From oil wealth to green growth - An empirical agent-based model of recession, migration and sustainable urban transition

This paper develops an empirical, multi-layered and spatially-explicit agent-based model that explores sustainable pathways for Aberdeen city and surrounding area to transition from an oil-based economy to green growth. The model takes an integrated, complex systems approach to urban systems and incorporates the interconnectedness between people, households, businesses, industries and neighbourhoods. We find that the oil price collapse could potentially lead to enduring regional decline and recession. With green growth, however, the crisis could be used as an opportunity to restructure the regional economy, reshape its neighbourhoods, and redefine its identity in the global economy. We find that the type of the green growth and the location of the new businesses will have profound ramifications for development outcomes, not only by directly creating businesses and employment opportunities in strategic areas, but also by redirecting households and service businesses to these areas. New residential and business centres emerge as a result of this process. Finally, we argue that industries, businesses and the labour market are essential components of a deeply integrated urban system. To understand urban transition, models should consider both household and industrial aspects

Structural Change, Environment and Well-being: Interactions Between Production and Consumption Choices of the Rich and the Poor in Developing Countries

Vulnerability to scarcity or to reduction of natural capital depends on defensive substitution possibilities that, in turn, are affected by the availability of other productive factors. However, in several developing countries asset distribution tends to be highly skewed. Taking into ac- count these elements, this paper argues that environmental degradation may represent a push factor of economic development in an economy polarized into two main classes (the Rich and the Poor) and characterized by the following stylized facts: a) the main income source of the rural poor is self-employment in traditional activities highly depending on natural resources; b) labor remuneration in rural sector represents the basic opportunity cost for (unskilled) labor in the economy. Thus, given that environmental degradation reduces labor productivity of the rural poor, it may depress wages; c) production of the modern sector managed by the rich is less affected by depletion of natural resources because they can adopt defensive strategies that the poor cannot. They are able to defend themselves by partially substituting natural resources with physical capital accumulation and wage labor employment. We will show that, in this context, environmental depletion may benefit the modern sector through an increase in low cost labor supply and, in turn, it may stimulate economic transition. However the structural change is likely to result in an increase in inequality.Production, Consumption Choices, Welfare

Adaptations of green growth and degrowth in an oil-dependent economy toward a better future

Throughout the history of Newfoundland and Labrador (NL), the province has been relying on natural resources as the main sources of economic production. Consequently, NL is prone to external shocks from demand and price fluctuations. For example, the collapse of fisheries during the 1990s and the fall in global oil prices during the 2008 financial crisis have had negative impacts on the NL socioeconomic system, increasing unemployment and out-migration rates. A lack of modeling studies in the literature related to NL natural resources dependency, unemployment, and migration is the motivation for this research. This research focuses on studying the impact of oil, as a major natural resource for NL, dependency on other industries within the economy, employment, and migration through implementing green growth and degrowth policies as an alternative to decoupling the natural resources dependency and shifting away from the region’s historical sources of economic growth. This research links econometric, input-output (IO), and agent-based modeling techniques as a novel combination of methodologies to study the impact of an oil-dependent economy using oil prices and production reduction rates (scenarios of green growth and degrowth) as exogenous variables. The data used in this empirical analysis is obtained from Statistics Canada. The results help create suggestions for policymakers to steer socio-economic policies toward developing their economy for a better future

Financial Innovation and Financial Fragility

We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash flows. Financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks. Because the risks are neglected, security issuance is excessive. As investors eventually recognize these risks, they fly back to safety of traditional securities and markets become fragile, even without leverage, precisely because the volume of new claims is excessive. Financial innovation can make both investors and intermediaries worse off. The model mimics several facts from recent historical experiences, and points to new avenues for financial reform.Financial Innovation, Financial Fragility, Securities, Risks

How to Achieve Inclusive Growth

Rising inequality and widespread poverty, social unrest and polarization, gender and ethnic disparities, declining social mobility, economic fragility, unbalanced growth due to technology and globalization, and existential danger from climate change are urgent global concerns of our day. These issues are intertwined. They therefore require a holistic framework to examine their interplay and bring the various strands together. This book brings together leading academic economists and experts from several international institutions to explain the sources and scale of these challenges. The book summarizes a wide array of empirical evidence and country experiences, lays out practical policy solutions, and devises a comprehensive and unified plan of action for combatting these economic and social disparities. This authoritative book is accessible to policy makers, students, and the general public interested in how to craft a brighter future by building a sustainable, green, and inclusive society in the years ahead

Degrowth, green growth, a-growth and post-growth: The debate on ways forward from our growth addiction

It is widely recognised that averting catastrophic climate change and ecological disaster requires society to relinquish the current growth-focused economic system. However, what this change might include and how it can be implemented is less clear. Different solutions have been envisioned, with advocates for variants of “green growth,” “post-growth” or “de-growth” all presenting possible options for a new economic and social system that can exist within planetary boundaries. This annotated bibliography includes a range of articles which engage with and critique these concepts, consider how they might work in practice and propose strategies for overcoming the obstacles to implementation. The papers were selected by Lincoln University postgraduate students taking the course ERST636: Aspects of Sustainability: an international perspective, in preparation for a class debate of the moot “Green growth is simply designed to perpetuate current unsustainable practices and divert attention away from the need for more fundamental change”. For each paper, the author’s abstract is presented, followed by a discussion of key points. In cases where the paper lacked an abstract, a brief summary has been included instead. Key points and summaries are based on the students work, where necessary edited for clarity