Discussions on sustainability still revolve around green growth, making it easy to assume that it is possible and desirable. However, this assumption is increasingly being challenged by the degrowth movement and even some economists. Is green growth a useful paradigm for the 21st century, or is it time to update our ideas about sustainable development?
The idea that economic growth can go on forever is a key assumption behind the green growth paradigm. However, some writers have said this cannot happen on a planet with finite resources. According to this view, infinite growth is unfeasible because infinite resource extraction is impossible. Others have proposed improved efficiency and technological innovation as an alternative way to achieve lasting green growth. At first glance, this seems plausible. We might have finite resources, but technological progress means we can use them more and more efficiently, letting us do more with less. Under this paradigm, we can base growth around using our limited resources more efficiently rather than using more of them. Efficiency often leads to cost savings, which in turn encourages production and consumption and leads to rising GDP.
For some critics, it is precisely this effect which makes growth inherently unsustainable. When costs fall, businesses are usually incentivized to increase production, not reduce it or keep it the same. After all, if businesses can make a profit on additional units sold at the current market price, why wouldn’t they? This typically leads to increases in supply, which results in falling prices and higher volumes being traded. Cost savings for consumers can have a similar effect, with more disposable income leading to more purchases. More resources are then needed to produce these additional products, eroding environmental gains. This is called the rebound effect, and it is far from insignificant. According to a study review, economy-wide rebound effects could eliminate at least 58% of expected emissions reductions. Six studies included even suggested that rebound effects could be over 100%. This might sound implausible at first glance, but it fits very well with historical patterns. Historically, there is little to no evidence of long-term absolute decoupling. This means that energy/resource use has never stayed stable or decreased while GDP increased, leading to some critics concluding that it’s impossible.
Even if we did achieve absolute decoupling someday, that doesn’t mean that green growth is the right paradigm for the 21st century. To achieve it, too many things need to happen. It isn’t merely a matter of switching to renewable energy, because it also requires limited resources like lithium. To have truly sustainable growth, GDP needs to rise while GHG emissions, land use, water use, mineral use and more all fall. To avoid a catastrophe, all this needs to happen very quickly. Although there’s debate on how long we have, all these innovations will probably need to happen before the end of this century at the latest. Some sources suggest our carbon budget could run out in less than five years while severe water shortage could hit most of the world by 2040. Deadlines like these are why some argue for short-term degrowth even if they believe that the economy can grow forever. Restricting production is one of the only methods we know will dramatically reduce unsustainable resource use quickly.
On the other hand, proponents of green growth also have several good arguments. Firstly, some believe that economic growth is the only way to continue improving living standards. As a result, sustainability policies which stimulate the economy are better than those that don’t. This view can definitely be applied to developing countries, where increases in GDP per capita could have a massive impact on living standards. Yet, it’s worth remembering that economic growth is not the only way to raise living standards. Countries with the resources to do so can provide welfare to their poorest citizens, raising their quality of life in the process. These policies have their limits, and will never have as big an impact as quadrupling the amount of wealth available every generation. However, using existing wealth to provide welfare could still be enough to lift billions of people out of poverty and dramatically expand social protection globally.
The best argument in favour of green growth is that it’s much more politically feasible. Nobody wants to hear that a new policy is going to slow down economic growth, especially not when GDP is still considered one of the most important macroeconomic indicators. Promising accelerated growth and sustainable development is much more palatable. Eco-friendly policies that have raised the costs of living, such as carbon pricing/taxes, have generated intense backlash, including but not limited to France’s Yellow Vest movement. Some analysts and politicians have even called strengthening carbon pricing in the EU “political suicide”, showing how risky pushing such measures should be. Nevertheless, the political backlash to green policies can be overestimated. Global polls suggest that the majority (62%) is in favour of some form of green tax. These people aren’t only from affluent Western countries. Support was highest in China (83%), Vietnam (80%) and Indonesia (78%). This shows that while eco-friendly policies that don’t stimulate economic production are still risky, getting them passed with popular support is far from impossible.
There’s no need to abandon green growth policies outright. Efficiency gains and investment in renewable energy are still crucial. Furthermore, the potential of green growth to improve living standards cannot be understated. However, the unreliable nature of efficiency gains and technological improvements means that it’s time to deprioritize green growth. With plentiful evidence of rebound effects, little historical evidence of absolute decoupling and so little time to act we cannot afford to gamble on it. Green growth may become a valuable paradigm once we have resolved our many ecological emergencies. For now, we must go green whether or not the economy grows.
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