The debate about economic growth and the environment that began in 1972 with the Club of Rome’s report The Limits to Growth is live again. It’s a debate that may be roughly characterised as follows; those on the ‘limits’ side of the argument, who were initially on the margins of broad economic opinion, have fairly consistently asserted that the earth and its resources are physically finite and that there are limits to the extent that humans can exploit the environment without undermining its ability to provide the ecosystem goods and services on which human economies and societies depend.
In several areas these limits are now being exceeded, and in due course this will have serious detrimental effects on human ways of life. Economic growth is a major cause of the exceeding of limits, and on the big issues there is little evidence that ‘absolute decoupling’ of economic growth and environmental impact can be achieved. Rich countries should therefore cease their pursuit of economic growth and learn to manage low-growth or even no-growth economies.
The argument that has emerged most recently is that a low or no-growth economy need not imply declining welfare, because there is very little evidence that growth has substantially increased welfare in the rich countries. The same argument clearly doesn’t hold for low-income countries, where a positive relationship between income and welfare can be expected for some time yet. One of the arguments for low/no growth in rich countries is to give poor countries ‘ecological space’ to grow.
The other side of the debate that was started in the 1970s still contests each of these assertions. Practically everyone now accepts the first three points, especially in respect of climate change and biodiversity loss. Beyond that, there is now a wider range of mainstream opinion, that accepts limits to the usefulness of GDP but not to GDP growth itself, exemplified by the Stiglitz-Sen report of 2009 commissioned by the French government, and the European Commission’s ‘Beyond GDP’ conference two years earlier and its Communication to the Council, also in 2009.
As the arguments have swirled back and forth about whether or not ‘green growth’ is a contradiction in terms, they have tended to be couched in terms of impossibility theorems on the ‘limits’ side, and imperatives on the side of those who now accept the seriousness of our environmental predicament but cannot imagine a modern industrial economy that doesn’t grow. Much less attention has been given to how to recognise ‘green growth’ were it being achieved. In short, how green has economic growth been since the 1970s, and how should the greenness or otherwise of growth be measured?
This is not a trivial question, even if it is simplified by choosing somehow to place the social dimension of sustainable development outside the conceptual space of green growth, and to limit this space to the relationship between the economy and the environment. It’s a controversial choice because the word green has increasingly become applied in political terms (and is of course the name of several major political parties in Europe). Yet it is most unlikely that these green parties would accept as green any pattern of economic growth that either undermined or failed to promote their own social objectives.
Does it, for instance, matter from the standpoint of greenness that economic growth in most countries over the last three decades has made them more rather than less unequal? The answer clearly depends on the political views of the person replying, and is not amenable to definitive resolution.
The key question, though, is the relationship between economic growth and the environment, encompassing as it does issues of local, regional and global pollution, the use and possible depletion of renewable and non-renewable resources and human appropriation of a rising share of these to the detriment of the millions of other species that sustain the biosphere.
By limiting the greenness criteria to the environmental impact of growth it is at least possible to set out broad principles and derive quantitative indicators against which economic growth can be evaluated. The most common approach is to align these principles with ‘sustainability’, which entails a judgement as to whether the impact of economic growth on the environment will allow economic growth to continue in the long-term.
The principles involved may be summarised briefly as follows; renewable resources should be renewed, and non-renewable resources should be extracted in such a way as to avoid depletion through increased recycling and the development of substitutes. Local pollution should not exceed the ‘critical load’ of ecosystems, meaning their ability to absorb it, or have excessive effects on human health. Global pollution should not disrupt wider ecosystem functions such as climate regulation, or the filtering out by the ozone layer of harmful ultra-violet radiation. Lastly, mankind should allow enough biodiversity to sustain the biosphere.
Many of these principles, especially those relating to pollution, can quite easily be translated into quantitative indicators. There is now much data on the impact of, say, local air pollutants on ecosystems and on humans too, and much regulation has already ensured that ecosystems are not disrupted and human health is protected. Most industrial societies now have strict limits on the pollutants permitted in drinking water, for instance.
This illustrates the first important point about economic growth and the environment. As societies become richer they become both more inclined to mandate, and more able to implement, measures of environmental improvement. They can insist on catalytic converters for motor vehicles, flue scrubbers for coal-fired power stations and highly effective water and sewerage systems. So it’s hardly surprising that poorer societies that are still unable to afford basic environmental protection insist on economic growth for environmental reasons as well as for general social betterment.
But these issues are not at the core of the debate in Europe about economic growth and the environment. Public opinion across the EU increasingly perceives industrial activities as having a global environmental impact that threatens either to unravel or seriously disrupt some of the biosphere’s most basic processes.
Climate change is the paradigm example of this, but the impact of biodiversity loss is in much the same category, and it is no accident that these were the only issues that produced binding conventions at the Earth Summit in Rio de Janeiro almost 20 years ago. The fact that those conventions seem to have done little or nothing to reduce greenhouse gas emissions or the rate of loss of biodiversity is partly why the whole ‘limits of growth’ debate has revived. Those who promised ‘green growth’ in 1992 have failed spectacularly to deliver it. So now the argument goes that there must be fundamental flaws in their goal. Added to that there’s the fact that the major events that have reduced CO2 emissions in Europe, the U.S. and the former Soviet Union over the last 25 years have been the slowdown since the 2008-9 recession, the impact of oil price rises on transport, and the industrial stagnation that followed the collapse of communism. None of these have been good for growth, but they have yielded some environmental benefit.
Growth in Europe since 1970 has thus been green to the extent that it has delivered local environmental improvements in EU member states. These include huge reductions in air emissions, and therefore improvements in air quality that yielded enormous health benefits. Much the same can be said of water quality. But it has not been green enough to prevent emissions of greenhouse gases from continuing to rise, and biodiversity loss has not been halted. There is also the calculation yet to be made of how much of Europe’s environmental improvements are due to the shift of so much manufacturing elsewhere, so displacing but not necessarily reducing the associated environmental effects. These latter issues go far beyond measurement to more fundamental issues of energy policy, spatial development and trade. It is achievements in these areas that will determine whether any growth that emerges from the European economy over the next two decades can properly be characterised as green or not.
Paul Ekins is professor of energy and environment policy at University College London’s Energy Institute. p.ekins@ucl.ac.uk