The Great Transition

A tale of how it turned out right
Andrew Simms, BBC News 19 Oct 09;

Western governments, including the UK's, are desperate to restore the global economy along "business as usual" lines. But, argues Andrew Simms, that is a short-sighted approach; a radical, green-tinged redevelopment would bring much bigger environmental, social and economic benefits.

If someone offered you a plan that would get rich countries on to a radical path of deep, immediate carbon cuts to tackle climate change and also solved a great swathe of social problems, would you take it?

A team of scientists and economists at the New Economics Foundation (nef) has come up with one.

It's called The Great Transition.

It provides a blueprint - or rather, a greenprint - for how the UK can make a step-change in delivering quality of life for all, whilst living within our collective environmental means.

What may shock some people is that it will do this even as the UK economy stops growing in a conventional economic manner and GDP falls significantly.

Economic madness

For decades, the addiction of business and politics to economic growth has steamrollered all attempts to make the economy environmentally sustainable.

The assumption of "growth forever" sits behind every major industrialised economy. Yet, as the great economist Kenneth Boulding put it: "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist."

One thing is sure: in spite of being well-intended, the recent Climate Change Committee call for more electric cars and nuclear power was a disastrously inadequate distraction from the type, scale and speed of measures actually needed.

So how did we find this holy grail of policymakers - a genuine win-win in which environmental imperatives, social objectives and the economy are brought together?

In short, by coming up with the equivalent of a new economic sat-nav. Because if the only navigation system you have keeps directing you over a cliff, it's time to reprogram it.

Only by including in economic calculations the social and environmental costs of business-as-usual can we properly assess the alternatives.

Alarm warming

At one extreme, of course, allowing runaway climate change to occur is infinitely expensive and therefore unthinkable.

So no cost below that should be too much to avoid it.

But even over the next few decades, simply by factoring-in reasonable, even highly conservative, estimates of how much we can save by tackling social and environmental problems with proven solutions, the results are astonishing.

Despite the destructive economic events of the last two years and the fact that we're now, perhaps, no more than 86 months away from a new, more perilous phase of global warming, governments are preparing a return to business-as-usual.

The costs of doing so, we forecast, are huge.

Between 2010 and 2050 the cumulative cost of climate change would range from £1.6 trillion to £2.5 trillion ($2.6 trillion to $4.1 trillion).

And the cumulative cost of addressing social problems associated with high levels of inequality is £4.5 trillion.

The Great Transition tackles climate and inequality at the same time.

It puts the UK economy on a rapid decarbonisation diet that puts us on track to playing our fair part in an effective global deal.

These cuts will avoid between £0.4 trillion and £1.3 trillion in environmental costs.

Simultaneously, progressive redistribution toward Danish levels of equality, we calculate, could generate £7.35 trillion of social value.

What is saved and generated in terms of cost and income more than compensates for the drop in GDP that happens as we consume fewer resources.

Mending Britain

How will it happen? First we need to get a real picture of what is going on in the economy. That means having a proper set of accounts that include real environmental and social value.

If we do that, what looks like radical and expensive change turns out to be a new direction we cannot afford to miss.

This is what we call the "great revaluing" - ensuring that prices reflect true social and environmental costs.

Next, following on from the ground-breaking, comprehensive work of social epidemiologists Richard Wilkinson and Kate Picket, whose work demonstrates that more equal societies almost always do better - against a host of indicators ranging from crime to health to the environment - we propose a "great redistribution" to mend so-called "broken Britain".

In the face of recent, catastrophic market failures, the "great re-balancing" then sets out a new productive relationship between markets, society and the state.

It builds a more effective "ecology of finance" so that money and investment flows to where it is most needed - such as the low carbon transition of our energy, housing and transport systems.

A national Green Investment Bank, for example, with start-up funding from windfall taxes on fossil fuel company profits, could provide initial capital.

It's a big, bold plan that tears up business-as-usual.

The details can be argued over; but given the scale of the challenge, we believe that this is one time when we really can say "there is no alternative".

Chilling tale

All change is threatening. Change to new ways of living - even if familiar to people in other cultures and different generations - we find hard to imagine.

But failures of imagination can be fatal.

When Greenland was occupied by Icelandic and Scandinavian settlers in the early Middle Ages they soon made themselves at home with familiar customs and methods of food cultivation.

When the great chill bit deep in the 15th Century, instead of adapting by learning from the climate-adjusted indigenous people, who they dismissed as skraelings (wretches), they clung to what they knew, and died out.

Far from that grim scenario, today the great re-skilling of society to manage this transition could even break the zombie walk of consumer society and bring us alive again as individuals and communities.

The Great Transition is a tale of how it turned out right.

Andrew Simms is policy director of nef and a co-author of The Great Transition

The Green Room is a series of opinion articles on environmental topics running weekly on the BBC News website