Cameron Hepburn

Wealth and Green Growth – INET

Event Details

  • Date:
  • Venue: Eagle House

The current model of economic growth has generated remarkable increases in human wealth and well-being during the 19th and 20th centuries.  The main mechanism has been the fantastic pace of innovation and knowledge accumulation, and the impressive conversion of resources and “natural capital” into more valuable forms of “produced capital”.  But there are now serious concerns that this model is reaching environmental limits and “planetary boundaries”, and that the conversion of natural capital needs to rapidly slow and then be reversed.  Some commentators have asserted that in order to do this, we will need to stop growing altogether and instead seek “prosperity without growth”.  Others argue that environmental concerns are low-priority luxuries that we can contemplate once we have emerged from the Great Recession that has followed the 2008 financial crisis.  A third group argue that there is no trade-off, and the politically appealing idea that we can simultaneously grow and address environmental problems has emerged in the notion of “green growth”.  This has been enthusiastically adopted by the OECD, United Nations and the World Bank.  This presentation provides a critical perspective on this debates, and advances the view that progress could be achieved by directing our attention to measures of per-capita wealth.  A public and political focus upon wealth (a stock), and its annual changes, could realistically complement the current focus upon market-based gross output as measured by GDP (a flow).  It is argued that this could have far-reaching policy implications. The presentation considers estimates of the wealth of various countries and provides a review of a forthcoming issue of the Oxford Review of Economic Policy on the topic.