Peter Victor "Managing withouth Growth: Slower by Design, not Desaster"
1. Managing without Growth
Slower by Design, not Disaster
Dr. Peter A. Victor
11 December 2009
Towards an ecological macroeconomics
WU-Vienna University of Economics and Business
6. Bio-physical Cycles
Waste Outputs
(SINKS)
Economic
Firms Households
Cycle
Natural Inputs
(flows of materials & energy from
SOURCES and
Environmental SERVICES)
7.
8. Growth is not possible Managing
Without Growth is
over long term
Growth? disappointing
Sources Sinks
Growth does not
Services
bring happiness
9. Growth is not possible
over the long term
Sources
SOURCES
10. Material intensity is declining,
but not fast enough
GDP 110%
Resource Extraction 47%
Material Intensity 29%
Key message:
Environmental impact depends on intensity and scale
11. Energy consumption - same story
GDP 110%
W. S. Jevons
Primary Energy 59%
Energy Intensity 24%
Key message:
Environmental impact depends on intensity and scale
13. Energy Transitions e in global
energy us e since 180
0
reas
20+ fold inc
Oil
Coal
Wood
Gas
Electricity
•Higher quality (higher energy density, easier storage, greater flexibility)
•Lower cost
22. ‘I would say this is most environmentally friendly cruise ship to date.
It is much more efficient than other similar ships. …It dumps no sewage
into the sea, reuses its waste water and consumes 25 percent less power
than similar, but smaller, cruise liners.’ (Project engineer)
23. Growth is not possible
over the long term
Sources
SINKS & SERVICES
32. Scale and Intensity: the Colours of Growth
Any combination of GDP and GHG/GDP
along the red line gives 592 mt of emissions
Brown growth Black growth
Higher
Lower
Green growth
Canada’s GDP 1990
592 mt Black degrowth
Green degrowth
Canada’s GHG Intensity 1990
36. An 87% reduction in Canada’s GHG emissions
from 2007 level in 50 years: Scale and Intensity
$5,785,000
3%/yr growth in
2%/yr growth in
$3,552,000
0%/yr growth in
747mt
$1,314,000
97mt
Intensity after .02 .03 .07 .57
50 years 3% 5% 13%
compared with 2007
2007 2007
42. Y = GDP
LowGrow - simplified structure C = consumption
I = investment
G = government
X = exports
MACRO M = imports
DEMAND
Y =C+I+G+X-M
Fiscal Population
Investment
Position
GDP
Employment,
Capacity Utilization
Labour
Force
Poverty
Forestry MACRO GHG Emissions
SUPPLY
K = capital
Y=f(K,L,t) L = labour
t = time
43. What makes an economy grow?
• Macro demand (what we
spend money on):
– Consumption
– Investment
– Government
– Trade
• Macro supply (what we can
produce):
– Labour
– Capital
– Productivity
44. ‘Business as usual’
GDP per Capita
GHG Emissions
Poverty
Debt to GDP Ratio
Unemployment
45. What happens if we eliminate increases
in all sources of economic growth?
(starting in 2010 over 10 years)
• Consumption
• Investment
• Government
• Trade
• Population/labour
• Productivity
46. A no growth disaster
Unemployment
Poverty
GDP per Capita
Debt to GDP Ratio GHG Emissions
47. Larry Elliot (economics editor)
The Guardian Weekly 29th August 2008
‘The real issue is whether it is possible to
challenge the “growth-at-any-cost model”
and come up with an alternative that is
environmentally benign, economically
robust and politically feasible.’
48. A better low/no growth scenario
How?
• Macro demand and supply stabilized
(stable population and labour force)
• Carbon price
• Shorter work year
• More generous anti-poverty programs
GDP per Capita
GHG Emissions
Unemployment
Poverty Debt to GDP Ratio
49. 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
50. Average hours worked per
employed person - Canada
1736
2007
Germany 1433
Norway 1417 low/no grow
Netherlands 1392 scenario
51. Selective Growth
High Intensity
Limited
Expenditures
Final Stable or decline
Demand
(GDP)
Relative
Rate of
Intensities of GHG
Economic
Commodities GDP
Growth
(GHG/$)
GHG
(Direct &
Indirect) Low Intensity
Expanded
Expenditures
Increase
53. Limited Expenditure: 50% GDP
Relative intensity: 10
Limited Expenditure Target: 10% in 2020
GDP/capita
GHG
47% reduction in GHG
LE % of GDP
Year
54. Limited Expenditure: 22% GDP
Relative intensity: 10
Limited Expenditure Target: 10% in 2020
GDP/capita
No reduction in GHG
GHG
LE as % GDP
Year
55. Limited Expenditure: 22% GDP
Relative intensity: 4
Limited Expenditure Target: 0% in 2020
Selective growth requires:
- LE to be large % of GDP
- High relative intensity
GDP/capita
15% increase in GHG
GHG
LE as % GDP
Year
56. High Real Land
GDP All Items Footprint Items
(20% GDP - UK)
High Carbon
Footprint Items
(22% GDP UK)
3rd Set of High
Impact Items High Impact Items
(15.2% GDP - UK
based on combined
Footprints)
58. Entering the Mainstream
“It is possible that the US and
Europe will find that…either
continued growth will be too
destructive to the environment
and they are too dependent on
scarce natural resources, or
that they would rather use
increasing productivity in the
form of leisure…
There is no reason at all
why capitalism could not
survive with slow or even no
growth.” Robert Solow
(Harper’s Magazine, March 2008) Nobel Laureate in Economics
59.
60. Elements of an ecological
macroeconomics
• 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
61. 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?