Economics, sustainability and energy: Discuss

There have been some good reads on environmental economics of late, notably Paul Krugman’s piece earlier this month which explains externalities, Pigou, and an argument for carbon tariffs.

More recently The Oil Drum summarised an interesting paper by Sussex University senior fellow Steven Sorrell called “Energy, growth and sustainability: Five propositions”.

Sorrell’s propositions are:

  • Rebound effects are significant and limit the potential for decoupling energy consumption from economic growth
  • The contribution of energy to productivity improvements and economic growth has been greatly
    underestimated
  • The pursuit of improved efficiency needs to be complemented by an ethic of sufficiency
  • Sustainability is incompatible with continued economic growth in rich countries
  • A zero-growth economy is incompatible with a debt-based monetary system

Check either of the links above for more details, but by way of background, Sorrell’s bio page says he is an engineer who has written several papers on energy economics and policy, a few of which focus on the rebound effect (aka Jevons Paradox).

The comments the TOD article are interesting, charting the differences between (some) engineers/peak oilists and (some) schools of economics. It moves from the ‘dates of the crash or crashes’ through to ‘vulgar’ definitions of energy economics, an explanation of fractional reserve banking, and the question of whether democracy or human nature allows humans to do anything other than continue to maximise the utility of all available resources.

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