Transdisciplinary Framework for Global Environmental and Social Sustainability - Sustainomics Professor Mohan Munasinghe

Transdisciplinary Framework for Global Environmental and Social Sustainability - Sustainomics Professor Mohan Munasinghe www.mohanmunasinghe.com

Founder Chairman, Munasinghe Institute for Development (MIND), Colombo KIVA Guest Professor of Sustainable Development, Darmstadt Univ., Germany Distinguished Guest Professor, Peking University, China Visiting Professor, Vale Sustainable Dev. Inst., Fed. Univ. of Para, Belem, Brazil Vice Chair, IPCC-AR4 that shared the 2007 Nobel Prize for Peace

Keynote Speech at the Thor Heyerdahl 100th anniversary international conference on Sustainable Development Larvik, Norway, 24 September 2014

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Ayubowan God Dag Greetings

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Warm congratulations to the Thor Heyerdahl Institute for selecting the theme of Sustainable Development for the 100th birth Anniversary of Thor Heyerdahl. Complex global problems of sustainable development need integrated, transdisciplinary methods.

We hope the message will reach a wide audience – researchers, decisionmakers, the public & youth. We need to inspire everyone! We need to empower civil society and business to work with government to make development more sustainable in Norway & worldwide applying transdisciplinary methods

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Thor Heyerdahl was a man ahead of his time – many of his ideas are highly relevant today! My lecture adresses the conference theme of Sustainable Development as well as the main areas covered by Thor Heyerdahl Institute, which seeks to promote his thoughts on:

•Interdisciplinary research (Heyerdahl – zoologist, geographer & Polynesian specialist) •International dialogue / multi-cultural co-op. (Heyerdahl - man of peace & ethnographer) •Protection of the global environment (Heyerdahl - explorer and nature lover)

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Thor Heyerdahl – Brief Bio • 1914 - Born - October 6, Larvik, Norway. • As a young child - showed a strong interest in zoology. He created a small museum in his childhood home Studied zoology and geography at the University of Oslo and privately studied Polynesian culture and history, consulting what was then the world's largest private collection of books and papers on Polynesia. • 1938 - first book På Jakt etter Paradiset (Hunt for Paradise) - About the events surrounding his stay on the Marquesas. • 1947 - Kon-Tiki expedition - sailed from Peru to the Tuamotus, French Polynesia, in a pae- pae raft made from balsa wood and other native materials. It was 101-days & 4,300 nautical mile (4,948 miles or 7,964 km). • 1955–1956 - Expedition to Easter Island (Rapa Nui). The expedition published two large volumes of scientific reports (Reports of the Norwegian Archaeological Expedition to Easter Island and the East Pacific). • 1969 and 1970 - Boats Ra and Ra II - built two boats from papyrus and attempted to cross the Atlantic Ocean from Morocco in Africa. The book The Ra Expeditions and the film documentary Ra (1972) were made about the voyages. • 1974 - published a new account of a voyage - titled Fatu Hiva ; 1996 – Published - Green Was the Earth on the Seventh Day – about his time on Fatu Hiva and his side trip to Hivaoa.

Thor Heyerdahl – Brief Bio • 1978 - Built Tigris, a reed boat which was intended to demonstrate that trade and migration could have linked Mesopotamia with the Indus Valley Civilization in what is now Pakistan. Tigris was built in Iraq and sailed with its international crew through the Persian Gulf to Pakistan and made its way into the Red Sea. After five months at sea and still seaworthy, the Tigris was deliberately burnt in Djibouti, on 3 April 1978, as a protest against the wars raging on every side in the Red Sea and Horn of Africa. • 1981, 1994, 1999 and 2000 - made four visits to Azerbaijan. Based on his published documentation, Heyerdahl proposed that Azerbaijan was the site of an ancient advanced civilization. He also investigated mounds found on Maldive Islands in the Indian Ocean, where he found sun-oriented foundations and courtyards, as well as statues with elongated earlobes. • 1990s - He was a major initiator and supporter of the effort by President Gorbachev to set up Green Cross International, the global environmental protection organisation. • 2002 – Died, aged 87. He was involved with many other expeditions and archaeological projects. He remained best known for his boat-building, and for his emphasis on cultural diffusionism. • 2011 - The Thor Heyerdahl Archives were added to UNESCO's "Memory of the World" Register. Currently, this list includes 238 collections from all over the world. He received many official and academic awards, honorary degrees and published many books. Cross-Disciplinary Terminology Multi-disciplinary Individual experts from different disciplines coordinate efforts to apply varying concepts and methods to complex problems

Inter-disciplinary multi-disciplinary team seeks to break down the barriers among various disciplines and achieve a synthesis, usually at the results stage.

Trans-disciplinary (approach used in Sustainomics) inter-disciplinary team seeks to combine knowledge from various disciplines to synthesize new concepts, methods and models - BEFORE applying them to a complex problem.

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WHAT ? are the major challenges Multiple global threats undermine SD efforts & need integrated, transdisciplinary solutions

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Growing Risks of Global Breakdown due to Multiple Heavy Shocks - Poverty, inequity & other socioeconomic trends - Resource shortages (energy, water, food, etc.) - Weak leadership & poor decisionmaking - Financial sector and wealth concentration - Trade, multinationals and special interests - Unexpected shocks and disasters - Unsustainable values - Conflict, insecurity & need for more polycentric world Multiple threats are inter-related and synergistic. Stakeholder interests are divergent. Responses uncoordinated & piecemeal – lack of political will Robust integrated strategy needed, applying transdisciplinary methods and models, scenario

analysis, risk management, etc. Munasinghe Institute for Development M I N D

Barbarization: Risky Future Scenario to Avoid

Unrestrained market forces increase risk of conflict (erosion of ethical & moral values underpinning civilization)

Poverty, Inequality, Pandemics Environmental degradation Resource Shortage, Conflict Social polarization, Terrorism Climate Change

Chaos, Break-down Fortress World Conflict & competition Local, regional & global groups for resources overwhelm protect their interests within enclaves efforts to impose order How will we cope with this result?

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POVERTY: Poor living on < $1 per day

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Sympathy for the poor and downtrodden

“In my experience, it is rarer to find a really happy person in a circle of millionaires than among vagabonds”.

Thor Heyerdahl

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Status of Global Resource Use & Limits

Green = within limits Red = exceeding limits

Areas: biodiversity loss, climate change, nitrogen, ocean acidification, freshwater use, stratospheric ozone, land use, phosphorus, chemical pollution, atmospheric aerosols

SEI, 2009 Munasinghe Institute for Development M I N D

Our Fundamental Dependance on Nature

“In fighting nature, man can win every battle except the last. If he should win that too, he will perish, like an embryo cutting its own umbilical cord”.

Thor Heyerdahl

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1.Ecol. Footprint of Humanity 2. Unfair World Income In 2012 we needed 1.5 earths; Distribution 2000 and by 2030 almost 2 Earths Also existing nuclear weapons can wipe out planet Champagne Glass

Richest fifth of world population receives Unsustainable 83% of world income BAU Ratio of 60:1 one Sustainable One fifth of the 1.4 earth Worlds Population billion between 2012 2030 highest & lowest 20% Poorest fifth of world

Number of Earths of Number population receives 1.4% of world income 3. Millennium Development Goals (MDG) & SDG United Nations Millennium Declaration, 2000 + Post-2015 Framework 1. Eradicate extreme poverty and hunger 2. Achieve universal primary education 3. Promote gender equality & empowerment 4. Reduce child mortality 5. Combat HIV/AIDS, malaria & other diseases 6. Improve maternal health 7. Ensure environmental sustainability 8. Global partnership for development Commendable targets for 1-2 billion poor, but where are the resources to meet them, especially with Climate Change

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Uncoordinated responses complicate matters Example: 2007-2008 food scarcity - 1

Human actions • Oil crisis  Corn for ethanol

M I N D Uncoordinated responses complicate matters Example: 2007-2008 food scarcity - 2

Human actions • Oil crisis  Corn for ethanol RESULT Food • Drought  Grain shortage Scarcity Nature

M I N D Poor Resource Decisionmaking - Dealing with the Triple Crisis Bubbles

WHAT ARE OUR VALUES AND HOW WELL HAVE WE ESTABLISHED PRIORITIES ?

M I N D Three Levels of Reality: Nature is the Base! Head in the clouds? Financial Markets Econ. Growth Productive Economic Assets Bio-geo-physical Resources

Feet firmly on the ground? Sound financial markets and economic growth should be based on the true value of the productive economic asset base. In turn the value and use of economic assets should closely reflect the state of natural (bio-geo-physical) resources M I N D Financial Markets

Asset Bubbles 2008 crisis Productive Economic Assets

Triple crisis bubbles driven by greed – enjoy now & pay later 2 A few get rich quickly, many innocents pay a heavy price afterwards

M I N D Financial Markets Econ. Growth

Asset Bubbles 2008 crisis Poverty-Inequity Productive Economic Assets

Triple crisis bubbles driven by greed – enjoy now & pay later 2 A few get rich quickly, many innocents pay a heavy price afterwards

M I N D Financial Markets Econ. Growth

Asset Bubbles 2008 crisis Poverty-Inequity Productive Economic Assets Climate change Externalities

Bio-geo-physical Resources

Triple crisis bubbles driven by greed – enjoy now & pay later 3 A few get rich quickly, many innocents pay a heavy price afterwards

M I N D Asset bubble >$100 trillion (1012), Global GDP >$60 trillion

Govt. Bailout >$6 trillion (1012) Aid/yr ~$100 billion (109) Financial Markets Econ. Growth

Asset Bubbles 2008 crisis Poverty-Inequity Productive Economic Assets Externalities Climate change Few billion $

Human Values/Choices Human Bio-geo-physical Resources

Triple crisis bubbles driven by greed – enjoy now & pay later 4 A few get rich quickly, many innocents pay a heavy price afterwards World Military Expenditures: over $2 trillion in 2014

M I N D Insanity of Modern Weapons and War “We must wake up to the insane reality of our time. We are all irresponsible, unless we demand from the responsible decision makers that modern armaments must no longer be made available to people whose former battle axes and swords our ancestors condemned.” Thor Heyerdahl

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Asset crisis: has the financial sector learned from history or is it business as usual? Financial Sector

Jobless Poor (~100 million)

M I N D Are banks being rewarded for behaving like “Banksters”? The latest in a string of bank scandals: • In May 2014, at least seven European banks or banks operating in Europe stood accused of falsely manipulating the Euribor benchmark interest rate. • In December 2013, the European Commission levied fines totalling 1.04 billion euros (1.42 billion dollars) on Barclays, Deutsche Bank, RBS and Societe Generale. Added recently are JPMorgan Chase, HSBC and Credit Agricole. PNB-Paribas was fined $9 billion in 2014 by US SEC. • According to Christine Lagarde, IMF Head, big banks are still being subsidised upto 70 billion dollars in the US and 300 billion dollars in the EU. At the same time, regulators have imposed 5.8 billion dollars in penalties for attempting to manipulate market benchmark rates. • In 2013, JP Morgan, the world’s largest bank, paid 18.6 billion dollars in fines. Yet, James Dimon, head of JP Morgan, received a 74 percent raise in salary for 2013. M I N D Governments failed to adequately regulate banks and instead bailed them out at taxpayer expense “ planned European bank reform, will fail to prevent European citizens from bearing the losses of failed banks in the event of a systemic banking crisis.”- Finance Watch In the aftermath of 2008 financial meltdown (IMF data)  industrialised countries bailed out private banks for 1.75 trillion dollars (1.3 trillion euros). This amounts to the one-year salary of more than 42 million people earning net average German wages of around 25,000 euro per year. The bailout created government debt and weakened economies of European states involved, in particular Portugal, Greece, Spain and Ireland. This worsened the ongoing european debt crisis and other problems, with huge social and human costs. Over 100 million people lost their jobs, mainly in the developing world. They were left mainly to fend for themselves

M I N D Growing inequality and wealth concentration “During past 300 years, the rich have got richer while the poor got poorer, Growth of returns to capital is faster than general growth rate – Thomas Piketty, French Economist “85 richest people in the world, who will fit into a single London double- decker, control as much wealth as the poorest half of global population (3.5 billion people).” – Christine Lagarde, IMF Head “ 300 wealthiest individuals increased their wealth last year by $524 billion - more than the combined revenues of Denmark, Finland, Greece and Portugal” - Bloomberg Billionaires Index Inequality in salaries  Chipotle Mexican Grill: CEO salary $25 million/year - 1200 times wage of av. worker $21000. Plus stock bonus >$100 million.  Walmart US: CEO salary $13 million/year – almost 500 times wage of av. worker $27000.  25 best paid hedge fund managers earned $21 billion in 2013. M I N D Trade Inequalities & WTO: Agricultural policies favour rich countries and multinationals while penalising small farmers in developing nations • WTO data show total domestic support to U.S. agriculture grew from $61 billion in 1995 to $130 billion dollars in 2010. • Agriculture subsidies (total support) of developed country members in OECD climbed from $350 billion in 1996 to $406 billion in 2011. • The effects of continuing rich country subsidies have been devastating to developing countries. Food products selling at below production costs are flooding into poor countries, destroying small farmers incomes and livelihoods. • Ironically WTO rules prevent developing countries from protecting their small farmers & fragile agriculture sectors.

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Shocks & Disasters Create Refugees – 2014 Over 50 million people were forced to flee their homes for the first time since World War II. Wars and adverse weather (including climate change will swell the ranks of refugees. The exponential rise adds to the human misery and is stretching nations and aid agencies to the breaking point. International criminality is growing with people trafficking networks dealing in drugs, arms and slavery. Refugees – 16.7 million people worldwide. Apart from 5 million Palestinians, the biggest refugee populations are Afghans, Syrians and Somalis, which together account for half the total. The main host countries were Pakistan, Iran, Lebanon, Jordan and Turkey. 86% of the world's refugees are hosted by developing countries – up from 70% a decade ago. • Asylum seekers – close to 1.2 million people claimed asylum, mainly in developed countries. Most were from Syria (64,300), Democratic Republic of Congo (60,400) & Burma (57,400). Germany was the largest recipient. • Internally displaced people – a record 33.3 million were forced to flee their homes but remained within their country's borders.

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Global Economic Balance Shifting From Rich Countries to BRICS The global balance of economic momentum has shifted. For the past decade, emerging and developing economies have grown over 5% faster than advanced economies. US, Europe and Japan are still struggling to come out of the financial crisis, and facing major issues including low growth and high debts. The SOUTH led by the BRICS emerging economies (Brazil, Russia, India, China & S. Africa) are doing better – both GNP and HDI have improved.

M I N D A Plea for Peace and Harmony among Nations “A civilized nation can have no enemies, and one cannot draw a line across a map, a line that doesn't even exist in nature and say that the ugly enemy lives Burning the “Tigris” in Djibouti, 3 April 1978 - on the one side, and protest against war. Tigris was crewed by eleven men: Thor Heyerdahl (Norway), Norman good friends live on Baker (US), Carlo Mauri (Italy), Germán Carrasco (Mexico), Yuri Senkevich (USSR), Hans Petter the other.” Bohn (Norway), Rashad Nazar Salim (Iraq), Norris Brock (USA), Toru Suzuki (Japan), Detlef Zoltze (Germany), & Asbjørn Damhus (Denmark). Thor Heyerdahl

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Multipolar or Unipolar World Order – Europe’s choice can affect the outcome •Bipolar World (1950-90) : USSR-USA cold war with risk of nuclear conflict. •Unipolar World (post-1990) : US led effort to dominate, militarily with NATO support, and with G7, single global reserve currency (USD) etc. •Multipolar World (post-2015)? : Based on “soft” economic power, driven by multiple centres - EU, BRICS, G77+China, Non-Aligned Movement, G20, Shanghai Cooperation Agreement, etc., with multiple global currencies (USD, EUR, CNY, etc.)

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Current status: some less desirable features

• US able to print dollars and flood world markets unilaterally to keep its economy afloat. But influence is waning: currently 33% of global foreign exchange holdings, down from 55% in 2000. • NATO military interventions have risen. Major military action in 7 countries in 21st century, including Iraq, Afganistan, Libya, Syria, etc. • US special forces operated in 60 countries in 2008 and now in 134 countries. SOCOM budget has grown from $2.3 billion in 2001 to almost 11 billion in 2013, while national debt is rises. • Uncontrolled surveillance (NSA), drone warfare and other intrusions are growing.

M I N D Multipolar World BRICS & Shanghai Cooperation Agreement (SCO) • Peaceful co-existence & respect for diverse civilizations is key concept, since lone countries and national governments are defenseless in the face of global financial forces and military might • offers greater fairness, rooted in different philosophies of individual existence, and based on their own economic and social order • BRICS can share their natural resources which are sufficient to sustain vigorous economic growth and give others hydrocarbon fuels, food, potable water, and electric power.

M I N D Women and children are the major victims of hatred & war!

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IPCC – Climate Change Main Findings • Global warming in unequivocal. Total radiative forcing of the climate now is unprecedented in several thousand years, due to rising concentrations of GHG (CO2, CH4 & NO2). • Humans activities since the 18th century are 95% likely to have caused net warming of Earth’s climate, dominating over the last 50 years. More temp. and sea level rise is inevitable, even with existing GHG concentrations. • Long term unmitigated climate change would likely exceed the capacity to adapt, of natural managed and human systems. • Adaptation measures are available, but must be systematically developed • Mitigation technologies are also available, but better policies and measures (PAM) are needed to realize their potential. • Poor countries and poor groups are most vulnerable to warming, sea level rise, precipitation changes and extreme events. Most socioeconomic sectors, ecological systems and human health will suffer. • Making development more sustainable (MDMS) is the most effective solution - by integrating climate change policy into sustainable development strategy.

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Way Forward - A Long Term Vision of SD: 1 Levels Indicators Time Human Interventions Main Poverty, Inequity, Exclusion, Now High risk from unrestrained, myopic market forces (“Washington Resource Conflicts, Harm to Issues consensus”, globalisation etc.) – (surface) Environment (including CC) Reactive: piecemeal - mainly govt.

Business-as-usual poses unacceptable risks for the future

Source: Munasinghe (2007), IPCC, MA, GTI

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Way Forward - A Long Term Vision of SD: 2 Levels Indicators Time Human Interventions Main Poverty, Inequity, Exclusion, Now High risk from unrestrained, myopic market forces (“Washington Resource Conflicts, Harm to Issues consensus”, globalisation etc.) – (surface) Environment (including CC) Reactive: piecemeal - mainly govt.

Making development more Consumption Patterns sustainable (MDMS) with Immediate Transition Production/Technology systematic policy reform to manage Drivers market forces (Sustainomics) – Population (sub-surface) Proactive: integrated, harmonious Governance approach - govt., business, civil soc.

SD transition requires multiple threats to be addressed with transdisciplinary analysis & policies integrated within a comprehensive SD strategy

Source: Munasinghe (2007), IPCC, MA, GTI

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Way Forward - A Long Term Vision of SD: 3 Levels Indicators Time Human Interventions Main Poverty, Inequity, Exclusion, Now High risk from unrestrained, myopic market forces (“Washington Resource Conflicts, Harm to Issues consensus”, globalisation etc.) – (surface) Environment (including CC) Reactive: piecemeal - mainly govt.

Fundamental global sustainable

Basic Needs dev. transition catalysed by grass Long Term roots citizens movements, & driven Underlying Social Power Structure Pressures by social justice, ethics and equity, Values, Perceptions, Choices innovative leadership, policies, info. (deep) flows, tech. (new SD paradigm) – Knowledge Base Proactive: civil soc., business, govt.

Source: Munasinghe (2007), IPCC, MA, GTI

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HOW DO WE GET THERE ? Addressing Complex, Multiple, Interlinked Sustainable Development issues applying the Integrated Transdisciplinary SUSTAINOMICS Framework Sustainomics was first presented at the 1992 Earth Summit (UNCED) in Rio de Janeiro. During the past two decades it has been practically applied worldwide and is taught in many universities.

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Core Concept 1: Make Development More Sustainable with EMPOWERMENT, ACTION & FORESIGHT

There are many definitions of sustainable development, and its precise meaning still remains elusive (and perhaps unreachable).

PRACTICAL TEST FOR HUMAN ACTIONS: Does the activity make development more (or less) sustainable?

Making development more sustainable (MDMS) is a more practical incremental strategy that is easiersimpler implement because many unsustainable activities are easier to recognize and eliminate. Parallel track strategy: 1. Short to medium term – make development more sustainable (apply best practice). 2. Long term - aim for ideal goal of sustainable development (identify next practice).

M I N D Sustainable Development Peak – including climate change (covered by clouds)

We cannot see the peak!! Let’s stop to discuss & Lets move forward NOW!! If analyze how to reach it. we climb uphill, we will reach the peak eventually

EMPOWERED to Make Development More ANALYSING SD and CC – Sustainable (MDMS) – BEST PRACTICE NEXT PRACTICE Many obviously unsustainable practices exist today. MDMS encourages us to eliminate them NOW! Examples include energy wastage and deforestation.

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Making Development More Sustainable: Personal Lifestyle Changes

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MDMS: Corporate Social Responsibility Plus (CSR+), Sustainability Accounting & Reporting, Shared Value • Corporate Social Responsibility (CSR) - considering wider social interests by being accountable for operational impacts on customers, suppliers, employees, shareholders, communities and environment. • Integrated External Engagement goes beyond CSR to push concern for stakeholders deeply into business decision making at every level. • Sustainability Accounting & Reporting includes the generation, analysis, use and reporting of economic, environmental and social information (monetised wherever possible) to improve corporate management and performance in those areas. This approach uses the Triple Bottom Line, which recognizes that the environmental & social consequences of corporate actions are as important as monetary profits, and seeks to measure and report on the outcomes. • Shared Value - making profits, with benefits to environment & to society through shared sources of value common to firm & society. • Impact Investment – investing to benefit society & environment

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MDMS: National Level SD Integration Make decision makers see environment as a key element of

the national sustainable development strategy (Social, Economic, Environmental) Sustainable Dev. Sustainable Impacts Adaptation

(natural variability (natural Mitigation

Development Environment - Sectors (Agriculture, Energy, Industry,

Transport, Health, etc.) CC

- Systems (Environmental, ecological, etc.)

- Communities (Poor, Vulnerable, etc.)

)

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MDMS: Global restructuring (not reduction) of development and growth - 1 Ecosystem

Socioeconomic Subsystem

Ecological Services The capacity of the ecosystem may become overloaded by the growing socio-economic subsystem (broken lines).

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MDMS: Global restructuring (not downsizing) of development and growth - 2 (rounding the rectangle)

Ecosystem Ecosystem

Socioeconomic Socioeconomic Subsystem Subsystem

Unsustainable Sustainable

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Core Concept 2: Harmonise the SD Triangle for BALANCE & INTEGRATION - 1 • growth • efficiency • stability Economic

Social Environmental • empowerment/governance • resilience/biodiversity • inclusion/consultation • natural resources • institutions/values • pollution Sustainable Development Triangle – harmonising key elements and interconnections (corners, sides and centre) Source: Munasinghe [1992], Rio Earth Summit

M I N D

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Core Concept 2: Harmonise the SD Triangle for BALANCE & INTEGRATION - 2 • growth • efficiency • stability Economic

Poverty Inequality Sustainability Climate Change

• inter-generational equity Social • values/culture Environmental • empowerment/governance • resilience/biodiversity • inclusion/consultation • natural resources • institutions/values • pollution Sustainable Development Triangle – harmonising key elements and interconnections (corners, sides and centre) Source: Munasinghe [1992], Rio Earth Summit

M I N D

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Focus on GREEN • growth ECONOMY must not • efficiency ignore SOCIAL issues • stability Economic

Poverty Inequality Sustainability Climate Change

M I N D

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Thor Heyerdahl Summer School "Green Economy”: June 16-27, 2014.

The course will focus on the frontiers of theory formation and empirical analyses regarding ‘the green economy’. The concept is loaded with very different meanings, as it is connected to different traditions within economics. It also links up closely with natural sciences – especially ecology, but also physics – as well as with other social sciences. Therefor studying the green economy is an interdisciplinary endeavour. The aim of the course is to analyse and discuss various perspectives regarding the ‘green economy’, through getting a better understanding of theoretical controversies and practical implications.

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Building Assets for Sustainable Development

Manufactured Capital

Thor H. Inst. Transdisciplinary Approach

Social Capital NaturalSocial • Human CapitalCapital • Cultural

Source: Munasinghe (1992), Rio Earth Summit

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Key role played by Social Capital embedded in Civil Society: ignored, undervalued, invisible

• At individual level: is built on personal networks that help us enormously in our private and professional lives. • At community and national levels: is the invisible glue that binds society together – involving values- ethics, culture, behaviour, and social linkages.

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Social Capital – Civil Society & Values Compare Civil Society Response: 2004 Tsunami, Sri Lanka VERSUS 2005 Hurricane Katrina, New Orleans, USA Event Deaths GNP/capita

~35,000 2004 Tsunami ~ USD 1,000 – Sri Lanka (1 in every 570 people)

2005 ~1850 ~ USD 35,000 Hurricane (1 in every Katrina - USA 200,000 people)

Recent: China earthquake, Japan Fukushima nuclear disaster

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Core Concept 3: Transcend Boundaries with INNOVATION & FRESH IDEAS

• Values – replace unsustainable, unethical values • Disciplinary – complex issues need all disciplines • Space – spans local to global scales • Time – spans days to centuries • Stakeholder – need to include all stakeholders • Operational – full cycle from data to application

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No Boundaries – Physical or Mental “Borders? I have never seen one. But I have heard they exist in the minds of some people”

Thor Heyerdahl

M I N D Transcending Unsustainable Values Build essential ethical and moral values - especially among youth Egoism, greed, self-gratification and violence are unsustainable

Selflessness, altruism, enlightened self-interest, and respect for other humans and nature will make development more sustainable

Ethical Dimensions of Climate Change 2006 Interfaith Declaration on Climate Change 2009

Munasinghe Institute for Development Sustainable Consumption Institute SCI M I N D University of Manchester

Wrong Values Drive Unsustainable Development: 1

Unethical Social Values Environmental Greed, Selfishness, DebtSocial Corruption, Inequity, Unsustainable Violence, Injustice, cons. &Capital prod. Elitism depleting NR

Source: Adapted from Munasinghe (1992), Rio Earth Summit

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Wrong Values Drive Unsustainable Development: 2

Economic Mal-development growth based on unsustainable debt, waste & inequitable consumption by the elites

Unethical Social Values Environmental Greed, Selfishness, DebtSocial Corruption, Inequity, Unsustainable Violence, Injustice, cons. Capital& prod. Elitism depleting NR

Source: Adapted from Munasinghe (1992), Rio Earth Summit

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Wrong Values Drive Unsustainable Development: 3

Economic Mal-development growth based on unsustainable debt, waste & inequitable consumption by the elites Drivers of Unsustainable Unethical Environmental Social Values Development EnvironmentalDebt Greed, Selfishness, (with feedback) UnsustainableDebtSocial Corruption, Inequity, UnsustainablePollution & Violence, Injustice, Depletingcons. Capital& Natural prod. Elitism depletingResources NR

Source: Adapted from Munasinghe (1992), Rio Earth Summit

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Transcending disciplines to address SD issues

SD Issues Disciplines

• social justice, equity, values and culture S Philosophy U Sociology S Anthropology • institutions and governance T Law A Politics • markets and prices I Economics N Finance O • technologies and management M Management I Engineering • biological and physical resource base C Ecology S Natural Sciences

Source: Munasinghe (2002), Int. J. of Sust. Dev. M I N D Transcending Stakeholder Boundaries to Ensure Cooperation for Sustainable Development

Business

THI Transdisciplinary Approach Civil GovernSocial- Society Capitalment

THI can catalyse interactions among government, civil society and business to strengthen local, national and global governance Source: Munasinghe (1992), Rio Earth Summit

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Transcending spatial and temporal scales Panarchy of Systems Concepts: 1

Human (sustainable) System being

Bigger & Longer Lived Longer & Bigger

Source: Gunderson and Holling (2002)

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Transcending spatial and temporal scales Panarchy of Systems Concepts: 2

Human (sustainable) System being

Innovation and Adaptation from below

(Faster Changes) Bigger & Longer Lived Longer & Bigger Sub-Systems Cells

Source: Gunderson and Holling (2002)

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Transcending spatial and temporal scales Panarchy of Systems Concepts: 3

Super-System Society

(Slower Changes) Conservation and Continuity from above

Human (sustainable) System being

Innovation and Adaptation from below

(Faster Changes) Bigger & Longer Lived Longer & Bigger Sub-Systems Cells

Source: Gunderson and Holling (2002)

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Transcending Operational Barriers Needs Better Stakeholder Cooperation Top Down Strategy

• Global -Policy

• Regional • National

• Local Integration

Subsidiarity • Community Specific Projects Bottom up • Individual Pragmatic balance between subsidiarity and integration is essential: eg., CC or river-basin

M I N D Practical Application & Learning from Nature

“One learns more from listening than speaking. And both the wind and the people who continue to live close to nature still have much to tell us which we cannot hear within university walls.”

Thor Heyerdahl

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Core Concept 4: Full cycle application of integrative tools, from data gathering to practical policy IMPLEMENTATION There are many practical analytical tools and policy options to integrate CC responses into SD strategy (from global to local levels)

There are many available case studies and best practice examples involving sustainomics applications

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Full Cycle - Operations ACTION ACTOR

Observations and Data Observers

Concepts and Ideas Thinkers & Philosophers Models & Analyses Scientists & Analysts Interpretation of Results Translators & Communicators Plans & Policies Decision Makers

Practical Applications Implementing Agents Seamless Cycle Impacts (SD triangle) Assessment Experts Each stage of activity has a tendency to become compartmentalised

Munasinghe Institute for Development M I N D Source: Munasinghe (2002), Int. J. of Sust. Dev.

Multiplicity of SD Indicators - Social - Environmental - Economic - Institutional many indicators are available; thus correct choice is critical for specific task at hand

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Integrative analytical tools and practical applications (linking across global, national and local levels) Integrative Analytical Tools Application 1. Restructuring Growth to Make Levels Development More Sustainable (MDMS) A. Global- 2. Optimisation and Durability Linkages AcrossLevels transnational 3. SD Analysis (Macro Level) 4. Action Impact Matrix (AIM) B. National- 5. Green Accounting (SEEA-SNA) macroeconomic 6. Integrated Models (IAM, CGE, etc.) C. Subnational- 7. SD Analysis (Micro Level) sectoral 8. Multi-Criteria Analysis (MCA), Cost-Benefit

D. Local- Analysis (CBA) and Economic Valuation project 9. SD Indicators

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Integrating across the three dimensions of SD

Main Types of Assets for Sustainable Development

Manufactured Capital

Sustainable Development Social Capital NaturalSocial • Human CapitalCapital • Cultural

Economic approach focuses on optimality - maximise growth Environmental & social approaches use durability – overall system health

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Integrating Diverse Definitions of Sustainability Economic approach focuses on optimality - maximise growth Environmental & social approaches use durability – overall system health

Economic: Maximum flow of income that could be sustained indefinitely, without reducing stocks of productive assets. Economic efficiency ensures both efficient resource allocation in production and efficient consumption that maximises utility. Ecological: Preserving the viability and normal functioning of natural systems, including system health ability to adapt to shocks across a range of spatial and temporal scales. Defined by a comprehensive, multiscale, hierarchical, dynamic measure describing system resilience, vigour and organization. Social: Maintaining the resilience of social systems and limiting their vulnerability to sudden shocks. Involves building social capital to strengthen cohesion, protecting cultural diversity and values, and improving inclusion and participation - especially of disadvantaged groups.

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Optimality and Durability: Simple Example

Two modes complementary - tradeoff depends on situation

Yield Risk

Optimal Mode Max. yield Olympic 100m sprinter – willing to Highest risk take high risk and make extreme effort Examples: Iskill to minimise running time (single (Voldemart) 2B+ indicator) for one special event loss at JP Morgan. Leeson - Bearings Durable Mode Middle aged walker – undertakes Mod. yield regular, low risk exercise for overall health (multiple indicators), over many Lower risk decades

M I N D

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WHAT ? are the major challenges Multiple global threats undermine SD efforts & need integrated, transdisciplinary solutions HOW ? can we move forward to transform risky current trends into a safer and better future Apply the SUSTAINOMICS framework to start making development more sustainable (MDMS) WHICH? practical analytical tools and policies are available Many best practice examples and case studies of integrated solutions exist, worldwide.

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Global Application of Sustainomics: Climate Change Challenge Making Development More Sustainable via “Tunneling”: Potential Post-Kyoto Framework for Jointly Managing Climate Risk & Right to Develop

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MAIN DRIVER Changes in CO2 from ice core and modern data (methane and nitrous oxide also cause global warming) Now: near 400

Pre-ind: 275

-10,000 -5,000 TODAY (years)

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RESULT: Mean temp, sea level and ice cover Mean Temp. (0.75C in 100 yrs.) Sea Level (16 cm in 100yrs.)

25 yr.

50 yr. 150 yr. 100 yr.

Arctic Sea Ice Extent (min.) Glacier Mass Balance

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IPCC-AR4: Predicting the Global Climate of 2100 GHG conc. 2-3 times pre-ind. level (280 ppmv)

Temp. rise ~3C (1.1 to 6.4) Sea level rise ~40cm (20 to 60)

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Global Impacts of Climate Change At 2C, Food & Water impacts are severe. Ecosystem impacts, extreme events and catastrophic changes worsen

Source: IPCC AR-4

M I N D Large Scale, Long Term Risks: Tipping Elements

Lenton et al, 2008 Even 2ºC imposes risks of catastrophic, irreversible impacts

M I N D Global Level Two Way CC-SD Links 1 Sustainable Development Climate Domain Domain

Climate Change Stresses Climate (temp., sea level, precip. etc.) Human and System Natural Systems

Feedbacks (V&A Areas)

Drivers

Different

Atmospheric Feedbacks Socio-economic GHG Emission Development and Concentration Paths Scenarios Human Actions Causing GHG Emissions (SD Goals & Policies)

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Global Level Two Way CC-SD Links 2 Sustainable Development Climate Domain Domain

Climate Change Stresses (temp., sea level, precip. etc.) Climate Human and Natural Systems System Adaptive Adaptation Capacity Feedbacks (V&A Areas)

Feedbacks

Econ. Soc. Envir. Feedbacks

Feedbacks Different

Atmospheric Feedbacks Mitigative Socio-economic GHG Emission Capacity Development and Concentration Paths Scenarios Human Actions Causing GHG Emissions (SD Goals & Policies)

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MOST DESIRABLE: CC Policies that Harmonise both Adaptation and Mitigation (Win-Win) while also Making Development More Sustainable (MDMS) Examples: growing forests, energy saving

Many trade-offs also arise and need to be reconciled

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Global Impacts and Vulnerability WE CAN PROTECT THE MOST VULNERABLE • People: Poor, Children, Elderly. • Regions: Small Islands, Arctic, Asian megadeltas, Sub-saharan Africa.

• Sectors & Ecosystems: Coral reefs, sea-ice regions, tundra, boreal forests, mountain and Mediterranean regions, low-lying coasts, mangroves & salt marshes; Water resources in mid-latitudes & dry tropics; Low-latitude agriculture; Human health where adaptive capacity is low.

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Ecosystems Vulnerability Loss of Critical Ecosystem Services

A temperature increase of 1.5°C - 2.5°C over present, would put 20% - 30% of higher plants and animals at high risk of extinction

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Category C C Gl Pe Ch

O2 O2 ob ak an Co - al in ge nc eq m g in en Co ea ye glo tra nc n ar bal tio en te for C 3 n tra m C O2 tio pe O2 em n3 rat e issi ur mi on e ssi s in on in cr s[3 20 ea ] 50 se (% ab of ov 20 e 00 pr em e- issi in on du s)4 str ial at eq uil ibr iu m, usi ng Mitigation: global emissions must “b est est peak & decline by 2015-2020 (latest) im ate ” Copenhagen Accord recognises danger limit of 2°C rise cli m and stabilisation level of ~450 ppmv by 2100 (currently 392 ate se ppmv, safe level 280 ppmv). nsi tiv ity CO2- GDP Reduction Global average CO2 Year CO2 Global Mean [1], Equivalent reducti in 2050 sea level rise stabili- needs to temp. incr. at [2] Stabili- on in relative to from thermal zation peak equilib. per pp pp Ye zation level 2030 2000 expansion ce m m ar ºC nt ppm ppm Year % Percent °C metres A1 35 44 2. 20 -85 0 5 0 00 to 350 – 400 445 – 490 2000–2015 < 3 -85 to -50 2.0 – 2.4 0.4 – 1.4 – – – - -50 40 49 2. 20 400 – 440 490 – 535 2000–2020 < 2 -60 to -30 2.4 – 2.8 0.5 – 1.7 0 0 4 15 440 – 485 535 – 590 2010 – 2030 0.6 -30 to +5 2.8 – 3.2 0.6 – 1.9 A2 40 49 2. 20 -60 0 0 4 00 to 485 – 570 590 – 710 2020 – 2060 0.2 +10 to +60 3.2 – 4.0 0.6 – 2.4 – – – - -30 44 53 2. 20 570 – 660 710 – 855 2050 – 2080 +25 to +85 4.0 – 4.9 0.8 – 2.9 0 5 8 20 660 – 790 855 – 1130 2060 – 2090 +90 to +140 4.9 – 6.1 1.0 – 3.7

B 44 53 2. 20 -30

0 5 8 10 to Munasinghe Institute for Development M I N D – – – - +5 48 59 3. 20 5 0 2 30 C 48 59 3. 20 +1 5 0 2 20 0 – – – - to 57 71 4. 20 +6 0 0 0 60 0 D 57 71 4. 20 +2 0 0 0 50 5 – – – - to 66 85 4. 20 +8 0 5 9 80 5 E 66 85 4. 20 +9 0 5 9 60 0 – – – - to 79 11 6. 20 +1 0 30 1 90 40 Total 1 7 7

[1] The best estimate of climate sensitivity is 3ºC [WG 1 SPM]. [2] Note that global mean temperature at equilibrium is different from expected global mean temperature at the time of stabilization of GHG concentrations due to the inertia of the climate system. For the majority of scenarios assessed, stabilisation of GHG concentrations occurs between 2100 and 2150. th th [3] Ranges correspond to the 15 to 85 percentile of the post-TAR scenario distribution. CO2 emissions are shown so multi-gas scenarios can be compared with CO2-only scenarios.

Failing the Challenge of Mitigation UNFCCC 1992 – good start. Article 2 specifies stabilization of atmospheric concentrations of GHG concentrations at a level that does not harm the climate system (food security, ecological systems and sustainable economic development).

Kyoto Protocol 1997 – modest target. By 2012 Annex I nations to reduce emissions 5% relative to 1990. Compliance weak. Came into force without USA (largest emitter). Even after Kyoto 1997, emissions continue to increase

Post-Kyoto Agreement 2013? Bali (COP13) & Poznan (COP14) made a start, but Parties repeatedly postponed the issues until 2020 , Copenhagen (COP15), Cancun (COP16), Durban (COP17), Qatar (COP18) and Posnan (COP19) ! World is now facing 3-4 °C temp. rise by 2100.

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Short-term (2010-2020) GHG emissions reduction are possible with existing technologies and policies at an affordable cost

• Energy: significant technical progress has been made in the last 10 years and at a faster rate than expected (wind power, solar, elimination of industrial by-products, hybrid engine cars, fuel cell technology, carbon capture and storage, etc.) • Land Use: good potential for carbon sinks and reduced GHG emissions from both better management of existing land cover, and transformation of land use

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All sectors and regions can contribute to mitigation

Note: estimates do not include non-technical options, such as lifestyle changes.

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Key Policy Elements

• Policies for “carbon price”- can create incentives for producers and consumers to significantly invest in low-GHG products, technologies and processes. Higher carbon prices could impose significant burdens on the poor, unless targetted relief policies are implemented to ensure basic energy needs are met. • Technology Policies - Deployment of low-GHG emission technologies and RD&D would be required for achieving stabilization targets and cost reduction • International Agreements - achieving the UNFCCC/Kyoto Protocol targets may stimulate a global response to the climate problem, an array of national policies, the creation of an international carbon market and new institutional mechanisms. Future agreements will help reduce global costs of mitigation( eg: emission trading, Joint Implementation and CDM) and improve environmental effectiveness

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Climate Justice – Equitable Allocation of Per Capita Carbon Emissions

M I N D Managing Risk: Climate Justice & Development Right

Climate change is likely to impact Adaptation Burden & disproportionately upon the poorest countries Equity: CC SD and the poorest persons within all countries, Adaptation is the first worsening inequities in health status and access priority of developing to adequate food, clean water & other resources. countries that are most Impacts worse & capacity to adapt is lower vulnerable to climate because of a lack of financial, institutional and change. Financial and technological capacity, and access to knowledge technical help is crucial

Mitigation Obligation & Equity: SD CC Annex 1 avg. Mitigation leadership is main responsibility of rich countries with high Non-Annex I avg. historic & per capita GHG emissions and

capacity to mitigate

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MOST DESIRABLE: CC Policies that Harmonise both Adaptation and Mitigation (Win-Win) while also Making Development More Sustainable (MDMS) Examples: growing forests, energy saving

Many trade-offs also arise and need to be reconciled

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MDMS via “Tunneling”: global cooperation to manage Climate Risk & Right to Develop - Step 1

Rich Today

Middle Income Climate Risk Climate

Poor (e.g. per capita (e.g. GHG per emissions)

Development Level (e.g. per capita income)

Source: M. Munasinghe (1995) "Making Growth More Sustainable," Ecological Economics, 15:121-4.

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MDMS via “Tunneling”: global cooperation to manage Climate Risk & Right to Develop - Step 2 Rich Transform –

Decarbonise (Norway)

Middle Income

Incentives/resources for developing countries Climate Risk Climate 1. Adaptation fund (safety net) for poorest and

Poor most vulnerable. (e.g. per capita (e.g. GHG per emissions)

Development Level (e.g. per capita income)

Source: M. Munasinghe (1995) "Making Growth More Sustainable," Ecological Economics, 15:121-4.

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MDMS via “Tunneling”: global cooperation to manage Climate Risk & Right to Develop - Step 3 Rich Transform –

Decarbonise (Norway)

Leapfrog (China) Middle Income

Incentives/resources for developing countries Climate Risk Climate 1. Adaptation fund (safety net) for poorest and Poor most vulnerable. (e.g. per capita (e.g. GHG per emissions) 2. Technology cooperation/support to leapfrog

Development Level (e.g. per capita income)

Source: M. Munasinghe (1995) "Making Growth More Sustainable," Ecological Economics, 15:121-4.

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Country Level Actions Integrating Climate Change Policies into National Sustainable Development Strategy

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Integrating CC Policies into National SD Strategy Make decision makers see sustainability & climate change

as key elements of the national development strategy (Social, Economic, Environmental) Sustainable Dev. Sustainable Impacts Adaptation

(natural variability (natural Mitigation

Development Environment - Sectors (Agriculture, Energy, Industry,

Transport, Education, Health, etc.) CC

- Systems (Environmental, ecological, etc.)

- Communities (Poor, Vulnerable, etc.)

)

M I N D Integration via SD Analysis at the Macroeconomic/Sectoral Level (general equilibrium analysis)

1. Macroeconomic/Sectoral Modeling 2. Environmental and Macroeconomic Analysis 3. Poverty/Income Distributional Analysis

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Expanded Green National Income Accounts for SD

Environmental- Economic Links Economic Links

Basic Satellite Input-Output Environmental Table Accounts

Economic-Social Links Envir.-Social Links Distribution of Distribution of Income Environmental Impacts

Source: Munasinghe (2001), Macroeconomics and Environment

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Example Analysing Water and Climate Change Impacts on Agriculture in Sri Lanka Source: M. Munasinghe and S. Perera (2006)

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Analysing SD-CC Links using the Action Impact Matrix (AIM) – Transdisciplinary Tool

National SD strategy & plans (NSSD, PRSP, NEAP etc.)

Identify Links, interacti ons of Screen, Prioritize Action Impact Matrix (AIM) national SD strateg y Issues, Select {with energy & CC Remedies applied to SED policies

Macro- and Sectoral Models and Analyses

Implement Energy & CC Policies & Proj.

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Downscaled GCM Results: Range of Climate Change Predictions for Sri Lanka in 2050

Global Period Rainfall Temperature Scenario Max. temperature: increase by 0.80 C Increase by 50 mm over the B1 NEM baseline Min. temperature : increase by 1.00 C Increase by 350 mm over Max. temperature: increase by 0.80 C the baseline, especially over B1 SWM the Western slopes of the Min. temperature : increase by 0.80 C central hills Increase by 70 mm over the Max. temperature: increase by 1.10 C baseline, especially over the A1F1 NEM Eastern slopes of the central Min. temperature : increase by 1.40 C hills Increase by 520 mm over Max. temperature: increase by 1.10 C the baseline, especially over A1F1 SWM the Western slopes of the Min. temperature : increase by 1.20 C central hills

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Multi-sector Computable General Equilibrium Model linked to sectoral and project level models

MACROECONOMY (Multisectoral CGE)

TRANSPORT AGRIC-ULTURE & URBAN-IND ENERGY LAND USE

ROAD RAIL TREE CROPS RICE REGION REGION I III

OTHER FORESTRY REGION II

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Impact on Sri Lanka national economy in 2050* - GDP effect small BUT equity effect larger

Crop Change of Total Change Agriculture GDP in GDP in 2050 (%) 2050 (%) Rice -0.36 -2.46 (LOSS) (dry zone – poorer) Plantation Crops +0.10 +0.70 (GAIN) (wet zone – richer) Rice + Plantation -0.26 - 1.76 (NET LOSS) Crops

*Note: Assuming the same economic structure in 2050

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Sri Lanka CC Impacts: Spatial Distribution

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Some Key Policy Implications

1. Moderate overall impact on agricultural output and national economy, but some effects will emerge within next two decades

2. Significant potential risk to food security (rice)

3. High poverty impact on small farmers

4. Equity impact (small rice farmers get poorer & large tree crop plantation owners get richer)

5. Demographic impact (potential migration from dry to wet zone)

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Subnational-Sectoral and Local-Project Level Analysis

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Sustainable Development Assessment Tools (partial equilibrium analysis at sector/project level )

1. Economic/Financial Assessment (CBA) 2. Environmental Assessment (EA) 3. Social Assessment (SA) 4. Multi-Criteria Analysis (MCA) 5. Poverty Assessment (PA) 6. Technical Assessment (TA)

Choice of appropriate SD indicators is vital for SD Assessment

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Cost-Benefit Analysis (CBA) and Multicriteria Analysis (MCA)

Economic valuation of environmental (and social) impacts and assets is an important (and often neglected) aspect of cost-benefit analysis (CBA) When valuation is not possible, other techniques like multi-criteria analysis (MCA) can be useful for decision making

M I N D Categories of Economic Value of Environmental Assets

(examples from a tropical rain forest) Total Economic Value

Use Value Non-use Value

Direct use values Indirect use values Option values Existence values Other non-use values

Outputs that Functional Future direct and Value from can be benefits indirect use values knowledge of consumed continued directly existence

-Food -Ecological -Biodiversity -Biomass functions -Habitats -Conserved Endangered -Recreation -Flood control habitats -Health -Storm protection species

Decreasing tangibility of value to individuals

M I N D Sustainomics Application – Forest Sector SD Assessment of a Tropical Rainforest in Madagascar

Focus on economic valuation of costs and benefits of establishing a new national park

Source: Munasinghe (2007)

M I N D Background and Objectives Madagascar is economically poor, but ecologically rich (e.g., lemurs). It has been designated a mega-diversity area, whose ecosystems are also at great risk. The government is seeking to control forest degradation and protect biodiversity. This study was the first stage analysis to facilitate a decision on creating a new national park. The proposed national park would generate both indirect and direct costs and benefits. Costs arise from acquisition of private land, hiring of park personnel, and development of roads, visitors' facilities, and other infrastructure. Other important costs (often ignored) are the opportunity costs from foregone uses of park land. Use-value benefits from tourism can generate considerable national revenues from both entrance fees and travel expenditures. Non-use benefits include existence and option values. Indirect benefits may include reduced deforestation, watershed protection and climate regulation. This study seeks to measure important but difficult to measure economic impacts, i.e., costs to local villagers and benefits to foreign tourists. M I N D SD Goals

Economic - maximise net benefits Social - balance (competing) interest of stakeholders (especially the poor): Villagers on-site, Tourists (foreign and local), People of Madagascar (Government) Environmental – safeguard and maintain nationa park and ecosystems

M I N D Valuation Techniques Used in Study

• Opportunity Cost Analysis • Travel Cost Analysis • Contingent Valuation Analysis

Evaluating Support Benefits of Forests (Millennium Ecosystem Assessment):

Provisioning, Regulation, Cultural

M I N D Value of Local Household Activities

Activity No. of Total annual Mean annual Observ- value for all value per ations villages (US$) household (US$) Rice 351 $44,928 $128 Fuelwood 316 $13,289 $38 Crayfish 19 $220 $12 Crab 110 $402 $3.7 Tenreck 21 $125 $6 Frog 11 $71 $6.5

M I N D Economic Costs and Benefits of Establishing New National Park (using different methods) Annual mean value Aggregate NPV

Welfare losses to local villages (US$) Method Used per household Opportunity Cost 91 566,070

CVM 108 673,078 Welfare gains to foreign tourists (US$) Method Used per trip Travel Cost 1 (random utility) 24 936,000

Travel Cost 2 (typical trip) 45 1,750,000

CVM (use & non-use value) 65 2,530,000

M I N D Madagascar Study - Key Conclusions Policy Implications: Can help in investment decisions, resource mobilization, project design and management, including how to (a) allocate scarce capital resources among competing land use activities; (b) choose and implement investments for natural resource conservation and development; (c) determine pricing, land use, and incentive policies; (d) set compensation for local villagers for foregone access to forest areas; (e) show value of park as a global environmental asset to foreigners (e.g., obtain external funds for conservation) Issues: WTP is fundamental to the economic approach, but over- emphasizes value ascribed to richer foreign visitors. If conflicting claims to park access were determined purely on this basis, poor local villagers are more likely to be excluded. However, social aspects of sustainable development (like equity and distributional concerns) will help to protect the basic rights of local residents – e.g., "safe minimum" degree of access to park facilities, “buffer zone”, etc. M I N D Sustainomics application: project level

Multicriteria SD Assessment of small hydro schemes using economic, social and ecological indicators

Primary Source: Morimoto R., and Munasinghe M. (2005) “Small hydropower projects and sustainable energy development in Sri Lanka”, Int. Journal of Global Environmental Issues, Vol.4.

Summary: Munasinghe, M. (2002) “The sustainomics trans-disciplinary meta- framework for making development more sustainable: applications to energy issues”, Int. J. of Sustainable Dev.,Vol.4, No.2, pp.6-54.

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Overview of study • Energy affects all three dimensions of sustainable development. • Reviews linkages between potential impacts of energy production and consumption on sustainable development,. • Multi-criteria analysis used to assess the role of small hydroelectric power projects in sustainable energy development. • 3 key variables (measured per unit of GHG avoided per year): Economic - electricity supply costs, Social - numbers of people displaced (resettled), Environmental - biodiversity loss • Analysis helps policy-makers compare and rank project alternatives more easily and effectively. • The multi-criteria analysis, which includes environmental and social variables, supplements and balances cost benefit analysis which is based on economic values alone.

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Project Level: Economic, social and ecological indicators for small hydro in Sri Lanka Average generation costs (AVC), biodiversity index (BDI), and number of resettled people (RE) by hydroelectric project. All indices are per tonne CO2 avoided per year. Numbers of people resettled and the biodiversity index are scaled for convenience (by multipliers 10-5 and 10-9 respectively). The values at the top of the graph indicate the annual energy generation in gigawatt hours (GWh).

28 11 159 210 209 20 149 114 390 512 22 78 161 34 50 83 42 18 123 79 113 143

AVC (US cents/kWhyr) 10 BDI/kWhyr RE/kWhyr 8

DIYA008GING052GING053GING074 KALU075KELA071 NALA004SITA014 UMAO08 AGRA003 HEEN009 KOTM033KUKU022LOGG011MAGA029MAGU043MAHA096MAHO007MAHW235MAHW287 SUDU009SUDU017 project

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Three dimensional MCA of SD indicators of small hydro

Figure 5. Three dimensional MCA of sustainable development indicators for various hydropower options.

Source: Morimoto, Munasinghe and Meier [2000]

Average generation cost (US cents/kWhyr) (US cost generation Average

Number of resettled Biodiversity index / people / kWhyr/ Tonne CO2 kWTonnehyr CO2

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Vision: Global Eco-Civilization of the 21st Century will focus on Happiness & Well-Being (GNH) determined not only by material consumption (GNP)

•efficiency •growth st •stability 21 Century Economic Global Eco- Civilization

SD based on Happiness & Well-Being (GNH)

• inter-generational equity Social • values/culture Environmental •fairness/empowerment •natural resources •inclusion/consultation •resilience/biodiversity •institutions/governance •pollution

China: Hu Jintao, 18th Party Congress M I N D Scepticism about modern “Progress”

“It is progress when a centuries-old oak is cut down to give space for a road sign?”

“It is progress when weapons are improved to kill more people at a longer range?”

“Progress is man's ability to

complicate simplicity.”

Thor Heyerdahl

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Vision for 2030-50: Some Targets Social: meet basic needs of all human beings especially the poor & vulnerable, ensuring peace, harmony, social justice & security. Environmental: respect nature & contain humanity’s global resource use within the sustainable capacity of the planet. Economic: build a sustainable economy that is prosperous and resource-efficient, but respects critical environmental and social sustainability constraints.

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THE SUSTAINABILITY AGENDA – ACT NOW Key role for Norwegians to build a More Sustainable World Resource Transition and Partnership of Sustainable Consumers and Producers

M I N D Key Role for Norway: Leading the way to a More Sustainable World 1. Robust economy finding new SD transition Economic: technology, resources and skills Social: social & human capital, committed to peace, harmony Environmental: mature culture that respects nature

2. Mobilizing civil society and business to work with government, nationally and globally

3. Ability to “connect” and build a more polycentric world with effective south- north and east-west partnerships

M I N D Educating Youth on Sustainability Raising values and standards of national conduct and ensuring good governance 1. Service to humanity 2. Honesty-integrity-ethics 3. Enlightened self-interest, altruism 4. Respect for nature, environment 5. Respect for society, law, tolerance-harmony 6. Discipline 7. Leadership 8. Accountability 9. Effectiveness 10. Impartiality M I N D Global Sustainability Transition - Sustainable Consumption & Production Pathway (SCP) to Sustainable Development (SD)

M I N D 1.Ecol. Footprint of Humanity 2. Unfair World Income In 2012 we needed 1.5 earths; Distribution 2000 and by 2030 almost 2 Earths Champagne Glass Unsustainable Richest fifth of world population receives BAU 83% of world income Ratio of Sustainable 60:1 one One fifth of the 1.4 earth Worlds Population billion between 2012 2030 highest & lowest 20% Poorest fifth of world Number of Earths of Number population receives 1.4% of world income 3. Millennium Development Goals (MDG) & SDG United Nations Millennium Declaration, 2000 & Post-2015 Framework 1. Eradicate extreme poverty and hunger 2. Achieve universal primary education 3. Promote gender equality & empowerment 4. Reduce child mortality 5. Combat HIV/AIDS, malaria & other diseases 6. Improve maternal health 7. Ensure environmental sustainability 8. Global partnership for development Commendable targets for 1-2 billion poor, but where are the resources to meet them, especially with Climate Change

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Climate Change Metaphor for Making Consumption and Production More Sustainable Rich Transform –

Decarbonise (Norway)

Leapfrog (China) Middle Income

Development Level (e.g. per capita income)

Source: M. Munasinghe (1995) "Making Growth More Sustainable," Ecological Economics, 15:121-4.

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Food for a Week: Poor Family Unsustainable/Unethical – must leapfrog/tunnel to prosperity: Millennium Development Goals

Food for a Week: Affluent Family

Unsustainable – must transform/decarbonize towards sustainablity: Millennium Consumption Goals

M I N D Source: Menzel, 2005 The consumption of the rich is crowding out the development prospects of the poor.

As resources (like energy, water and food) become scarce, the “market” solution is for prices to rise – but this will simply ration those resources in favour of the rich and deprive the poor of even their basic needs. Recent events in many countries show that deprivation leads to violence

We can enhance poverty eradication and protect nature by complementing the MDGs with Millennium Consumption Goals that will help make the rich consume more sustainably M I N D Millennium Consumption Goals – Basic Concepts

MCG Cluster 1: Address under-consumption of poor: Ensure basic human needs for everyone (eg., food, water, energy, shelter, health, education, etc)

MCG Cluster 2: Address unsustainable consumption of rich: Reduce over-consumption and waste (eg., food, water, energy, GHG emissions, pollution & waste, land use, etc.)

MCG 1 is mandatory. MCG 2 has begun with voluntary goals at local levels – eg., city, community, firm, institution, etc. and eventually will become part of an international agreement. Changes in lifestyles, diet and health, livelihoods and values are being promoted. Binding UN agreements to follow. M I N D Millennium Consumption Goals (MCG): Advantages of New Pathway to Sustainability 1. Targeted: 20% of richest percentile (1.4 billion people) account for >80% of consumption. Small changes towards sustainable consumption can reduce burden on environment 2. Complements MDGs: Builds MCG-MDG links & protects consumption of poor 3. Soft Multilevel Strategy – Bottom Up & Top Down: Seeks to influence voluntary behaviour of many people at individual, community, city, enterprise, regional, and country levels. Complements top-down policy, global targets (UN, govt.) 4. Complements MDG: Frees resources to build consumption safety net for poor 5. Fractal and Subsidiary: Basic concept unchanged (like snowflake) and effective implementation possible at finer levels of detail. 6. Faster Response: Provides quicker results compared to top down government policies and long term industrial investments. Momentum build up over time. 7. Transnational: Cuts across national boundaries and avoids self-interest based approach of governments and interest groups 8. Motivation: Rich are key stakeholders acting with enlightened self-interest, better education, more influence and resources 9. Integrates Sustainable Consumption and Production: Links with producers and global supply/value chains M I N D Millennium Consumption Goals Initiative (MCGI) & Network (MCGN) The Millennium Consumption Goals Initiative (MCGI) was launched to move this idea forward. It is being pursued by a broad coalition of stakeholders - the MCG Network (MCGN). It is action-oriented, multilevel, pluralistic and transnational. The MCGI seeks to be as inclusive as possible, and follows aflexible, multi-track approach. It is moving forward in the UN. Meanwhile, action is being taken NOW by individuals, families, communities, enterprises, cities, regions and countries. These pioneers are already developing their own specific versions of MCG, implementing them, and monitoring and reporting progress - there is no need to wait for broad multilateral agreements at the UN-global level! Thus, MCG is being pursued by the willing, at whatever level they choose, and focusing on the goals they prefer — carbon emissions is the favourite, but energy and water are also attractive. A broader enabling framework of goals and policies will emerge gradually from discussions at UN/govt. level. Support MCGI, Set Voluntary MCG !

M I N D Pioneering Voluntary MCG Cities and Communities Climate Alliance (~2000 european cities) – endorse MCGs City of Munich, Germany 1. By 2030, to halve per capita CO2 emissions in relation to 1990. 2. By 2025, to meet all Munich’s electricity demand from renewable energy. Naestved Community, Denmark By 2030, reduce carbon emissions by 50%. Business Novozymes, Denmark By 2015, reduce CO2 emissions by 75 million tonnes through customers’ application of Novozymes’ products relating to bioenergy, agriculture, household care and industrial processes Academic and Research Munasinghe Institute for Development, Sri Lanka From 2011 onwards, became 100% carbon neutral Civil Society A number of individuals have declared their personal MCG targets.

M I N D Sustainable Consumption empowers households Influence people’s behaviour to promote sustainable change

Individual • Empower and motivate – using prices, labels information, psychology and advertising.

Community • Change values, habits and socio-cultural contexts to shift to low-carbon products and behaviour. Eg., public attitude to smoking

Producer • Adapt material and physical elements of production - goods and infrastructures are inter-connected Social capital embedded within individuals and communities, can be better mobilized, organized, and empowered to work synergistically with business and influence government, to make development more sustainable (MDMS)! “Take charge of your life! Don’t let meaningless consumption define you!“ Define your own meaningful consumption! M I N D Changing Consumer Behaviour: Example - Basic Principles of Sustainable Energy Pricing

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Sustainable Energy Pricing: to incorporate Economic, Environmental and Social Goals 1. Economic efficiency: prices based on long-run marginal cost to reflect scarcity e.g., rising energy supply costs

Munasinghe Institute Institute for for Development Development M I N D

Sustainable Energy Pricing: to incorporate Economic, Environmental and Social Goals 1. Economic efficiency: prices based on long-run marginal cost to reflect scarcity e.g., rising energy supply costs 2. Environmental protection: prices incorporate (internalise) externalities e.g., add air pollution taxes, carbon taxes, etc. 3. Social equity: subsidised prices to meet basic energy needs of the poor e.g., targeted low prices for minimum use by poor High energy prices meets economic & environmental goals. The social equity goal offsets high prices that favour the rich & deprive the poor of basic energy needs. Integration across energy sub-sectors to avoid cross-pricing conflicts.

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Sustainable Pricing of Energy Summary • Eliminate Economic subsidies (cost-based pricing for economic efficiency) • Internalise Environmental externalities • Satisfy Social concerns (affordable basic energy needs)

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Changing Values by Appealing to the Heart – Focusing on Young People through ART

Launched at Rio+20 SustainoMusica is an international consortium of musicians and music lovers who believe that music and song constitute an universal language that can be used effectively to communicate the message of sustainability to everyone on the planet. We are confident that our new music of sustainability will appeal to the heart, especially to empower and motivate young people. We feel that this complementary approach will have greater appeal than the messages of science and policy, which are aimed mainly at the mind. Music and song will help to make sustainability a practical and living reality, by harmonising people and planet, to achieve prosperity, peace and happiness - that is what our logo shows. M I N D Food Example: % of Population Hungry

About 1 billion hungry: 1 in every 7 persons, mainly in Africa and Asia! M I N D Food Waste a Major Cause of World Hunger

About 4 billion tons of food is currently produced annually for human consumption BUT For the past six decades, almost 1 billion people have gone hungry, many of them children WHILE 1.3 billion tons of food are spoiled annually 1/3 rd of world food production is lost or wasted (in homes: USA-50% & Europe-30%)

M I N D FAO ,2011 Sustainable Production: Insights from Workshops & Seminars on Business & Sustainability for Senior Managers of Leading Multinationals Recent Examples: • BASF, Germany (Chemicals) • TESCO, UK (Supermarkets) • Unilever, Coca Cola, Reckit-Benkeiser, Johnson SC, Danone, Nestle (Retail) • Petrobras, Brazil (Energy, Oil and Gas) • OPEC (energy, oil and gas) • Sime Darby, Malaysia (Plantations Conglomerate) • Novozymes, Denmark (Biotechnology) • Vale, Brazil (Mining) • Siemens, Shanghai Electric Group (Heavy Industry) • Rio+20 Business Summit (300 World Business Leaders) • WCW, Denmark (300 CEOs in Europe) • Zermatt Summit (250 World Business Leaders)

M I N D Material extraction per unit GDP fell 4-fold 1900-2005 (billion tons and $)

Total global material extraction grew by a factor of 8, while GDP rose 23-fold. This expansion of material consumption was not equitably distributed and had major environmental impacts (UNEP, 2011)

Source: UNEP,Res. Eff. For Dev. (2011)

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Global resource use vs. income - Past (175 countries in the year 2000)

Res. Use per capita Some countries have a high resource use per capita relative to GDP per capita, while other countries have achieved high GDP per capita while consuming fewer resources

GDP per capita

Source: UNEP,Res. Eff. For Dev. (2011) Munasinghe Institute for Development M I N D

Global resource use vs. income - Future (175 countries in the year 2000)

Res. Use per capita Some countries have a high resource use per capita relative to GDP per capita, while other countries have achieved high Future growth trajectory GDP per capita while is key to sustainability consuming fewer resources

GDP per capita

Source: UNEP,Res. Eff. For Dev. (2011) Munasinghe Institute for Development M I N D

Business Community - Evolution of Attitudes “Few trends could so thoroughly undermine the very foundations of our free society than the acceptance by corporate officials of a social responsibility other than to make as much money as possible for stockholders.” Milton Friedman (1962), Econ. Nobel Prize, Capitalism & History

”The crisis has led many in the UK, France and the USA to demand the right of inventory. Should the only questions that Managers be asking be: how to maximize shareholder’s value? Or, what is the importance of values? What are our values? Stephen Green (2009), CEO of HSBC, "Good Value: Reflections on Money, Morality and an Uncertain World”

“Over the past decade, sustainability has moved from the fringes of the business world to the top of the shareholders' agenda….” PriceWaterHouseCooper (2009)

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Sustainable Production - life cycle analysis of CO2 emission hot spots along the supply/value chain: 1 Raw material Manufacture Logistics Retail Consumer Recycling production & processing distribution use & transport disposal Light bulb (UK 11W) 2% 1% 1% 95% 1%

M I N D Source: Adapted from Munasinghe et al. (2009) Sustainable Production - life cycle analysis of CO2 emission hot spots along the supply/value chain: 2 Raw material Manufacture Logistics Retail Consumer Recycling production & processing distribution use & transport disposal Light bulb (UK 11W) 2% 1% 1% 95% 1%

Orange Juice (Brazil freshly squeezed 1L) 28% 19% 47% 5% 1% 0%

M I N D Source: Adapted from Munasinghe et al. (2009) Sustainable Production - life cycle analysis of CO2 emission hot spots along the supply/value chain: 3 Raw material Manufacture Logistics Retail Consumer Recycling production & processing distribution use & transport disposal Light bulb (UK 11W) 2% 1% 1% 95% 1%

Orange Juice (Brazil freshly squeezed 1L) 28% 19% 47% 5% 1% 0%

Milk (UK, National Tesco) 76% 5% 4% 10% 3% 1%

M I N D Source: Adapted from Munasinghe et al. (2009) Caution – Jevons Paradox & Limits of Resource Efficiency Economic Behaviour Stanley Jevons (1865) first noted the “Jevons’ paradox” - any technological advance that increases efficiency of resource use, reduces its effective price, and eventually leads to an increase in the consumption of that resource. Efficient resource use  Lower price  More resource use

Biological Behaviour (instinct) Species tend to live near the short-term carrying capacity their habitats. Until constrained by negative feedback (scarcity, disease, conflict, etc.), they will: (1) occupy all accessible habitat; and (2) use up all available resources (for humans, 'availability' is extended by improved technology). Consumerist culture, greed & focus on material consumption reinforce these behaviours

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Caution – Jevons Paradox & Limits of Resource Efficiency

Improved technology and increased efficiency of resource use alone cannot solve our problems. Human beings need to use rational analysis based on long term thinking to adopt more sustainable values and lifestyles that will over-ride instinctive short term behaviour

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Bringing Sustainable Consumers & Producers Together: 1 Sustainability Culture - Making Development More Sustainable (MDMS) Sustainability leadership by a few consumers and producers

Sustainable Sustainable Consumers Producers

Civil Busi- Society ness

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Bringing Sustainable Consumers & Producers Together: 2 Sustainability Culture - Making Development More Sustainable (MDMS) Sustainable behaviour spreads throughout the country

Govt.

Other Sustainable Sustainable Other Sustainable Sustainable Consumers Producers Consumers MCG Producers Civil Busi- Society ness

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Key Role for Thor Hey. Inst. & Responsible Media in Making Developmenty More Sustainable

Business

THI Inst. & Responsible Civil Media GovernSocial- Society Capitalment

Media can help Thor Hey. Inst. in disseminating correct information to strengthen civil society and business in supporting and influencing government to move towards a more sustainable development path.

Source: Munasinghe (1992), Rio Earth Summit Munasinghe Institute for Development M I N D

Hopeful final message for the World •Multiple global problems pose a serious challenge to us all – poverty, energy, water, hunger, climate change, economic crises, resource scarcity, ecosystem harm, etc. are interlinked. • There is hope that we can find integrated, holistic solutions to these problems, using transdisciplinary methods provided we begin now - we should not despair although the issues are complex and serious. •The Sustainomics framework shows us how to take the first steps towards making development more sustainable (MDMS), that will transform the risky “business-as-usual” scenario into a safer & better future. •Governance systems need to be transformed at all levels. •Business and civil society can help government in identifying issues, changing values and implementing solutions. •Working together, we can build the new sustainable development models for a 21st century Global Eco-Civilization. M I N D WHAT ? are the major challenges Multiple global threats undermine SD efforts & need integrated, transdisciplinary solutions HOW ? can we move forward to transform risky current trends into a safer and better future Apply the SUSTAINOMICS framework to start making development more sustainable (MDMS) WHICH? practical analytical tools and policies are available Many best practice examples and case studies of integrated solutions exist, worldwide. WHO ? could respond and how Govt., business & civil society must collaborate to achieve SD, using transdisciplinary methods.

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Ancient Pali Blessing (Sri Lanka)

“DEVO VASSATU KALENA SASSA SAMPATTI HETU CA PHITO BHAVATU LOKO CA RAJA BHAVATU DHAMMIKO”

Environmental: “May the rains come in time, Economic: May the harvests be bountiful Social: May the people be happy & contended May the king be righteous”

Even in ancient times, a favourable environment, economic prosperity, social stability (and good governance), were clearly identified as key pre-requisites for making development more sustainable.

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Environment

M I N D

Society Economy Munasinghe Institute for Development "making development more sustainable - MDMS“

10/1 De Fonseka Place, Colombo 5, Sri Lanka Phone: +9411-255-1208; Fax: +9411-255-1608 E-mail: ; Web:

M I N D MIND PROGRAMMES • Awards Research fellowships, Scholarships, MIND Sustainable Support Service (MS3), Book donations • Dissemination & Research Dissemination & Training workshops Expert meetings & conferences Applied research studies and evaluations UN “Centre of Excellence” for Asia in the Climate Change Capacity Development (C3D) network of the United Nations Institute for Training and Research (UNITAR).

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Graduate level courses on Sustainomics have been given at leading universities worlwide, including:

Brazil - Federal Univ. of Para, Rio de Janeiro State Univ. China - Peking Univ. Denmark - Copenhagen Univ. Germany – Darmstadt Univ. India - TERI Univ. Sri Lanka - Colombo Univ. UK - Manchester Univ. USA - Yale Univ. M I N D MIND CC-SD Training Course, CMA, Beijing, July-Aug, 2006 270 Senior Chinese Officials

M I N D MIND SD Course, Delhi, Feb. 2007 25 Senior Indian Civil Service Officers M I N D MIND-ERC CC-SD Training Course, University of Cape Town, October 2007, for 30 Senior Decision Makers from Government, Business and Civil Society

M I N D Suggestions for Further Information

1. Munasinghe, M. (2010) Making Development More Sustainable Development, Second Edition, MIND Press, Sri Lanka – Translated into Chinese and Portuguese. 2. Munasinghe, M. (2009) Sustainable Development in Practice – Sustainomics Methodology and Applications, Cambridge University Press, UK. 3. Munasinghe, M., and Swart, R. (2005) Primer on Climate Change and Sustainable Development, Cambridge University Press, UK – Translated into Chinese. 4. Website URL:

Munasinghe Institute for Development M I N D

MIND Press Book: 650 pages

Second Edition Published in April 2010

Munasinghe Institute for Development M I N D

Cambridge University Press Book: 650 pages

Published in May 2009

Munasinghe Institute for Development M I N D