Rethinking the economy for the planet

In the fifth of six monthly conversations, three experts ask: can the way nations spend money help bring about the change needed to cool the Earth?

How does economics affect the environment? Can economic change help us fight climate change?

That was the subject of the latest Ecologues event, “Environmental Economics,” which brought together three climate and economics experts at the American Library in Paris on Thursday, 25 May. The six-part conversation series is presented by News Decoder in partnership with the Climate Academy and the American Library in Paris as part of the Writing’s on the Wall project.

The talk featured Marlowe Hood, senior editor at Agence France-Presse, Bianca Getzel, research officer at the global affairs think tank ODI and Juan Pablo Arellano, a Master’s student and former content director at ClimateScience.

Can the planet survive on business as usual?

To frame the discussion, Hood presented two opposing camps in the climate action discourse: business as usual, often referred to as green growth, which aims to continue GDP growth while reducing environmental impacts, or a complete lifestyle change.

Essentially, we need to change everything. That’s the message from Hood, who covers science, the environment and the climate crisis at Agence France-Presse.

Hood described the Paris Agreement’s goal to limit global warming to 1.5 degrees Celsius above pre-industrial levels “aspirational” but noted its importance. According to a pivotal report from the Intergovernmental Panel on Climate Change (IPCC), to reach these levels will require systemic changes in how we produce, distribute and consume.

This was, Hood said, “a huge earth-shaking conclusion to reach.” But this finding caused tension between those who acknowledge the urgency of action and those who question the feasibility of making significant lifestyle changes.

In Paris, the governments at the summit questioned whether limiting climate emissions to 1.5 degrees or 2 degrees would be worth the cost.

“I think we’re seeing a split between the people who are taking this [information] at face value and those who say that the theory may be right, but is it realistic?” Hood said. “Are people going to allow it to change their lives so much? Do we want to [tell people], ‘Well, that’s it, get rid of your cars and switch to public transport,’ or do you say, ‘Just get an electric car?’”

Banks can help mitigate the climate crisis.

Bianca Getzel is a Research Officer in the Development and Public Finance Programme at the global affairs think tank ODI. She focused on the role of multilateral development banks (MDBs) in financing climate-related initiatives.

MDBs play a crucial role in providing financial assistance and investments to developing countries. They have contributed significantly to the pledge to mobilise $100 billion per year for international climate finance, collectively providing $51 billion in 2021. Besides financial support, MDBs offer low-cost financing, grants, technical assistance and policy advice.

“What MDBs need to do better, is to multiply three times their current commitments in order to meet what is needed for ‘1.5’,” Getzel said. “But scaling up investments requires parts of the supply and demand sides. By demand I mean the willingness of borrowers, i.e. countries in Africa and Asia to take up that finance.”

To boost supply and release money you could use money better, get more actors to invest and find more capital, she said. But some countries are reluctant to borrow funds to fight climate change since they see it as a problem caused by more developed nations.

“That’s a very valid concern,” Getzel said.

In a survey of 73 countries eligible for MDB assistance, mitigating climate change was not a top priority. Instead for many of these countries, education, health and agriculture were listed as more important.

“Different countries have different needs,” Getzel said. “Middle-income countries, Brazil or India, don’t have the needs of Gambia or Ghana, low-income countries. Low-income countries want and need climate adaptation financing, not mitigation, whereas Brazil or India don’t need grants for solar power. The unfortunate reality is that at times MDBs are doing [exactly] that.”

To effectively finance climate change mitigation and adaptation, MDBs need to collaborate with governments to ease the transition and decarbonisation of middle-income countries while providing low-income countries with necessary funding.

Prioritising carbon reduction

Juan Pablo Arellano is a former content director at ClimateScience, specialising in creating accessible and trustworthy content on climate change solutions. He studied economics and environmental science at university and is currently pursuing a Master’s degree in degrowth.

To start, Arellano outlined the distinctions between environmental and ecological economics. Environmental economics focuses on the economic analysis of environmental issues, often employing market-based solutions and cost-benefit analysis. Ecological economics, on the other hand, considers the interconnections between ecosystems, society and the economy, emphasising the importance of sustainability and recognising the intrinsic value of nature.

Stemming growth to stem climate change

For Arellano the question is this: can we grow our economy infinitely on a finite planet?

“We are growing everything,” Arellano said. “We call it ‘the great acceleration.’ We’re growing in population, the use of energy, fertiliser, machines, plastic. Absolutely anything that you can think of that hasn’t been a short-lived fad has grown exponentially.”

This means, Arellano said, that the impacts of all this on the planet are also growing exponentially. “We’re seeing an increase in carbon dioxide, methane, loss of topsoil, global temperature, acidification of our oceans, biodiversity loss etc.,” he said.

Arellano describes the green growth narrative as unsustainable. Instead, he said, we need to reevaluate the prevailing economic paradigm which focuses on constant growth but doesn’t take into account these parallel impacts which lead to adverse environmental effects. He cited the example of Sweden, a country considered “green” but still exceeding planetary boundaries.

Degrowth economics prioritises human well-being, sustainability and the environment over the relentless growth often seen in capitalist systems.

It advocates for a temporary and equitable reduction in production and consumption until the economy achieves a steady state within planetary boundaries, also known as “post-growth economics.”

Key principles include reduced working hours, increased employee participation, capped income levels, more quality time with loved ones, local production, sharing and cooperation, lowered retirement age and minimising socially-unnecessary output.

While seemingly utopian, this vision is gradually materialising. More countries are embracing four-day work weeks and the European Parliament recently co-organised and hosted the three-day Beyond Growth conference in Brussels.

Instead of imposing austerity, such an economic system would improve quality of life for many people, he said. “It is calling for fewer weapons, less private jets and mansions, less beef, less advertising, but more renewable energy, more nutritious food, more social housing.”

But Arellano clarified that degrowth policies are aimed at rich countries. “This is not for the Global South,” Arellano said. “We want the Global South to emit more. These countries need to grow their economies.”

You can watch a full recording of the talk here. The sixth and final Ecologues meeting on the theme of Legislating for the Future will take place on Thursday 29 June at the American Library in Paris and online.

Ecologues is part of the Writing’s on the Wall climate education project, helping young people combat the climate crisis through journalism, activism and art. Learn more at thewritingsonthewall.org.

Questions to consider:

1. What is degrowth economics?
2. What role can multilateral development banks play in stopping climate change?
3. What lifestyle changes could you make to help fight climate change?

Karolina Krakowiak is News Decoder’s Project Management Intern for The Writing’s on the Wall. Leaving engineering behind and following her passion, Karo decided to move to Paris and pursue a Master’s degree in International Management and Sustainability at the American University in Paris. Both in her professional and private life, she prioritizes nature, kindness and mindfulness.