Gustav Engström, Johan Gars and Chandra Kiran

Project summary

Global biophysical processes in climate-economy modelling: implications for economic policy instruments

The research project aims to study the links between the macroeconomy and the biophysical processes that regulate the Earth’s environment at the global level. Over the past century, the scale of human activity has increased dramatically, bringing with it growing impacts on many global biophysical processes.

 

A large group of natural scientists has recently identified a number of these processes as being particularly important for maintaining the stable and favourable conditions that have prevailed on Earth since humans first began practising organised agriculture. A total of nine so-called “planetary boundaries” have been defined for these processes. The boundaries are set in such a way that, as long as human activity does not cause them to be exceeded, the risk of disrupting the stable and favourable conditions that have characterised the Earth for the past 10,000 years remains limited.

 

The concept of planetary boundaries has had a major impact on the international debate. However, the economic aspects of these boundaries and their implications for the use of economic policy instruments have received relatively little attention. The major exception is climate change, where there is an extensive body of economic research and substantial progress has been made, particularly in recent years. For other aspects of the planetary boundaries, individual issues have often been analysed, but an overarching perspective is still lacking.

 

Such a perspective is important because many sectors of the global economy both affect and are affected by several biophysical processes. Food production and energy are clear examples. In this project, we aim to address this gap by building on recent advances in climate-economy modelling and extending these models to incorporate additional biophysical processes relevant to the planetary boundaries. In this way, we seek to develop a comprehensive picture of how different biophysical processes are interconnected and interact with the wider economy, and what this implies for the use of economic policy instruments to address global environmental challenges, including climate change.