Inequality and sustainability

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  • 1. Introduction The economics paradigm Planetary boundaries Unequal distribution of wealth Economic inequality and sustainability in a full world Union of Concerned Scientists Cambridge, MA Carlos Amador-Bedolla∗ ∗ Departamento de Física y Química Teórica, Facultad de Química Universidad Nacional Autónoma de México On sabbatical semester at Department of Chemistry and Chemical Biology Harvard University May 12, 2010 carlos.amador@unam.mx
  • 2. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Current human activity carlos.amador@unam.mx
  • 3. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Human population Población humana a través de la historia 7000 Homo sapiens exists 6000 since two hundred 5000 thousand years Población (millones) approximately 4000 100% population Población mundial increase in the last 44 3000 years 2000 42% population increase in the last 25 1000 years Data from 0 http://en.wikipedia.org/wiki/World_population_estimates −10000−8000 −6000 −4000 −2000 0 2000 Año AC/DC carlos.amador@unam.mx
  • 4. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Current human activity is recent Our population growth rate is not exponential! Three different exponential rates Adam was created either in 220 000 BC, 25 264 BC or 828 BC carlos.amador@unam.mx
  • 5. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Demand for energy United States of America from 1635 to 2000 Different energy sources: wood, coal, oil, natural gas, hydro, nuclear Quadrillion Btu ≈ 25 million tons of oil Current USA: 100 Quad. World: 450 Quad/year=15TW. Energy Information Administration http://www.eia.doe.gov/emeu/aer/eh/intro.html carlos.amador@unam.mx
  • 6. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Who made this possible? A few scientists... Johannes Kepler (b. 1571 near Stuttgart) Astronomia nova (1609, Prague) carlos.amador@unam.mx
  • 7. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Who made this possible? A few scientists... Isaac Newton Philosophiae Naturalis Principia Mathematica (1687) carlos.amador@unam.mx
  • 8. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Who made this possible? A few inventors... Thomas Newcomen (1710) Piston steam engine Efficiency below 1% Miner’s friend carlos.amador@unam.mx
  • 9. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Who made this possible? A few inventors... James Watt (1784) Separation of the hot and cold phases Efficiency close to 3% carlos.amador@unam.mx
  • 10. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Who made this possible? More scientists... James Prescott Joule (1845) Heat and work are energy Thermodynamics first law carlos.amador@unam.mx
  • 11. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Who made this possible? More scientists... Rudolf Clausius (1850) Heat and work are energy but interconversion is limited by entropy Thermodynamics second law carlos.amador@unam.mx
  • 12. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Who made this possible? And economists Adam Smith (1776) The invisible hand Free market carlos.amador@unam.mx
  • 13. Introduction The economics paradigm Present human activity Planetary boundaries Unequal distribution of wealth Who made this possible? And economists David Ricardo (1817) Comparative advantage Law of diminishing returns carlos.amador@unam.mx
  • 14. Introduction The economics paradigm Permanent growth is impossible Planetary boundaries Unequal distribution of wealth Who made this possible? And economists John Stuart Mill (1848) Discussions on freedom and liberty Human rights, feminism, environment carlos.amador@unam.mx
  • 15. Introduction The economics paradigm Permanent growth is impossible Planetary boundaries Unequal distribution of wealth Ever increasing economic activity paradigm Year after year, economy must grow Historic World Gross Product Producto mundial bruto (PMB) a través de la historia 50 Humanity golden age PMB (billones de dólares internacionales) 40 or Humanity mega bash 30 Producto Mundial Bruto 20 10 Angus Maddison. Historical Statistics for the World Economy: 1-2006 AD. http://www.ggdc.net/maddison/Historical_Statistics/horizontal- file_09-2008.xls 0 0 500 1000 1500 2000 Año carlos.amador@unam.mx
  • 16. Introduction The economics paradigm Permanent growth is impossible Planetary boundaries Unequal distribution of wealth Current human activity is recent Our economic growth rate is not exponential! At least two different economic rates of growth Until 1870 we grew at 0.2% per year —twofold increase in 302 years. Since 1870 we grow at 3.2% per year —twofold increase in 22 years. carlos.amador@unam.mx
  • 17. Introduction The economics paradigm Permanent growth is impossible Planetary boundaries Unequal distribution of wealth Ever increasing economic activity paradigm Year after year, economy must grow Humanity golden age or Humanity mega bash horizontal: 1896-2009 vertical: 0 to 14000 djia units Dow Jones & Co. 2009. https://www.djaverages.com/ carlos.amador@unam.mx
  • 18. Introduction The economics paradigm Permanent growth is impossible Planetary boundaries Unequal distribution of wealth Ever increasing economic activity paradigm Year after year economy must grow Humanity golden age or Humanity mega bash H. Charles J. Godfray, et al. Food Security: The Challenge of Feeding 9 Billion People. Science 327, 812 (2010); DOI: 10.1126/science.1185383 World food production per capita grew 12% since 1990, 20% in developing countries, 5% in least developed countries. carlos.amador@unam.mx
  • 19. Introduction Climate change The economics paradigm Energy Planetary boundaries Water Unequal distribution of wealth And a few more Ever increasing economic activity paradigm Year after year economy must grow Humanity golden age or Humanity mega bash H. Charles J. Godfray, et al. Food Security: The Challenge of Feeding 9 Billion People. Science 327, 812 (2010); DOI: 10.1126/science.1185383 Chicken production increased over 450% since 1960, pork more than 250%. carlos.amador@unam.mx
  • 20. Introduction Climate change The economics paradigm Energy Planetary boundaries Water Unequal distribution of wealth And a few more World is (effectively) a closed system Permanent growth is impossible in a finite system: Climate change Oxygen in the atmosphere (a. u.) Carbon equivalent emissions Change in the fraction of 13 C to 12 C —inverted scale— new carbon comes from fossil fuels Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R. Betts, D.W. Fahey, J. Haywood, J. Lean, D.C. Lowe, G. Myhre, J. Nganga, R. Prinn, G. Raga, M. Schulz and R. Van Dorland, 2007: Changes in Atmospheric Constituents and in Radiative Forcing. In: Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Miller (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. carlos.amador@unam.mx
  • 21. Introduction Climate change The economics paradigm Energy Planetary boundaries Water Unequal distribution of wealth And a few more World is (effectively) a closed system Permanent growth is impossible in a finite system: Energy Hubbert’s peak Open debate. Cornucopians vs. neo-Malthusians. For more recent calculations v. Nashawi, Malallah & Al-Bisharah, Forecasting world crude oil production using multicyclic Hubbert model. Energy Fuels. ASAP DOI:10.1021/ef901240p (2010). carlos.amador@unam.mx
  • 22. Introduction Climate change The economics paradigm Energy Planetary boundaries Water Unequal distribution of wealth And a few more Mexico: Hubbert’s peak Mexico (UK, Norway) is amongst the oil producing countries with the fastest decrease rates carlos.amador@unam.mx
  • 23. Introduction Climate change The economics paradigm Energy Planetary boundaries Water Unequal distribution of wealth And a few more World is (effectively) a closed system Permanent growth is impossible in a finite system: Water carlos.amador@unam.mx
  • 24. Introduction Climate change The economics paradigm Energy Planetary boundaries Water Unequal distribution of wealth And a few more GRACE: Gravity Recovery And Climate Experiment GRACE: humanity golden age Satellites orbiting 200 km apart and interchanging microwaves Sense the variation in gravity for regions (∼160 000 km2 ) This is the most irrigated region of the world (more than 80% of the surface) Estimated 54±9 km3 /year water extraction from aquifers V. M. Tiwari, J. Wahr & S. Swenson, Dwindling groundwater resources in northern India, from satellite gravity observations, Geophys. Res. Lett. (2009, in press) M. Rodell, I. Velicogna & J. Famiglietti, Satellite-based estimates of groundwater depletion in India, Nature doi:10.1038/nature08238 (12 August 2009) carlos.amador@unam.mx
  • 25. have become the main driver of global envi- industrialized forms of agriculture, human Introduction Gini index ronmental change5. This could see human activities have reached a level that could dam- The economics paradigm activities push the Earth system outside regionage the systems that keep Earth in the desirable Country by country, region by the Planetary boundaries Application to CO of stable environmental state 2 the Holocene, Holocene state. The result could be irrevers- Unequal distribution of wealth with consequences that are detrimental or ible and, in some cases, abrupt environmental Inequality and/or sustainability even catastrophic for large parts of the world. change, leading to a state less conducive to During the Holocene, environmental human development6. Without pressure from change occurred naturally and Earth’s regu- humans, the Holocene is expected to continue World is (effectively) a closed system latory capacity maintained the conditions for at least several thousands of years7. that enabled human development. Regular temperatures, freshwater availability and Planetary boundaries Permanent growth is impossible in a finite system: Planetary boundaries biogeochemical flows all stayed within a rela- To meet the challenge of maintaining the tively narrow range. Now, largely because of Holocene state, we propose a framework a rapidly growing reliance on fossil fuels and based on ‘planetary boundaries’. These Nine boundaries not to be crossed to mantain viability of human species Climate change on ) uti Oc oll fied ean l p nti ac ica qua id ifi climate change (−) t ot m ye e Ch ca tion (n ocean acidification ) ified ozo (not yet quant g Stra epletion aerosol load ic in r Atmosphe ne d tospheric atmospheric ozone depletion nitrogen and phosphorous cycles (−) loss flow eoch (bio Nitro cycl en ity g bou em ycle oru e g ers global freshwater use nd ica div ar l o y) Bi Ph c ph os change in land use us e nd in la fre shw at s Change Glo er use bal biodiversity loss (−) atmospheric aerosol A safe 1operating space for humanity. Johan Rockström, et al. Nature 461 472-475 Figure | Beyond the boundary. The inner green shading represents the proposed safe operating space for nine planetary systems. The red wedges represent an estimate of the current position for (24 September 2009). Planetary Boundaries: Exploring the safe operating space for humanity. and human each variable. The boundaries in three systems (rate of biodiversity loss, climate change Ecology chemical pollution interference with the nitrogen cycle), have already been exceeded. and Society. 14(2): 32. [online] URL: 472 http://www.ecologyandsociety.org/vol14/iss2/art32/ !"#$!"%&'()*)+*&,-.*/0.12&3+4*5.1)/6&78&9:;)*55&&&!"# carlos.amador@unam.mx
  • 26. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Permanent-growth-allows-distribution-of-wealth paradigm Everybody is invited to the bash... Índice de Gini (G=0.54) 1 Corrado Gini (1912) 0.8 Select the poorest people quintile and find the fraction of total wealth they Fracción acumulada 0.6 have. If homogeneously distributed they would have 20%. They have less 0.4 than that. Move to next quintile... Measure inequality as fraction of area 0.2 not covered —zero if homogeneous, one if only one person has it all. Worlds Apart: Measuring International and Global Inequality. Branko 0 Milanovic. Princeton University Press (2005) 0 0.2 0.4 0.6 0.8 1 Fracción del total de la población carlos.amador@unam.mx
  • 27. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth paradigm Population (millions), GNI (USD 2006), Income distribution country GNI Pop. (mill) 10% 20% 40% 60% 80% 90% India 820. 1131.9 3.6 8.1 19.4 34.3 54.7 68.9 China 2000. 1318.0 1.6 4.3 12.8 26.5 48.1 65.1 Namibia 3210. 2.1 0.5 1.4 4.4 9.8 21.3 35.5 Bolivia 1100. 9.8 0.3 1.5 7.4 18.3 37.0 52.8 Colombia 3120. 46.2 0.8 3.7 10.6 21.6 39.9 55.0 Brazil 4710. 189.3 0.9 2.9 9.4 20.5 39.2 55.1 Mexico 7830. 106.5 1.6 4.3 12.6 25.2 44.9 60.6 Russian Fed 5770. 141.7 2.4 6.1 16.6 31.5 53.3 69.4 Korea 17690. 48.5 2.9 7.9 21.5 39.5 62.6 77.5 Israel 20170. 7.3 2.1 5.7 16.2 32.1 55.1 71.2 Germany 36810. 82.3 3.2 8.5 22.2 40.0 63.1 77.9 UK 40560. 61.0 2.1 6.1 17.5 33.5 55.8 71.5 USA 44710. 302.2 1.9 5.4 16.1 31.8 54.2 70.1 World Development Indicators 2008. World Bank, Washington, DC. carlos.amador@unam.mx
  • 28. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth paradigm Use two gamma probability distribution functions F (x) = P r1 G(x, a1 , b1 ) + r2 G(x, a2 , b2 ) ; ba a−1 −bx G(x, a, b) = x e , Γ(a) ∞ xF (x)dx = GNI 0 The cumulative distribution function, A(x), is x A(x) = F (x )dx ; 0 and represents the fraction of the total population with income up to x. The fraction of the global income accumulated by this fraction of the total population, A$(x), is x 1 A$(x) = x F (x )dx . GNI 0 The graph of A$(x) vs. A(x) is the Lorenz curve. carlos.amador@unam.mx
  • 29. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability The Lorenz curve Nonlinear least squares fitting Best and worst estimations for America (T&T and Bolivia) carlos.amador@unam.mx
  • 30. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth paradigm World: 131 countries (26Dd, 105Dg), 6.3 billion humans. Carlos Amador. Marx reloaded (En preparación, 2010) carlos.amador@unam.mx
  • 31. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth paradigm Carlos Amador. Marx reloaded (En preparación, 2010) carlos.amador@unam.mx
  • 32. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth paradigm Carlos Amador. Marx reloaded (En preparación, 2010) carlos.amador@unam.mx
  • 33. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth paradigm Carlos Amador. Marx reloaded (En preparación, 2010) carlos.amador@unam.mx
  • 34. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth paradigm Carlos Amador. Marx reloaded (En preparación, 2010) carlos.amador@unam.mx
  • 35. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth paradigm Carlos Amador. Marx reloaded (En preparación, 2010) carlos.amador@unam.mx
  • 36. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Distribution of wealth: CO2 Clean slate; do not consider historic CO2 production Communitarianism vs. Cosmopolitanism Look at the people who produces most CO2 wherever they live 2030: To limit emissions in 30% a billion human beings must reduce emissions 2030: 30P consider all human beings reach 1tCO2 /year emission S. Chakravarty et al., Sharing global CO2 emission reductions among one billion high emitters, PNAS 106, 11884 (2009) carlos.amador@unam.mx
  • 37. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Towards a sustainable full world Inequality and/or sustainability Ansatz: the probability density function that represents the income also represents the demand for energy, fresh water, food consumption,... and other planetary boundaries What constitutes a reasonable quantity for the maximum wealth a person should apply in the generation/consumption of these categories, Wmax ? What constitutes a minimum quantity to achieve access to basic human needs, Wmin ? Several different estimations allow to consider either the economic growth necessary to improve the lot of humanity or to guarantee the sustainability —and therefore continuity— of the current population at the current level of civilization carlos.amador@unam.mx
  • 38. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Towards a sustainable full world Caveat lector Elasticity: Consumption does not scale linearly with wealth. How big a car can you have? How many computers (or jet planes) can you buy? PPP (Purchase Power Parity) vs. International dollars: A haircut is cheaper in developing countries... country Pop. (mill 2007) GDP PPP (USD 2005) GNI (USD 2006) China 1318.0 4088 2000 India 1131.9 2222 820 United States 302.2 41813 44710 Indonesia 231.6 3209 1420 Brazil 189.3 8474 4710 Pakistan 169.3 2184 800 Bangladesh 149.0 1068 450 Nigeria 144.4 1520 620 Russian Federation 141.7 11858 5770 Japan 127.7 30290 38630 México 106.5 11387 7830 World Development Indicators 2008. World Bank, Washington, DC. carlos.amador@unam.mx
  • 39. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Towards a sustainable full world Some preliminary results carlos.amador@unam.mx
  • 40. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Improving the lot of humanity I: All human beings will earn at least 2500 USD/y 4100 million people will increase consumption/emission World increase will be at least 14% (if international dollars are considered) World increase will be at least 7% (if PPP is considered) At 3.2% annual average growth it is not too much carlos.amador@unam.mx
  • 41. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Improving the lot of humanity II: All human beings will earn at least 11000 USD/y 5300 million people will increase consumption/emission World increase will be at least 100% (if international dollars are considered) World increase will be at least 75% (if PPP is considered) It is impossible on current technology carlos.amador@unam.mx
  • 42. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Guaranteeing sustainability I: All human beings will earn at most 20000 USD/y 750 million people will need to reduce his/her consumption/emission World decrease will put us at 59% of current level We could even have everybody at least at 2500 USD and still go to 66% of current level carlos.amador@unam.mx
  • 43. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Guaranteeing sustainability II: All human beings will earn at most 11000 USD/y 1000 million people will need to reduce his/her consumption/emission World decrease will put us at 43% of current level Approximately what we had right after WWII, with more than twice as many people carlos.amador@unam.mx
  • 44. Introduction Gini index The economics paradigm Country by country, region by region Planetary boundaries Application to CO2 Unequal distribution of wealth Inequality and/or sustainability Thanks! Leila and Laura who made this possible Prof. Alán Aspuru-Guzik: http://aspuru.chem.harvard.edu You may want to check: http://cleanenergy.harvard.edu http://amador.cbsj.org (en español) email: carlos.amador@unam.mx carlos.amador@unam.mx