Resilient and Inclusive Prosperity within Planetary Boundaries

17 Pages Posted: 16 Sep 2014

See all articles by Cameron J. Hepburn

Cameron J. Hepburn

London School of Economics, Grantham Research Institute

Eric Beinhocker

University of Oxford - Blavatnik School of Government

J. Doyne Farmer

University of Oxford

Alexander Teytelboym

University of Oxford - Oxford Martin School

Date Written: September–October 2014

Abstract

The current model of economic growth generated unprecedented increases in human wealth and prosperity during the 19th and 20th centuries. The main mechanisms have been the rapid pace of technological and social innovation, human capital accumulation, and the conversion of resources and natural capital into more valuable forms of produced capital. However, there is evidence emerging that this model may be approaching environmental limits and planetary boundaries, and that the conversion of natural capital needs to slow down rapidly and then be reversed. Some commentators have asserted that in order for this to occur, we will need to stop growing altogether and, instead, seek prosperity without growth. Others argue that environmental concerns are low‐priority luxuries to be contemplated once global growth has properly returned to levels observed prior to the 2008 financial crisis. A third group argues that there is no trade‐off, and, instead, promotes green growth: the (politically appealing) idea is that we can simultaneously grow and address our environmental problems. This paper provides a critical perspective on this debate and suggests that a substantial research agenda is required to come to grips with these challenges. One place to start is with the relevant metrics: measures of per‐capita wealth, and, eventually, quantitative measures of prosperity, alongside a dashboard of other sustainability indicators. A public and political focus on wealth (a stock), and its annual changes, could realistically complement the current focus on market‐based gross output as measured by GDP (a flow). This could have important policy implications, but deeper changes to governance and business models will be required.

Keywords: green growth, limits to growth, planetary boundaries, resilience, sustainable prosperity

JEL Classification: O10, Q01, Q5

Suggested Citation

Hepburn, Cameron J. and Beinhocker, Eric and Farmer, J. Doyne and Teytelboym, Alexander, Resilient and Inclusive Prosperity within Planetary Boundaries (September–October 2014). China & World Economy, Vol. 22, Issue 5, pp. 76-92, 2014, Available at SSRN: https://ssrn.com/abstract=2496678 or http://dx.doi.org/10.1111/j.1749-124X.2014.12085.x

Cameron J. Hepburn (Contact Author)

London School of Economics, Grantham Research Institute ( email )

Houghton Street
London, WC2A 2AE
Great Britain

HOME PAGE: http://www.cameronhepburn.com

Eric Beinhocker

University of Oxford - Blavatnik School of Government ( email )

10 Merton St
Oxford, Oxfordshire OX1 4JJ
United Kingdom

J. Doyne Farmer

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Alexander Teytelboym

University of Oxford - Oxford Martin School ( email )

University of Oxford
34 Broad Street
Oxford, OX1 3BD
United Kingdom

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