Development Talks17 September 2012

After Rio +20:More growth!

Thomas SternerVisiting Chief Economist EDF

Professor Environmental Econ Gothenburg

Is Growth Good ?

Is Growth Good ?

Can ”GROWTH” be bad….?

• Yes: for growth in simple output

• No: NOT If we mean growth in welfare and if we measure it right!

• This is environmental Economics.

Just go fast and you’ll get there

The market is great but

• Does not deal with externalities• Does not deal with public goods• Does not deal with common property• Does not deal with risk and uncertainty• Does not deal with assymetric information• Does not deal with altruism, love or envy

Is Anything New under the Sun?

• World Bank and UN workshops• Sustainable Development• Max social welfare subject to distributional equity• Is “GG” just re-packaging?

• IT IS More, used by (OECD, WB, UNEP, UN RIO+20, Korea)

• Green growth defined politically, not economically

• This give us an OPPORTUNITY

Levying carbon tax, promoting low-carbon education proposed

Olympic Growth medalists

Growth Threatened

OTHER ENVIRONMENTAL PROBLEMS

• Biodiversity• Spread of Toxic substances•Manipulation of N & P cycles• Ozone Depletion, Acidification•Water, Fish stocks

We can solve these problems

• Catch shares• Water treatment and purification

Climate is special

•Longrun •Stock•Global• http://dhcp2-pc011135.fy.chalmers.se/EXEC/0/05wopec04fy3421f88wnj0rjch2c

x

CHALMERS CLIMATE CALCULATOR

EMISSIONS STOCK OF C TEMPERATURE

Christian Azar, Daniel Johansson (Frt) (1 region vs)

STABILIZE EMISSIONS

CUT EMISSIONS 1%FROM 2020

STILL T 2.5 OR 3°

SLASH EMISSIONS 2% IMMEDIATELY

Can we do this or are we doomed?

Can we do this or are we doomed?

• Amory’s House• Amory’s Hypercars • Amory’s Vision: Reinventing Fire• 0 coal 0 oil, Less Gas; 0 Nuclear• No regulations – just smartness: • The ”Search for Intelligent Life on Earth”

Ask Me---

• I think you can – but it will be difficult:

•Q=YP-β

•Emissions rise with income unless prices rise even faster!

Can u ”combine growth & environment”?

• YES.• 5 % growth in Income and 2% DECREASE in

emissions ????

• EASY: Price of gas has to rise by 9% every year.

All you have to do is get everyone to agree

• But, everyone does not agree.• Taxes not popular• Countries divided on goals & means• Fairness in allocation looms big

Nigeria abolished fuel subsidy Jan 1

This was what failed in COPenhagen

• Pretend it does not matter• Have ”green growth” ”instead”?

Green Growth will require agreement

• But plenty to do: • Reseach and Education• Infrastructure• Wind and Solar and Efficiency• Agriculture and Forestry• Short Lived Climate Forcers• Bottom up linking of carbon trading

REMEMBER

• Taxes to back up those who invest in the new fire.

• Feebates, road pricing, feed-in tariffs…• Utlimately grand deal and carbon price

needed.