms than comparable investments. SMEs in particular need to have better access to finance for resource-efficient innovation.

Public funding has an important role in assisting SMEs, particularly as market signals are not fully aligned with resource efficiency. However, access to private funds is essential for the scale of investment. The combination of public and private action needed to open up private investment opportunities in resource efficiency can be identified by suitably focussed discussions between policy makers and financiers.

A Resource Efficiency Finance Round Table, including representatives from private and institutional banks (such as the EIB, EBRD), insurance companies and venture capital companies may serve this purpose and to identify opportunities to develop adapted finance for resource-efficiency.

4.2. Supporting resource efficiency internationally

The EU is affected by global resource scarcity through economic and environmental interactions. It also has significant direct and indirect effects on global resources through its consumption (and the drivers that provides for global resource use), its wastes, its pollution, the activities of EU firms overseas and its international policy interactions.

In a globalised economy, a more globalised view of products and markets is increasingly necessary. Recent model calculations, quoted by the UN’s International Resource Panel suggest that CO2 emissions embedded in internationally traded products accounted for 27% of global energy-related CO2 emissions in 2005, up from 22% ten years earlier.

In addition, unsustainable resource use also leads to security risks as the competition for scarce resources becomes more intense. Water, food and soils are essential for basic subsistence and poverty eradication, with evident links to EU development goals.

The use of international policy tools is one of the key routes to influence resource use outside the EU that matters for EU objectives. This complements the EU's impact through supply chains and leadership in innovation (in technology, policy and consumption behaviours). The EU has a window of opportunity to take the lead in a number of areas, by leading by example in environmental performance and know-how, and by promoting a level playing field among competitors for resources. A number of EU environmental policies and standards are already being taken up around the world: electrical/electronic waste and hazardous substances (e.g. China WEEE, China RoHs, Brazil RoHs).

A number of countries are re-orientating their policies towards resource efficiency; the United States, China, Korea and some developing countries. The EU can learn from this experience and help influence their path. As developing countries grow economically, they have to address a range of resource management issues (e.g. better waste and water management) and can learn from European know-how in design and implementation of policy.

There are a wide range of actions open to the EU, including: direct support to and joint initiatives; strengthening the implementation of existing agreements; using our own consumer power and trade agreements to influence global consumption and production patterns; using development aid; cooperating in research and innovation; and working towards stronger multilateral mechanisms for a global governance of public goods. Progress in other countries’ resource efficiency in partner countries will not only enable them to develop sustainably, but will also in turn make it easier for the EU to reduce its own global footprint.

If resource efficiency could become a shared objective of the international community, it could form the basis of co-operation in many different fields, including development, trade and technology co-operation.

The EU can make increasing resource efficiency in global supply chains a key part of the EU’s approach to the Rio+20 Summit in June 2012, where business and global governments can set goals and pathways to international efficiency providing strong market signals and tackling international barriers. The Commission has proposed a wide range of actions, including new international initiatives on agriculture, land use, forests, chemicals and marine resources, helping mobilise private and public financing and investment, as well as help with progress towards a more effective global, multilateral governance system[145].

To bring this about resource efficiency considerations would need to be more systematically factored into our external policies.

4.3. Removing skills bottlenecks and mitigating social costs

The issue of skills is a key issue. A key factor affecting transition costs is the number of skill shortages and the potential exclusion from work of people with obsolete skills. Already there are some reports of green skill bottlenecks For example, recent OECD work has confirmed that SMEs face particular challenges in upgrading or adjusting the skills of their workforce[146].

In order to build a sustainable future growth, employment needs to be of high quality and move away from precarious and low-paid working conditions. Jobs created in sectors linked to sustainable growth are often more secure, with high potential for exports and economic value creation

The European Employment Strategy already offers range of tools based on principle of flexicurity including anticipation, social support to restructuring, active labour market policies (ALMP), skills provision and social dialogue. There is a need to build on the existing range of programmes trying to fill this gap[147].

As announced in the ‘Agenda for new skills and jobs’, the Commission will develop an EU skills Panorama to improve transparency and mobility for jobseekers, workers, companies and/or public institutions by providing information, in the short and medium term, on current and future skills needs, skills supply and mismatches. The Panorama will contain updated forecasting of skills supply and labour market needs up to 2020. As part of this skills panorama, the green skills for a low carbon a resource efficient economy will be analysed in detail.

The Commission will continue to support the establishment of European Sector Skills Councils. A European Sector Council on skills for green and greener jobs could, for example, facilitate the exchange of information between Member States on skills profiles, training programmes and emerging skills gaps mismatches. Skills and employment strategies can be developed for promising areas, e.g. the construction of zero-carbon homes.

Closely linked to this, the European Social Fund is used for green skills promotion, but not to a great extent and hardly at all in some countries. There is scope to expand the targeting on green jobs and share best practice in this respect. The vast majority of this support does and will need to come at Member State and regional level. Social dialogue is an important part of measures to anticipate skills and design and provide the right responses.

4.4. Improving implementation of EU legislation

Poor implementation brings economic costs: the costs of implementation gaps in relation to currently legally binding targets are estimated at around €50 billion per year[148].

Poor implementation also signals uncertainty, which puts business off investing in resource efficiency. It also impacts on the single market through different conditions in Member States which can reduce the rewards for innovation, and so slow the pace of efficiency gains. Good implementation of EU legislation is crucial for creating clear market signals. It helps create a single market for innovation that is sufficiently large to encourage R&D and commercialisation. It also prevents free-riders causing damage to resources that others use as inputs. At present there are gaps in compliance and implementation. Correcting these fully by 2020 would support the transition to resource efficiency.

Actions to support implementation will need to be taken by a wide range of stakeholders working together. The Commission has a role to play in facilitating action, though the action is ultimately for Member States.

The impacts depend on design and enforcement in implementation, where the record of Member States is mixed, varying depending on political priority and capacity. For example, implementation by Member States of recycling policy or the Water Framework Directive (which calls for many measures promoting efficient use of water) has been mixed.

Annex 4: Representative European Ecological Footprints

This annex shows the 'ecological footprint' of some EU Member States consumption (not available for all countries) plus Switzerland – an assumption and data based assessment of the natural resources consumed by a Member State, measured in hectares/capita[149].

Annex 5: The rebound effect and odd price effects

This annex summarises a study by Bio Intelligence Service on the rebound effect[150]. The study provides an overview of the main findings from a review of the literature.

1. Definition

Although in the literature there are many definitions of the rebound effect, in general it can be defined as 'increases in consumption due to environmental efficiency interventions'. These increases in consumption can occur through:

· behavioural effects – when a feel good perception of being 'green' encourages increased consumption for certain products where 'greener' options are readily available.

· price effects – there are three types of price induced rebound effect:

(1) Direct Rebound Effect – where increased efficiency and associated cost reduction for a product/service results in its increased consumption because it is cheaper.

(2) Indirect Rebound Effect – where savings from efficiency cost reductions enable more income to be spent on other products and services.

(3) Economy wide Rebound Effect – where more efficiency drives economic productivity overall resulting in more economic growth and consumption at a macroeconomic level.

2. Evidence and significance

Evidence on the existence of direct rebound effects is robust…

The existence of the rebound effect is recognised on the basis of evidence from many credible sources including United Nations Environment Programme, International Energy Agency, UK Dept of Environment, Food and Rural Affairs, European Environment Agency, UK Dept for Energy and Climate Change and the EEA State of the Environment and Outlook Report[151].

… but the exact size is hard to measure and extrapolate…

Whilst widely accepted, the size of the rebound effect is still a widely debated subject. The rebound effect is both hard to measure and varies depending on the intervention (policy, technology, practice), the type of products/services/resources investigated (energy, food, transport, etc.), as well as other related factors e.g. income level, productivity, price elasticity, saturation, location and time[152]. Therefore the evidence is clear that generalising the available direct rebound effect estimates to all types of rebound effect from all types of energy efficiency improvement is not appropriate.

Even harder to measure are indirect and economy wide rebound effects, which are difficult to define and distinguished from other micro- and macro-economic effects[153].

... we have a number of examples…

In general, examples relate to the direct rebound effect associated with interventions relevant to energy efficiency, with a smaller number focusing on water, materials and waste. This is a reflection of the status of the rebound effect topic which has been mostly measured for energy efficiency as rather than wider resource related impacts. Examples include:

– direct rebound effects for household energy efficiency for space heating/ cooling, personal transport, white goods and lighting are estimated in the range 10- 30% for developed countries[154].

– direct rebound effects of 30-80% for fuel efficiency in commercial road transport[155].

– for policies to reduce the environmental impacts of meat and dairy consumption in the EU[156] found negative rebound effects of -10 to -100%[157].

– for industry sectors, estimates for rebound effects for energy efficiency in the UK are 15%[158].

– a recent USA study investigating 30 industry sectors shows long term direct rebound effects of 20-60% with energy intensive sectors e.g. utilities, chemicals and agriculture having the highest effects[159].

3. Implications for policy

The rebound effect can lead us to miss targets

Understanding the size of the reduction in anticipated environmental savings from the rebound effect is important when developing policy as it affects the environmental effectiveness. Rebound effects can be assessed e.g. in Regulatory Impact Assessment (RIA) though, to date, only the UK government has accounted for ‘take back’ in energy savings in its policy evaluation. This could relatively easily be done in the short term for specific policies where direct rebound effects are known to occur e.g. energy efficiency interventions for energy services, transport, household heating/cooling heating, appliances and lighting. It could also be considered in the evaluation and performance monitoring of policy.

Need a policy mix to respond to rebound effects

Where the rebound effect is significant, it is clear that efficiency measures alone will not be sufficient and that other measures will also be required[160]. The evidence shows that a policy mix, incorporating technology, fiscal and behavioural aspects, is best suited to addressing direct rebound effects. For example, awareness raising through the provision of information on consumption via SMART metering (or real time displays) gives the consumer the opportunity to think about their consumption and then reduce it. The use of a mixture of instruments is already found in the EU Sustainable Consumption and Production policy, which has both demand and supply facing measures.

Annex 6: Resource efficiency indicators and targets

1.           Introduction

Indicators and targets are important tools to measure and foster progress towards the vision and objectives of the resource efficiency flagship initiative. This annex on indicators and targets presents in more detail the approach on indicators. The section on theme and action specific indicators is organised according to the chapters of the Resource Efficiency Roadmap Communication and includes related targets or milestones. It complements the already existing and agreed indicators and targets on climate change, energy and energy efficiency.

This annex presents the indicators that are now ready for use, discusses their scope and limitations and gives information on ongoing work to improve or develop further indicators. The targets or milestones mentioned are in various stages of development: some are already in place, others are presented here as a basis for further discussion and evaluation. As a whole, further progress and development is needed to better incorporate the monitoring of resource efficiency in policy making.

2.           The approach

To orient decisions, assess state of play and communicate progress towards the objectives of this roadmap, the Commission will use a lead indicator, accompanied by a dashboard of complementary macro indicators. A complementary set of theme specific indicators will be used to measure progress towards the specific thematic objectives and actions set out in the roadmap.

3.           Lead indicator and dashboard of complementary macro indicators

3.1.        The Lead Indicator

For the near future, while recognising that it only captures the material resources aspects of resource efficiency, the Commission will use "Resource Productivity" (GDP/DMC[161] expressed in euro/tonne) as the lead indicator. To compensate for the limitation in scope of DMC, the lead indicator will be complemented by a dashboard of macro indicators on water, land and carbon. New indicators on natural ecological capital[162] and on environmental impacts of resource use[163] will be added as soon as possible.

The lead indicator and the dashboard are closely linked and should normally be used in combination. This is because the scope of the lead indicator does not cover all relevant natural resources, it has a national rather than a supply chain perspective (thus not covering shifts of material use from EU to abroad) and, furthermore, economic value, scarcity and environmental impacts of a resource are only partially correlated to its weight. Therefore, there might be situations in which an improvement of the lead indicator hides some overall unfavourable development. Such a highly aggregated indicator needs to be complemented by a small set of additional indicators and this follows the recommendations from the Commission’s "Beyond GDP" initiative[164] and the work of the Stiglitz-Sen-Fitoussi-Commission[165]. Monitoring evolution of the lead indicator together with the dashboard of macro indicators on land, water and carbon can help to disclose potential unfavourable trends that are hidden by the Resource Productivity indicator. A disaggregation of the material use in main categories such as biomass, fossil energy carriers (linking with energy and energy efficiency), industrial minerals and ores and construction minerals will also be necessary.

The proposal described above is based on an analysis of existing, readily available indicators, indicators that have been developed and produced but are discontinued, and indicators under development that are likely to be finalised before 2013 (see Appendix 1). The selection of a single lead indicator has taken careful account of its quality profile, purpose and key message.

Resource Productivity indicator (GDP/DMC) relates an important part of the resource input into the economic production process to the output of economic activity. GDP, as a measure of monetary values, does not cover non-market goods and services, it focuses on current economic activities rather than on the developments in natural, social and economic assets important from a longer term perspective, and it has no concern for inequality. Despite all its limitations, GDP is still considered as the best available indicator accounting for the output of economic activity. The Commission is working under its "Beyond GDP" initiative towards a more comprehensive measure of prosperity or wealth that might be used in the long-term.

3.2.        The dashboard

As mentioned, DMC covers only material resources and has a national production perspective, which means that it does not include material resources used overseas to produce our imports. Thus, it would not register or 'indicate' if improvements of domestic resource efficiency are made by delocalisation of resource intensive or less resource efficient steps in the production chain to countries outside the EU. Indicators that have a life cycle or value chain perspective are needed to trace such potential effects. Therefore, the dashboard complementing the lead indicator needs to comprise both perspectives.

The Commission intends to use, improve or develop the following concrete indicators:

|| Production / territory perspective || Consumption / global supply chain perspective

Land || Artificial land or built-up area (km²) – available with restrictions in time series || Indirect land use / embodied land for agricultural and forestry products (km²) – to be developed

Water || Water exploitation index[166] (WEI, %) – available with restrictions on completeness of data and regional/temporal resolution (river basin/intra-annual variations) || Water footprint – to be updated and improved or Embodied water – to be developed

Carbon || GHG emissions (t) – available || Carbon footprint – estimates available from scientific sources

This dashboard of indicators – in conjunction with the lead indicator – has the advantage that it focuses on clear stocks or flows of main resources: materials, land, water and carbon. As such it can be easily understood, measured and communicated.

3.3.        Baselines, latest values and trends[167]

Resource productivity: Resource productivity in 2007 has increased with 7.4% in comparison with 2000. However, in order to achieve absolute decoupling of economic growth from resource use, resource productivity needs to grow equally to or faster than GDP, which has not been the case. GDP has grown with 16.2% over the same period while DMC has grown 7.9%. An absolute decoupling would mean that DMC should remain constant or decrease.

Land: Artificial land has continued to expand; in the period 2000-2006 at a rate of 920 km² per year. To reach a state of no net land take by 2050 and assuming a linear reduction from now until then, the average annual land take needs to decease to maximum 800 km² per year in the period 2010-2020.

Water: Trends in EU average values of the water exploitation index (WEI) have been stagnating around 13% for the past 20 years. However WEI national values vary from 64% to less than 1% and decreases of WEI are rare. Values above 20% are considered unsustainable.

GHG emissions: After an initial decline starting from the baseline in 1990, GHG emissions were for almost stable for a decade. Recently a further decline was observed, reaching 17.4% reduction (compared to 1990) in 2009 (the Kyoto Protocol requires the EU to reduce greenhouse gas emissions by 8% below 1990 levels by 2008-2012). The challenge will be to keep this trend also in the period of economic recovery as the EU target for 2020 is a 20% reduction (30% if the conditions are right).

3.4.        Further developments

An indicator on natural ecological capital and an indicator on environmental impacts of resource use will be added as soon as possible. Indicators on natural ecological capital are under development by the EEA as part of their activities to set up comprehensive eco-system accounts to complement the existing approach on environmental economic accounting. For example, Landscape Ecosystem Potential and Ecosystem Degradation are indicators that will be developed and evaluated for inclusion into the dashboard. Also the life cycle based environmental impact indicators under development by the Commission's Joint Research Centre will be considered.

A further important development underway is the integration of indirect or embodied material consumption into material flow accounts in order to reflect the life cycle or value chain perspective. The indicator that will come out of this improvement is Raw Material Consumption (RMC). In contrast to DMC, but similarly to the life cycle based indicators, it will also include the indirect effects outside the EU.

In addition, the Commission will continue working on improving indicators on:

· Resource availability and consumption, thereby clearly distinguishing renewable and non renewable resources;

· Resource productivity, including sustainable management patterns;

· Policy instruments, such as environmental taxes or Green Public Procurement;

· Benefits of resource efficiency along the production chain, such as innovation and green jobs;

all above listed aspects measured appropriately at:

· industry,

· product,

· national and European level.

4.           Theme specific indicators

This section presents specific thematic indicators – and where appropriate also milestones and existing targets – that the Commission intends to use to define existing or potential levels of ambition and to assess the state of play, the progress towards objectives and the implementation of actions of the Resource Efficiency Roadmap. The presented indicators, targets and milestones are related to both 'objectives' and 'actions' from the Roadmap, depending on availability of data or "measurability".

For each indicator a short rationale is given, including information on any other indicators that have been considered but rejected. This annex presents the best indicators currently available, some of which are still under development. For some parts no good indicators exists; they still need to be developed and produced. As new or improved indicators, besides the ones suggested, become available, they will be used to replace or complement those laid out below. As such this will be a continuous process of improvement. These new and improved indicators could also be used in iGrowGreen, since there are strong synergies between indicators, areas and domains covered by iGrowGreen and the indicators considered below.

4.1.        Transforming the economy

4.1.1.     Improving products and changing consumption patterns

4.1.1.1   Supporting Green Public Procurement (GPP)

The Commission will consider developing the following indicators in 2012:

· Proposed indicator:

– Percentage of the value, and number, of public procurement contracts that include GPP criteria.

· A milestone or target will be considered.

Rationale

Public authorities are major consumers in Europe with a large purchasing power: they spend annually the equivalent of around 17% of the EU’s GDP. By greening their purchases, they can make an important contribution to environmental protection, energy and resource efficiency, the fight against climate change and the development of eco-innovation industries. This contributes to achieving a critical mass for producing and consuming green products and services (products with a low environmental impact over the life-cycle). A higher uptake of GPP therefore indicates an overall improvement in resource efficiency.

4.1.1.2   Promoting green buying

The Commission will consider developing the indicators on green products (products with a low environmental impact over the life-cycle) bought by households, or on the output of green products by 2012. This includes also further clarification of the definition of 'green products'.

· Proposed indicator:

– Number and value of green products purchased by households;

– Alternatively: output or share of green products in total output;

– A milestone or target will be considered.

Rationale

Households in Europe are major contributors to environmental problems such as climate change, air pollution, water pollution, land use and waste. The proportion (number and value) of green products bought by households is an indicator not only of the change in environmental performance of products on the market, but also in attitudes towards resource efficiency. Based on work on environmental footprint of products, products sold in the EU market should communicate their environmental impact to final consumers.

4.1.2      Boosting efficient production

4.1.2.1.  Measuring, managing and improving European companies' resource efficiency

The Commission will consider developing the following indicators in 2012:

· Proposed indicators:

– Proportion of companies using environmental footprint, by sector and size class, within priority sectors, for:

· measuring,

· managing,

· meeting benchmarks,

– Number of companies, by sector and size class, benefiting from advisory assistance from Member States or regional government on improving their environmental performance.

· A milestone or target will be considered for the share of companies within the priority sectors, which measure their environmental footprint, to be achieved by 2020.

Rationale

Based on work on corporate environmental footprint, and to help European companies become more resource efficient and lower their environmental impacts, companies need to measure and monitor their performance (based on an harmonised 'environmental footprint' methodology), and to improve it against agreed benchmarks. In the long-term and to reduce significantly their environmental impacts, all companies should measure and improve the environmental footprint of their operations. In order to set benchmarks and start trends, by 2020 most of the companies in sectors where environmental impacts are the highest, should do so. Assistance is essential especially for SMEs in taking the first steps in managing resource efficiency aspects of their operations. The availability of such services is uneven across the EU. The indicator would show progress on this issue.

4.1.2.2.  Phasing out the most harmful chemicals

· Proposed indicators:

– Number of known 'substances of very high concern' (SVHC) included on the REACH Candidate list.

· Targets and milestones:

– Currently there are 53 SVHCs on the REACH Candidate List. The aim is to have 136 on the Candidate list by 2012 (existing target), and to include all relevant SVHC by 2020.

Rationale

REACH has a number of mechanisms (notably, authorisation/restriction) for dealing with substances of very high concern (SVHC.) These are substances that are for example carcinogenic, mutagenic or toxic for reproduction (CMRs) or persistent, bio accumulative and toxic (PBTs). Substances that are subject to authorisation may not be used in the EU, unless a company (and their registered users) have been authorised to do so. This will mean that eventually these substances are phased out of all non-essential uses. In other words, the more SVHC substances there are under REACH, the higher control is of their use. Our aim is to achieve the '2020 Chemical Goal' of the World Summit on Sustainable Development (WSSD). This commitment aims, by 2020, to use and produce chemicals in ways that do not lead to significant adverse effects on human health and the environment. REACH generates pressure to substitute hazardous chemicals of very high concern leading to a reduction in the number of CMRs and Endocrine Disruptors in the environment.

4.1.3.     Turning waste into a resource

4.1.3.1.  Ensuring full implementation of waste legislation, in line with the waste hierarchy

· Proposed indicators:

– Total waste generation;

– Overall recycling rate;

– Landfill rate;

– Proportion of secondary raw material used in the EU economy compared to primary raw material (to be developed based on existing information).

· Targets and milestones:

– Waste prevention – a milestone or target will be considered for the reduction of waste generated by 2020;

– Reuse and recycling – the existing targets of 50% of reuse/recycling of municipal waste and 70% of reuse/recycling/recovery of construction and demolition waste by 2020 will be reviewed and potentially raised to their maximum feasible level. New targets for other waste streams will likely be proposed in 2014;

– Existing landfill diversion target for biodegradable waste will be reviewed and new targets for other waste streams will likely be proposed in 2014.

Rationale

Increasing waste prevention and re-use/recycling in line with the principles of the 'waste hierarchy' will contribute directly to improving resource and material efficiency. First, overall waste generation will be monitored, with a view to progressively decouple it from economic growth as well as to reduce the absolute quantities generated. Member States have to draw up waste prevention programmes by 2013 according to the revised Waste Framework Directive, and the experience from the most advanced Member States has shown that a reduction target of 7% in 7 years is achievable, although there are still considerable differences between the waste management performances between Member States. Second, to secure access to raw materials in the EU, to create new job opportunities and to ensure a sustainable management of materials, the recycling/reuse targets should be reviewed and driven to their maximum feasible levels when they are reviewed in 2014, further to an Impact Assessment. The proposed indicators, for example on overall recycling rate, can be segmented by stream and material type, if needed. The landfill diversion rates, notably for biodegradable waste, should be reviewed accordingly to progressively and drastically limit land-filling to non-recoverable/compostable waste and energy recovery to not recyclable/compostable waste.

4.1.4.     Supporting research and innovation

4.1.4.1.  Increasing investment in research and innovation on resource efficiency

· Proposed indicator:

– Number and value of funding (€/year) of research and innovation projects promoting mainly resource efficiency and sustainable environmental management, allocated through European financial support programmes.

· Milestone:

– A milestone or target has not been set yet. The aim is to significantly increase funding compared to the sum of (1) funding for environmental research under FP7 (environment theme), and (2) funding for research in all other themes of FP7 contributing to the environmental knowledge base (which is approximately on the order of 5 times the environment theme in terms of funding).

Rationale

To mobilize innovation policy to be more resource efficient, we need to provide sufficient, targeted funding for relevant research and innovation projects. The amount of financial support for such projects would be a good indicator, together with the indicator of the number of such projects supported. However, investments in research and innovation from the private sector are evenly important. Related data and indicators are difficult to be set up, but will be considered as well.

4.1.5.     Phasing out inefficient subsidies

4.1.4.1.  Phasing out Environmentally Harmful Subsidies (EHS)

· Proposed indicators:

– Annual value of all EHS provided (to be developed);

– The value of EHS removed measured by last year's or last years' average annual spending, including tax exemptions where appropriate.

· Milestone:

– EHS phased out completely by 2020.

Rationale

EHS have a negative impact on the levels of waste, emissions, resource extraction and biodiversity. As such, they prevent the economy from shifting to greater productivity. The key action is to remove all EHS, although replacing the social benefits of EHS can sometimes be challenging. The indicators should measure the value of EHS actually phased out, as well as the value of EHS still provided (and their share of total subsidies). A good proxy for the value is the previous year's total spending including tax exemptions where appropriate on EHS. The decrease in annual spending would represent the amount the public budget and consumers are directly saving in a given year. It will include both on-budget and off-budget subsidies (such as tax exemptions) as appropriate. This indicator should be complemented by a broader indicator on the annual value of EHS provided which requires to find objective, statistical criteria to distinguish EHS from non-harmful subsidies and standardization of different EHS methodologies.

4.1.6.     Getting the prices right

4.1.6.1.  Increasing the share of environmental taxation

· Proposed indicators:

– Environmental taxes as share of total taxes and social contributions;

– Total value of environmental taxes paid.

· Milestone:

– By 2020 the share of environmental taxation in public revenues will have been increased to an EU average of more than 10%.

Rationale

Getting the prices of resources right will create incentives to use them more efficiently and sustainably. These indicators will provide information about the value of public revenue brought in by environmental taxes and show their relative weight in the tax system, thereby showing if the objective of shifting taxation from labour or capital to environment and resources is being met. The milestone suggests putting the EU average in line with what is now the level in the best performing Member States.

Note: The indicator 'environmental taxes as share of GDP' is not suitable to answer this question, as it measures the share of environmental taxes compared to total economic activity, not in relation to total taxation. Comparing environmental tax to GDP provides insights into the tax burden on products damaging the environment, rather than insights into assessing whether "green" taxes account for an increasing share of the tax burden.

4.2.        Natural capital and ecosystem services

4.2.1.     Ecosystem services

4.2.3.1.  Mapping and assessing the state and value of ecosystems and their services

· Proposed indicators:

– Based on the EU 2010 Biodiversity Baseline, measurable milestones and indicators will be developed within the EU Biodiversity Strategy to 2020. They will be available by mid 2012.

· Milestones:

– Map and assess the state of ecosystems and their services in Member States territory by 2014.

– Assess the economic value of such services, and integrate these values into accounting and reporting systems at EU and national level by 2020.

Rationale

The benefits from ecosystem services or the costs imposed by their loss are usually not accounted for in the decision making process. As a result, degradation of these services and depletion of natural capital continue unnoticed. Mapping and assessing the state of ecosystems and their services is necessary to establish a baseline and to develop a prioritisation framework for protection, restoration and sustainable management. These milestones have been defined in the EU Biodiversity Strategy to 2020.

4.2.3.2.  Maintaining and enhancing ecosystems and their services

· Proposed indicators:

– Based on the EU 2010 Biodiversity Baseline, measurable milestones and indicators will be developed within the EU Biodiversity Strategy to 2020. They will be available by mid 2012.

· Milestone:

– Establishing sufficient functional green infrastructure in all MS for maintaining and enhancing ecosystems and their services.

Rationale

Biodiversity and ecosystems are crucial resources to support societal and individual well-being and economic prosperity. Solutions relying on natural capital and ecosystem services are in many cases more cost-effective than engineering options, e.g. for flood protection and water purification. Such green infrastructure, thanks to its multi-purpose character, makes most efficient use of the multiple ecosystem services the same piece of land offers to people. The milestone reflects Target 2 of the EU Biodiversity Strategy to 2020. It translates the global Aichi Biodiversity Targets 14 and 15 of the Strategic Plan[168] agreed under the Convention on Biological Diversity in Nagoya in October 2010, where the restoration of at least 15% of degraded ecosystems is seen as a means of contributing to climate change mitigation and adaptation. These have been defined in the EU Biodiversity Strategy to 2020.

4.2.2.     Biodiversity

4.2.3.1.  Halting the loss of biodiversity and ecosystem services in the EU and restoring them as far as possible

· Proposed indicators:

– Based on the EU 2010 Biodiversity Baseline and the Aichi Biodiversity targets, measurable milestones and indicators will be developed within the EU Biodiversity Strategy to 2020. They will be available by mid 2012.

· Target:

– Halting the loss of biodiversity and the degradation of ecosystem services in the EU by 2020, and restoring them in so far as feasible (at least 15% of degraded ecosystems by 2020), while stepping up the EU contribution to averting global biodiversity loss.

Rationale

Biodiversity underpins our ecosystems and is vital to their resilience and is thus a crucial resource to support societal and individual well-being and economic prosperity. The Biodiversity Strategy is aimed at reversing biodiversity loss and speeding up the EU's transition towards a resource efficient and green economy. It is an integral part of the Europe 2020 Strategy, and in particular the resource efficient Europe flagship. The target reflects the 6 targets of the EU Biodiversity Strategy to 2020[169]. It translates the global Aichi Biodiversity Targets of the Strategic Plan agreed under the Convention on Biological Diversity in Nagoya in October 2010, where the restoration of at least 15% of degraded ecosystems is seen as a means of contributing to climate change mitigation and adaptation. These targets have been set in the EU Biodiversity Strategy to 2020.

4.2.3.     Minerals and metals

· Proposed indicators:

– Resource productivity of minerals and metals (GDP/DMC minerals+metals)

· A milestone or target will be considered.

Rationale

The lead indicator (resource productivity measured as GDP/DMC) takes into account all materials, but can be decomposed in the main material streams such as minerals and metals.. The indicators mentioned in the section "Turning waste into a resource" are also closely related to this field as they point out how the material loops could be closed and as they often refer to minerals and metals.

4.2.4.     Water

4.2.4.1.  Ensuring good quality and quantities of water

· Proposed indicators:

– Indicators will be presented as part of the 2012 Blueprint[170], accompanied by a rationale for their choice.

– In the meanwhile, the Water Exploitation Index could be used.

· Milestones and targets:

· All Water Framework Directive River Basin Management Plans (RBMPs) are implemented by 2012, good status of waters is attained in all EU river basins in 2015, and good quality and quantities of water will be ensured by 2020.

· By 2020, water abstraction stays, as a rule, below 20% of available renewable water resources.

Rationale

Water is a key resource necessary for life – it needs to be preserved and used efficiently. The milestones reflect the need to integrate resource efficiency actions into EU policies relevant for water as competing demands for fresh water is putting pressure on the availability and quality of fresh water. Climate change is another important factor affecting availability and quality of fresh water and is projected to have even more severe impacts in the future. Member States are expected to set water efficiency targets for 2020 at River Basin level, based on a common EU methodology that takes into account the great variety of situations across economic sectors and geographic areas. The 2012 Blueprint will also provide indicative water efficiency targets. These targets will be subject to full cost-benefit and feasibility studies and developed with full stakeholder involvement to ensure their credibility amongst those stakeholders that may bear costs of meeting them. The choice of indicators will be linked to these specific targets. On the Water Exploitation Index, the warning threshold to distinguish a non-stressed to a stressed area is around 20%.

4.2.5.     Safeguarding clean air

4.2.5.1.  Achieving air quality with no significant negative impact on health and the environment

· Proposed indicator:

– Concentrations of Particulate Matter (PM10) in ambient air;

– Percentage of urban population in areas with PM10 concentrations exceeding daily limit values.

· Target:

– Concentrations of Particulate Matter (PM10) in ambient air, not exceeding 50µg/m3 per 24 hours more than 35 times a year.

Rationale

Air quality and related emission control policies have been in place for decades. Legislation required setting up of a comprehensive monitoring and evaluation system. In addition, impact and sector specific indicators have been developed and reported annually[171]. Particulate matter is one of the pollutants with the largest impact on human health and therefore on quality of life (cardiovascular/ lung diseases, effects on central nervous system etc.). There is no known threshold for PM10 under which there is no effect on human health. Hence, besides measuring the concentrations of PM10 in ambient air, an additional indicator referring to the percentage of urban population in areas with PM10 concentrations exceeding daily limit values would measure the proportion of urban population exposed to this risk.

4.2.6.     Land and soils

4.2.6.1.  Reducing the anthropogenic pressure on ecosystems from land take

· Proposed indicator:

– Average annual land take on the basis of the EEA Core Set Indicator 14 "Land take"[172].

· Milestone:

– Annual land take (i.e. the increase of artificial land) does not exceed 800 km² per year at the EU level by 2020.

Rationale

Land take is used in this context as a proxy for soil sealing. Land take, i.e. increase of artificial land, covers increase of urban, industrial, commercial or transport land, mainly coming from agricultural land. It thus indicates the total amount of land converted to urban and commercial, etc purposes in a given time period. Soil sealing causes adverse effects on, or complete loss of, practically all soil functions. For example, fluxes of gas, water and energy are cut off; soil biodiversity is affected and the water retention capacity and groundwater recharge of soil are reduced. This in turn results in several negative impacts such as a higher risk of floods. There are also indirect effects, including habitat fragmentation and indirect land use changes with losses in biodiversity and food production capacity. To reach a state of no net land take by 2050 and assuming a linear reduction from now until then, we would need to decrease the average annual land take from 920 km² per year in the period 2000-2006 to 800 km² per year in the period 2010-2020.

4.2.6.2.  Reducing soil erosion

· Proposed indicator:

– Soil erosion on the basis of the EEA indicator "Soil erosion by water"[173] and the PESERA and/or RUSLE models of the JRC[174].

· Milestone:

– The area of land in the EU that is subject to soil erosion of more than 10 tonnes per hectare per year should be reduced by at least 25% by 2020.

Rationale

Erosion is a natural process, which can however be significantly accelerated by human activities. It is a serious problem throughout Europe, from the Mediterranean zone to Scandinavia (snowmelt erosion) and Central and Western Europe (wind erosion). As natural soil formation is extremely slow, losses of over 1 or 2 tonnes/ha/year are considered irreversible for most soils. In the context of the EU Strategy for the Danube Region (COM(2010)715), the Commission has proposed to reduce by 25% the area affected by soil erosion exceeding 10 tonnes per hectare by 2020. On the basis of existing estimates, there are 100,000 km² where soil erosion (by water) is higher than that value over the 21 Member States considered in the PESERA model. This milestone is a first step to decrease erosion in the most affected areas.

4.2.6.3.  Maintaining soil organic matter levels

· Proposed indicator:

– Soil organic matter levels, e.g. on the basis of LUCAS results[175].

· Milestone:

– By 2020 soil organic matter levels do not decrease overall and increase for soils currently with less than 3.5% organic matter.

Rationale

Soil organic matter plays a very important role, not only for soil fertility, but also for soil structure, buffering and water retention capacity and is crucial for soil biodiversity. It also has a major role in the global carbon cycle, as soil can at the same time be both an emitter of greenhouse gases and a major store of carbon. Around 45% of soils in Europe have low or very low organic matter content (0-3.5% organic matter) and 45% have a medium content (3.5-9% organic matter). Besides climate reasons, various unsustainable human activities are the most relevant driving forces. By 2020 soil organic matter levels should not be decreasing overall and should increase for soils with currently low or very low organic matter content. The proposed indicator will provide relevant information as to the evolution of soil organic matter levels.

4.2.6.4.  Identifying and remediating contaminated sites

· Proposed indicator:

– Share of contaminated sites on which remediation actions have started in the previous year on the basis of the EEA Core Set Indicator 15 "Progress in management of contaminated sites"[176].

· Milestone:

– Member States should have started undertaking remediation actions on identified contaminated sites by 2020.

Rationale

Available information indicates that the number of contaminated sites and surface covered across Europe is very large. There is a very unequal progress among Member States in addressing the issue. Soil contamination has far reaching consequences for environment, human health and sectors as agriculture. As a first step we need to monitor the identification of contaminated sites, followed by the monitoring of remediation actions. To allow for proper identification and remediation, all Member States should set up an inventory of contaminated sites in their territory by 2020 and should in parallel start remedial actions. This will ease the soil contamination problem and will also contribute to less land take by increasing the land bank available for urban and industrial development.

4.2.7.     Marine resources

4.2.7.1.  Ensuring fish and shellfish are within maximum sustainable yield

· Proposed indicator:

– Share of fish and shellfish populations within safe biological limits.

· Target:

– All fish and shellfish populations are exploited within maximum sustainable yield in all areas in which EU fishing fleets operate by 2015.

Rationale

The marine environment offers many economic opportunities in the use of its resources and it has an important natural regulatory function. Examples of vital resources are fish and shellfish populations, which need to be sustained within safe biological limits. The aforementioned indicator is considered appropriate as it sums up in an easily understandable and measurable way (necessary data are already regularly collected) the various aspects which are key to sustainable management of stocks e.g. discard and by-catch practices and fleet overcapacity. The target is part of the Biodiversity Strategy[177] and also in line with the requirements of Common Fisheries' Policy and EU commitments under Regional Fisheries' Management Organizations (RFMOs).

4.2.7.2.  Achieving good environmental status in all EU waters

· Proposed indicator:

– The number and area of Marine Protected Areas (MPAs).

· Milestone:

– At least 10% of the marine EU area is covered by a coherent network of MPAs.

Rationale

The coverage of MPAs is a good indicator in relation to the preservation of marine habitats and marine biodiversity more generally. MPAs will contribute to the achievement of Good Environmental Status under the Marine Strategy Framework Directive and foster regional cooperation within Regional Seas Conventions. Increasing coverage of MPAs will moreover facilitate the fulfilment of EU commitments under these Conventions but also those under the Convention for Biodiversity. The latter included in its strategic goals adopted in Nagoya in 2010 the target that, by 2020, at least 10 per cent of coastal and marine areas, especially areas of particular importance for biodiversity and ecosystem services, are conserved through effectively and equitably managed, ecologically representative and well connected systems of protected areas and other effective area-based conservation measures, and integrated into the wider landscapes and seascapes.

4.3.        Key sectors

4.3.1.     Addressing food

4.3.1.1.  Making food consumption healthier and more sustainable

· Proposed indicator:

– Development in consumption of different meat and dairy products per capita per year based on ETC/SCP Indicator 13.2 for the EEA[178].

· Milestone:

– Amount of animal proteins (including meat and dairy products) consumed per person is in line with WHO recommendations.

Rationale

Food production and consumption, in particular of animal proteins, are responsible for a large part of environmental impacts, as highlighted, for example, in reports from the International Resource Panel[179] and PLB Netherlands Environmental Assessment Agency[180]. The planet's carrying capacity is limited while the population is increasing. As an increasing part of the population suffering from health problems due to unhealthy diets, following the WHO recommendation on the daily intake of animal proteins would make a significant contribution to ease this problem. The ideal indicator to measure this would be the 'amount of animal proteins consumed per person per year' but this is not yet available. Currently existing indicator, the 'development in consumption of different meat and dairy products per capita per year' covers large part of animal proteins.

4.3.1.2.  Reducing food waste

· Proposed indicator:

– Share of edible food waste in households, retailers and catering.

· Milestone:

– Decrease of edible food waste in households, retailers and catering by 50% in the EU.

Rationale

Reducing our food waste is a clear first step towards more resource efficiency in the food value chain. To have a significant impact, we should at least halve our edible food waste. Households count for about 40 % of all food waste; the retail and catering sector add another 20%. If the same rate of edible food waste of households (60%) is applied to the retail and catering sector, halving our edible food waste results in a reduction of total food waste by approximately 18%[181].

After the results of ongoing studies will be available, expected in 2013/14, the Commission will, together with ESTAT's Working Group on Waste Statistics, develop proposals on how such an indicator can be developed and maintained.

4.3.2.     Improving buildings

4.3.2.1.  Promoting green buildings

· Proposed indicators:

– The rate of nearly zero-energy new buildings (to be developed);

– Energy consumption per m2 for space heating, per dwelling and for total housing stock alongside growth in m2 of living space per capita based on ETC/SCP Indicator 16.1 for the EEA (to be further developed)[182].

· Target:

– Member States shall ensure that by 31 December 2020, all new buildings are nearly zero-energy buildings; and after 31 December 2018, new buildings occupied and owned by public authorities are near zero-energy buildings[183].

Rationale

Energy consumption for building-related services accounts for approximately one third of total EU energy consumption. One way to reduce energy consumption is to improve energy efficiency. The proposal for a Directive on energy efficiency[184] strengthens the energy performance requirements. A target set in this Directive is to ensure that all new buildings are nearly zero-energy buildings by 2020. The indicator on the energy consumption per m2 shows developments in energy use for heating in housing at different scales. It is based on the reasoning that developments in energy consumption per m2 are directly influenced by technical improvements in building envelopes and in heating technology. Average per capita size of living space can offset or strengthen technological improvements. Increasing living space per capita will, in general, offset technical improvements[185]. Looking at these trends gives an indication on energy efficiency of new buildings.

4.3.3.     Ensuring efficient mobility

4.3.3.1.  Transforming transport

· Proposed indicators:

– CO2 emissions in the transport sector;

– Total energy consumption/km driven as a proxy for energy efficiency in transport;

– Average CO2 emissions per km for new passenger cars;

– Pollutant emissions (NOx, VOC, PM) from the transport sector (available from EEA / Reporting under NECD);

– Energy consumption by fuel type.

· Milestones and targets:

– The Transport White Paper proposes a target to decrease GHG by 60% in transport sector by 2050 (EU transport emissions should drop by 1% annually until 2030, afterwards by 5% annually until 2050).

Rationale

The decarbonisation of the economy and the transformation of the efficiency of the transport system are essential aspects of the move to a resource efficient economy. CO2 is a reasonably good proxy for how efficiently conventional fossils are being used, because most emissions occur during the fossil fuel combustion phase, and hence lower levels of CO2 emissions tend to correspond to reductions in fossil fuel energy use. Transport remains a significant contributor to persistent air quality problems, hence the environmental performance of transport with respect to other key pollutants (such as PM, NOx and VOCs) will be monitored. Energy consumption by fuel type is another indicator to monitor fuel shifts in the transport system, i.e. whether we are moving towards more sustainable fuel types.

4.4.        Governance: New pathways to action on resource efficiency

4.4.1.     Financing resource efficient innovation and investments

· Proposed indicators:

– Share of total budget spent on the environmental and resource efficiency measures;

– Capitalisation of ‘Core’ and ‘broad’ Sustainable and Responsible Investments (SRI) in Europe (billion/€) based on ETC/SCP Indicator 24.1 for the EEA (to be further developed)[186].

· Milestone:

– 30% of the EU Regional Budget (i.e. cohesion policy budget) allocated to environment related expenditure.

Rationale

The target is set according to the Sustainable Growth Communication of January 2011, which mentions, "approximately 30% of the total € 344 billion Regional funding over 2007-2013 is available for activities with a particular impact on sustainable growth. By the end of 2009, 22% of this funding for sustainable growth had been allocated to specific projects compared to 27% for the total of Regional funding." The 30% funding refers to the cohesion policy budget, and includes both direct and indirect expenditure covering environment, climate, resource efficiency, clean transport, and others. The indicator on public funding for the transition can directly track how much of the budget is spent on the environment and resource efficiency. The indicator on private funding for the transition shows how funds with social and environmental criteria are increasing/decreasing, i.e. it represents those financial assets selected by fund managers according to criteria about the social and environmental responsibility of emitters.

Appendix 1: choice of lead indicator

Developing a set of resource efficiency indicators is a considerable challenge, as measuring the state of and changes in resource efficiency is much more complex than measuring, say, labour or energy productivity. Ideally, a set of indicators would cover (i) resource use, (ii) its efficiency, (iii) related policy measures and (iv) related societal and economic benefits – such as (green) jobs, free ecosystem services, (cost) savings and (eco-) innovation – along the full production chain from extraction to recycling or waste disposal. They should include inter alia information on availability, scarcity, location, economic value/prices and environmental and biodiversity impacts of resources. For renewable resources the sustainability of their management patterns is to be covered.

A substantial amount of base data is readily available, e.g. on mining, agriculture, waste and international trade. Other data sets, e.g. those on environmental impacts of production and consumption, are under development. On the other hand the conceptual work on how to aggregate these detailed statistics into meaningful macro indicators on resource use and efficiency is still underway.

First macro indicators such as Resource Productivity (GDP/domestic material consumption), Environmentally-weighted Material Consumption (EMC) or the Ecological Footprint have been developed and produced and are in principle ready for use. However all of them should be considered as "proxy" indicators, as all of them cover only part of the resource efficiency agenda.

There is currently no indicator measuring comprehensively the consumption of natural resources as defined in the roadmap – and there are considerable methodological challenges to aggregating resources as different as land, water, oil and ores into one single indicator. For the selection of the lead indicator the Commission looked at existing indicators on materials, such as the Domestic Material Consumption; indicators on land use, such as the Ecological Footprint; indicators related to carbon, such as carbon intensity; indicators on environmental impacts, such as Environmentally-weighted Material Consumption (EMC); and resource specific indicators, such as on water, land, soils and others.

The following assessment criteria have been used as appropriate:

· Political relevance;

· Coverage of all relevant categories of resources;

· Coherence and completeness;

· Transparency of trade-offs and negative side effects such as burden shifting;

· Link to a timeline for production of the data and calculation of the indicator;

· Applicability to different levels of economic activities (EU, Member States, sectors, firms, products);

· Support by data that can be aggregated and disaggregated across scales, from products to sectors and countries.

Below the key arguments are listed that led to the proposal to continue using Resource Productivity (GDP/DMC) as the lead indicator for efficient use of natural resources.

DMC

Aggregated weight of used domestic extraction of raw materials, plus direct weight of imports (raw materials and products), minus exports (raw materials and products) measured in tonnes.

Strengths

· Established indicator;

· Output of well established integrated environmental economic accounting methods;

· Official statistics;

· Statistical regulation for continuous production in place;

· Includes all materials: minerals, metals, carbon related fossil fuels and (renewable) biomass;

· Breakdown by materials and sectors and industries possible.

Limitations

· Material resources only;

· Economic value, resource scarcity and environmental impacts of resource use are only partially correlated to their weight;

· Statistically not fully consistent with GDP.

Ecological Footprint

Aggregates the land use caused by human consumption based on "bio-productive" land (and sea) areas and the land area theoretically necessary for carbon sequestration. Measured in 'global hectares'.

Strengths

· Powerful communication tool;

· Strong link to biodiversity and eco-system health;

· Strong link with the thresholds for use of the renewable resources, or carrying capacity of the planet;

· Includes renewable materials, land and carbon.

· Takes account of burden shift issues

Limitations

· Methodology under scientific and statistical scrutiny;

· Current version based on weak international data set while better EU data sets are available;

· Water and non-renewable materials only indirectly included.

Carbon Intensity

Relates economic output to aggregated emissions of greenhouse gases, measured in tonnes of CO2 equivalent per euro of GDP.

Strengths

· Good data quality;

· Proxy for wider environmental impacts;

· Proxy for use of non-renewable materials;

· Proxy for unsustainable use of land based renewable resources (soil degradation, forest loss).

Limitations

· Duplication of information of the already agreed indicators on 20/20/20 targets;

· Mainly driven by energy consumption;

· Does not include consumption of renewable and nuclear energy;

· Does not include other resources.

EMC

Aggregates the contribution of resource use to specific (or the overall) environmental impacts, such as ground-level ozone or human toxicity, measured in percentage of total environmental impact.

Strengths

· Aggregates material consumption not only by weight (as DMC), but according to environmental impacts.

Limitations

· Weighting of environmental impacts cannot be done scientifically;

· Methodology under scientific and statistical scrutiny;

· Limited data availability and quality.

Resource specific indicators

Aggregate use or consumption of a specific resource, e.g. coal, land or water, using their physical unit of measurement.

Strengths

· Concrete;

· Easy to communicate;

· Indicate substitution effects / shift of burden.

Limitations

· No overview;

· Difficult to aggregate into one indicator or index.

Appendix 2: Trends for EU and Member States on lead and dashboard indicators

Table 1: Resource productivity GDP/DMC (EUR per kg)

GEO/TIME || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007

EU || 1,21 || 1,24 || 1,27 || 1,30 || 1,27 || 1,28 || 1,29 || 1,30

Austria || 1,41 || 1,44 || 1,38 || 1,37 || 1,30 || 1,30 || 1,32 || 1,40

Belgium || 1,32 || 1,29 || 1,36 || 1,41 || 1,43 || 1,43 || 1,43 || 1,47

Bulgaria || 0,13 || 0,13 || 0,13 || 0,13 || 0,13 || 0,14 || 0,13 || 0,14

Cyprus || 0,66 || 0,66 || 0,61 || 0,67 || 0,61 || 0,62 || 0,66 || 0,64

Czech Republic || 0,33 || 0,34 || 0,37 || 0,37 || 0,36 || 0,39 || 0,40 || 0,42

Denmark || 1,28 || 1,32 || 1,38 || 1,36 || 1,31 || 1,22 || 1,20 || 1,24

Estonia || 0,32 || 0,34 || 0,32 || 0,25 || 0,28 || 0,31 || 0,31 || 0,27

Finland || 0,76 || 0,76 || 0,78 || 0,76 || 0,79 || 0,80 || 0,78 || 0,79

France || 1,64 || 1,73 || 1,74 || 1,87 || 1,74 || 1,83 || 1,83 || 1,80

Germany || 1,41 || 1,52 || 1,55 || 1,58 || 1,58 || 1,64 || 1,65 || 1,71

Greece || 0,88 || 0,86 || 0,86 || 0,83 || 0,87 || 0,90 || 0,94 || 0,98

Hungary || 0,45 || 0,43 || 0,45 || 0,46 || 0,42 || 0,38 || 0,47 || 0,60

Ireland || 0,63 || 0,63 || 0,67 || 0,67 || 0,68 || 0,68 || 0,66 || 0,66

Italy || 1,25 || 1,36 || 1,46 || 1,62 || 1,52 || 1,49 || 1,52 || 1,60

Latvia || 0,24 || 0,27 || 0,27 || 0,29 || 0,29 || 0,29 || 0,31 || 0,31

Lithuania || 0,44 || 0,53 || 0,47 || 0,38 || 0,42 || 0,43 || 0,46 || 0,43

Luxembourg || 2,78 || 3,01 || 2,95 || 3,01 || 3,33 || 3,33 || 3,04 || 4,32

Malta || 3,00 || 3,26 || 3,04 || 2,81 || 2,32 || 2,42 || 2,18 || 2,14

Netherlands || 2,16 || 2,14 || 2,35 || 2,44 || 2,42 || 2,45 || 2,59 || 2,60

Poland || 0,32 || 0,35 || 0,38 || 0,38 || 0,37 || 0,38 || 0,40 || 0,38

Portugal || 0,66 || 0,64 || 0,68 || 0,75 || 0,70 || 0,70 || 0,62 || 0,62

Romania || 0,18 || 0,15 || 0,17 || 0,16 || 0,16 || 0,16 || 0,16 || 0,14

Slovakia || 0,40 || 0,39 || 0,40 || 0,43 || 0,40 || 0,39 || 0,44 || 0,49

Slovenia || 0,48 || 0,51 || 0,51 || 0,50 || 0,49 || 0,53 || 0,48 || 0,46

Spain || 0,93 || 0,93 || 0,87 || 0,85 || 0,86 || 0,87 || 0,85 || 0,90

Sweden || 1,71 || 1,82 || 1,81 || 1,83 || 1,85 || 1,69 || 1,95 || 1,79

United Kingdom || 2,11 || 2,13 || 2,24 || 2,30 || 2,28 || 2,41 || 2,48 || 2,54

Figure 1: Resource productivity in the EU (index 2000 = 100)

Table 2: Artificial Surface (hectares)

GEO/TIME || 1990 || 2000 || 2006 || Total Surface

EU || 17.614.704 || 18.621.100 || 19.173.193 || 432.080.477

Austria || 392.958 || 401.408 || 409.181 || 8.392.463

Belgium || 605.485 || 627.595 || 630.347 || 3.066.430

Bulgaria || 549.815 || 553.385 || 557.529 || 11.096.372

Cyprus || 67.544 || 68.870 || 79.103 || 925.971

Czech Republic || 472.803 || 493.223 || 501.899 || 7.886.893

Denmark || 301.465 || 315.255 || 324.745 || 4.289.089

Estonia || 86.603 || 90.953 || 94.173 || 4.346.186

Finland || 461.581 || 472.234 || 483.422 || 33.702.920

France || 2.588.183 || 2.744.303 || 2.826.586 || 54.881.341

Germany || 2.744.401 || 2.964.561 || 3.012.304 || 35.708.592

Greece || 231.604 || 270.084 || 283.301 || 13.162.924

Hungary || 532.595 || 546.685 || 561.572 || 9.300.074

Ireland || 108.416 || 142.516 || 162.565 || 6.987.857

Italy || 1.362.772 || 1.450.012 || 1.498.303 || 30.150.499

Latvia || 85.011 || 85.241 || 86.224 || 6.461.353

Lithuania || 209.948 || 212.818 || 215.648 || 6.497.798

Luxembourg || 22.303 || 24.003 || 24.171 || 259.741

Malta || 7.402 || 8.171 || 8.178 || 31.586

Netherlands || 406.803 || 475.143 || 510.995 || 3.735.750

Poland || 1.211.876 || 1.243.546 || 1.254.749 || 31.195.005

Portugal || 237.586 || 287.976 || 315.507 || 9.196.404

Romania || 1.490.431 || 1.502.611 || 1.511.699 || 23.845.069

Slovakia || 257.984 || 265.604 || 268.718 || 4.901.397

Slovenia || 53.795 || 55.155 || 56.215 || 2.027.724

Spain || 759.205 || 893.455 || 1.030.762 || 50.672.957

Sweden || 593.125 || 611.383 || 628.929 || 44.911.418

United Kingdom || 1.773.010 || 1.814.910 || 1.836.368 || 24.446.664

Figure 2: Artificial Surface in the EU (million hectares)

Table 3: Water Exploitation Index

GEO/TIME || 1990 || 2002 || 2005 || 2007

EU || 0,131 || 0,132 || 0,13 || 0,13

Austria || 0,05 || 0,04 || 0,04 || 0,04

Belgium || 0,338 || || 0,32 || 0,32

Bulgaria || 0,10 || 0,06 || 0,06 || 0,06

Cyprus || || 0,63 || 0,45 || 0,64

Czech Republic || 0,23 || 0,12 || 0,12 || 0,12

Denmark || 0,08 || 0,04 || 0,04 || 0,04

Estonia || 0,15 || 0,11 || 0,13 || 0,15

Finland || 0,02 || 0,02 || 0,02 || 0,02

France || 0,21 || 0,18 || 0,18 || 0,17

Germany3 || 0,25 || 0,20 || 0,20 || 0,19

Greece || 0,11 || 0,12 || 0,12 || 0,13

Hungary || 0,06 || 0,05 || 0,0545 || 0,0562

Ireland || 0,026 || : || 0,02 || 0,02

Italy || || 0,24 || 0,24 || 0,24

Latvia || 0,01 || 0,01 || 0,007 || 0,006

Lithuania || 0,18 || 0,13 || 0,10 || 0,09

Luxembourg || || 0,04 || 0,04 || 0,04

Malta || 0,32 || 0,24 || 0,21 || 0,21

Netherlands || 0,09 || 0,10 || 0,12 || 0,11

Poland || 0,24 || 0,19 || 0,18 || 0,18

Portugal || 0,10 || 0,15 || 0,15 || 0,15

Romania || 0,08 || 0,03 || 0,02 || 0,03

Slovakia || 0,03 || 0,01 || 0,01 || 0,01

Slovenia || 0,01 || 0,01 || 0,03 || 0,03

Spain || 0,33 || 0,33 || 0,34 || 0,30

Sweden || 0,02 || 0,01 || 0,01 || 0,01

United Kingdom4 || 0,204 || : || 0,22 || 0,13

Note:     

(1) 1990 data are for average EU24, no data for CY, IT and LU

(2) 2002 data are for average EU24, no data for UK, BE, and IE

(3) Germany includes ex-GDR from 1991

(4) United Kingdom comprises of England and Wales data only

Figure 3: Water Exploitation Index in the EU

Table 4: Greenhouse Gas Emissions (CO2 equivalent thousands of tonnes)

GEO/TIME || 1990 || 1995 || 2000 || 2001 || 2002 || 2003 || 2004 || 2005 || 2006 || 2007 || 2008 || 2009

EU || 5.588.798 || 5.231.962 || 5.085.820 || 5.145.129 || 5.104.918 || 5.177.396 || 5.181.206 || 5.148.753 || 5.128.892 || 5.071.328 || 4.969.052 || 4.614.526

Belgium || 143.344 || 150.070 || 145.415 || 144.863 || 143.564 || 145.899 || 146.713 || 142.729 || 137.737 || 132.908 || 135.155 || 124.440

Bulgaria || 111.401 || 80.814 || 63.344 || 66.359 || 63.052 || 68.300 || 67.560 || 67.110 || 68.297 || 71.763 || 69.029 || 59.493

Czech Republic || 195.523 || 153.632 || 147.420 || 149.612 || 145.343 || 144.419 || 145.331 || 144.711 || 146.036 || 147.055 || 141.131 || 132.925

Denmark || 68.007 || 75.655 || 67.847 || 69.524 || 68.859 || 73.599 || 67.897 || 63.634 || 71.556 || 66.927 || 63.654 || 60.985

Germany || 1.247.901 || 1.119.906 || 1.042.071 || 1.056.941 || 1.036.680 || 1.030.603 || 1.021.218 || 999.776 || 1.002.257 || 979.873 || 981.112 || 919.698

Estonia || 41.053 || 20.249 || 17.811 || 18.200 || 17.531 || 19.479 || 19.835 || 19.164 || 18.710 || 21.603 || 20.071 || 16.837

Ireland || 54.820 || 58.490 || 67.865 || 69.701 || 67.870 || 67.842 || 67.683 || 69.221 || 68.683 || 68.035 || 67.817 || 62.395

Greece || 104.365 || 108.983 || 126.003 || 127.444 || 127.161 || 130.876 || 131.383 || 134.356 || 130.746 || 133.395 || 128.550 || 122.543

Spain || 283.168 || 314.839 || 379.563 || 379.820 || 396.775 || 403.731 || 419.511 || 433.847 || 426.023 || 437.130 || 404.771 || 367.548

France || 562.886 || 559.672 || 566.838 || 569.147 || 563.708 || 565.719 || 566.462 || 568.972 || 552.969 || 544.501 || 539.178 || 517.248

Italy || 519.157 || 529.951 || 551.640 || 557.476 || 558.668 || 573.477 || 576.600 || 574.893 || 563.911 || 554.569 || 541.749 || 491.120

Cyprus || 5.273 || 6.666 || 9.112 || 9.079 || 9.100 || 9.115 || 9.296 || 9.590 || 9.705 || 9.855 || 10.182 || 9.401

Latvia || 26.576 || 12.699 || 10.316 || 10.952 || 10.923 || 11.134 || 11.299 || 11.417 || 11.839 || 12.348 || 11.918 || 10.723

Lithuania || 49.559 || 21.833 || 19.166 || 20.271 || 20.659 || 20.871 || 21.627 || 22.610 || 23.419 || 25.146 || 24.033 || 21.609

Luxembourg || 12.827 || 10.104 || 9.766 || 10.275 || 11.044 || 11.486 || 12.900 || 13.152 || 13.018 || 12.398 || 12.260 || 11.684

Hungary || 96.824 || 78.180 || 76.703 || 78.713 || 76.667 || 79.665 || 78.707 || 79.495 || 77.824 || 75.478 || 73.095 || 66.727

Malta || 2.065 || 2.463 || 2.614 || 2.727 || 2.750 || 2.932 || 2.900 || 2.927 || 2.965 || 3.048 || 3.009 || 2.866

Netherlands || 211.852 || 223.249 || 213.161 || 214.995 || 214.317 || 215.370 || 216.762 || 211.105 || 207.129 || 205.405 || 204.601 || 198.872

Austria || 78.171 || 79.811 || 80.476 || 84.343 || 86.159 || 91.894 || 90.927 || 92.884 || 90.103 || 87.373 || 86.961 || 80.059

Poland || 452.935 || 440.282 || 389.427 || 385.999 || 372.786 || 384.621 || 385.557 || 388.017 || 402.339 || 400.695 || 395.724 || 376.659

Portugal || 59.417 || 69.499 || 81.225 || 82.337 || 86.897 || 81.703 || 84.078 || 85.984 || 81.272 || 79.107 || 77.935 || 74.583

Romania || 250.087 || 187.882 || 142.117 || 147.844 || 154.573 || 161.227 || 160.118 || 155.738 || 160.404 || 156.215 || 153.419 || 130.828

Slovenia || 18.478 || 18.458 || 18.821 || 19.682 || 19.955 || 19.635 || 19.898 || 20.237 || 20.455 || 20.567 || 21.286 || 19.339

Slovakia || 74.112 || 53.311 || 49.203 || 50.590 || 49.754 || 50.983 || 50.751 || 50.087 || 49.864 || 47.836 || 48.166 || 43.404

Finland || 70.364 || 70.783 || 69.162 || 74.383 || 76.524 || 84.278 || 80.269 || 68.477 || 79.711 || 78.144 || 70.420 || 66.336

Sweden || 72.490 || 74.313 || 68.900 || 69.521 || 70.378 || 70.914 || 70.369 || 67.591 || 67.283 || 65.794 || 63.570 || 59.994

United Kingdom || 776.142 || 710.168 || 669.832 || 674.330 || 653.223 || 657.625 || 655.557 || 651.027 || 644.637 || 634.159 || 620.257 || 566.210

Figure 4: Greenhouse Gas Emissions in the EU (CO2 equivalent millions of tonnes)

Annex 7: Trends in Resource Use

1. Introduction

To describe trends in sustainable resource use, it is essential to monitor economic activity, use of natural resources and, finally, interdependance between natural resources, in particular how unsustainable use of some resources may lead to the depletion of others. While complete statistics exists for economic activity, monitoring is more complex for the use of natural resources and even more so for their interlinkages.

This Annex presents snapshots of information on resource trends, taken from various data sets. Given the breadth of different resources, it does not attempt to cover all trends for all relevant resources, but shows selected examples to give a representative picture. If focuses mainly on trends in material resources, but attempts also to present the most relevant data as regards other key natural resources. Next to that, in analyses some aspects of resource interdependence, referred to also as environmental impacts. Finally, it reflects briefly on the drivers of resource use. Wherever possible, EU and global trends are shown graphically, complementing the information in the two Staff Working Documents accompanying the Roadmap to a Resource Efficient Europe.

2. Material Use in the EU 2.1. Domestic Material Use and Import Dependency

The use of materials in Europe is closely connected with economic growth. Being a key driver of material use, it entails the changing structure of the economy with a growing share of services and a parallel increase of imports of resources including finished and semi-finished products as well as growing levels of household consumption. Contrary to most parts of the world, population growth in Europe has only a limited impact on the use of resources (see section 5).

In 2007, the domestic material consumption (DMC) in the EU amounted to 8.2 billion tonnes, equalling 13% of the global materials extraction. Minerals including metals accounted for half of EU consumption, while fossil fuels and biomass for about one quarter each. With an annual average per capita material consumption of about 16.5 tonnes/capita/year in 2007, the EU was more than 65 % above the global average. Having adopted a rigorous resource conservation policy, Japan was down to an average of 12 tonnes/capita/year; however, the USA reached a level of 27 tonnes/capita/year.

While material use has stabilised at a high level in the EU-15 (DMC slightly growing but a small decline for DMC per capita), it is still increasing substantially in the EU-12, which results in a slow growth in material use in EU-27 overall, at a similar pace as population. The important increase in EU-12 is probably due to large-scale infrastructure projects and the construction boom that started in the late 1990s and later on intensified when joining the EU.

Figure 1: Trends in the use of material resources in EU15 and EU12, 1972-2008 (Source: EEA, 2010)

The overall trend of stabilisation of material consumption is based upon stable or even decreasing domestic material extraction. The latter is the case for metallic ores and fossil energy carriers, while domestic extraction of biomass and non-metallic minerals are stable at high levels. In contrast, in order to meet EU's material demand, trade is rapidly increasing and there is a high import dependency for many material categories, especially strategically important ones. Net imports of materials into the EU-27 are now 1.3 billion tonnes, reflecting an increase of over 25% in the period between 2000 and 2007 and currently between 20 and 30 % of the resources we use are imported. This means that care needs to be taken when interpreting the observed trends of stabilisation of material use as upstream material flows are not taken into consideration in import data.

Figure 2: EU-27 physical trade balance with the rest of the world (Source: EEA, 2010)

Fossil Fuels Use

The current energy system is heavily dependent on fossil fuels and their share in the total energy consumption has declined only slightly, from 83 to 79 % between 1990 and 2005. Oil is still the biggest contributor with over 36 % of the gross inland consumption in 2007 while gas was up to almost 24 % and solid fuels reached above 18 %. Renewable energy made up 7.8 %. In this category, wind power remains dominant and represented 75 % of the total installed renewable capacity in 2006.

The gross inland consumption of energy in EU27 amounted to about 1800 Mtoe in 2007, having experienced an annual increase of final energy consumption by 0.6 % between 1990 and 2005. In the same period, the total energy intensity (total energy divided by GDP) in the EU-27 decreased by an estimated 1.3 % annually, with by far the fastest decrease taking place in the new Member States. The dependency on import is particularly high in this sector and over 53 % of all fuels are imported, showing one of the most dramatic increasing trends in recent years. As can be seen in Figure 3, oil import dependency in the EU was over 80% in 2006, and gas import dependency around 60%. Moreover, according to the Netherlands Environmental Assessment Agency these imports only stem from a limited number of countries. This restriction of the number of potential import countries is likely to increase further due to the concentration of world oil and gas reserves in some of them and the expected depletion of world oil and gas reserves in other countries[187].

Figure 3: EU-27 Energy import dependency 1995-2006 (Source: Eurostat, 2010)

Biomass extraction

The EU has a highly productive land use system and biomass extraction amounted to 1.6 billion tonnes in 2005, corresponding roughly to 8 % of total global biomass extraction. Crop harvest accounted for the largest share of total extraction (42 %) followed by forage and grazed biomass (31 %). The share of timber and fuel wood was 17 % and that of crop residues 10 %. The use of biomass is dominated by feeding livestock. Trade of biomass based products is very dynamic with both imports and exports growing rapidly. Here as well, the EU is an important net importer, with large imports of feed and animal products as well as wood and wood-based products. To a large extent, biomass consumption in the EU affects land use in third countries, where the import of soybean and soybean cake may serve as an example. The EU meat production, which equals about 15-18 % of global meat production and which is almost exclusively consumed within EU, requires large amounts of high quality protein feed. With only a minor domestic production, the major share of this feed is based on soybeans and soybean cake which is imported from countries like Brazil and the United States. The imported amount corresponds to an area of more than 20 mio ha of cropland and this illustrates how European imports are demanding large areas of fertile cropland in distant regions of the world, with European consumption patterns contributing to land use change elsewhere. Several studies have attempted to estimate the drawing of global land use and results vary from about 50% of domestic HANPP (2000) and upwards. The implementation of the European biofuel strategy will drastically increase this demand and is likely to further increase EUs draw on global land resources, with its associated environmental impacts.

Decoupling economic growth from material resources use

The general trend is of relative decoupling between economic growth and use of material resources. An absolute decoupling only took place under very limited periods and was always linked to recession or at least very low economic growth. Absolute decoupling of material use during economic growth, as has been observed in Japan since 1990, has not been achieved in the EU.

Varying trends can however be seen across member states with most countries achieving relatively stable DMC and relative dematerialisation. A few Member States have reached absolute decoupling also in the long run. This has generally been the result of fuel shifts and deindustrialisation with the fading out of intensive and heavy industries or mining activities, a process which is often related to the externalisation of material use and corresponding environmental impacts to third countries. If taking these aspects into account, the absolute decoupling may no longer be obvious. At the same time, certain Member States, often with low level of per capita income but with high economic growth, have seen particularly the development of built infrastructure contribute to a high increase in material use and, thus, not even reaching a relative decoupling. The overall improved resource productivity during the last two decades in the EU is largely based on more resource-efficient technologies, the transition to service-based economies but at the same time an increased share of imports in EU economies, outsourcing early phases in the life cycle which generally have a lower economic value/weight. Figure 4 shows resource use per person in 2000 and 2007.

Figure 4: Resource use per person, by country, 2000 and 2007 (Source: EEA, 2010)

Limitations of DMC measurement

Current material flow accounts only consider direct material flows and do not take into account indirect or hidden resource flows associated with used material extraction which do not enter the economy (such as overburden from mining operations, eroded soil or earthen materials displaced during construction). Hidden flows can be large and can moreover give rise to considerable environmental pressures. The increasing dependency on imported materials thus risks hiding increasing material flows and their associated environmental pressures and impacts taking place beyond the EU. In terms of weight, the EU imports over six times more materials than it exports, and this ratio is fairly stable. Considering how overall trade is growing, this means most Member States are increasingly consuming products for which the majority of the resource use has taken place elsewhere. In fact, Europe has the highest net imports of resources per person in the world. Thus, behind a significant part of the improved figures in EU material productivity lays the increasing dependency on import for which upstream flows, hidden flows, never enter the material flow accounts and the statistics of the EU. Pilot studies which quantify these upstream flows indicate that, for highly industrialised countries, the so called Raw Material Equivalents are three to six times larger than the direct import flows.

2.2. Global Stocks and Imports of Materials

Europe is highly dependent on imports for many raw materials which are increasingly affected by growing demand pressure from emerging economies and by an increasing number of national policy measures that disrupt the normal operation of global markets[188]. Import dependency holds for several minerals and metals. 95% of global 'rare earth' elements production is thought to be located in China, which has imposed export restrictions on of some of them. Likewise phosphate, an essential raw material in fertilizer and thus in agricultural production is only extracted in a limited number of countries: three quarters of total known world reserves are in China, with the rest coming from Morocco and the Western Sahara, and minor fractions from the US and South-Africa[189].

There is a particular concern about the availability of 14 minerals. Figure 5 depicts the economic importance and supply risk of 41 materials. The minerals in the upper-right quadrant are labelled as critical because their importance for the economy is high and they run the risk of supply shortage. An overview of the sources of these minerals, their producers, substitutability and recycling rate as well as the EU's import dependency rate[190] can be found in Figure 6.

Figure 5: Economic importance and supply risk of 41 materials (Source: European Commission – DG Enterprise and Industry, 2010)

Figure 6: Main producers, main sources of imports into EU-27, import dependency rate, substitutability and recycling rate (Source: Tackling the challenges in the commodity markets and on raw materials – European Commission, 2011)

Geological data on global metals stocks is scarce, and if available, it is only relevant when used to generate scenarios for the future, which include use intensity, discard, reuse, etc. Such data and scenarios are now beginning to appear[191]. From Figure 7 for example it can be seen that there are only scarcities for a couple of minerals that are defined as critical by the EU[192].

Figure 7: Global reserves and resources of minerals (2009) (Source: Dutch Environmental Assessment Agency, 2010)

2.3. Waste and recycling

In 2006, EU-27 Member States produced some 3 billion tonnes of waste – an average of 6 tonnes per person[193]. About two thirds (62 %) of the waste generated in EU-27 is mineral waste, stemming from construction and demolition activities (25-30 %) and from mining and quarrying 25 %. The rest is from manufacturing (12%), households (7%) and other activities[194]. Of all the resources consumed in the EU a significant part ends up as waste.

Recycling rates[195] are above 50% for 18 of 60 metals and the share of old scrap in the total flow is above 50% only for thirteen metals. End-of-life recycling rates are still globally low due to the relative abundance of primary material and due to the absence of performing collection and processing of old metals.

Figure 8: Composition of waste EU-27, 2006 (by weight) (Source: European Commission – Review of the thematic strategy on waste prevention and recycling, 2011)

Figure 9: Average end-of-life functional recycling (Source: UNEP – International Resource Panel (2011)

3. Key natural resources

Resource efficiency policies build on a broad concept of resources, including not only raw materials but also environmental media such as air, water and soil, flow resources as well as space in the form of land area. Past trends in resource use have led to changes in the available stocks of resources, with very different results between resources and regions, depending on the nature of the resource and varying social and economic conditions.

3.1. Water

Water is a resource on which increasing stress has been observed in recent years, with an increasing number of severe draughts as well as floods. In both cases, climate change is projected to aggravate this even further.

As regards water quantitiy, a comparison of the impacts of draughts in the EU between 1976-1990 and 1991-2006 shows doubling in both areas and population affected. In many locations in Europe, water used by agriculture, industry, public water supply and tourism puts considerable stress on Europe's water resources, and demand often exceeds local availability[196]. Figure 10 shows the Water Exploitation Index (WEI) in the late 1980s / early 1990s (WEI-90) compared to the latest years available (1997-2005). The WEI is a measure of the annual total water abstraction as a percentage of available long-term freshwater resources. The warning threshold, which distinguishes a non-stressed from a water scarce region, is around 20%, with severe scarcity occurring where the WEI exceeds 40%[197].

Figure 10: Water exploitation index (WEI) ) in late 1980s / early 1990s (WEI-90) compared to latest years available (1997-2005) (Source: EEA, 2010)

As regards water quality, despite improvements in some regions, pollution from agriculture remains a major pressure on Europe's freshwater with nitrogen and phosphorus being washed to waterways. Improved wastewater treatments and bans on phosphates in detergents have resulted in a decline of phosphorus levels in freshwater in recent years, but with this trend slowing down, diffuse sources need to be targeted for further improvements. Nitrate concentrations are also declining, but the situation in many rivers is often such that eutrophication is likely to occur in receiving costal waters with the subsequent depletion of oxygen and loss of life in bottom waters. Even with measures implemented to reduce this trend, measurement stations show no change in nitrogen and phosphorus concentrations in 85% and 80 % of the cases respectively. Oxygen depletion is particularly serious in the Baltic and Black seas.

Just as for material and land, many European countries have an important share of their water footprint (an indicator for direct and indirect water use) imported from wherever production takes place, causing potential water stress abroad.

3.2. Biodiversity

Changes in habitat impose the greatest impacts on species in Europe. With grassland and wetland in decline, urban sprawl and infrastructure fragmenting the landscape, only a small share of the forest being undisturbed and agro-ecosystems being characterised by agricultural intensification and abandoned land, biodiversity is affected negatively. Introducing biofuel crops may further worsen the situation. Monitoring the status and trends of biodiversity is a challenge and there are significant gaps in our understanding. As can be seen from Figure 11, detailed bio-geographical evaluations of the species listed in the EU Habitats Directive show a favourable conservation status for only 17 %, an unfavourable status for 52 % and an unknown status for 31 %. Linked to this, only 17 % of the assessments of the European habitat types were favourable[198].

Moreover, climate change has started to take its toll and is increasing the ecosystem vulnerability. Sea surface temperature changes in Europe's regional seas have been up to six times greater than in the global oceans in the past 25 years. This leads to changes in the composition of plankton and some fish species, with consequences on fishing opportunities.

Figure 11: Conservation status of species of Community interest in 2008 (Source: EEA, 2010)

3.3. Fish

Overfishing is threatening the viability of both European and global fish stocks. In 2010, 70 % of commercial stocks were fished above the maximum sustainable yield.

Looking at the biological viability of stocks, only 8 % and 11 % of coastal habitats and species, and 10 % and 2 % of marine habitats and species, respectively, are in favourable conservation status. The remaining majority either have unfavourable status or are un-assessed. Figure 12 shows the proportion of fish stocks within and outside safe biological limits – so at risk of collapse. 21 % of the assessed commercial stocks in the Baltic Sea are outside safe biological limits. For the areas of the North-East Atlantic, the percentages of stocks outside safe biological limits vary between 25 % in the Arctic East and 62 % in the Bay of Biscay. In the Mediterranean Sea, the percentage of stocks outside safe biological limits is about 60 %, with four out of six areas exceeding 60 %.

Figure 12: Status of commercial fish stocks in European Seas, 2003-2004 (Source: EEA, 2010)

At the global level the FAO (2007) reports that the proportion of over-exploited and depleted stocks has been rising during the last 40 years, e.g. from 10% in 1974 to 25% in 2005, although this trend has moderated in the last 10-15 years. Excess fishing pressure exerted on these stocks in the past leaves no possibilities in the short- or medium-term for further expansion, with an increased risk of further declines or even commercial extinction[199]. Figure 13 represents the status of world fish stocks in 2005.

Figure 13: Status of world fish stocks (2005) (Source: FAO, 2007)

3.4. Land use

There has been a change in land-cover type on 1.3 % of the total land stock (68 353 km2 of 5.42 million km2) from 2000 to 2006 across 36 European countries. Although the rate of these changes has slowed down compared to the period 1990 to 2000, the trend of land use specialisation (urbanisation, agricultural intensification and abandonment, together with natural afforestation) is still very strong and is expected to continue.

The largest relative increase was of artificial surfaces: they grew with more than 3 % from 2000 to 2006, mainly due to conversions for economic sites and infrastructures. Internal conversion has been relatively large for forestry, but total forest area increased only slightly. It has been noted, however, that due to steadily growing demand for wood and wood products, the ratio of felling over net annual increment (utilisation rate) could temporarily increase in some European countries to over 100 %, causing a decline in growing stock after 2020. A temporary high utilisation rate is not necessarily unsustainable, but given that much of the forest is relatively old in many Member States, this could turn forests from a carbon sink into a temporary source. A high utilisation rate could however at the same time help decreasing instability of aging stands, reducing saturation effects in old forests and vulnerability to forest fires, storms and pests and, thereby, counteracting the risk that EU forests turn into a carbon source.

As in many other industrialised regions, the EU is experiencing a long-term trend of decline in agricultural areas, which are either reforested or developed as urban or infrastructure land. Arable land and permanent crops as well as pastures and mosaics decreased with 0.2 and 0.3 % respectively during 2000-2006. Although land change rate in Europe has slowed down since the 1990s, biodiversity-rich natural and semi-natural areas continue to decline, mainly due to conversion to forest but also because of intensification in agriculture.

Land use has impacts on climate with increasing releases of carbon dioxide when soils and natural vegetation are disturbed, which has direct impacts on biodiversity and ecosystem services. Unsustainable use of land is furthermore leading to increased soil degradation and thereby a loss of a fundamental resource. Several other factors with a negative impact on the soil quality and biodiversity are working in parallel; organic matter decline, compaction in agriculture, salinisation, contamination and sealing.

Figure 14: Net land-cover changes 2000–2006 in Europe: total area in hectares (left) and percentage change from 2000 (right) (Source: EEA, 2010)

3.5. Air

Air pollutants make their way to soil and water and thus deplete ecosystems and biodiversity. Major sources of air pollution are still the energy sector and road transport. Emissions of the main air pollutants in Europe have however declined significantly in recent decades. For example, in 2008 SOx emissions were 72 % below 1990 levels and emissions of particulate matter decreased by 13 % since 2000. Primarily SO2 mitigation measures have succeeded in considerably reducing the ecosystems area affected by acidification.

However, in terms of controlling emissions, only 14 European countries expect to comply with all four pollutant-specific emission ceilings set under EU and international legislation for 2010. The limit for NOx is the most challenging, which 12 countries expect to exceed. This is e.g. reflected in the fact that nitrogen compounds, released as NOx and ammonia, are currently the main acidifying components. In addition, nitrogen contributes to nutrient oversupply in terrestrial as well as aquatic ecosystems, leading to changes in biodiversity. The area of sensitive ecosystems affected by excessive atmospheric nitrogen diminished only slightly between 1990 and 2010. Thus, despite major improvements, Europe still contributes significantly to global emissions of air pollutants and the complex links between emissions and ambient air quality moreover means that lower emissions have not always produced a corresponding drop in atmospheric concentrations.

4. Interactions between Resources

As described above, the use of resources for production and consumption not only impacts on the resource stock of the inputs, it drives impacts on other resources and their availability. For example:

· emissions from the use of fossil fuels lead to climate impacts that affect fish stocks, fresh water, soils and ecosystems;

· biomass use puts pressure on land and water resources and also contributes to climate change and biodiversity loss in ecosystems - any land-cover changes may have additional considerable effects on ecosystems;

· extraction of industrial minerals and ores uses significant amounts of fossil fuels and often releases toxins;

· transport and production of bulk construction materials (eg. cement) contribute to wastes and CO2 emissions.

These interactions are taken into account by Life-Cycle Analysis of resources, products or services, where information on the impacts at different stages of the life-cycle from extraction to end-of-life/waste are brought together. The complexity of interactions and indirect effects makes it difficult to reach simple conclusions about direct linear causal links between resource input use (or product consumption) and inputs on other (eg. environmental) resources. This is possible for impacts directly related to global warming, acidification and health effects from fossil fuel consumption. But links get more complex the further consequent impacts are looked at (eg. consequent effects of the use of an extracted resource, or impacts on fresh water from climate change). There are 4 main reasons for this:

1) Each resource used has different impacts on other resources

The use of one resource has impacts of different strength on the other resources. Figure 15 indicates this. For example, oil use has a large impact on global warming and pollution damaging to health, but a relatively low impact on land use. The diagram shows the relative importance of the impacts of resources listed on the right viewed by certain metrics of impact. (It demonstrates that the mass of materials is not necessarily correlated to their impacts – so mass consumed is not always a good proxy for resource impacts.)

Figure 15: Environmental impact of materials (Source: International Resource Panel)

In the diagram, the left-hand column shows the impacts of resource use in the economy judged by mass, the next column the impacts of the same use of resources judged by impact on climate, the next on land, and the next on human health. The right hand column shows an amalgamated indicator of the impact of the use of resources on environmental resources as a whole.

2) Products are a combination of different resources, from different sources

Products made from many different materials have a correspondingly increased complexity of impacts.

In addition, resources can be used and produced in different ways or places that bring different impacts – for example a material can be produced with more or less material and energy efficient processes. Hydropower can be used for energy in one country, coal in another. The local geography (e.g. environmental vulnerability) also affects the impact a process can have.

Tracing impacts along supply chains is possible, but does require simplifications. This can be illustrated by Figure 16. Looking at only one resource – steel – it can be seen that products on the right are made from a mix of steels from various different processes. Considering that products are made up of many materials, each of which could come through various supply chains with different impacts, a complex product can have differing degrees of impact.

Figure 16: Global Steel Flows (Source: Cullen, Allwood et al., The efficient use of energy: Tracing the global flow of energy from fuel to service; Energy Policy38 (2010) 75–81

3) Including the full life-cycle: global impacts

Much of the EU resource base is now located outside the EU, with more than 20 % of resources used in Europe being imported. Often, only a relative minor part of the environmental pressures caused by consumption are emitted during the use phase, the majority is emitted during production, i.e. elsewhere in case of import. An important part of the impacts on resources from European consumption occurs in exporting regions. Although caused by European consumption, these pressures are less visible to European policy makers and will require different sets of measures than those that may have been adopted to tackle emissions from domestic production.

4) Aggregating trends in Resource Impacts

Given the complexity, it is not possible to present clear trends for the full impacts on environmental resources that use of natural resources inputs may have. This pushes the limits of scientific knowledge about indirect impacts, and resulting impacts of the combination of different pressures (on environmental systems, or health). This is an area needing more research to clarify the potential impacts.

However, sufficient attribution is possible to link certain consumption activities to major pressures on environmental resources. These areas are: eating and drinking, housing and infrastructure, and mobility.

It is also possible to create aggregate indicators that point to particular causes and important trends. Data for indicators such as EMC (environmentally-weighted material consumption) and EF (ecological footprint) exist, even though both are criticised for the methodological weaknesses mentioned. EMC data from 1992 to 2000 suggest that the impact on environmental resources in Europe has remained fairly constant per capita while it has decreased in relation to GDP, even though there are large differences across Member States.

EF data, which go back about 50 years, show the resources that are used expressed in global hectares per person. In the EU, EF has increased from 3.0 in 1961 to 4.7 in 2006. Such data allow us to identify the single largest contributor to eco-efficiency in Europe as the reduction in coal use. Investigations claim decoupled air emissions from growth in production with several related emissions either decreasing or remaining stable during times of continuous economic growth. A major reason for this decoupling was the shift towards a service-based economy. This again shows how apparent improvements in the EU may have been possible by increasing the pressure on environmental resources elsewhere. Few sources suggest that global impacts from Europe's resource use are going down.

5. Drivers

There are 3 key drivers of resource use: population, economic growth, and resource productivity, each of which will be described briefly below.

5.1. Global Trends and Drivers

Increasing materials use in the EU is part of a global trend. Figure 17 shows global material extraction for the period from 1900 to 2005 broken down by the four major material classes: biomass, fossil energy carriers, ores & industrial minerals and construction. Total material extraction has increased by a factor of 8. The strongest increase can be observed for construction minerals, which grew by a factor 34, ores & industrial minerals by a factor 27, and fossil energy carriers by a factor of 12. Biomass extraction increased 3.6 times[200].

Figure 17: Global material extraction in billion tons, 1900-2005 (Source: Krausmann et al 2009)

5.2. Population Growth

During the 20th century, world population increased from 1.65 billion to 6 billion. The global population growth rate has fallen from its peak of 2 per cent per year to around 1.3 per cent today, but the annual growth in people is larger every year[201]. Figure 18 shows the evolution of world population during the last millennium. Figure 19 shows the evolution of EU-27 population.

Figure 18: World population 1000-2000 (Source: http://www.theglobaleducationproject.org/earth/human-conditions.php)

Figure 19: EU-27 population 1960-2010 (Source: Eurostat, 2011)

5.3. Economic Development

The world economy grew more in the last half century than at any time in the past. World GDP increased six–fold from 1950 to 1998 with an average growth of 3.9 per cent a year compared with 1.6 from 1820 to 1950, and 0.3 per cent from 1500 to 1820[202]. Figure 20 represents world GDP from 1960 until 2009, at current market prices.

Figure 20: World GDP 1960-2009 at current market prices (left scale in units of $1.000 million) (Source: World Bank, 2009)

5.4. Productivity

European economies are creating more and more wealth from the resources that we use. Resource productivity in Europe has improved over the past two decades through the use of more eco-efficient technologies, the transition to service-based economies and an increased share of imports in EU economies[203]. Figure 21 shows the evolution of the growth in the productivity of labour, energy and materials from 1970 till 2008.

Figure 21: Growth in the productivity of labour, energy and materials in EU15 and EU12, 1970-2008 (Source: EEA, 2010)

Annex 8: Modelling for the Roadmap to a Resource Efficient Europe

1. Existing resource modelling – approaches & tools

The Communication on the Resource Efficiency Flagship introduced the ambition to: […] develop a set of tools to allow policy makers to drive forward and monitor progress. This will help build the clear support and involvement of national, regional and local authorities, stakeholders and citizens.

A study was commissioned[204] to explore the possibility of developing a quantitative modelling framework that could be used to assess Resource Efficiency scenarios, and identify the policies needed. The study explored the different scenarios used by different sustainability exercises. It found that there are some aspects of the scenarios that cannot be quantified under the current knowledge base. However, the modelling capabilities to carry out the assessment exist and are reasonably well established.

Whilst for individual resources, there is often good modelling and data, the focus of future development should be to build on this and improve the linkages between resources within a single modelling framework (see Figure 1). Whilst there is already some modelling of interlinkages, this is the weak point of existing efforts. The new framework should cover both: the key linkages between different types of resources like materials, energy and climate, fresh water and land use, soil and biodiversity but also the link between the economy and the environment. The study concluded with four recommendations:

(1) economic models should include materials by default;

(2) economic models should develop a modular framework to provide better detail of key sectors;

(3) a common interface should be developed for linking models;

(4) some further research is needed to deepen the understanding of the linkages from environment to economy.

As regards including materials in economic models, two macroeconomic models, E3ME and GINFORS, already include a treatment of material demands. Although both these models are econometric in structure, there is no reason that this development could not also be brought into Computable General Equilibrium (CGE) models.

2. Developing a new modelling framework

If a new modelling framework is to be developed along the lines set out above, then this is easiest to do if there is a methodology that is clearly documented and is generally adopted by model developers, with the underlying assumptions explored to provide good data. The challenge is partially one of dissemination. There are 3 particular aspects to tackle:

1) To develop a modular framework for economic models: Previous examples of model linkages have been based on a modular approach, but this has not usually been generalised to a position where modules can easily be added or removed for a particular assessment. The academic literature has increasingly been moving in this direction although putting the recommendations into practice has in general been less successful.

This could be the subject of a research project, but the focus of the work and the research outputs must be on the methodology used rather than the results for particular scenarios. If these outputs defined a standard modular framework, other models could be adapted on this basis.

2) To design a common interface for linking models, there are some general principles that must be adhered to if the interface is to be widely accepted and used. For example:

– A system must be flexible so that different types of models can use it.

– The requirements of model operators from different backgrounds must be taken into account.

– Issues of differences between models in spatial and sectoral disaggregation and time steps should be addressed.

3) Understanding linkages from environment to economy. Work in this area is already going on for key linkages and involves determining the key sectors / regions where these occur, and then quantifying the linkages.

3. Modelling EU Resource Efficiency 3.1. An Example of an integrated modelling of resource efficiency

There is already some modelling of complex resource efficiency questions. An example is modelling by PBL for the Commission[205], employing a suite of models that have also been used for the modelling associated with the OECD Environmental Outlook and OECD's Green Growth work. The study explores the implications of resource efficiency for five resource themes: energy, land, phosphorus, fresh water, and fish stocks.

The results of the study provide a global, model-based analysis of the impacts of current and projected resource use up to 2050, in the assumed absence of any additional, targeted policies.

The study provides evidence of the biophysical potential for boosting resource efficiency, in different contexts of global and EU coordinated action. It concludes that there is substantial potential to improve efficiency in the use of the resources analysed, compared to current policy. As examples of outputs, it illustrates that:

· Global energy use could be reduced by over 30% in 2050 (see figure 2), compared to policies continued in line with that envisaged by the EU. As a result, this would halve the gap between baseline greenhouse gas emissions and the 450 ppm CO2-eq mitigation scenario. It would require accelerated adoption of best available technologies in industry, new buildings, household appliances, power and transport sectors, but without major changes in consumer habits.

· Net global agricultural expansion between 2010 and 2050 can be halted, with expansion in Africa reduced by half.

· Global fertilizer phosphorus use from primary sources can be reduced by 18%, as compared to currently envisaged policies; total global phosphorus demand could reduce an additional 8% by banning its use in detergents.

· Water withdrawals can be reduced by 25%.

· Fish stocks can be recovered, and marine biodiversity improved, sustaining higher catches in the long-term.

[1]               Policy Studies Institute, 2009. Designing policy to influence consumers: Consumer behaviour relating to the purchasing of environmentally preferable goods [online]. London: Policy Studies Institute. Available from: http://ec.europa.eu/environment/enveco/pdf/RealWorldConsumerBehaviour.pdf.

[2]               EEA, The European Environment – State and Outlook 2010: Consumption and environment, 2010

[3]               EEA, The European Environment – State and Outlook 2010: Consumption and environment, 2010

[4]               De impact van het programma duurzaam inkopen anno 2011 - Vervolgonderzoek naar de effecten van duurzaam inkopen op markt en milieu (The impact of the programme bying sustainably 2011 – Follow-up research about the effects on the market and the environment)

[5]               http://archive.defra.gov.uk/sustainable/government/advice/public/buying/products/furniture/spec/furniture.htm

[6]               Price Waterhouse Coopers, Collection of statistical information on Green Public Procurement in the EU Report on data collection results, report to DG Environment, 2009,         http://ec.europa.eu/environment/gpp/pdf/statistical_information.pdf, page 69

[7]               EEA, The European Environment – State and Outlook 2010: Consumption and environment,2010

[8]           "Lags in the EU economy's response to change", Ecorys, 2011 for the European Commission

[9]               Ecorys 2011 Study on the Competitiveness of European Companies and Resource Efficiency

[10]             Fischer et al. 2004; ADL et al. 2005; also Aldersgate Group, 2010

[11]             The Economic Benefits of Resource Efficiency Policy, COWI 2011, forthcoming

[12]             EIM, 1996. Stimular naar het jaar 2000, een evaluatie van 5 jaar Stimular [Stimular to the year 2000, an evaluation of 5 years of Stimular]

[13]             Ecorys 2011 Study on the Competitiveness of European Companies and Resource Efficiency

[14]             EEA, The European Environment – State and Outlook 2010: Material resources and waste (p. 22), 2010

[15]             http://www.eea.europa.eu/soer/synthesis p.79

[16]             Critical Raw Materials, Ad hoc group of the EU Raw Materials Supply Group (2010)

[17]             EEA, The European Environment – State and Outlook 2010: Material resources and waste (p. 41), 2010

[18]             Bio Intelligence Service 2011, Analysis of the Key Contributions to Material Efficiency

[19]             Friends of the Earth Europe, Gone to Waste: The valuable resources that European countries bury and burn, 2009

[20]             Critical Raw Materials, Ad hoc group of the EU Raw Materials Supply Group (2010)

[21]             F. Grosse, 'Is recycling "part of the solution"? The role of recycling in an expanding society and a world of finite resources', Institut Veolia Environnement, 2010.

[22]             OECD, 2004, The Economic Impact of ICT

[23]             OECD, Green Growth Synthesis (2011)

[24]             Industrial symbiosis brings together traditionally separate industries and organisations from all business sectors with the aim of improving cross industry resource efficiency and sustainability; involving the physical exchange of materials, energy, water and/or by-products together with the shared use of assets, logistics and expertise. See http://www.nisp.org.uk/what_is.aspx

[25]             Environmental Technology Verification Impact Assessment

[26]             2010, "Understanding the state of play in financing eco-innovation in the EU", Cleantech Group       http://ec.europa.eu/environment/ecoinnovation2010/2nd_forum/presentations_en.htm

[27]             World Bank/FAO 2009: The sunken billions – the economic justification for fisheries reform.

[28]             OECD, Environmentally harmful subsidies: challenges for reform, 2005

[29]             The table should be treated only as an illustration as estimates are subject to uncertainty, the definition of an EHS is not always clear, and figures are not available at the EU level in most cases.

[30]             TEEB – The Economics of Ecosystems and Biodiversity for National and International Policy Makers, Chapter 6: Reforming subsidies, 2009

[31]             OECD, Environmentally harmful subsidies: challenges for reform, 2005

[32]             OECD, Mitigation potential of removing fossil fuel subsidies - A general equilibrium assessment, 2011

[33]             G20, Leader’s Statement: The Pittsburgh Summit, (Preamble, para 24), 2009

[34]             S. Naess-Schmidt and M. Winiarczyk (Copenhagen Economics),Company car taxation: Subsidies, welfare and environment, Report to DG TAXUD, 2009

[35]             SEC(2009)53 final

[36]             As a percentage of GDP, environmental taxes accounted for 2.4% in 2008 as against 2.9% in 1999, when they reached their peak level (Eurostat data)

[37]             Taxation Trends in the European union, 2011, European Commission

[38]             Innovation of energy technologies: the role of taxes, Copenhagen Economics, 2010

[39]             Taxation, Innovation and the Environment, OECD (2010)

[40]             ibid

[41]             OECD 2006 Boosting Jobs and Incomes, Policy lessons from Reassessing the OECD Jobs Strategy

[42]             OECD. Green Growth Synthesis, based on OECD, ENV-linkages model

[43]             SEC(2009)53 final

[44]             COM(2011)112 and SEC(2011)288, in particular sections 2.3 and 5.2.3

[45]             The Economics of Ecosystems and Biodiversity. Mainstreaming the economics of nature. A synthesis of the approach, conclusions and recommendations of TEEB

[46]             WBCSD(2010) Vision 2050: New Agenda for Business. World Business Council for Sustainable Development

[47]             http://bankofnaturalcapital.com/category/ecosystem-services  

[48]             EU 2010 Biodiversity baseline.

[49]             European Commission’s Green Paper on the Reform of the Common Fisheries Policy

[50]             The Economics of Ecosystems and Biodiversity. Mainstreaming the economics of nature. A synthesis of the approach, conclusions and recommendations of TEEB.

[51]             International Union for Conservation of Nature (IUCN)               quoted at http://www.eea.europa.eu/themes/biodiversity/where-we-stand/threats

[52]             EEA, The European Environment – State and Outlook 2010: Water, 2010

[53]             EEA 2010 State of the Environment Report (SOER), Water, key messages.

[54]             EEA, The European Environment – State and Outlook 2010: Water, 2010

[55]             Source Wada et al. (2010) Global depletion of groundwater resources    (http://tenaya.ucsd.edu/~tdas/data/review_iitkgp/2010GL044571.pdf)

[56]             ClimWatAdapt project

[57]             T. Dvorak et al.(Ecologic - Institute for International and European Environmental Policy), EU Water saving potential, Report for DG Environment, 2007

(http://ec.europa.eu/environment/water/quantity/pdf/water_saving_1.pdf)

[58]             EEA, The European Environment – State and Outlook 2010: Synthesis, 2010

[59]             BDEW, 2010 and Statistics Denmark, 2006

[60]             European Environment Agency, 2010. The European environment – State and outlook 2010: Synthesis pp. 96-100

[61]             WHO –Health and Environment in Europe: Progress Assessment (2010), ISBN 978 92 890 4198 0

[62]             COM(2010) 265 final

[63]             See UNEP (2010) "Measures to Limit Near-Term Climate Change and Improve Air Climate: An Integrated Assessment of Black Carbon and Tropospheric Ozone" which is the first assessment that actually shows this in a quantitative way.

[64]             European Environment Agency, 2010. The European environment – State and outlook 2010. Synthesis pp. 96-100. Copenhagen. Via http://www.eea.europa.eu/soer.

[65]             Directive 2001/81/EC

[66]             Study on the Competitiveness of the EU eco-industry –Within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054. Available at http://ec.europa.eu/environment/enveco/eco_industry/pdf/report%20_2009_competitiveness_part1.pdf

[67]             For a detailed analysis see SEC(2011)288, in particular section 5.2.14.

[68]             Land Use/Cover Area frame Survey (LUCAS), conducted in 2009. Land was surveyed in 23 EU Member States, where both the physical cover of the land and its visible socio-economic use were recorded

[69]             Prokop et al (2011)

[70]             Gardi, Ciro, Claudio Bosco, and Ezio Rusco (2009), Urbanizzazione e sicurezza alimentare, Estimo e Territorio, 11:44-47.

[71]             Eurostat Farm Structure Survey 2007

[72]             JRC IPTS AGLINK study

[73]             (based on 2009 CO2 price, i.e. €20/tCO2).

[74]             Peatlands in EU-27: 318,000 km²; EU-27 surface area: 4.2 million km². See also Schils et al. (2008), Review of existing information on the interrelations between soil and climate change (CLIMSOIL), Final report to DG Environment (http://ec.europa.eu/environment/soil/review_en.htm), p. 71.

[75]             Reflection paper p. 14

[76]             Soil – a key resource for the EU (http://ec.europa.eu/environment/pubs/pdf/factsheets/soil2.pdf).

[77]             SEC(2006) 620.

[78]             SEC(2006) 1165.

[79]             SEC(2006) 620.

[80]             PESERA (Pan–European Soil Erosion Risk Assessment) model, covers 21 Member States

[81]             SEC (2006) 620

[82]             EEA, The European Environment – State and Outlook 2010: Thematic Assessment - Soil, 2010

[83]             COM(2010) 715.

[84]             European Commission, Facts and Figures on the Common Fisheries Policy. Basic Statistical Data. ISSN 1830-91192010 edition.

[85]             European Commission, Facts and Figures on the Common Fisheries Policy. Basic Statistical Data. ISSN 1830-91192010 edition.

[86]             The economic value of sustainable benefits from the Mediterranean marine ecosystems, Blue Plan. Sophia Antipolis, May 2010

[87]             Marine Biotechnology: Marine Board, A New Vision and Strategy for Europe, September 2010, http://www.esf.org/marineboard  

[88]             European Commission (2008) Directorate-General for Maritime Affairs and Fisheries ‘CFP Reform’. Green Paper: Reform of the Common Fisheries Policy, COM (2009)163.

[89]             EEA. Status of marine fish stocks (CSI 032) - Assessment published Feb 2009.

[90]             Thurstan, R.H., Brockington, S. & Roberts, C.M. (2010) The effects of 118 years of industrial fishing on UK bottom trawl fisheries. Nature Communications, 1(2) p15.

[91]             The State of World Fisheries and Aquaculture 2008. FAO Fisheries and Aquaculture Department, Food and Agriculture Organization of the United Nations, Rome, 2009.

[92]             Worm, B., Barbier, E.B., Beaumont, N., Duffy, E., Folke, C., Halpern, B.S., Jackson, J.B.C., Lotze, H.K., Micheli, F., Palumbi, S.R., Sala, E., Selkoe, K.A., Stachowicz, J.J. & Watson, R. (2006) Impacts of biodiversity loss on ocean ecosystem services. Science, 314 (5800), p787.

[93]             FAO Newsroom (2008) Half of world fish trade sourced from developing countries.

[94]             Eurostat – includes EU aquaculture production. Eurostat statistics © European Communities (1990–2006).

[95]             Fish dependence, Ocean2012 p.16-18

[96]             World Ocean review : Marine minerals and energy http://worldoceanreview.com/wp-content/downloads/WOR_chapter_7.pdf

[97]             UNEP, Ecosystems and Biodiversity in Deep Waters and High Seas, 2006

[98]             "Plastic ingestion by mesopelagic fishes in the North Pacific Subtropical Gyre", Peter Davison, Rebecca G. Asch, 2011

[99]             Tukker, A. et al. (2006). Environmental Impact of Products (EIPRO). EC Joint Research Centre - IPTS

[100]            http://ec.europa.eu/enterprise/sectors/index_en.htm

[101]            Eurostat Household Budget Survey

[102]            European Commission, (2009) publication Trade and agriculture – an overview of EU imports and exports based on EUROSTAT COM, 2008. Available at:    trade.ec.europa.eu/doclib/cfm/doclib_section.cfm?sec=175&langId=en

[103]            UNEP (2010) Assessing the Environmental Impacts of Consumption and Production: Priority Products and Materials, A Report of the Working Group on the Environmental Impacts of Products and Materials to the International Panel for Sustainable Resource Management. Hertwich, E., van der Voet, E., Suh, S., Tukker, A., Huijbregts M., Kazmierczyk, P., Lenzen, M., McNeely, J., Moriguchi, Y.

[104]            EEA, The European Environment – State and Outlook 2010: Synthesis, 2010

[105]            Van der Voer et al, 2005

[106]            EEA, The European Environment – State and Outlook 2010: Synthesis, 2010

[107]            S. Moll, D. Watson et al., Environmental pressures from European consumption and production: A study in integrated environmental and economic analysis, ETC/SCP working paper 1/2009

[108]            S. Moll, D. Watson et al., Environmental pressures from European consumption and production: A study in integrated environmental and economic analysis, ETC/SCP working paper 1/2009

[109]            Preparatory study for the review of the thematic strategy on the sustainable use of natural resources, Bio Intelligence Services, 2010, http://ec.europa.eu/environment/natres/pdf/BIO_TSR_FinalReport.pdf

[110]            UNEP (2010) Assessing the Environmental Impacts of Consumption and Production: Priority Products and Materials, A Report of the Working Group on the Environmental Impacts of Products and Materials to the International Panel for Sustainable Resource Management.

[111]            J. Gustavsson et al., Global food losses and food waste, FAO, 2011

[112]            BIO Intelligence Service (2010) Preparatory study on food waste across EU27

[113]            WRAP, Waste arisings in the supply of food and drink to households in the UK, 2010

[114]            WRAP, Waste arisings in the supply of food and drink to households in the UK, 2010

[115]            UNEP, The Enviornmental Food crises: Environment's role in averting future food crises, 2009

[116]            FAO, Livestock's long shadow, Livestock Environment And Development (LEAD) Initiative, 2006

[117]            FAO, Livestock's long shadow, Livestock Environment And Development (LEAD) Initiative, 2006

[118]            Some 306 of the 825 terrestrial ecoregions identified by the Worldwide Fund for Nature (WWF) reported livestock as one of the current threats. In addition 23 out of 35 global hotspots – identified by Conservation International – are reported to be affected by livestock production. According to the International Union for Conservation of Nature (IUCN) most of the world's threatened species are suffering habitat loss where livestock are. (FAO, Livestock's long shadow, Livestock Environment And Development (LEAD) Initiative, 2006)

[119]            FAO, Livestock's long shadow, Livestock Environment And Development (LEAD) Initiative, 2006

[120]            FAO, Livestock's long shadow, Livestock Environment And Development (LEAD) Initiative, 2006

[121]            B.P. Weidema et al., Environmental Improvement Potentials of Meat and Dairy Products (IMPRO), JRC, 2008

[122]            WHO 2007

[123]            See also the Lancet paper of 12th September 2007 "Slash global meat consumption to tackle climate change" stating that not more than 50 g per day should come from red meat provided by cattle, sheep, goats and other ruminants.

[124]            D. Cordell et al., The story of phosphorus: Global food security and food for thought, Global Environmental Change vol. 19 p. 292-305, 2009

[125]            PBL Netherlands Environment Agency, Scarcity in a Sea of Plenty? Global Resource Scarcities and Policies in the European Union and the Netherlands, 2011

[126]            Minemakers Limited, 2008 quoted in D. Cordell et al., The story of phosphorus: Global food security and food for thought, Global Environmental Change vol. 19 p. 292-305, 2009

[127]            PBL (2011) EU Resource Efficiency Perspectives in a Global Context: A fast track analysis. Forthcoming (will be available at: http://ec.europa.eu/environment/enveco/studies.htm)

[128]            European Construction Industries Federation

[129]            ETAP, 2007; BUILD-NOVA, 2006a quoted in S. Jofre (Technical University of Denmark), The challenge of a greener European construction sector: Views on technology-driven (eco)innovation, 2011

[130]            S. Moll, D. Watson et al., Environmental pressures from European consumption and production: A study in integrated environmental and economic analysis, ETC/SCP working paper 1/2009

[131]            Action in line with the Energy Performance of Buildings Directive alone would reduce direct CO2 emissions by 160 to 210 Mt per year (IA of the EPBD)

[132]            Sustainable Competitiveness of the Construction Sector (2010) Ecorys

[133]            OECD, Environmentally sustainable buildings: Challenges and policies, 2003

[134]            Bell et al., 1996 quoted in OECD, Environmentally sustainable buildings: Challenges and policies, 2003

[135]            Directive 2010/31/EU

[136]            In line with Art. 9 of Directive 2010/31/EU of 19 May 2010 on the energy performance of buildings

[137]            In line with Art 11 of Directive 2008/98/EC of 19 November 2010 on waste.

[138]            E.g. the European Re-Building Forum, run by the Resource Efficiency Alliance.

[139]            COM(2011)144, White Paper: Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system

[140]            This would also substantially reduce other harmful emissions

[141]            UNEP Green Economy Synthesis 2010

[142]            OECD Green Growth Synthesis 2010

[143]            OECD Green Growth Synthesis 2011

[144]            Roadmap to a Low Carbon Economy (2011)

[145]            COM (2011) 363

[146]            OECD, 2010 Leveraging training and skill development activities in SMEs – Cross country analysis of the TSME survey, CFE/LEED

[147]         Programmes to promote environmental skills (2010) , Ecorys

[148]            COWI (2011) 'The costs of not implementing the environmental acquis'

[149]            Data from from National Footprint Accounts 2010 edition, WWF and Global Footprint Network., retrievable at www.footprintnetwork.org

[150]            Bio Intelligences Service, Addressing the rebound effect, April 2011 (for the European Commission)

[151]            UNEP, 2002; IEA, 2005; 4CMR, 2006; EEA, 2009; DECC, 2010; EEA, 2010

[152]            Sorrell, 2007; UKERC, 2007

[153]            Estimates of indirect and economy wide rebound were only found for energy efficiency improvements, and are limited due to few published studies with weaknesses in the measurement approach (Sorrell, 2007; Allan et al, 2006; Barker, 2005).

[154]            Greening et al, 2000; Schipper and Grubb, 2000; UKERC, 2007; Sorrell, 2007; Small and van Dender, 2007

[155]            Gately 1990, Graham & Glaister 2002, Anson & Turner 2009

[156]            Environmental Improvement Potentials of Meat and Dairy Products, JRC, 2008

[157]            This negative rebound effect means that the net environmental benefit would be greater than planned. It occurs because the policy measure increases the production and consumption costs.

[158]            4CMR, 2006

[159]            Saunders, 2010

[160]            Sorrell, 2007; EEA, 2010

[161]            DMC is defined as Domestic Material Consumption.

[162]            E.g. Landscape Ecosystem Potential or Ecosystem Degradation under development by the EEA

[163]            The life cycle based resource-efficiency indicators under development by the Commission's JRC is one key option the Commission will consider

[164]            COM (2009) 433 "GDP and beyond" and www.beyond-gdp.eu

[165]            Report of the Commission on the Measurement of Economic Performance et Social Progress (CMEPSP), see http://www.stiglitz-sen-fitoussi.fr/en/index.htm

[166]            This indicator has limitations; e.g. it aggregates different water resources, it does not take into account the nature of the water use after abstraction, the commonly used threshold values are under discussion. The Commission is exploring alternatives, which are however not yet fully available. Awaiting improvements, the WEI will be further used.

[167]            The relevant data is provided in an appendix to this document.

[168]            http://www.cbd.int/sp/

[169]            "Our life insurance, our natural capital: an EU biodiversity strategy to 2020". COM(2011)244. http://ec.europa.eu/environment/nature/biodiversity/comm2006/2020.htm

[170]            The Commission will publish a Blueprint for Safeguarding Europe's Waters (2012).

[171]            http://www.eea.europa.eu/data-and-maps/indicators/.

[172]            http://www.eea.europa.eu/data-and-maps/indicators/land-take-2/assessment.

[173]            http://www.eea.europa.eu/data-and-maps/indicators/soil-erosion-by-water/soil-erosion-by-water-assessment.

[174]            http://eusoils.jrc.ec.europa.eu/library/themes/erosion/.

[175]            http://epp.eurostat.ec.europa.eu/portal/page/portal/lucas/introduction and http://eusoils.jrc.ec.europa.eu/projects/Lucas/.

[176]            http://www.eea.europa.eu/data-and-maps/indicators/progress-in-management-of-contaminated-sites/progress-in-management-of-contaminated-1.

[177]            COM(2011)244

[178]            Developed by the ETC/SCP for the EEA, http://scp.eionet.europa.eu/announcements/ann1298365469, based on Eurostat data.

[179]            http://www.unep.org/resourcepanel/Publications/PriorityProducts/tabid/56053/Default.aspx

[180]            http://www.pbl.nl/sites/default/files/cms/publicaties/Protein_Puzzle_web_1.pdf

[181]            Calculated based on data in the preparatory study on food waste in the EU27, http://ec.europa.eu/environment/eussd/reports.htm

[182]            Developed by the ETC/SCP for the EEA, http://scp.eionet.europa.eu/announcements/ann1298365469. The data is held by Enerdat Odyssee database and the indicator is available for 27 EU MS except of one trend line for growth in floor area available only for 19 EU MS.

[183]            Article 9 of the Directive 2010/31/EU on the energy performance of buildings (recast)

[184]            Repealing Directives 2004/8/EC and 2006/32/EC, see COM(2011) 370 final of 22.6.2011

[185]            2011 Progress Report prepared by ETC/SCP for the EEA, http://scp.eionet.europa.eu/announcements/ann1298365469

[186]            The definitions of 'Core' and 'broad' SRI can be found in the 2011 Progress report on SCP prepared by ETC/SCP for the EEA. To date the indicator covers 14 EU MS (for 2010) and is based on the data from the Eurosif database. This indicator would need further processing but is a good proxy for private funding for the transition.

[187]            Netherlands Environmental Assessment Agency, Scarcity amidst a Sea of Plenty?, 2010

[188]            European Commission – DG Enterprise and Industry, Critical raw materials for the EU, 2010

[189]            Netherlands Environmental Assessment Agency, Scarcity amidst a Sea of Plenty?, 2010

[190]            "Import dependence is calculated as “net imports / (net imports + production in EU)" European Commission – DG Enterprise and Industry, Critical raw materials for the EU, 2010

[191]            International Resource Panel,, Metal Stocks in Society – Scientific Synthesis, 2010

[192]            Dutch Environmental Assessment Agency, Scarcities in a sea of plenty: Global resource scarcities and policies in the EU and the Netherlands, 2010

[193]            EEA, The European Environment – State and Outlook 2010: Synthesis, 2010

[194]            Staff Working Document with the Thematic strategy on the prevention and recycling of waste (2005)

[195]            Recycling Rates of Metals : A Status Report, International Resource Panel, 2011

[196]            EEA, The European Environment – State and Outlook 2010: Synthesis, 2010

[197]            EEA, The European Environment – State and Outlook 2010: Synthesis, 2010

[198]            EEA, The European Environment – State and Outlook 2010: Synthesis, 2010

[199]            OECD, Environmental Outlook to 2030, 2008

[200]            International Resource Panel, Decoupling the use of natural resources and environmental impacts from economic activity: Scoping the challenges, 2010

[201]            United Nations, The world at six billion, 1999

[202]            OECD (A. Maddison), The World Economy: A millennial perspective, 2001

[203]            EEA, The European Environment – State and Outlook 2010: Synthesis, 2010

[204]            Cambridge Econometrics, Wuppertal Institute and SERI (2011). Sustainability Scenarios for a Resource Efficient Europe. Forthcoming, will be available at: http://ec.europa.eu/environment/enveco/studies.htm

[205]            PBL (2011). EU Resource Efficiency Perspectives in a Global Context: A fast track analysis. Forthcoming, will be available at: http://ec.europa.eu/environment/enveco/studies.htm