ecological economics: is green growth possible? - fmi*igf economics_is green growth... · is green...
TRANSCRIPT
Ecological Economics: Is Green Growth Possible?
Peter A. Victor25 November 2014
Seven Questions
1. What is ecological economics?2. What is economic growth?3. What is green growth? 4. What is the history of decoupling?5. What are the future prospects of decoupling?6. Is green growth possible? 7. Are fundamental changes required?
1
1. What is ecological economics?
2
Firms Households
Bio-physical Cycles
EconomicCycle
3
Billiontonnes Global Materials Extraction 1900 to 2005
100%
700%
F. Krausmann et al Ecological Economics 2009
4
Transgressing Planetary Boundaries
J. Rockstrom et alNature, October 2009
5
2. What is economic growth?
An increase in the final goods and services produced by an economy during a given period, as measured by the rate of change in real gross domestic product (GDP).
7
Economic growth as a policy objective
Article 1a) The aims of the OECD shall be to promote policies designed: to achieve the highest sustainable economic growth and employment... (1960)
8
Progress as economic growth
9
Uneconomic growthGross Domestic Product
The Ecological Footprint
What we are promised
What we get
Innovation leading to increased labour
productivity
if inadequate economic growth
unemployment up
consumption down
tax revenues downdeficits up
public expenditures down
loan defaults up
investment down
lower economic growth
The dilemmaof growth
Tim Jackson
3. What is green growth?
15
Decoupling environmental impact from resource use
GDP
Resources
Environmental Impact
Decoupling - The essence of green growth
Decoupling resource use from economic growth
TIME16
“...to stress the key point for the last time, these impressive achievements of relative dematerialization have not translated into any absolute declines of material use on the global scale.” (Smil, 2014)
4. What is the history of decoupling?
17
Technology
18
1946 1970
1995 2014 19
1946 1970
1997 2014
22
23
‘I would say this is the most environmentally friendly cruise ship to date. It is much more efficient than other similar ships.’ (Project engineer)
24
Jevons’ Paradox(rebound effect)
“It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth”
The Coal Question (1865)
1835-188225
High Income Countries ‘Decoupling’ 1971-2010
0
50
100
150
200
250
300
350
400
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
GDPENERGY
CARBON DIOXIDE
World Bank Data
27
Low and Middle Income Countries ‘Decoupling’ 1971-2010
0
100
200
300
400
500
600
700
800
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
GDP ENERGYCARBON DIOXIDE
World Bank Data
Note – different scale
28
Ratio of GHG shadow to production GHGs
0%
20%
40%
60%
80%
100%
120%
140%
160%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
UK
EU-27
USA
CAN
BRIC
29
Material Footprint ‘Decoupling’ in OECD countries
T. Wiedmann et al, PNAS, 201330
5. What are the future prospects of decoupling?
“The global gap between the haves (approximately 1.5 billion people in 2013) and the have-nots (more than 5.5 billion in 2013) remains so large that even if the aspirations of the materially deprived four-fifths of humanity were to reach only a third of the average living standard that now prevails in affluent countries, the world would be looking at the continuation of aggregate material growth for generations to come.” (Smil, 2014)
31
Green growth
Brown growth Black growth
Black degrowth
Scale and intensity: the Colours of Growth
Canada’s GDP 1990
Canada’s GHG Intensity 1990
Green degrowth
Any combination of GDP and GHG/GDPalong the red line gives 591mt of emissions
Higher
Lower
Canada’s economic growth scale and intensity 1990-2011
591 mt
702 mt
555 mt[Kyoto
Target]
0.51
$1,367,000
0.72
$825,318
(kt/$m)
An 87% reduction in Canada’s GHG emissions from 2011 level in 50 years: Scale and Intensity
702mt
90mt
0%/yr growth in GDP
2%/yr growth in GDP
3%/yr growth in GDP
.51.025 .067.015
$1,367,000
$5,999,000
$3,675,000
Intensity after 50 yrs 3% 5% 13%
2011 2010
4%6%7%Rate of decarbonization
Rate of economic growth 3% 2% 0%
6. Is green growth possible?
• Green growth requires the rate of throughput to decline faster than the rate of economic growth
• If the rate of economic growth is 3%/yr, GDP increases 10-fold in 78 years. Throughput per dollar would have to decline by 90% to avoid an increase in throughput, and by more for green growth.
• How long can this go on?
Throughput
Throughputper dollar GDP
Environmental Impact
35
Larry Elliot (economics editor)29th August 2008
‘The real issue is whether it is possible to challenge the “growth-at-any-cost model” and come up with an alternative that is environmentally benign, economically robust and politically feasible.’
7. Are fundamental changes required?
LowGrowCanada
Can we have full employment, no poverty, fiscal balance, reduced GHG emissions without relying on economic growth?
Managing without growth
What makes an economy grow?
• Demand (what we spend on):– Consumption– Investment– Government– Trade
• Supply (what we can produce):– Labour– Capital– Productivity
‘Business as usual’
GDP per Capita
GHG Emissions
Poverty
UnemploymentDebt to GDP Ratio
What happens if we eliminate increases in all sources of economic growth?
(starting in 2010 over 10 years)
• Consumption• Investment
• Government• Trade
• Population/labour• Productivity
A no growth disaster
GDP per Capita
GHG Emissions
Poverty
Unemployment
Debt to GDP Ratio
A better low/no growth scenarioHow?• New meanings and measures of success• Fewer status goods• Limits on materials, energy, wastes and land use• Stable population and labour force• Carbon price – more informative prices• More efficient capital stock• Shorter work year• More generous anti-poverty programs• Education for life not just work
GDP per Capita
GHG EmissionsUnemployment
Poverty Debt to GDP Ratio
Jeff Frankel’s Weblog
Origins of the financial/economic crisis
More than just a financial crisis
• A financial system that serves the real economy
• A real economy that serves the interests of people and communities
• Absolute reductions in throughput
• Stem the loss of biodiversity
Ecological Macroeconomics
Real
Natural
Financial
Ecological Economics
Modern MoneyTheory
Towards an Ecological Macroeconomics
50