www.southwestrda.org.uk

Growth, low growth and environmental limits

Eleanor Field

27th Jan 2010

Introduction

‘Growth within environmental limits’?

Arguments for low growth

Modelling - what does low growth mean for the South West?

Growth within environmental limits

The South West Debates

Defining environmental limits

“the concept of environmental limits is based on the notion of the threshold or a number of thresholds tha cannot be surpassed. From a human perspective an environmental limit may be defined as the point past which the flow of services which are essential to support well-being and ultimately human life are put at risk” (The New Economics Foundation, 2008)

Progress towards growth within environmental limitsIncremental vs radical change

in business models

Public attitudes Barriers to env sustainable

business practice (NEF,2008)

Enforceable limits Economic consequences

(EA, 2008)

Is it enough?

‘Prosperity without growth’

1. Prosperity and material wealth

2. Economic stability

3. ‘Myth of decoupling’ – Environmental limits

Is low growth an alternative?

What might low growth mean for SWE?

Scenario modelling using the SW regional accounts model

Aims of the work

Introduction

‘Growth within environmental limits’?

Arguments for low growth

Modelling - what does low growth mean for the South West?

South West Growth

1989-2006 trend growth (GVA) 2.9% a year

1.1% of growth in labour 1.8% growth in labour

productivity (GVA per FTE) Baseline growth 2.5% and

scenario of 1.5%.

ScenariosMechanism Geographical scope

SW only All UK Global

1. Imposed

Environmental Resource Constraints

Technological Growth Slowdown

2. Behavioural Changes

Savings/Consumptions Behaviour

Labour Supply Behaviour

Environmental Resource Constraints

Environmental Resource Constraints

The other scenariosSlower technology growth Assumption that slow down

occurs in all sectors Initial shock – 1.5% growth leads

to 1.3% growth

Reduction in Labour supply Output effects tend to be in

labour-intensive activities. SW only – increase in in-

migration Impact partially mitigated by

increase in real wages

So what for environmental limits

20,000

21,000

22,000

23,000

24,000

25,000

26,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Car

bon

Dio

xide

(K

t)

Scenario 1 (+2.8% pa) Scenario 2 (+3.2% pa) Scenario 3 (+2.4% pa)

Scenario 4 (+1.8% pa) REEIO default (+2.6%)

Final thoughts

Our future is completely intertwined with everyone else’s.

Low growth can come from a variety of different places – what causes it determine its impact

Better models and data

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