Can Economic Growth Be Environmentally Sustainable?

Economies worldwide depend on the natural environment and it’s natural resources.

In this guide, we look at whether a country’s economic growth (of GDP) can be decoupled or separated from impact on the environment and resource use.

The implication of these findings is that endless GDP growth as a success measure for a country is either sustainable, or unsustainable.

If it’s unsustainable, countries might need to consider transitioning to growing or improving other success measures or indicators.


Summary – Can Economic (GDP) Growth Be Sustainable, & Also Decoupled From Environmental Degradation & Resource Use?

We’ve already discussed elsewhere on this site the relationship between the economy and the environment when it comes to sustainability

A more specific question is whether economic growth is sustainable when it comes to protecting environmental sustainability

There’s two types of decoupling that can take place – absolute decoupling, and partial decoupling

Absolute decoupling is when economic growth can take place without any impact on environmental degradation or resource use i.e. it’s sustainable long term

Partial decoupling is when economic growth does impact both factors, but these factors lag behind the rate of economic growth.

Even in partial decoupling though, economic growth is unsustainable, because eventually the physical limits of the environment and resources are reached

From the available studies, some countries have decoupled some measures of environmental degradation and resource use from economic growth for short periods

But, to date, we could not find any evidence that any country has or can absolutely decouple economic growth from these factors

Some sources go as far as to say that absolute economic growth is elusive, and is temporary at best, or simply not plausible or impossible for certain measurables

Other sources say ‘… Empirical evidence has produced inconclusive evidence and results that even rich economies can decouple economic growth and increased use of material resources’

In this case, if GDP growth and different types of economic growth are unsustainable, countries might want to look at what options for growth and improvement in quality of life or increased productivity and competition are sustainable and increase wider social well being


Other considerations to pay attention to might be:

– There’s many ways to measure economic growth

– There’s many different types of environmental impact

– There’s many types of materials and resources, and each has their own measurements and considerations for resource depletion

– … based on the above, there’s many ways to measure and track economic and environmental decoupling other that for example weight of resources entering an economy.


Apart from that, the following should be considered:

– The size of the economy in comparison to the total size of the world economy

– How advanced or mature the economy is

– Amount of importation and amount of goods produced elsewhere but consumed in an economy (outsourcing raw material resource use in production, and outsourcing environmental impact)

– Over what period a change has been observed, and whether it’s temporary or permanent

– How technology advancements and changes in the future might impact the economy and the environment e.g. population growth, consuming more resource intensive products like fossil fuels and beef, new renewable energy technology, and so on

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Notes On GDP/Economic Growth, & Environmental Degradation & Resource Use

Our notes from a research article:

Growth in GDP can’t be decoupled from growth in material and energy use – based on this, policies shouldn’t be developed around this theory/assumption

You have to consider that if GDP growth can’t be decoupled from material and energy use, that it might be better to tie sustainable resource use and sustainable environmental impact to other measures and indicators of social well being and social improvement 

Classical economists and ecological economists may have different opinions on the matter

Relative decoupling and absolute decoupling are two separate things

China has seen some relative decoupling in regards to energy use and material use

Germany has also managed to reduce energy use 10% and total material use 40%

At the global level, we also only see relative decoupling

Decoupling may not happen for all resources, but may happen for some individual resources

Areas where there can be an illusion of decoupling are 1) substitution of one resource for another 2) the financialization of one or more components of GDP that involves increasing monetary flows without a concomitant rise in material and/or energy throughput, and 3) the exporting of environmental impact to another nation or region of the world (i.e. the separation of production and consumption)

There’s also way that GDP can grow, but the end result isn’t always a financial benefit for all within a country (i.e. the benefits might only apply to a small group of people, and economic growth actually contributes to economic inequality across a society)

Overall, relative decoupling has been observed in some countries, but there’s no evidence of absolute decoupling in at least the last 50 years.

There has been absolute decoupling with technological advances for specific types of environmental impact (like for example the removal of tetraethyl lead from automotive fuel and CFCs from refrigerants and propellants)

It’s also possible GDP growth could be decoupled from the use of certain problem resources like fossil fuels when renewable energy becomes more feasible on a wider scale – but, this doesn’t decouple GDP growth from energy use on the whole

Absolute decoupling is the only true way to achieve true sustainable economic growth

On the basis of this simple modeling … decoupling of GDP growth from resource use, whether relative or absolute, is at best only temporary

Permanent decoupling (absolute or relative) is impossible for essential, non-substitutable resources because the efficiency gains are ultimately governed by physical limits.

Population growth and increases in affluence may may provide problems for trying to achieve decoupling in the future

In the long term, if absolute decoupling isn’t possible, countries will need to consider transitioning to other measures of national growth other than GDP growth, and might consider measures that contribute more clearly to wider social well being that GDP growth does (one example is the 17 UN Sustainable Development Goals (SDGs))



Our notes from a Chris Goodall article:

In the early 2000’s, absolute decoupling of resource use from economic growth may possibly have occured in the UK

This is based on empirical evidence that shows reduced consumption of physical goods like water, building materials, and paper. It also includes impact of items imported from overseas

The indicators used were weight of goods entering the economy, and the amounts ending up as waste

There should be a distinction between the different types of economies – developing vs developed

The UK is a mature/developed economy, and mature economies that are more technologically advanced may be able to experience economic growth whilst also putting no more pressure on volume of material goods consumed. Some of this has to do with increased efficiency, and moving from industrial activity, to a service based economy, and information and digitalization (which requires less material input)

Some of the most important resources to pay attention to (because of their potential for negative environmental impact, or because depletion could lead to dire consequences) might include fossil fuels, fresh water, fertilizers, food, motor cars, and ores and minerals. 

Other ways to classify resources are biomass, minerals, and fossil fuels

Key industries that use common resources are food production, paper, textiles, fertilizer, cement, cars, energy and travel

Note that weight of resources entering an economy can be misleading if materials used are getting lighter over time, but the same or more materials are used

Each individual resource can be assessed to see where it ends up as waste, and how it is managed

Landfill, compost, chemicals dumped in water sources, and gases to atmosphere are common places waste by products end up

Also note that recessions as well as world events like pandemics can lead to resource usage decline, and lessened eco impact in some countries

Overall, it’s only a hypothesis at this stage though that economic growth is not incompatible with sustainability

Empirical evidence has produced inconclusive evidence and results that even rich economies can decouple economic growth and increased use of material resources

GDP growth generally leads to technological progress, which can lead to more efficient use of resources and reduced environmental damage

Some say that China should be encouraged to grow as fast as they can because once they reach a certain level of economic maturity, impact on resource use and ecology will diminish






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