Green growth alone causes greater inequality, a new model suggests. But there are socially just alternatives.By André Cieplinski
Our team at the University of Pisa, in partnership with LOCOMOTION, published the results of our simulation exploring alternative routes towards a low-carbon transition with social justice. ‘Feasible alternatives to green growth’ was published in Nature Sustainability, on 9 March 2020, and compares alternative policy-mixes to achieve EU targets in greenhouse gas emissions while improving employment and income distribution.
The study is based on the Eurogreen model, calibrated for France, which combines recent developments in ecological macroeconomics and post-Keynesian economics to project three alternative scenarios from 2014 to 2050: Green Growth, Policies for Social Equity (PSE), and De-growth.
The Green Growth scenario combines the development of renewable energy sources with market incentives for innovation and energy efficiency. Even if it is successful at reducing emissions, it involves an increase in unemployment and inequality compared with our baseline. Moreover, the environmental performance of Green Growth is due to its failure to boost GDP growth. If it were to increase economic growth, this would lead to higher emissions.
The remaining two scenarios represent alternatives to Green Growth and suggest that there are other viable paths towards a fairer low-carbon economy.
PSE adds radical social policies, such as a job guarantee programme and a reduction of five hours to the working week, to the energy and innovation incentives of green growth. This scenario was designed to reflect the ideas of the proposed Green New Deal in America. PSE reduces emissions as much as Green Growth while improving income distribution and employment, but at the cost of higher public deficits.
The final scenario assessed de-growth or post-growth, i.e. an economy founded on the principles of sufficiency, efficiency and solidarity rather than the pursuit of infinite economic growth. It considered a voluntary reduction in private consumption and a wealth tax on top of all the policies implemented in PSE. Despite its negative effects on GDP, the accompanying radical social policies were still able to maintain low unemployment rates and reduce inequality, while the fall in consumption and production resulted in greater reductions in greenhouse gas emissions.
The article concludes that alternative strategies might be just as or even more effective than green growth to reduce CO2 emissions while also improving social conditions, at the expense of government balances. The take-home message is that, although each policy package brings about trade-off, the road toward a sustainable and just transition must include radical social policies.
The paper details and access link are given below.