Warming Economy

The global economy and Australia’s economic stability is threatened by the ever present, climate emergency. As the climate emergency continues unabated, extreme weather and climatic events will progressively cause economic shocks that will cascade through the economy (Steffen, 2019). From this perspective, now, 2020, is the perfect opportunity to shift our economic story and hire a system that transforms the ‘business as usual’ attitude into a structure, that supports our climates future.

“Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different.” -Arundhati Roy (2020).

In anticipation of a new way, we may predict our Australian economic future to appear something along the lines of the following approaches:

Cancel Growth

Economists are united around the belief that the economy always needs to grow. The growth of gross domestic product (GDP), measures a country’s wealth and prosperity (Chappelow, 2020). We are conditioned to believe growth is the only way our communities can function. This belief successfully worked in post war scenarios however, it is now outdated, flawed and failing our society (Libert, 2016). The current system does not measure, instead it often obliterates, the foundational needs of health, security, freedom, leisure and happiness. We need our foundations to be fundamentally and systemically different; by disassociating ourselves from growth, capitalism and materialism, a substantial shift will transpire.

“A persistent above-norm increase in average global temperature by 0.04 Celsius per year leads to substantial output losses, reducing real per capita output by 0.8%, 2.51% and 7.22% percent in 2030, 2050 and 2100, respectively. …Furthermore, we show that our empirical findings apply equally to poor or rich, and hot or cold countries.” -Thomas Frank (2019).

Shift to a Happiness Indicator

Any economic effort that has been made in recent times to combat climate change has failed. Bhutan’s new metrics measure the happiness of their population, “Gross National Happiness” (GNH), as an alternate way to measure a countries progress (Chhetri, 2011). GNH development has had impacts on their countries social consciousness in turn they balance material well-being and cultural facets of well-being, which is increasingly being identified as a necessity for economic development (Newman, 2018). This social consciousness has prioritised the conservation of the environment and sustainability at the heart of Bhutan’s political agenda (Kelly, 2012).

Utilise a Doughnut Economy

Kate Raworth, has designed an economic, holistic platform that reins in aspects of social foundation and the climate emergency (diagram below). In Kates own terms the donut economy’s principle is to, “ensure that no one falls short on life’s essentials, while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems” (Raworth, 2020). This donut framework, has recently been recommended as a guide for Amsterdam’s housing crisis by the Dutch government (Boffey, 2020). Architects can reimagine the city by utilising bio based materials, affordable housing, safely designed communities, stimulating health and education, reducing construction based imports, plentiful social housing and aiming to be carbon neutral. The donut methodology ensures everyone in a community has equal opportunities and we simultaneously achieve a stable climate, fertile soils, and a protective ozone layer.

Eliminate ‘Dirty’ Money

Fortunately, corporations are becoming more conscious of where their money is being invested and funded. 36 major banks refused to finance the Adani Group’s Carmichael project. This forces their chairman, Gautam Adani, to personally repay the $100M worth of Abbot Point Debt, with another $1B due by 2022 (Market Forces 2020). In similar fashion this week, energy shares have plunged as the oil market is in a volatile position. Caltex, Woodside Petroleum and Santos (Walton 2020), are now selling Brent crude oil at less than half the price of what it was in January (Morton, 2020). This major collapse defers investment decisions on projects, hence halting greenhouse gas emissions. This uncertain time is threatening investors and shareholders abhorrent fossil fuel assets; a psychological shift, has resulted in fossil fuel chief executives, confronting what a world without oil could look like:

“This crisis has helped make clear that the world in which the sole objective of a company’s purpose is to maximise profit is no longer acceptable.” – BP’s chief executive Bernard Looney (O’ Shanassy, 2020).

Dirty (fossil fuel funded) money is the oxygen, the global warming fire needs to burn. By educating ourselves on the importance of employing different structures, there are opportunities for governments to shift away from large economic disruption and climate instability. The aforementioned schemes are a catalyst for systemic change. They deconstruct the current standard, thus cohesively advocating the climate emergency.

Image Sources

Noon, M (2013). U.N. Climate Change Talks: It’s Really All About the Money blog.heartland.org/2013/12/u-n-climate-change-talks-its-really-all-about-the-money/ (cited April 22, 2020).

Raworth, K (2018). Can we do business in the doughnut economy? https://www.greenbiz.com/article/can-we-do-business-doughnut-economy (cited April 22, 2020).

Wright, C (2019). How Bhutan built conservation finance into its DNA. https://www.euromoney.com/article/b1hhztr7y2w8sv/how-bhutan-built-conservation-finance-into-its-dna (cited April 22, 2020).

Resources

Boffey, D (2020). Amsterdam to embrace ‘doughnut’ model to mend post-coronavirus economy. The Guardian. https://www.theguardian.com/world/2020/apr/08/amsterdam-doughnut-model-mend-post-coronavirus-economy (cited April 20, 2020)

Kelly, A (2012). Gross national happiness in Bhutan: the big idea from a tiny state that could change the world. The Guardian. https://www.theguardian.com/world/2012/dec/01/bhutan-wealth-happiness-counts (cited April 21, 2020).

Libert, B (2016). GDP Is a Wildly Flawed Measure for the Digital Age https://hbr.org/2016/07/gdp-is-a-wildly-flawed-measure-for-the-digital-age (cited April 21, 2020).

Market Forces (2020). Adani faces debt bill as Abbot Point refinancing fails. https://www.marketforces.org.au/adani-faces-debt-bill-as-abbot-point-refinancing-fails/ (cited April 20, 2020)

Morton, A (2020). Australia’s booming LNG industry stalls after fall in oil prices amid coronavirus. The Guardian. https://www.theguardian.com/environment/2020/apr/13/australias-booming-lng-industry-stalls-after-fall-in-oil-prices-amid-coronavirus (cited April 21, 2020)

Newman, P (2018). Sustainability in an Emerging Nation: The Bhutan Case Study. (PDF) https://www.researchgate.net/publication/325267416_Sustainability_in_an_Emerging_Nation_The_Bhutan_Case_Study” (cited April 21, 2020).

O’ Shanassy, K (2020). How rural Australia can ‘bounce forward’ after coronavirus and create a resilient future. Australian Conservation Foundation.https://www.acf.org.au/how_rural_australia_can_bounce_forward_after_coronavirus (cited April 21, 2020)

Raworth, K (2020). What on Earth is the Doughnut? https://www.kateraworth.com/doughnut/ (cited April 20, 2020).

Roy, A (2020). Arundhati Roy: ‘The pandemic is a portal’.https://www.ft.com/content/10d8f5e8-74eb-11ea-95fe-fcd274e920ca (cited April 21, 2020).

Steffen, W (2019). HOW CLIMATE CHANGE IS DAMAGING AUSTRALIA’S ECONOMY. (PDF)  Climate Council.https://www.climatecouncil.org.au/wp-content/uploads/2019/05/costs-of-climate-change-report-v3.pdf(cited April 22, 2020).

T, Frank (2019). Climate change to slow global economic growth, new study finds. https://www.cnbc.com/2019/08/20/climate-change-to-slow-global-economic-growth-new-study-finds.html (cited April 20 2020).

Walton, S (2020). Australian energy stocks fall, as oil futures collapse. https://www.ig.com/au/news-and-trade-ideas/australian-energy-shares-fall–as-oil-futures-collapse-200420 (cited April 21, 2020)