Is economic growth 'good' for the environment?

Abstract

The relationship between economic growth and the environment is the focus of this study. It is a question that is both interesting and important. Whether the global economic system can continue to grow without under mining the environmental system that is its ultimate foundation, and of which it is a part, is known as the sustainability question. Many opinions as to the role of economic growth have been offered, with most leading to a polarisation of views.

A divergence arises because different assumptions are made about human ingenuity in the face of concrete constraints, and because conceptions of the growth process are poles apart. The ability to evaluate various positions is thus complicated by the lack of an agreed discourse. The first part of this study aims to synthesise these positions into a coherent framework for discussing the growth-environment relationship.

This is essentially an empirical question. However, economists, the media, and environmental organisations each provide a distorted impression of environmental problems. Doomsday prognoses attract headlines, while optimism is often read as complacency. Behind such opinions is an ever-expanding set of environmental data with which to evaluate the growth-environment relationship. The use of these data is the subject of the second part of this study, with particular regard to the question of whether economic growth is 'good' for the environment.

`Economic Growth' is generally understood to mean increases in average income, commonly measured as Gross Domestic Product (GDP) divided by population. In this sense, economic growth is a means to an end, namely rising living standards, attained through the consumption possibilities of 'material progress' – gradually increasing income. Income itself is a flow, and its rate of change over time is a dynamic concept.

The 'natural environment' is a very different notion, barely compatible with 'growth'. All economic activity takes place within, and is thus a constituent part of, a biotic habitat. This system, including the Earth and its atmosphere, will henceforth be referred to as 'the environment'. The quality of this closed system is an end in itself - essentially a normative concept. For this reason, it is hard to reduce overall 'quality' to quantitative analysis. Human activity necessarily has an impact on the environment, but whether we observe emissions or ambient concentrations of pollutants is still only a tiny snapshot of the natural system's capacity to absorb shocks. While trends can be observed over time, the quality is determined by the resilience of the total stock.

The world's resource base is limited, containing a complex and interrelated set of ecosystems that many have shown is displaying evidence of fragility. The natural chemical, biological, and physical processes that make up the environment have always been subject to human interference, initially through over-hunting, later via farming practices and land conversion, and general depletion of natural resources. In the last 200 years, technological progress and industrialisation have driven the forces of production and consumption to levels that necessitate the use of the environment as a sink for residual wastes, once the consumption services that materials provide are exhausted. This contamination has become pervasive in scope due to the sheer volume produced on a global scale, and increasingly toxic in impact.

It is continually questioned whether the global economic system can continue to grow without undermining the natural systems that are its ultimate foundation. Just as growth is desired to alleviate poverty (in the absolute sense), it has also been posited as the solution to ecosystem stresses. However, the possibility that growth can take an uneconomic direction in the long run lingers as a source of controversy, no less because it remains to be seen. Common (1995) identifies a key source of such different perspectives about economic growth and sustainability as interconnectedness. As well as the economy environment nexus, the institutional, social, and economic forces that enable collective adaptation require broad-based consideration. For those forces to be instrumental in delivering sustainability, the environmental dynamics themselves must be understood.