On 11 March 2025, the Institute for New Economic Thinking at Oxford Martin School hosted a hybrid lecture by Edward B. Barbier, Visiting Fellow and University Distinguished Professor of Economics at Colorado State University, moderated by INET Oxford’s Cameron Hepburn. Drawing on over three decades of scholarship in environmental and resource economics, Barbier examined how escalating ecological scarcity—climate change, biodiversity loss, freshwater stress, and ocean degradation—confronts economies with a defining choice: double‑down on the fossil‑fuel era or compete in the emerging “green race” of low‑carbon innovation, environmental markets, and nature‑based assets.

Opening Remarks

Cameron Hepburn welcomed both in‑person and online audiences, noting Barbier’s pioneering 1989 blueprint with David Pearce and his extensive consulting roles with the UN, World Bank, and OECD. Hepburn highlighted Barbier’s 350+ peer‑reviewed articles, 27 books—including the award‑winning Economics for a Fragile Planet—and underscored the evening’s aim: to explore sustainable prosperity amid tightening ecological limits.

Defining the Era of Ecological Scarcity

Barbier positioned humanity in a ninth historical “frontier” stage—today’s Anthropocene—where relative scarcity of land, water, minerals, and fossil fuels has driven past economic booms. The Industrial Revolution’s phases (1750–1830 steam and textiles; 1870–1900 electrification and oil) catalyzed coal‑ and oil‑led growth. Yet since the 1970s, 75% of terrestrial and 66% of marine environments have been profoundly altered, 14 of 18 ecosystem services have declined, and wildlife populations have plunged 73%, marking acute ecological scarcity.

Fossil‑Fuel Barriers vs. the Green Race

Despite mounting environmental costs, Barbier argues, economies underprice and subsidize fossil fuels—an estimated $6 trillion in 2020—while underinvesting ($600–$800 billion annual gap) in nature protection. Yet two countervailing forces emerge:

1. Green Innovation & Productivity Pressures
   ‑ Global productivity growth has stalled since the 1980s, and climate‑driven shocks now account for 70% of economic disruptions.
   ‑ Nations with strong clean‑tech patents, green market shares, and “net‑zero” sectors (e.g., Taiwan at 30% green capitalization) are positioning to win green competitiveness.
2. Expanding Environmental Markets
   ‑ Voluntary carbon credits—over two‑thirds issued via nature‑based solutions—surged to 1.3 billion tonnes in 2021.
   ‑ Broader markets for biodiversity offsets, water rights, sustainably produced commodities, and tokenized nature assets (e.g., Maluku Token in Indonesia) signal a nascent $4–5 trillion bioeconomy.
   ‑ Environmental risk assessments now drive investor and corporate strategy, as three‑quarters of global GDP depends on nature’s services.

Competition, Cooperation, and Democracy

Barbier cautioned that this green race—fueled by national industrial policies, subsidies, and protective trade measures—risks devolving into “green mercantilism,” undermining the global cooperation essential for addressing cross‑border environmental public goods. With democracy in decline (71% of humanity now under authoritarian regimes), he warned that competitive self‑interest may eclipse the collective action needed for sustainability.

Audience Q&A Highlights

Democracy vs. Autocracy in the Green Race
– Question: Can autocracies like China lead sustainable transitions without democratic cooperation?
– Barbier: China’s incentives may drive green industrial leadership, but long‑term global sustainability demands transparent, cooperative policymaking that autocracies seldom prioritize.

Inequality & the Race for Capital
– Question: How will wealth inequality evolve in the green transition?
– Barbier: Initially, returns on capital in emerging green sectors may exacerbate inequality (per Piketty’s r > g). Over time, widespread adoption and productivity gains could ease disparities, contingent on inclusive policies.

Looking Ahead

Barbier concluded that while the green race for innovation and markets is gaining momentum, it may be “too little, too late” without strong global cooperation and democratic accountability. The winners of this race—nations, industries, and firms—will shape both economic prosperity and the planet’s ecological future.

Next Steps
For full recording, slides, and upcoming INET Oxford events, visit the Institute for New Economic Thinking website or contact info@inet.ox.ac.uk.

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The Institute for New Economic Thinking (INET), founded in 2009, challenges traditional economic theories in response to the 2008 financial crisis. It supports innovative research and fosters a global network of scholars. Through initiatives like the Young Scholars Initiative, INET collaborates with academic institutions worldwide to advance new, inclusive approaches to economics.

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