First step: getting a focus!
• What is the economy? • What things should be
governed by /included in the economy?
Environment
Society
Economy
Second step: qualifying a ’sustainable’ economy Building a strong, stable and sustainable economy, which provides prosperity and opportunities for all, and in which environmental and social costs fall on those who impose them (polluter pays), and efficient resource use is incentivised
(SD Commission for UK government)
Korsunova 2013/Jalas 2014
’prosperity and opportunities for all’
and in which environmental and social costs fall on those who impose them (polluter pays), and efficient resource use is incentivised
(SD Commission for UK government)
Korsunova 2013/Jalas 2014
• Spatially
• Temporally
’costs fall on those who impose them’ & benefits for those who bear the cost
Jalas 2014
Source: Suomen Luonto
Source: http://www.broccolicity.com/
Source: Rakennusperinto.fi
State subsidies for natural resource extraction
– Tax breaks – Transport infrastructure – In Finland e.g. forest road subsidies – Geological maps
’efficient resource use is incentivised’
Jalas 2014
Source: NBA
hakku.gtk.fi
• Structure of the economy matters
• Sustainable economy avoids lock-in situations – Large MNC as established
players vs. – Creative destruction & disruptive
innovation
An agile, public economy: Innovation towards sustainability
Jalas 2014
… and ecological costs (Herman Daly: Steady-State-Economy)
”Empty” frontier economy
”Full” world economy
Korsunova 2013
The dynamics of welfare relationship to environment and the economy
• Before 1960s: – The economy is small relative to the environment – The flow of welfare from the ecosystem (fresh air, beautiful
scenery, clean water, etc.) is relatively larger that the services from the economic system (products and services)
• After 1960s: – The ideas of economic growth and increased consumption – Economy growth is so rapid that there is no time for the
ecosystems to regenerate (loss of biodiversity, forests, etc.) – More welfare from the stream of goods and services (cars,
clothing, TVs, etc.)
Korsunova 2013
Shmelev 2012
Environmental economics approach
• The concept of ”externalities” • Priority to resource efficiency • Maximization of utility and profit • Growth optimism and ”win-win” options • Monetary indicators • External costs and economic valuation • Global market and isolated individuals • Partial, monodisciplinary, analytical
Van den Bergh 2000
economy
ecosystem
waste
extraction
Korsunova 2013
Ecological economics approach • Priority to sustainability • Fulfillment of needs and equitable distribution • Growth pessimism and difficult choices • Physical and biological indicators • Local communities • Environmental ethics • Complete, integrative and descriptive • Limited individual rationality and uncertainty • Systems analysis, multidimensional evaluation
(MCDA), holistic approach
economy
ecosystem
Van den Bergh 2000
Korsunova 2013
Growth versus Development
• Economic growth may be one aspect of economic development but is not the same
• Economic growth: – A measure of the value of output of goods and
services within a time period • Economic Development:
– A measure of the welfare of humans in a society
www.bized.co.uk
Korsunova 2013
Economic Growth • GDP – Gross Domestic Product
– The value of output produced within a country during a time period • GNP – Gross National Product
– The value of output produced within a country plus net property income from abroad
• GDP/GNP per head/per capita – Takes account of the size of the population
• Real GDP/GNP – Accounts for differences in price levels in different countries
www.bized.co.uk
Korsunova 2013
• But how are the income & wealth distributed inside the country?
Seeing the BIG picture..
• Distribution of global GDP per capita reflects the inequalities in the levels of economic development in the world
• There is a significant correlation between the GDP per capita and CO2 emissions per capita
• Other indicators, together with GDP, can provide more insight into the situation and make it more meaningful
Korsunova 2013
How to measure and evaluate development?
• How can changes in the quality of life be measured?
• Example: does additional earning bring with it additional stress, increases in working hours, increased health and family problems?
Korsunova 2013
Development is about people
• Development is about people and not about objects – Which development is better? How it could be compared?
(beyond GDP, GNP, etc.)
• The best development process is the one that allows the greatest improvements in people’s quality of life – What determines people’s quality of life?
• Quality of life depends on the possiblities people have to adequately satisfy their fundamental human needs – What are the fundamental human needs? And who decides
what they are? Max-Neef, 1991
Korsunova 2013
Development
• Development incorporates the notion of a measure/measures of human welfare
• As such it is a normative concept – open to interpretation and subjectivity
• What should it include? – Poverty (absolute vs relative) – Inequality – Progress (??) – What else?
Korsunova 2013