Presentationby

Peter A. Victor

23 September 2010

Summary

1. The economy: a sub-system of the biosphere2. Green growth3. LowGrow and scenarios4. Some policy directions

Firms Households

Natural Inputs(flows of materials & energy from

SOURCES andEnvironmental SERVICES)

Waste Outputs(SINKS)

Bio-physical Cycles

Economic Cycle

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The economy: a sub-system of the biosphere

The Lisbon strategy for growth and employment

“For Europe to increase living standards, itneeds to accelerate employment andproductivity growth…[and be] as supportiveas possible of growth … to sustain …environmental sustainability.”

GDP = P(1- u)LP: productivity (GDP per employed person)L: labour force (employed plus unemployed)u: rate of unemployment (unemployed/labour force)E: environment/resource impacty: intensity (impact/GDP)

E = y

Green growth

Brown growth

592 mt

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 592 mt of emissions

Higher

Lower

Canada’s Economic GrowthScale and Intensity 1990-2008

592 mt

734mt

556 mt[KyotoTarget]

0.56

$1,318,000

0.72

$825,318

An 87% reduction in Canada’s GHG emissionsfrom 2008 level in 50 years: Scale and Intensity

734mt

95mt

0%/yr growth in GDP

2%/yr growth in GDP

3%/yr growth in GDP

.57.03 .07.02

$1,318,000

$5,778,000

$3,548,000

Intensity after50 years compared with 2008

3% 5% 13%

2008 2008

Material intensity is declining,but not fast enough

47%

110%

29%

Key message:Environmental impact depends on intensity and scale

GDP

Resource Extraction

Material Intensity

Must address scale as well as intensity

Energy consumption - same story

59%

Key message:Environmental impact depends on intensity and scale

110%

24%

GDP

Primary Energy

Energy Intensity

LowGrowCanada

Can we have full employment, no poverty, fiscal balance, reduced GHG emissions without relying on economic growth?

MACRODEMAND

Y =C+I+G+X-M

MACROSUPPLY

Y=f(K,L,t)

Inve

stm

ent

GD

P

Employment,Capacity Utilization

Poverty

GHG Emissions

FiscalPosition

Forestry

Population

Labour Force

LowGrow - simplified structureY = GDPC = consumptionI = investmentG = governmentX = exportsM = imports

K = capital L = labourt = time

LowGrow - High Level Structure

What makes an economy grow?

• Macro demand (what wespend money on):– Consumption– Investment– Government– Trade

• Macro supply (what we canproduce):– Labour– Capital– Productivity

‘Business as usual’

GDP per Capita

GHG Emissions

Poverty

UnemploymentDebt to GDP Ratio

What happens if we eliminate increasesin 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

‘The real issue is whether it is possible tochallenge the “growth-at-any-cost model”and come up with an alternative that isenvironmentally benign, economicallyrobust and politically feasible.’

Larry Elliot (economics editor)The Guardian Weekly 29th August 2008

A better low/no growth scenarioHow?• New meanings and measures of success• Limits on materials, energy, wastes and land use• Carbon price - more informative prices• Stable population and labour force• More efficient capital stock• Shorter work year• More generous anti-poverty programs• Fewer status goods• More informative advertising• Education for life not just work

GDP per Capita

GHG EmissionsUnemployment

Poverty Debt to GDP Ratio

Entering the Mainstream“It is possible that the US andEurope will find that…eithercontinued growth will be toodestructive to the environmentand they are too dependent onscarce natural resources, orthat they would rather useincreasing productivity in theform of leisure…

Robert SolowNobel Laureate in Economics

There is no reason at allwhy capitalism could notsurvive with slow or even nogrowth.”(Harper’s Magazine, March 2008)

Policy Directions• Measuring progress• Environment• Population• Reduced work time• Investment, productivity and technology• Consumption• MWG in one country?

‘It may not be possible to increase the production, especially of goods, beyond

limit, because of the environmental damage that this would entail…As society progresses, it is not

unreasonable to expect people to enjoysome of the fruit of that progress

in the form of leisure.’

How should we measure progress?

Joseph Stiglitz Amartya Sen

Environment

Daly’s Three Principles1.Renewable resources: harvest not to

exceed regeneration rate

2.Non-renewable resources: rate ofdepletion not to exceed rate of creationof renewable substitutes

3.Waste emissions: not to exceedassimilative capacity

Policies for limiting throughput

• Limits:– e.g. annual allowable cut, ozone depleting

substances• Taxes:

– e.g. carbon tax• Trading

– e.g. SOx, carbon

Protected areas‘Defined as legally established areas,both land and water, that are regulatedand managed for conservation objectives:include parks, wildlife and forest reserves,wilderness and other areas designated throughfederal, provincial, and territorial legislations.’(NRCan)

Protected areas in Canada

Population

Economic immigrantsFamily unificationRefugees

Canada’s immigration policy• “Canada’s immigration levels plan for 2010 reflects a long-

term vision for immigration and recognizes the important roleof immigration in Canada’s economic growth and prosperity.”(Annual Report to Parliament on Immigration, 2009)

• In whose interest?–The country of immigration–The country of emigration–The immigrant

Stabilizing Canada’s population

• Low projection: 103,000 economic immigrants/yr• Medium projection: 22,000 economic immigrants/yr• High projection: 0 economic immigrants/yr

reduction in other categories

• Environmental migrants?

Reduced work time

Average hours worked peremployed person - Canada

low/no growscenario

1699

13781389Netherlands14071423Norway13901430Germany20092008

Conditions for a successful policy ofreducing work time to reduce unemployment

1. Wage compensation rising2. Changes in work organization3. Train more skilled labour4. Low fixed cost per employee5. Earnings equity6. Standardization of working hours

Consumption and advertising

• Ban advertising in public spaces• Control advertising on the internet• End the commercialization of

childhood• Tax advertising• Introduce a time and resources levy• Put the agencies’ mark on their

work• Introduce statutory regulation of the

advertising industry

Investment, productivity and technology

• Shift investment to priorities of MWG(leisure/recreation, community, publicgoods)

• Limits on throughput: will affectinvestment priorities

• Taxation:– Capital gains and capital tax– Favour investment in throughput efficiency

• Realize productivity gains as reducedhours worked

• Technology:– investment– assessment

GDP = aPe (1- u) L

L: labour force (employed plus unemployed)u: rate of unemployment (unemployed/labour force)Pe: productivity (GDP per employee hour)a: hours per employed person

Realize productivity gains (Pe)as reduced hours worked (a)

MWG in one country?• Obstacles:

– International trade treaties– Flight of capital and skilled labour

• Opportunities:– Policy support for transformation:

• measures of success• localization• alternative business models• work time

– Individual and community action– International movements for SSE

and degrowth