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Sustainability, Economic Growth, and Technology Pramod P. Khargonekar University of Florida

Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

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Page 1: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Sustainability, Economic Growth, and Technology 

Pramod P. KhargonekarUniversity of Florida

Page 2: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Key Questions

• Can we raise the standard of living of the world population to an acceptable level and achieve sustainability?

• What are the limits to economic growth from sustainability constraints?

• What is the required economic growth to sustain full employment?

• Overarching question: Is it possible to have full employment, high quality of life, and sustainable development?

• Can we contribute usefully to these questions?

Page 3: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

0

2

4

6

8

10

12

0 1000 1250 1500 1750 1800 1850 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 1999 2000 2010 2020 2030 2040 2050 2100 2150

6.06B

World Population (Billions)

0.31B

1B

Source: A. Maddison, www.ggdc.net/maddison/Historical_Statistics/horizontal‐file_03‐2009.xls

Page 4: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Source: A

. Maddison, W

orld Econo

my, 2007

0

1000

2000

3000

4000

5000

6000

7000

0 500 1000 1500 2000 2500

World GDP per capita (1 – 2003)

Exponential growth starting with industrial revolution

1820

Page 5: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Population Growth

Source: U

N: W

orld Pop

ulation to 2300

Today’s graduates will shape the world in 2050

Page 6: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Emerging economies have much higher energy intensity relative to advanced economies

Page 7: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Energy use today is largely from unsustainable sources

Page 8: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly
Page 9: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly
Page 10: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

What will happen if Asia and North America equalize their per capita resource consumption?

Page 11: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Is there a “systems” oriented explanation of this chart? How does one move northwest?

Page 12: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

A hopeful sign

Page 13: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Environmental Kuznets Curvehttp://phe

.rockefeller.e

du/new

s/wp‐conten

t/up

loads/20

09/04/sulfu

rdioxide

kuznetscurveusa.pd

f

Some evidence that pollutiondecreases as incomes increase beyond a certain point but

Regulatory policies play an important role

K. Dutt

Essentially static analysis. Would dynamic modeling/analysis reveal more linkages?

Page 14: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Economic Growth• Mainstream view: Economic growth is highly desirable –

synonymous with progress– Technology leads to productivity increase– Income growth leads to improved nutrition, health, education 

…– Even if population is constant, economic growth is necessary to 

maintain full employment due to rising productivity– Economic growth requires consumption growth– Consumption = Population x Consumption/capita

• Advanced economies have achieved enormous economic growth in the last 250 years leading to dramatic improvement in the quality of life overall

• High economic growth needed in emerging and poor nations to raise their quality of life.

Page 15: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Current Reality

• Post 2008‐09 world• Simultaneous economic and environmental crises– High unemployment in many parts of the world– Global warming and environmental stress– Rising food and energy prices

• Globalization and interconnected world– Competing socio‐economic priorities

• Opportunity to rethink the future

Page 16: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Economic Stagnation

“rising intolerance and incivility and the eroding generosity and openness that have marked important aspects of American society in the recent past have been, in significant part, a consequence of the stagnation of American middle‐class living standards during much of the last quarter of the twentieth century.”

‐ B. Friedman, Moral Consequences of 

Economic Growth

Page 17: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Economic Growth and Sustainability

How can economic growth imperatives and sustainability be harmonized? 

Is this possible?

What are the “system” level constraints and trade‐offs?

A sociological + economic + technological + political 

global problem

Page 18: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Zero Growth

• “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly possible that economic growth cannot go on at its current rate forever … it is possible that the US and Europe will find that…either continued growth will be too destructive to the environment and they are too dependent on scarce natural resources, or that they would rather use increasing productivity in the form of leisure . . . . There is nothing intrinsic in the system that says it cannot exist happily in a stationary state.”

‐ Robert Solow

Page 19: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Rethink Growth Macroeconomics• Compelling evidence that increasing consumption does not 

increase happiness• Full employment and fair distribution of incomes critically 

important • GDP is a poor measure of overall societal prosperity

– Bhutan is considering GNH• J. Stiglitz and A. Sen commission report

“In the quest to increase GDP, we may end up with a society in which most citizens have become worse off … but the standard GDP measure not only does that but also takes no account of resource depletion and environmental degradation. ”

[http://www.ft.com/intl/cms/s/0/95b492a8‐a095‐11de‐b9ef‐00144feabdc0.html#axzz1PZ3c7j7c]

Page 20: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Possible Ideas• Herman Daly: Steady state economy• Peter Victor: Managing without Growth

– reduced work week + high carbon tax + social investment• Tim Jackson: 

– shift from consumption to investment into resource conservation, energyefficiency, clean technology, and ecosystem restoration

• Jonathan Harris:– prosperity without material growth– breakdown economic aggregates into smaller components

Dynamic systems, feedback, control, optimizationpoint of view may be helpful

Page 21: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Systems Studies

1972 20041973 1984

Controversial past record of computational systems models

Page 22: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Role/Perspective for Systems/Control

• Modeling, analysis, optimization, control of complex dynamic  socio‐techno‐environmental systems

• Incorporating natural feedbacks in such systems• Resource efficiency and dynamic optimization in all forms in all engineered systems

• Sustainable systems solutions to water, food, energy, health problems

• Incorporation of broader perspective• Multidisciplinary collaborations with other academic disciplines

• Connect with non‐profit organizations, global organizations, governments, private enterprises

Page 23: Sustainability, Economic Growth, and · PDF fileZero Growth • “There is no reason at all why capitalism could not survive with slow or even no growth. I think it’s perfectly

Thank You!

Questions?