Both of these studies came to this conclusion because they acknowledged the
fragile state of ecosystems today. For the authors, swift and significant investment
is necessary to restore their balance so that they can continue to provide the biophysical conditions that humans have enjoyed for thousands of years. The sooner
these investments are undertaken, the lower the eventual costs for overall development. The economic costs of inaction today will rise so quickly that GDP growth
will not be able to outstrip them. Depending on the range of risks and impacts
calculated, Stern predicted losing between at least 5 % and more than 20 % of
global GDP each year indefinitely, while the TEEB report estimated the cost of
biodiversity and ecosystem damage would reach 18 % of global economic output
by 2050.
These claims are supported by the Oxford Martin Commission for Future
Generations chaired by Pascal Lamy, a former director-general of the WTO. The
primary purview of its work was to check where in current analytical concepts and
governance solutions the ignorance about the future was highest. The 2013 report
diagnosed a structural discrimination against future generations and concluded that
in “a world of considerable uncertainty about future levels of well-being” neither
linear extrapolation of trends nor short-term returns on investments in imperfect
markets were suitable measures for policy design. Instead, “[W]hen evaluating the
costs of action and inaction, policymakers need to ensure discounting embraces a
more sophisticated appreciation of the role of ethics, risk, and the scale of possible
damages in the future” (Oxford Martin Commission 2013: 61).
The science on ecosystems has shown that expecting further exponential growth
everywhere in the world for a long time might not be a fair base for ethical
considerations. Also, data from rich countries shows that growth rates have been
slumping for two decades (Wahl/Gödderz 2012). The research results on human
well-being have shown that this might not be such terrible news as long as the
growth-dependent institutional setups are changed and measures corrected so that
one can see what is really going on underneath the growth saga. Without this
transparency and accountability the GDP and monetary output measures keep us
blind to where a lot of uneconomic and unproductive ‘wealth’ is created and
concentrated.
For the majority of people on this planet—the 3 billion still living in poverty—
more and better access to goods and services is urgently needed. But the dogged
pursuit of absolute economic growth is not necessarily leading to this desired
outcome. GDP rose from $13 trillion with 5 billion people in 1987 to $72 trillion
with 7 billion people in 2012. Roughly speaking, this means we now live in a world
with economic output equaling $10,000 per capita compared to one equaling $2600
per capita 25 years ago. Technically, no one should have to suffer from hunger and
extreme poverty any longer. So reaching sustainability is not about more and more
output of everything for everyone but about getting the right outputs in the right
places into the right hands.
This is the key message that the inventors of the Genuine Progress Indicator
(GPI) and its predecessor, the Index of Sustainable Economic Welfare (ISEW) want
to illustrate. The GPI seeks to measure how economic growth can actually destroy
3.3 How Mainstream Economics Anticipate the Future
101
fragile state of ecosystems today. For the authors, swift and significant investment
is necessary to restore their balance so that they can continue to provide the biophysical conditions that humans have enjoyed for thousands of years. The sooner
these investments are undertaken, the lower the eventual costs for overall development. The economic costs of inaction today will rise so quickly that GDP growth
will not be able to outstrip them. Depending on the range of risks and impacts
calculated, Stern predicted losing between at least 5 % and more than 20 % of
global GDP each year indefinitely, while the TEEB report estimated the cost of
biodiversity and ecosystem damage would reach 18 % of global economic output
by 2050.
These claims are supported by the Oxford Martin Commission for Future
Generations chaired by Pascal Lamy, a former director-general of the WTO. The
primary purview of its work was to check where in current analytical concepts and
governance solutions the ignorance about the future was highest. The 2013 report
diagnosed a structural discrimination against future generations and concluded that
in “a world of considerable uncertainty about future levels of well-being” neither
linear extrapolation of trends nor short-term returns on investments in imperfect
markets were suitable measures for policy design. Instead, “[W]hen evaluating the
costs of action and inaction, policymakers need to ensure discounting embraces a
more sophisticated appreciation of the role of ethics, risk, and the scale of possible
damages in the future” (Oxford Martin Commission 2013: 61).
The science on ecosystems has shown that expecting further exponential growth
everywhere in the world for a long time might not be a fair base for ethical
considerations. Also, data from rich countries shows that growth rates have been
slumping for two decades (Wahl/Gödderz 2012). The research results on human
well-being have shown that this might not be such terrible news as long as the
growth-dependent institutional setups are changed and measures corrected so that
one can see what is really going on underneath the growth saga. Without this
transparency and accountability the GDP and monetary output measures keep us
blind to where a lot of uneconomic and unproductive ‘wealth’ is created and
concentrated.
For the majority of people on this planet—the 3 billion still living in poverty—
more and better access to goods and services is urgently needed. But the dogged
pursuit of absolute economic growth is not necessarily leading to this desired
outcome. GDP rose from $13 trillion with 5 billion people in 1987 to $72 trillion
with 7 billion people in 2012. Roughly speaking, this means we now live in a world
with economic output equaling $10,000 per capita compared to one equaling $2600
per capita 25 years ago. Technically, no one should have to suffer from hunger and
extreme poverty any longer. So reaching sustainability is not about more and more
output of everything for everyone but about getting the right outputs in the right
places into the right hands.
This is the key message that the inventors of the Genuine Progress Indicator
(GPI) and its predecessor, the Index of Sustainable Economic Welfare (ISEW) want
to illustrate. The GPI seeks to measure how economic growth can actually destroy
3.3 How Mainstream Economics Anticipate the Future
101