Climate, environment and growth: Are there ways out of the mess? Arild Vatn Key debates in climate, poverty and development

The present development path After WWII we observe economic growth at an average level between 2,5 and 3 % per year globally. A wanted development, taking many out of poverty. Made some incredibly rich. We also observe increased pressure on environmental resources –Climate change  global temperature increases by 2100 in the range of 2-5 C –Loss of species at a rate of times of what is normal –In Europe it is estimated that about new chemicals are released into the environment. We know (some of) the effects of about 1 %... These issues are linked through the material underpinning of economic growth

Temperature change

4 Carbon and economic development

We see no absolute ‘de-coupling’ Jackson (2009)

USA Norway China India From energy use to emissions

Growth and ‘happiness’

Why does the economy of the rich still grow? The above picture raises the question: If economic expansion threatens the environment, but deliver less and less increase in welfare, why not stop growing the economy in rich countries? The unpleasant answer may be: We cannot stop. Present institutions demand growth to function –Low or zero growth will force recessions/instability due to increased uncertainty for investments – e.g., the financial crisis –The functioning of the political system demands growth to e.g., ease redistribution –The consumption ‘tread-mill’ –Present policies to reduce environmental impacts are caught in dif- ferent types of lock-ins too: Investment lock-ins; Interest lock-ins So sustainable development will demand institutions that can function well with low(er) growth Stabilizing consumption levels in the rich part of the world to give room for growth in developing countries

It seems OK?  Natural systems are characterized with quite some ‘power of resistance’  We have, however, a political-economic system directed at growth and at ex post (after the fact) corrections of environ- mental problems  Instead of appropriate action, we are consuming the resilience of natural systems – pushing us closer to ‘tipping-points’  Strategies:  Do not force the system against its limits – precaution/reducing the level of risk  Establish systems that can offer ‘early warnings’ and actions not captured by vested interests

Sketching an alternative The future will demand more emphasis on political decisions and less emphasis on ‘self correcting’ markets Will demand increased emphasis on ex ante (‘before the fact’) regulations of resource use. For example: –Restricted withdrawals of resources – specifically fossil fuels –Turning the burden of proof – prior verification that a production is environmentally acceptable –Infrastructure development  low carbon energy and transport Create the socially and environmentally conscious firm –’Corporate social responsibility’ is not sufficient –Instituting responsibility as a motivation for production Non-profit firms; cooperatives Community owned firms Triple bottom line with ownership also to the social and environmental dimensions Limits and changed motivations are thought to be mutually reinforcing