An economy based on efficient consumption of resources

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It is more than obvious that we need a functional economy - a green economy. Such an economy depends, among other things, on an uninterrupted flow of natural and material resources.

How possible would it be to maintain this flow of resources? Or do we risk generating an impact on the environment? How much can we actually extract without harming the environment? The answer is found in a new concept of development, a new economy and a different way of thinking.

Including for the Republic of Moldova, the green economy represents a real solution for reducing unemployment, mass poverty, making the production and consumption process more efficient, while avoiding the depletion of natural resources.

The adoption of this concept at the national level requires the identification of a set of conditions, mechanisms and tools of the green economy development policy, presented in the work "A guidebook to the green economy", and later adjusted to national requirements.

Green Growth Policy Framework for Developing Countries – six conditions, four mechanisms and eight instruments.

Six conditions that would favor green economic growth:

  1. Restructuring of public expenditures;
  2. Vocational education and training;
  3. More effective enforcement of legislation;
  4. Special regimes for resource and land rights;
  5. Creation of premises for exchange of experience;
  6. Facilitating businesses to integrate sustainable and fair practices as quickly as possible.

Four mechanisms for integrating green growth:

  1. Environmental Expenditure Review;
  2. Strategic environmental assessment;
  3. Councils for Sustainable Development;
  4. Greening Accounting / alternative development measures.

Eight instruments of green growth policy:

  1. Certification of sustainable production and trade;
  2. Subsidy reform;
  3. Payments for Environmental Services;
  4. Environmental tax reform;
  5. Green Energy Investments and Incentives;
  6. Existence of green social enterprises;
  7. Sustainable public procurement;
  8. Green innovation.

With certainty, decoupling the consumption of resources in relation to the repercussions of economic activities on the environment is a strategic priority at the national level. It tends to reach a relative decoupling so that the rate of environmental degradation is slower compared to the increasing values recorded by the economic indicators.

In the most recent report “Decoupling technologies, opportunities and policy options, 2014", carried out by the International Resource Panel, the existing technological possibilities and those that can be obtained are identified, including the opportunities in the direction of accelerating the decoupling and increasing the productivity of resources. This report states that many of the decoupling technologies and techniques that deliver 5- to 10-fold improvements in resource productivity are already available. This fact allows countries to continue development strategies while significantly reducing resource use and negative environmental impact. Improvements of up to 60%-80% in energy consumption and water efficiency are technically possible and commercially viable in sectors such as construction, agriculture, hospitality, industry and transport. The working group within this report estimates that as a result of decoupling, resource savings in the amount of 2.9-3.7 billion USD will be achieved annually until 2030.

Achieving the desired results can only be possible by joining forces. Accordingly, a close collaboration between the public and private sectors is required by developing policies and action plans that would support and facilitate the achievement of decoupling and the efficiency of the production process through minimal input and impact on the environment in the conditions where the output will be increasing.

Over the past decade, the EU economy has created more "added value" in terms of Gross Domestic Product for each unit of matter consumed. For example, using the same amount of metal, the economy produced cell phones or laptops that were more "valuable" than their predecessors. This is known as resource productivity. In the EU, resource productivity increased by about 20 %: from €1.34 to €1.60 per kg of material between 2000 and 2011, the economy grew by 16.5% during this period.

The lower productivity of labor and capital places the Republic of Moldova in last place in relation to the EU member countries according to the productivity of resources per kg of raw material used, with only 0.56 euro/kg. The highest values of the productivity of natural resources are recorded by the Netherlands - 3.66 euro/kg, Luxembourg - 3.54 euro/kg and Great Britain - 3.13 euro/kg, and the lowest values by Bulgaria - 0 .67 euro/kg, Estonia – 0.64 euro/kg and Romania 0.63 euro/kg.

It is a theme that should give us serious thought, because it is not the same to grow using more and more resources, or to advance without increasing the consumption of material first, protecting the environment at the same time. The necessary condition of this trade-off would be efficient technology and ecological education of the population.

At the moment, unfortunately, the Republic of Moldova rather practices one linear economic model of development, in which all resources are extracted from nature to be consumed and the obtained remains thrown away, actions that over time generate an impact on the environment, a fact that involves additional expenses to remedy any negative consequences.

Fig. 1. The linear and circular economic model.

We no longer have the time or resources to afford to do wrong. Now is the time for change, reconciliation with nature and harmonization of the relationship "economy-environment - well-being of the population". This change becomes possible only by practicing a circular model of development by limiting the consumption and waste of raw materials and non-renewable energy resources and by no means the linear one, fig.2.

I tend to mention that the fundamental documents, which are the basis of the priorities of the Ministry of the Environment for the year 2015 such as: Action plan for the implementation of the RM-EU Association Agreement 2014-2016; The environmental strategy for the years 2014-2023; The Government's activity program for the years 2015-2018, etc., will only be successful if it starts from a pre-established and efficient model for collecting and recording environmental data. Here I would refer to one of the most practical models at the international level - the "Pressure-State-Response (PSR)”, fig.3, which could very well reflect the level of environmental degradation and its causes at the national level.

The use of the PSR model allows the highlighting of cause-effect relationships, thus contributing to the correct information of decision-makers and the public regarding environmental and economic issues and their interconnection. This process is made possible by the careful selection and organization of indicators, thus ensuring that nothing important has been overlooked. Each individual component of the PSR model is differentiated by content and calculation indicators.


Fig. 2. The "Pressure-State-Response" model, OECD

To begin with, it would be necessary to carry out an inventory of all polluting enterprises with the issuance of integrated environmental authorizations and their licensing, which will also provide for a serious examination of the project documentation for each new or old enterprise as well as a reasoned presentation with alternative solutions of the prevention of pollution, depollution or use of waste from the source.

Another recommendation would be to complete the current National Accounting System since it does not identify environmental expenses. The inclusion of environmental accounts in the national accounting is possible only by replacing the SNC National Accounting System with a satellite system, hereinafter called the SICEM Integrated Economic and Environmental Accounting System. Using this system will involve the following ten steps:

1. Elaboration of production and consumption accounts;
2. Identification and calculation of environmental protection expenses;
3. Elaboration of the accounts for the natural assets produced;
4. Elaboration of accounts for natural resources in physical expression;
5. Evaluation of natural resources: preparation of accounts in monetary terms;
6. Evaluation of accounts for environmental assets in physical terms (optional);
7. Calculation of emissions from the economic sector;
8. Calculation of the cost of maintaining emissions;
9. Aggregation and tabulation;
10. Comparisons between conventional indicators and indicators adjusted according to environmental criteria.

As subjects of economic activities, enterprises significantly direct the process of sustainable development through a series of structural transformations. Respectively, environmental accounting, offers these enterprises, the possibility of quantitative evaluation of the results obtained through the application of various initiatives to restructure the economic system in order to align with the requirements of sustainable development.

At the current stage, we unfortunately have a primitive mechanism for accounting for environmental data. This fact once again demonstrates the national contribution in solving environmental problems in relation to socio-economic ones.

Approaching with firm steps towards the European Union, we must urgently apply the best environmental practices at the national level as well. For the Republic of Moldova, the most important orientation would be the establishment of key indicators of sustainable development, including the monetary evaluation of natural resources. This achievement is largely due to the development of the capacities for collection, processing and responsibility of environmental data and natural resources, through the improvement of economic-social surveys, the description of the environment, the development of statistical series of environmental monitoring.