Photo: Flickr_Takuma Kimura

This thematic area involves promoting cutting-edge work on (primarily macro-)economic models that explicitly consider and integrate the biosphere, based on the recognition that the economic system is embedded in the biosphere. The aim is to integrate the latest developments within economic theory with methods used in sustainability science, as well creating economic models that include many more environmental factors than existing models in use today.

Incorporating earth system processes in climate-economy models

A key project is understanding how key earth system processes (ESPs) identified within the planetary boundaries framework can be incorporated into existing dynamic climate­-economy frameworks, and how this affects model properties and policy outcomes. More specifically it entails developing a dynamic economic model which couples both a climate system model and key ESPs.

One clear example where the connection between different ESPs can be seen, is in the food sector as climate change will alter the conditions for agriculture. Furthermore, one tool of climate-change policy is to avoid deforestation, which in turn affect the amount of land available for agriculture. As a result both climate change and policies to mitigate it affect the conditions for agriculture. Farmers can be expected to react to these changes through different forms of adaptation. They may, for example, increase their use of fertilizers in order to increase yields from available land. This will likely increase the flows of nutrients into bodies of water which will affect aquatic ecosystems and their ability to provide food. In addition to that, ocean acidification (another of the considered aspects, primarily caused by increased atmospheric CO2 levels) affects the ability of the oceans to provide food.

From this rapid description of planetary boundaries interaction, three obvious ESPs emerge – ocean acidification, chemical flows (primarily from fertilizers) and land-use change – and the incorporation of these additional ESPs into the climate­-economy models will be a significant focus of this theme in the coming years.

Project members: Johan Gars, Gustav Engström and Chandra Kiran, the Beijer Institute 

Linking social development and environmental sustainability

Another project includes modelling with an explicit focus on the link between social development and environmental sustainability of nations over the past two decades (more specifically latent-variable state-space time series modelling to quantify and characterize national changes over time). It operationalizes the “safe-and-just operating space for humanity”, which is a framework that emerged out of discussions on how planetary boundaries can also incorporate development issues. This work integrates material use and progress indicators to characterize trends and assess the comparative role of trade in achieving social and environmental efficient material use. The results will be highly policy relevant given the ongoing process surrounding the Sustainable Development Goals (SDGs). 

Project members: James Watson and Mark Sanctuary, Stockholm School of Economics (formerly at GEDB).