Green Growth: Restorative Economics for a Post-Carbon Planet
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www.ecologicalcitizen.net LONG ARTICLE Green growth: Restorative economics for a post-carbon planet Economic growth is driving ecological degradation on a scale that poses an existential Joshua Farley threat to civilization. Gross domestic product now provides a better measure of costs than of benefits. We must transition to clean energy and simultaneously restore degraded About the author global ecosystems. Neither of these activities are amenable to market allocation: ecological Joshua is Professor of restoration provides collective benefits and requires collective decision making, while the Community Development value of green technologies is maximized when the required knowledge has a price of zero, and Applied Economics, and in which case markets will not provide it. We thus need an economic transition towards Fellow, Gund Institute for Ecological Economics, at institutions based on cooperation and reciprocity. One option that can help instigate the the University of Vermont necessary transition is a common asset trust, in which R&D into green technologies is (Burlington, VT, USA). funded collectively then freely available to all. This low-cost initial step can help to spur the cooperation required to address larger challenges. Citation Farley J (2020) Green growth: he world currently confronts a growth since then has increased the use of Restorative economics for series of interrelated ecological fossil fuels. Alternative energy sources – a post-carbon planet. The Ecological Citizen 3(Suppl B): and economic crises. Biodiversity such as solar, wind and geothermal – are T 23–33. sustains our ecosystems and all the services available as finite flows, and our capacity they generate, yet is currently being depleted to capture them is currently inadequate to Keywords at unprecedented levels. We are depleting maintain the global economy, much less Ecological economics; renewable resources faster than they can expand it (Hall and Klitgaard, 2011). Yet a limits; societal change; regenerate, and using non-renewable string of recent reports suggests that failure sustainability resources to generate chemicals and waste to reduce net CO2 to emissions to zero by emissions that threaten catastrophic mid-century poses an existential threat to harm to global ecosystems. Global climate civilization (e.g. Intergovernmental Panel change threatens catastrophic disruption of on Climate Change, 2018; 2019). planetary ecosystems and the services they The goal of this article is to explore the provide which are vital to our survival. potential for a major economic transition. Markets are the major determinant of Our current era of economic growth and how quickly fossil fuels are burned, forests ecological degradation has been strongly cut, soils mined and pollution spewed into associated with a competitive market the environment, which makes economic economy driven by self-interest. This growth the driving force behind these crises article presents the hypothesis that a (Daly and Farley, 2010). In turn, the driving sustainable economy capable of meeting force behind economic growth is fossil fuel people’s basic needs must instead be based consumption. All economic production on unprecedented levels of cooperation requires energy, and fossil fuels account and altruism. The hypothesis is not based for about 80% of the energy used globally on ideological leanings, but on technical (British Petroleum, 2018). Fossil fuels are considerations, namely, whilst the available as a finite stock that we can use physical characteristics of fossil fuels to create economic products and waste favour competitive markets, the physical emissions as fast as we choose (Georgescu- characteristics of alternative energy Roegen, 1971). Prior to the fossil fuel and the ecological crises we currently revolution, economic growth was uneven, face favour cooperation and non-market uncertain and rare, and virtually all economic allocation. The Ecological Citizen Vol 3 Suppl B 2020 23 Green growth: Restorative economics for a post-carbon planet www.ecologicalcitizen.net The structure of the rest of this paper means that the more we have of something is as follows. First, it argues that what we the less an additional unit is worth. This currently call economic growth is actually applies not only at the level of any given uneconomic, with marginal costs exceeding commodity, but also for the economy as a marginal benefits, and must be replaced whole. For example, an increase in economic by green growth and degrowth. The paper production provides far greater welfare then assesses a path toward green growth, in a poor country than in a rich country. defined as a quantitative increase in what is Economists also generally accept the law of green: the ecological infrastructure essential increasing marginal costs of production, and to humans and all other species. It presents the principle clearly extends to ecological economic cooperation as inherently more costs. Each additional ton of greenhouse efficient than economic competition when gas emissions takes us closer to the tipping managing our most pressing problems. The point of runaway climate change, each paper then focuses on human behaviour, additional fish taken from depleted stocks and the extent to which we are capable of the or hectare of forest converted to agriculture degree of cooperation required; it concludes may drive a species closer to extinction. At by suggesting a possible path towards some point, the rising ecological costs of greater global cooperation. additional economic growth must surpass the diminishing marginal benefits. When Uneconomic growth, we reach that point, growth becomes green growth and degrowth uneconomic, and continued growth makes Economists almost universally accept the us worse off than before (Daly, 2007).1 law of diminishing marginal returns. This Economic growth is conventionally measured by gross domestic product (GDP), which fails to capture the costs of growth and hence the possibility for uneconomic growth. Furthermore, GDP Price when scarce responds perversely to quantitative P2 changes in our most essential resources for which substitution is most difficult. Our demand for essential and non-substitutable resources such as food, energy, water, and lifesaving medicines is insensitive to price. That is, a small decrease in quantity supplied of such resources typically leads to a large increase in price, and vice versa. For Price example, when the supply of food grains decreased slightly in 2007–08 and 2011–12, prices doubled (Farley et al., 2015). Now, GDP is the quantity of all final goods and Price when abundant services produced in a country multiplied P1 by their price. Hence, when grain supply fell, its contribution to GDP nearly doubled, and the same is true for any essential resource. On the other side, increasing supply reduces the contribution of essential resources to Q Q 2 1 GDP. In other words, GDP perversely shows a Quantity of essential commodity decrease in production as a gain in welfare, and an increase in production as a loss. Figure 1. The contribution of essential commodities to GDP (measured by Figure 1 illustrates this dynamic. price × quantity of final goods and services) increases when supply decreases, Most economists claim that adjusting GDP and vice versa. Q1 × P1 is clearly less than Q2 × P2. for inflation (or deflation) addresses these 24 The Ecological Citizen Vol 3 Suppl B 2020 www.ecologicalcitizen.net Green growth: Restorative economics for a post-carbon planet problems, but inflation implies an increase development of cost-saving technologies in overall price levels independent of supply can also show up as a decrease in GDP, such as and demand, not the response of individual LED light-bulbs that reduce expenditures on commodity prices to changes in supply or electricity. Far more insidious, if scientists demand. Furthermore, any decent indicator develop a clean, sustainable alternative to of economic welfare should be amenable fossil fuels, or any green technology, the to disaggregation – it should measure the more people who use it as a substitute for contribution to welfare for each sector of environmentally destructive technologies, the economy as well as for the economy the more benefits it generates. Charging as a whole. GDP clearly fails this litmus monopoly prices for the technology test, which leads economists to absurd maximizes its direct contribution to GDP, conclusions. For example, several famous but decreases the benefits it generates and economists, including Thomas Schelling hence its value. Value is maximized when and William Nordhaus, have claimed that the information underlying the technology global climate change will have minimal is freely available to all and contributes economic impacts because it primarily nothing (directly) to GDP (Farley and affects agriculture, which is less than three Kubiszewski, 2015). Depletion of natural per cent of GDP (Daly, 2000; Schelling, 2007). resources decreases society’s wealth, yet GDP also confuses costs and benefits. As increases GDP, as do major catastrophes computers get better and cheaper, their such as oil spills, hurricanes and fires (Daly individual contribution to GDP can decrease and Cobb, 1994). even as they provide more benefits. The Continues on next page… Call for Artists Stephanie Moran, Art Editor, and Salomón Bazbaz Lapidus, Art Advisor We are inviting artists to submit artworks to The Ecological Citizen. We are seeking full-page spreads across 2–4 pages, single-page artworks