What is a Steady State Economy? Why do we need one? How do we achieve it? Dan O’Neill CENTER for the ADVANCEMENT of the STEADY STATE ECONOMY SUSTAINABILITY RESEARCH INSTITUTE

2 The Problem  Economic growth is a primary policy goal of most governments  There is a fundamental conflict between economic growth and environmental protection  Economic growth is no longer improving people’s lives in the developed world

3 What is Economic Growth?  Increase in the production and consumption of goods and services Occurs when either population or per capita consumption increases  Typically measured using GDP Total expenditure on all goods and services produced within a country  A relatively recent policy goal

4 The History of Economic Growth The Global Economy, 1–2006 AD Can this really continue??? Source: Maddison 2008

5 The Economy and the Environment Waste products £ £ Waste products £££ Resources Waste Resources Waste

6 The Limits to Growth

7 The Ecological Footprint  Measures how much land society needs to: Produce the resources it consumes Assimilate the wastes it generates Ecological Footprint GDP Sources: Global Footprint Network, U.S. Bureau of Economic Analysis United States

8 Global Ecological Overshoot  Global ecological footprint is greater than available biocapacity!  We are in a state of overshoot Resources are being used faster than they can be regenerated Wastes are being produced faster than they can be assimilated Source: Global Footprint Network The World

9 Planetary Boundaries  Study in Nature in 2009  Nine planetary boundaries that define the “safe operating space” for humanity on the planet  Relate to earth-system processes: 1. Climate change 2. Biodiversity loss 3. Nitrogen and phosphorous cycles 4. Stratospheric ozone depletion 5. Ocean acidification 6. Global freshwater use 7. Change in land use 8. Atmospheric aerosol loading 9. Chemical pollution

10 Planetary Boundaries Source: Rockstrom et al. 2009, Nature 461: “Transgressing one or more of the planetary boundaries could lead to catastrophic change at the continental to global scale.”

11 Can Technology Save Us? Source: SERI (  GDP growth has overwhelmed any decoupling The World GDP Material Use Material Intensity  Can we decouple economic growth from resource use? Technological progress Switch from goods to services

Is It All Worth It? Imogen Shaw

13 Happiness and GDP “Americans have been more successful decoupling GDP from happiness than in decoupling it from material and energy” —Peter Victor Real income per person Percentage very happy Source: Layard (2005) United States Percentage very happy

14 Happiness and GDP Across Countries Source: Inglehart and Klingemann (2000) Income per Person ($) Happiness (Index)

15 What Are We Actually Measuring?  GDP Total expenditure on all goods and services produced within a country  Adds to GDP:  Also adds to GDP:

16  Same accounting framework as GDP, but Adds value of household and volunteer work Subtracts cost of crime, pollution, and family breakdown Genuine Progress Indicator (GPI) Source: Redefining Progress United States

17 The Degrowth Transition to a SSE Size of Economy Time Carrying Capacity GrowthDegrowthSSE

18 What is a Steady State Economy (SSE) ?  Stable population  Stable per capita consumption  Energy and material flows are reduced and kept within ecological limits  Constant stocks of natural and human- built capital

19 Energy and material flows within ecological limits  Sustainable Scale  Fair Distribution  Efficient Allocation  High Quality of Life Energy and material flows within ecological limits Limits to inequality  Sustainable Scale  Fair Distribution  Efficient Allocation  High Quality of Life  Sustainable Scale  Fair Distribution  Efficient Allocation  High Quality of Life Use markets only where appropriate  Sustainable Scale  Fair Distribution  Efficient Allocation  High Quality of Life Health, time, prosperity, and community Characteristics of a SSE

20 Can We Really Do This?  Model for the Canadian Economy  Possible to have Full employment More leisure time Fiscal responsibility Virtually no poverty Reduced GHG emissions  All without the need for economic growth! Source: Peter Victor, York University

21 How Do We Achieve a SSE?  Adopt the right macro-economic goal: the Steady State Economy  Gradually change existing policies from growth towards a steady state

22 The CASSE Position  Position statement on economic growth Recognises the conflict between growth and environmental protection Calls for the transition to a SSE  Purpose Demonstrate the level of support for a SSE Advance the SSE in policy discussions  Endorsements >170 organisations, 7000 individuals

23 How Do We Achieve a SSE?  Adopt the right macro-economic goal: the Steady State Economy  Gradually change existing policies from growth towards a steady state

24 1. Limit Resource Use Currently:  Few controls on use of resources and emission of pollutants Montreal Protocol: limits ozone-depleting substances EU Emissions Trading Scheme: limits CO 2 emissions In a SSE:  Impose strict resource and emission caps  Employ a cap–auction–trade system Caps set based on ecological criteria Permits auctioned by government Trade between industries to allow efficient allocation

25 2. Stabilise Population Currently:  Natural increase is low in many wealthy countries  But many rich countries are trying to encourage population growth In a SSE:  Births plus immigration must equal deaths plus emigration In wealthy countries:  Balance immigration with emigration In poorer countries:  Provide education, access to birth control, and equal rights for women

26 3. Reduce Inequality Currently:  Economic growth is used as an excuse to avoid dealing with poverty “A rising tide lifts all boats” In a SSE:  No growth, so no excuses!  Finite resource use = Finite amount of wealth  Must deal with distribution explicitly Need a minimum and maximum income

27 4. Reduce Working Hours Currently:  Technological progress is used to increase production of goods and services A better widget machine = more widgets! In a SSE:  We cannot increase production if it results in higher resource use  Instead, shorten the working day, week, & year Same salaries but more leisure time!

28 5. Reform the Monetary System Currently:  Fractional reserve banking Most money is created by private banks in the form of debt  Increasing debt drives economic growth In a SSE:  All money would be created and spent into existence by a public institution  Banks would be prohibited from creating money, but would instead have to borrow existing money to lend it

29 6. Change How We Measure Progress Currently:  Rely on GDP, which doesn’t distinguish between: Benefits and costs Quality and quantity In a SSE:  What happens to GDP is not important  Replace GDP with two sets of accounts: Well-being  To be maximised Resource use  To be reduced and kept within ecological limits

30 Conclusion  There is a conflict between economic growth and environmental protection  Economic growth is no longer improving people’s lives in the developed world  We need to make the transition to a SSE Adopt the right macroeconomic goal Restrict resource use, stabilise population, limit inequality, reduce working hours, eliminate fractional reserve banking, and change the way we measure progress

31 Enough is Enough

Thank you! CENTER for the ADVANCEMENT of the STEADY STATE ECONOMY SUSTAINABILITY RESEARCH INSTITUTE Dan O’Neill