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The Effect of Resource Efficiency on Employment & Competitiveness
As part of Defra's framework on Sustainable Consumption and Production, Cambridge Econometrics (CE) and Risk and Policy Analysis (RPA) were commissioned to develop and test a framework to assess the impact of business resource efficiency on employment and competitiveness. We undertook a technical literature review of methods and of the data used in previous studies. Also informed by a number of case studies, we then developed a framework and tested it for the construction and the food, drink & tobacco sectors of the economy. To compare and contrast the results of the newly-developed framework, we also undertook a comparable analysis of resource efficiency using CE's MDM-E3 model of the UK economy. In the report recently published by Defra the conclusions are that:
- The implementation of the different quick-win resource efficiency measures analysed tends not to be directly linked to job creation but possibly job retention. This is because the measures are often implemented in order to save costs. However, businesses are able to yield competitive benefits with the implementation of a number of quick-win measures.
- From the case studies, the quick win resource efficiency savings were estimated at 1.0% of costs (£1058m) for construction and 0.9% of costs (£341m) for food, drink & tobacco.
- The first round impacts of resource-efficiency savings suggest modest gains in competitiveness (GVA, profit, trade balance) and employment (more through job retention than job creation, as stated above) within sectors through lower prices, increased demand, and increased output.
- The secondary effects on the wider economy can outweigh the first round impacts, implying that income effects can be larger than the price effects that result directly from the resource-efficiency savings. The lower intermediate demand reduces output (of supply-chain industries), employment, income and spending on a small scale.
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