Forgive them, for they do not know what they are doing

A quarter century after the world decided to solve the problem of global warming in 1992, the carbon dioxide (CO2) concentration of the Earth’s atmosphere has increased from 356 ppm to over 400 ppm and annual emissions have risen by 55%[1]. Simultaneously, temperatures have increased and biodiversity has decreased[2]. There are far fewer wild animals today than 25 years ago and humanity’s global footprint now stands at 1.6 Earths, moving the global overshoot day to August 8 in 2016[3]. Whatever politicians have been doing to prevent global warming and environmental destruction since 1992, it has not worked.

The reason for this failure is obvious. The graph below shows the global CO2 emissions and GDP since 1965[4].

co2-gdp

It is impossible to deny the fact that the two curves are strongly correlated. Actually, the correlation coefficient turns out to be +0.976, where a value of +1 would denote perfect correlation. This should come as no surprise. To begin with, GDP measures economic activities, such as manufacturing, transportation, and travel, which all require energy. On the other hand, increasing wealth allows us to consume more and travel more. The causation works both ways: increasing energy demand leads to higher GDP and a higher GDP leads to an increase in energy demand. As long as 86% of our energy is provided by fossil fuel, we should expect a strong correlation between GDP and CO2-emissions, as is indeed the case.

Apparently, by promoting economic growth through trade agreements and deregulation, our politicians have actually been boosting global warming. There is, as Naomi Klein and others have pointed out, a fundamental conflict between our economic system and the laws of nature[5]. It is also clear that we can only change the economic system.

In order to limit global warming to below +2°C, as was decided in the Paris agreement in 2015, global emissions of CO2 would have to decrease by at least 5% annually[6]. Graphically, this looks like the green curve in the graph below.

gdp-co2-future

It is simply delusional to believe that such a strong reduction is possible while maintaining economic growth as measured by GDP. It would require a correlation coefficient closer to -1 than +1, i.e. that people consume less as they get richer. Unfortunately, our political leaders do not understand this but are senselessly trying to boost economic growth.

The good news is that – contrary to common belief – the correlation between GDP and quality of life or prosperity is not very strong, at least not for rich countries. Again, the reason is easy to understand: once our basic material needs have been taken care of, more wealth does not necessarily lead to greater happiness. Having access to sufficient food is enormously important, having access to 10 times more food does not have any discernible benefits. This effect has been demonstrated in a large number of studies and the TED talk by Michael Green is a good place to start[7].

equation

Currently, politicians all over the world are chasing their own tails. If GDP and CO2-emissions are almost perfectly correlated, one cannot increase one while decreasing the other. Unless we accept this simple truth, we will never be able to stop global warming.

Humanity is facing an unprecedented challenge. Resolving it will require courage, ingenuity, and determination. The first rule of innovation is not to prematurely exclude any possible solutions. By refusing even to discuss any ideas which could negatively impact the GDP, we limit ourselves to looking for purely technical solutions to a political and economic problem. Why are we prepared to sacrifice everything we love in order to increase an abstract number, invented and computed by economists, with no obvious connection to our well-being?

A simple solution would be to abolish the GDP altogether, as has recently been discussed by many leading economists[8]. It is redundant, being completely correlated to CO2 emissions, and it is not even useful, as it does not measure human prosperity or well-being. There is no contradiction between improving people’s lives and reducing greenhouse gases. The contradiction only appears when GDP is taken into account.

Another option is to ensure that the GDP actually measures the right thing, which is most easily achieved by putting a price tag on non-renewable resources. A global carbon tax would make it preferable to avoid using fossil, leading to massive investments in renewable energy and energy efficiency. It would also give people an incentive to travel less, eat less, and consume less, which would all be good for the planet. It would probably also be bad for the GDP, but who cares?

It is probably not too late to stop global warming. All we have to do is to get our priorities right and focus on effective solutions. You do not negotiate water rates when your house is on fire! Likewise, we should not be haggling over the cost of doing something we all know needs to be done. The economic cost of stopping global warming is not even a relevant parameter. What a liberating idea that is!

[1] Data on the CO2 emissions and concentrations from the Carbon Dioxide Information Analysis Center (http://cdiac.ornl.gov) and from BP (www.bp.com). Data on GDP from the World Bank (http://data.worldbank.org/indicator/NY.GDP.MKTP.CD)

[2] See e.g. WWF Living Planet Report 2014 (http://wwf.panda.org/about_our_earth/all_publications/lpr_2014/)

[3] http://www.overshootday.org/

[4] The same sources as in [1].

[5] Naomi Klein, This Changes Everything (https://thischangeseverything.org)

[6] Many researchers quote a higher number, such as 6-8%

[7] See the TED talk by Michael Green or the web site of the Social Progress Imperative (http://www.socialprogressimperative.org)

[8] https://www.weforum.org/agenda/2016/04/beyond-gdp-is-it-time-to-rethink-the-way-we-measure-growth/

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4 Responses to Forgive them, for they do not know what they are doing

  1. Agricultural rather than petrochemical sources for the GDP would change the equation. C3 plants absorb the carbon and create the materials required for food, clothing, fuel & shelter.

    • Agreed! The question is how much stuff can be produced from agricultural sources. Currently, 86% of our energy demand is covered by fossil energy. I also do not see how one will be able to build and power an aircraft from agricultural sources. Obviously, I have nothing against maintaining a high GDP. The first priority, however, should be to reduce our environmental impact. It is like if you are at port with a leaking ship: Do you first fix the leak, before setting out to sea or do you set out immediately, in the hope that you will be able to fix the leak at some point? We should not base economic policies on technologies which have not been invented yet.

  2. Merlin says:

    Thanks for the excellent advice, it actually is useful.

  3. Reynaldo says:

    The post has actually peaks my interest. Iwill bookmark your site
    and keep checking for new info.

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