Managing without GrowthSlower by Design, not Disaster

Dr. Peter A. Victor

24 September 2010

Summary1. Economy: a subsystem of the biosphere2. Excessive burden of the economy on the biosphere3. Technology helpful but not sufficient4. Must address scale and intensity5. Many questioning growth6. Extreme global inequalities - rich countries should go first7. Managing without growth:

Low/no growth scenario Degrowth scenario

8. Can we adapt?

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Firms Households

Natural Inputs (flows of materials & energy from

SOURCES and

Environmental SERVICES)

Waste Outputs(SINKS)

Bio-physical Cycles

Economic Cycle

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1. The economy: a sub-system of the biosphere

Financial

Real

Natural

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OECD Founded in 1960

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2. Excessive Burden on the Environment:Transgressing Planetary Boundaries

Billiontonnes Global Materials Extraction 1900 to 2005

100%

700%

Peak oil

Production exceedsdiscoveries

Peak Oil

Peak discovery

3. Technology: helpful but not sufficient

1946 1970

1992 2010

‘I would say this is most environmentally friendly cruise ship to date. It is much more efficient than other similar ships.’ (Project engineer)

Energy intensity is declining but not fast enough

0

50

100

150

200

250

1980 1985 1990 1995 2000 2005

GDP Population Primary Energy Consumption Energy Intensity

59%

Key message:Environmental impact depends on intensity and scale

110%

24%

GDP

Primary Energy

Energy Intensity

4. Must address scale as well as intensity

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50

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150

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1980 1985 1990 1995 2000 2005

GDP Resource extraction Population Material intensity

Material intensity: same story

47%

110%

29%

Key message:Environmental impact depends on intensity and scale

GDP

Resource Extraction

Material Intensity

5. Many questioning growth

Real Income per person

Percentagevery happy

6. Extreme global inequalities: rich countries should go first

LowGrow Canada

Can we have full employment, no poverty, fiscal balance,

reduced GHG emissions without relying on economic growth?

LowGrow Canada

You bet!

What makes an economy grow?

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

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

‘Business as usual’

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50

100

150

200

250

300

2005 2010 2015 2020 2025 2030 2035

GDP per capita Unemployment Debt to GDP ratio

GHG emissions Poverty

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

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150

200

250

300

2005 2010 2015 2020 2025 2030 2035

GDP per capita Unemployment Debt to GDP ratio

GHG emissions Poverty

GDP per Capita

GHG Emissions

Poverty

Unemployment

Debt to GDP Ratio

‘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.’

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

A better low/no growth scenario

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50

100

150

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2005 2010 2015 2020 2025 2030 2035

GDP per capita Unemployment Debt to GDP ratio

GHG emissions Poverty

How? • 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

Generating a Canadian degrowth scenario(in US$2000)

1. Maximum sustainable global GDP• GDP when ecological footprint = biocapacity: 1980 ($17.6 trillion)• With 40% reduction in carbon: 1999 ($30.5 trillion)

2. Maximum sustainable average GDP/capita• Divide by 8 billion ($3,815)

3. Canadian sustainable GDP/capita• Equal to world average ($3,815)• Equal to multiple of world average ($15,260)

(Canadian GDP/capita in 1976)

• LowGrow simulation for Canada

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250

300

2005 2010 2015 2020 2025 2030

Poverty

Unemployment

GHG Emissions

Debt to GDP Ratio

GDP per Capita

A Canadian degrowth scenario

The scenarios compared: GDP/Capita

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250

2005 2010 2015 2020 2025 2030 2035

BAU LOW/NO GROW DEGROWTH

The scenarios compared: GHG emissions

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60

80

100

120

140

160

180

200

2005 2010 2015 2020 2025 2030 2035

BAU LOW/NO GROW DEGROWTH

The scenarios compared: growth driversGovernment Expenditure Constant Dollars

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50

100

150

200

250

300

2005 2010 2015 2020 2025 2030 2035

BAU LOW/NO GROW DEGROWTH

Population

0

20

40

60

80

100

120

140

2005 2010 2015 2020 2025 2030 2035

BAU LOW/NO GROW DEGROWTH

Working Time

0

20

40

60

80

100

120

2005 2010 2015 2020 2025 2030 2035

BAU LOW/NO GROW DEGROWTH

Carbon Tax $97$/tonne

$-

$100

$200

$300

$400

$500

$600

2005 2010 2015 2020 2025 2030 2035

BAU LOW/NO GROW DEGROWTH

Entering the Mainstream

“It is possible that the US and Europe will find that…either continued growth will be too destructive to the environment and they are too dependent on scarce natural resources, or that they would rather use increasing productivity in the form of leisure…

Robert SolowNobel Laureate in Economics

There is no reason at all why capitalism could not survive with slow or even no growth.” (Harper’s Magazine, March 2008)