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Growth versus the Environment: is there a trade-off? By Per Kågeson (Kluwer Academic Publishers,

Growth versus the Environment: is there a trade-off? By Per Kågeson (Kluwer Academic Publishers, Dordrecht, 1998). The debate :

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Growth versus the Environment: is there a trade-off? By Per Kågeson (Kluwer Academic Publishers,

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  1. Growth versus the Environment: is there a trade-off? By Per Kågeson (Kluwer Academic Publishers, Dordrecht, 1998)

  2. The debate: • Critics of economic growth — the critics of modern civilization, environmental debaters and the prophets of demographic catastrophe alike — argue that the continuing economic growth in developed nations is leading to an unprecedented depletion of resources and degradation of the physical environment. • Advocates of economic growth accept the exploitation of natural capital under certain conditions because the process permits conversion into other forms of capital. • The motto of “sustainable development” (World Commission, 1987) seeks to reconcile economic growth and a good environment, based on the realization that “economic growth and environmentally sustainable development are not mutually exclusive”.

  3. Factors to consider: • Economic growth diminishes over time due to (1) fewer working hours and demographic stagnation, (2) stagnant employment participation level, (3) diminished labor productivity, (4) the rising cost of environmental protection, and (5) finite resources. • Energy and material intensity are diminishing over time, due to (1) saturation tendencies, (2) a shift towards services and “hi tech” and (3) lower specific inputs of materials and energy. • Environmental damage is diminishing over time, due to (1) diminishing material and energy intensities, (2) better pollution-abatement technologies, (3) substitution, and (4) higher willingness to pay for environmental protection.

  4. … Factors to consider • Economic growth (a) will not exhaust non-renewable resources, and (b) growing scarcity of minerals will, in most cases, only raise the commodity prices moderately, due to (1) large resources becoming available at higher prices, (2) continuing improvements in extraction technology, (3) extraction costs increasingly accounting for smaller portion of the total production costs, (4) growing importance of recycling, (5) substitution, and (6) slow growth in the manufacturing industry, relative to the growth of the service sector.

  5. How do they add up? • These factors combine to produce a negative relation between economic growth and environmental damage. • The question, therefore, is whether continued economic growth will indeed lead to our achieving a sustainable development within a reasonable time. • This is because of (1) the very heavy load at present on the atmosphere and certain ecosystems, (2) irreversible damage resulting from historical and present emissions, (3) impaired resistance of some soils and ecosystems, (4) continued growth of certain environmentally destructive activities, (5) new or as yet undiscovered threats, and (6) high marginal costs of improved pollution control and insufficient willingness to pay.

  6. Is the conflict absolute or real? • An absolute conflict between growth and environment occurs when: (1) volume-growth needed for short-term utility undermines the renewable resource-base needed for long-term survival, or (2) marginal cost of averting degradation equals or exceeds the resources created by economic growth. • A relative conflict exists when growth gives rise to such a high turnover in materials and energy that vital eco-systems or other values are threatened. • Some of the environmental problems of today may in the long run evolve into an absolute conflict if the general public and their leaders ignore the threat (e.g., continued emissions of greenhouse gases or the use of bad agricultural practices that eventually result in loss of biodiversity and extinction of species).

  7. Would a slower growth have • saved the environment? • Specific damage to the environment (per unit of GDP) diminishes with increasing per capita GDP, due to (1) structural change, (2) improved technology, and (3) increasing willingness to pay for environmental protection. • What would have been the results of zero growth or a very low annual growth-rate? • It is safe to assume that economic growth brings faster renewal of man-made capital and that structural damage would have been slower in the case of zero growth. But then, while it may take longer to reduce emissions below a critical level when the growth is very rapid, it is equally true that industrial discharges and emissions are easier to abate in a situation of rapid economic growth than when growth is either very slow or does not exist.

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