Presentation

by
Peter A. Victor

23 September 2010
 Summary

1. The economy: a sub-system of the biosphere

2. Green growth
3. LowGrow and scenarios
4. Some policy directions
The economy: a sub-system
Bio-physical
B Cyclesof the biosphere
io-physical Cycles

Waste
Waste O
Outputs
utputs
((SINKS)
S IN K S )

Economic
E c o n o m ic
Firms
Firms Households
H ouseholds
C y c le
Cycle

Natural
N atural Inputs
Inputs
((flows
flo w s o
off m
materials
a te r ia ls & e
energy
nergy from
fr o m
SOURCES and
SOURCES and
Environmental
E n v iro n m e n ta l S V IC E S )
SERVICES
ERV
The Lisbon strategy for growth and employment

“For Europe to increase living standards, it

needs to accelerate employment and
productivity growth…[and be] as supportive
as possible of growth … to sustain …
environmental sustainability.”

E = y GDP = P(1- u)L

P: productivity (GDP per employed person)
L: labour force (employed plus unemployed)
u: rate of unemployment (unemployed/labour force)
E: environment/resource impact
y: intensity (impact/GDP)
 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

 Canada’s Economic Growth
Scale and Intensity 1990-2008
$1,318,000 734mt

$825,318
592 mt
556 mt
[Kyoto
Target]

0.56 0.72
 An 87% reduction in Canada’s GHG emissions
from 2008 level in 50 years: Scale and Intensity

$5,778,000
3%/yr growth in GDP

2%/yr growth in GDP

$3,548,000
0%/yr growth in GDP

734mt
$1,318,000

95mt

Intensity after .02 .03 .07 .57

50 years 3% 5% 13%
compared with 2008

2008 2008
MustMaterial
addressintensity
scale as is declining,
well as intensity
but not fast enough

GDP
110%

Resource Extraction

47%

Material Intensity 29%

Key message:
Environmental impact depends on intensity and scale
 Energy consumption - same story

GDP
110%
Primary Energy

59%

Energy Intensity 24%

Key message:
Environmental impact depends on intensity and scale
 Can we have full employment, no poverty, fiscal balance,
reduced GHG emissions without relying on economic growth?

LowGrow
Canada
 Y = GDP
LowGrow - simplified structure C = consumption
I = investment
G = government
X = exports
MACRO M = imports
DEMAND
Y =C+I+G+X-M
Investment

Fiscal Population
Position

GDP
Employment,
Capacity Utilization
Labour
Force
Poverty

Forestry MACRO GHG Emissions

SUPPLY
K = capital
Y=f(K,L,t) L = labour
t = time
LowGrow - High Level Structure
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
‘Business as usual’

GDP per Capita

GHG Emissions

Poverty

Debt to GDP Ratio

Unemployment
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
A no growth disaster
Unemployment

Poverty

GDP per Capita

Debt to GDP Ratio GHG Emissions

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.’
A better low/no growth scenario
How?
• New meanings and measures of success
• Limits on materials, energy, wastes and land use
• Carbon price - more informative prices
• Stable population and labour force
• More efficient capital stock
• Shorter work year
• More generous anti-poverty programs GDP per Capita
• Fewer status goods
• More informative advertising
• Education for life not just work
GHG Emissions
Unemployment

Poverty Debt to GDP Ratio

 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
 Policy Directions
• Measuring progress
• Environment
• Population
• Reduced work time
• Investment, productivity and technology
• Consumption
• MWG in one country?
 ‘It may not be possible to increase the How should we
production, especially of goods, beyond measure progress?
limit, because of the environmental
damage that this would entail…
As society progresses, it is not
unreasonable to expect people to enjoy
some of the fruit of that progress
in the form of leisure.’

Joseph Stiglitz Amartya Sen

Environment
 Daly’s Three Principles
1.Renewable resources: harvest not to
exceed regeneration rate

2.Non-renewable resources: rate of

depletion not to exceed rate of creation
of renewable substitutes

3.Waste emissions: not to exceed

assimilative capacity
Policies for limiting throughput

• Limits:
– e.g. annual allowable cut, ozone depleting
substances
• Taxes:
– e.g. carbon tax
• Trading
– e.g. SOx, carbon
 Protected areas
‘Defined as legally established areas,
both land and water, that are regulated
and managed for conservation objectives:
include parks, wildlife and forest reserves,
wilderness and other areas designated through
federal, provincial, and territorial legislations.’
(NRCan)
Protected areas in Canada
Population
Economic immigrants
Family unification
Refugees
Canada’s immigration policy
• “Canada’s immigration levels plan for 2010 reflects a long-
term vision for immigration and recognizes the important role
of immigration in Canada’s economic growth and prosperity.”
(Annual Report to Parliament on Immigration, 2009)

• In whose interest?
–The country of immigration
–The country of emigration
–The immigrant
Stabilizing Canada’s population

• Low projection: 103,000 economic immigrants/yr

• Medium projection: 22,000 economic immigrants/yr
• High projection: 0 economic immigrants/yr
reduction in other categories

• Environmental migrants?
Reduced work time
Average hours worked per
employed person - Canada

1699

2008 2009
Germany 1430 1390
Norway 1423 1407 low/no grow
Netherlands 1389 1378 scenario
 Conditions for a successful policy of
reducing work time to reduce unemployment

1. Wage compensation rising

2. Changes in work organization
3. Train more skilled labour
4. Low fixed cost per employee
5. Earnings equity
6. Standardization of working hours
Consumption and advertising

• Ban advertising in public spaces

• Control advertising on the internet
• End the commercialization of
childhood
• Tax advertising
• Introduce a time and resources levy
• Put the agencies’ mark on their
work
• Introduce statutory regulation of the
advertising industry
Investment, productivity and technology
• Shift investment to priorities of MWG
(leisure/recreation, community, public
goods)
• Limits on throughput: will affect
investment priorities
• Taxation:
– Capital gains and capital tax
– Favour investment in throughput efficiency
• Realize productivity gains as reduced
hours worked
• Technology:
– investment
– assessment
Realize productivity gains (Pe)
as reduced hours worked (a)

GDP = aPe (1- u) L

L: labour force (employed plus unemployed)

u: rate of unemployment (unemployed/labour force)
Pe: productivity (GDP per employee hour)
a: hours per employed person
 MWG in one country?
• Obstacles:
– International trade treaties
– Flight of capital and skilled labour
• Opportunities:
– Policy support for transformation:
• measures of success
• localization
• alternative business models
• work time
– Individual and community action
– International movements for SSE
and degrowth