Abstract
Energy Systems Language models of the resource base for the U.S. economy and of economic exchange were used, respectively, (1) to show how energy consumption and emergy use contribute to real and nominal GDP and (2) to propose a model of coupled flows that explains high correlations of these inputs with measures of market-based economic activity. We examined a 3rd power law model of growth supported by excess resources and found evidence that it has governed U.S. economic growth since 1900, i.e., nominal GDP was best explained by a power function of total emergy use with exponent 2.8. We used a weight of evidence approach to identify relationships among emergy, energy, and money flows in the U.S. from 1900 to 2011. All measures of quality adjusted energy consumption had a relationship with nominal GDP that was best described by a hyperbolic function plus a constant and the relationship between all measures of energy consumption and real GDP was best described by a 2nd order polynomial. The fact that energy consumption per unit of real GDP declined after 1996 as real GDP continued to increase indicates that energy conservation or a shift toward less energy intensive industries has resulted in lower fossil fuel use and reduced CO2 emissions, while maintaining growth in real GDP. Since all energy consumption measures vs. real GDP deviated from a power law relationship after 1996; whereas, total emergy use did not, we concluded that total emergy use captured more of the factors responsible for the increase in real GDP than did energy measures alone, and as a result, total emergy use may be the best measure to quantify the biophysical basis for social and economic activity in the information age. The Emergy to Money Ratio measured as solar emjoules per nominal $ followed a decreasing trend from a high of 1.01E+14 semj/$ in 1902 to 1.56E+12 semj/$ in 2011 with fluctuations in its value corresponding to major periods of inflation and deflation over this time.
Highlights
In 1994, Ken Watt stated that “For a century two different bodies of theory have been developed to account for the dynamic behavior of society
IS “TOTAL EMERGY USE” A MORE ACCURATE MEASURE OF ECONOMIC ACTIVITY THAN ENERGY CONSUMPTION IN DEVELOPED ECONOMIES? The World System model (Figure 1) demonstrated that emergy provides a more complete basis for understanding economic activity than energy consumption alone. This theoretical evidence is supported by null hypothesis 1, which we can reject based on the results reported in Figures 9A,B, in which the emergy use to real gross domestic product (GDP) ratio modeled as both power and linear functions of time accounts for 15% more of the variance than did a typical energy consumption measure, Emergy quality adjusted (QA)
We used a third conceptual model of dynamic growth within a system running on excess resources (Figure 2B) and hypothesis testing (H 0 3) to develop evidence that supports the hypothesis that a third power law based on cooperation to promote growth has governed the increase in U.S nominal GDP from 1900 to 2011
Summary
In 1994, Ken Watt stated that “For a century two different bodies of theory have been developed to account for the dynamic behavior of society. The other assumed the interplay between resource availability, energy, and demographic variables determine societal dynamics. The former is in the ascendancy . The dominant economic paradigm used to manage the United States (U.S.) in the twenty-first century is not as fully informed as it could be, i.e., only an understanding of the mutual coupling of money as a counter current to energy, material, and information flows (Odum, 1983) will provide a holistic mechanism for managing society. There will be only one completely worked out, synthetic theory to which people will be able to turn for guidance: that developed by Odum, and applied to many situations by his students.” In this paper, we will examine how Energy Systems Theory, EST (Odum, 1983), and the emergy evaluation methods derived from it (Odum, 1996) provide a more robust basis for understanding economic activity than that available from financial methods alone or by using other less comprehensive biophysical approaches, e.g., measures of energy consumption
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