This document summarizes a presentation on research questions for a green, inclusive economy. The presentation covered three main topics: 1. Metrics - It discussed developing alternative metrics to GDP like national wealth accounts and a prosperity metric based on solving human problems. 2. Vision - It addressed the need for systems thinking and considering renewable vs. exhaustible natural resources. 3. Transition - Key research questions were presented around the politics and innovation required for an economic transition, including governance mechanisms, necessary institutions, and business models within planetary boundaries. The presentation concluded by noting the career prospects for economists to work on these important transition questions and called for mutual understanding between disciplines.

1. Research questions for a green, inclusive economy
Green Economy Workshop
Cameron Hepburn
Professor of Environmental Economics
Smith School and INET at Martin School,
University of Oxford and New College
Professorial Research Fellow, LSE
Monday 10 February 2014
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2. Agenda
1.
2.
3.
Metrics
Vision
Transition
2

3. Could wealth accounts realistically complement
GDP as the focus of public obsession?
Wealth per capita (2005 USD)
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
NOR
USA
GBR
NLD
FRA
CAN
ITA
NZL
ESP
ISR
KOR
POL
ROU
-$200,000
Produced capital
Natural capital
Net foreign assets
Human capital
Intangible residual
Total wealth
Source: Hamilton and Hepburn (2014, Oxrep) “Wealth”, forthcoming
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4. Then develop a metric of prosperity as the
accumulation of solutions to human problems?
Source: McLaughlin et al. (2014, Oxrep) “Historical wealth accounts for the Britain”, forthcoming
4

5. Agenda
1.
2.
3.
Metrics
Vision
Transition
5

6. Prices are powerful, but systems thinking
(resilience, non-marginality, ABIAM) is critical
Forests, fisheries,
ecosystems, biodiversity
is all “renewable”
natural capital
Often the most valuable
assets (coal, oil, gas)
are “exhaustible”
natural capital
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7. The politics of the transition are critical
– can we better use leverage points?
Rest of
the World
25
China
As likely as not, CO2 only
30
Land
use
Likely, CO2 only
35
Likely
Aggregate Fossil Fuel CO2 extraction [GtCO2]
40
Atmospheric space
Fossil carbon
reserves by country
20
Saudi Arabia
Canada
15
Russia
10
USA
5
9th – 20th countries
by reserves
Iran
0
0
Australia
India
50
100
Source: Otto, Allen and Hepburn (2014) based on Aurora Energy Research (2014)
150
200
Years of
extraction at
current rates
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8. Agenda
1.
2.
3.
Metrics
Vision
Transition
8

9. Key research questions on the transition
relate to politics and innovation
•
•
•
•
What drives down costs of clean energy?
How have governance mechanisms for the commons emerge?
How can we create the institutions that we need for the transition?
How can firms use behavioural economics to develop the profitable
business models that respect planetary boundaries?
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10. Agenda
1.
2.
3.
4.
Metrics
Vision
Transition
More broadly….
10

11. Brilliant young economists now see career
prospects in working on these questions….
11

12. What is needed is mutual understanding,
even love, between disciplines….
12

13. Thank you
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14. Nature in the Balance, Jan (2014)
The Economics and Politics of Climate Change
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