Long-run evolution of the global economy - Part 2: Hindcasts of innovation and growth

TL;DR

This study evaluates a physics-based economic model's ability to hindcast global economic growth and energy consumption from 2000 to 2010, highlighting its high skill and potential for future climate-economic projections.

Contribution

It introduces and tests a purely physical principles-based economic model, offering an alternative to traditional societal dynamics approaches for long-term economic forecasting.

Findings

Model achieved >90% skill in hindcasting 2000-2010 growth.

High skill partly due to fossil fuel energy reserve discoveries in mid-20th century.

Forecasting future growth is challenging as the energy impulse diminishes.

Abstract

Long-range climate forecasts use integrated assessment models to link the global economy to greenhouse gas emissions. This paper evaluates an alternative economic framework outlined in part 1 of this study (Garrett, 2014) that approaches the global economy using purely physical principles rather than explicitly resolved societal dynamics. If this model is initialized with economic data from the 1950s, it yields hindcasts for how fast global economic production and energy consumption grew between 2000 and 2010 with skill scores > 90 % relative to a model of persistence in trends. The model appears to attain high skill partly because there was a strong impulse of discovery of fossil fuel energy reserves in the mid-twentieth century that helped civilization to grow rapidly as a deterministic physical response. Forecasting the coming century may prove more of a challenge because the effect of the energy impulse appears to have nearly run its course. Nonetheless, an understanding of the external forces that drive civilization may help development of constrained futures for the coupled evolution of civilization and climate during the Anthropocene.