Thursday, 18 December 2014

A Happier Economy

One of the major issues preventing action on climate change is its economic framing. Using the market mechanism means that environment costs or ‘externalities’ are not factored in to the costs of energy. This leaves the cost of fossil fuels far below that of renewables despite their longer term implications. When coupled with the issue of discounting, driving an economic argument for clean tech is very difficult. People have tried arguing for green growth, with the development of 1million clean energy jobs a cornerstone of Labour’s 2015 manifesto, but again you are struggling with this idea that benefits are in the future but financial costs are here and social/environmental costs are unaccounted for. [accessed 18/12/14]

An interesting idea currently being research by the New Economics Foundation (NEF) is structuring economic policy by well-being rather than GDP. They note that despite the rise in UK GDP since the mid 20th century life satisfaction doesn’t change, with other studies suggesting that beyond a certain monetary threshold happiness doesn’t improve (Boyce et al 2010). In a recent talk at the institute of global prosperity Charles Seaford, head of Wellbeing at NEF, suggested that introducing well-being into policy decisions allows for a more integrated process and targets ‘better growth’. Improving aspects such as job security, inequality, housing provision etc. It’s important to stress this isn’t a subjective analysis, rigorous work such as the happiness index produces quantitative data on life satisfaction. This means you can look at things such as zero-hours contracts and say, actually this is negatively affecting lives by a quantifiable amount (in this case it was 0.52 on a scale of 1-5).

Looking a climate change through a well-being lens could provide excellent benefits. Introducing a carbon tax may reduce the GDP of certain countries and individuals but would bring secure jobs in a new ‘green’ economy and massively reduce health and social problems. The key benefit however would be inequality reduction. We know that climate change disproportionately impacts the poor, both nationally and internationally, which is especially poignant given the poor produce the smallest emissions, reorienting policy decisions by assessing wellbeing could help then adjust the cost-benefit analysis into one that is more likely to inspire action.

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