Environmental News Network - Better Be Safe Than Sorry: Economic Optimization Risks Tipping of Important Earth System Elements

Details: By Potsdam Institute for Climate Impact Research (PIK); 15.Jun

Optimizing economic welfare without constraints might put human well-being at risk, a new climate study argues. While being successful in bringing down costs of greenhouse gas reductions for instance, the concept of profit maximization alone does not suffice to avoid the tipping of critical elements in the Earth system which could lead to dramatic changes of our livelihood. The scientists use mathematical experiments to compare economic optimization to the governance concepts of sustainability and the more recent approach of a safe operating space for humanity. All of these turn out to have their benefits and deficits, yet the profit-maximizing approach shows the greatest likelihood of producing outcomes that harm people or the environment.

Julie Swatson

Optimizing economic welfare without constraints might put human well-being at risk, a new climate study argues. While being successful in bringing down costs of greenhouse gas reductions for instance, the concept of profit maximization alone does not suffice to avoid the tipping of critical elements in the Earth system which could lead to dramatic changes of our livelihood. The scientists use mathematical experiments to compare economic optimization to the governance concepts of sustainability and the more recent approach of a safe operating space for humanity. All of these turn out to have their benefits and deficits, yet the profit-maximizing approach shows the greatest likelihood of producing outcomes that harm people or the environment.

“We find that the concept of optimization of economic welfare might in some cases be neither sustainable nor safe for governing modern environmental change,” says Wolfram Barfuss from the Potsdam Institute for Climate Impact Research (PIK, member of Leibniz Association) and Humboldt University Berlin, lead-author of the study published in Nature Communications. “Economic optimization can be quite effective in reducing current greenhouse-gas emissions, it certainly has its strengths. Yet under human-made global warming, we face a world full of complex non-linearities, namely the tipping elements in the Earth system. The ice sheets of Greenland and Antarctica might collapse at some point if greenhouse-gas emissions do not get reduced, or the great circulation systems in ocean and atmosphere could fundamentally change."

"In such a setting, optimization can lead to dangerous side effects," Barfuss points out. "Even for relatively high risks, and even if profit-maximizing agents in our calculations are far-sighted, they tend to accept the possibility of detrimental environmental and societal impacts.”

Image: Risky (left) and cautious policy (right) - cutout from Figure 3 of Barfuss et al, 2018. To get the full picture, please refer to the study. (Credit: PIK)

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Better Be Safe Than Sorry: Economic Optimization Risks Tipping of Important Earth System Elements