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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.

Suggested Citation

  • Jonathan Harris, "undated". "Ecological Macroeconomics: Consumption, Investment, and Climate Change," GDAE Working Papers 08-02, GDAE, Tufts University.
  • Handle: RePEc:dae:daepap:08-02
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    File URL: http://www.bu.edu/eci/files/2020/01/08-02EcologMacroEconJuly08.pdf
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    References listed on IDEAS

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    1. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, October.
    2. Jonathan M. Harris & Neva R. Goodwin, "undated". "Reconciling Growth and Environment," GDAE Working Papers 03-03, GDAE, Tufts University.
    3. Jonathan M. Harris, "undated". "Macroeconomic Policy and Sustainability," GDAE Working Papers 01-09, GDAE, Tufts University.
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    8. Frank Ackerman & Timothy A. Wise & Kevin P. Gallagher & Luke Ney & Regina Flores, "undated". "Free Trade, Corn, and the Environment: Environmental Impacts of US – Mexico Corn Trade Under NAFTA," GDAE Working Papers 03-06, GDAE, Tufts University.
    9. Gallagher, Kevin P. & Aguayo, Francisco, 2003. "Economic Reform, Energy, and Development: The Case of Mexican Manufacturing," Working Papers 15575, Tufts University, Global Development and Environment Institute.
    10. Aguayo, Francisco & Gallagher, Kevin P., 2005. "Economic reform, energy, and development: the case of Mexican manufacturing," Energy Policy, Elsevier, vol. 33(7), pages 829-837, May.
    11. Jamie Sanderson & Sardar M. N. Islam, 2007. "Climate Change and Economic Development," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-59012-0.
    12. Harris, Jonathan M. & Kennedy, Scott, 1999. "Carrying capacity in agriculture: global and regional issues," Ecological Economics, Elsevier, vol. 29(3), pages 443-461, June.
    13. Dapice, David, 2003. "Current Economic Conditions in Myanmar and Options for Sustainable Growth," Working Papers 15582, Tufts University, Global Development and Environment Institute.
    14. 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, vol. 44(2-3), pages 165-185, March.
    15. Goodwin, Neva R., 2003. "Macroeconomics for the 21st Century," Working Papers 15581, Tufts University, Global Development and Environment Institute.
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    Cited by:

    1. Halkos, George & Paizanos, Epameinondas, 2015. "Environmental Macroeconomics: A critical literature review and future empirical research directions," MPRA Paper 67432, University Library of Munich, Germany.
    2. Miklós Antal & Jeroen C.J.M. van den Bergh, 2014. "Macroeconomics, Financial Crisis and the Environment: Strategies for a Sustainability Transition. WWWforEurope Policy Paper No. 10," WIFO Studies, WIFO, number 47013, February.
    3. Jonathan M. Harris, "undated". "The Macroeconomics of Development without Throughput Growth," GDAE Working Papers 10-05, GDAE, Tufts University.
    4. Harris, Jonathan M., 2013. "Green Keynesianism: Beyond Standard Growth Paradigms," Working Papers 179111, Tufts University, Global Development and Environment Institute.
    5. Jonathan M. Harris, 2016. "Population, resources and energy in the global economy: a vindication of Herman Daly’s vision," Chapters, in: Joshua Farley & Deepak Malghan (ed.), Beyond Uneconomic Growth, chapter 4, pages 65-82, Edward Elgar Publishing.
    6. Rezai, Armon & Taylor, Lance & Mechler, Reinhard, 2013. "Ecological macroeconomics: An application to climate change," Ecological Economics, Elsevier, vol. 85(C), pages 69-76.
    7. Kemp-Benedict, Eric, 2014. "The inverted pyramid: A neo-Ricardian view on the economy–environment relationship," Ecological Economics, Elsevier, vol. 107(C), pages 230-241.
    8. Lu, Hongyou & Xu, Wenli & Xu, Kun, 2016. "How to Make The Fiscal policies Greener in China?——Based on The Perspective of Environmental Macroeconomics," MPRA Paper 70221, University Library of Munich, Germany.
    9. Hardt, Lukas & O'Neill, Daniel W., 2017. "Ecological Macroeconomic Models: Assessing Current Developments," Ecological Economics, Elsevier, vol. 134(C), pages 198-211.
    10. -, 2018. "The Inefficiency of Inequality," Documentos de posición del período de sesiones de la Comisión 43443, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Lim, C.S. Vincent, 2010. "Greener Central Banks: Exploring Possibilities," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp76.
    12. Kemp-Benedict, Eric, 2018. "Investing in a Green Transition," Ecological Economics, Elsevier, vol. 153(C), pages 218-236.
    13. Bernardo, Giovanni & D'Alessandro, Simone, 2014. "Transition to sustainability? Feasible scenarios towards a low-carbon economy," MPRA Paper 53746, University Library of Munich, Germany.
    14. Miklós Antal & Jeroen C.J.M. van den Bergh, 2014. "Macroeconomics, Financial Crisis and the Environment. Strategies for a Sustainability Transition," WIFO Working Papers 464, WIFO.

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