Changing the scope_of_economic_growth_toward_sustainability
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The way we think and act has devastating effects on the environment and our way of life. What are alternative growth pathways for a sustainable future?
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Changing the scope_of_economic_growth_toward_sustainability
- 1. AC&EMS conference University Guesthouse December 19 2015 Steven Debipersad
- 2. The key is to reflect on 6 kinds of capital goods Busine ss capital Infrastruct ure Natur al capit al Hum an capit al Intellect ual capital Social capital S U S T A I N A B I L I T Y
- 3. Business Capital: Growth / Profit Econo mic Growt h: Free market concept Keynesian growth concept
- 4. Suriname: main drivers of the economy
- 5. Increasing importance of gold in exports
- 9. SCALE OF
- 10. Business capital Infrastructure Natural capital Human capital Intellectual capital Social capital
- 12. Business capital Infrastructure Natural capital Hum an capit al Intellectual capital Social capital
- 13. Date HDI HDI Ranking 2014 0.714 103º 2013 0.705 100º 2012 0.702 101º 2011 0.701 101º 2010 0.698 101º 2008 0.694 93º 2005 0.672 94º HUMAN DEVELOPM ENT INDEX
- 14. Human Capital – Intellectual capital • • Invest in R & D for innovation • Knowledge economy is a INNOVATIVE economy • Knowledge ‘upgrades’ productivity (TFP) • Key to Sustainability
- 17. What are the Sustainable alternatives? • Diversification…….? – Agriculture (hydrophytes extract pesticides from environment) – Tourism (customized products) •Green Economy •Blue Economy
- 23. Bottled air, the solution to air pollution? Source: The Economist 16-12-15
Editor's Notes
- Changing the scope of economic growth toward sustainability. The last couple of weeks Government fiscal and budgetary policy has come under increasing scrutiny. Together with declining prices of Suriname’s export products this has led to declining growth figures. The economy will remain in turmoil for the next years to come based on the most recent national and international figures. This knowledge brings me to the purpose of my presentation, nearly at the end of this conference. What must we do to make the economy better again end better yet, how do we change our perception of economic growth toward sustainability. After all, our economy can only be viable if the harm to nature is minimal and if it coexists with nature……
- (The key is to reflect on) For my presentation I’ll be Reflecting on 6 trending forms of capital goods used in modern economics to achieve sustainability. Because of time constrains I’ll highlight 4 of these capital goods incorporating them fluently as a roadmap toward sustainability.
- Starting with business capital: The driver for this is always economic growth brought forward prominently by 2 types of thinking. These two schools of thought tend to dominate today’s economic debates. According to free-market economists, governments should cut taxes, reduce regulations, reform labor laws, and then get out of the way to let consumers consume and producers create jobs. According to Keynesian economics, governments should boost total demand through quantitative easing and fiscal stimulus. Yet neither approach is delivering good results, especially not in the developing world. In the words of Jeffrey Sachs prof of Sustainable development @ Colombia University, free market- increasingly benefits the rich, while Keynes’– easy money, leads to enormous deficits/ public depts and hording of cash by the rich. We need new Sustainable Development Economics, with governments promoting new types of investments.
- In Sur the government is the biggest sector in the economy employing nearly half of the workforce (directly and indirectly) as it fulfills a self proclaimed role of ‘employer of first resort’. There are more social and political reasons than rational ones for the actual government’s size. Because of it’s share size the Gov. is also the biggest spender in the economy. The export, mainly from multinational corporations, are primarily focused on natural resource extraction. In the last decade gold has become the biggest contributor to export and earner of foreign currency, while oil has captured a strong second place.
- This slide shows the shift in the mineral sector from bauxite (light blue) to gold (red).
- These graphs are from the Central Bank Leading Sectors publication. This slide depicts the increasing importance of gold. As the production increased and the international gold price rose in the last decade, so did the contribution of this precious metal to Suriname’s income. Keep in mind that the State (of Sur) has a minimal stake in the large scale gold mining. The graph beneath shows the respective contribution from the Rosebel Gold mine and the so called small scale gold miners. Central bank estimates show that the profit of the small scale gold mining is comparable to that of the Rosebel Gold mine, but the contribution to national income is minimal. The overall contribution from the gold sector to the economy is estimated at USD 600 million from 2010-2015.
- Also keep in mind the total contribution of all natural resource exports over the period 2010-2015. An estimated contribution to the economy is calculated at a whopping USD 3.8 billion. Keep this figure in mind, because this is just part of the real potential of our natural resources. What good have these increased earnings from scarce resources brought us?...
- Natural resource extraction especially small scale gold mining has had devastating effects as can be seen on these photo’s made by Erlan Sleur, a nature activist. The above picture is an aerial photo near Brownberg, and the picture underneath is from the Witikreek. Since this form of gold mining is apparently not confined to a specific location compared to the Rosebel Goldmine, the term small scale is no longer applicable. These gold diggers are operating in a much larger area.
- The size of devastation due to illegal logging and local gold mining is visible in different ways. This slide shows the ongoing deforestation and land degradation in Suriname. Is this really the only potential of ‘our’ nature? Do we only need nature for logging and gold excavation? And what will happen when the trees are gone and all the gold has been exported?
- The purpose of my presentation is to think in terms of natural capital and not just mineral resources which can be capitalized on. Nature is our most valuable resource. Once it’s gone, so are we!
- Why is natural capital so important? Natural capital being the whole of natural resources combined with the ecosystems of nature. If we extract too much. or if we cause irreversible environmental damage while extracting resources, nature is degraded and the economy and even more we our self will be at risk. I’ll come back on this in the closing remarks.
- What is the role of human capital in this context?
- The UNDP Human development index (HDI) is a frequently used composite indicator for the development of human capital. Here we see the Caricom trend for the last decade. Suriname has a medium Human development (Medium HDI class) behind much of the Caribbean and Caricom nations. Only Guyana and Haiti receive a lower score. In the table on the upper right of this slide we see that Suriname fell 10 places since 2005 on the worldwide HDI ranking. Not only is this measure of human capital relatively lower in Suriname than much of the Caribbean, nationwide due to inequality in income distribution and access to health facilities and education, human capital development in the interior tends to be even lower than the national figure.
- Investing in education especially higher education is a necessity for a knowledge upgrade. OECD studies show that at least 10% of GDP investment in S&T/R&D yearly is needed to cultivate innovation. A knowledge economy is only possible over time, with investments in higher education, research promotion, creating and nurturing intellectual property. This in turn shapes national intellectual capital and elevates human capital. Finally knowledge of newer technological processes improves labor productivity via total factor productivity and thus elevating human capital. This is the key to sustainability.
- What is sustainability? This definition defines sustainability as the ability to meet the needs of the present without compromising the ability of future generations. The picture underneath depicts sustainability as being a chain of interactions between different aspects of our society, resulting in the elevation of our true potential of a society….
- This scheme depicts sustainability in an organization. Here sustainability creates value for this firm. For my presentation I want to elevate value creation to a national level.
- What are the sustainable growth alternatives for Suriname? The topic of diversification is once again a very popular issue, especially due to declining mining income. What are the diversification areas and to what extent will these be viable for Suriname to increase prosperity? Indeed, agriculture has great potential and the problems with pesticides that end up in the environment can now be reduced with hydrophytes. So does tourism which can increase it’s contribution to GDP from a mere 2% by creating customized unique products. However, real prosperity is only possible by thinking in a larger more cohesive framework. The Green economy framework/context is one of these, and even the blue economy referring to the focus on ocean resources. Green and Blue thinking fits into the concept of the COP21- Paris Declaration on climate change.
- Concepts of the green growth combine biodiversity and low carbon emissions, with social development and even poverty reduction through equitable communities. The real value of our natural capital is at the core of Green Growth.
- This is an example from Arizona, USA, where value creation from tree’s is simplified – from renewable raw material to sophisticated valuable products.
- Renewable energy is the most known association with green growth, since renewable energy is a powerful tool in the reduction of carbon emissions. This stat shows that Suriname is lagging behind in the planning toward renewable energy sources. While our focus is centered mainly on hydropower and geothermal (non-renewable) many Caricom nations move toward wind and solar energy. Aruba for instance, a non Caricom nation is 100% windenergy.
- This is the potential of solar panels in Suriname’s interior. This study is partly conducted by GuguPlex. It’s well known that only the coastal areas of Suriname has a 24/7 energy supply. Most communities in the interior receive only a couple of hours energy at most. Access to reliable energy is a human right. Green solutions could make a difference in social equity and strong communities especially in the interior. Hoe dan ook: geef een bestaanszekerheid, dit moet een alternatief vormen. Simpelweg stoppen met goudzoekken is geen alternatief. Ontsluit het binnenland. Dr Essed promote de opzet van een 2-de stad. Laten wij eerder gaan om mensen in hun woongebieden de tools te geven. Een belangrijke mensenrecht is het recht op ontwikkeling. Is dit recht er overal in sur en in gelijke mate?
- The Blue economy continues on sustainability by incorporating the ocean as a important source of renewable energy, transportation, mining, tourism and food. This makes sense since the oceans make up of 70% of our planet. Since many Caribbean nations are surrounded by seawater, blue thinking will be central in future developmental issues and sustainability. Because of the long coastline the ocean could play in important role as a source of renewable energy in Suriname. The ocean could furthermore, play an important role in our tourism sector, whether it be dolphin spotting or interest in the wetlands…and even an observational/science lab for research on endangered species, as is the case in Curacao (Carmabi). Think of the great publicity Monique Pool received with the Endangered Sloth project.
- Here is something to think about: “Canadian firm starts selling bottled air in China! One can sells at USD 14-20. Sales are booming…” (The Economist 12-16-15). We do have clean air…?
- The real quest is to be more innovative, to think completely out of the box. Where can we get such ideas: copying from nature; Biomimicry. Here are Just some examples to stretch your mindset
- Innovative agriculture and fishery, rice-fish culture, increasing the rice yield up to 10% in Indonesia.
- My ending remarks may seem somewhat contradictory. All of the sustainable solutions need funding. It is common knowledge that the Gov. has budgetary problems. So where could funding come from. Public-private-partnerships could indeed hold the solution, but these tend to need the govs to step in first. According the association of mining engineers and geologists in Suriname, mining still has great potential, because of the large untouched reserves and the high yield of these reserves. Think back of the payments from mining from 2010-2015. These amounted USD 3.8 billion, more than the total sum of Dutch Aid at independence! More research is needed in the occurrence mineral deposits and extraction should be done responsibly without the devastation harm we have seen in previous slides. Although the exploration of non-renewable resources is not sustainable (and that is the contradiction in this recommendation), payments from these could fund the necessary investments in sustainable projects for a more equitable, viable en bearable society. My final remark is on the Blue Economy concept which is relatively new. I’m very pleased with all the help I received for a lecturer from the department of Environmental Science @ the university. This department has an impressive course on this subject. I would advise everyone to seek information on this topic because of the great importance it may hold for the Caribbean and Suriname.
- Only real (out of the box) change will bring us sustainability.