Matthew Henry John Bartlett

Global Recession; An opportunity to create a more sustainable and desirable future

13 March 2009
Robert Costanza

Jeanette Fitzsimons:
[lots of claps]
300 respondees on a Friday night – pretty good.
[Very warm feeling]

Bob Costanza:
My and Jeanette’s ideas are very close. The idea of using the current crisis to move green is getting some mainstream currency. Don’t want to get back on the same track we were on. Opportunity to rethink entire agenda. Anthropocene now, not Holocene. Human activities changing major global cycles. Full world. When our economic ideas were being formed, natural capital was abundant, built capital was scarce. ‘The folly of growth’ NewScientist. Oil peak. Net energy production even worse curve than gross. Oil reserves concentrated in unstable parts of the world. Climate disruption – rather than ‘climate change’, or ‘global warming’. Improving ability to understand complexadaptive systems. Hockey-stick graph. Stern Report. Cost of doing nothing. Sustainability or Collapse – my book. Look at the past. Understand the past – apply science. Develop models. Integrated History and future of People on Earth (IHOPE) [amazing] graph. Civilisation developed during stable climate. 1950 – the great acceleration. Fossil fuels. “the ones most responsible to change” – attrib. Charles Darwin. Collapse – Jared Diamond. Systems that lose resilience are vulnerable to shocks from several sources. Unprecedented change during great acceleration: ecosystems, storms, floods. Potential tipping points. Recession presents necessity to change worldviews, institutions and technology in an integrated way. Interdependent. In a full context world, what is ‘the economy’ and what is it for? Man on the street: it’s the market. It’s for producing goods & services. But in our new world, we need to broaden: it’s everything that contributes to human wellbeing, and the sustainability of wellbeing. Maintaining quality of life.

Empty-world model of economy: Land, labour & capital. -> economic process -> goods and services -> cultural norms and policy -> individual utility/welfare (or revinvested in L L & C). Premises: more always better, economy can grow forever, private property is always best. Public goods not well dealt with in this vision. Discussion on the news reflects this view of the economy. Get back on the track of exponential growth. Empty World Energy Planning: Alabama Power’s motto ‘Always On: With electricity prices 15% other states, why not?’

Full-world model: Materially closed earth system. Natural, Human, Social and Manufactured capital. Not perfect substitutability between types of capital. Wellbeing is complex (science of happiness). Natural capital provides ecosystem services – climate regulation, water etc. Some of these contribute directly to human wellbeing.

QOL: interaction of human needs and subjective perception of their fulfilment, as mediated by the opportunities available to meet the needs. Missing from economic analyses: spirituality, creativity, identity, freedom etc.

Wellbeing v. GDP: Economic gains for a while, then a kink, and more material consumption doesn’t add much. Policies should aim at convergence – middle between low and high-consuming countries.

Distribution of production of natural wealth much different to convential economic wealth. GDP being used as proxy measure of welfare for decades. GNP adds everything together, doesn’t subtract. Oil spills add to GNP. Alternatives: ISEW, GPI (Genuine Progress Indicators). Or even better, human welfare measures: HDI, HNA. GNP should be in the denominator, not the numerator. GPI (or ISEW) has a bunch of additions and subtractions. GDP and ISEW correlate for a while, but more recently starts to dissipate. US: GDP doubled since 1975, GPI peaked in 1975 and relatively flat since then. US has been in a quality of life recession since 1975. Happiness surveys: US has stayed flat for ages. Graphs here: http://www.eoearth.org/article/Toward_an_ecological_economy

Bottom line: GDP is not sustainable and does not necessarily bring happiness. How we manage the natural & social capital – the commons. They’re gifts, they’re shared. Inherited. Capitalism 3.0 – Peter Barnes. Value of common assets far exceed the private and state assets. Ecosystem services make up a large part of that. This breaks down the distinction between economy / ecology. Millennium Ecosystem Assessment. Costanza et al synthesised value of all eco services in 1997: $16-54 trillion per year. Imprecise but conservative estimate. Degradation of eco services causes significant harm to human well-being. Cost/benefit for conservation in the US: 100:1.

MEA scenarios: ‘order from strength’, ‘adapting mosaic’. Peter Victor, Managing Without Growth: Slower by design. Macroeconomic model for Canada – could we have an economy that wasn’t growing. Full employment, low carbon emissions etc. Stabilise consumption. Fewer status goods, more public goods. Green investments. Stabilise govt spending. Balance trade. Stabilise population. Stabilise capital production. Renewable energy. Stabilise labour force. Slower but more discriminating tech change. Reduce work hours.

Making the market tell the truth. Privitization is not the answer: most eco services are public goods. But signals are required. Full-cost accounting. Trucost Ltd. Tax bads not goods. Charge for depletion of natural capital. Payments for ecosystem services – Costa Rica. Assurance bonds to incorporate uncertainty about impacts. PPPP. Expand the ‘commons sector’.

Lisbon principles of sustainable governance: Responsibility, scale-matching (institution–process), precaution (burden of proof), adaptive management (experimental policy), full-cost allocation, participation (involve all stakeholders).

New commons sector: Global (Earth Atmospheric Trust), National (American Permanent Fund, Children’s start-up trust…), Regional (), ? (). Earth Inc. NGO. Redefining profit. Stop global warming, ameliorate poverty.

Global recession helping with emission path to stabilisation. New institutions and incentives required. Atmospheric Trust. Cap & trade with gradually reducing cap. Revenue goes to trust fund, part to everyone on earth per capita. Less aggressive than carbon tax. Rest of revenue for enhance and restoring the asset.

Changing goals: more -> better. Measures: GDP -> GDI. Scale/carrying capacity: growth forever -> ?. Distribution/poverty: rising tide lifts all boats -> ?. Economic efficiency/allocation: ?. Property rights: private -> private + common + state. Role of government: ?. Principles of government: lassie faire -> Lisbon.

Good stimulus package – what would it look like? Renewable energy, smart power grids etc; full utilisation of human capital, universal quality education; rebuilding social capital, more leisure; restoration of natural capital assets.

Conclusion: Break addiction to growth at all costs. Difficult but necessary. Focus on quality of life, recognise contribution of natural and social capital. New vision, measures, institutions, new technologies. New journal: Solutions.

More related links at www.uvm.edu/giee/publications

Q: What is the difference between state & common property?
A: Spectrum of things.

Q: Has any government used e.g GPI for budget process?
A: Not yet

Q: Market signals, eco taxes. Any ideas on how to address the regressive nature of eco-taxes?
A: Trusts can be applied at other scales, not just global. Cap & dividend scheme is on the table in the US at the moment. Next round of Kyoto may do it. In Vermont, bill introduced: Vermont Common Asset Trust.

My (unasked) Qs
If the cost benefit ratio is 100:1, why is it a difficult sell?
Who gets paid for eco services in Costa Rica?
In these schemes the GDP is going down down down – how to soften that difficult and famous number?

Vicki Forgie:
NZ Centre of Ecological Economics. Ambition: to be at the cutting edge of international efforts to promote integrative sustainability. Joint venture between Massey & LandCare. Market Economics Ltd. Projects: Sustainable Pathways. 86% of NZers live in urban environment. Auckland Regional Council use it. GPI for NZ. Ecological Footprint Plus. Triple Bottom Line reports for food and fibre sectors. Working with iwi. Creating Futures – linking environmental and economic impact. Carbon Embodied in Trade (MAF). Bio-energy Options for NZ (Scion). Scholarships for Maori students. Need for ecological economists – shortage in this area. Future vision: build resilience into the NZ economy.

NZ GPI: gone up slowly while GDP gone up better. 1970s: shops shut on weekend, family time. 1980s restructuring. Economic growth but GPI drop. GPI has increased again but gap between the two measures is growing. Real cost of GDP increasing. Hurdles for GPI: Poor metrics for environmental costs. GDP has advantage of accountants. GPI lets you know when ‘growth’ becomes ‘uneconomic’.

Marianne Van den Belt:
New to NZ. All models are wrong, some are useful. Modeling as a group process: build consensus. Status quo -> Mediated discussion | expert modelling -> mediated modelling. Adaptive management: spiral of planning, assessing, envisioning, monitoring, implementing. Assessing: mediated models, research models, management models. Book: Mediated Modeling

My (unasked) Q:
How does democracy, or elections, fit into adaptive management?

Ida Kubiszewski:
Next steps. Solutions journal. Provide whole-system solutions. Peer reviewed but plain English. Vision of what the world can look like. Big names: Ray Anderson, Wes Jackson. Global University MetaCourse Alliance. Masters programme in Eco Economics, but also single papers for individuals. Encyclopedia of earth. www.eoearth.org. Peer-reviewed Wikipedia. Capitalism 3.0 is up there. Intro to eco economics there.

Q: How can we get climate change modellers and resource limit modellers in the same room?
A: We’re working on it at AIMs.

Q: Does this all work for ever-rising population?
A: Population control is an important part of the issue. Julian Simon? ‘we can keep growing for the next 7 billion years’. There are non-draconian ways to limit population: education of women. Current projections level off at ~9billion.

Q: What is an ecological economist? Do you ever talk to the other kind?
A: There’s a society of eco economics. NZ-Aussie society has 80 members. Transdisciplinary field. We’re looking at the real economy – everything, the whole planet.

Q: What are the prerequisites for the Eco Economics Masters?
A: Would be tailored to your previous quals. Broad range of backgrounds is great. We’ll try and fill in the gaps.

continuing but I must go home and eat …