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Research questions for a green, inclusive economy

Green Economy Workshop

Cameron Hepburn

Professor of Environmental Economics

Smith School and INET at Martin School,

University of Oxford and New College

Professorial Research Fellow, LSE

Monday 10 February 2014

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1. Metrics

2. Vision

3. Transition

Agenda

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Could wealth accounts realistically complement

GDP as the focus of public obsession?

Source: Hamilton and Hepburn (2014, Oxrep) “Wealth”, forthcoming

-$200,000

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

NOR USA GBR NLD FRA CAN ITA NZL ESP ISR KOR POL ROU

Produced capital Natural capital Net foreign assets

Human capital Intangible residual Total wealth

Wealth per capita (2005 USD)

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Then develop a metric of prosperity as the

accumulation of solutions to human problems?

Source: McLaughlin et al. (2014, Oxrep) “Historical wealth accounts for the Britain”, forthcoming

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1. Metrics

2. Vision

3. Transition

Agenda

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Prices are powerful, but systems thinking

(resilience, non-marginality, ABIAM) is critical

Forests, fisheries,

ecosystems, biodiversity

is all “renewable”

natural capital

Often the most valuable

assets (coal, oil, gas)

are “exhaustible”

natural capital

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The politics of the transition are critical

– can we better use leverage points?

40

35

30

25

20

15

10

5

00 50 100 150 200

Years of

extraction at

current rates

Aggre

gate

Fo

ssil F

uel

CO

2extr

acti

on

[G

tCO

2]

Saudi ArabiaCanada

Russia

USA

9th – 20th countries

by reserves

IranAustralia

India

China

Rest of

the World

Fossil carbon

reserves by country

Land

use

Source: Otto, Allen and Hepburn (2014) based on Aurora Energy Research (2014)

Lik

ely

Lik

ely

, CO

2only

As

likely

as

not,

CO

2only

Atmospheric space

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1. Metrics

2. Vision

3. Transition

Agenda

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Key research questions on the transition

relate to politics and innovation

• What drives down costs of clean energy?

• How have governance mechanisms for the commons emerge?

• How can we create the institutions that we need for the transition?

• How can firms use behavioural economics to develop the profitable

business models that respect planetary boundaries?

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1. Metrics

2. Vision

3. Transition

4. More broadly….

Agenda

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Brilliant young economists now see career

prospects in working on these questions….

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What is needed is mutual understanding,

even love, between disciplines….

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Thank you

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Nature in the Balance, Jan (2014)

The Economics and Politics of Climate Change