Is the Controlled Shrinking of Economies a Better Bet to Slow Climate Change Than Unproven Technologies?

Existing plans to limit global warming rely too much on “increasingly unrealistic assumptions” that societies will be able to remove huge amounts of carbon from the atmosphere while simultaneously maintaining incessant economic growth over the next 50 years, according to a May 2021 study in Nature Communications. These strategies appear to be speeding the planet deeper into the climate crisis, the authors said.

Economic degrowth—strategies to shrink the economies of rich, developed countries while maintaining the wellbeing of the people and environments they are based on—might be less risky, and a better way to meet the goals of the Paris climate agreement. Efforts to slow climate change that are built on structural social changes, like rethinking the way we work, produce food, heat our homes and move around could be more successful than those that rely on uncertain carbon removal technologies, they said.

There are “substantial uncertainties” associated with those technologies, said co-author Manfred Lenzen, of the University of Sydney’s School of Physics. “Carbon dioxide removal, including carbon capture and storage, is in its infancy and has never been deployed at scale,” he said.

Lorenz Keyßer, an environmental systems researcher with ETH Zürich and co-author of the study, added that the consequences of misjudgements of how much carbon future technologies could remove from the atmosphere or keep from being emitted in the first place would be severe. “The over-reliance on unprecedented carbon dioxide removal and energy efficiency gains means we risk catastrophic climate change if one of the assumptions does not materialize,” he said.

Degrowth is described by ecological economists in Europe as downscaling production and consumption in wealthy countries, while improving their ecological conditions and maintaining people’s quality of life. The goal is to make well-being independent from economic growth.

To explore that possibility, the researchers built 18 climate models, with varying combinations of degrowth, renewable energy deployment and social change. They included only simple, existing carbon removal techniques, such as planting forests, in the models.

They then compared those models against the standard scenarios to avert dangerous warming used by the Intergovernmental Panel on Climate Change and found that moderate degrowth in the economies of developed countries was a more feasible and sustainable option for reaching the Paris target than plans that called for massive carbon dioxide removal in the future.

The study found that holding global economic growth to zero could cap climate warming at the 2 degree Celsius limit of the Paris agreement. While that strategy still requires low levels of carbon dioxide removal from the atmosphere, it doesn’t rely on unproven technologies. The models showed that degrowth measures aimed at limiting warming closer to 1.5 degrees Celsius with the help of the same existing technologies would cause a 0.5 percent annual decline in the global GDP.

“Our simple model shows degrowth pathways have clear advantages,” Keyßer said. “It appears to be a significant oversight that degrowth is not even considered in the conventional climate modeling community.” 

Lessons from the Pandemic

The options explored in the study were based on degrowth numbers that were a fraction of the roughly 4.2 percent decline in global GDP measured during the first six months of the Covid-19 pandemic, when restrictions on travel and commercial activity were widespread. The UN has estimated that global GDP declined by 1 percent in 2020, as compared to 3.2 percent growth in 2019.

While the study found that the degrowth options produced climate benefits,it also spelled out that structural social changes—some similar to those that came with the coronavirus pandemic and its economic slowdown—would be needed to make well-being independent from economic growth.

The study outlined a few examples of how a society might pursue such degrowth. Shortening work hours could reduce unemployment and increase productivity as well as reduce the economic drivers of climate change. Ensuring universal access, independent of income, to necessities like food, health care and transportation could improve the well-being of countries’ citizens overall, while also slowing growth. Limits on maximum income and the accumulation of wealth by individuals could help fund a universal basic income and reverse the trend of growing economic inequality.

“A just, democratic and orderly degrowth transition would involve reducing the gap between the haves and have-nots, with more equitable distribution from affluent nations to nations where human needs are still unmet,” Keyßer said.

The idea of social tipping points was explored in a January study led by Ilona Otto, at the University of Graz, Austria, who researches complexity and systems transformation. Keyßer said that paper described some of the mechanisms that can trigger structural changes, including ending fossil fuel subsidies and divesting from assets linked to fossil fuels; building carbon-neutral cities; revealing the moral implications of continued fossil fuel burning; and strengthening climate education and engagement.

Degrowth advocates know that the term evokes a contraction or reduction that scares some people, who think it means giving up a high standard of living, Keyßer said. But he added that  decoupling growth and well-being doesn’t have to produce that result.

“Many people feel uncomfortable with the word and there will be a lot of resistance to these proposals,” he said. “But what it means is focusing on a well-being economy, independent of economic (GDP) growth.”

While Keyßer admits the paper was intended to be provocative, he emphasized that degrowth does not equal a self-imposed recession. “A recession is a crash of the growth-based system,” he said. “Degrowth means managing with less. A growing or shrinking GDP should not affect our well-being.”

A New Term in Europe Rooted in an Old American Concept

Degrowth is Eurocentric for now, but the concept has North American roots anchored in the fertile ground of the 1970s ecological movement, said Peter Victor, an environmental researcher at York University, who studies how economies can be managed equitably and efficiently without growing beyond the limits of the planet and its ecosystems. 

Degrowth could also be described as an equitable redistribution of economic activity to achieve “sustainable prosperity” for everyone on the planet, Victor said.

“The media keeps telling us that GDP growth is desirable, but there is no scientific basis for saying that is always a good thing,” Victor, who was not involved in the new study, said. “We have to push back against this preoccupation with growth.” 

The modern degrowth movement was built partly on 1970s research by University of Maryland economist Herman Daly, as well as the influential 1972 Club of Rome report, The Limits to Growth. 

In a steady state economy, as Daly described it, the throughput—the amount of materials moving through the economy—stays the same. For example, there would be no increase in the amount of raw materials used for manufacturing. But that doesn’t mean one can’t find new and more efficient ways to use those supplies, Victor said. “The more efficient you become, the more you can do with it. The economy can still be dynamic.”

“There is discontent about what growth hasn’t delivered, combined with rising inequality,” he said. “The endless quest for economic growth hasn’t benefited everybody, as promised.” 

Another iteration of degrowth appeared as “doughnut economics” in 2012, when Oxford economist Kate Raworth visualized a safe, ring-shaped space for humanity between an outer boundary of planetary ecological limits and an inner boundary beyond which basic human needs went unmet. Building a sustainable economy means that “no one falls short on life’s essentials (from food and housing to health care and political voice), while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems, on which we fundamentally depend–such as a stable climate, fertile soils, and a protective ozone layer,” Raworth wrote on her Doughnut Economics web page.

Can Smaller be Better?

In reality, there are already some clear signs of global economic shifts that point to opportunities for degrowth, said Giorgos Kallis, an ecological economist at the Universitat Autònoma de Barcelona and one of the leading proponents of the idea that societies can live better with less. Those signs include that GDP growth in many countries is now often fueled by “creating money,” rather than by producing anything new, he said. Central banks can print money, or it can be generated by systems of lending, debt and financing, as well as by complex supply chains that add cost and value to products.

The new study, said environmental researcher Aljoša Slameršak, also with the Universitat Autònoma de Barcelona, is “eye-opening because it opens the door to new ways of thinking about the pathways” to reaching the Paris climate goals. The pathways toward carbon neutrality currently envisioned by the IPCC, and other global carbon budget models, assume that we can limit the global temperature increase with technological revolutions, Slameršak said, adding that those models assumed “unprecedented transformations that we haven’t seen in any countries.” 

Such pathways assume that economic growth is required to improve the well-being of people in any given economy. That tradition was formalized and advanced by generations of economists and institutionalized through financial instruments like pensions and money lending systems that Slameršak said “have made us addicted to growth.”

“We want to emphasize how GDP is dominating the discussion,” he said. “There is no room for other narratives.”  

But right now, the same global climate models assuming that global GDP will grow are also projecting that the planet will warm to a level beyond the goal of the Paris agreement, which risks triggering runaway climate change, he said, so the numbers don’t add up.

And even beyond the statistics, there are other reasons to consider degrowth, Slameršak said.

“It’s not just about climate science, he said. “It’s about global environmental justice, fairness and equity. Degrowth opens a pathway to addressing environmental justice issues.” Neither Kallis nor Slameršak were involved in the recent research.

“Current models and policy discussions assume an unprecedented technological transformation, but not a social transformation,” Keyßer said. “Why do we assume such a huge change in the tech sphere? Why aren’t we looking at social transformation?”

Social changes are complex, nonlinear and unpredictable in the short term, but that is not  

an argument against exploring them, he said. “You never know how fast we can move,” he said. “If we organize, a lot can change really quickly.”