Growth versus the
Environment:
is there a trade-off?
By Per Kågeson
(Kluwer Academic Publishers,
Dordrecht, 1998)
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”.
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.
… 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)
(2)
large resources becoming available at higher
prices,
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.
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.
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 ecosystems 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).
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.