In recent years and decades, numerous socio-ecological crises of planetary proportions have continued to escalate. Climate change and increasing biodiversity loss are just two essential examples of the overexploitation of the Earth's ecological capacities. Despite this overuse of ecological resources, many people still suffer from a lack of food, housing, or social participation (see, e.g., here). Currently, there is not a single country in the world that manages its economy in an ecologically sustainable manner while simultaneously providing a minimum level of social prosperity and security.

The current focus on efficiency and consistency strategies is not enough

Although political attention and effort—both internationally and nationally—have rapidly increased in recent years, especially regarding climate protection, the goal of limiting global warming to 1.5 degrees remains distant. The political measures implemented so far primarily rely on so-called efficiency and consistency strategies. Both approaches mainly describe socio-technical innovations, with efficiency strategies typically aiming to increase efficiency and resource utilization rates, and consistency strategies aiming for closing material cycles and transitioning to renewable energies. Undoubtedly, both strategies are essential for achieving climate goals.

Unfortunately, despite all technological progress, the focus on efficiency and consistency measures has not led to the expected success: While, for example, CO2 emissions not only need to be stabilized globally but must be reduced to (net) zero, emissions have continued to rise globally in recent years. Therefore, it seems highly questionable whether these two approaches are sufficient to achieve the urgently needed absolute reduction of ecological burdens.

There are numerous reasons for the lack of success, including rebound effects, displacement effects, externalizations, and resource scarcity. Rebound effects describe the compensation of efficiency gains by increased consumption elsewhere and have been empirically and theoretically described many times (e.g., here, here, or here). For example, in the housing sector in Germany since the 1970s, enormous efficiency gains have been achieved through better insulation, partly prompted by energy-saving regulations. However, during the same period, the living space per person has more than doubled, so the overall space-heating demand today is approximately at the level of 30 years ago:

Development of heat demand per person, living space per capita, and heat demand per living space for the residential sector in Germany compared to the base year 1990. Data: Federal Statistical Office and Working Group on Energy Balances; own representation.

As for displacement effects, this phenomenon refers to the resolution of a crisis in one area but the initiation or intensification of a new crisis in another area. For example, a massive expansion of renewable energies can contribute to the production of synthetic fuels for emission reduction but can simultaneously have problematic effects on biodiversity (here and here) and resource use (here and here).

When displacement effects occur on a geographical dimension, it is often referred to as externalization: In this case, environmentally harmful activities are outsourced from one region—often in the Global North—to another region—often in the Global South—so that the environmental balance of the outsourcing region may improve at first glance, but overall, no positive ecological effects arise. Rather, the costs of non-sustainable behavior are imposed on regions and people who cannot even benefit from the positive effects of these activities.

Technological optimism is currently more skin to wishful thinking than empirical orientation

A current example of such displacement effects is the planned imports of synthetic fuels in climate-neutral scenarios for Germany. Since the combination of efficiency and consistency strategies is insufficient to cover the expected future energy demand, the energy carriers are produced in other regions and no longer appear in the production-based calculation of national emissions (for further examples and the possible consideration of such emissions, see, e.g., here, here, here, or here).

Another limit of current climate protection measures is the non-substitutability of certain scarce resources such as land, rare earths, and elements like phosphorus or lithium. These resources are indispensable for the implementation of many technical innovations. It is not yet clear how the corresponding needs could be met in the future, potentially creating problematic dependencies on the producing countries and jeopardizing a global energy transition.

Of course, despite the outlined difficulties, it is theoretically possible that in the coming years, technical innovations will allow humanity to sufficiently reduce its global ecological footprint, especially if incentive systems, such as higher pricing of environmentally harmful activities, are improved. However, experiences from the last decades are anything but encouraging in this regard. Accordingly, such technological optimism seems more like wishful thinking than empirically based action guidance and, considering the irreversible consequences of excessive global warming, is not a good guide for action.

Sufficiency measures as an indispensable complement

Against the background of the inadequate success of efficiency and consistency measures, it is surprising that a third strategy discussed in sustainability debates remains largely unnoticed: sufficiency. In light of the challenges described above, demands for sufficiency measures are increasing in both scientific and political discourse, most recently by the IPCC.

Sufficiency describes both a goal and a sustainability strategy. Specifically, sufficiency aims to avoid or reduce socio-ecological damages by reducing (certain) production and consumption activities. In contrast to efficiency and consistency strategies, a sufficiency perspective allows for the identification of possible absolute limits of consumption and sustainable consumption corridors. The limits of these corridors aim to avoid excessive consumption that jeopardizes the life chances of other people (and species) and also avoid shortages and the associated inability to satisfy basic human needs. Such consumption corridors operationalize the implications of sustainability concepts, such as Kate Raworth's Doughnut Economics, for the production and consumption of goods and services.

By setting an upper limit, rebound effects could be avoided, whereas a lower limit aims for a fair distribution of available resources

Due to this focus on the 'right measure,' sufficiency is also described as a framework for the other two strategies (see here and here). This means that from a sufficiency perspective, an absolute framework for ecologically sustainable and socially necessary consumption is initially identified or negotiated, which is then provided as efficiently as possible based on renewable energies and resources. With such an upper limit, for example, rebound effects could be avoided, while a lower limit aims for a fair distribution of available resources. A sufficiency perspective explicitly addresses the often implicitly negotiated normative debate about the limits of consumption corridors.

Sufficiency also encompasses a strategic dimension for achieving sustainability goals. Sufficiency strategies expand existing socio-technical innovations of efficiency and consistency strategies with social innovations. It involves changes in social practices and collective behavioral changes, as well as the question of how societal organization must be shaped so that needs can be satisfied as justly and resource-efficiently as possible—within the consumption corridors. Sufficiency asks, for example: What should our villages and cities look like so that people enjoy living in moderate living spaces? How can mobility be ensured without needing 48 million cars (and increasing) in Germany? Answers to these questions can only be provided to a limited extent individually, which is why sufficiency policy is needed to 'simplify good living.'

Past experiences suggest that achieving climate and sustainability goals is not possible without sufficiency policy. The fact that such measures are not a mere utopia is evident in some cities and municipalities already working on the concrete implementation of corresponding sufficiency strategies. The city of Zurich has even anchored sufficiency as a guiding principle. Individual European countries' sustainability strategies already contain some sufficiency measures. However, these flagship projects are not sufficient for the necessary sufficiency turnaround. Instead, a comprehensive sufficiency policy is needed at all political levels.

We need a better macroeconomic understanding of sufficiency measures

Among other areas, the macroeconomic implications of sufficiency measures are still largely unexplored and receive relatively little attention in economics, except for certain 'heterodox' paradigms such as Ecological Economics (e.g., here, here, or here).

This is problematic because, according to the authors, not only would macroeconomic research benefit from engaging with the sufficiency domain, but the design and effective implementation of sufficiency measures would also gain from accompanying macroeconomic research. Otherwise, well-intentioned measures could easily lead to unintended and negative social and ecological consequences, undermining the urgently needed transformation.

Therefore, in the design of sufficiency measures, such as setting consumption corridors, it must be considered how binding consumption upper limits in certain areas influence macroeconomic variables such as wages, inflation, or interest rates through various channels, and what implications can be expected for individual and functional income and wealth distribution, or which accompanying measures could control these implications. A deeper macroeconomic analysis is also required for estimating indirect effects. Only in this way can unintended consequences, such as a socio-economically dangerous deflationary spiral resulting from intended consumption reduction, be prevented.

For a rational political decision, a comprehensible assessment of the consequences and identification of relevant mechanisms are necessary.

Moreover, the implementation of sufficiency measures would necessitate changes in handling public finances and shaping financial regulatory frameworks, as a permanent absolute reduction in consumption activities in a country, ceteris paribus, would be associated with lower growth rates and thus higher debt ratios—a situation that would be incompatible with current European regulatory frameworks and sustainable financing of essential state activities, including welfare provision.

And even if sufficiency measures are essentially seen as complements to efficiency and consistency measures, under certain circumstances, conflicts of interest may arise. For instance, if the implementation of sufficiency measures diminishes the profit prospects of investments, it could lead to lower investment dynamics, even in sectors crucial for the sustainable transformation of our economy. Even if economics cannot provide final answers in this regard, a rational political decision requires a comprehensible assessment of the consequences and identification of relevant mechanisms.

Sufficiency should play a more significant role in economics

One thing is clear: A comprehensive implementation of sufficiency measures, as deemed necessary by many researchers, must go hand in hand with far-reaching reforms in our national and international institutions. Such a reform agenda—or more accurately, such a transformation program—inevitably comes with risks, controversies, and uncertainties. At the same time, it seems unavoidable in the face of the status quo.

Within this framework, concrete and also long-term sustainable proposals must be developed. These include -

• How a transition from the status quo to a world economy less dominated by socio-ecological externalization could concretely look like, and how high adaptation costs can be avoided,
• How societal prosperity can be ensured with lower consumption and production quantities, and
• How necessary measures against politico-economic resistance can be enforced and fairly implemented.
• The engagement of economics with these questions is urgently needed and would help maximize the success prospects of sufficiency policy.

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Disclaimer: This article is a translated version of the intervention that was originally published in German language as part of the Economists For Future Debate Series in the online magazine Makronom. Hence, some of the linked references are in German.

‍About the authors:

Claudius Gräbner-Radkowitsch is Assistant Professor of Plural Economics at Europa-Universität Flensburg, Project Leader at the Institute for Comprehensive Analysis of the Economy (ICAE, Johannes Kepler University Linz), and Research Fellow at ZOE. Institute for Future-Fit Economies in Cologne.

Jonas Lage is pursuing his doctorate as part of an interdisciplinary junior research group at the Norbert Elias Center for Transformation Design and Research at Europa-Universität Flensburg, focusing on sufficiency-oriented urban development and socio-ecological transformation.

‍Frauke Wiese is Assistant Professor of Energy Systems Transformation at Europa-Universität Flensburg and leads an interdisciplinary junior research group on energy sufficiency.

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