[F] Environment-Economy Interactions
Coordinators: Irene Monasterolo
EDHEC Business School and EDHEC-Risk Climate Impact Institute (ERCII), FR
University of Sussex, UK
Latest scientific evidence confirms that we are now in an era when human activities are having a significant global impact on Earth’s natural systems (the ‘Anthropocene’), leading to growing risk of climate change and exceeding the Planetary Boundaries, with resulting socio-economic and political impacts on development, leading to calls for a fast transition towards a low carbon, resource resilient economy. At the same time, while the European economy is still struggling to recover from the economic crisis trapped in the ‘secular stagnation’, the recovery program being implemented in the EU-28 seems to have missed the window of opportunities offered by the green economy to support sustainable and inclusive development. Whilst ecological economics has established itself as a coherent but pluralist approach, based on seeing the economy as a subsystem of the biosphere and recognizing agents as social beings, more work is needed to link to other heterodox economics approaches which emphasize other challenges to mainstream economic thinking.
A new economics paradigm is required to rethink sustainability as a complex adaptive system. The neoclassical based general equilibrium modelling approaches and tools are not able, by construction, to model the dynamics of a complex system, such as the green economy, which is characterized by non-linearity, multiple feedbacks, time delays, non-rationale and short term thinking agents. Instead, evolutionary economics approaches, linked to complexity science and based on System Dynamics, Agent Based Models and Network Analysis, could fill this modelling gap and contribute to understanding and action, by providing policy makers and the broad non-academic audience accessible results, combining quantitative and narrative scenario analyses.
Therefore, the Environment-Economy Interactions research area welcomes submissions which embrace heterodox ways to analyse the finance – growth – environment nexus, such as (but not limited to):
- Methodological innovation for modelling the transition to low carbon, resource resilient economies through green policies (e.g., fiscal, monetary) using different heterodox modelling approaches in the simulation and computational areas (Agent Based Models, System Dynamics, Network analysis);
- Understanding the role of modelling uncertainty (model structure, parameters, behaviours, etc.) in the assessment of climate risks and costs, opening a dialogue among different modelling approaches with the goal to leverage added value from mutual learning eventually exploring advantages from integration;
- Evidence-based policies to finance the green economy, focusing on (i) the drivers and bottlenecks which prevent actors and financial markets to mobilize capital into the green sector and assets, disinvesting from the brown ones and reversing the current dysfunctional market allocation, and (ii) the effects of alternative green fiscal and monetary policies, regulations and incentives to unlock investors capital and promote the green transition;
- Carbon risk disclosure: development of tools for quantitative assessment of investors’ exposure to carbon stranded assets and the potential trickle down effects on the real economy, and climate stress testing in order to understand the potential sources of instability (stranding assets, green bubble) and how they may spread within the system;
- Climate finance policy network: analysis of the relation which characterized actors and stakeholders involved in the green economy and in the policy arena, aimed at informing the climate policy process and increasing the transparency towards the development of an international governance for sustainability.
The goal is to provide a platform for evolutionary and institutional economic thinking to contribute to the development of a new economic paradigm based on sustainability and inclusiveness.