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08-02 "Ecological Macroeconomics: Consumption, Investment, and Climate Change"

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  • Jonathan Harris

Abstract

The challenge of reducing global carbon emissions by 50-85 per cent by the year 2050, which is suggested by the Intergovernmental Panel on Climate Change (2007a) as a target compatible with limiting the risk of a more-than-2ºC temperature increase, clearly conflicts with existing patterns of economic growth, which are heavily dependent on increased use of fossil fuel energy. While it is theoretically possible to conceive of economic growth being “delinked” from fossil fuel consumption, any such delinking would represent a drastic change from economic patterns of the last 150 years. Current macroeconomic theory is heavily oriented towards an assumption of continuous, exponential growth in GDP. The historical record shows GDP growth is strongly correlated with a parallel record of increasing fossil energy use and CO2 emissions. A path of reduced carbon emissions would require major modifications in economic growth patterns. Climate change is part of an inter-related group of environmental issues associated with growth limits. These include population growth, agricultural production, water supplies, and species loss. To achieve a low-carbon path requires population stabilization, limited consumption, and major investments in environmental protection and social priorities such as public health, nutrition, and education. Macroeconomic theory must be adapted to reflect these new realities. A reclassification of macroeconomic aggregates is proposed to distinguish between those categories of goods and services that can expand over time, and those that must be limited to reduce carbon emissions. This reformulation makes it clear that there are many possibilities for environmentally beneficial economic expansion. New forms of Keynesian policy oriented towards ecological sustainability, provision of basic social needs such as education and health care, and distributional equity can provide a basis for a rapid reduction in carbon emissions while promoting investment in human and natural capital.

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Paper provided by GDAE, Tufts University in its series GDAE Working Papers with number 08-02.

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Handle: RePEc:dae:daepap:08-02

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  1. Harris, Jonathan M. & Kennedy, Scott, 1999. "Carrying capacity in agriculture: global and regional issues," Ecological Economics, Elsevier, Elsevier, vol. 29(3), pages 443-461, June.
  2. William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
  3. Kevin P. Gallagher & Francisco Aguayo & Ana Citlalic González, . "01-07 "Dirt is in the Eye of the Beholder: The World Bank Air Pollution Intensities for Mexico"," GDAE Working Papers, GDAE, Tufts University 01-07, GDAE, Tufts University.
  4. Ekins, Paul & Simon, Sandrine & Deutsch, Lisa & Folke, Carl & De Groot, Rudolf, 2003. "A framework for the practical application of the concepts of critical natural capital and strong sustainability," Ecological Economics, Elsevier, Elsevier, vol. 44(2-3), pages 165-185, March.
  5. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2004. "Will the U.S. productivity resurgence continue?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, Federal Reserve Bank of New York, vol. 10(Dec).
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Cited by:
  1. Miklós Antal & Jeroen van den Bergh, 2014. "Macroeconomics, Financial Crisis and the Environment: Strategies for a Sustainability Transition," WWWforEurope Policy Paper series 10, WWWforEurope.
  2. Armon Rezai & Lance Taylor & Reinhard Mechler, 2012. "Ecological Macroeconomics: An application to climate change," SRE-Disc sre-disc-2012_06, Institute for the Environment and Regional Development, Department of Socioeconomics, Vienna University of Economics and Business.
  3. Jonathan M. Harris, . "10-05 "The Macroeconomics of Development without Throughput Growth"," GDAE Working Papers, GDAE, Tufts University 10-05, GDAE, Tufts University.
  4. Bernardo, Giovanni & D'Alessandro, Simone, 2014. "Transition to sustainability? Feasible scenarios towards a low-carbon economy," MPRA Paper 53746, University Library of Munich, Germany.
  5. Jonathan M. Harris, 2013. "Green Keynesianism: Beyond Standard Growth Paradigms," GDAE Working Papers, GDAE, Tufts University 13-02, GDAE, Tufts University.
  6. Jonathan M. Harris, 2013. "Population, Resources, and Energy in the Global Economy: A Vindication of Herman Daly's Vision," GDAE Working Papers, GDAE, Tufts University 13-03, GDAE, Tufts University.

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