How can we change our economy from a jet to a helicopter?

Ecological Economist Herman Daly

Herman Daly, an Ecological Economist from the university of Maryland, argues that we humans will, sooner rather than later, have to transtion from a growth-based economy to what he calls a Steady State Economy (SSE).  In Daly’s conception, the economy has grown immensely over the last few hundred years compared to the static, steady state of the Earth; the more it continues to grow, the more it will have to conform to the Earth:

“That behavior mode is a steady state—a system that permits qualitative development but not aggregate quantitative growth. Growth is more of the same stuff; development is the same amount of better stuff (or at least different stuff). The remaining natural world no longer is able to provide the sources and sinks for the metabolic throughput necessary to sustain the existing oversized economy—much less a growing one. Economists have focused too much on the economy’s circulatory system and have neglected to study its digestive tract. Throughput growth means pushing more of the same food through an ever larger digestive tract; development means eating better food and digesting it more thoroughly. Clearly the economy must conform to the rules of a steady state—seek qualitative development, but stop aggregate quantitative growth.”

To further identify what a SSE would look like, Daly compares a growth based economy to an airplane, designed for forward motion, unable to hover in place.  Unlike the airplane, a SSE would be more like a helicopter, which is designed to hover.  In other words, the SSE would have a relatively constant population and stock of capitol, and maintain a reasonable rate of materiel throughput “within the regenerative and assimilative capacities of the ecosystem.”  To create the SSE, Daly recommends upstream resource taxes (instead of income taxes), redistribution of wealth, ecological protectionism, and an emphasis on durable, long lasting consumer goods.

To achieve these goals, decoupling will be necessary.  Absolute decoupling in when resource impacts decline in total, across the economy.  In his book Prosperity Without Growth, Tim Jackson points out that despite greater efficiencies and technological innovations, no absolute decoupling has occurred since the Kyoto climate summit:

“Despite declining energy and carbon intensities, carbon dioxide emissions from fossil fuels have increased 80% since 1970.  Emissions are almost 40% higher than they were in 1990 – the Kyoto base year – and since the year 2000 they have been growing at over 3% per year…. [and] what’s true for fossil resources and carbon emissions is true for material throughputs more generally.”

So, decoupling will require hard work and sacrifices in our standards of living.  However, energy and mineral resources get more and more expensive by the day, as the Energy Returned on Energy Invested continues to drop across the board, from oil to copper.  Additionally resources that we humans have long taken for granted are becoming scarce.  Today the New York Times described new investments by Australian in desalination plants to meet the country’s water needs:

‘In one of the country’s biggest infrastructure projects in its history, Australia’s five largest cities are spending $13.2 billion on desalination plants capable of sucking millions of gallons of seawater from the surrounding oceans every day, removing the salt and yielding potable water. In two years, when the last plant is scheduled to be up and running, Australia’s major cities will draw up to 30 percent of their water from the sea. The country is still recovering from its worst drought ever, a decade-long parching that the government says was deepened by climate change. With water shortages looming, other countries, including the United States and China, are also looking to the sea. “We consider ourselves the canary in the coal mine for climate change-induced changes to water supply systems,” said Ross Young, executive director of the Water Services Association of Australia, an umbrella group of the country’s urban water utilities. He described the $13.2 billion as “the cost of adapting to climate change.”’

What this means is that the economy is already bumping up against the limits of the Earth.  However, the decoupling that Daly advocates will require careful coordination on development, between nations, not the type of ad hoc development planning that is evident in Australia.  Unfortunately, as Jackson shows in his book, the developing economies, especially in India and China, will require more and more resources in coming years.  The schism that was evident at the Climate summit in Copenhagen between Europe and the United States, and the developing economies belies that the careful coordination required to achieve decoupling is a long way off.  Unfortunately, I think it will take some much more vivid evidence of the economy bumping up against the limits of the Earth to inspire the necessary action and coordination.  The growth based economy, represented by the worship of Gross National Product, is in our DNA.  It will take a shock to our system to create the conditions for the necessary change.

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