The UK should adopt an economic strategy focused on resource efficiency much wider in scope than the current Low Carbon Transition Plan so as to secure its place in the global economy of the future.

This is the conclusion of Beyond Carbon, an ambitious report by the Aldersgate Group, a coalition of companies, NGOs, professional bodies and MPs, who lobby government on the grounds that high environmental standards are essential to long-term economic growth.

The report states that resource efficiency will be one of the key determinants of economic success and human well-being in the 21st century and describes what a resource efficient economy might look like and what policies would be required to enable the transition.

The report is a challenge “for government, certainly, but not just for government… but for business… and consumers,” said Sir John Harman, former Chairman of the Environment Agency and lead author of the report.

“Good resource management requires a combination of price, regulation and information to achieve the desired behavioural change,” says the report – a mix which will be different for each industrial sector.

Beyond Carbon welcomes the publication of the Low Carbon Industrial Strategy, but says that focus on a single resource is unlikely to produce the required outcome for the UK economy, and it calls for the UK to adopt general resource efficiency principles through practices such as true resource pricing and life-cycle management.

“The single-minded pursuit of efficiency for one resource will often work to the opposite effect for another,” the report says.

Resource efficient policies should become key objectives for HM Treasury’s management of the economy and be supported across Government departments, the report says.

It also calls for policy interventions – effectively legislation - designed to address the full life-cycle of resources through extraction, use, reuse and recycling, rather than impinge at a single point of the life-cycle. The government’s waste strategy is held up as a good example by the report’s authors.

“We aim to consign waste to the bin of history,” said Hilary Benn, secretary of state for Defra, at the launch of the report.

Financial markets alone will not be sufficient to bring about the required changes in behaviour, the authors of the report said.

“We have to take the physical basis of the economy as seriously as we take its financial basis, which means we have to accurately account for physical assets,” said Professor Paul Ekins, head of energy and environmental policy at University College London’s Energy Institute.

The report describes the possible features of a resource-efficient economy by considering three contrasting economic sectors - food, water and materials. It makes clear that resource use has to be considered sector by sector. Although there are common issues, such as a need for a life-cycle approach to policy making and for the true price of environmental externalities to be reflected, they work out very differently in each sector due to the nature of the resources in question and the market structure in which each resource operates.

For example, the water sector is characterised by a small number of very large companies operating in a closely regulated manner. The report recommends the regulator’s role be enhanced to take a number of environmental considerations and costs into account and take some decisions on environmental grounds alone, rather than simply focusing on supplying water at least short-term cost to the consumer.

Conversely, the food sector has a large number of small enterprises, with the result that regulation is less all-encompassing and the market dominates. The food sector involves a complex interplay between land, water and nutrient resources so any regulatory response would have to include policies covering each diverse area. In addition there would have to be significant improvements made in food-chain economics to produce more with less and to reduce waste through the system, while far greater efforts would have to be made to drive sustainable consumption.

A one-size-fits-all approach would not work with such a complex production and consumption sector.

“We have made a number of policy recommendations in this paper but they will need support across government departments through policies on spatial planning, the remits of regulators and specific targets in key sectors,” said Sir John Harman added.

By: Andrew Charlesworth, BusinessGreen