Material efficiency: An economic perspective

Abstract This article presents an economic perspective of material efficiency, and discusses the role of public policy in providing market incentives for a more efficient use of materials. In doing so, it comments on the engineering approach to material efficiency presented by Allwood et al. (2011) in an earlier issue of Resources , Conservation and Recycling . We argue that concerns over potential future natural resource scarcities do not represent a strong motive for introducing policies to foster greater material efficiency but that various environmental externalities and information failures in the relevant material markets do. Moreover, in such instances policy makers should opt for policy measures that target the relevant market failures (e.g., environmental damages) as closely as possible. This normally means avoiding policies that directly encourage specific material efficiency options. Policy measures that address particular environmental problems and information externalities will enhance material efficiency in a more effective manner. This is because ex ante it is difficult for policy makers to know in what ways and by how much to alter material production and use.

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