ecological macroeconomics

Consumption, investment, and climate change

RealWorldEconomicsReview | In February 2008, two separate scientific research articles analyzed climate models that included deep-sea warming, and reached the conclusion that carbon dioxide emissions must fall to near zero by the mid twenty-first century to prevent temperature increases in the range of 7º Fahrenheit by 2100 (Schmittner et al., 2008; Matthews and Caldeira, 2008), These results were consistent with, though somewhat stronger than, those of the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC, 2007b), which indicates that a reduction of 50–85 per cent in carbon emissions by 2050 is needed to limit the likelihood of temperature increases in excess of 2ºC (3.6ºF), Also in the spring of 2008, the Earth Policy Institute reported that “… global carbon dioxide (CO2) emissions from the burning of fossil fuels stood at a record 8.38 gigatons of carbon (GtC) in 2006, 20 percent above the level in 2000. Emissions grew 3.1 percent a year between 2000 and 2006, more than twice the rate of growth during the 1990s” (Moore, 2008).

The cognitive disconnect between scientists’ warnings of potential catastrophe if carbon emissions continue unchecked on the one hand, and the political and economic realities of steadily increasing emissions on the other, defines the outstanding economic problem of the twenty-first century. Can economic growth continue while carbon emissions are drastically reduced? Addressing this issue necessarily refocuses attention on the meaning of economic growth itself.

The debate over economic growth and the environment has a long history, and involves many issues other than climate change. Theorists have considered possible growth limits associated with population, agriculture, energy, renewable resource systems, and waste generation (see Harris and Goodwin, 2003). Ecological economists have suggested that environmental and resource constraints imply limits on economic scale, and thus limits to growth (Daly, 1996). Mainstream neoclassical economics, however, has generally rejected the concept of growth limits. The contrast between these two perspectives has remained unresolved so long as no immediate issues of urgent growth constraints at the macroeconomic level have come to the fore. Areas in which ecological capacities are clearly being overstressed – such as declining fisheries, degraded agricultural systems, or ecosystems loss – have been recognized as important problems, but are not usually seen as serious threats to the continuation of global economic growth. Global climate change, by contrast, has a clear and direct relationship to economic growth both in industrialized and developing nations.

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.