Saturday, January 4, 2014

The Great Disruption by Paul Gilding

Assalamualaikum and greetings fellow citizens of Bits and Pieces!

I've been meaning to write this post for a long time and today, alhamdulillah, I finally get to write it.

Environmental economics. I've been interested in this field ever since I enrolled in my Master's programme. We were talking in the cafe when a friend of mine was saying this. I was intrigued.
"Environmental Economics? I thought economics doesn't care about the environment," my judgmental and foolish self spoke inside.
So I begged my friend to explain. What he told me in simple terms was how can men build the economy in such a way that the environment can still be sustained? That is environmental economics.
I thought to myself, "wow!" This is something realistic. Human beings need economics and we sure need the environment. And truthfully, people will get more serious about saving the environment when they know that economy will be in jeopardy too.

I am a student of Finance. Having to take courses and writing a dissertation, I don't have much free time to indulge myself in Environmental Economics at that time.

But then the Big Bad Wolf came and being a book worm, I can't resist. I went there with a friend, both of us bringing our wheeled travel bags to put in the tonnes (hyperbolic here) of books we were going to buy. And during that faithful event, I found this book:  

Paul Gilding wants us to realize that we are experiencing what he called "Scream Crash Boom".
"In summary it argued that the Scream - the call to action that had been under way since the late 1950s, was coming to an end; the Crash - of the ecosystem and economy, was beginning; and the Boom - a response to extraordinary speed and scale, was not far behind."

Let me explain a bit. 

Paul Gilding argued that humanity, the economy and the planet's ecosystem operate as a single interdependent system and that this system is in deep trouble. Quoted from this book, many scientists have given their warning:
"The broad conclusion they all come to is that we face a significant risk of major change that undermines society's prosperity and stability, we are a substantial contributor to the risk, and to reduce the level of risk we should dramatically reduce emissions of the pollution that causes the problem and the solutions is really very simple".

I'll get back to you on the solution. Now, I want to explain how is it that the economy can impact the environment and vice versa; and how all these will in turn affect us. To do so, I will again use Paul Gilding's own words:
Goldman Sachs has another set of data and predictions that reach similar conclusions. They forecast that while per capita GDP will approcimately double in the G7 developed countries by 2050, the real growth in per capita income will occur in the BRIC (Brazil, Russia, India and China) and N-11 (Next Eleven, the large developing economies that along with BRIC have the potential to overtake the G7 as the world's largest economies in this century). In these economies, Goldman Sachs sees per capita income increasing on average by almost ten times between 2006 and 2050...
When we add population increases to per capita income increases, we can see a world in 2050 where the economy is many times the size of today's. According to IMF and Australian Treasury figures, it will be five times larger. According to accounting firm PricewaterhouseCoopers (PwC), we can forecast an average global growth rate of 3.2% a year in purchasing power terms until 2050, which over forty years means an economy more than 3.5 times larger than today's.
That's a planet now running at 140% of capacity that will subsequently run at somewhere between 500% and 700% of capacity. Yes, it is true, that there is potential for significant efficiency gains that will decrease resource use and pollution per dollar of output, but that has a natural limit - we can make things lighter and cleaner but in the end we still have to make them. This combined with the fact that we keep making more of them means efficiency gains will not even come close to compensating for the growth we plan for...
Putting the numbers together, including continued efficiency gains, we plan to create an economy which in 2050 is running at somewhere between 300% and 400% of capacity. Based on their own data sets and projections, the Global Footprint Network has warned that we are on course to be running at 200% of capacity by the early 2030s - two planet's worth. Having only one planet makes this a rather significant problem...
We will face the Great Disruption. First, the economy will simply not grow. The earth is full; there is nowhere to put an economy that is twice the size of the earth, let alone five times the size. We will try hard to grow it; indeed, we will throw everything we have at the task, as we did when growth stalled in 2008. We will have some success, and growth will occur in individual countries and companies, and at different times it will occur globally for periods. But it will not happen on a significant scale of for sustained periods, for any decades to come. It will be prevented from doing so by the physical constraints of resource availability and the physical response of the global ecosystem, particularly the climate, on which our economy depends.

However, we are not doomed. There is still hope to stop this. Paul Gilding did not leave us with these frightful facts without any proposed solutions. So here you are, the solutions that we can adopt:
1. Cut deforestation and other logging by 50%
2. Close 1000 dirty coal power plants within 5 years
3. Ration electricity, get dressed for the war, and rapidly drive efficiency
4. Retrofit 1000 coal power plants with carbon capture and storage
5. Erect a wind turbine or solar power plant in every town
6. Create huge winds and solar farms in suitable locations
7. Let no waste go to waste
8. Ration use of dirty cars to cut transport emissions by 50%
9. Prepare for biopower with CSS
10. Strand half of the world's aircraft
11. Capture or burn methane
12. Move away from climate-unfriendly protein
13. Bind 1 gigaton of CO2 in the soil
14. Launch a government-and community-led "shop less, live more" campaign

I know, we are just normal people with no position in the government. We don't have any power.

Well people, we need to stop with the excuses and inferiority. We need to grow up and be strong! At the very least, we can do no. 7, 8,12 and/or 14. We should recycle and stop wasting, walk to the shops or class or to prayers instead of hopping on motorbikes and cars, cut down on climate unfriendly meat and lastly, I know this is tough girls, but cut down on your shoppings!

Thus this ends my post. I sincerely hope now that you've read and realize the reality; and that you will do something even if it is a little.

Good day to you :)