Changing the Paradigm

1
Changing the Paradigm
The Transition from Uneconomic Growth to
Sustainability
The Center for the Advancement of the Steady
State Economy
2
Outline

• Definitions
• The Conflict between Economic Growth and the
  Environment
• Theoretical Framework
• Empirical Evidence
• Steady State Economy,the Alternative to Economic
  Growth
• Policies and Institutional Changes for the
  Transition
• Getting Started with the Paradigm Shift

3
Definition Paradigm
Thought pattern in a scientific discipline
4
Growth Paradigm in Economics
5
Definition Economic Growth

• Increase in the production and consumption of
  goods and services (typically expressed in terms
  of GDP)
• facilitated by increasing
• population
• per capita consumption
• Not the same as economic development

6
Component 1 Population
World Population (Millions)
7
Component 2 Consumption
U.S. Per Capita GDP (year 2000 dollars)
8
Definition Uneconomic Growth
Growth of the macroeconomy that costs more than
it is worth.
Value ()
Quantity (units producedor consumed)
9
Definition Sustainability

• Sustainable development is development that meets
  the needs of the present without compromising the
  ability of future generations to meet their own
  needs.
• Basic human needs and the worlds poor
• Limits imposed by technology and social
  organization
• - Brundtland Commission

Strong Sustainability Hold natural capital
constant. Assumes the two forms of capital are
complements.
Weak Sustainability Hold total capital (natural
and human-built capital combined) constant.
Assumes the two forms of capital are substitutes.
Economic growth converts natural capital into
human-built capital and goods and services.
10
Outline

• Definitions
• The Conflict between Economic Growth and the
  Environment
• Theoretical Framework
• Empirical Evidence
• Steady State Economy,the Alternative to Economic
  Growth
• Policies and Institutional Changes for the
  Transition
• Getting Started with the Paradigm Shift

11
Thermodynamics
First Law of Thermodynamics Conservation of
mass and energy. Second Law Entropy never
decreases in an isolated system.
12
Competitive Exclusion
Natural capital allocatedto the economy
Natural capital allocated tonature
GDP
E c o n o m i c G r o w t h
Time
13
Cover of the Wildlife Society Bulletin Spring 2000
14
Ecological Carrying Capacity Scenarios
Individuals
Time
15
Economic Carrying Capacity Scenarios
GDP
Time
16
Trophic Theory
17
Trophic Theory
18
Limits to Growth - The Evidence
Source Limits Limits on the quantity of natural
resources that are raw materials for the economy.
Sink Limits Limits on the ability of the
environment to assimilate wastes generated by
economic production.
19
Source Limit - Overfishing
Fishing down the food web
Daniel Pauly, UBC
20
Source Limit Resource Depletion
r-selected economy
21
Sink Limit Climate Change
If humanity wishes to preserve a planet similar
to that on which civilization developed and to
which life on earth is adapted, paleoclimate
evidence and ongoing climate change suggest that
CO2 will need to be reduced from its current 385
ppm to at most 350 ppm."
22
Combined Sink/Source Limit
Causes of species endangerment

• Urbanization
• Agriculture
• Water diversions
• Recreation, tourism
• Pollution
• Domestic livestock, ranching
• Mineral, gas, oil extraction
• Non-native species
• Harvest
• Modified fire regimes
• Road construction/maintenance
• Industrial development

• 247
• 205
• 160
• 148
• 143
• 136
• 134
• 115
• 101
• 83
• 83
• 81

Czech et al. 2000. Bioscience 50(7)593-601.
23
Combined Sink/Source Limit EcologicalFootprint
GlobalFootprint Network
24
Final Thought on Limits
A challenge from the realm of common sense Can
you cite examples of Earthly things that
continuously grow without approaching a limit?
25
Outline

• Definitions
• The Conflict between Economic Growth and the
  Environment
• Theoretical Framework
• Empirical Evidence
• Steady State Economy,the Alternative to Economic
  Growth
• Policies and Institutional Changes for the
  Transition
• Getting Started with the Paradigm Shift

26
Alternatives

• If the economy is not growing, what can it do?
• Shrink.
• Remain about the same size.

27
What is a Steady State Economy?

• Stable production and consumption of goods and
  services
• Indicated by stable GDP
• Stabilized population
• Stabilized per capita consumption
• Stabilized throughput and
• Constant stocks of natural and human-built
  capital.

28
Whats the Bottom Line?
Does a steady state economy mean

• Freezing in the dark under a harsh communist
  regime?

• Some kind of hippy fantasy about returning to a
  bygone era that no longer exists?

• A luddite world where we each farm our own plots
  of land using nothing but sticks for tools?

A steady state economy is not a failed growth
economy. Remember the paradigm.
29
Characteristics of a SSE

• Optimal Scale
• Just Distribution
• Efficient Allocation
• Development and High Quality of Life

30
Optimal Scale

• Technical marginal benefits of growth marginal
  costs
• Conversational Finding the sweet spot.
  Applying the Goldilocks principle not too big,
  not too small, just right!

• A Few Elements of Sustainable Scale
• Elimination of the boom and bust cycle.
• Restoration of natural capital and ecosystem
  services.
• Secure stocks of natural capital.
• Maintenance and improvement of built capital.

31
Just Distribution

• A Few Elements of Just Distribution
• Equitably assigned property rights for common
  resources.
• Equal access to the commons.
• Equitable distribution of common wealth.
• Limits to private income and wealth inequality.

32
Efficient Allocation

• A Few Elements of Efficient Allocation
• Inclusion of non-market values.
• Evolution of sectors of the economy.
• Efficient use of capital.

33
Development and Quality of Life
Poverty, illness,and unemployment
Over-consumptionand liquidationof resources
Health, time,prosperity, and community
34
Outline

• Definitions
• The Conflict between Economic Growth and the
  Environment
• Theoretical Framework
• Empirical Evidence
• Steady State Economy,the Alternative to Economic
  Growth
• Policies and Institutional Changes for the
  Transition
• Getting Started with the Paradigm Shift

35
Herman Dalys Top Ten 1-5

• Employ cap-auction-trade systems for basic
  resources.
• Institute ecological tax reform.
• Limit the range of inequality in income
  distribution.
• Shorten the working day, week, and year.
• Re-regulate international commerce.

36
Herman Dalys Top Ten 6-10
6. Limit the scope of the International Monetary
Fund, World Bank, and World Trade
Organization. 7. Move to 100 reserve
requirements instead of fractional reserve
banking. 8. Stop treating the scarce as if it
were not scarce, and the non-scarce as if it were
scarce. 9. Stabilize population. 10. Reform
national accounts to be able to measure when
growth is economic and when it is uneconomic.
37
Institutional Arrangements

• The Market
• Employment
• Regulated banking systems
• Regulated international trade
• Stock markets and investments
• Thriving local economies

• The Public Sector
• Governance for sustainability
• Ecological taxation
• Competent regulatory agencies

• The Private Sector
• Ecologically sound business operations
• Redesigned corporate charters
• Limited demand creation

• The Commons Sector
• Property rights for commons
• Trusts for managing the commons

38
Outline

• Definitions
• The Conflict between Economic Growth and the
  Environment
• Theoretical Framework
• Empirical Evidence
• Steady State Economy,the Alternative to Economic
  Growth
• Policies and Institutional Changes for the
  Transition
• Getting Started with the Paradigm Shift

39
Changing Perceptions
Spreading the information We cant jumpstart a
paradigm shift until people know about the new
paradigm.
Inroads The first text book for college courses
on ecological economics came out in 2003.
CASSEs position on economic growth was
formulated in 2004.
40
The CASSE Position

• Carefully crafted position statement on economic
  growth.
• Based on years of study in the fields of ecology
  and economics.
• Sanctioned by many leaders in sustainability
  science.
• Individual signatures for demonstrating
  widespread understanding of the conflict between
  economic growth and environmental protection.
• Organizational endorsements and adoption of
  similar positions by professional societies to
  build a foundation of advocacy.

http//www.steadystate.org/CASSEPositionOnEG.html
41
The CASSE Position

• The Whereas Clauses
• Define economic growth, how it occurs, and how it
  is measured.
• Point out that economic growth is a top policy
  goal, there are limits to growth, and growth has
  negative effects.

• The Therefore Clauses
• Recognize the conflict between growth and the
  environment.
• Identify the steady state economy as a positive
  alternative to growth.
• Recognize that other nations may still pursue
  growth to meet needs.

http//www.steadystate.org/CASSEPositionOnEG.html
42
The Steady State Economy Take a Position! Thank
you.
www.steadystate.org rob_dietz_at_steadystate.org 54
1-602-3097