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Green Futures: Sharing the Wealth and Saving the Planet - Presentation for Peter Eisenberger's Class, October 31, 2011 at Columbia University
 

Green Futures: Sharing the Wealth and Saving the Planet - Presentation for Peter Eisenberger's Class, October 31, 2011 at Columbia University

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Presentation from Graciela Chichilnisky on Green Futures as a guest speaker for Peter Eisenberger's Class at Columbia Universty. October 31, 2011

Presentation from Graciela Chichilnisky on Green Futures as a guest speaker for Peter Eisenberger's Class at Columbia Universty. October 31, 2011

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    Green Futures: Sharing the Wealth and Saving the Planet - Presentation for Peter Eisenberger's Class, October 31, 2011 at Columbia University Green Futures: Sharing the Wealth and Saving the Planet - Presentation for Peter Eisenberger's Class, October 31, 2011 at Columbia University Presentation Transcript

    • Green Futures:
      • Sharing the Wealth Saving the Planet
      • Graciela Chichilnisky
      • Columbia University New York
      • 3 y 4 de Noviembre 2010
      • ENCUENTRO 2 DE ECONOMIA ECOLOGICA
      • BOGOTA COLOMBIA
    • Global Financial Crisis
      • Global Environmental Crisis
      • The Two sides of the Coin
      • Both Require a new Model of Economic Growth
      • Green Capitalism
    • Building the Future
      • In the midst of the 6 th largest extinction of Planet Earth
      • Facing potentially Catastrophic Climate Change
      • Threatening the World’s Seas - the Basis of Life on Earth
      • Global Emergency
      • Only the Young Can Help
    • An Impossible Mandate?
      • Stave Off Biodiversity Extinction
      • Reduce Carbon Emissions
      • While Supporting the Needs of Developing Nations?
    • Green Economics
      • Rethink Economics in Two Ways:
      • Markets & Value
      • The Present & the Future
      • Developing Nations are the Future
      • 60% of Global Growth since 2000
      10/31/11
    • The World since WWII
      • Rapid expansion of International Markets since WWII – Bretton Woods Institutions
      • Industrialization is Resource Intensive
      • Fueled by resources from developing nations – forests, minerals, biodiversity
      • Resources exported at low prices – poverty - and over consumed in industrial nations
      • Leading to an ever expanding Global Divide
    • Globalization
    • Program on Information and Resources Columbia University Source: World Trade Organization (WTO) 2005 data
    • Program on Information and Resources Columbia University Source: World Trade Organization (WTO). World Trade Overview 2005. http://www.wto.org/english/res_e/statis_e/its2006_e/its06_overview_e.pdf
    • Program on Information and Resources Columbia University Source: Baker, E, Bournay, E, Harayama, A, & Rekacewicz, P (2004). Vital Waste Graphics. UNEP/DEWA/GRID-Europe, RetrievedJan. 24, 2009, from http://www.grida.no/_res/site/file/publications/vital-waste/wastereport-full.pdf
    • Program on Information and Resources Columbia University Note: The graph corresponds to the regression system in Table 3, column 2 (next slide). The curve shows the partial relation between the Gini coefficient and the log of per capita GDP, holding fixed the estimated effects of the explanatory variables other than the log of per capita GDP and its square. Source: Robert Barro. Inequality and Growth Revisted. ADB January 2008. http://aric.adb.org/pdf/workingpaper/WP11_%20Inequality_and_Growth_Revisited.pdf
    • Increasing Global Divide
    • Energy = Economic Progress
    • Emissions follow GDP
    • North South Divide
    • Global Justice & the Environment
      • Two sides of the same coin
      • Poverty caused by cheap resources
      • Destroying the atmosphere of the planet
      • Undermining Climate Stability
      • Causing 6 th largest extinction in the history of the planet
      • We are part of the complex web of species that makes life on Earth
    • The Stumbling Block
      • The North South Divide is the main Stumbling Block in Climate Negotiations
      • Copenhagen COP 15
      • Problem: Who Should Abate?
      • A Cold War- like conflict between China v. the USA
      • The same this year in Cancun COP 16
      • Must Overcome the North - South Divide
    • The Gordian Knot
      • Must sever the LINK between Resources, Fossil Energy and Economic Progress
      • Only Clean Energy can Achieve this
      • But requires changing a $US50 trillion power plant infrastructure (IEA)
      • Because 87% of world energy is driven by fossil fuels
      • And power plants produce 41% of the global emissions
      • How to make a swift transition to renewable energy?
    • Sever the Knot - Transform Markets
      • Markets rule the Global Economy
      • Markets define Economic Value
      • They Measure GDP (or PIB)
      • But New Scarcities mean New Values
      • Where is the Scarcity Signal?
      10/31/11
    • The Missing Signal
      • Water is in the XXI Century what Petroleum was for the XX Century
      • A Clean Atmosphere
      • Biodiversity
      • Need New Markets to Provide New Value
      • Global Traffic Lights to Warn Danger Ahead
      • The Missing Signal
      10/31/11
    • Green Markets
      • New Infrastructure for the Global Economy
      • Reflecting New Values
      • New Scarcities
      • The Survival of the Human Species
      10/31/11
    • The Challenge to Economics
      • The Planet’s Atmosphere
      • Carbon Concentration
      • The Same for All
      • Public Goods - since not Rival in Consumption
      • Yet Privately Produced
      • Public in Consumption – Private in Production
      10/31/11
    • New Markets = New Capitalism
      • Green Capitalism
      • Valuing the Global Commons
      • Linking Equity and Efficiency
      • Cutting the Gordian Knot
      • Needed for the Survival of our Species
      10/31/11
    • Who Needs a Carbon Market?
      • Everything is Made with Energy
      • 1997: In creating the Carbon Market of the Kyoto Protocol I helped change the value of all goods and services in the world economy
      • Clean Energy becomes profitable & Dirty Energy Undesirable and Costly
      • Carbon Market is International Law since 2005: EU ETS
      • Trades $US165 Bn annually
      • Corrects the Biggest Externality in the History of Humankind (Stern 2009)
      • The Carbon Market Cuts the Gordian Knot
    • Green Markets
      • The Kyoto Protocol Carbon Market that I introduced International law since 2005, EU ETS trading $165 billion today
      • SO2 Market in Chicago Board of Trade
      • UN exploring New Biodiversity Markets
      • New Markets for Water
      • Efficiency with Equity
      • The two sides of the Coin
    • KP Clean Development Mechanism
      • Since 2005 it funded US$50 Bn Clean Technology Projects in poor nations – see World Bank “Status and Trends of the Carbon Market”
      • Decreased the equivalent of 20% of EU emissions
    • Green Capitalism
      • New Types of Markets
      • Valuing and Trading the Global Commons
      • Equity with Efficiency
        • Carbon Market
        • SO2 Market in US
        • Markets for Biodiversity
        • Markets for Water
      • Providing the Missing Signal of Scarcity
      • Traffic Lights for Human Survival
    • Alternative Energy Solutions
      • Going Forward:
      • Global Climate Negotiations
      • Negative Carbon Technologies
      Page
    • Negative Carbon Technologies
      • Negative Carbon: Capture more carbon than what is emitted
      • Trees do that – must preserve biodiversity
      • Biochar does that
      • But they are too slow for what we need today
    • Why Negative Carbon? Page
    • Negative Carbon is needed NOW Page
    • Blueprint for Transformation Global Thermostat Page
    • The Evidence of Change
      • and
      • Methodological Advances in
      • The Economics of Markets
      10/31/11
    • Living the Knowledge Revolution
      • In many countries, is leading to a new economy, with different environmental problems and new opportunities for action.
      • Examples: Asian Tigers and Little tigers, parts of India and Barbados.
    • The Knowledge Revolution
      • US leads the pack because of its property-rights systems and financial markets.
      • Japan lost in the software race because of property-rights systems.
    • ● This is not a ”service economy” as previously thought. ● It is a new economy using knowledge rather than capital as the most important input of production. ● Fossil fuels are now replaced by information technology
    • Leading The Way to Eco-friendly Profits Some major manufacturers have decided to do more than reduce waste and clean up pollution. They are developing products and processes that make it profitable to be environmentally friendly. DUPONT has co-developed 3GT, a bioengineered polyester fabric made from cornstarch that is lower in cost than oil-based polyester and can be recycled indefinitely. SONOCO has created an rectangular “paper can” for Lipton Iced Tea that is 70% recyclable. 3M has developed a plastic coating for the Navy to replace paint on trucks, ships and trains. It’s lighter than paint, which leads to greater fuel efficiency.
    • S.C. JOHNSON reformulated Raid roach killer, converting from a solvent-based to a water-based formula. Its Greenlist Process has slashed 1.8 million pounds of volatile organic compounds from its Windex line of products. Another 4 million pounds of polyvinylidene chloride has been eliminated from Saran Wrap. ELECTROLUX’ environmental products, including solar-powered lawn mowers, chain saws lubricated with vegetable oil, and water saving washing machines, generated 3.8% higher profits last year than the company’s conventional products. TOYOTA is introducing a hybrid car that gets 66 mph on a combination of gasoline and electricity. A. FINKL & SONS , a Chicago steel forger, recycles more than 955 of its solid waste and has cut energy use by 36.4% over 10 years, making it one of the most efficient forgers in the world.
    • BRITISH PETROLEUM has invested $160 million in developing solar energy and is building a completely solar-powered Olympic village for the 1998 Summer Games in Australia. EXXON – Making $600 million investment to develop algae-based biofuel. HONDA – Developing next generation hybrids, hydrogen fuel cell powered “FCX” vehicle and taking steps to create an entire infrastructure for hydrogen. GE – Developing consumer-minded energy cost-cutting appliances like hybrid water heaters, energy-efficient aircraft engines and factoring carbon costs into deal approval processes.
    • INTEL - Reducing energy consumption of its chips while increasing their speed. Strong programs to reduce waste and release of toxics. Largest corporate purchaser of renewable energy in the US, equivalent to 46% of company's US energy use. STARWOOD HOTELS – Building highly-efficient, earth-friendly luxury properties, including a $200 Million Sheraton in Seattle. NiIKE – Introduced shoe made from "environmentally preferred materials", such as recycled polyester, and packaged in a 100% recycled fiber box.
    • Source: “Comparing economic and scientific wealth” of the article “The Scientific Impact of Nations” by David A. King, Nature, July 15, 2004, p. 311-316.
    • Sources: Pisa. www.pisa.oecd.org . World Bank. www.worldbank.org .
    • Sources: Pisa. www.pisa.oecd.org . World Bank. www.worldbank.org .
    • Knowledge Sector (% of GDP) U.S. BEA 2007, Knowledge Sector: Computer and electronic products; information; finance and insurance; professional, scientific, and technical services; management of companies and entreprises Sources: US Bureau of Economic Analysis (BEA) 2007 data www.bea/gov. World Bank. www.worldbank.org
    • Sources: US Bureau of Economic Analysis (BEA) 2007 data www.bea/gov. World Bank. www.worldbank.org
    • Sources: US Bureau of Economic Analysis (BEA) 2007 data www.bea/gov. World Bank. www.worldbank.org
    • Sources: US Bureau of Economic Analysis (BEA) 2007 data www.bea/gov. World Bank. www.worldbank.org
    • Sources: US Bureau of Economic Analysis (BEA) 2007 data www.bea/gov . World Bank. www.worldbank.org
    • Sources: World Bank. www.worldbank.org . World Resource Institute (WRI). www.wri.org
    • Sources: US Bureau of Economic Analysis (BEA) 2007 data. www.bea/gov Energy Information Administration (EIA). www.eia.doe.gov/
    • New Economics of Markets
      • The Most Important Markets this Century:
      • Markets for Knowledge
      • Markets for Environmental Assets
      • Both trade privately produced public goods
      Program on Information and Resources Columbia University
    • Markets are widely used institutions They are decentralized, and can be efficient. But global environmental markets trade unusual goods: privately produced public goods ● Biodiversity is one ● The planet’s atmosphere is another Program on Information and Resources Columbia University
    • Market Innovation
      • New Markets are created, which trade property rights on the use of the Global Commons
      Program on Information and Resources Columbia University
    • Environmental assets are often public goods
      • CO 2 concentration in the atmosphere is a quintessential public good because it mixes very thoroughly throughout the planet and is very stable (remains about 100 years)
      • It is not a typical public good because it is not produced by the government such as defense
      • CO 2 is privately produced
      Program on Information and Resources Columbia University
    • Public goods change matters New Economic Findings
      • Only certain allocations of property rights on the atmosphere between countries will yield efficient market solutions
      • This ties together the goals of efficiency and fairness:
      • The aspirations of North and South
      Program on Information and Resources Columbia University
    • Privately produced public goods
      • are goods which are not “rival” in consumption, but are privately produced
      • we all produce emissions but the atmosphere is the same for us all
      Program on Information and Resources Columbia University
    • First Theorem of Welfare Economics The allocation resulting from a competitive market equilibrium with private goods is Pareto efficient (Adam Smith, Arrow 1950)
      • This theorem is independent of the distribution of property rights. For example: all but two traders may have zero endowments of property rights and the resulting equilibrium is still Pareto efficient.
      Program on Information and Resources Columbia University
      • But it requires all traded goods to be private goods, with rival consumption, and to be private goods
      Program on Information and Resources Columbia University
    • With private goods efficiency requires that MRS=MRT, but with public goods the formula changes: Lindahl-Bowen & Samuelson proved that: Sum of MRS across people = MRT Program on Information and Resources Columbia University
    • ● Therefore free choice must lead every trader to select the same overall trade-off between private goods and atmospheric quality ● For this to happen, trader’s wealth should not be too far apart Program on Information and Resources Columbia University
    • ● Efficiency and distribution are connected in markets with PPP goods ● A measure of equity is necessary for efficiency ● Markets with knowledge and environmental assets require equity for efficiency Program on Information and Resources Columbia University
    • New Economic Findings
      • Efficiency in trading permits requires more emission rights to developing countries
      • Why?
      • For the same reason that J. Mirlees’ ‘Optimal Taxes’ are Progressive – efficient payment for Public Goods
      Program on Information and Resources Columbia University
    • World Market with Privately Produced Public Goods
      • Two Nations, I = 1,2
      • Two Goods:
      • one private: x
      • one public: a = abatement = - emissions
      • Initial data:
      • (1) the technology  a  x, with  ’ 
      • (2) the property rights on the use of the public good,
      • a i , with    a 1 = a
      Program on Information and Resources Columbia University
      • Each Nation solves the following problem:
      • ( * ) Max u i (x i ,a),
      • Such that
      • x i =   a i   ( a i - a i )
      • where  π is the market price of x relative to a – namely the price of ‘permits’ – and where a i are trader i’s property rights on the global commons – namely rights to emit.
      • At a World Market Equilibrium each country maximizes utility (*) and markets clear
      •  a i =  a i = a
      Program on Information and Resources Columbia University
    • Program on Information and Resources Columbia University
    • Knowledge/ Wealth Correlation: High Income Countries Source: World Bank KI and KEI indexes, 2009
    • Source: World Bank KI and KEI indexes, 2009 Knowledge/ Wealth Correlation: Low Income Countries
    • Knowledge/ Wealth Correlation: Regions/ Income Groups Source: World Bank KI and KEI indexes, 2009
    • Green Markets lead the way to Green Capitalism Global Thermostat Technology and Other Carbon Negative Solutions are the Future of Energy Resolving the Global Climate Negotiations Providing Clean Energy and Growth for North and South that is Harmonious with the Earth’s Resources Building the Future A Vision of Green Economics