achieving better outcomes achieving better outcomes and some - PDF document

The role of science and modelling in achieving better outcomes achieving better outcomes and some thoughts on wellbeing and sustainability Professor Steve Hatfield-Dodds Presentation to ESCAP Study Tour, Canberra, 11 September 2013 CSIRO INTEGRATION Can humanity transition? “We are now in the middle of a long process of transition in the nature of the image which man has of himself and his environment …” Kenneth Boulding (1966) The economics of the Coming Spaceship Earth 1

Some big questions What needs to change? What are the links between economic growth, wellbeing, and environmental pressure? What blocks or supports desirable policy change? What is the role of science and modelling ? Case study: Using climate economics to inform policy What needs to change? What are the policy levers? Do we need to choose between economic growth and sustainability? Do we need a change of values? 2

The (climate) transition challenge Abatement Additional Australian Emissions and Abatement to 2020 from existing Abatement policies Challenge (MtCO2e) in 2020 (MtCO2e) 800 800 reference case emissions, 46 Mt 1990 policy settings 2011-2020 63 Mt 700 700 1995-2011 +22% baseline national emissions, 2011 policy settings, no carbon price 600 600 historical emisisons -5% - 149 500 500 Mt -15% emisisons - 205 excluding land use change Mt -25% - 261 400 400 Mt 300 300 1990 2000 2010 2020 Source: redrawn from Australian Government (2011) Strong Growth Low Pollution , and Department of Climate Change and Energy Efficiency (DCCEE), 2011, Australia’s emissions projections 2010 What are the opportunities? Power Industry Transport Percent of total opportunity Buildings GHG reduction, MtCO 2 e A stylized abatement cost curve Average cost, A$/tCO 2 e Forestry Agriculture Cost to society A$/tCO 2 e Net savings Moderate cost Higher cost 150 100 50 0 Emissions reduction potential MtCO 2 e per year -50 energy supply -100 land use, agriculture (fuel switching and -150 (medium to long term) renewable energy) -200 energy and 0 50 100 150 200 250 transport planning, resource use urban design efficiency (long term) Source: adapted from ClimateWorks Australia 2010 3

What are the policy levers? Power Industry Transport Percent of total opportunity Buildings GHG reduction, MtCO 2 e Forestry Average cost, A$/tCO 2 e Agriculture Cost to society A$/tCO 2 e Net savings Moderate cost Higher cost 150 100 50 0 Emissions reduction potential MtCO 2 e per year -50 -100 -150 -200 0 50 100 150 200 250 agricultural inform information accreditation, frameworks and enable and reporting for voluntary action extension incentives, appliance reward carbon price pollution regulation standards offsets (land) (energy, industry) address split network coordination and planning coordinate incentives governance Source: adapted from ClimateWorks Australia 2010 What are the impacts? National emissions fall ... while national income grows Mt CO2-e Mt CO2-e '000, $2005 '000, $2005 1,200 1,200 100 100 1,000 1,000 80 80 800 800 60 60 600 600 40 40 400 400 20 20 200 200 0 0 0 0 2010 2020 2030 2040 2050 2010 2020 2030 2040 2050 Reference CPRS -5 Reference CPRS -5 CPRS -15 Garnaut -10 CPRS -15 Garnaut -10 Garnaut -25 Garnaut -25 Emissions allowances fall 60-90% Average income grows around 1.3% per from 2000 levels by 2050 annum in most scenarios, compared to 1.4% pa in the reference case Domestic emissions typically fall slowly to around 2030, and then accelerate, with Real GNP per capita rises from $50,400 in 2008 to at trend rate depending on the carbon price least $54,700 in 2020 and $78,000 in 2050 Source: Australian Government (2008) ALPF , Charts 6.1 and 6.4; Summary Table 3.2 4

Decoupling growth and pressure Is it possible? Would it be sufficient? BAU Technology: the intensity of economic activity Population (P) Affluence (A) (reference case) 200 200 200 (GDP.pc) Te (energy per unit of GDP) Tc (CO2e emissions per unit of energy) follower (emissions reduction policy) 150 150 150 BAU (reference case) x x follower Tc (CO2e), BAU (emissions 100 100 100 reduction policy) Te (energy), BAU P A T ∆ Te energy intensity of GDP 50 50 50 Te (energy), ∆ Tc CO2e Tc (CO2e), follower intensity of energy follower 0 0 0 2005 2020 2035 2050 2005 2020 2035 2050 2005 2020 2035 2050 Energy (primary energy production) ∆ Energy 200 CO2e emissions across scenarios ‘Impact’ ( or ‘Pressure’ ) Energy , (before use of international offsets) BAU CO2e , BAU 150 = � Energy growth slows Energy , ∆ CO2e follower across secnarios 100 (+57 rather than +111%) � Emissions fall significantly 50 CO2e , rather than rise (-60 vs +102%) follower 0 2005 2020 2035 2050 Source: Calculated from data used in Hatfield-Dodds et al (2007) ‘Leader, Follower, Free-rider’, see Hatfield-Dodds et al (2008) ‘Growing the Green Economy’ Economic growth and average income with ambitious action on climate change … World GDP per capita in 450ppm CO2e scenarios GDP per capita for regional groups, Multiple global models (index 2010=100) 450-480ppm CO2e scenarios (IIASA A2r) 2.0% 200 80,000 World: 450 ppm CO2e scenarios World: 450 ppm CO2e scenarios 450-480 ppmv - A2r scenario (IIASA) GDP per capita - deviation from reference GDP per capita 70,000 0.0% World average index 2010=100 150 IIASA B1 OECD max 60,000 OECD -2.0% ALPF OECD min B2 GTEM 50,000 CPA (China) 100 -4.0% MESSAGE A2r LAC (Brazil) 40,000 FSU (Russia) IIASA B2 -6.0% 50 Eastern Europe MESSAGE-NOBECS 30,000 SA (India) -8.0% MiniCAM-BASE Other max 20,000 IIASA A2r Other average 0 -10.0% 10,000 Other min FUND - -12.0% -50 2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050 2000 2020 2040 2060 2080 2100 emissions reductions likely increased innovation (R&D) or sustainability policies to slightly slow income growth resource efficiency could are ‘pro-growth’ but increase income security boost growth and security, and ‘pro-wellbeing’ before 2050 with net income gains before 2050 in the long run Source of charts: Klinsky , Hatfield-Dodds and Mizuno, 2012 5

Economic growth and average income with ambitious action on climate change … (GPD per capita, US$ PPP) Garnaut 450ppm scenario $40,000 $40,000 Advanced $35,000 $35,000 Emerging $30,000 $30,000 Other developing $25,000 $25,000 All developing 2008 2040 $20,000 $20,000 Incomedoubling point $15,000 $15,000 1972 2023 $10,000 $10,000 2037 1951 2009 $5,000 $5,000 1894 1993 2017 $0 $0 1875 1900 1925 1950 1975 2000 2025 2050 Calculated from Treasury (2008), major country groupings, Garnaut -25 (450ppm) scenario. Does not account for climate feedbacks or surprise, such as arctic methane releases. How does change happen? What are the preconditions of policy change? How can we help achieve desirable change? 6

How does governance evolve? When do institutions ‘naturally’ respond to environmental threats? � distant impacts ~ time damage ~ location ~ communities � complex, poorly understood � irreversible � local impacts � visible and understood time or activity � reversible How does governance evolve? When do institutions ‘naturally’ respond to environmental threats? (i) we understand causes and consequences: damage major determinants of system or resource condition, resilience, and impacts of different trajectories are well known (ii) we can do something about it: resource or asset subject to human influence, including that damage is reversible (iii) we want to do something: formal or informal arrangements can be crafted that result in perceived net benefits to key constituencies time or activity from Arrow et al 1995 Science 268, Dietz el al 2003 Science 302 “ the evolution of rules and norms Adaptive that shape the management and use of shared resources Governance: to better meet the underlying needs and values of the group ” 7

What is the role of knowledge? … and what is the role of science and scientists? DISCOVERY ROLE raising (and answering) more valued attractive. politically possible questions linking cause and effect, identifying emerging issues TECHNICAL ROLE informing management identifying and assessing interventions in complex and complicated systems SOCIAL ROLE informing governance, being an honest broker more valuable government licence to worthwhile , efficient, operate, identifying risks and welfare enhancing opportunities What needs to change? Understanding and influencing nested layers of decisions and actions ‘values change’ might help but is not central, norms necessary, or sufficient our understanding of information – creation and sharing consequences (norm activation) rules and governance, infrastructure planning organisations governance (and choices) standards current and expected future asset infrastructure incentives asset choices prices, individual actors (acquisition and disposal) use of current assets 8