Pierre Ducret: Shifting to a resilient economy is an economic conundrum

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Opinion

Following the global economic crisis that deeply affected Europe after 2008, there was a debate between those who considered that recovering growth with traditional economic means was the urgent priority to bring back employment and income and those for whom shifting to a new economic model, to a green economy, was a way to overcome the crisis.

Shifting to a greener economy is commonly agreed as a necessity for environmental reasons: climate change, resource scarcity, pollution, biodiversity losses.

But the investment needed to shift is estimated at five per cent to 10 per cent higher than business as usual so it has long been considered as a cost that our economies can't afford.

On the other hand, economic costs generated by environmental negative externalities - such as health or extreme events - are being recognised more and more and the best climate change analysts, such as Lord Stern in 2007, have demonstrated that it will be more costly to postpone action than to act now.

Many studies have also been published showing that putting environmental constraints on the economy is also a means to be creative and to find innovative solutions.

For instance, using IT in energy systems is a powerful way to increase energy efficiency.

It would encourage us to find new ways to optimise the use and re-use of raw material and create more sustainable models for goods and services.

But this shift to a more resilient economy is modifying existing economic and social paradigms.

And it creates winners and losers.

It is spelling the end to some industries and giving rise to new businesses.

One would say it is "creative destruction", the "Schumpeter's gale" acting as usual.
The question is how to accelerate the pace to meet the environmental challenges.
I would like to highlight the three drivers which can be used: cities, carbon pricing and finance.

First, I'm convinced that cities are likely the best level to implement environmental policies. They are key for energy issues, via transportation and building solutions.

But they are also the level at which citizens can take part in decisions and benefit from a more resilient way of life.

Secondly, carbon pricing is a necessary signal to bring back environmental costs that everybody pays for those who are responsible for them.

If not a silver bullet, it is a very powerful tool to fight against climate change.
Thirdly, the financial sector has its own responsibility.

The capital it allocates now will have impacts in the long term and it has to be aware of all the risks and opportunities.

Dealing with the global transformation of the world is dealing with the conflict between winners and losers.

Too many think they will lose; the coalition of those who expect to win is still weak.
Yet, a cynical attitude is unhelpful.

A successful transition can be achieved with growth, justice and equity concerns as conditions to the process of transformation.

• Pierre Ducret, special advisor for climate change & COP21 at the public investment group Caisse des Dépôts (France), is one of the French speakers invited to take part in the panel discussions "The Age of Resilience" held in Auckland tomorrow night, as well as in Wellington on Thursday and Christchurch next Tuesday. For more information about the talks, see the Royal Society of New Zealand website www.royalsociety.org.nz/resilience.