From crops and wood to oil and metal, Office of National Statistics (ONS) data released in February suggests that the consumption of raw materials by people in the UK has fallen significantly over the course of a decade. On average, people got through 15 tonnes of material in 2001 but consumed just over 10 tonnes in 2013. Digital disruption has been credited at least in part for this change, as consumers buy fewer resource-intensive goods such as stereo systems, CDs and books, and source things digitally instead. But is digitalisation’s role in this shift being overstated?
“We are consuming more content online, which means information is easier to spread and replicate without the need to store it in a physical form,” says Fabiano Vallesi, who researches strategy at wealth management firm Julius Baer. “Furthermore, the digitalisation of consumption is speeding up the structural change within economies, driving them from being industrial-led to service and now information and digitally-led.”
Businesses are finding ways to produce more with fewer materials and less energy. Digitalisation in manufacturing – the likes of robotics and 3D printing – reduces manufacturing waste while smart grids and intelligent thermostats help optimise energy consumption. Cloud computing is enabling startups and smaller enterprises to innovate faster and more cheaply.
“Digitalisation is [also] creating new business structures which weren’t possible before, the likes of sharing economy models,” points out Vallesi. “These peer-to-peer platforms are reducing transaction costs and barriers to share assets, rendering these assets cheaper and more easily accessible than ever – thus possible on a much larger scale.”
Though the term “sharing economy” has been hijacked by enterprises solely focused on profit, many other “collaborative economy” businesses have formed in the wake of well-known proponents like Airbnb and Uber. Eden is a US-based, on-demand tech help service that draws upon a freelance pool to send specialists direct to your home. Much better established but similarly lean in structure, online mobile marketplace TaskRabbit matches freelance labour to household errands that you don’t have the time or inclination to do yourself. Stephen Koukoulas, a research fellow at think tank Per Capita, is among those who has suggested that this shift could help create more sustainable economies, despite an initial slowing of economic growth.
Tellingly, households are now spending more on services than on goods. According to calculations made by Chris Goodall, author of the Carbon Commentary blog, in the early part of the last decade, British consumers devoted 26% of their total household purchasing to physical goods while this dropped to about 21% by 2014. The consumption of raw materials per head in Britain is now among the lowest in Europe, behind only Spain. Manufacturing-focused Germany uses far more materials and energy per unit of economic output. And consumption of steel and cement in China are both thought to have peaked, Goodall points out.
“‘Peak stuff’ is not just a UK phenomenon,” he says. “In various ways, it is happening everywhere in the developed world, including China. The drivers may include digitalisation, but this is far from the only cause. We are not consuming less water because we’ve found a digital replacement. Arguably the same is true for energy and for things like agricultural fertilisers or, at the other extreme, the products sold by IKEA.
“The UK consumer is spending less on physical objects but you could argue that this is because non-physical things like energy or health care or education are draining more of people’s cash. The arguments aren’t resolved yet.”
Vallesi also urges caution in drawing simplistic connections between consumption and digitalisation. Holistic interpretations – as much as is possible in such a complex subject – are the only ones worth making at this time of transition, and it is important to note to what extent any research takes into account international flows of resources, reminds Goodall.
“You can see from the statistics that the economy has shifted from using coal towards renewable energy and gas, which is being imported,” says Vallesi. “Furthermore, low-value added and resource intensive manufacturing has been outsourced and replaced by high value-added and less resource intensive services. So fewer resources are being consumed “at home” but rather imported as end products from the outside. The resource footprint is therefore not complete. Digitalisation is improving resource efficiency, but this is masked in the stats by other structural changes in the economy.”
For consumers, digitalisation is offering near endless consumption options. “Basically you can consume what you want and where you want,” notes Vallesi. “But this is not necessarily improving resource balance. On the contrary, the likes of more smartphones are being produced which are not low-resource items. But it is an interesting cultural shift. Everything seems available today: it’s just a click away. I believe that consumers will increasingly focus on experiences. Instead of owning and collecting ‘stuff’, experiences will gain in importance going forward.”
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