This presentation discusses a macroeconomic model that integrates biophysical variables (people, natural resources (energy), capital) to economic variables (wages, debt, profits, interest payments, employment). This modeling framework can be used to understand and model long-term energy transitions and resource-economic feedbacks.
This was a talk given at the 2018 Conference of the International Society for Biophysical Economics (www.isbpe.info), Wells College, Aurora, NY. This is a longer and updated version of a similar talk given in France in March, 2018.
June 7, 2018: “Energy and Economic Narratives“
Presentation at the 2018 Schweitzer Engineering Laboratories Modern Solutions Power Conference, Chicago, Illinois.
March 20, 2018: “Food, Energy & Water Resources and Economy: Evidence for Biophysical & Social Constraints on Society”
A full-day session arranged for the 255th American Chemical Society Meeting in New Orleans, Louisiana.
A summary of each speaker, talk title, and abstract are listed below:
- Carey W. King (Research Scientist and Assistant Director, Energy Institute, University of Texas at Austin), “Systems Thinking Linking Energy and the Economy: Size and Structure” This presentation shows how the post-World War II structure of the U.S. economy has changed in 2 contexts. Both contexts show a trend toward increasingly concentrated flows of money after the 1970s as the rate of energy consumption slowed. First, I show how the “wage share” (fraction of economic output going to workers) and “profit share” (fraction of economic output going to those that own capital, businesses, and property) have changed since the 1940s. From the 1940s until the 1970s, wage share increased and profit share decreased. From the 1970s until the 2000s, wage share and profit share remained constant. After the early 2000s, wage share decreased and profit share increased. Second, I summarize my 2016 paper that shows how the sector-to-sector monetary flows of the U.S. economy went through a similar set of three phases. For a video discussing the results of this 2016 paper, see my 2017 Bureau of Economic Geology presentation also linked below: “Energy and the Economy over the Long-Term: Size and Structure”.Download slides
- Julie Hoggarth (Baylor University, Department of Anthropology), “Tales from the Past: Indicators of Ancient Maya Societal Structures during the ‘Classic Maya Collapse‘” The sociopolitical structures of the Classic Maya broke down during several distinct drought intervals at the end of the Classic Period (AD 750-1000). Some scholars have proposed that existing social, political, and economic stresses within the society may have been exacerbated by the impacts of drought on agricultural production across the region. This talk will summarize quantified measures of social disparities in Late and Terminal Classic Maya society (based on access to material goods) using Lorenz curves and Gini coefficients. The talk also discusses the strength of economic networks by looking at access to long distance trade goods such as obsidian. Finally, population changes are explored using summed probabilities of radiocarbon dates. Together, an exploration of these quantitative measures aim to explore the breakdown of sociopolitical structures during drought episodes during the ‘Classic Maya collapse’.Download Slides
- Charles Hall, (retired, College of Environmental Science and Forestry, State University of New York, Syracuse, NY), “Biophysical Economics: History and Uses”
- Andrew Jarvis (Lancaster Environment Center, Lancaster University, UK) , “Accretaxis: the regulation of the growth of the global economy”, accretion /əˈkriːʃ(ə)n/ – growth or increase by gradual accumulation. taxis /taksɪs/ – a motion or orientation of a cell, organism, or part in response to an external stimulus. Growth remains the centrepiece of almost all national and international economic discourse. And not simply growth, but growth of a certain kind – not too high and not too low. This narrative suggests economies goal-seek on specific growth rates i.e. they are ‘accretaxic’. Using GDP data from 1900 to present I will attempt to show this is so for the global economy, with a goal of achieving growth of ~3 % yr-1 in GDP. I will briefly explore why 3 % yr-1 emerges as the goal despite very significant regional and temporal heterogeneity and stochastic disturbance. All systems experiencing real growth also experience the effects of diminishing returns to scale associated with increases in physical size. In biological systems, for example, this ultimately leads to the cessation of growth where all net returns are consumed by rising transport costs. Therefore, if maintaining growth is the objective, there is a necessary rate at which innovations have to be introduced in order to overcome the penalties of having to move resources over ever greater distances. These innovations can be categorised into three classes; improving the usefulness of primary resources, improving the efficiency whereby they are moved to points of consumption, and improving the efficiency with which they are used at points of consumption. Using global energy data 1900- present I will show how these three efficiencies have evolved over time and relate this to the evolution of the global economy’s Resource Acquisition, Distribution and End-use (RADE) networks.Download Slides
- Joseph R. Burger (Post-doctoral fellow, Department of Biology, University of North Carolina, Chapel Hill, USA & North Carolina Museum of Natural Sciences, Raleigh, USA), “Extra-metabolic energy use and the rise in urban hyper-density” Two interacting forces influence all populations of all species including humans: i) the Malthusian dynamic of exponential population growth if unchecked by ecological constraints, and ii) the Darwinian dynamic of innovation and adaptation to circumvent these limits through biological and/or cultural evolution. This Malthusian-Darwinian Dynamic (MDD) has important implications for understanding the trajectory of the human species from small tribes of hunter-gathers to large agglomerations of industrial-technological urban dwellers in less than 10,000 years, a blink of an eye in evolutionary time. We use metabolic scaling to compare densities and individual energy use in other land mammals and human societies ranging from hunter-gatherers, early agriculturalists, and modern city dwellers. This shows that hunter-gathers live at densities well within the mammalian expectation (< 1 person/km2) and are powered by biological metabolism of ~100 watts or ~2500 kcals/day. In contrast, modern city dwellers occur at densities much greater (~40,000 times) than hunter-gathers and use up to ~10,000 watts of energy in the form of biological and extra-biological metabolism. Hunter-gatherer abundance is constrained by local environmental productivity as in all other species. In contrast, hyper-dense cities are resource sinks. Vast quantities of energy and materials must cross the urban boundaries to maintain dense human populations, high standards of living, and flow of information and money. Modern cities now flux more energy than net primary productivity on a per area basis. Cross-country and year analyses show that urbanization is marked by a transition in employment from resource to service sectors and coincide with increased per capita energy use, CO2 emissions, and Gross Domestic Product. We hypothesis that the rise in hyper-densities is driven by the MDD and powered by extra-metabolic energy to run information and financial systems and facilitate a rapid cultural evolution contributing to cultural and technological innovations. We will show the trajectory of key transport technologies over the past 10,000 years that have led to a decoupling of urban systems from local environmental constraints in space and time. The metabolic rift with nature created by rapid urbanization and driven by the MDD poses formidable challenges for establishing a sustainable relationship on a finite planet.Download Slides
- Garvin Boyle (Independent Researcher, Orrery, Software, Richmond, Ontario, Canada) “Distributional Social Justice: Insights From a Doubly-Bounded Capital Exchange Model” Distributional social justice has long been a debated topic in philosophy and in the social sciences, and has recently become an important consideration among heterodox economists such as Econophysicists, Ecological Economists and Biophysical Economists. Espousing the twin goals of sustainability and social justice, they argue that participants in any society must believe they have equitable access to well-being if the society is to demonstrate long-term sustainability. There seems to be common agreement amongst most participants in Western society that the historically ubiquitous unjust distribution of wealth is simply due to unfettered greed, or that it can be overcome via broad access to high-quality education. However, recent papers by Econophysicists have shown that there are relentless dynamic processes that cause all economies to relax towards a state of high economic entropy, usually characterized by a profoundly unjust distribution of wealth. This presentation will briefly note the historical roots of the discussion around distributional social justice, and the emergence of the Benatti-Dragulescu-Yakovenko (BDY) capital exchange model as a research object and tool. Then, a doubly-bounded variation of the BDY model will be introduced, a concept of economic entropy will be proposed based on the new model, and the variant behavior of this model will be explored. Insights will be drawn that should positively inform the modern discussions of distributional social justice, and should also help to bridge the gap between the study of chemistry and thermodynamics and the study of economics.Download slides
- Daniel Urban (PhD Candidate, Department of Economics, University of Missouri Kansas City, Kansas City, USA) “The Production Boundary & Empirical Constructs: The Implicit Foundations of National Accounting” This paper seeks to highlight the implicit foundations of national accounting aggregates qua empirical constructs. We begin by demarcating primary facts from empirical constructs, crucially noting that much of our economic data, and specifically national accounts, exemplify the latter. We then consider how these measures are constructed based on Kuznets’ criteria of scope, valuation, and netness, which in conjunction serve to constitute the production boundary. Our explication of these components shall suggest that differing conceptions of the boundary result in drastically different understandings of the economy and measures of national product. That is, as no single boundary can be taken as given, conceptions of the boundary will vary depending on the prospective accountant’s prior theory-and ideology-laden “vision” of the economy, production, and the distinction between input and output or intermediate and final product. Such distinctions are immediately relevant when using input-output tables (or similar economic data) for tracking net value, energy, or other physical or environmental flows within the economy. We shall highlight the significance of these distinctions through a brief discourse on the treatment of research & development, the banking problem, and government in national accounts. Particular attention shall also be paid to differences between subjective and objective theories of value, a distinction that frequently remains unaddressed but, as shall be suggested, poses significant problems for the practice of national accountingDownload slides
- Nathan Schaffer (Partner, Groppe, Long, and Littell, Houston, TX) “U.S. Unconventional Resource Development – A Lesson Learned in Time” U.S. production of crude oil and natural gas has increased substantially over the last decade through drilling and development of unconventional resources, first shale gas and now tight oil. The process is capital intensive and requires large upfront investments – for which the true economics become evident only after considerable time has passed. In broad terms development of shale gas did not live up to early expectations when considering high acreage costs, lower ultimate recoveries and the resulting asset write-downs. With development of tight oil still in the early stages it will be important to examine the parallels, apply any lessons learned and determine realistic expectations for the domestic oil industry.Download slides
March 20, 2018: “Systems Thinking on the Modern Economy: Size and Structure“
Presentation at the 255th ACS National Meeting & Exposition of the American Chemical Society, New Orleans, LA, USA (the 2018 Spring Meeting of the American Chemical Society).
Presentation at the 4th Science and Energy Seminar at Ecole de Physique des Houches, March 4th-9th, 2018.
February 27, 2018: “Energy and Food Costs and the Structure of the Economy“
Presentation at the London School of Economics.
January 4, 2018: “Systems Thinking Linking Energy and the Economy: Size, Growth, and Structure“
December 15, 2017: “Energy and the Economy over the Long-Term: Size and Structure”
Weekly seminar of the Bureau of Economic Geology: http://www.beg.utexas.edu/node/4038
Video (direct link):
Abstract: A long-term and systems-oriented perspective on the role of energy resources and technologies shows that they play a fundamental role in enabling the physical and economic growth of the Industrial era. Yet, most economic modeling approaches do not even consider that energy availability and constraints fundamentally affect the size and structure of our economies. This lack of energy-economic coupling means that most economic frameworks cannot even consider the energy system as an explanatory factor for the Great Recession and the economic “secular stagnation” since 2008. In addition, mainstream economic frameworks cannot explain future implications of large scale changes in the energy system (e.g., a low-carbon transition), even though they are used for this purpose. This presentation shows data to make the case that (1) the declining cost of energy (including food) is an apt explanation for historical growth, (2) worldwide energy and food costs reached the lowest point in history around the year 2000, and (3) the cessation of the decline in energy and food costs (within the U.S.) helps explain structural changes within the U.S. economy.
Webinar video: https://www.youtube.com/watch?v=NUiF3WwKLe4
March 6-11, 2016: Science for Energy Scenarios conference, France, March, 2016
Suppose we agree how to calculate EROIs … so/now what?, Science for Energy Scenarios, the
3rd Science and Energy Seminar at Ecole de Physique des Houches, Les Houches, France, March 6th-11th 2016. See conference link: http://science-and-energy.org/slides-videos/.
Video (~ 60 minutes): https://www.youtube.com/watch?v=R9GGmGYIcS8
Presentation (with notes): link
March 2016: Masaryk University, Czech Republic
Summary of Carbon Capture and Storage research, pilots, and economics in the United States (presentation).
Energy and its Relation to Complexity of the Economy, Granada Seminar 2015: Physics Meets the Social Sciences, La Herradura, Spain, June 15, 2015.
Long-term Energy and Economic Trends: Pre-Industrial to Today, presentation for the CleanTX Lunch series, Austin, TX, February 10, 2015.
Energy-Water Nexus, Texas Water Law Institute Conference, November 19-21, 2014, Austin, TX.