IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0201141.html
   My bibliography  Save this article

It's not the 'what', but the 'how': Exploring the role of debt in natural resource (un)sustainability

Author

Listed:
  • Julen Gonzalez-Redin
  • J Gareth Polhill
  • Terence P Dawson
  • Rosemary Hill
  • Iain J Gordon

Abstract

A debt-based economy cannot survive without economic growth. However, if private debt consistently grows faster than GDP, the consequences are financial crises and the current unprecedented level of global debt. This policy dilemma is aggravated by the lack of analyses factoring the impact of debt-growth cycles on the environment. What is really the relationship between debt and natural resource sustainability, and what is the role of debt in decoupling economic growth from natural resource availability? Here we present a conceptual Agent-Based Model (ABM) that integrates an environmental system into an ABM representation of Steve Keen’s debt-based economic models. Our model explores the extent to which debt-driven processes, within debt-based economies, enhance the decoupling between economic growth and the availability of natural resources. Interestingly, environmental and economic collapse in our model are not caused by debt growth, or the debt-based nature of the economic system itself (i.e. the ‘what’), but rather, these are due to the inappropriate use of debt by private actors (i.e. the ‘how’). Firms inappropriately use bank credits for speculative goals–rather than production-oriented ones–and for exponentially increasing rates of technological development. This context creates temporal mismatches between natural resource growth and firms’ resource extraction rates, as well as between economic growth and the capacity of the government to effectively implement natural resource conservation policies. This paper discusses the extent to which economic growth and the availability of natural resources can be re-coupled through a more sustainable use of debt, for instance by shifting mainstream banking forces to partially support environmental conservation as well as economic growth.

Suggested Citation

  • Julen Gonzalez-Redin & J Gareth Polhill & Terence P Dawson & Rosemary Hill & Iain J Gordon, 2018. "It's not the 'what', but the 'how': Exploring the role of debt in natural resource (un)sustainability," PLOS ONE, Public Library of Science, vol. 13(7), pages 1-19, July.
    • Handle: RePEc:plo:pone00:0201141
    DOI: 10.1371/journal.pone.0201141
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0201141
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0201141&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0201141?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lafforgue, Gilles, 2008. "Stochastic technical change, non-renewable resource and optimal sustainable growth," Resource and Energy Economics, Elsevier, vol. 30(4), pages 540-554, December.
    2. Guus ten Broeke & George van Voorn & Arend Ligtenberg, 2016. "Which Sensitivity Analysis Method Should I Use for My Agent-Based Model?," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 19(1), pages 1-5.
    3. Steve Keen, 2009. "Household Debt: The Final Stage in an Artificially Extended Ponzi Bubble," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 347-357, September.
    4. D. Joseph Stiglitz, 2009. "Moving Beyond Market Fundamentalism To A More Balanced Economy," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(3), pages 345-360, September.
    5. Herman E. Daly, 1991. "Towards an Environmental Macroeconomics," Land Economics, University of Wisconsin Press, vol. 67(2), pages 255-259.
    6. Steve Keen, 1995. "Finance and Economic Breakdown: Modeling Minsky’s “Financial Instability Hypothesis”," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(4), pages 607-635, July.
    7. Luis R Murillo-Zamorano, "undated". "Total Factor Productivity Growth, Technical Efficiency Change and Energy Input. An International Frontier Analysis," Discussion Papers 03/09, Department of Economics, University of York.
    8. Grimm, Volker & Berger, Uta & DeAngelis, Donald L. & Polhill, J. Gary & Giske, Jarl & Railsback, Steven F., 2010. "The ODD protocol: A review and first update," Ecological Modelling, Elsevier, vol. 221(23), pages 2760-2768.
    9. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801, January.
    10. Joseph Persky, 1995. "The Ethology of Homo Economicus," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 221-231, Spring.
    11. Bovari, Emmanuel & Giraud, Gaël & Mc Isaac, Florent, 2018. "Coping With Collapse: A Stock-Flow Consistent Monetary Macrodynamics of Global Warming," Ecological Economics, Elsevier, vol. 147(C), pages 383-398.
    12. Bruun, Charlotte & Heyn-Johnsen, Carsten, 2009. "The paradox of monetary profits: an obstacle to understanding financial and economic Crisis?," Economics Discussion Papers 2009-52, Kiel Institute for the World Economy (IfW Kiel).
    13. Victor, Peter A. & Rosenbluth, Gideon, 2007. "Managing without growth," Ecological Economics, Elsevier, vol. 61(2-3), pages 492-504, March.
    14. J. Doyne Farmer & Duncan Foley, 2009. "The economy needs agent-based modelling," Nature, Nature, vol. 460(7256), pages 685-686, August.
    15. Cox, Charles C, 1976. "Futures Trading and Market Information," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1215-1237, December.
    16. Martínez-Alier, Joan & Pascual, Unai & Vivien, Franck-Dominique & Zaccai, Edwin, 2010. "Sustainable de-growth: Mapping the context, criticisms and future prospects of an emergent paradigm," Ecological Economics, Elsevier, vol. 69(9), pages 1741-1747, July.
    17. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
    18. Jule Thober & Birgit Müller & Jürgen Groeneveld & Volker Grimm, 2017. "Agent-Based Modelling of Social-Ecological Systems: Achievements, Challenges, and a Way Forward," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 20(2), pages 1-8.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ampofo, Gideon Minua Kwaku & Jinhua, Cheng & Bosah, Philip Chukwunonso & Ayimadu, Edwin Twum & Senadzo, Patrick, 2021. "Nexus between total natural resource rents and public debt in resource-rich countries:A panel data analysis," Resources Policy, Elsevier, vol. 74(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julen Gonzalez-Redin & Iain J. Gordon & J. Gareth Polhill & Terence P. Dawson & Rosemary Hill, 2024. "Navigating Sustainability: Revealing Hidden Forces in Social–Ecological Systems," Sustainability, MDPI, vol. 16(3), pages 1-23, January.
    2. George Van Voorn & Geerten Hengeveld & Jan Verhagen, 2020. "An agent based model representation to assess resilience and efficiency of food supply chains," PLOS ONE, Public Library of Science, vol. 15(11), pages 1-27, November.
    3. Emmanuel Bovari & Gaël Giraud & Florent McIsaac, 2018. "Carbon Pricing and Global Warming: A Stock-flow Consistent Macro-dynamic Approach," Working Paper 0a6be926-7c78-4aba-a60b-6, Agence française de développement.
    4. Naqvi, Asjad & Stockhammer, Engelbert, 2018. "Directed Technological Change in a Post-Keynesian Ecological Macromodel," Ecological Economics, Elsevier, vol. 154(C), pages 168-188.
    5. Fikret Adaman, 2012. "Power Inequalities in Explaining the Link between Natural Hazards and Unnatural Disasters," Development and Change, International Institute of Social Studies, vol. 43(1), pages 395-407, January.
    6. Rezai, Armon & Taylor, Lance & Mechler, Reinhard, 2013. "Ecological macroeconomics: An application to climate change," Ecological Economics, Elsevier, vol. 85(C), pages 69-76.
    7. Auke Hoekstra & Maarten Steinbuch & Geert Verbong, 2017. "Creating Agent-Based Energy Transition Management Models That Can Uncover Profitable Pathways to Climate Change Mitigation," Complexity, Hindawi, vol. 2017, pages 1-23, December.
    8. Hoffmann, Christin & Hoppe, Julia Amelie & Ziemann, Niklas, 2022. "Faster, harder, greener? Empirical evidence on the role of the individual Pace of Life for productivity and pro-environmental behavior," Ecological Economics, Elsevier, vol. 191(C).
    9. J. Farmer & Cameron Hepburn & Penny Mealy & Alexander Teytelboym, 2015. "A Third Wave in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 329-357, October.
    10. Apetrei, Cristina I. & Strelkovskii, Nikita & Khabarov, Nikolay & Javalera Rincón, Valeria, 2024. "Improving the representation of smallholder farmers’ adaptive behaviour in agent-based models: Learning-by-doing and social learning," Ecological Modelling, Elsevier, vol. 489(C).
    11. Stéphane Hallegatte, 2008. "A Proposal for a New Prescriptive Discounting Scheme: The Intergenerational Discount Rate," Working Papers 2008.47, Fondazione Eni Enrico Mattei.
    12. Richard Tol, 2011. "Regulating knowledge monopolies: the case of the IPCC," Climatic Change, Springer, vol. 108(4), pages 827-839, October.
    13. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    14. Bailly, Hugo & Mortier, Frédéric & Giraud, Gaël, 2024. "Empirical analysis of a debt-augmented Goodwin model for the United States," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 619-633.
    15. Malmaeus, J. Mikael & Alfredsson, Eva C., 2017. "Potential Consequences on the Economy of Low or No Growth - Short and Long Term Perspectives," Ecological Economics, Elsevier, vol. 134(C), pages 57-64.
    16. Deegen, Peter & Matolepszy, Kai, 2015. "Economic balancing of forest management under storm risk, the case of the Ore Mountains (Germany)," Journal of Forest Economics, Elsevier, vol. 21(1), pages 1-13.
    17. Philippe Aghion & Antoine Dechezleprêtre & David Hémous & Ralf Martin & John Van Reenen, 2016. "Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 1-51.
    18. Vipul Bhatt & Masao Ogaki & Yuichi Yaguchi, 2017. "Introducing Virtue Ethics into Normative Economics for Models with Endogenous Preferences," RCER Working Papers 600, University of Rochester - Center for Economic Research (RCER).
    19. Stefano Giglio & Bryan Kelly & Johannes Stroebel, 2021. "Climate Finance," Annual Review of Financial Economics, Annual Reviews, vol. 13(1), pages 15-36, November.
    20. Pindyck, Robert S., 2012. "Uncertain outcomes and climate change policy," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 289-303.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0201141. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.