Measuring progress towards a steady state economy
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This document summarizes Daniel O'Neill's research on measuring progress towards a steady state economy (SSE). It presents a conceptual framework with socio-economic and biophysical indicators to measure stocks, flows, and scale of resource use. Preliminary results show that most economies are still growing, some are degrowing but not where most needed, and none have achieved a steady state. Life expectancy and satisfaction are highest in degrowing and stable economies. Unemployment and inflation remain challenges to address with policy changes to achieve an SSE. The research provides a way to measure progress towards macroeconomic goals aligned with sustainability.
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Measuring progress towards a steady state economy
- 1. Measuring Progress in the Degrowth Transition to a Steady State Economy Daniel W. O’Neill CENTER for the SUSTAINABILITY ADVANCEMENT of the RESEARCH STEADY STATE ECONOMY INSTITUTE 2nd Conference on Economic Degrowth, Barcelona March 26–29, 2010
- 2. The Degrowth Transition to a SSE Growth Degrowth SSE Size of Economy Carrying Capacity Time 2
- 3. The Conceptual Framework Those goals that are desired only for • Life Satisfaction • Hedonic Well-being Socio-economic Ultimate Ends themselves, and are not Flourishing to • Health • the means achieve any other end. Accounts • Meaningful Work • Community The goals that the economy is expected • Leisure • Education Intermediate Ends to Meeting Basic Needs • Good Governance • deliver. • Equality • Stability The factories, machines, and skilled labour Intermediate Means that transform natural resources into • Built Capital • Population Biophysical products and services. Accounts • Materials • Biocapacity The natural resources that sustain life and Ultimate Means allEnergy • economic transactions. 3
- 4. The Steady State Economy Accounts Socio-economic Accounts: Measure the functioning of the socio-economic system, and how effectively it delivers well- being Include subjective and objective indicators Biophysical Accounts: Measure the annual rate of change of biophysical stocks and flows over a 10-year period (e.g. 1995–2005), and the scale of these flows in relation to ecosystem sources and sinks 4
- 5. Stocks, Flows, and Scale Environment Human Energy Energy Population Sources Sinks Material Built Material Inputs Capital Outflows 5
- 6. Biophysical Accounts: The Indicators Stocks Population growth rate Built capital growth rate Flows Energy use growth rate Material inputs growth rate Material outflows growth rate Scale Ratio of material throughput to the capacity of ecosystems to: Regenerate materials Assimilate wastes 6
- 7. The Indicators (in Practice) Stocks Population growth rate Data readily available Built capital growth rate Working on this… Flows Data readily available Energy use growth rate Material inputs growth rate Biomass, Minerals, and Fossil Fuels Material outflows growth rate CO2 Emissions Scale Ratio of material throughput to the capacity of ecosystems to: Ratio of Per Capita Regenerate materials Ecological Footprint to Fair Earthshare Assimilate wastes 7
- 8. Some Results: Growth Economies Change in Stocks (%) Change in Flows (%) Scale Country Built Population Energy Materials CO2 EF Ratio of Capital (In) (Out) EF to FES Cambodia .. 2.0 9.9 0.9 9.4 3.7 0.5 China .. 0.8 6.5 3.9 6.3 4.3 1.0 Spain .. 1.0 4.3 3.3 4.7 3.1 2.8 U.S. .. 1.0 0.8 0.2 1.0 1.4 4.6 World .. 1.3 2.2 1.9 2.3 1.5 1.3 Yellow Shrinking (< –0.5%/year) or Scale Too Small (<0.8) Green Stable (–0.5 to 0.5%/year) or Optimal Scale (0.8 to 1.2) Red Growing (>0.5%/year) or Scale Too Large (>1.2) 8
- 9. Some Results: Degrowth Economies Change in Stocks (%) Change in Flows (%) Scale Country Built Population Energy Materials CO2 EF Ratio of Capital (In) (Out) EF to FES Moldova .. -1.3 -1.5 -3.1 -3.3 -1.3 0.6 Poland .. -0.1 -1.1 0.4 -1.8 -0.7 1.9 Romania .. -0.5 -2.1 -1.1 -2.3 -0.2 1.4 Ukraine .. -0.9 -0.3 -0.6 -1.0 -2.6 1.3 Yellow Shrinking (< –0.5%/year) or Scale Too Small (<0.8) Green Stable (–0.5 to 0.5%/year) or Optimal Scale (0.8 to 1.2) Red Growing (>0.5%/year) or Scale Too Large (>1.2) 9
- 10. Some Results: Stable Economies Change in Stocks (%) Change in Flows (%) Scale Country Built Population Energy Materials CO2 EF Ratio of Capital (In) (Out) EF to FES Cuba .. 0.3 0.1 0.2 0.1 2.6 0.9 Germany .. 0.1 0.2 -2.4 -0.3 -1.0 2.0 Sweden .. 0.2 -0.2 3.3 -1.4 0.2 2.5 Switzerland .. 0.4 0.5 2.1 0.2 -0.2 2.4 Yellow Shrinking (< –0.5%/year) or Scale Too Small (<0.8) Green Stable (–0.5 to 0.5%/year) or Optimal Scale (0.8 to 1.2) Red Growing (>0.5%/year) or Scale Too Large (>1.2) 10
- 11. The Pathway to a SSE Degrowth Stability Growth 10 Large Too Desirable Undesirable Degrowth Growth Optimal Scale 1 SSE Undesirable Desirable Degrowth Growth Small Too 0.1 -2 -1 0 +1 +2 Change in Flows 11
- 12. The Pathway to a SSE – Results 0.7 5 US Desirable Undesirable Degrowth Growth Ratio of Per Capita Ecological Footprint Switzerland UK Spain Germany Poland Country Years to to Fair Earthshare FES Ukraine Romania Germany 64 China Poland 91 1 0.0 Cuba Switzerland 156 Ukraine 17 Moldova Cambodia Undesirable Desirable Degrowth Growth 0.2 -0.7 -5 0 5 Change in Ecological Footprint (% /year) 12
- 13. The Pathway to a SSE – Results 0.7 5 US Desirable Undesirable Degrowth Growth Ratio of Per Capita Ecological Footprint Switzerland UK Spain Germany Poland Life Satisfaction (0–10) to Fair Earthshare Ukraine Romania Happy (≥7) China Relatively Happy (6–6.9) 1 0.0 Brazil Cuba Colombia Relatively Unhappy (5–5.9) Unhappy (<5) Moldova Cambodia Undesirable Desirable Degrowth Growth 0.2 -0.7 -5 0 5 Change in Ecological Footprint (% /year) 13
- 14. Life Expectancy & Life Satisfaction Life Expectancy Life Satisfaction (Years) (0-10) Too Small 62 5.4 Size of Ecological Fair Earthshare 70 6.7 Footprint Too Large 75 6.9 Degrowing 72 6.5 Change in Ecological Stable 69 6.3 Footprint Growing 68 6.2 Decreasing 69 5.3 Change in Stable 75 6.7 Population Increasing 67 6.2 Life expectancy and life satisfaction are highest when: Ecological footprint is large (but degrowing) Population is stable 14
- 15. Unemployment & Inflation Unemployment Inflation (%) (%) Too Small 6.0 7.6 Size of Ecological Fair Earthshare 5.7 5.0 Footprint Too Large 7.8 13.8 Degrowing 9.3 18.1 Change in Ecological Stable 8.1 12.4 Footprint Growing 5.6 6.2 Decreasing 11.4 50.0 Change in Stable 8.7 12.4 Population Increasing 6.0 7.2 Unemployment and inflation are lowest when: Ecological footprint is close to a fair earthshare Population and the ecological footprint are growing 15
- 16. Conclusion To measure progress we need two sets of indicators: Biophysical and Socio-economic The Steady State Economy Accounts provide a framework with these indicators Preliminary results indicate: We live in a world of growth economies A number of economies are degrowing Not the ones where degrowth is needed most Rates are slow There are no steady state economies Some economies are closer than others Social conditions are good in these countries 16
- 17. Conclusion Life expectancy and life satisfaction Higher in degrowing and stable economies than in growth economies Correlate with resource use that is too high Unemployment and inflation remain key issues to resolve Significant structural and policy changes will be required To achieve a SSE we must change our macroeconomic goals 17
- 18. Thank you! Dan O’Neill d.oneill@leeds.ac.uk CENTER for the SUSTAINABILITY ADVANCEMENT of the RESEARCH STEADY STATE ECONOMY INSTITUTE www.steadystate.org