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Pacific Ecologist

Can Economic Growth Save the Environment?

PETER NORTH points out the faults in the claims of economists, industrialists and governments that economic growth is good for the environment. The idea technology will solve the problems caused by economic growth is not shared by technologists or scientists. There is no magic technological fix to solve climate change, storage of radioactive and solid waste, salinity, expanding deserts, or declining resources. Economic growth continues to be promoted and the environment continues to deteriorate. When will governments act?

Most ecologists say the earth is over-populated. Too many people are consuming too many resources, in the process creating ecological problems that threaten mankind's continued existence. Ecologists consider tackling these problems requires reducing populations, cutting back consumption, conserving resources, developing renewable technologies and fixing the environment. Economists, by contrast, argue the opposite. They claim money generated by economic growth can be applied to fix any problems growth creates.

Economists see the solution to today's mounting environmental problems as yet more economic growth. U.S. President, George W. Bush has said: "My approach recognizes that economic growth is the solution, not the problem. Because a nation that grows its economy is a nation that can afford investments and new technologies." George Bush's quote is as good a statement as any on the economic growth proposition and is the view of most economists.

Where are we ecologically speaking?

In this debate, for the most part the economists hold sway. Some governments are more active than others in addressing looming problems of environmental degradation and resource shortages. But this has made little difference to the economic policies that rule the world. On the economic front, almost all nations pursue economic growth as their number one objective. Growth policies that increase consumption of the world's resources are encouraged, the environment continues to degrade and the global population continues to grow at about 80 million per annum.

There are many ways to look at the question of man's impact on the planet. One of the most common is the ecological "footprint." For the purpose of the ecological debate, the "footprint" of a country is defined as the area of land needed to support the average individual of that country. Many studies have been published on the subject of footprints. A 1997 study by the Earth Council found the world was using up its renewable resources at a rate of about 2.3 hectares per world citizen, whereas the space available was around 1.7 hectares per world citizen. From this, the Earth Council study concluded the earth was running a 35% "ecological deficit" at that time - meaning the sustainable limits of the earth had already been exceeded. Studies by bodies such as the U.N. and Australia's CSIRO reached similar conclusions.

The Earth Council report studied 52 countries with about 80% of total global population. It found countries using up their resources unsustainably were spread fairly indiscriminately across rich and poor countries alike. The country with the highest impact on its environment, was the USA (1997 population 268m), with a consumption footprint of 10.3 ha per capita and a capacity of 6.7 ha per capita - indicating an ecological deficit of 3.6 ha per capita. At the bottom of table was Bangladesh, with 0.5ha per capita consumption, 0.3 ha per capita and a deficit of 0.2ha per capita. Only 20% of the countries studied - all geographically large countries with low-population density - were living sustainably.

Examining the economic argument on the environment

A key point made by the Earth Council study, and similar reports by other bodies, is that ecological footprints of rich countries are much larger than those of poorer countries. For example, the impact of an average citizen of the U.S. on the environment, on the Earth Council measure, is twenty times that of the average Bangadeshi.

But despite the size of the first world ecological footprint, the economic growth lobby promotes an argument that the best way to improve the global environment is to raise living standards in the third world. The premise of this argument is that richer societies can allocate more resources to environmental projects. In terms of footprints, this counter-intuitive proposition is equivalent to saying ecological problems will be abated by increasing the size of the footprint and therefore increasing the "ecological deficit."

Although the idea economic growth improves the environment seems absurd, it's a very seductive idea to the business community, and therefore to economists and politicians. If growth is already taking care of environmental problems, no major changes to the existing economic system are required. Businesses don't need to change their operations. Governments don't need to change their policies. Economists don't need to change their economics. More or the same will get us through. So, what are we to make of the proposition of Mr Bush and others that continued economic growth will fix the environment? First let's examine the historical evidence.

We can easily compare the present environment, to the environment of the past when the economy was far less developed than it is today. In the 20th century, the average rate of global economic growth was 3% per annum, meaning that the size of the global economy was twenty times larger at the end of the century than at the beginning. If the purported relationship between economic growth and environmental improvement is linear (this aspect hasn't been defined by growth economists), should it not follow that, the environment at the end of the 20th century should be 20 times "better" that it was at the start? In fact, if economic growth is the solution to fixing the environment, shouldn't the environmental problems we are now experiencing have already been solved? If the growth theory is correct, how come we entered the 21st century with any environmental problems at all, with all that solid 20th century growth behind us?

Environmental problems increase with economic growth

Just a cursory review of the historical evidence should have been enough to defeat the growth economists' proposition, as all major global environmental indicators were worse at the end of the 20th century than they were at the beginning. Greenhouse gas levels were higher, water was in short supply, soil was more eroded, salinity was out of control in many semi-arid locations, climate change was starting to wreak havoc in many parts of the world, the northern polar ice cap had thinned, sea levels were rising. Resources were in similar disarray. Production of fossil fuels was close to its peak, underground water was running out, fish stocks were depleted and global agricultural output was declining.

No record exists of such matters being pointed out to President Bush. What he would have made of them is uncertain, for the growth economists are nothing if not resilient. Proponents of the economic growth idea will not easily concede anything is wrong at all, and may well argue that far from degrading during the 20th century, environmental indicators have actually improved. They may point out that present conditions in the third world are similar to past conditions in the first world and that the environment in the third world is worse than the first world. From which it would follow, at least in their minds, that environmental problems are best solved by raising third world standards to first world standards.

Logical holes in this proposition are not hard to find. The claim increased living standards improve the environment is a product of human dependency for its impressions on our overriding physical sense - vision. In the 18th century, the world was vast in relation to its economy. Cities of the time were centres of quite disgusting local pollution. When one visits a third world country, a similar degraded environment may be all too apparent. The broken footpaths, open sewers, the contaminated water supply are there for all to see. Economists argue these problems will go away as living standards rise. In reality, many of them do go away. But these local environmental problems are merely replaced by worse environmental problems that are less apparent because they are invisible.

First world countries disperse pollution to rest of world

Rather than solving environmental problems, raising living standards conceals environmental problems. It is the out of sight, out of mind solution. Solid waste is taken to landfill. Industrial waste is stored in underground vaults. Gaseous and liquid emissions are discharged to nature's twin sewers - the atmosphere and the oceans. Nice clean-looking countries like USA and Australia are amongst the world's worst atmospheric and ocean pollution offenders of the global community. They merely disperse their waste to the rest of the world. A higher standard of living might or might not help clean-up the countryside in the third world. But overall, economic growth increases the stress on the global environment. As the Earth Council points out, increasing the per capita footprint, increases the ecological deficit.

That we can't see carbon dioxide does not mean carbon dioxide is not present. Yet, one can meet business leaders (as I have), not versed in the sciences, who think the act of combustion is destroying matter. Rather than converting waste products to a colourless, odourless gas that is sent up a flue to be discharged to the atmosphere, some of our leaders (how many is unknown) think combusted matter ceases to exist merely because it bursts into flames!

Greenpeace climate lobbyist, Dr Jeremy Leggett, recalls a conversation on this topic at the Geneva climate conference in 1991. Dr Leggett and a delegate from Iran were talking about carbon dioxide build-up in the atmosphere. As an OPEC member, Iran was a member of the "carbon club," which sought to undermine climate treaties. The Iranian delegate thought increasing carbon dioxide levels of the atmosphere was no problem "Can you see the carbon dioxide," the Iranian delegate asked Leggett, fixing him with a little smile, that suggested he thought he had made a telling point." Leggett, normally erudite and persuasive, was for once "out of his depth." How can you possibly see a colourless gas? Does being unable to see carbon dioxide have the slightest bearing on its existence and its thermodynamic affects?

Technology - the elixir of growth

While the environmental and resource situation on the planet has changed considerably in the past few years, the economics by which we run the world has barely changed at all. In the 19th century economics didn't need to recognise the world as finite, as the impact of the world economy was much smaller. Little regard was paid to resource limitations and none at all to the environment.

Though the finiteness of the earth is now a major issue, both in terms of handling waste and providing resources, the economic model of endless growth is still in vogue. In fact, the environmental and resource problems faced by the world are so blindingly obvious even economists have taken note. However rather than change the growth-based economic system, economists claim resources and environmental problems can be managed. As their solution, economists cite technology as the reason the economy can continue to grow indefinitely despite the restraints of the physical universe.

The word technology has become a mantra that now regularly makes its appearance in economic articles. Magicians of past eras would utter "abracadabra" to make things happen; today's economists and politicians think invoking the word "technology" will produce the miracles needed to overcome the shortcomings of their policies. Technology is the wand of growth economics. Merely by waving this magic wand, all the annoying impediments of growth are meant to disappear!

The technology explanation comes in three parts:

  • Technology improves the efficiency with which materials are used. Therefore, the use of resources will diminish.
  • When we run out of one resource, technology will find us a substitute.
  • Technology will find a solution to environmental problems.
Despite the economic "theory" on the subject, an enormous amount of evidence shows that historically use of resources hasn't diminished with economic growth and improved technology. Consumption of resources is increasing exponentially - though at about half the economic growth rate. Technology has improved the efficiency with which materials are used, but not sufficiently to curb the ever-increasing demand for resources.

In the short term, the second claim, that substitutes will always be found for depleted resources, is valid in cases where substitutes are available. Though if we accept that the earth is a closed economic system (some economists don't) then in the very long term it cannot provide for endless growth either. If growth has no limits - logic requires an infinite number of substitutes to supplement the supply of exhausted resources. But more importantly, there are some resources, such as fossil fuels and fresh water, for which substitutes are clearly not available. Technology is not alchemy. It can't create resources out of nothing. The non-availability of substitutes for vital resources that are running out is a major weakness of the claim technology will find substitutes for resources that become exhausted.

The third claim, that technology will solve the waste disposal problems of the growth economy, is not travelling well. Technology clearly isn't solving the world's waste problems. Carbon dioxide build-up, solid waste disposal, and liquid waste disposal, are all major unsolved issues that growth economists are currently ignoring.

Why don't our leaders act on the evidence?

One of the problems with growth economists, most politicians and most people now running the planet is that, as a group, they are mostly technologically and scientifically illiterate. Though growth economists state technology will provide solutions for the growth economy, few technologists share this view. No wide circle of scientists and technologists has agreed to discharge their duty of finding the solution to the problems growth economics is creating. In fact, scientists such as E.O.Wilson and David Suzuki say growth economists have taken leave of their senses (if they ever had any in the first place). Scientists in institutions like the CSIRO express similar opinions. Wilson, Suzuki and the rest, point out that the very scientists and technologists charged with the responsibility for creating the future technological fix to sustain the future, claim the miracle is unlikely to occur. The idea technology will fix the problems we have created is an expression of faith by the technologically ill-informed in the technologically informed, who are not normally consulted on the matter.

It is easy for the technologically illiterate to acquire an exaggerated idea of the power of technology. Technology has been the great success story underpinning industrial society. Technology has been very successful at the micro level, but at the macro level, its power is more limited. The forces of nature are still several magnitudes greater than the biggest engineering projects man can muster and this is unlikely to change. Technology has had little success in producing rainfall, controlling volcanoes, preventing hurricanes, taming tornadoes and abating global warming.

Scientists concerned about the effect on the natural world of the inexorable march of economic activity have rung alarm bells many times, pointing out the world's most intractable large technology problems are looking distinctly unfixable. Carbon dioxide "sequestering" by storing the gas in disused holes in the ground like exhausted oil wells and coalmines has in recent times become a buzz phrase amongst economists, but no technology has emerged to sequester carbon dioxide from the atmosphere in an economic manner. Storage of solid wastes has not been solved; neither has the storage of radioactive waste, liquid or solid. Fresh water is in short supply everywhere. Deserts are expanding. The climate is changing. These are big problems that economists, who are for the most part technologically and biologically illiterate, blithely assure us technology will fix.

Prominent Australian Labor Party federal MP Lindsay Tanner, technically unqualified, as are almost all Australian politicians, believes in the technology wand. Mr Tanner authored a book, "Open Australia," to explain his vision for the future to promote an expanding role for Australia on the global stage. Mr Tanner dismisses environmental objections to endless growth in a single paragraph, part of which reads: "The one credible argument against a larger population is the restraints imposed by our geography. Yet even this argument rests on the fallacious assumptions that we can continue our reckless use of arable land and water resources, and that other countries have more of these resources per head of population, and that technology will not change." Based on his confidence in a technology he doesn't define, and probably does not understand, Mr Tanner recommends Australia grows its economy, increases its population thereby exacerbating the ecological problems the country is currently not solving.

The alternative view (entirely consistent with proven principles of good maintenance) is this. Before implementing policies, such as increasing the population that will exacerbate the environmental problem, surely we should first fix the problems populations cause. As pioneer ecologist, Dr David Suzuki, once remarked: "If you don't know how to fix something, don't keep breaking it."

Throwing in the Towel

The growth economy can exist for years on the assumption that problems it is creating can later be fixed. But every now and again, something emerges showing the assumption is erroneous, that the problems cannot be fixed. By this time of course it's too late to solve the problems the policies have caused.

For example, the problem of dryland salinity in Australia has been known about for at least a century. Yet the country has done very little to prevent it, in the belief the problem could one day be reversed. On 6 October 2001, a symposium, organised by the Australian Agricultural Resource Economics Society was held in Melbourne to discuss salinity. At the conference of distinguished economists, David Parnell, Professor of Agricultural and Research Economics of the University of Western Australia, broached the delicate subject of giving up on dryland salinity. Professor Parnell said: ". . .as painful as it sounds, we might have to sacrifice parts of the Australian landscape. The battle against salt is, frankly, too expensive.

The salinity problem illustrates the weakness of assuming technological fixes will come along in the future to fix the problems now being created. Global warming is in a similar category to salinity. For over ten years, conservationists lobbied for sensible economic and ecological policies without success. At the 2002 round of climate talks held in New Dehli in October 2002, the first signs emerged that conservationists were throwing in the towel on this issue. The industrial lobby groups were too strong. The growth economists had the ear of government - particularly the US government. It was considered all too hard to reverse, stop or even slow down the consumer economy. The emphasis of the New Dehli conference shifted from curbing carbon dioxide emissions to putting up with the consequences. No magic wand technologies had emerged to fix the problem.

Conclusion - Urgent policy change needed

An article in the science magazine Nature once pointed out: "If the earth had an operating manual, the chapter on climate might begin with a caveat that the system has been adjusted by the factory for optimum comfort, so don't touch the dials." Even that doyen of the political Right wing, Margaret Thatcher, former U.K. Prime Minister, was quoted saying as long ago as 1992. "We may have unwittingly begun a massive experiment with the system of the planet itself."

The dangers of tampering with the planet, and destabilising nature's processes are all too evident. No fixes exist for large-scale environmental or resource problems. There is no known way to solve global warming other than by curbing production of greenhouse gases. There are no adequate energy substitutes for fossil fuel. Salinity, soil erosion and water-resource problems are worsening; so are waste-disposal problems. Yet, the powerbrokers deny these problems exist.

Against all the evidence, growth economists reassure the powerbrokers that more of the same is the way to go. Economic growth, they claim, is the solution, not the problem. Since this is what business and politicians want to hear, it is believed and acted on. But the evidence the solution isn't working is comprehensive.

However, after years of politicians assuring the public problems can be fixed with technology, the salinity symposium in 2001 and the climate conference in 2002 recognise no technologies exist to reverse salinity and global warming. After years of reassurance that the problems would be solved when some technology arrived to do the job, the conferences admit defeat. Another piece of the environment is sacrificed so the growth economy can continue to consume the natural world.

Neither of these dramatic signposts of environmental catastrophe have made the slightest impact to the economic policy of endless exponential growth. Nothing is more important to governments than growth of GDP - essentially consumption - a measure almost all governments have made their benchmark of success. Growth, policy-makers insist, will generate funds to fix the problems growth is causing. So it is that governments defer fixing environmental problems to a future time while they wait for the growth economy to produce the necessary cash surplus to pay for the rehabilitation program. After over 100 years of steady growth, this day has yet to dawn. Environmental problems compound as they remain unfixed. Scientists continue to issue warnings. The warnings continue to be ignored. Economists say, for the present, fixing the environment can be postponed. The present is turning out to be a very long time.

Peter North - By background an engineer and with qualifications in economics and accountancy. Peter's early background was in the mining industry and later in the manufacturing industry. In recent years he has combined teaching finance and accounting with writing books, articles and papers combining technological, economic, environmental and political themes. Eight of Peter's books have been published, with an additional book, "Culture Shock! Cambodia" to be published in early 2005. This article is the copyright of the author and Pacific Ecologist. We are happy to allow reproduction of articles in Pacific Ecologist, on request to the author and Pacific Ecologist and provided credit is given to Pacific Ecologist as publisher's of the original article.


[1] From the article "Still Waiting for Greenhouse" Global Warming News and Views. http://www.vision.net.au/~daly/index.htm

[2] From a 1997 study by the Earth Council "Ranking the Ecological Impact of Nations" http://www.ecouncil.ac.cr/rio/focus/report/english/footprint/ranking.htm

[3] These growth rates are measured in "real terms" - in the physical goods and services rather than money terms. The effect of the varying price of the goods and services is therefore removed from the calculation. In rough numbers (there are various ways of measuring these things) for the 20th century the global population rose by about five times (from 1.6 bn to 6.1 bn) and the per capita consumption of goods and services by about four times for a total economic growth of 20 times - or 3% pa average - see World Bank www.worldbank.org/data/quickreference/quickref/html

[4] "The Carbon War" by Jeremy Leggett, Taylor & Francis, 2001

[5] Lindsay Tanner, Open Australia, Pluto Press, 1999, pp35-36.

[6] Author emphasis added

[7] Contrary to the views of Lindsay Tanner that the magic of technology can fix all problems, no fix of dryland salinity is currently known, which is in itself a pretty good argument for not creating any more of it with economic growth.

[8] State of the Environment Report, 2001, op.cit., p.12, "The National Land and Water Resources Audit (NLWRA) (2001a) has released their dryland salinity assessment in collaboration with the states and territories. This assessment, which described the distribution and effects of dryland salinity across Australia, estimated:

  • about 5.7 million hectares, mostly in the agricultural regions, are at risk of or are affected by salinity, potentially increasing to 17 million hectares in 50 years
  • up to 20 000 km of inland waters could be salt affected by 2050
  • up to two million hectares of native remnant vegetation could disappear over next 50 years
  • at least 200 rural towns could experience salt damage over the next 50 years."

[9] Andrew C Revkin, NY Times News Service, "Global climate talks shift focus to possible impacts" reported in Bangkok Post, November 4, 2002, page 13.

[10] Jeremy Leggett, Op Cit., p. 141 citing Nature magazine.

[11] Margaret Thatcher in a 1992 speech on climate change to the Royal Society in London. Note: unlike most politicians, Margaret Thatcher was scientifically literate. In her earlier life she had worked as an industrial chemist.

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