Date post: | 29-Nov-2014 |
Category: |
Education |
Upload: | institute-for-the-environment-and-regional-development-wu |
View: | 3,101 times |
Download: | 2 times |
Managing without GrowthSlower by Design, not Disaster
Dr. Peter A. Victor
11 December 2009
Towards an ecological macroeconomicsWU-Vienna University of Economics and Business
World Population
World GDP
8 out of 125,000 generationshave experienced growth
World Fossil Fuels
World in Year 1 World in 2009
Firms Households
Natural Inputs(flows of materials & energy from
SOURCES andEnvironmental SERVICES)
Waste Outputs(SINKS)
Bio-physical Cycles
Economic Cycle
Managing WithoutGrowth?
Growth is not possible over long term
Growth does not bring happiness
Growth is disappointing
Sources Sinks
Services
SourcesGrowth is not possible
over the long term
SOURCES
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
Energy consumption - same story
59%
Key message:Environmental impact depends on intensity and scale
110%
24%
GDP
Primary Energy
Energy Intensity
W. S. Jevons
The era of fossil fuels
Wood
CoalOil
Gas
•Higher quality (higher energy density, easier storage, greater flexibility)•Lower cost
Electricity
20+ fold increase in global energy use since 1800Energy Transitions
Technology
1946 1968
1992 2009
1946 1968
1992 2009
‘I would say this is most environmentally friendly cruise ship to date. It is much more efficient than other similar ships. …It dumps no sewageinto the sea, reuses its waste water and consumes 25 percent less power than similar, but smaller, cruise liners.’ (Project engineer)
SourcesGrowth is not possible
over the long term
SINKS & SERVICES
Transgressing Planetary Boundaries
Growth is not possible over log term
Growth does not bring happiness
Real Incomeper person
Percentagevery happy
Making roomHow slowing the rate of
economic growth can helpdeal with climate change
World populationWorld income
World populationWorld income
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
USA’s Economic GrowthScale and Intensity 1990-2007
6,099mt
7,150mt
0.86
$7,113,000
0.62
$11,524,000
Britain’s Economic Growth Scale and Intensity 1990-2007
773mt
676mtKyoto target
637mt
0.94
825,099
0.50
1,266,347
Canada’s Economic GrowthScale and Intensity 1990-2007
592 mt
747mt
556 mt[KyotoTarget]
0.57
$1,314,000
0.72
$825,318
An 87% reduction in Canada’s GHG emissionsfrom 2007 level in 50 years: Scale and Intensity
747mt
97mt
0%/yr growth in GDP
2%/yr growth in GDP
3%/yr growth in GDP
.57.03 .07.02
$1,314,000
$5,785,000
$3,552,000
Intensity after50 years compared with 2007
3% 5% 13%
2007 2007
Environmental Kuznets Curve
Increa
sing I
mpact Decreasing Impact
Intensity (Environmental Impact/GDP)
Scal
e (G
DP)
Environmental Impact
Scale, Intensity and the Environmental Kuznets CurveEI’ EI’’ EI’’’ EI’’’’
EI’EI’’EI’’’’ EI’’’
Brown Growth
Green Growth
(Scale growing slowerthan decline in intensity)
(Scale growing fasterthan decline in intensity)
Managing withoutgrowth?
LowGrowCanada
Can we have full employment, no poverty, fiscal balance, reduced GHG emissions without relying on economic growth?
LowGrowCanada
You bet!
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
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?• Macro demand and supply stabilized
(stable population and labour force)• Carbon price• Shorter work year• More generous anti-poverty programs
GDP per Capita
GHG EmissionsUnemployment
Poverty Debt to GDP Ratio
What would change? New meanings and measures of success Limits on materials, energy, wastes and land
use More meaningful prices More durable, repairable products Fewer status goods More informative advertising Better screening of technology More efficient capital stock More local, less global Reduced inequality Less work, more leisure Education for life not just work
Average hours worked peremployed person - Canada
low/no growscenario
1736
1392Netherlands
1417Norway
1433Germany
2007
Selective Growth
FinalDemand(GDP)
High IntensityLimited
ExpendituresStable or decline
Low IntensityExpanded
ExpendituresIncrease
GHG(Direct &Indirect)
RelativeIntensities ofCommodities
(GHG/$)
GHGGDP
Rate ofEconomic
Growth
Business as Usual
90% increase in GHG
Year
GDP/capita
GHG
Limited Expenditure: 50% GDP Relative intensity: 10
Limited Expenditure Target: 10% in 2020
47% reduction in GHG
GDP/capita
GHG
LE % of GDP
Year
Limited Expenditure: 22% GDP Relative intensity: 10
Limited Expenditure Target: 10% in 2020
No reduction in GHG
GDP/capita
GHGLE as % GDP
Year
Limited Expenditure: 22% GDP Relative intensity: 4
Limited Expenditure Target: 0% in 2020
15% increase in GHG
GDP/capita
GHG
LE as % GDP
Year
Selective growth requires:- LE to be large % of GDP- High relative intensity
GDP All Items
High Carbon Footprint Items(22% GDP UK)
High Real Land Footprint Items(20% GDP - UK)
High Impact Items(15.2% GDP - UKbased on combined Footprints)
3rd Set of High Impact Items
We must knock economic growth off its pedestal
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)
Elements of an ecologicalmacroeconomics
• Full world• Economy as a subsystem
– Biophysical limits– Relevance of 1st and 2n laws of thermodynamics– Use of non-monetary data– Risk, uncertainty, ignorance
• Scale matters• Longer time horizon• Technological skepticism• Definition and measurement of progress• Ethical framework• New institutions• Spatial definition• Money
Some questions
• How should we measure progress and prosperity?• What new institutions are required to limit throughput and
protect habitat more effectively?• How should financial, corporate and legal institutions be
redesigned?• What would be the role of money in a low or non-growing
economy, what would determine the rate of interest?• What are the micro foundations of a macro economy that
has dispensed with growth?• Is low/no growth feasible for an individual economy?• Is capitalism compatible with an economy that respects
the limits of the biosphere?