Sustainable Economy

The economic resilience of Ireland is intimately linked to environmental quality and to the supporting role of our ecosystems and natural resource services. However, we have designed and evolved our governance structures, our society and our economy in ways that are not always suitably considerate, or protective, of ourselves or of our environment. Our national value system has evolved to a stage that sees conspicuous consumption as socially desirable.  Moreover the rise of individualism is dictating behaviors that are not always in the best interests of society or the environment.  This is not a sustainable pathway for any nation. 

The environment will thrive in the absence of an economy or a society, but the opposite does not hold. Economic and social wellbeing are intimately associated with the condition of the environment and its ability to sustain us. In general, what is good for the environment is good for the economy in the long term.

Current Trends

 

Global Sustainability Models

One of the main frailties of the global sustainability model up to recent years was the incorrect perception that the social, economic and environmental pillars of the sustainable development paradigm were equally weighted. In fact, the relationship is less equal and, at the same time, more complex. Our economy can only expand within society’s ability to support it. Both the economy and the society that hosts it can only exist within the confines of the environmental and resource boundaries available. Infinite economic expansion without regard to environmental constraints is illogical, immoral and, ultimately, impossible.

International and National Policy Context

Successive EU Environmental Action Programmes (EAPs) have, since 1973, been the foundation stones to foster policy action and integration for identified environmental and sustainability issues. These include EU policies for the green economy, resource efficiency, circular economy, industrial and product regulation. In its 7th EAP, Living Well, Within the Limits of our Planet, the EU has renewed its commitment to stimulate the transition to a green economy and to strive towards an absolute decoupling of economic growth and environmental degradation. This should ease pressure on the environment and bring increased competitiveness and new sources of growth and jobs through cost savings from improved efficiency, the commercialisation of innovations and better management of resources over their whole life cycle.

United Nations Sustainable Goals

September 2015 saw the globally significant intergovernmental meeting convened by the UN to agree a plan of action for People, Planet & Prosperity. Seventeen Sustainable Development Goals with 169 targets were agreed. This plan envisages a world in which nations can enjoy inclusive and sustainable economic growth, with decent work for all, and where consumption and production patterns, as well as the use of all natural resources, are sustainable.

This will deliver sustained and inclusive economic growth, social development and environmental protection. These aspects of the resolution identify two core concepts for sustainability. The first is the need for appropriate (realistic and rational) production and consumption; the second is the balancing of social, economic and environmental needs.

Strategies for a Resource-efficient and Low-carbon Europe

The Europe 2020 Strategy reaffirms a collective determination to shift towards a resource-efficient and low-carbon economy and the European Commission has committed to using a range of financing and economic instruments to achieve this objective. These include mobilising EU financial instruments; enhancing the framework for the use of market-based instruments (e.g. emissions trading, revision of energy taxation); and promoting a comprehensive programme of resource efficiency leading to changes in consumption and production patterns.

In 2011, the EU Commission published one of its most significant and visionary documents entitled A Roadmap to a Resource Efficient Europe. This document articulates ambitions for European society, economy and environment that seek to address the challenges of environmental damage, resource depletion and climate change. A 2014 review of progress under the roadmap concluded, that the majority of the actions announced in the roadmap have been launched; however, “the full impacts of the actions launched under the roadmap are yet to unfold”.

Ecosystem Services - the Value of Being Clean and Green

This commitment to valuing our natural capital is also reflected in the government policy Delivering our Green Potential, in which it is stated that we must “ensure that the value of ecosystem services and biodiversity to the economy is captured and monitored so as to ensure sustainable drawdown and protection of (our) natural assets… The protection of the environment and the development of the green economy are integrally connected”. Environmental attributes were two of the top five reasons cited for successful tourism visits (i.e. scenery and nature), and this is expected to grow with the success of the marketing of the Wild Atlantic Way. Irish food and drink exports are worth €10.6 billion and the Origin Green dimension of marketing for these exports is intimately linked to environmental quality and sustainability.

Cause

 

National "Environomic" Performance

There is some evidence of the need to decouple economic activity and growth from environmental impact. In recent years, Ireland has moved from a position of being one of the most resource-inefficient economies in the EU (our rate of material consumption was growing faster than the population) to greatly improve its efficiency in terms of raw material consumption per capita.

The reduction in personal consumption and building programmes over this period largely contributed to this trend. This reduction in building has induced social challenges (e.g. housing availability), suggesting that the scale of reduction was too severe and poorly managed. Better integration and coherence between environmental, economic and social policy needs could act to mitigate these shock swings.

Harmful Environmental Subsidies

It is now recognised that environmentally harmful subsidies can lead to lock-in of unsustainable technologies and infrastructure, as well as poor decision making. It is estimated that the scale of subsidies with potential negative impacts on the environment, notably in the areas of fossil fuels, transport and water, are worth €1 trillion per year. Environmentally harmful subsidies lead to higher levels of waste, polluting emissions (including climate change gases), inefficient resource extraction and negative impacts on biodiversity. They can lock in inefficient practices and hinder businesses from investing in green (more sustainable) technologies.

The EU Commission sees environmental taxation as an essential market mechanism to address any pricing market failures. The State will need to undertake a review of environmentally harmful subsidies that may be operating and set about eliminating them; examples include subsided peat extraction, low CO2 vehicle tax (causing rise in diesel use and particulate air emissions) and green diesel VAT relief. Ireland has achieved considerable behavioural change success in relation to employing taxation based measures to address certain environmental harms, e.g. the plastic bag tax, the landfill levy, and the carbon tax.

What's Being Done

Ireland - Our Sustainable Future

The aims of this government policy Our Sustainable Future are to provide for the integration of sustainable development into key areas of policy, to put in place effective implementation mechanisms, and to deliver concrete measures to progress sustainable development. A recent progress report on actions under the national sustainability plan has concluded that Ireland continues to move in the right direction generally across the spectrum of sustainable development goals, while recognising the role of the economic downturn in reduced emissions and consumption. The report also concluded that it will be important to maintain our focus on sustainability through the period of economic recovery and growth.

In its 2014 Climate Change Policy Position document, the Irish Government articulated a vision to 2050 that integrates the climate and sustainability imperatives in stating that it aims “as a fundamental national objective, to achieve transition to a competitive, low-carbon, climate-resilient and environmentally sustainable economy by 2050”.

Circular Economy

The coming years will need to see much greater effort – at an institutional and commercial level – to secure the supply, from sustainable sources, of the primary and secondary raw materials necessary to sustain our economies and our wellbeing. The recognition of the limitation of critical raw materials, allied to the ambition of resource efficiency and life cycle assessment for goods and services, has evolved and coalesced into the concept of the circular economy.

The enabling conditions needed to move to a circular economy require wide-ranging integrated market interventions such as eco-design, eco-labelling, life cycle assessment, recycling, durability, clean production, repair and reuse, elimination of harmful chemicals, renewable energy, carbon neutrality, etc. Most of these policies and concepts will require major intervention over the coming years if they are to become the reality and norm. From a social and values perspective, the circular economy can assist in driving an appreciation of sufficiency as regards consumption behaviours. 

Assessing the Life Cycle of Goods and Services

In the coming decade, businesses will increasingly be required through regulatory approaches to undertake life cycle assessment for their goods and services and to adopt eco-label standards. The latter are essential to support informed consumption choices. Goods and services that currently incorporate environmentally harmful substances/practices will be required to be eliminated or replaced.

In Ireland, the significant role expected for agricultural and food production and tourism will require ambitious and monitored sectoral development plans to ensure that future growth can be achieved through carbon neutrality and sustainable production/service processes. The national food sector development plan, Food Wise 2025, includes a monitoring and implementation plan to track and measure implementation of initiatives and actions, in particular those dealing with the environmentally sustainable expansion of the sector.

Economic Sector Plans for Sustainability

National plans and programmes also contribute to progressing decoupling. Bord Bia, through its very successful Origin Green Programme, has identified the competitive advantage of marketing sustainable low carbon produce to a national and international audience. Bord Bia has developed a suite of programmes for its client primary producers and processors to progress certified resource-efficient sustainable food production practices.

Major producers, retailers and service providers are also progressing greener credentials as part of their commercial strategy (e.g. Green Hospitality, the Musgrave Group’s Environmental & Social Accountability Policy). The need for sustainability is strongly reflected in a number of national sectoral policies and economic development strategies (e.g. Food Wise 2025, National Energy Efficiency and Renewable Energy Action Plans). Strategies should include a commitment to report publicly and regularly on their environmental performance against relevant environmental indicators. This will make the strategies more robust and provide for increased environmental accountability and transparency during implementation.

Economic Value of the Environment

Not only is there evidence of decarbonisation, resource efficiency and green growth, but there is also evidence that the economic contribution of a valued and protected environment is becoming widely appreciated at business and policy level (e.g. Origin Green, eco-labelling, green tourism). This realisation is strong at the general public level, also, as indicated by the results of a 2014 EU survey of environmental attitudes, which found that Irish people’s appreciation of the economic value of the environment significantly exceeds the EU average. The coming years will need to see a broader range of metrics and indicators developed for national economic performance that take into account matters such as wellbeing, environmental health, ecosystem services and natural capital.

Outlook

Sustainable competitiveness should be at the heart of thinking about sustainability. This is because competitive economies tend to be more innovative, more resilient and better able to respond to external shocks and, therefore, maintain high levels of prosperity into the future. A recent EU report concluded that the economic challenges currently facing Europe are not cyclical, but of a structural nature. The report added that European production and consumption practices and expectations are not equipped to face a global climate of slow demand growth and resource volatility, commenting that “without change the EU will become inevitably less competitive, less attractive, and less economically viable”.

Growing population, the competition for diminishing resources, the appropriate recognition of ecosystem services and natural capital, as well as the adaptive challenges arising from our changing climate and our national climate change commitments will, over the next 30 years, require ambitious social and economic interventions and responses. We will need to put economies on a more sustainable footing, resulting in a resource-efficient, carbon-neutral, circular economy. This will require an all-of-society response: essentially we have to rethink, and redesign what we mean by social and economic ‘prosperity’ in order to deliver the resilience essential for us to prevail.  

Sustainable Competiveness

We must all learn to live, produce and consume within the physical and biological limits of the planet. To achieve this will require integrated and enduring governance, including brave social and economic measures. Ireland’s economy needs to strive for sustainable competitiveness, defined as the set of institutions, policies and factors that make a nation productive over the longer term while ensuring social and environmental sustainability.

We know from previous national statistics that excessive consumption can lead to significant wastefulness and other environmental burdens. The EU’s Eurobarometer survey of environmental attitudes notes that 94% of Irish people rate protection of the environment as fairly or very important, and 96% agree that they can play a role in protecting the environment. The governance challenge is to realise these declared intentions in displayed behaviours.

The State must consider market interventions and other policy instruments that correct market failures, and also both direct and where possible “nudge” (through elective and, in time, normalised value-based decisions) consumption and production behaviours towards a more sustainable outcome.