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Sustainable economy

Written by Professor John Quiggin, The University of Queensland.

Sustainable economies enhance the environmental and social systems on which they depend. Yet Australia’s economy, and the world economic system it operates within, are depleting these systems. Consequently, we now face critical challenges that require both immediate action and a commitment to creating a sustainable economy over the longer term.

Regulation and market based responses both have roles to play in driving the economy down a more sustainable path.

Achieving a sustainable economy in Australia requires policies to be in place which:

  • Stabilise the climate, by limiting global warming to a 1.5°C increase in mean global temperature relative to pre-industrial levels. This will require a substantial restructuring of the economy.
  • Protect and replenish natural resources, including food and water supplies. The economic cost of Australia’s degraded natural resources and environment is at least $2 billion a year.
  • Preserve species diversity, in line with our role as a “megadiverse nation”.

We need to shift towards a “circular economy”, where economic activity is decoupled from the consumption of finite resources and waste is designed out of the system.

We need to account for the true value of Australia’s natural assets and the true cost of their depletion and pollution.

As a public good, strong public institutions including laws and public funding are essential for the environment to be managed in the interests of the public. Knowledge is also a public good, and government has an important role to play in funding the research required to solve environmental problems. Over the past two decades our system of “public good” research has largely been dismantled.

Transitioning to a sustainable economy will deliver financial and social benefits as well as positive environmental outcomes. Australia is in a strong position to capitalise on shifts in global economic demand and investment towards renewable energy, resource efficiency and rebuilding natural capital.

The main obstacles to achieving this transition to a sustainable economic system are political, not technical. As such we need to effectively communicate the economic benefits of a healthy environment and the evidence that shifting to a sustainable economy is both possible and desirable.

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