The visible hand in economics

Is our economy killing the planet?

Posted on: December 2, 2008

I’ve recently been browsing old magazines and my attention was grabbed by a feature in the October 18 edition of NewScientist. In it they collate a series of articles under the heading ‘Why the economy is killing the planet and what we can do about it’. At first I was disappointed that a publication puporting to be scientific in nature was resorting to scare journalism and economics bashing; however, there are a number of interesting ideas in the articles that bear discussion.

The first is a discussion by Tim Jackson, a professor of sustainable development at the University of Surrey, about the standard of living that sustainable resource use allows. It has become fashionable among politicians to sell carbon reduction policies by claiming that technology changes will mean our lifestyles can remain pretty much as they are. Jackson draws on the work of the ecologists Ehrlich and Holdren to make some basic calculations on the subject.

He suggests that, at projected population and GDP growth rates, stabilisation of greenhouse gasses in the environment would require an eleven-fold decrease in carbon intensity from the current western European average. That is to say that the average level of carbon emitted per dollar’s worth of production would have to decrease eleven-fold. If there were no increase in global GDP then it would require only a five-fold decrease in carbon intensity of consumption.

Jackson’s point is that, if we want to save the planet, then we can’t have consumption grow faster than technology’s ability to offset the increased pollution. So will we have to consider a significant change in out lifestyles? Well, no emissions reduction scheme works without changing peoples’ behaviour, so clearly our habits will need to change. Does that mean we’ll be worse off, though? Does it mean we have to forsake a vision of economic growth that allows people to better their current position? Stay tuned for more instalments later this week!

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9 Responses to "Is our economy killing the planet?"

One thing that continues to bother me is that starting positions matter. It’s all very well to talk about targets, but too often they’re expressed as percentage reductions. I much prefer natural unit targets – grams of CO2 per dollar, litres of water per day, whatever. That way you don’t penalise early adopters or favour the worst offenders. Percentages are regressive.

You can also look at places like Cuba for a low-energy economy with a reasonable standard of living. Or just at the poeple in your local society who live comfortable low-impact lifestyles.

Frog covered this back then:
http://blog.greens.org.nz/2008/10/25/what-politicians-dare-not-say-except-the-greens/

If we want to feed the world and reduce our ecological impact we need to increase the efficiency of the global economy within the constraints that these demands impose.
Unfortunately the left-wing economics that Greens favour will have the opposite effect, making the economy less market oriented and therefore less efficient, while the Right, which should be part of the solution, still denies that there may be a problem.

Rauparaha, have you heard of Joseph Tainter’s theories on societal collapse?

That is what some of us have been saying all along.

Even if everything the IPCC says is true, nobody has come remotely close to suggesting a way of reducing carbon emissions where the benefits outweigh the costs.

I think it is going too far to say “nobody has come remotely close to suggesting a way of reducing carbon emissions where the benefits outweigh the costs”.

Putting a price on carbon, be it via a tax or emissions trading, means that producers and consumer will do what they do best: make millions of small decisions that all tend to equate costs and benefits at the margin.

Experience with economic instruments to solve environmental issues, especially examples like the acid rain programmes in the US, show that people are very inventive when given the right incentives.

While the challenges of climate change are large, the gains from discovering new technologies that decarbonise the economy are equally great. The person who patents the vaccine that stops ruminants from producing methane will be rich beyond the dreams of avarice.

Andrew W:

Thanks for the link to the Green’s post. I can’t stand that ‘graph’ they use from NewScientist: it’s a scaremongering graphic, not a graph of anything.

I hadn’t heard of Tainter but I looked up his book and it sounds interesting. Do you know the latest opinion on his theory?

Nigel and George:

I agree with George that you go too far, Nigel. I think an assessment of the costs and benefits depends upon how much you value future generations’ welfare. It may be true that, at the rate people currently discount future welfare, there isn’t any way to profitably reduce emissions. It certainly seems that way, given the current opposition to most carbon reduciton schemes.

The problem is we can’t force other countries to do it too.

Some countries will choose not to cripple themselves with penalties for carbon emissions and will just laugh at us for effectively imposing tariffs on our own exports. Certainly the Chinese won’t agree to anything, at least until they run out of coal. They will produce more to compensate for the reduced production in the carbon-limiting countries and emissions may even increase overall if their methods are less efficient.

Even if we go completely Soviet and ban their imports as well as preventing our own people from leaving, they will keep growing and emitting and and we will be riding bicycles and eating tofu while the planet heats up just the same.

The best thing to do is figure out ways to live with higher temperatures. All of the Earth’s fossil fuels are going to be burned and in the atmosphere at some point anyway.

Ah, I see, you’re referring to the Prisoner’s Dilemma situation where it’s not optimal for anyone to individually enforce carbon pricing. In that case, I have a lot of sympathy for your position. It just doesn’t appear that there’s enough political motivation to get anything done at the moment, and doing something individually is just a hair shirt protest.

The political motivation is all one way:

Australia has ratified Kyoto and is now progressing with its own emissions trading scheme;

Barack Obama gave a speech last week also committing his administration to an ETS. The two large domestic ETSs in the US (one in the west and another in the east) are gathering support from other states.

The EU ETS is up and running and the after a few false starts is having an effect.

The UK has just passed a Climate Change Bill committing itself to 80% reductions by 2050.

While very early days, it is possible that the political ructions in Canada will see it back in the fold.

So I think there is strong movement in west to limit emissions.

The leaders of the G20 and APEC (China in both, India and Brazil in the G20) both made statements recently supporting the UNFCCC process.

And most fundamentally, I think that the fast-growing middle classes in both China and India hold the key. These people, with ever increasing political power, just don’t want to live in dirty countries.

So while there is a long way to go, I am confident that the UNFCC conference in Pozan this week will make enough progress that in Copenhagen next year, with the US firmly in the lead (Secretary of State Clinton will almost definitely attend, president Obama may also be there in person), there will be an agreement that commits the industrial countries to 25 – 40% cuts in emissions by 2020 and the rest of the world to reductions that are sufficient, when combined with those in the rich countries, to see emission levels stabilizing.

The political motivation is all one way:

Australia has ratified Kyoto and is now progressing with its own emissions trading scheme;

Barack Obama gave a speech last week also committing his administration to an ETS. The two large domestic ETSs in the US (one in the west and another in the east) are gathering support from other states.

The EU ETS is up and running and the after a few false starts is having an effect.

The UK has just passed a Climate Change Bill committing itself to 80% reductions by 2050.

While very early days, it is possible that the political ructions in Canada will see it back in the fold.

So I think there is strong movement in west to limit emissions.

The leaders of the G20 and APEC (China in both, India and Brazil in the G20) both made statements recently supporting the UNFCCC process.

And most fundamentally, I think that the fast-growing middle classes in both China and India hold the key. These people, with ever increasing political power, just don’t want to live in dirty countries.

So while there is a long way to go, I am confident that the UNFCCC conference in Pozan this week will make enough progress that in Copenhagen next year, with the US firmly in the lead (Secretary of State Clinton will almost definitely attend, President Obama may also be there in person), there will be an agreement that commits the industrial countries to 25 – 40% cuts in emissions by 2020 and the rest of the world to reductions that are sufficient, when combined with those in the rich countries, to see emission levels stabilizing.

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