J Mater Cycles Waste Manag (2007) 9:112–120 DOI 10.1007/s10163-007-0182-0
SPECIAL FEATURE: ORIGINAL ARTICLE
© Springer 2007
3R Initiatives and Circular Economy
Yuichi Moriguchi
Material flow indicators to measure progress toward a sound material-cycle society
Received: April 10, 2007 / Accepted: June 12, 2007
Abstract This article reviews recent progress in material flow analysis and its use in providing resource productivity indicators and is based on developments in Japanese policy toward a sound material-cycle society and in international forums such as within the Organisation for Economic Development and Cooperation, covering both institutional and methodological issues. Indicators derived from economy-wide material flow accounts such as direct material inputs are useful to demonstrate the absolute size of a physical economy and to reinforce the need to both reduce consumption of natural resources and limit waste generation. Interpretation of material flows as resources and potential environmental impacts is discussed, and linkages between the size of material flows and specific environmental impacts and damage must be further elaborated for use in environmental policy. Lessons learned from the practical use of resource productivity indicators are also discussed. Additional indicators are needed that can be used to evaluate the performance of microeconomic contributors. The need for an integrated approach that links upstream resource issues and downstream waste issues through the 3Rs concept or the circular economy/society concept is attracting increasing attention. Consequently, the accumulation of reliable scientific knowledge and data in this field in a fully international context is essential. Key words Material flow · Resource productivity · Indicator · Sound material-cycle society
Introduction The transition from a society characterized by mass production, mass consumption, and mass disposal to a sound Y. Moriguchi Research Center for Material Cycles and Waste Management, National Institute for Environmental Studies, 16-2 Onogawa, Tsukuba, Ibaraki 305-8506 Japan Tel. +81-29-850-2540; Fax +81-29-850-2808 e-mail:
[email protected]
material-cycle society (SMCS) is one of the top priority issues on the agenda for Japanese environmental policy. The concept of SMCS has its origin in waste-prevention and recycling policy within the downstream economy. The scope of SMCS is gradually broadening to cover interrelated upstream issues such as the efficient use of natural resources and the increasing use of renewable resources. At the international level, the transition to sustainable consumption and production (SCP) is recognized as one of the core elements on the agenda for achieving sustainable development. In 2002, an outcome of the World Summit on Sustainable Development (WSSD) in Johannesburg was the Johannesburg Plan of Implementation (JPOI), adopted to reinforce concrete actions to implement the United Nation’s Agenda 21 for sustainable development, and SCP was included as a key element. However, the recent rapid growth of Asian economies has led to increasing demand and soaring prices for both primary and secondary material resources. Apart from potential environmental issues related to resource use, the supply of material resources is a significant economic issue. This implies the social dimension of sustainable development, namely, the equity of resource use across space and time. Thus, the efficient use of material resources is relevant to the full scope of sustainability in its environmental, economic, and social dimensions. The flows of material resources, products, and wastes have been intensively studied during the past decade with the aims of characterizing the physical dimensions of the economy and setting targets for the sustainable use of material resources. This article reviews recent progress in material flow analysis and its use in providing resource productivity (RP) indicators and is based on developments in Japan and in international forums such as within the Organisation for Economic Development and Cooperation (OECD).
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Progress in material flow analysis and derived indicators Institutional aspects of progress in international material flow studies Material flow accounting and analysis (MFA) has a considerable history as an environmental accounting approach and in the field of industrial ecology.1,2 From a purely academic point of view, recent MFA studies might be seen as a mere reinvention because MFA is based on a wellknown, simple, and generic methodological principle, namely the mass balance or the mass conservation principle. Nevertheless, valuable progress in MFA is apparent with regard to the application of MFA to environmental, economic, and other policies; the compilation of data by official statistical institutions; and efforts to improve methodologies to enhance the policy relevance of this systemanalytic tool. At the 1995 SCOPE Scientific Workshop on Indicators of Sustainable Development held at the Wuppertal Institute (an organization that has been playing a leading role in MFA studies), experts from Germany, the Netherlands, the United States, and Japan agreed to initiate an international joint study to capture the totality of material flows associated with economic activities of their respective countries. In 1997, the World Resources Institute (WRI) published the first-phase report3 from this study, which focused on the inflows of natural resources from the environment to the economy. Direct material input (DMI) and total material requirement (TMR) were proposed as indicators to characterize input flows. DMI accounts for the total input of materials and includes both domestically extracted and imported materials. TMR is an even more comprehensive indicator and includes unused and indirect flows of material associated with resource extraction and import. In the second phase of the joint study, experts from Austria joined as the fifth partner. The second-phase report,4 which measured total outflows of emissions and wastes to the environment was published in 2000. Net additions to stock (NAS), representing the balance between inflows and outflows, were also investigated in the second-phase report. In parallel with this joint project, international networks of experts in the MFA community have been strengthened through both nongovernmental and governmental channels. The experts who initiated the international joint study were active members of ConAccount (Coordination of Regional and National Material Flow Accounting for Environmental Sustainability), a network of researchers, statisticians, and other MFA experts, mainly from Europe. Several workshops and conferences were organized during the late 1990s. ConAccount was funded by the European Commission DGXII (Directorate-General on Science, Research and Development) in its initial stage and then managed as a voluntary network of experts in later stages. The most recent ConAccount conference was held in Vienna in
September 2006, hosted by the Institute of Social Ecology of IFF (the Faculty for Interdisciplinary Studies of Klagenfurt University), which has been a key contributor to recent MFA studies. Industrial ecology is an emerging field of research and education that has had a key role in bringing together the above-mentioned European MFA activities and relevant research communities in the United States and other world regions. Research in industrial ecology has been more active in the United States than elsewhere, at least in its initial phase. The first volume of the Journal of Industrial Ecology (JIE) was published in 1997 by MIT press with editorial support from the School of Forestry and Environmental Studies at Yale University. In 2001, the International Society for Industrial Ecology (ISIE) was founded and held its inaugural conference in the Netherlands. Since then, the location of its biennial conferences has alternated between North America and Europe. An increasing number of experts from Asia, not only Japan but also China and other Asian countries, have participated in recent ISIE activities. A large number of peer-reviewed articles on MFA have been published in JIE. At the intergovernmental level, the OECD and the Statistical Office of the European Commission (EUROSTAT) have played a crucial role in the standardization and international harmonization of MFA methodologies as well as in delivering empirical evidence. In 2001, EUROSTAT published a methodological guide5 for economy-wide MFA (EW-MFA). EW-MFA examines the amounts of physical inputs into the economy, the accumulation of materials in the economy, and outputs to other economies or back into nature. The OECD has had a catalytic role in disseminating the experiences of countries leading the way in MFA to other members. The final chapter of the first WRI3 report identified the OECD as a candidate to further the application of material flow methodology to more countries. As a result of a joint proposal by the United States and Japan, a special seminar on MFA was held back to back with a seminar on waste-material flows and resource efficiency in September 2000. The main focus of the MFA session was EW-MFA, whereas the seminar focused on more specific issues of waste management, recycling, and resource efficiency. The thematic coverage of the seminar addressed issues very similar to those addressed by the recently developed sound material-cycle society (SMCS) policy of Japan, despite the fact that there was no direct link between the seminar and the developers of the Japanese SMCS policy. Another important origin of the attention that has been paid to resource productivity (RP) within the OECD has been the proposal for “decoupling.” Decoupling in this context refers to the possibility of economic growth while environmental burdens and resource consumption decrease. This concept of decoupling was proposed and elaborated as a horizontal project within the OECD and disseminated as the OECD input to the WSSD in Johannesburg.
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Policy intervention in material flows and resource productivity issues The year 2003 was a significant milestone for policy-relevant uses of MFA and RP indicators. In Japan, the Fundamental Plan for a Sound Material-Cycle Society (FPSMCS) was adopted by the Japanese government. A set of three economy-wide MF indicators was introduced into the FPSMCS, and numerical targets were set for each indicator. One of the three indicators chosen was RP, expressed as GDP per unit of material input (DMI). The adopted target for this indicator was set as a 40% improvement between 2000 and 2010. The other two indicators were the rate of cyclical use of materials and the total amount of solid waste disposal. These three indicators capture inflows, cyclical flows, and outflows of materials. In parallel with this progress at the national level, the Japanese government took a leading role in an international policy forum. Environmental Ministers of the G8 and the European Commission met in Paris in April 2003 and adopted a communiqué that included the following paragraph related to sustainable production and consumption. The ministers stated that “We recognize that it is essential to improve resource productivity. In that regard, we note with interest Japan’s proposal to launch an international joint research project on economy-wide material flow accounts to develop a common measurement system of material flow, building on existing work at international level.” In June 2003, G8 leaders adopted the Science and Technology for Sustainable Development – A G8 Action Plan and further confirmed the leadership role of the OECD in research and development of RP and MFA by stating “We will enhance our understanding of resource material flows and continue work on resources productivity indices, notably in the Organisation for Economic Cooperation and Development.” The Japanese Ministry of the Environment hosted an International Expert Meeting on Material Flow Accounts and Resource Productivity in November 2003 in Tokyo. This series of events in 2003 led to the preparation and adoption of the OECD Council Recommendation on Material Flows and Resource Productivity (MF/RP) in April 2004.
Recent activities at the international and regional levels OECD After the adoption of the MF/RP recommendation, two working groups under the direction of the Environmental Policy Committee (EPOC) of the OECD played a significant role in the process of promoting MFA activities in member countries. The Working Group on Environmental Information and Outlooks (WGEIO) has taken a leading role in exploring the capacities of MFA and MFA-based indicators for policy making. The WGEIO brings together experts on environmental information, statistics, indicators, and accounting and has covered the supply side of material flow studies. The Working Group on Waste Prevention and
Recycling (WGWPR) has mainly covered the demand side of MFA. Issues covered by the WGWPR are relevant to Japanese policy on SMCS; a sustainable material management (SMM) project being undertaken by the WGWPR is of particular relevance. Under the auspices of these two working groups, annual workshops on MF/RP have been organized in Helsinki (June 2004), Berlin (May 2005), and Rome (May 2006), and the Japanese Ministry of the Environment will host the next workshop in Tokyo in September 2007. The following documents are the major outputs of the first 3 years of MFA-related activities of the WGEIO:6,7 – An overall report on MF in OECD countries – A guide on how to measure material flows and resource productivity – A technical guidance manual on material flow accounts – A brochure on MFA and the potential uses of related indicators
European Union and member states Since EUROSTAT published its methodological guide for EW-MFA in 2001, a number of EU member countries have compiled their own material flow accounts. For the broader European region, the European Environment Agency (EEA) has been a key actor. Its European Topic Center on Resource and Waste Management (ETC/RWM) has cooperated with the OECD to conduct a global survey of material flow.7 Under the Sixth Environment Action Program of the European Community 2002–2012, seven thematic strategies have been adopted, including the sustainable use of natural resources strategy,8 issued in December 2005. According to the description of the strategy, “the strategy does not set targets for resource efficiency and diminished use of resources because of insufficient knowledge and state of development of indicators.” However, the strategy set a process in motion whereby indicators could be defined and targets could possibly be set over the next 5–10 years. The strategy also included a proposal to establish an International Panel on Sustainable Use of Natural Resources (IPSUNR). The United Nations Environmental Program (UNEP) is facilitating the establishment of the IPSUNR, and the inaugural meeting of the panel is scheduled for late 2007. In 2002, the German Council for Sustainable Development adopted a strategy for sustainable development, titled “Perspective for Germany,”9 which included indicators and objectives for 21 selected topics. Conservation of resources was one of these topics, and its numerical objective was that raw material productivity should be doubled between 1994 and 2020. As a basis for assessing the strategy’s success, the German Federal Statistical Office publishes the trends of sustainable development indicators in its annual report on environmental and economic accounting.10
115 Table 1. Types of material flow-related analysis Type I Specific environmental problems within certain firms, sectors, and regions related to certain impacts per unit flow of the following
Type II Problems of environmental concern associated with substances, materials, and products related to the throughput of the following
Ia
Ib
Ic
IIa
IIb
IIc
Substances e.g., Cd, Cl, Pb, Zn, Hg, N, P, C, CO2, CFC
Materials e.g., wooden products, energy carriers, excavation, biomass, plastics
Products e.g., diapers, batteries, cars
Firms e.g., single plants, medium and big companies
Sectors e.g., production sectors, chemical industry, construction
Regions e.g., total or main throughput, mass flow balance, total material requirement
Modified from Bringezu and Moriguchi2 CFC, Chloro Fluoro Carbon
China Remarkably, China promotes the circular economy (CE) concept. RP is a core element of CE, but CE also includes other elements, such as cleaner production and the aim to establish eco-industrial parks. Moreover, since the National Development and Reform Commission of China (NDRC) took responsibility for promoting CE, the circular economy principle has been interpreted as a comprehensive state policy guideline and is seen as an integrated development strategy rather than an environmental strategy. Recent growth in the Chinese physical economy has been tremendous both in its speed and size. For example, China’s crude steel production more than tripled in only six years from 2000 to 2006, and steel production exceeded 400 million tonnes in 2006, which is in the range of the total production of OECD countries. In terms of the circular use of material resources, however, the proportion of secondary resource inputs to China’s raw material industry is relatively small. This is probably because in a newly industrializing and growing economy it takes a considerable number of years before sufficient secondary resources from used products are accumulated; it seems that this has not yet happened in the Chinese economy. There have been few preliminary studies on Chinese EW-MFA; however, Xu et al.11 recently published the first comprehensive set of material flow indicators for China for the period 1990–2002. This study covers both inputs and outputs, and it includes direct and indirect flows. The study presents several key indicators such as DMI, TMR, and NAS. Estimated DMI for China is about 7 tonnes per capita per year, which is less than half the average rate for developed countries. TMR per capita is about 25 tonnes, and the relatively large difference between DMI and TMR reflects the extraction of domestic resources, such as local coal mining.
Methodological progress in academia and statistics In parallel with increasing policy demands, methodological progress by research communities in areas such as industrial ecology has been remarkable during the past decade. Table
1 shows the variety of MFA studies and applications. The development of headline MF indicators, which is the main topic of this article, has mostly been based on the type-II approach, i.e., to account for the flow of all or selected materials through a specific system. Accounting for material flows at the whole economy level, as is the case in EW-MFA studies, has been a priority and indicators representing the overall size of an economy in physical terms have been a main focus of material flow studies. The development of an internationally comparable accounting framework, and of resulting empirical datasets, has been undertaken to meet policy demands. Increasingly, comparisons between countries have become possible, and examples include Weisz et al.,12 who presented several MF indicators for the EU-15 member states, and Bringezu et al.,13 who compared DMI for 26 countries and TMR for 11 countries. Other important participants in the supply side of material flow studies are national statistical institutions. In several countries, such as Germany,10 Italy,14 Sweden,15 and Denmark,16 national statistical offices have been active in both the design and compilation of material flow accounts. In Germany, physical input–output tables (PIOT)17 have been compiled representing the most sophisticated and promising approach to ensure the appropriate interpretation of economy-wide MF indicators. However, establishing a PIOT is a time-consuming activity and data are often only available after a delay, which is an obstacle to the PIOT being used in timely policy formulation. In 2003, the United Nations Statistics Division (UNSTAT) published the second edition of the handbook on the System of Integrated Economic and Environmental Accounting (SEEA), in which physical material flow accounting is described in more detail than in the first edition of 1993.
Interpretation of material flows as resources and potential environmental impacts As discussed above, a number of empirical studies on EWMFA have been undertaken during the past decade. These studies show both the similarities and differences of material flows among different countries and also reveal deficiencies in simple indicators derived from EW-MFA. This section reviews the rationales that underpin MF indicators
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and some of the typical arguments that arise in their interpretation; in particular, RP indicators derived from EWMFA are discussed.
Indicators of decoupling: resource productivity and eco-efficiency The origin of the recent main stream of material flow studies can be found in studies undertaken by a group of experts at the Wuppertal Institute and their partners. These studies were closely linked with concepts such as RP, Factor X, and material intensity per service unit (MIPS). Taking into account the OECD Council’s 2004 recommendation on MF/RP, as well as more recent policy documents from meetings of the G8 and the European Commission that refer to RP, the development of internationally comparable indicators of RP is a high-priority issue. The generic formula for an RP indicator is the ratio between economic production and resource consumption. Usually, the numerator represents production, output, or the service derived from a system, and the denominator represents the resource inputs or resource consumption of the same system. The term resource intensity is applied when the numerator and denominator are interchanged. A ratio of this type, i.e., between economic variables and resource or environmental variables, has been developed and used to represent the concept of decoupling. The essence of the RP concept (and similar concepts) is very simple. The aim is to increase RP by earning more value from fewer resources and generating less environmental degradation. This can be accomplished, so the argument goes, by decoupling increasing resource consumption from economic growth. Critics of the RP concept have argued that improvements in efficiency are insufficient to overcome the ultimate limitation of the total available stock of nonrenewable resources because of the rebound effect.18 Nonetheless, the setting of RP targets is a pragmatic option for taking an initial step to address resource availability and use as a fundamental limiting factor to sustainable development. The term resource efficiency is used to express resource productivity, for example, in the context of waste management and within the Japanese 3R (reduce, reuse, recycle) strategy, as mentioned in paragraph 22 of the Johannesburg Plan of Implementation (JPOI). In the JPOI, the term ecoefficiency (EE) was also referred to in paragraphs 15 and 16. When the terms eco-efficiency19 or environmental efficiency are used to describe an indicator, the denominator represents environmental impact rather than resource consumption. The thematic strategy of the European Commission formulated the relationship between RP and EE as follows: RP = economic output/resource input WF (weighting factor) = material-specific environmental impacet/resource input EE = RP/WF = economic output/environmental input
Thus, there are two components of decoupling that contribute to increases in EE. The first is related to the process of dematerialization, i.e., to improve RP by reducing the volume of material inputs while the economy grows. The latter is related to detoxification of materials; for example, to reduce WF by the replacement of high environmental impact materials by lower impact materials. Unfortunately, we have not built a robust scientific knowledge base to determine WF for a variety of materials. As adopted in the Japanese SMCS policy, the simplest form of RP indicators is GDP divided by total weight of material resources consumed. The introduction of weighting factors allows the determination of the magnitude of the environmental damage attributable to a particular material per unit of that material used. This use of weighting to differentiate the environmental impact of individual materials provides a partial response to the criticism that aggregation of different material resources is an oversimplification. However, weighting factors have to be carefully assessed, not only in terms of the toxicity of individual substances, but also taking into account all other impacts that those substances may have throughout their life cycle, addressing a broad range of sustainability issues. To this end, we come back to the fundamental question, Why do material flows matter?
Dematerialization for tight resource acquisition Natural resources are the fundamental input to all economic activities that support human welfare. However, the natural environment that provides us with resources is finite and has physical limits. As early as 1972, the Club of Rome delivered a message of caution in this regard in its wellknown report The Limits to Growth.20 Scarcity of resources is a central concern for long-term sustainability, although this aspect is often considered to be outside the scope of environmental policy. There are diverse views, both optimistic and pessimistic, on the scarcity of natural resources. Nevertheless, considering recent increasing demands for material resources for rapidly developing economies, typified by China, as well as the over-heated market prices of primary and secondary metals, a supply–demand problem does exist, at least in a short-term economic sense. Scarcity of material resources in the longer term should be assessed carefully, as this is a fundamental issue for the functioning of industrialized economies. Even if scarcity is not an appropriate topic to discuss in the context of environmental policy, resource policies should address the link between resource scarcity and environmental degradation. As an example, the quality of metal ore reserves has already been degraded because of the imbalance between increased demand and finite supply. As the grade of ores decreases, larger amounts of mining wastes are generated and more energy is required for excavation and smelting. At the same time, the potential for pollution by the mining and smelting industries grows, for example, by increased emissions of heavy metals. Problems of this
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type as outlined for the mining industry can be monitored by using the concept of “ecological rucksacks,” i.e., the total amount of material moved or disturbed during extraction as a proxy indicator.
Waste prevention and resource saving The amount of solid waste generated by resource consumption is often interpreted as a symbolic indicator of the affluence of society. Prevention of waste generation contributes to resource saving; conversely, reduction of resource consumption contributes to the prevention of waste generation. This very simple logic is the reason that “Reduce” is the first principle of the “reduce, reuse, recycle” (3Rs) policy. More importantly, both the upstream (source) and downstream (sink) problems can be solved in a win–win situation if an integrated approach is taken to the management of materials throughout their life cycles. As material resources such as metal ores are becoming scarcer, there is an increasing incentive for upstream industries, such as smelters, to seek a secondary supply of resources from recycling activities. By strengthening the links between the primary resource supply sector and the recycling and waste management sector, both resource supply issues and waste management issues can be better addressed. This is the rationale behind the SMCS policy.
What to decouple from economic growth? Dematerialization versus detoxification There has been much criticism21 of simple aggregated indicators such as DMI. Critics typically say that it is meaningless to aggregate different materials with very different attributes; for example, one kilogram of lead and one kilogram of rock. Another metaphorical example is that adding a piece of apple and a piece of orange is senseless. However, there are significant differences even between these two examples. In the latter case, both apples and oranges are organic materials, and neither of them is toxic. If they are not eaten, they become organic waste to be composted, incinerated, or put into landfill. They have a common feature in their potential to generate organic waste. In the former example, we need to consider multiple dimensions of differentiation. On one hand, lead is a toxic heavy metal. On the other, it is an important material resource for industrial production. As discussed above, particular weighting factors for different materials need to be introduced addressing environmental impacts throughout the life cycle of materials. A difficult point is that the final fate of materials cannot be predefined because materials are used for a variety of products. There is a wide variety of problems and potential problems associated with the massive use of material resources. A reasonable approach, therefore, is to find a few priority issues on which to focus. There are several alternative views to rationalize the need to reduce the total requirement for
materials and thus improve RP. Possible arguments made are: – We need to reduce the massive environmental pressures in material resources extraction. In this regard, so-called ecological rucksacks or hidden flows can provide proxy indicators. – Dematerialization directly contributes to the prevention of massive solid waste generation from end-of-life material resources. – Dematerialization contributes to a reduction of both life-cycle energy consumption and greenhouse gas emissions. – Dematerialization is effective in reducing life-cycle environmental impacts. In this regard, the size of material flows is a proxy for life-cycle environmental pressures. If one of these arguments can be supported by the international environmental community, use of even a very simple RP indicator that is based on aggregated material resource use makes sense.
Lessons learned from the practical use of RP indicators: experiences in Japan and other countries Reflections on the use of material flow indicators in Japanese national policy Since the adoption of FPSMCS in 2003, the performance of the plan has been reviewed annually by the Central Environmental Council of Japan. The progress of MF indicators toward numerical targets has also been reviewed. This review process revealed several needs for improvement and further examination. The first problem is simple but serious. There is a timelag of more than 2 years in the availability of statistical data to calculate indicators. The first review in fiscal year 2004 could base its valuation only on indicators for the year 2002, which predated adoption of the FPSMCS. To enable a timely and effective review, statistical data for the calculation of indicators should be made available without such a time-lag or, alternatively, effective modeling approaches should be used to replace actual data. Another general observation is that EW-MF indicators are inherently macroscopic; therefore, it is difficult to observe the direct effects of individual efforts to achieve SMCS. There is no explicit model that explains the relationship between indicators and the actions and efforts undertaken by stakeholders such as industries, private households, and local and central governments to achieve the targets set for those indicators. Nevertheless, stakeholders are interested to know how effective their efforts have been. Within the FPSMCS, another set of indicators, titled effort indicators, was prepared for this purpose. The basic rationale behind the indicators is that visible linkages between MF indicators and effort indicators will enhance their policy relevance. There are other more specific technical observations. Although the RP indicator had improved by about 40% during the 1990s, the RP indicator for 2001 did not improve
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when compared to the base year 2000. The main reason for this unexpected outcome was an increase in the input of construction minerals. During this period, there was a largescale construction project underway to build an artificial offshore island on which the new Central Japan International Airport (Centrair) was to be located. There are a few different interpretations and arguments related to this case. The type of materials used in building infrastructure will be in place in perpetuity, so will not contribute to future waste generation. From the viewpoint of waste prevention, these inputs should therefore be excluded or accounted for separately. Another point in this specific case is that recycled construction materials could have been, but were not, used. Unfortunately, planning and construction work for this project were completed before the adoption of the FPSMCS, so there was no agreed plan for policy intervention. After all, it is impressive that a single construction project has had such a visible influence on the overall EW-MF indicator. In this sense, this example demonstrates that the MF indicator is sensitive enough to show the effect of large-scale alterations to the landscape. Another unexpected trend was the decline in the cyclical use rate from 2000 to 2001. This, however, can be explained by the increase in the export of secondary materials such as scrap iron and used paper. Demands from China and other neighboring Asian countries for raw materials have increased in recent years, and the market prices of secondary resources have risen. As a result, the export of secondary materials from Japan is still increasing today. The cyclical use rate has been rising since 2002, but the domestic recycling component has not achieved its potential. In the current definition of cyclical use rate, the numerator of the indicator includes only domestically recycled materials. Further discussion is needed to identify whether resources recycled beyond national borders should be included in the calculation of this indicator.
DMI versus TMR Within the FPSMCS, the Japanese RP indicator adopted for target setting was DMI, and not TMR. This decision was not taken for strategic reasons but mainly because of the limitations in the data required to calculate TMR. Nonetheless, TMR is more appropriate than DMI as a proxy indicator to show environmental pressure associated with unused flows through massive resource extraction and indirect flows by international trade. DMI can give an inappropriate signal when production of finished products in countries with more-efficient technology is replaced by imports from regions with less-efficient technology. Such a situation may occur in the relationship between Japan and other Asian countries. The adoption of a DMI-based RP indicator has the potential to be misunderstood, as it does not report on the translocation of environmental pressures from Japan to the exporter of traded products. In this context, the raw material equivalent (RME), which accounts for both direct and indirect material flows, is a candidate for an alternative indicator of DMI.
The main aim of the FPSMCS was prevention of the generation of domestic solid wastes. In this context, indirect flows associated with imports are of no relevance. DMI is a necessary and sufficient indicator to address issues related to domestic waste generation, but it is inappropriate and even misleading as an indicator of upstream environmental pressures.
Deficiencies revealed and how to overcome them In Japan, material flow indicators seem to be accepted as demonstrating the transition from a society of mass production, mass consumption, and mass disposal to a more environmentally sound material-cycle society. However, as discussed in the previous sections, experts have often debated whether or not these macro-MF indicators are useful proxy indicators that properly represent both resource and environmental problems. Most likely, we may need to add supplementary indicators to focus on more specific high-priority issues in the areas of both resource conservation and environmental protection. It was found that annual values of DMI can be significantly influenced by fluctuations in construction material inputs.22 The DMI indicator is sensitive enough to capture a large-scale construction project, but this is not directly relevant to the prevention of solid waste generation or to resource supply. This problem can be tackled by developing indicators that are disaggregated by material group, for example, into categories such as fossil fuels, metals, nonmetal minerals, and biomass. There are increasing demands from local governments to apply these indicators at the prefectural or municipal level. However, because of limited availability of data at the local level, and difficulties in setting geographical system boundaries, application of these principles at the local level requires further examination. A major problem is that trade statistics are usually not available at the subnational level and so a significant part of resource usage is not officially reported. Meso-scale material flow models provide a solution to fill the data gap.
International comparison of material flow indicators EW-MF indicators are useful for capturing the trends of material flows for a specific country. However, international comparisons of countries based on these indicators require careful interpretation. DMI per capita is the simplest indicator, but it is greatly influenced by levels of industrial structure and international trade. In particular, countries that export large amounts of material resources show low RP if DMI is used as the denominator in the calculation of RP. To avoid this bias, another indicator has been proposed: direct material consumption (DMC), which is equivalent to DMI minus exported materials. When used in the denominator of the RP calculation, DMC gives a more realistic value of RP, but it still does not completely address the material flows induced by the consumption activity of
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the target country. Calculation of net consumption of raw materials by consumption activity of a country is theoretically possible by combining physical MF data and international economic input–output tables. However, the compilation of such huge tables is not practicable. A better approach is to start with a few case studies in selected countries where application of economic input–output analysis to environmental, resource, and energy issues is well understood. Translocation of environmental problems from resourceconsuming countries to resource-producing countries is a common phenomenon, and problems are often shifted from developed economies to developing economies. This has been addressed as one of the North–South problems,23 which have been mostly overlooked in environmental policy making in industrialized countries. Other indicators, such as the ecological footprint24 and virtual water,25 address problem shifting explicitly. They do capture hidden resource consumption but are not always as rigorously done or as comprehensive as material flow accounts.
Measurement of circular material flows EW-MFA has been used to measure inputs, outputs, and additions to stock, but circular flows have not been measured in most studies. Circular flows are definitely an important issue for SMCS, but in a practical sense, it is extremely difficult to compile internationally comparable datasets for such flows. Even in Japan, data acquisition methods and processes to quantify circular flows need to be improved. The measurement of circular material flows has been discussed repeatedly in the context of the 3Rs policy. For the past few decades, indicators representing the recycling rate of typical materials and products have frequently been used. However, the definition of recycling rate varies considerably, mainly because both the numerator and denominator of the fraction that represent a recycling rate have been inconsistently chosen. The numerator often represents the amount of waste separated from waste streams for subsequent recycling, but usually the amount actually recycled is less than that separated, because of the generation of residues in recycling processes. From an RP viewpoint, the net amount of recovered material that is used as a substitute for virgin material would be a better numerator. The definition of a circular flow is often controversial. If the circular flow increases as a result of the use of secondary resources, inputs of primary resources should decrease as a result of the material substitution. But, because of the lower quality of secondary materials, larger amounts of them may be needed to effectively replace primary resources. Some secondary materials may not be used as a substitute for virgin materials, but may instead be used to produce lowprice products (e.g., additional construction materials). Thus, the amount of secondary materials used may not be a good indicator. A better approach would be to capture the reduction in the requirement for primary resources as a net effect of circular flows.
Concluding remarks. Navigation by MF indicators: where to now? A sometimes misunderstood point is that indicators themselves do not tell us which way to go. It is our decision, based on a value judgment, to choose the way forward. Indicators work as a compass to help us to navigate in the right direction. It is therefore crucial that we reexamine the rationale behind MF indicators. This article reviewed recent progress in MFA and the indicators derived therefrom, covering both institutional and methodological issues. Indicators derived from EWMFA, such as DMI, are useful in demonstrating the absolute size of a physical economy and to reinforce the need to both reduce consumption of natural resources and limit waste generation. Linkages between the size of material flows and specific environmental impacts and damage must be further elaborated if we intend to use MF indicators in the traditional field of environmental protection policy. Developers of waste management and recycling policies are the most likely users of MF indicators. However, international discussion has shown that there are difficulties in defining circular flows and in acquiring reliable data about them. Japanese experiences in reviewing progress of MF indicators toward numerical targets set within the FPSMCS have revealed various practical problems with the indicators that have so far been calculated. Disaggregation by type of material and by industry sector is useful in analyzing structural changes behind the trend of aggregated indicators. Additional MF indicators are needed that can be used to evaluate the performance of microeconomic contributors, such as companies and individual consumers; the achievement of the goal of SMCS is highly dependent on these actors. The recent tight supply–demand situation for industrial material resources, such as metal ores, driven by the demand of emerging and developing Asian economies provides an opportunity for policy-relevant use of material flow indicators. Furthermore, the need for an integrated approach that links upstream resource issues and downstream waste issues through the 3Rs concept or the circular economy/society concept is attracting increasing attention, not only from Japan and other Asian countries, but also from Europe and other regions of the world. Consequently, the accumulation of reliable scientific knowledge and data in this field in a fully international context is truly essential. Acknowledgments The international activities of the author on material flow indicators were supported by the Global Environment Research Fund of the Japanese Ministry of the Environment (Grant No. H-9). The author wishes to thank the reviewers for their comments and suggestions.
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