Development of reference economic futures
When we model the impact of disaster events, we often use models that match the economy as it is structured today. But disasters are unpredictable. They can occur tomorrow, or in 5, 10, 50 or 100 years. When deciding how to reduce the impacts of future disasters, it is important to consider the ways our economy might change in the future and to assess the disaster impacts against the background of a range of potential future economic pathways.
In this project, we have developed three reference future economic futures. They were developed by analysing many future scenarios created by other experts to find representative sets, in conjunction with detailed historical data analysis and forecasting for specific prices and other economic parameters. These three scenarios span a wide range of potential world economic pathways and allow testing out possible disaster preparedness and mitigation measures - to ensure that we are making robust decisions - no matter what the future holds.
The reference economic futures
Fragmented future
In this future, frosty international relations has slowed the flow of goods, people and information between countries. Traditional export activities are increasingly replaced with activities to ensure self-sufficiency. Environmental policies are more inward-facing too, focused particularly on protection from competing claims but without a particularly strong focus on sustainability. The fragmentation of the world's economy, slows economic growth, both globally and in New Zealand.
Techno-global future
In this future, information, goods and people flow freely around the world. This creates a highly competitive market landscape and strongly growing economy. Technology innovation and adoption is rapid, improving the efficiency of many industries, including the upskilling of the workforce. In this high growth, technology-driven future, environmental concerns have taken a back-seat and fossil fuel is still a dominant fuel source, albeit supplemented by others such as bio-fuel. This reference economic future is further divided into two sub-futures.
2a Job-replacing
In New Zealand, technology has been adopted with abandon. Automation is replacing jobs and new, technology-driven markets are significantly impacting traditional industries.
2b Job-augmenting
In New Zealand, technology is enhancing our traditional industries. Technology is being developed and applied to create more value but with a stronger focus on adding value to labour rather than replacing.Green-oriented future
In this future, prioritisation has been given to addressing environmental concerns and technology plays a key role in making the transition to a more 'green'-oriented economy. Government policies encourage a switch to cleaner modes of production and changes in consumption choices. Greater energy efficiency and increased uses of renewable energy sources ensue. Demand for forestry increases to support a more sustainable construction industry, while demand for dairy and meat reduces, as less resource-intensive protein sources become more popular. This new economy enables moderate economic growth both globally and in New Zealand.