POLICY HIGHLIGHTS

BETTER POLICIES FOR BETTER LIVES

Material resources,
productivity and
the environment
POLICY HIGHLIGHTS
Improving resource productivity contributes to economic
growth and to the reduction of pressures on the
environment. The OECD puts resource productivity in
a welfare perspective. It is understood to contain both
a quantitative dimension (e.g. the quantity of output
produced with a given input of natural resources) and
a qualitative dimension (e.g. the environmental impacts
per unit of output produced with a given natural resource
input).
Source: 2008 Recommendation by the OECD Council on
Resource Productivity.

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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
Overview
Establishing a resource efficient economy is central to achieving
green growth. It involves improving resource productivity and
putting in place policies that ensure a sustainable resource and
materials management building on the principle of the 3Rs
reduce, reuse and recycle, and encouraging more sustainable
consumption patterns. Better resource productivity helps to
improve the environment, by reducing the amount of resources that
human economic activity requires and diminishing the associated
environmental burden. It also helps to sustain economic growth by
securing adequate supplies of materials, improving competitiveness
and fostering new technologies and innovation.
To be successful such policies need to founded on a good
understanding of the material basis of the economy, of international
and national flows of materials, and of the factors that drive
changes in resource use and productivity over time, across countries
and in the different sectors of the economy. Some natural resources,
such as water, energy, forests, are monitored internationally,
but information is insufficient to give an integrated view of how
minerals, metals, or timber flow through the economy throughout
their life cycle. In addition, little is known about how this affects the
productivity of the economy and the quality of the environment.
The OECD report Material Resources, Productivity and the
Environment is a first step to fill some of these gaps. It describes
the material basis of OECD economies. It examines how material
resources flow between the economy and the environment, and
the factors that drive changes in resource productivity over time
and across countries. The report uses concepts and tools from
material flow analysis and accounting, and provides a factual basis
to help understand some of the key challenges and opportunities
associated with material resources and resource productivity in
OECD countries.
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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
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Natural resources provide essential raw materials, water and other
commodities to support economic activity, and are an important
source of income and jobs. As part of broader ecosystems, they
support the provision of ecosystem services climate regulation,
flood control, natural habitats, amenities, cultural services that are
necessary to develop man-made, human and social capital.
The use of materials from natural resources in economic activities
and the related production and consumption processes have many
environmental, economic and social consequences that extend
beyond the borders of individual countries or regions, and that affect
future generations. They have consequences on:
The rate of extraction and depletion of renewable and non-
renewable natural resource stocks, and the extent of harvest and
the reproduction capacity and natural productivity of renewable
resource stocks.
The environmental pressures associated with the extraction,
processing, transport, use and disposal of materials (e.g. pollution,
waste, habitat disruption); and their impacts on environmental
quality (e.g. air, climate, water, soil, biodiversity, landscape), on
ecosystem services and on human health.
International trade and market prices of raw materials and other
goods.

The productivity and the competitiveness of the economy.
The way natural resources and materials are managed and used
all way through the economy is thus important, not only from an
environmental perspective but also from an economic and trade
perspective.
Natural resources are
fundamental to the economy
and human well-being
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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
A development pattern that depletes the economys natural asset base
without providing secure, long-term substitutes for the goods and
services that they provide is unlikely to be sustainable.
The environmental consequences of the use of natural resources and
materials occur at different stages of the resource cycle and affect
the quantity and quality of natural resource stocks and the quality of
ecosystems and environmental media. The type and intensity of these
consequences depend on the kind and amounts of natural resources
and materials used, the way these resources are used and managed,
and the type and location of the natural environment from where they
originate.
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Graphic 1: The commercial material cycle and the 3Rs - closing the loop
3R and circular economy initiatives aim at closing materials loops
and extending the lifespan of materials through longer use, reuse and
remanufacturing, and the increased use of secondary raw materials.
These initiatives also aim at material substitution: using materials with
lower environmental impact, and replacing the environmentally most
damaging materials.
Reduce
Recycle Re-manufacture Re-use
Resource
extraction
Processing Manufacture Use
Final
disposal
Releases to the environment (pollution, waste).
land use, habitat alteration...
OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
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Rising material demand presents
challenges and opportunities
The last decades have witnessed unprecedented growth in demand
for raw materials worldwide, driven in particular by the rapid
industrialisation of emerging economies and continued high levels of
material consumption in developed countries.
The amount of materials extracted, harvested and consumed
worldwide doubled since 1980, an estimated ten-fold increase since
1900; it reached nearly 72 billion metric tonnes (Gt) in 2010, and is
projected to reach 100 Gt by 2030. Growth has been primarily driven by
global demand for construction materials, fossil fuels, and biomass for
food.
At the same time, international commodity markets have expanded,
with increasing international trade flows, increasing mobility and
fragmentation of production factors, and expanding linkages among
countries and regions. This has been accompanied by increasing and
highly volatile commodity prices and by growing competition for some
raw materials.
Did you know
OECD countries account for:
Slightly less than half of the global economy
(using PPPs) compared to about 60% in 2005.
Less than one-third of all material resources
consumed worldwide compared to 43% in 1990.
Growing demands for
materials worldwide and
the globalisation of supply
chains change the ways
in which materials are
supplied to the economy
and raise concerns as
to the environmental
impacts of their use to
create opportunities for
new markets and greener
growth
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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
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Figure 1: Global extraction of material resources,
world and world regions
World, 1980-2010 OECD and world, 1990, 2010
Source: SERI and Dittrich, M. (2014). Global Material Flow Database. 2014 Version. Available at www.materialows.net. OECD (2013).
Material ow database.
Note: BRIICS: Brazil, Russian Federation, India, Indonesia, China.
0
10
20
30
40
50
60
70
1980 1990 2000 2005 2010
Biomass
Fossil energy
carriers
Metals
Construction &
industrial
minerals
billion tonnes (Gt)
% change, 1980-2010
48%
66%
87%
202
%
OECD
27%
BRIICS
51%
rest of
world
22%
World 2010 material
extraction
72 billion tonnes
OECD
43%
BRIICS
34%
rest of
world
23%
World 1990 material
extraction
43 billion tonnes
OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
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Rising demand for materials affects the ways in
which natural resources are supplied to, and used
in the economy.
They raise questions about the sustainability
of natural resource use and the negative
environmental impacts of production and
consumption of resources, as well as about
risks of disruptions in materials supply.
As production and consumption have become
displaced with increasingly complex and
globalised value chains, questions also arise
about the distribution of the environmental
burden associated with material use.
By 2050, the world economy is expected to
quadruple and the global population to grow to
over 9 billion, placing additional strain on the
earths material resources and the environment.
A growing population with higher average income
requires more food, more industrial products, more
energy and more water. This creates formidable
economic and environmental challenges.
Confronting the scale of these challenges requires
ambitious policies to achieve a significant increase
in resource productivity, particularly through
technical change and innovation, and through
more effective management approaches. This will
in turn create opportunities for investment, for
new products and markets, and for employment.
Decoupling is breaking the
link between environmental
bads and economic goods.
Absolute decoupling occurs
when environmental degradation
or environmental pressures are
decreasing while the economy is
growing. Decoupling is relative
when environmental degradation
or environmental pressures are
growing, but at a slower rate than
the economy
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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
Material productivity is improving,
but decoupling remains weak
Material extraction and consumption in OECD countries have
increased, but much more slowly than at the global level. Material
productivity is improving and there are signs of decoupling of
material consumption from economic growth.
Today, OECD countries generate 50% more economic value with one
tonne of raw materials than they did in 1990 and 30% more than in
2000. The domestic material productivity of OECD economies rose
from 1400 USD per tonne in 2000 to over 1800 USD per tonne in 2011
(in constant prices and PPPs). Decoupling has occurred overall in the
OECD area, across all material groups.
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OECD countries
generate 50% more
economic value
with one tonne of
raw materials than
in 1990
Source: SERI and Dittrich, M. (2014). Global Material Flow Database. 2014 Version. OECD (2013). Material ow database.
Figure 2: Material consumption and decoupling
Material consumption per capita, OECD and world,
1980-2010, kg/cap/day
Decoupling trends, OECD, world
1990 -2011 or latest available year
Material consumption per capita, OECD,
2010/11, kg/day
0 10 20 30 40 50 60
World
OECD
2010
2000
1980
50
75
100
125
150
175
200
1990 1995 2000 2005 2010
Index 1990=100
material
consumption
GDP
OECD
50
75
100
125
150
175
200
1990 1995 2000 2005 2010
Index 1990=100
material
consumption
GDP
World
10
18
5
13
Biomass (food, feed, wood)
Construction & industrial
minerals
Metals
Fossil fuels
46 kg
per person per
day
OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
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Progress in material productivity can be attributed
to policy action and technological change, as well
as to structural changes, including the rise of the
service sector and the substitution of resource
intensive domestic production by imported goods.
The economic slowdown following the nancial and
economic crisis plays an important role in recent
developments due to an important decline in the
demand for materials, in particular construction
materials.
Prior to 2007, there were only a handful of instances
of absolute decoupling of material consumption
from economic growth. Since then, a majority of
OECD countries display an absolute decoupling.
As economic growth resumes, the demand for
materials will increase and will exceed pre-crisis
levels unless countries strengthen resource
productivity policies and measures.
The consumption of material resources to support
economic activity remains high. An average person
living in an OECD country consumes about 46 kg
of materials per day (about 60% more than the
world average), including 10 kg of biomass, 17 kg of
construction minerals, 5kg of metals and about 13
kg of fossil fuels.
Productivity gains have been
achieved in recent years, but
material consumption remains
high and progress is moderate
once indirect flows associated
with trade are considered
As OECD economies become more service-
based, their reliance on imports is increasing
with resource-intensive production often being
displaced to non-OECD economies. Imports make
up almost one-third of material inputs in the OECD
area, compared to one quarter in 1990. They make
up 40% in OECD Europe and in OECD Asia-Pacic;
and less than 15% in OECD Americas.
Finished and semi-nished products weigh
signicantly less than the raw materials from
which they are derived. When accounting for all
the raw materials that are required to produce
a good but that are not physically incorporated
into the traded product, the productivity gains in
countries that are net resource importers are more
modest.
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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
From waste to resources
The amount of solid waste generated by economic activity is rising in
line with growing consumption of material resources. Many valuable
materials continue to be disposed of as waste and, if not recovered,
are lost to the economy. But efforts to recycle waste are starting to
pay off, and a generally positive trend can be observed for municipal
waste (representing roughly 10% of total waste).
The amount of municipal waste generated per year is around 660
million tonnes; per capita generation decreased by 5% (to 530
kilograms per person compared to 560 in 2000), but remains high
compared to other countries in the world, and is still higher than
in the early 1990s.
Municipal solid waste is increasingly being diverted from landlls
and kept in the economy through recovery or recycling.
Markets for secondary raw materials are expanding, but have to
cope with volatile commodity prices.
Recycling rates have increased for a large range of important
materials, such as glass, steel, aluminium, paper and plastics,
reaching levels as high as 80% for some of these materials. There
are however many precious or specialty metals that are not
recycled or for which recycling rates remain very low.
Efforts to move from
waste to resources show
first results. Recycling
rates are high for a
number of materials, but
many valuable materials
continue to be disposed
of as waste
Figure 3: Decoupling trends and municipal waste
Source: OECD environmental statistics (database). Note: Data contains estimates.
Decoupling trends, OECD countries, 1990-2011 Municipal waste, OECD countries, 1995-2011
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80
100
120
140
160
1990 1995 2000 2005 2010
GDP
Municipal
waste
//
0
0
100
200
300
400
500
600
1995 2000 2005 2011
560
530
520
530
560 560
19%
25% 33% 30%
16% 16% 19% 17%
64% 58% 48% 53%
Material recovery
Energy recovery
Disposal
Share in % going to
:
Amounts in kg
per capita
80
100
120
140
160
1990 1995 2000 2005 2010
GDP
Municipal
waste
//
0
OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
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Urban mines: an
important, undervalued
source of raw materials
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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
Raw materials are usually extracted or produced from natural
resource stocks. Valuable materials can also be gained from the
recovery and recycling of solid waste by diverting materials from the
waste stream before nal disposal. They can further be extracted
from nal waste disposal sites such as landlls, where solid waste has
accumulated over long periods. Valuable resources are also found in
the built environment, and in products and appliances in use. These
urban mines are an important source of minerals and metals for
industry (e.g. electric and electronic equipment), and a potentially
important domestic source of raw materials in the future.
Estimates quantifying the amount of raw material locked in the
economy indicate that the size of future urban mines could be
signicant. Reliable estimates have been made for only a few metals.
For example, the stocks of iron locked in the economy are estimated
between 12 and 18 million tonnes or roughly 15-20% of global iron
ore reserves in 2011. These estimates form a picture of the amount of
material that could one day be available for reuse or recycling free of
technical or economic constraints.
Urban mines
Closing the loop of the material cycle:
better policies for greener growth
Resource productivity is essential to future economic growth and
development, and hence to prosperity. In the past ten to fteen
years, improving resource productivity has become a priority for
governments and businesses alike. Many countries are taking
action and some have set national targets for material productivity.
Sustainable resource use and resource productivity are also high on
the international policy agenda. They have been addressed by the
Heads of State and Government of G8 countries, and are actively
promoted by the OECD, UNEP and the European Commission.
Much more is however needed to effectively decouple the use
of material resources from economic growth so as to reduce the
associated negative environmental impacts and avoid waste of
valuable resources.
This involves scaling-up existing policies, establishing proper
framework conditions, and ensuring that policies are more coherent
and better integrated. Some of the key challenges are linked to the
transboundary dimension and complexity of most supply chains and
the large number of economic actors and government agencies that
need to be involved in such policies.
It requires measures and investments to support technological
change and innovations, and to promote integrated life-cycle-
oriented approaches, such as 3R policies, sustainable materials
management and sustainable manufacturing. Signicant potential
exists for efciency gains and improved resource productivity in
many sectors, including construction, transport, agriculture and
manufacturing.

It also requires efforts in policies that affect trade in raw materials
and in certain types of waste, enhanced international co-operation
and capacity development
Sustainable materials
management (SMM)...
...is defined as an
approach to promote
sustainable materials
use, integrating
actions targeted at
reducing negative
environmental impacts
and preserving natural
capital throughout the
life-cycle of materials,
taking into account
economic efficiency
and social equity.
The key principles
that should be used
when developing SMM
policies and strategies
are: the preservation
of natural capital, the
life-cycle perspective,
the use of the full range
of policy instruments
and multi-stakeholder
approach
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Filling knowledge gaps:
better information for better policies
A considerable amount of work has been carried out over the past
ten years to develop the methods to analyse material ows and
to develop appropriate indicators to monitor progress. Almost
all OECD countries have developed initiatives in this area. In
Europe, reporting on materials ows has become mandatory. This
is supported by the adoption at UN level of the System of
Environmental-Economic Accounting (SEEA) as an international
statistical standard.
However, missing information and inconsistencies still limit the
tracking of progress with resource productivity in many countries and
at international level.
Important gaps include the following:
Material ows that do not enter the economy as transactions, but
that are relevant from an environmental point of view, including
unused materials such as mining overburden and indirect ows of
raw materials associated with trade.
Material ows of importance to the 3Rs, including ows of recyclable
materials and secondary raw materials, and ows of waste.
Distinguishing between primary and secondary raw materials is
crucial for assessing resource productivity and decoupling trends.
The size and the value of the urban mine: with the exception of
some of the most common industrial metals, there are insufcient
estimates of stocks of material locked in the economy to form a
reliable picture of their potential to contribute to future supply.
Capitalising on the potential of the urban mine will require not only
better knowledge of its size, but also its dynamics, how it evolves
over time and in relation to virgin stocks.
Industry-level and material-specic information that is needed to
indicate opportunities for improved performance and efciency
gains in production and consumption processes along the supply
chain.
Compatible databases for key materials and substances, including
critical raw materials, environmentally harmful substances and
substances that play a role in global biogeochemical cycles.
Many countries have
taken initiatives to
measure material flows
and resource productivity
but significant gaps
remain
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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
There is also considerable scope for deeper analysis
of particular resources and materials, and their
interactions. Examples include trade related
resource ows and ows of secondary raw materials,
the way they interact with commodity prices and
recycling markets, and how they relate to innovation
and to natural resource stocks.
Future work will also need to further explore the
environmental impacts and the costs of material
resource use throughout the life-cycle of materials,
as well as the economic and environmental
opportunities provided by improved resource
productivity. An important task is to improve
understanding of the trade-offs that need to be
made.
Better information will also help make a strong case
for policies aimed at improving resource productivity
by showing the full benets of such policies.
Further reading
OECD (2014), Material Resources, Productivity and the Environment, OECD Publishing, Paris.
OECD (2014), Green Growth Indicators 2014, OECD Publishing, Paris.
OECD (2012), Sustainable Materials Management: Making Better Use of Resources, OECD Publishing, Paris.
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OECD MATERIAL RESOURCES, PRODUCTIVITY AND THE ENVIRONMENT
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BETTER POLICIES FOR BETTER LIVES
For more information:
http://www.oecd.org/env/waste
http://www.oecd.org/env/waste/material-resources-productivity-and-
environment.htm
The OECD works with its member countries and international partners to
further develop resource productivity indicators, and improve information
on material ows, natural resource stocks, and the environmental impacts
and costs of resource use. This is done in collaboration with UNEP and its
International Resource Panel, Eurostat and several research institutes.