Towards a climate change scenario that is ecologically sustainable, fair, and welfare-increasing

Philip Lawn Flinders Business School Flinders University GPO Box 2100, Adelaide, 5001 Australia 1. Introduction The main argument put forward in this chapter is that while anthropogenic global warming is a major environmental issue in itself, it is very much a problem within a larger problem. The larger problem that humankind confronts is its addiction to the growth of the economic subsystem relative to a finite, non-growing ecosystem. Should humankind continue with population growth and GDP growth-as-usual, it will not be able to stabilise the concentration of greenhouse gas emissions at a safe level or achieve sustainable development overall. To achieve sustainable development and resolve the climate change dilemma, the world’s high-income countries must immediately make the transition to a steady-state economy – in effect, a non-growing but qualitatively-improving economy maintained by a declining rate of resource throughput. The movement by high-income countries to a steady-state economy would not only reverse the recent decline in their own well-being, it would provide low-income countries with the room required to enjoy a spurt of welfare-increasing growth before they, too, must make the transition to a qualitatively-improving steady-state economy.

The general argument made in this chapter is that, to resolve the climate change dilemma, humankind must:

• Stabilise the atmospheric concentration of greenhouse gases at no more than 450 parts-per-million (ppm) of CO2-equivalent greenhouse gases (i.e., 450 ppm of CO2-e should be the upper limit of a safe atmospheric concentration of greenhouse gases).

• Stabilise human population numbers at no more than 8 billion. Preferably, human population numbers should be stabilised at something much less than this.

• Reduce the aggregate rate of resource use so it is again within the sustainable carrying capacity of the planet (note: the aggregate rate of resource use currently exceeds the Earth’s sustainable carrying capacity by at least 35%).

• Improve the distribution of income and wealth between and within countries. • Make the transition from a growth-based economy to a qualitatively-improving steady-

state (non-growing) economy. In this sense, high-income countries need to make the transition to a qualitatively-improving steady-state economy immediately. Conversely, low-income countries need a further phase of growth, albeit growth that is as green, equitable, and efficient as possible. However, they will also eventually need to move to a qualitatively-improving steady-state economy.

In all, can the climate change dilemma be meaningfully solved in a growth-as-usual setting? The answer is an unequivocal no. 2. Sustainability and growth Sustainable development, which is better known as ‘sustainable qualitative improvement’, requires two things: (1) that economic activity remains ecologically sustainable, and (2) that the difference between the benefits and costs of economic activity does not decline, and preferably increases (Lawn, 2007). What, then, is the relationship between sustainable development and the growth of the economic subsystem?

2

Physically, the Earth is a steady-state system. It is finite and physically non-growing. The inflow of energy is effectively equal to the outflow of energy and material inflows and outflows are negligible. Although the Earth is physically a steady-state system, considerable qualitative change can and does take place on Earth. The most critical change on Earth in recent times has been the growth of the economic subsystem and the human population living within it.

Consider Figure 1 which depicts the economy as a subsystem of the natural environment (Earth). In general, as the economy physically grows, resource (R) inputs and waste (W) outputs rise. That is, as the economy expands, the rate of throughput of materials and energy increases. Insert Figure 1 here

It is true that resource-saving and pollution-reducing technology has the potential to reduce the rate of throughput. However, evidence shows that reductions in resource inputs and waste outputs per unit of physical goods produced are often overwhelmed by increases in the total quantity of goods produced. As a consequence, the rate of throughput has been increasing (Jevons’ paradox of ‘rebound effect’) (Brookes, 2000; Ayres, 2005; Haberl et al., 2006; IPCC, 2007d; Daly, 2008; Polimeni, 2008; Lawn, 2009). Moreover, there are strict thermodynamic limits to increases in technical efficiency and recycling (Georgescu-Roegen, 1971; Peet, 1992; Daly, 2007). Even if resources savings can be achieved in the present, further resource savings through technological progress cannot continue indefinitely.

For the economy to be sustainable in the long-run, two basic rules or precepts must be adhered to:

1. The aggregate rate of resource use (R) must be no greater than the rate of natural resource regeneration

2. The aggregate rate of waste generation (W) must be no greater than the rate at which environmental sinks can safely assimilate wastes.

Clearly, if ongoing physical expansion of the economy results in a continuing rise in aggregate resource use and waste generation, one and eventually both precepts must be violated. As such, continuing growth of the economy is unsustainable in the long-run. Of course, if the economy is ‘small’ relative to the steady-state Earth (i.e., if the world is relatively ‘empty’ of human-made objects and human beings), the economy can safely and desirably grow. However, once the economy becomes ‘large’ relative to the steady-state Earth (i.e., if the world becomes ‘full’ of human-made objects and human beings), the economy must conform to the physical behavioural mode of the Earth in order to remain sustainable (Daly, 2007). In other words, in a ‘full’ world, the economy must conform to a steady-state physical system. It should therefore be obvious that humankind must eventually initiate the transition from a growth economy to a steady-state economy, and by this I’m including a steady-state (non-growing) population of human beings. In terms of anthropogenic global warming, there is little point in trying to achieve a 450 ppm target if growth is major factor driving the increase in greenhouse gas emissions – as a form of waste – and if nothing is done to curtail the unsustainable growth of economic systems. 3. How do we know when to make the transition to a steady-state economy? 3.1 Ecological limits to growth There are two limits to growth that need to be considered to determine when a nation should make the transition to a steady-state economy. The first of these is the ecological limit to

3

growth. What indicator can we use to ascertain if the economy has reached or surpassed ecological limits? One of the better known ecological or biophysical indicators is the Ecological Footprint (Wackernagel et al., 1999). The Ecological Footprint estimates the area of land required to provide the resources, assimilate wastes, and provide the critical life-support services needed to sustain economic activity. A nation’s Ecological Footprint is often compared to its Biocapacity to determine whether a nation is operating sustainably. A nation’s Biocapacity estimates the area of land available to provide the source, sink, and life-support services needed to sustain economic activity. If a nation’s Ecological Footprint exceeds its Biocapacity, it effectively means that its current level of economic activity is ecologically unsustainable. The Ecological Footprint and Biocapacity comparison can also be undertaken at the global level. As at 2010, humankind’s Ecological Footprint exceeded the Earth’s Biocapacity by 37% (Global Footprint Network, 2010). In other words, to sustain global economic activity at 2010 levels, it was necessary to use the equivalent of 1.37 Earths. To many, this would seem nonsensical. How can humankind use 1.37 Earths when only one Earth is available for use? Humankind doesn’t use all the resources available at any one point in time. The use of 1.37 Earths simply means that if humankind continued to exploit the source, sink, and life-support services of the Earth at the rate it was doing so in 2010, it would require 1.37 Earths for the rate of exploitation to be ecologically sustainable. The ability to exploit the Earth’s bounty at an ecologically unsustainable rate in the present just means that humankind is eating into the natural capital of the Earth, which it cannot do forever. Indeed, eating into natural capital reduces the sustainable resource flow available for human use in the future. From a national perspective, the Global Footprint Network (2008) has estimated that, in 2005, 78 of 143 surveyed countries had an Ecological Footprint in excess of their Biocapacity. More than half of the world’s surveyed nations were therefore operating unsustainably. There are some observers who have suggested that national ecological deficits are not a problem given that countries with ecological surpluses can aid deficit countries via the exportation of their surplus resources or through the importation of their surplus wastes. Whilst true, the fact that the global economy is in ecological deficit means that the ecological surpluses enjoyed by some nations are insufficient to ‘finance’ the combined ecological deficits of the remainder. Insert Figure 2 here Figure 2 shows that the global economy surpassed its ecologically sustainable limit in the mid-1980s. Thankfully, the Earth and its constituent ecosystems have enormous resilience, which has prevented the wholesale collapse of ecological and resource systems. This cannot be expected into the foreseeable future. At the very least, humankind must reduce the scale of the global economy and the population of human beings to one where humankind’s Ecological Footprint equals the Earth’s Biocapacity (i.e., to something approximating an ecologically balanced budget). A reasonable question to ask at this stage is this: should humankind operate the economy at its maximum sustainable scale or where the Ecological Footprint equals Biocapacity? For precautionary reasons alone, it would seem sensible to operate where humankind’s Ecological Footprint is no more than, say, 90% of global Biocapacity. However, there is also a good economic reason to operate well short of the maximum sustainable scale. This is because there is also an economic limit to growth and this economic limit is reached prior to reaching the ecological limit to growth.

4

3.2 An economic limit to growth As the economy grows, there are associated benefits and costs. The benefits exist in the form of the satisfaction that people gain from consuming goods and services, from the use of benefit-yielding infrastructure, and from meaningful work. The costs exist in the form of adverse social impacts, such as unemployment, soul-destroying work, mental illnesses, and family breakdown, etc. The other major cost associated with the economic expansion is the loss of some of the natural environment’s source, sink, and life-support services. Figure 3 illustrates the likely impact of the benefits and costs of economic activity as a nation’s economy expands. The ‘Benefits’ curve shows that the benefits of a growing economy are likely to increase at a diminishing rate, which simply adheres to the standard economic principle of diminishing marginal benefits. On the other hand, the ‘Costs’ curve shows that we can expect the costs of a growing economy to increase at an increasing rate, which follows the standard economic principle of increasing marginal costs. Insert Figure 3 here

Importantly, the ‘Costs’ curve is vertical at a scale of SS, which represents the maximum sustainable scale of the economy – that is, the largest physical scale of the economy consistent with ecological sustainability and the two sustainability precepts outlined earlier. Nations should do their utmost to avoid their economies exceeding SS, although, as suggested above, they are best advised to never exceed 90% of SS.

It can also be seen from Figure 3 that the maximum difference between benefits and costs occurs at S*, which represents the optimal scale of the economy. From a sustainable development perspective, this is the scale that nations should operate since although operating between S* and SS is technically sustainable, operating at S* maximises the nation’s sustainable economic welfare. Figure 3 also reveals that an economic limit to growth will be reached prior to nearing the ecological limit to growth. Where, then, are nations operating with respect to their optimal scale? There is an indicator called an Index of Sustainable Economic Welfare (Daly and Cobb, 1989) which is designed to estimate and compare the benefits and costs of economic activity. This indicator has since been labelled a Genuine Progress Indicator (Redefining Progress, 1995; Lawn, 2000, 2006). Studies using the Genuine Progress Indicator (GPI) in the mid-1990s revealed that most high-income nations exceeded the economic limit to growth in the 1970s and 1980s. As can be seen from Figure 4, while the GDP of six major industrialised nations has continued to rise, the GPI has peaked and, in many cases, has begun to fall (Jackson and Stymne, 1996). This suggests that many rich nations have already surpassed their optimal scale of economic activity. Insert Figure 4 here

4. The threshold hypothesis regarding growth and sustainable economic welfare In the 1990s, Manfred Max-Neef discerned that the per capita GPI peaked when the per capita GDP of many rich nations reached somewhere in the range of Int$15,000-20,000. This led Max-Neef (1995) to put forward a threshold hypothesis regarding GDP and sustainable economic welfare. The hypothesis was this: a per capita GDP of Int$15,000-20,000 constitutes a threshold level of per capita income beyond which the sustainable economic welfare of nation begins to decline. The upshot of the threshold hypothesis is that most high-income nations should have begun the transition to a qualitatively-improving steady-state economy in the mid-1970s or 1980s. Had they done this, they could have settled their economies at the optimal scale and focused their attention on shifting the ‘Benefits’ curve

5

upwards and the ‘Costs’ curve downwards, which would have increased the economic welfare enjoyed at the optimum, and which would be equivalent to achieving sustainable development. I will outline some of the measures that could be taken to increase sustainable economic welfare at the optimal scale later in the chapter. One of the more promising aspects to emerge from Max-Neef’s threshold hypothesis was that poor nations, with a per capita GDP of much less than Int$15,000-20,000, could proceed with growth-based policies in the knowledge that growth would increase the economic welfare enjoyed by their citizens. Unfortunately, the results of a GPI study of seven Asia-Pacific nations (see Figure 5) indicate that such optimism is misplaced (Lawn and Clarke, 2008). As per Max-Neef’s threshold hypothesis, the study revealed that the three high-income nations – Australia, New Zealand, and Japan – have reached an economic limit to growth. But so, too, have China and Thailand. Disconcertingly, the per capita GPI of China and Thailand peaked when the per capita GDP of both countries was well short of the Int$15,000-20,000 range. In the case of Thailand, its per capita GPI peaked in 2001 when its per capita GDP reached Int$7,500. As for China, its per capita GPI peaked in 2002 when its per capita GDP was just Int$5,000. Furthermore, when the per capita GPI of these two countries peaked, it was much lower than that of rich countries. Simply put, China and Thailand have reached an economic limit to growth at a relatively low level of economic welfare. As for the other two low-income nations included in the study – India and Vietnam – the per capita GPI of both nations was still rising at the end of the study period, albeit their per capita GDP was much lower than that of China and Thailand. Whilst the results indicate that India and Vietnam have yet to reach an economic limit to growth, the considerable rise in social and environmental costs in recent years in both countries suggests that this limit is not too far away. Insert Figure 5 here

Why have these low-income nations reached an economic limit to growth so much earlier in the economic development process than rich countries? Lawn and Clarke (2008) believe that the phenomenon revealed in Figure 5 can be mostly explained by: (i) low consumption levels in poor nations relative to their domestic production – a consequence of net export strategies; (ii) the migration of manufacturing operations to countries with low wages and feeble environmental regulations; and (iii) growth late-comers having to contend with GDP expansion in a world full of human beings and human-made capital, yet one with much less natural capital and many fewer ecosystems. Whereas the first factor reduces the marginal benefits enjoyed by poor nations and the third factor increases the marginal cost of an increment of GDP growth, the second factor results in poor nations having to bear a disproportionately large share of the world’s social and environmental costs.

It is because of the above factors that Lawn and Clarke (2008) have gone beyond Max-Neef (1995) to propose a new contracting threshold hypothesis: as the economies of the world collectively expand in a globalised economic environment, there is a contraction over time in the threshold level of per capita GDP. As such, growth late-comers face the prospect of never attaining the level of economic welfare enjoyed by the early-movers.

Despite this new hypothesis, Lawn and Clarke still believe it is possible for poor nations to experience higher levels of economic welfare. However, they argue that progress will only occur if an extension can be made to the threshold point at which the per capita GPI of the world’s poor countries begins to decline. This, according to Lawn and Clarke (2008), will necessitate dramatic policy changes on the part of the world’s poorer countries. Just as importantly, it will require rich nations to cease growing their economies in order to provide the ‘ecological space’ that poor nations need to enjoy a phase of welfare-increasing growth.

6

Should this check on growth be a cause for concern for rich nations? Not at all, since many rich countries will need to reduce the physical scale of their economies so they themselves can move towards an optimal scale of economic activity. Hence, the ecological space required by poor nations can potentially emerge should rich nations make the economic adjustments needed to improve the well-being of their own citizens. As we shall see, this is likely to be very important in terms of dealing with the climate change dilemma. Economic downsizing will not only render it easier for rich nations to reduce their own greenhouse gas emissions, it will allow poor countries to increase emissions as they complete their economic development process.

5. An emissions pathway consistent with achieving sustainable development In order to determine an emissions pathway that is consistent with sustainable development, it is first necessary to establish the following:

• What constitutes the dividing line between a sustainable and unsustainable economy? – that is, what constitutes the maximum sustainable scale of national economies and the global economy as a whole (SS)?

• Given that sustainable development requires nations to gravitate towards their optimal scale of economic activity, what level of economic activity approximates the optimum (S*)?

The answer to the first dot point is crucial because, first and foremost, the objective of the international community must be an emissions trajectory that is consistent with ecological sustainability. To achieve this, humankind must not only avoid a potentially catastrophic concentration of greenhouse gases in the Earth’s atmosphere, it must ensure that the aggregate rate of resource use is ecologically sustainable. Since the rate of resource use is partially a function of human population numbers, it will also be necessary to stabilise the human population at a level consistent with the ecosphere’s long-run carrying capacity.

The answer to the second dot point is crucial because once national economies are operating sustainably, further economic adjustment is required to deliver higher levels of economic welfare. However, to know how far to go and in what direction the adjustment should take, it is necessary to determine the per capita real GDP that approximates an optimal macroeconomic scale. Once known, the optimum becomes a nation’s long-term macroeconomic target. 5.1. Ecological sustainability: avoiding catastrophic climate change A stated objective in Article 2 of the United Nations Framework Convention on Climate Change (UNFCCC) is the need to ‘achieve stabilization of greenhouse gas concentrations in the atmosphere at a low enough level to prevent dangerous anthropogenic interference with the climate system.’ What constitutes a ‘safe’ concentration level of greenhouse gas emissions is the subject of on-going debate. In view of the projected impacts of various temperature rises on water availability, food supplies, land, ecosystems, biodiversity, and human health (see IPCC, 2007a: Table 3.6), it is widely accepted that a ‘safe’ concentration level is one that limits global average warming to 2oC above the pre-industrial mean temperature (Retallack, 2005). Continuing improvements in climate change modelling coupled with emerging palaeoclimate evidence make it difficult to confidently draw a stabilisation ‘line in the sand’. Until recently, it was assumed that a stabilisation level not exceeding 450 parts-per-million (ppm) of CO2-equivalent (CO2-e) would be sufficient to stave off a temperature rise above 2oC. However, a recent study by Hansen et al. (2008) suggests that humankind may have to lower the stabilisation target further if it is to meet the UNFCCC objective.

7

For the purposes of this paper, it will be assumed that 450 ppm of CO2-e constitutes a safe, upper, stabilisation level of greenhouse gases. This assumption is based on a recent assessment that global warming above 2oC becomes a ‘likely’ prospect once the concentration of greenhouse gases reaches 475 ppm of CO2-e (Meinshausen, 2006). In effect, this makes a 450 ppm concentration level the equivalent of a sustainability threshold and our first guiding sustainability parameter.1 What emissions trajectory should we follow to arrive at a stabilisation level of 450 ppm of CO2-e? This question arises because the concentration of greenhouse gases in the atmosphere is primarily a function of cumulative emissions levels. As a consequence, a multitude of emissions pathways can lead to a desired target (IPCC, 2000, 2007a, 2007b, 2007c; den Elzen and Meinshausen, 2006; Stern, 2006; Anderson and Bows, 2008).

Before choosing a particular emissions trajectory, the following must be borne in mind. Firstly, the shallower are the initial reductions in greenhouse gas emissions, the deeper the cuts must be in future years to stabilise at the desired concentration level. Secondly, because of the path-dependent nature of economic systems (David, 1985; Arthur, 1989), deep initial reductions in greenhouse gas emissions are likely to increase the ease and reduce the relative cost of having to make future emissions reductions. Thirdly, although it is possible to overshoot a stabilisation target and later achieve it through massive emissions reductions and high rates of carbon sequestration, the potential warming effect of climate inertia suggests that overshoot trajectories are best avoided (Meinshausen, 2006; Hansen et al., 2008). A desirable emissions trajectory must therefore involve deep initial emissions reductions (Stern, 2006). A constant rate of decline in emissions is also likely to be more desirable than a trajectory interspersed with abrupt emissions reductions. In many ways, little that can be done to alter emissions levels prior to 2012. This is because, until 2012, global emissions will be significantly determined by the obligations pertaining to the first commitment period of the Kyoto Protocol (2008-2012). They will also be strongly influenced by the underlying growth rate of the global economy. Given the reductions in greenhouse gas emissions required by many Annex I nations to meet their Kyoto obligations, plus the global ‘GDP’ recession that is expected to endure until at least 2010, the growth in global emissions is likely to decelerate up to 2012.2

Let us assume that there will be a slight rise in greenhouse gas emissions between 2010 and 2015 – a consequence of existing Kyoto obligations and a new emissions protocol involving strict emissions reductions that do not come into effect until 2015. Should greenhouse gas emissions peak in 2015, it has been estimated that the stabilisation of greenhouse gases at 450 ppm of CO2-e will require a 4% annual reduction in global CO2-e emissions (Anderson and Bows, 2008). Of this, there will need to be a 6.5% annual reduction in energy and process-related emissions. Of particular note is that annual energy and process-related emissions must be reduced to negligible levels by the end of the 21st century. Unquestionably, the achievement of such a target will require the inclusion of all the world’s countries in any new emissions protocol and the need for high-income nations, as major beneficiaries of past emissions, to undertake massive emissions reductions. 5.2 Ecological sustainability: requiring a sustainable population and sustainable rate of resource use To ensure that the rate of resource use is ecologically sustainable, it will be assumed that the global ecological footprint is an appropriate indicator of aggregate resource use intensity. Clearly, to operate sustainably, the global ecological footprint must be no greater than the Earth’s biocapacity. For precautionary reasons, it will be assumed that ecological sustainability requires humankind to reduce its ecological footprint to at least 90% of the

8

Earth’s biocapacity. The 90% factor will thus serve as our second guiding sustainability parameter.

The third and final sustainability parameter – namely, the maximum sustainable human population – is a difficult parameter to ascertain because it depends on the average per capita resource consumption of the future. This, in turn, depends on the per capita real GDP that approximates an optimal macroeconomic scale; the rate of resource-saving and pollution-reducing technological progress; and, most importantly, whether nations are willing to make the transition to a steady-state economy at the estimated optimal scale.

Ideally, humankind would bring the global ecological footprint into line with the Earth’s biocapacity before 2050 and further reduce the footprint to satisfy the 90% sustainability factor soon after. Assuming a rapid rate of technological progress and the willingness of all nations to adjust towards an optimum per capita GDP, achieving a sustainable human population will require a population peak around 2060 and a population of no more than 8 billion by the end of the 21st century. Achieving this ambitious population target will require the introduction of population stabilisation programmes in many of the world’s high population growth nations. Reliance upon the demographic transition alone – i.e., a decline in the fertility rate that normally accompanies the increase in per capita income – will not be sufficient. The world’s high-income nations will need to play their part by means of programme funding and the provision of technical and logistical support. 5.3 Increasing economic welfare: moving towards an optimal macroeconomic scale We are now left with the task of determining the optimal per capita GDP. It was revealed earlier that the sustainable economic welfare of high-income nations – as indicated by the GPI – has generally ceased to rise once per capita GDP reaches a level between Int$15,000 and Int$20,000. At first blush, this suggests that the optimum is somewhere within in this range. However, it was also pointed out that the sustainable economic welfare of some poorer nations has begun to decline at lower levels of per capita GDP (e.g., China and Thailand). This suggests that the optimum could now be much less than Int$15,000.

In a world actively seeking to achieve sustainable development, as opposed to one that is not or is seeking to achieve it through inappropriate means, there is good reason to discount the second factor when determining the optimal per capita GDP. As previously explained, the early decline in the economic welfare of poor nations can be ameliorated if high-income countries, by reducing the physical scale of their own economies, can provide the ecological space for low-income nations to enjoy an extended phase of welfare-increasing growth. Since our main interest lies in a sustainable emissions pathway, we shall assume that high-income countries will make the transition to a smaller albeit qualitatively superior economy and that this will allow the economic welfare of the world’s poor nations to rise as they increase their per capita GDP.

With the second factor excluded, where in the Int$15,000-$20,000 range might the optimum lie? There are two key influences worth considering. Firstly, the global ecological footprint is presently 50% larger than it was when high-income nations reached their per capita welfare peak in the 1970s and 1980s (Global Footprint Network, 2008). Even allowing for a gradual decline in humankind’s ecological impact, the larger footprint should ensure that the marginal cost of global economic activity remains high. Secondly, the world’s population is larger now and will inevitably rise regardless of the measures taken to quell its growth. Thus, I believe that Int$15,000 is the probable per capita optimum. It will therefore serve as our welfare-maximising parameter.

Before we move on, it is important to say a couple of things about a per capita optimum of Int$15,000 and its efficacy as a national macroeconomic target. For high-income nations, the target implies a need to reduce per capita consumption to levels reminiscent of the 1970s/80s.

9

Many would see this decline in consumption as a self-imposed recession that would lead to suffering not seen since the 1930s Great Depression. There is no doubt that, in a growth-reliant economy, a sharp fall in GDP leads to considerable hardship. Nonetheless, we have seen that excessive GDP levels are also detrimental (Figures 4 and 5). The mere fact that the increase in hardship can be minimised when GDP is rising in a growth-reliant economy does not imply that GDP growth beyond the optimal macroeconomic scale is desirable.

What matters more is that an increase in hardship need not occur if the decline in GDP constitutes an integral part of a successful transition to a qualitatively-improving steady-state economy. Through the implementation of appropriate policies, it should be possible to increase the service-yielding quality of most goods; improve the equity of wealth ownership; reduce social costs, such as the cost of crime and family breakdown; and augment the productivity of labour. The latter is important because it can facilitate job sharing that, in turn, can help maintain high employment levels and allow workers to increase their leisure time (Lawn, 2009). Taken together, these advances can drastically reduce the quantity of physical goods required to generate a given level of net psychic income.

At the same time, it should be possible to increase the technical efficiency of production; improve the recycling rates of waste materials; augment the productivity of natural capital; and develop more ecologically sensitive resource extraction techniques. Moreover, a smaller physical scale of high-income economies would itself decrease the throughput required to fuel the economic process that would further reduce the uncancelled costs of economic activity (lost natural capital services). These factors would significantly boost the GPI of high-income countries. Clearly, by the time high-income nations settle at an optimal per capita GDP of Int$15,000, the economic welfare generated ought to be considerably higher than the welfare once generated by the same per capita GDP in the 1970s/80s.

Mainstream commentators will argue that GDP growth, together with qualitative change, would produce a superior welfare outcome. Certainly, a qualitative emphasis would generate a better outcome than a policy focused on growth alone. But the economy would still be larger than the optimum and quite possibly larger than its maximum sustainable scale. The failure to recognise this and the fact that, at some point, sustainable economic welfare can only be augmented in the context of a qualitatively-improving steady-state economy reflects a widespread misunderstanding of the disparate welfare-generating potentials of a qualitatively-improving steady-state economy and a shrinking/expanding growth-reliant economy (Daly, 2008; Lawn, 2009, forthcoming). 5.4 Achieving sustainable development: a summary Overall, to resolve the climate change dilemma within the context of the broader sustainable development goal, the following needs to be at least achieved. Firstly, in order for the global economy to operate sustainably:

• The global ecological footprint must be reduced to something less than the planet’s biocapacity. From a precautionary perspective, this means reducing the global ecological footprint so it is no greater than 90% of the Earth’s biocapacity.

• The human population must be stabilised at something less than 8 billion, although, from a precautionary perspective, a number much less than this less would be more desirable and less risky.

• The concentration of greenhouse gases in the atmosphere must stabilise at no more than 450 ppm of CO2-e.

To maximise sustainable economic welfare both globally and within nations, per capita GDP should be adjusted – that is, nations should facilitate adjustments in their population and national output levels – until it stabilises at around Int$15,000 per person.

10

6. A growth-as-usual versus a sustainable emissions scenario The aim of the remainder of this chapter is to simulate a ‘growth-as-usual’ scenario and ‘sustainable’ scenario, where the latter adheres to the requirements just listed to achieve sustainable development. Both scenarios are conducted for the period 2010-2100. The central question I wish to answer by conducting these two simulation exercises is: Can sustainable development be achieved and can the 450 ppm target be attained if humankind continues with a growth-as-usual, or must it adopt a more austere approach consistent with a qualitatively-improving steady-state economy?

There are three good reasons for performing this exercise. Firstly, it can reveal the structural changes required to achieve a safe emissions target consistent with the broader goal of sustainable development. Secondly, it enables one to assess and compare the plausibility of a conventional emissions scenario and what that many would regard as a more radical emissions scenario. As we shall see, the more radical scenario – i.e., the sustainable scenario – is feasible but the conventional growth-as-usual scenario is not. Finally, consideration of the plausibility of both scenarios can provide valuable input when designing a global emissions-trading system. 6.1 Sustainable scenario – assumptions There are a number of assumptions used to conduct the sustainable scenario. I will outline a few of them here, but the remainder are explained in greater detail in Lawn (forthcoming). Assumed in this scenario are the following:

• Greenhouse gas emissions are reduced in order to meet the stabilisation target of 450 ppm of CO2-e. To achieve this, annual greenhouse gas emissions begin at 53.2 GtCO2-e in 2010 and peak in 2015 at 54.0 GtCO2-e.3 The peak comprises non-CO2 and land use emissions of 21.9 GtCO2-e and energy and process-related emissions of 32.1 GtCO2-e. Non-CO2 and land use emissions eventually fall to a floor level of 7.5 GtCO2-e (Anderson and Bows, 2008).

• The global population in 2010 is 6.92 billion. Assuming the immediate introduction of population stabilisation programmes, the annual population is thereafter determined by the following equation:

)( 0002.1

)()(

tt

tPPoptPop

−= (1)

where Pop(t) = population in year t; PPop(t) = projected population in year t (without stabilisation measures); t0 = 2010.

• The total number of bioactive hectares declines by 0.1 per cent in any year where the biocapacity is exceeded by the ecological footprint (i.e., where there is an ecological deficit).

• The annual resource flow used for production purposes changes in direct proportion to the change in the global ecological footprint.

• GWP is a function of the annual resource flow and the technical efficiency of production. The production function for GWP is:

( )[ ] RKGWP H ×−−= .exp1 β (2)

where KH = a combined factor of producer goods and labour; β = technology; R = the annual resource flow (reflected by the annual change in the global ecological footprint); ( )[ ]HK.exp1 β−− = the technical efficiency of production (E); and 0 < E < 1.

11

• Over the study period, significant technological progress increases the technical efficiency of production by a factor of 3.6 (1.4% p.a).4

• Upon reducing the footprint/biocapacity ratio to 0.9, the reduction in the ecological footprint is momentarily suspended to minimise the remaining time it takes to reach the optimal per capita GWP of Int$15,000.

• Upon reaching the optimal per capita GWP, a 1% annual decline in the ecological footprint is resumed. By reducing the ecological footprint, the uncancelled costs of economic activity are further lowered. This progressively increases the sustainable economic welfare enjoyed at the optimal macroeconomic scale.

6.2 Sustainable scenario – results Table 1 reveals the end-of-decade values of each major variable and the values pertaining to the years in which key milestones are attained during the simulation period. The five columns in the left-hand segment of Table 1 reveal the changes in total and component greenhouse gas emissions, population, and per capita total emissions. The emissions values reflect the emissions trajectory needed to stabilise greenhouse gas concentrations at the 450 ppm target. The population column shows the global population peaking at 8.55 billion in 2062 and then falling to 7.95 billion by 2100 (Figure 6). Due to the large decrease in total greenhouse gas emissions over the simulation period, per capita global emissions decline from 7.69 tonnes per person in 2010 to 0.96 tonnes per person in 2100 (Figure 6). This constitutes an 87.5% decrease over the simulation period or an average annual decline of 2.3%. Insert Table 1 here Insert Figures 6-9 here

The five columns in the central segment of Table 1 reveal the ecologically-related variables. The third column shows the footprint/biocapacity ratio falling from 1.37 in 2010 to 1.0 by 2044 and then to 0.9 by 2054. The ecological footprint is subsequently maintained at 90% of the Earth’s biocapacity until the per capita GWP reaches Int$15,003 in 2084. The ecological footprint is then reduced to 10.13 billion global hectares by 2100 which lowers the footprint/biocapacity ratio to 0.76 (Figure 7). Over the entire simulation period, the global ecological footprint declines by 44.4% (average decrease of 0.7 per cent per annum). The per capita ecological footprint, by falling from 2.63 to 1.27 global hectares, declines by 51.6% over the simulation period (average decrease of 0.8% per annum).

The economic adjustment variables are revealed in the right-hand segment of Table 1. The first column shows GWP increasing from Int$61.0 trillion in 2010 to Int$125.2 trillion in 2084, but then declining slightly to Int$119.3 trillion by 2100 (Figure 8). Per capita GWP (second column) rises from its 2010 value of Int$8,811 to its optimal value of Int$15,003 in 2084. Beyond 2084, per capita GWP remains at the optimal value (Figure 8).

The third, fourth, and fifth columns in the right-hand segment are efficiency variables. These variables are of critical concern since they provide insight into the technical plausibility of the sustainable scenario. As the fifth column shows, the technical efficiency of production rises from its initial value of 0.25 in 2010 to 0.89 in 2100. The third column, which reveals the GWP/emissions ratio (i.e., the output per tonne of greenhouse gas emissions), begins in 2010 at Int$1,145 per tonne and increases to Int$15,588 per tonne by the end of the simulation period (Figure 9). Finally, the GWP/footprint ratio in the fourth column rises from Int$3,347 per global hectare to Int$11,781 per global hectare (Figure 9).

12

6.3 The plausibility of the sustainable emissions scenario Although the scenario presented meets the three sustainability parameters and the one welfare-maximising target, doubts surrounding its plausibility rest mostly with the GWP/emissions ratio and the technical efficiency ratio. This is because the two ratios must increase over the remainder of the century by factors of 13.6 and 3.5 respectively to permit the generation of the GWP levels indicated in Table 1 (or 2.9% and 1.4% per annum).5 Should the ratios fail to increase sufficiently, it will be impossible to achieve the optimal per capita GWP of Int$15,003 by 2084, if ever.

There is no doubt that it will be difficult to increase the technical efficiency ratio at the rate being assumed in this scenario. Having said this, the 1.4% annual increase required over the remainder of the century is only slightly greater than the projected annual increase of 1 per cent (Nakicenovic et al., 2006; IPCC, 2007d). As things stand, modern production processes and transport systems are extremely resource-wasteful. In addition, the recycling of waste materials falls well short of potential recycling rates (Weiszacker et al., 1998). Provided appropriate policies and incentives are introduced to stimulate efficiency-increasing technological progress – e.g., ecological tax reform (see Lawn, forthcoming) – the assumed rise in technical efficiency would appear feasible (IEA, 2006; Jolley, 2006; IPCC, 2007d).

More problematic is the required rate of increase in the GWP/emissions ratio. At 2.9% per annum, it is well above the 1.2% historical rate of increase (IPCC, 2007d). There are, nonetheless, encouraging results emerging from interventionist emissions scenarios aimed specifically at reducing the carbon intensity of economic activity. Some of these simulation studies forecast a decline in the carbon intensity of GWP of around 2.5% per annum (IPCC, 2000; Riahi and Roehrl, 2001; Nakicenovic et al., 2005; Riahi et al., 2006). Whilst this is below the 2.9% rate needed, I believe appropriate policy measures, together with a well-designed emissions-trading system (see Lawn, forthcoming), are more conducive to efficiency improvements, carbon-reducing technological progress, and the transition away from carbon-based fuels than the measures pertaining to these interventionist scenarios. Should this be the case, and should the policies be enough to bridge the 0.4% gap, the required increase in the GWP/emissions ratio should be comfortably achieved.

Another important aspect requiring serious consideration is whether it is possible to make the shift to renewable energy at the rate and levels required to satisfy this or any other sustainable emissions scenario. Such an assessment is not easy to make. There is, for example, considerable debate over the future prospects of: (i) renewable energy; (ii) nuclear energy as a relatively safe, low-carbon, non-renewable energy source; and (iii) carbon capture-and-storage technology (geosequestration) as a means of reducing the urgency with which fossil fuel use must be decreased. The most optimistic estimates suggest that humankind should have little difficulty in meeting the energy demands of the sustainable emissions scenario just presented (Pacala and Socolow, 2004; IPCC, 2007c; MacKay, 2009).

Because of the possible inaccuracy of the optimistic claims, it makes more sense to focus on the pessimistic estimates. After all, should they exceed the necessary energy requirements, there is little cause for concern (see Table 2). A number of pessimistic outlooks have been articulated in relation to the development, expansion, and integration of wind and solar energy, biofuels, hydro-electricity, nuclear energy, hydrogen conversion, and geosequestration technology (Trainer, 1995, 2005, 2007, 2008; Davy and Coppin, 2003; Bossel, 2003, 2004; Torvanger et al., 2004; Hendricks et al., 2004; Jolley, 2006; Augenstein and Benemann, 2007; Storm van Leeuwin and Smith, 2008). Taken together, these viewpoints indicate the need to augment nuclear energy as a means of overcoming initial energy shortfalls.6 However, due to safety and international security concerns, it would be desirable to reduce the use of nuclear energy once renewable energy has reached sufficient supply capacity.

13

Insert Table 2 here

In order to assess the plausibility of the sustainable emissions scenario, it is first necessary to convert the global ecological footprint from Table 1 to an equivalent level of energy use. It is then necessary to make assumptions regarding the potential to expand the different energy sources as well as assumptions about the greenhouse gas emissions associated with their use. Using the above references as a guide, Table 2 and Figure 10 reveal: (i) the total energy required over the simulation period (measured in Exajoules (EJ)); (ii) the change in the composition of energy use; and (iii) a lower-bound estimate of the world’s renewable energy potential. As column C shows, the permissible use of non-renewable energy – the major contributor of energy and process-related emissions – decreases dramatically over the simulation period from 405.9 EJ in 2010 to 6.1 EJ by 2100. Conversely, the use of nuclear energy (column D) rises rapidly between 2010 and 2050 (29.2 EJ to 57.5 EJ); increases marginally between 2050 and 2060 (57.5 EJ to 59.7 EJ); and is reduced to negligible levels by 2100 (1.9 EJ in 2100). Insert Figure 10 here

Except for a minimal rise between 2040 and 2050, renewable energy requirements (column F) increase steadily between 2010 and 2080 (89.1 EJ to 307.2 EJ). Beyond 2080, renewable energy requirements fall to 269.0 EJ by 2100 – a consequence of the reduction in total energy demand. As for the lower-bound estimate of the world’s renewable energy potential (column L), it rises throughout the simulation period (up from 89.1 EJ in 2010 to 394.5 by 2100). Nevertheless, the rate of increase slows in the second half of the century due to diminishing returns caused by power integration difficulties, lengthening transmission distances, a lack of suitable locations (wind, wave, and solar), increasing siltation of dams (hydro-electricity), and declining soil fertility and water shortages (biofuels). Critically, the lower-bound estimate of the world’s renewable energy potential remains above the estimated renewable energy requirements for the entire simulation period.7 Column M and Figure 10 show the extent to which the former exceeds the latter. In all but 2030, the world’s renewable energy potential at the end of each decade is at least 17.7% higher than its renewable energy requirements. In 2030, the excess capacity is just 4.1%. Provided this constitutes a sufficiently secure buffer, it should be possible to generate the renewable energy needed to satisfy the sustainable emissions scenario. All things considered, the sustainable scenario presented appears eminently plausible. 7. A growth-as-usual emissions scenario 7.1 A growth-as-usual scenario – assumptions Having revealed and assessed the plausibility of a sustainable emissions scenario, a growth-as-usual scenario will now be simulated. Some of the assumptions applied in the sustainable emissions scenario are also used in the growth-as-usual scenario. The most obvious similarity is the greenhouse gas emissions trajectory, which is in every way identical to the sustainable emissions scenario (i.e., leads to stabilisation at 450 ppm of CO2-e).

Where the growth-as-usual scenario differs to the sustainable scenario is in terms of Gross World Product (GWP). It is assumed that GWP rises at a rate consistent with IPCC projections (IPCC, 2000, 2007c). In addition, there is no aim to reduce the global ecological footprint below the Earth’s biocapacity, nor any desire to have per capita GWP settle at an assumed optimal level. It is these assumptions which render the simulation conducted in this

14

section a growth-as-usual exercise despite the 450 ppm target. Some of the additional assumptions employed in the growth-as-usual scenario include:

• As projected by the Population Division of the United Nations Department of

Economic and Social Affairs, the global population increases to a peak of 9.57 billion by 2082 and is 9.52 billion by 2100 (www.earthtrends.wri.org).

• Gross World Product (GWP) increases at an average rate of 2.3% per annum. This is consistent with IPCC projections (IPCC, 2000, 2007c).

• Because this a growth-as-usual scenario, there is no aim to reduce the global ecological footprint below the Earth’s biocapacity, nor any desire to have per capita GWP settle at an assumed optimal level.

• The total number of bioactive hectares declines by 0.1 per cent in any year where the biocapacity is exceeded by the ecological footprint (i.e., where there is an ecological deficit).

7.2 A growth-as-usual scenario – results Like the sustainable emissions scenario, the growth-as-usual scenario is also simulated for the 2010-2100 period. The end-of-decade values of each major variable and the values pertaining to one milestone year are revealed in Table 3. The values of all but one of the five columns in the left-hand segment of the table are the same as the sustainable emissions scenario. The one exception – the population column – shows the global population rising to a peak of 9.67 billion by 2082 and then falling to 9.52 billion by 2100. Insert Table 3 here

The ecologically-related variables in the central segment of Table 3 are considerably different to the sustainable emissions scenario. The first column shows the global ecological footprint rising throughout the simulation period – the result of having to constantly increase the rate of throughput to boost GWP by 2.3% per annum. By 2100, the ecological footprint is 39.52 billion global hectares. This constitutes a 116.9% rise over the simulation period or an average rate of increase of 0.9% per annum. Because the Earth’s biocapacity (second column) is always exceeded by the ecological footprint, the biocapacity declines in every year between 2010 and 2100. By 2100, the Earth’s biocapacity is 12.52 billion global hectares – a 5.8% decrease over the simulation period. The increase in the global ecological footprint and a comparison with the footprint pertaining to the sustainable emissions scenario are diagrammatically presented in Figure 11.

Insert Figures 11-13 here

Unlike the sustainable emissions scenario, the footprint/biocapacity ratio (third column)

increases throughout the simulation period. Beginning at 1.37 in 2010, the ratio rises to 3.16 by 2100. On a per capita basis, the ecological footprint increases from 2.63 to 4.15 hectares (57.8% increase). Conversely, the per capita biocapacity falls from 1.92 to 1.32 hectares (31.5% decrease).

The first of the economic adjustment variables in the right-hand segment of Table 3 shows GWP growing at 2.3% per annum. By 2100, GWP is Int$472.1 trillion – a 7.7 factor-increase over the simulation period. Per capita GWP (second column) rises from its 2010 value of Int$8,811 to Int$49,607 by 2100. It therefore grows well beyond the optimal value of Int$15,000 (Figure 12).

15

Of the efficiency variables, the technical efficiency of production (fifth column) rises from its initial value of 0.25 in 2010 to 0.89 by 2100. This is the same rate of increase as the sustainable emissions scenario.8 As a consequence, GWP/footprint ratio in the fourth column also rises at the same rate as the sustainable emissions scenario (i.e., up from Int$3,347 per global hectare in 2010 to Int$11,945 per global hectare by 2100). I should point out that the identical change in the GWP/footprint ratio also explains why the rapid rate of GWP growth in the growth-as-usual scenario results in a large and ever-increasing ecological footprint. Finally, the GWP/emissions ratio (column three) increases from Int$1,145 to Int$61,697 per tonne of greenhouse gas emissions. This constitutes a 53.9 factor rise over the simulation period or an average rate of increase of 4.5 per cent per annum – much higher than the required 13.6 factor rise or annual 2.9 per cent increase pertaining to the sustainable emissions scenario (Figure 13). 7.3 Plausibility of the growth-as-usual scenario Although, by adhering to a 450 ppm stabilisation target, the growth-as-usual scenario satisfies the first sustainability parameter, there are many reasons why it can be dismissed as a plausible means of achieving the sustainable development goal. Firstly, with a footprint/biocapacity ratio rising to 3.16 by 2100, the scenario is grossly unsustainable. In fact, it is questionable whether a footprint/biocapacity ratio of this magnitude would be possible without triggering a catastrophic collapse of the world’s ecosystems and renewable resource stocks. In view of the complementarity that exists between human-made and natural capital, it is therefore doubtful whether the GWP levels assumed in this scenario – particularly those towards the end of the century – are in any way achievable. Secondly, even allowing for the most optimistic predictions regarding the development and implementation of geosequestration technology, it is unlikely that a 53.9 factor-increase in the GWP/emissions ratio could be achieved.9 Whilst a massive increase in nuclear energy could greatly assist in this regard, it would be insufficient to bridge the gap (Trainer, 2007; Storm van Leeuwin and Smith, 2008). In any case, the nuclear industry is dependent upon non-renewable resources and is itself unsustainable in the long-run.

Thirdly, although many of the optimistic estimates concerning renewable energy supplies appear to be sufficient to power a global economy producing a GWP of Int$472.1 trillion in 2010 (1,073.8 EJ), these estimates include such developments as the expansion of biofuels and hydro-electricity.10 They are consequently based on the capacity to further increase humankind’s ecological footprint. As explained above, the ecological footprint/biocapacity ratio will be exceedingly unsustainable by the year 2100. The optimistic estimates are therefore wildly over-inflated. As for the lower-bound estimates of the world’s renewable energy potential (Table 2), it is demonstrably clear that, if reasonably accurate, it would be impossible to generate the renewable energy needed to power the global economy, let alone generate it in an ecologically sustainable manner (Note: the lower-bound estimate of the world’s renewable energy potential for 2010 is 394.5 EJ which is considerably less than the required 1,073.8 EJ).

Finally, even if a GWP of Int$472.1 trillion could be produced in 2100, the associated per capita GWP of Int$49,607 would be well above the optimal value of Int$15,000. Thus, as much as average consumption levels would be very high in a growth-as-usual scenario, the additional benefits generated would be far outweighed by the additional costs, especially given that the projected rise in the ecological footprint/biocapacity ratio suggests a massive future increase in the uncancelled costs of economic activity. It is also highly likely that a growing proportion of the rising GWP would be comprised of defensive and remedial activities (Lawn and Clarke, 2008). These activities do not directly increase well-being but merely minimise, where possible, the current and future welfare losses associated with

16

excessive growth (Leipert, 1986). Combined with the high cost of lost natural capital services, the economic welfare experienced by the average global citizen is likely to be much lower than the welfare experienced in a sustainable emissions scenario. Overall, the growth-as-usual scenario is both infeasible and undesirable. 8. Concluding remarks Dealing adequately with climate change requires the resolution of the climate change dilemma within the broader context of sustainable development. This is because climate change: (i) has the potential to undermine the ecological integrity of the planet; (ii) is likely to impact negatively on the quality of human life; and (iii) must be tackled in the knowledge that other social and environmental maladies also threaten the sustainable development process.

A major driving force behind the escalation in greenhouse gas emissions is humankind’s predilection with the continuous growth of the economic subsystem – an obsession that has also led to the global economy overshooting the ecosphere’s long-run carrying capacity and to many national economies exceeding their optimal scale. As a consequence, the world’s high-income countries must make the transition to a steady-state economy. The world’s low-income nations will have to do likewise but only following a much needed phase of clean, efficient, and equitable growth.

To achieve sustainable development, it has been argued that the atmospheric concentration of greenhouse gases must not exceed 450 ppm of CO2-e. In addition, the global ecological footprint must be reduced to 90% of the Earth’s biocapacity; the world’s population must be stabilised at no higher than 8 billion by the end of the 21st century; and nations should gravitate towards a per capita GDP of $Int15,000. Given the need for high-income nations to reduce their rates of production and consumption (i.e., given that high-income nations have a per capita GDP in excess of $Int15,000), the focus of policy in a steady-state milieu must shift from quantitative expansion (growth) to qualitative improvement (development). This will enable nations to increase their per capita economic welfare without the need for growth. It will also make it easier to reduce greenhouse gas emissions to the levels required to stabilise at 450 ppm of CO2-e. It is with this in mind, plus the need for high-income nations to bear the greatest brunt of global emissions reductions, that a future emissions protocol should be designed and implemented. References Anderson, K. and Bows, A. (2008), ‘Reframing the climate change challenge in light of post-

2000 emission trends’, Philosophical Transactions of the Royal Society, doi:10.1098/rsta.2008.0138.

Arthur, W. (1989), ‘Competing technologies, increasing returns, and lock-in by historical events’, The Economic Journal, 99, pp. 116-131.

Augenstein, D. and Benemann, J. (2007), ‘The Cellulosic Ethanol Delusion’, www.aiche-norcal.org/Symposium/Symposium2006/pdfs/EnergySolutions.pdf (accessed 30 March 2009).

Ayres, R. (2005), ‘Resources, scarcity, technology, and growth’, in R. Simpson, M. Toman and R. Ayres (eds), Scarcity and Growth Revisited, Resource for the Future, Washington DC, pp. 142-154.

Bossel, U. (2003), The World Needs a Sustainable Energy Economy, not a Hydrogen Economy, European Fuel Cell Forum, Report E09.

Bossel, U. (2004), ‘The hydrogen illusion: why electrons are a better energy carrier’, Cogeneration and On-Site Power Production, March-April, pp. 55-59.

201

17

Brookes, L. (2000), ‘Energy efficiency fallacies revisited’, Energy Policy, 28(6/7), pp. 355-366.

Daly, H. (2007), Ecological Economics and Sustainable Development: Selected Essays of Herman Daly, Edward Elgar, USA.

Daly, H. (2008), ‘A Steady-State Economy: A failed growth economy and a steady-state economy are not the same thing; they are the very different alternatives we face’, Paper produced for the Sustainable Development Commission, UK.

Daly, H. and Cobb, J. (1989), For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future, Beacon Press, Boston.

David, P. (1985), ‘Clio and the economics of QWERTY’, American Economic Review, 75(2), pp. 332-337.

Davy, R. and Coppin, P. (2003), South East Australian Wind Power Study, Wind Energy Research Unit, CSIRO, Canberra.

den Elzen, M. and Meinshausen, M. (2006), ‘Multi-gas emission pathways for meeting the EU 2oC climate target’, in H. J. Schellnhuber, W. Cramer, N. Nakicenovic, T. Wigley, and G. Yohe (eds), Avoiding Dangerous Climate Change, Cambridge University Press, Cambridge, UK, pp. 299-309.

Global Footprint Network (2008), The Ecological Footprint Atlas 2008: Version 1.0, Global Footprint Network, Oakland, CA.

Global Footprint Network (2010), The Ecological Footprint Atlas 2010, Global Footprint Network, Oakland, CA.

Haberl, H., Krausman, F. and Gingrich, S. (2006), ‘Ecological embeddedness of the economy’, Economic and Political Weekly, November 25.

Hansen, J., Sato, M., Kharecha P., Beerling, D., Masson-Delmotte, V., Pagani, M., Raymo, M., Royer, D. and Zachos, J. (2008), ‘Target Atmospheric CO2: Where Should Humanity Aim?’, Open Atmospheric Science Journal, 2, pp. 217-231.

Hendricks, C., Graus, W. and van Bergen, F. (2004), ‘Global carbon dioxide storage potential and costs’, ECOFYS, Utrecht, www.ecofys.nl (accessed 30 March 2009).

IEA (2006), World Energy Outlook, OECD/IEA, Paris. IPCC (2000), Special Report on Emissions Scenarios, Intergovernmental Panel on Climate

Change, Cambridge University Press, Cambridge. IPCC (2007a), Climate Change 2007: Synthesis Report, Synthesis of the Fourth Assessment

Report, Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge.

IPCC (2007b), Climate Change 2007: The Physical Science Basis, Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge.

IPCC (2007c), Climate Change 2007: Impacts, Adaptation and Vulnerability, Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge.

IPCC (2007d), Climate Change 2007: Mitigation of Climate Change, Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, Cambridge University Press, Cambridge.

Jackson, T. and S. Stymne (1996), Sustainable Economic Welfare in Sweden: A Pilot Index 1950-1992, Stockholm: Stockholm Environment Institute.

Jolley, A. (2006), ‘Technologies for Reducing Stationary Energy Use’, Climate Change Project Working Paper Number 6, Centre of Strategic Economic Studies, Victoria University, March 2006.

Lawn, P. (2000), Toward Sustainable Development, CRC Press, Boca Raton.

18

Lawn, P. (2006), ‘Sustainable development: concept and indicators’, in P. Lawn (ed.), Sustainable Development Indicators in Ecological Economics, Edward Elgar, UK, pp. 13-51.

Lawn, P. (2007), Frontier Issues in Ecological Economics, Edward Elgar, UK. Lawn, P. (ed.) (2009), Environment and Employment: A Reconciliation, Routledge, UK. Lawn, P. (forthcoming), The Ecological Economics of Climate Change, Springer, Dordrecht,

The Netherlands. Lawn, P. and Clarke, M. (eds) (2008), Sustainable Welfare in the Asia-Pacific, Edward Elgar,

UK. Leipert, C. (1986), ‘From gross to adjusted national product’, in P. Ekins (ed.), The Living

Economy: A New Economics in the Making, Routledge & Kegan Paul, London, pp. 132-140.

MacKay, D. (2009), Sustainable Energy – Without the Hot Air, UIT, Cambridge. Max-Neef, M. (1995), ‘Economic growth and quality of life’, Ecological Economics, 15 (2),

pp. 115-118. Meinshausen, M. (2006), ‘What does a 2oC target mean for greenhouse gas concentrations? A

brief analysis based on multi-gas pathways and several climate sensitivity uncertainty estimates’, in H. J. Schellnhuber, W. Cramer, N. Nakicenovic, T. Wigley, and G. Yohe (eds), Avoiding Dangerous Climate Change, Cambridge University Press, Cambridge, UK, pp. 265-279.

Nakicenovic, N., McGalde, J., Ma, S., Alcamo, J., Bennett, E., Cramer, W., Robinson, J., Toth, F. and Zurek, M. (2005), ‘Lessons learned from scenario analysis’, in S. Carpenter, Pingali, P., E. Bennett and M. Zurek (eds), Ecosystems and Human Well-Being: Scenarios, Volume II, Island Press, Chicago, pp. 449-468.

Nakicenovic, N., Kolp, P., Riahi, K., Kainuma, M. and Hanaoka, T. (2006), ‘Assessment of emissions scenarios revisited’, Environmental Economics and Policy Studies, 7(3), pp. 137-173.

Pacala, S. and Socolow, R. (2004), ‘Stabilization wedges: solving the climate problem for the next 50 years with current technologies’, Science, 305(5686), pp. 968-972.

Polimeni, J. (2008), ‘Empirical evidence for the Jevons Paradox’, in J. Polimeni, K. Mayumi, M. Giampoetro and B. Alcott (eds), The Jevons Paradox and the Myth of Resource Efficiency Improvements, Earthscan, London.

Retallack, S. (2005), Setting a Long-Term Climate Objective, A paper for the International Climate Change Taskforce, Institute for Public Policy Research, London.

Riahi, K. and Roehrl, R. (2001), ‘Energy technology strategies for carbon dioxide mitigation and sustainable development’, Environmental Economics and Policy Studies, 3(2), pp. 89-123.

Riahi, K., Grubler, A. and Nakicenovic, N. (2006), ‘Scenarios of long-term socio-economic and environmental development under climate stabilization’, Technological Forecasting and Social Change, 74(8-9), Special Issue, doi:10.1016/j.techfore.2006.05.026.

Stern, N. (2006), The Economics of Climate Change: The Stern Review, Cambridge University Press, UK.

Storm van Leeuwen, J. and Smith, P. (2008), Nuclear Power – The Energy Balance, www.stormsmith.nl (accessed 30 March 2009).

Torvanger, A., Kallbekken, S. and Rypdal, K. (2004), Prerequisites for Geological Carbon Storage as a Climate Policy Option, Centre for the International Climate and Environmental Research, Norway.

Trainer, T. (1995), ‘Can renewable energy save industrial society?’, Energy Policy, 23(12), pp. 1009-1026.

19

Trainer, T. (2005), ‘Can renewable energy sources sustain affluent society?’, Energy Policy, 23(12), pp. 1009-1026.

Trainer, T. (2007), Renewable Energy Cannot Sustain Consumer Society, Springer, Dordrecht.

Trainer, T. (2008), ‘A critique of the Stern and IPCC analyses of CO2 mitigation: consumer-capitalist society cannot solve the problem’, The International Journal of Inclusive Democracy, 4(4), pp. 1-12.

Wackernagel, M., Onisto, L., Bello, P., Callejas Linares, A., Susana Lopez Falfan, S., Mendez Garcia, J., Suarez Guerrero, A. I., and Suarez Guerrero, Ma. G. (1999), ‘National natural capital accounting with the ecological footprint concept’, Ecological Economics, 29 (3), pp. 375-390.

Weiszacker, E. Lovins, A. and Lovins, L. (1998), Factor Four: Doubling Wealth – Halving Resource Use, Earthscan, London.

World Resources Institute (WRI), EarthTrends: The Environmental Information Portal, http://earthtrends.wri.org.

20

Figure 1: Economy as a subsystem of the Earth

EARTH

ECONOMY

Resources (R) Waste (W) (production) (consumption)

21

Figure 2: Humankind’s Ecological Footprint versus Earth’s Biocapacity (Source: Wackernagel et al., 2006)

22

Figure 3: The sustainable economic welfare generated by a growing economy

Benefits Costs Costs Sustainable economic welfare (GPI) Benefits GPI* 0 S* SS Physical scale of economy

23

Figure 4: Genuine Progress Indicator (GPI) of six high-income countries (Source: Jackson and Stymne, 1996)

24

Figure 5: The per capita GPI versus per capita GDP of selected Asia-Pacific countries (Sorce: Lawn and Clarke, 2008)

Per capita GPI versus per capita GDP of selected Asia-Pacific countries

0

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000

22,500

0 4,000 8,000 12,000 16,000 20,000 24,000 28,000 32,000

Per capita GDP ($Int at 2004 prices)

Per

cap

ita G

PI (

$Int

at 2

004

pric

es)

Australia

NZ

Japan

China

India

Thailand

Vietnam

25

Table 1: A sustainable scenario with an optimal scale of the world economy at $Int15,000 per capita Greenhouse gas trajectory to stabilise Ecological sustainability trajectory Economic adjustment - p.c. Int$15,000

at 450 CO2-e ppm (Ecological footprint ≤ biocapacity) equates to optimal scale Total Non-CO2 Energy & Popn Per capita Ecological Biocapacity Earths Per Per GWP Per capita GWP/ GWP/ Techical

emissions & land use process CO2-e footprint (BC) required capita capita GWP emissions gha efficiency

emissions emissions emissions (EF) (EF/BC) EF BC

Year (GtCO2-e) (GtCO2-e) (GtCO2-e) (millions) (t/person) (mill.of gha) (mill. of gha) (gha) (gha) (bill. of Int$) (Int$) (Int$/tonne) (Int$/ha)

2010 53.2 21.6 31.7 6,922.0 7.69 18,220.2 13,294.3 1.37 2.63 1.92 60,987.5 8,811 1,145 3,347 0.252015 54.0 21.9 32.1 7,222.6 7.48 17,335.9 13,260.5 1.31 2.40 1.84 63,954.6 8,855 1,184 3,689 0.282020 44.4 20.9 23.5 7,515.4 5.91 16,494.5 13,225.2 1.25 2.19 1.76 66,941.3 8,907 1,508 4,058 0.302030 30.0 17.5 12.5 7,991.9 3.75 14,932.3 13,142.7 1.14 1.87 1.64 72,873.5 9,118 2,430 4,880 0.362040 20.3 13.6 6.7 8,310.2 2.44 13,518.0 13,070.7 1.03 1.63 1.57 78,543.4 9,451 3,877 5,810 0.432044 17.3 12.1 5.2 8,398.0 2.06 12,990.5 13,037.6 1.00 1.55 1.55 80,671.8 9,606 4,659 6,210 0.462050 13.7 10.1 3.5 8,485.3 1.61 12,237.7 13,064.8 0.94 1.44 1.54 83,647.2 9,858 6,113 6,835 0.512054 11.7 8.9 2.8 8,519.2 1.37 11,760.2 13,082.0 0.90 1.38 1.54 85,452.0 10,031 7,305 7,266 0.542060 9.4 7.5 1.9 8,544.6 1.10 11,796.0 13,106.7 0.90 1.38 1.53 93,518.5 10,945 9,960 7,928 0.592062 9.2 7.5 1.7 8,546.3 1.07 11,803.2 13,114.6 0.90 1.38 1.53 96,209.2 11,257 10,496 8,151 0.612070 8.5 7.5 1.0 8,518.9 1.00 11,830.3 13,144.8 0.90 1.39 1.54 107,011.7 12,562 12,580 9,046 0.682080 8.0 7.5 0.5 8,408.8 0.96 11,861.4 13,179.3 0.90 1.41 1.57 120,163.1 14,290 14,953 10,131 0.762084 7.9 7.5 0.4 8,341.8 0.95 11,873.0 13,192.2 0.90 1.42 1.58 125,151.7 15,003 15,808 10,541 0.792090 7.8 7.5 0.3 8,217.6 0.95 11,184.9 13,210.6 0.85 1.36 1.61 123,288.3 15,003 15,835 11,023 0.832100 7.7 7.5 0.2 7,950.8 0.96 10,125.5 13,239.0 0.76 1.27 1.67 119,285.2 15,003 15,588 11,781 0.89

% change -85.6% -65.2% -99.5% 14.9% -87.5% -44.4% -0.4% -44.2% -51.6% -13.3% 95.6% 70.3% 1260.8% 252.0% 256.9%Ave. p.a. -2.1% -1.2% -5.8% 0.2% -2.3% -0.7% 0.0% -0.6% -0.8% -0.2% 0.7% 0.6% 2.9% 1.4% 1.4%

2010: Policies implemented to reduce CO2-e emissions to the levels required to stabilise the atmospheric concentration of greenhouse gases at 450 ppm 2015: Annual emissions levels peak 2044: World economy at maximum sustainable scale or one Earth (i.e. ecological footprint equals biocapacity)2054: Scale of world economy at safe level of 0.9 Earths2062: World population peaks2084: World economy settles at optimal macroeconomic scale of approximately Int$15,000 per person

26

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Ton

nes

of C

O 2-e

em

issi

ons

per

pers

on

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Millions of people

Per capita emissions

Population

Figure 6: Population and per capita emissions – World, 2010-2100

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Mill

ions

of g

loba

l hec

tare

s (g

ha)

Biocapacity

Ecological footprint

Figure 7: Ecological footprint versus biocapacity – World, 2010-2100

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Bill

ions

of $

Int a

t 200

4 pr

ices

0

5,000

10,000

15,000

20,000

$Int a

t 2004 pricesGWP

pc GWP

Figure 8: GWP and per capita GWP – World, 2010-2100

27

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

$Int

(20

04 p

rices

) pe

r gl

obal

hec

tare

(gh

a)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

$Int (2004 prices) per tonne of CO2 -e em

issions

GWP/CO2-e emissions

GWP/ecological footprint

Figure 9: Required footprint and emissions efficiency – World, 2010-2100

28

Table 2: Energy potential to meet energy needs and CO2-e emissions caps (sustainable scenario) - World, 2010-2100

Energy Energy & Permissible Nuclear Geosequest. Renewable energy Excess Renewable

trajectory process non-renew. energy Total Potential renewable renewable % of total

emissions energy required Wind Solar Biomass Hydro Remainder Total capacity energy

(EJ) (GtCO2-e) (EJ) (EJ) (EJ) (EJ) (EJ) (EJ) (EJ) (EJ) (EJ) (EJ) (%) (%)Year A B C D E F G H I J K L M N

2010 495.0 31.7 405.9 29.2 0.0 89.1 1.5 0.3 64.4 14.9 8.1 89.1 100.0% 18.0%2020 448.1 23.5 326.4 36.3 15.0 121.7 16.6 26.4 75.8 18.6 12.1 150.8 123.9% 27.2%2030 405.7 12.5 200.8 43.4 16.8 204.9 31.7 52.6 87.2 22.3 16.9 213.3 104.1% 50.5%2040 367.3 6.7 132.7 50.4 14.2 234.5 46.9 78.7 98.6 26.0 22.0 276.1 117.7% 63.9%2050 332.5 3.5 96.8 57.5 10.7 235.6 62.0 110.0 110.0 29.7 26.4 338.1 143.5% 70.9%2060 320.5 1.9 75.7 59.7 8.0 244.8 65.1 115.5 115.5 31.2 29.1 356.3 145.6% 76.4%2070 321.4 1.0 34.2 21.4 6.0 287.2 67.7 120.1 120.1 32.4 30.5 370.9 129.2% 89.3%2080 322.2 0.5 15.0 5.4 4.5 307.2 69.7 123.7 123.7 33.4 31.7 382.3 124.5% 95.3%2090 303.9 0.3 9.5 3.4 3.5 294.4 71.1 126.2 126.2 34.1 32.7 390.3 132.6% 96.9%2100 275.1 0.2 6.1 1.9 2.8 269.0 71.8 127.5 127.5 34.4 33.3 394.5 146.6% 97.8%

SourcesA: Trainer (2007); IEA (2009); own estimatesB: Anderson and Bows (2008)C: Own estimatesD: Trainer (2007); Storm van Leeuwen and Smith (2008); IEA (2009); own estimatesE: Torvanger et al. (2004); Hendricks et al. (2004); Trainer (2007); own estimatesG: Davy and Coppin (2003); Stern (2006); Trainer (2007); Global Wind Energy Council (2008)H: Hayden (2003); Stern (2006); Trainer (2007); IEA (2009); own estimatesI : Stern (2006); Trainer (2007); Augenstaein and Benemann (2007); REN21 (2009); own estimatesJ: Trainer (2007); REN21 (2009); own estimatesK: Bossel (2003, 2004); Trainer (2007); IEA (2009); own estimatesL: Sum of columns G-K

Note: Values may not sum precisely due to rounding errors

29

0

100

200

300

400

500

600

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Exa

joul

es o

f ene

rgy

(EJ)

Sustainable energy trajectory

Permissible non-renewable energy use

Renewable energy required

Renewable energy potential

Figure 10: World energy trajectory in a sustainable scenario with greenhouse gas stabilisation at 450 ppm of CO2-e, 2010-2100

30

Table 3: A growth-as-usual scenario with no population stabilisation policy Greenhouse gas trajectory to stabilise Growth-as-usual trajectory Growth-as-usual trajectory - GWP increases

at 450 CO2-e ppm at the rate of 2.3% p.a.Total Non-CO2 Energy & Popn Per capita Ecological Biocapacity Earths Per Per GWP Per capita GWP/ GWP/ Techical

emissions and land use process CO2-e footprint (BC) required capita capita GWP emissions gha efficiency

emissions emissions emissions (EF) (EF/BC) EF BC

Year (GtCO2-e) (GtCO2-e) (GtCO2-e) (millions) (t/person) (mill.of gha) (mill. of gha) (gha) (gha) (bill. of $Int) ($Int) ($Int/tonne) ($Int/ha)

2010 53.2 21.6 31.7 6,922.0 7.69 18,220.2 13,294.3 1.37 2.63 1.92 60,987.5 8,811 1,145 3,347 0.252015 54.0 21.9 32.1 7,295.1 7.40 18,522.3 13,260.5 1.40 2.54 1.82 68,331.2 9,367 1,265 3,689 0.282020 44.4 20.9 23.5 7,667.1 5.79 18,864.4 13,225.2 1.43 2.46 1.72 76,559.2 9,985 1,725 4,058 0.302030 30.0 17.5 12.5 8,317.7 3.60 19,692.9 13,150.4 1.50 2.37 1.58 96,106.7 11,554 3,205 4,880 0.362040 20.3 13.6 6.7 8,823.5 2.30 20,764.1 13,070.7 1.59 2.35 1.48 120,645.1 13,673 5,956 5,810 0.432050 13.7 10.1 3.5 9,191.3 1.49 22,157.1 12,986.6 1.71 2.41 1.41 151,448.9 16,477 11,067 6,835 0.512060 9.4 7.5 1.9 9,442.3 0.99 23,980.7 12,898.8 1.86 2.54 1.37 190,117.7 20,135 20,248 7,928 0.592070 8.5 7.5 1.0 9,603.9 0.89 26,384.1 12,880.8 2.05 2.75 1.34 238,659.6 24,850 28,056 9,046 0.682080 8.0 7.5 0.5 9,671.1 0.83 29,573.2 12,807.6 2.31 3.06 1.32 299,595.4 30,978 37,281 10,131 0.762082 8.0 7.5 0.5 9,673.0 0.82 30,328.5 12,713.5 2.39 3.14 1.31 313,535.3 32,413 39,326 10,338 0.772090 7.8 7.5 0.3 9,641.9 0.81 33,828.4 12,617.0 2.68 3.51 1.31 376,089.8 39,006 48,305 11,118 0.832100 7.7 7.5 0.2 9,517.1 0.80 39,524.2 12,518.4 3.16 4.15 1.32 472,115.1 49,607 61,697 11,945 0.89

% change -85.6% -65.2% -99.5% 37.5% -89.5% 116.9% -5.8% 130.4% 57.8% -31.5% 674.1% 463.0% 5286.1% 256.9% 256.9%Ave. p.a. -2.1% -1.2% -5.8% 0.4% -2.5% 0.9% -0.1% 0.9% 0.5% -0.4% 2.3% 1.9% 4.5% 1.4% 1.4%

2010: Policies implemented to reduce CO2-e emissions to the levels required to stabilise the atmospheric concentration of greenhouse gases at 450 ppm

2015: Annual emissions levels peak 2082: World population peaks

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Mill

ions

of g

loba

l hec

tare

s (g

ha)

Biocapacity (growth-as-usual)

Ecological footprint (growth-as-usual)

Ecological footprint (sustainable)

Figure 11: Ecological footprint versus biocapacity – World, 2010-2100

0

10,000

20,000

30,000

40,000

50,000

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

$Int

at 2

004

pric

es

pc GWP (growth-as-usual)

pc GWP (sustainable)

Optimal pc GWP (Int$15,000)

Figure 12: Per capita GWP – World, 2010-2100

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

$Int

(20

04 p

rices

) pe

r to

nne

of C

O2-

e em

issi

ons

GWP/CO2-e emissions (growth-as-usual)

GWP/CO2-e emissions (sustainable)

Figure 13: Required emissions efficiency – World, 2010-2100

32

Notes 1 Of course, a sustainability threshold of 450 ppm of CO2e may have to be altered as new scientific evidence and information comes to hand. 2 Annex I countries are high-income, industrialised nations as defined under the United Nations Framework Convention on Climate Change (UNFCCC). 3 GtCO2-e refers to Gigatonnes of CO2-equivalent greenhouse gases. Based on World Resources Institute estimates (WRI, Earthtrends, www.earthtrends.wri.org). 4 In this case, the technical efficiency of production equals GWP/R. 5 The order-of-magnitude increases of 13.6 and 3.5 are implied by the 1,260.8 per cent and 252.0 per cent values at the bottom of the GWP/emissions and technical efficiency columns in Table 1. 6 I personally would rather nuclear energy be avoided altogether. That we must rely on nuclear energy to help resolve the climate change dilemma, and a achieve the sustainable development goal more generally, is an indication of just how far we have grown our economic systems beyond their maximum sustainable scale. 7 Renewable energy potential and renewable energy requirements are the same in 2010 because it is assumed that the amount available will be the amount used. 8 It might be argued that a much faster rate of GWP growth in the growth-as-usual scenario would lead to a larger annual increase in the human-made production factor (β.KH) and hence a faster rate of increase in the technical efficiency of production. Although more producer goods would be generated in the growth-as-usual scenario, less of them are likely to be of the efficiency-increasing kind. This is because the self-imposed constraints in the sustainable scenario, plus the policies implemented, would induce greater levels of efficiency-increasing progress. Indeed, most of the technological advances in the growth-as-usual scenario would be of the throughput-increasing variety. Hence, whilst KH would increase more in the growth-as-usual scenario, β is likely to rise at a much slower rate. 9 A similar factor increase would be required in the 450 ppm scenario envisaged by Stern (2006) which Stern claims would be unachievable with current and foreseeable technologies. 10 The 1,073.8 Exajoules required in 2100 is equal to the 2010 energy requirement of 495.0 EJ multiplied by the assumed factor-increase in the global ecological footprint over the 2010-2100 period (i.e., 1,073.8 = 495.0 × [39,524.2 gha/18,220.2 gha]).