The aim of my intervention is to address the issue of why economic growth
is not compatible with environmental sustainability
and the motivation behind it is the need to fill the gap between science and policy making
For every substantive statement that I make, I provide a reference in the text which has been made available
so that my intervention is structured as a literature review.
Growth for the sake of growth remains the credo of all governments and international institutions
Economic growth is presented as the panacea that can solve any of the world problems:
poverty, inequality, sustainability, you name it
However, there is an uncomfortable scientific truth that has to be faced:
Economic growth is environmentally unsustainable.
Then the central question becomes:
How can we manage an economy without growth?
Economist Kenneth Boulding famously said that:
"Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist".
Ecological economists argue that the economy is physical,
while mainstream economists seem to believe it is metaphysical.
Social metabolism is the study of energy and material flows within the economy.
On the input side of the economy, key material resources are limited,
and many are peaking including oil and phosphorus.
On the output side of the economy, because of thermodynamics
everything that enters into the economy is to come out at some point
So on the output side, humanity is trespassing planetary boundaries.
Climate change is the evidence of the limited assimilative capacity of ecosystems.
It is the planet saying: "Enough is enough!".
Now, mainstream economists, finally convinced by the existence of biophysical limits,
started to argue that economic growth can be decoupled from the consumption of energy and materials,
or from environmental impacts, that is the same thing
Now, historial data series, Like Material Flow Accounting from EUROSTAT, for instance
demonstrates that this, up to now, has not happened.
At most, there is relative decoupling
that is: a decrease in resource use per unit of GDP.
But, there is no absolute decoupling, that is what matters for sustainability:
which is an absolute decrease of environmental resources consumption.
Now, the only periods of absolute dematerialisation coincide with economic recession.
Trade should also be taken into account,
to avoid externalization of pollution intensive activities outside the European Union
the so called pollution heaven hypothesis.
Now, the current economy cannot be circular.
The main reason being that energy cannot not be recycled,
and materials only up to a certain extent
The global economy, currently, recycles less than 10% of materials
about 50% of processed materials are used to provide energy
and are thus not available for recycling,
it is basically fossil fuels.
It is simple: Economic growth is not compatible with environmental sustainability.
The list of nice oxymorons is long:
from sustainable development to its reincarnations like green economy or green growth,
but wishful thinking does not solve real problems.
Increase in GDP leads to increase in material and energy use,
and therefore to environmental unsustainability.
Now, technology and market based solutions are not magic bullets.
Faith in technology has become religious:
Scientific evidence shows that, based on past trends in technological improvement
these are coming way to slowly to avoid irreversible climate change.
For instance, efficiency improvement leads to rebound effects, in the context of economic growth:
this is, the more efficient you are, the more you consume, think of cars:
Cars have become more and more efficient, but the total consumption of gasoline has increased, not decreased
So, renewable energy produces less net energy,
because it has a lower Energy Return on Investment than fossil fuels
For this, and other reasons, renewable energy cannot satisfy current levels of energy consumptions
which therefore needs to be reduced.
Most of the world's fossil fuel reserves must be left in the ground
unburned, to keep global temperature rise to no more than 2°C
In fact, fossil fuels should be called unburnable fuels
Science sometimes brings bad news, I'm sorry!
An article recently published in Nature Sustainability argues that:
"No country in the world meets the basic needs of citizens at a globally sustainable level of resource use."
The question then becomes:
How can the conditions for a good life for all within planetary boundaries be generated?
The uncomfortable truth to be faced by policy makers is the following:
First: economic growth is ecologically unsustainable.
The total consumption of materials and energy needs to be reduced, starting from developed countries.
Second: economic growth might also not be socially desirable.
Inequalities are on the rise, poverty has not been eliminated and life satisfaction is stagnant.
Third: economic growth is fuelled by debt, think for example of quantitative easing,
which corresponds to a colonisation through marketing of the future.
This debt cannot be paid and the financial system is still prone to instability, despite Basilea III
What to do? For instance, scientifically it is not clear to me how the European Union
will achieve a low-carbon economy in a context of economic growth,
since it implies a reduction of greenhouse gas emissions to 80% below 1990 levels by 2050.
In fact, climatologists Kevin Anderson and Alice Bows have argued convincingly that:
"for a reasonable probability of avoiding the 2°C characterisation of dangerous climate change
the wealthier (annex 1) nations need, temporarily, to adopt a de-growth strategy."
Obviously, a transition from a growth society to a degrowth, or post-growth one poses several challenges, it's obvious.
However, the emerging field of ecological macro-economics is starting to address these challenges convincingly.
Happiness and economic literature ,for example, shows that GDP growth is not needed for well-being
because there are other important determinants, and I think here of the Easterlin paradox.
High life expectancy is compatible with low carbon emissions, but high incomes are not.
Moreover, lack of growth may increase inequalities, unless there is redistribution.
In any case, the issue is not whether we shall abandon economic growth.
The question is how?
Scientific debates around it are on the rise, but I am afraid policy making is behind.
There are good signs:
Critiques of GDP as an indicator of well-being are common, even mainstream, I would say.
There are de-growth policy proposals and de-growth is entering into the Parliaments.
This is not new.
For example, in 1972, Sicco Mansholt, a Dutch social-democrat who was then EU Commissioner for agriculture,
wrote a letter to the then President of the European Commission Franco Maria Malfatti,
urging him to seriously take into account the limits to growth in the EU economic policy.
Mansholt himself became the President of the European Commission after only two months from the letter,
but for a too short term to push a zero, or below zero, growth agenda
Nowadays, I think, the time is ripe not only for a scientific de-growth research agenda, that exists,
but also for a political one.
As ecological economists Tick Jackson and Peter Victor argued in The New York Times:
"Imagining a world without growth is among the most vital and urgent tasks for society to engage in."
Thank you
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