Economics serving society

PSE - Environment Initiative

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Faced with the climate emergency, economies must be transformed in order to reduce drastically our pressure on the environment, by reducing pollution and loss of biodiversity. PSE economists aim to respond to these challenges, both by laying the foundations for a new model of growth that is sustainable in terms of both production and consumption, and by helping to create a transition that is socially acceptable and economically viable. PSE adopts adopt a multi-dimensional economic approach to these problems, integrating more effectively the behaviours of households and firms, emphasising the international context, and considering seriously the political constraints and equity principles that will determine the range of choices.

A subject crossed by vital questions

Taking into account the negative externalities (the damage) of our modes of consumption and production, which take a heavy toll on the environment, should lead to policies that will change our economic choices and our ways of life. Demand for healthy food and responsible agriculture continues to grow in some countries, while others face food shortages. What is the optimal model and what are the most efficient ways to achieve it? How should we measure externalities so as to integrate them better into economic calculations? What policies should be implemented in a market economy? What are the new problems for clean energy pricing and distribution? An ambitious, climate-friendly energy mix will entail a significant number of stranded assets. What will the consequences be for industrial activity and economic growth? What reactions can be expected from the various actors, and what compensations should be envisaged? These questions form the core of the environmental conundrum that the international community faces at present.

A renewed approach

Our ways of life, housing and transport must all be profoundly changed, along with production models across the world, through a reorganisation of international value chains. All of these issues arise for all countries with the same degree of urgency but in different ways for emerging economies, and particularly for developing countries, for which the specificities must be taken into account in order not to turn the environmental crisis into a development crisis as well. International treaties on trade and environmental regulations must allow for cooperation among countries in which there might be temptations to compete and for opportunism.

Too often approached through the prism of the production model, such transitions should be studied putting households at the centre of the analysis. Change will be facilitated and accelerated, even made possible, if the behaviours and preferences of consumers increase the demand for green goods and services, if there is increased acceptance of paying the costs of the transition, and greater uptake of the new opportunities that will be created by these changes. The range of job offers will be more and more determined by the environmental strategies that firms adopt.

The broadening of this issue will certainly have to encompass questions of inter- and intra-generational equity, as well as the ways in which citizens collectively deliberate and decide on how to measure and increase the social acceptability of the transitions at stake. Similarly, the behaviour of firms must be compatible with their environmental responsibility, which is expected to be one of the main drivers of the ecological transition.

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An initiative immersed in the PSE

The thematic research group Regulation and the Environment is one of the essential components of the Environment Initiative, to which is attached the collaborative project “Society and Environment”, intended to broaden the scientific conversation to include researchers from environmental studies. The collaborations with the CEPII on the one hand and the IPP on the other aim to reinforce in this domain, too, PSE’s expertise in evaluating economic policy. Finally, our research potential will also be amplified by the creation of a number of research chairs, currently under consideration.