Can Economic Growth Be Environmentally Sustainable?

In this guide, we look at whether a country’s economic growth (of GDP) can be environmentally sustainable

We also specifically look at whether economic growth can be decoupled or separated from environmental degradation and resource use.

Potential answers to these questions have an important bearing on whether countries can continue to engage in economic growth in the way it’s always been done, or, whether economic activities should be adjusted to become more compatible, or better balanced with specific sustainability indicators.

 

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

Economic Growth (GDP Growth), Sustainability, & Decoupling From Resource Use & Environmental Degradation

A broad question to ask is whether economic growth is compatible or incompatible with sustainability

A more specific question to ask is whether GDP growth can be decoupled/detached from resource use and environmental degradation i.e. can economic growth continue without contributing further to environmental degradation or resource depletion and scarcity (particularly natural resources and non renewable resources)

 

Different Types Of Decoupling

There are different types of decoupling to consider – relative vs absolute, and also temporary vs permanent.

 

Relative Decoupling vs Absolute Decoupling

There is a difference between relative decoupling, and absolute decoupling

Relative decoupling involves decoupling a certain % for specific resources

Absolute decoupling would involve 100% decoupling for critical resources

Absolute decoupling might be described as the only way to achieve endless sustainable economic growth

 

Temporary Decoupling vs Permanent Decoupling

There is a difference between temporary decoupling, and permanent decoupling

Temporary decoupling happens over the course of X amount of years, before significantly declining or reverting back to a non decoupled state

Permanent decoupling is permanently decoupling into the future without a decline or reversion

 

So, Is Decoupling Achievable, and What Does Evidence & Country & Global Case Study Data Indicate?

There’s debate by different types of economists on whether decoupling is possible (and whether new concepts like green economies can help achieve decoupling)

One model containing data and projections shows that decoupling from resource use is not possible, or, at best, relative or absolute decoupling is only something that can be achieved temporarily. It can’t be achieved permanently

It might be accurate to say that permanent decoupling of any type is not possible for essential, non-substitutable resources.

The reason given for this is that efficiency gains are governed by physical limits.

This might be a similar sustainability challenge faced by the tourism industry, whereby there are potentially in-built physical and practical limits on how sustainable different activities can become

Other sources discuss economic growth being compatible or incompatible with sustainability (which is a slightly different topic)

What these sources indicate is that we only have hypothesis’ available on this topic, and the empirical evidence available suggests that there’s inconclusive evidences and results that rich economies can decouple economic growth and increased use of material resources

There’s generally a link between GDP growth leading to technological progress, which can lead to more efficient use of resources and reduced environmental damage

The UK for example as a mature, developed, and technologically advanced economy may be able to achieve economic growth alongside some forms of efficient resource use, in part due to technology, but also because they moved from an industrial economy, to service based, along with an information and digitalised economy (which requires less material input

So, it might be one argument to make that countries should be encouraged to grow as quickly as possible, both economically and technologically, up to a certain point, where they can then focus on efficient resource use and environmental impact within certain limits or boundaries

Some countries have shown evidence of being able to achieve relative decoupling for energy use and material use, and the same can be said for the global level. However, this was only over a certain time period, and only for energy use and material use

One source indicates that only relative decoupling has been observed on a country by country bases.

There’s no evidence that absolute decoupling has happened in the last 50 years

There is a source that indicates that absolute decoupling of just resources use from economic growth may have occurred in the UK – but, it’s worth noting that this is a maybe, and it’s only referring to resource use and not other sustainability indicators

 

Decoupling For Some Types Of Environmental Impact, But Not Others

Technological advances may have enabled absolute decoupling from specific types of environmental impact in some industries in the past, but not for other types of environmental impact yet

 

Decoupling For Some Types Of Resources, But Not Others

Decoupling might be possible for resources that are either non essential, or that have a substitute

But, decoupling (or absolute decoupling) may not be possible for essential resources without a substitute

 

Illusions Of Decoupling To Be Aware Of

There are various instances, which are listed in this guide, where there can be the illusion of decoupling, but, resource use or environmental impact is simply transferred to another place within the economy, or exported to another economy

One example of this might be linked to the example given of the UK as an advanced and developed economy above. It might need to be cross checked that the UK isn’t simply outsourcing their industrial and manufacturing needs and footprint, in terms of resource use  and environmental impact, to other countries with lesser developed economies

Environmental footprint or resource usage may also not change, but the data shows that less weight of resources is coming into the economy when products are made to be lighter over time – just as another example

The same can be said for other developed and advanced economies

 

Delineating Between Different Types Of Economies

There’s both developing, and developed economies

More developed, mature, technologically advanced economies may be able to achieve economic growth with better efficiency, and lower environmental impact in some areas. Some of this is due to technological advances, and some is due to moving from primarily a 

 

Measuring & Tracking GDP Growth vs Sustainability, & Different Variables To Consider

There’s many different ways to measure and track GDP growth vs sustainability

For example, different resources, different environmental impacts, and different time periods can all be measured and tracked

Some of the most important resources to track are included in the guide below

There’s also key data that can be included such as weight of resources entering an economy, or, waste exiting the economy. There’s various types of waste pollution that could be measured and tracked

There’s also many variables to consider

Examples of variables might be include different types of economies (how advanced they are, and what economic stage they are at), how much a country relies on importing goods and services and therefore outsourcing their resource and environmental footprint, and also how much random events like pandemics affect one particular economy, can all be significant variables

There’s also future variables to consider, such as further technological advancements (with AI, and blockchain being just two of many examples), population growth, consuming more resource intensive products like fossil fuels and beef, new renewable energy technology, and so on

 

Challenges To Achieving Decoupling In The Future

Population growth and increases in affluence are listed as potential problems in trying to achieve decoupling in the future

But, there could conceivably be others as well

 

GDP Might Be A Misleading Metric In Some Ways

Some sources point out that GDP can be a misleading indicator of a nation’s growth or success

As one example, it’s possible for GDP to grow, but only a small % of the population benefit from this growth, leaving a large % of the population not benefitting. Some claim this is a form of economic inequality 

 

Argument That GDP Growth May Not Be The Best Social Goal To Pursue In The Future

Some argue that GDP growth isn’t the best measure or goal for social well being in the future

Some argue that other measures of national growth and goals for social well being might be pursued

 

Relationship Between The Environment & The Economy

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

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

 

Below are some paraphrased notes from two different articles on economic growth, and decoupling it from environmental degradation and resource use.

The full resource URL links are available at the bottom of this guide if you want to see the full text.

 

Can GDP Growth Be Decoupled From Environmental Impact & Resource Use?

Paraphrased and summarised from plos.org:

[Neo-classical economists and ecological economists may have different opinions on the decoupling debate

Although some argument indicate society can decouple economic growth from environmental impact, one model containing data and projections shows that decoupling growth in GDP from growth in material and energy use is not possible

It would therefore be inaccurate to say that policies can be created around the expectation that it can]

On the basis of [the] modelling … 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.

 

Paraphrased and summarised from Chris Goodall’s carboncommentary.com article:

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

[There should be a distinction between the different types of economies as well – 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)

 

What Does The Country Specific, & Global Data/Evidence Indicate About Decoupling In The Past?

Paraphrased and summarised from plos.org:

[In terms of countries that have seen some evidence of decoupling …]

[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%, which is some evidence of relative decoupling too]

[At the global level, only relative decoupling was observed over a 22 year period. And, it was only with energy and material use]

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

 

Paraphrased and summarised from Chris Goodall’s carboncommentary.com 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

 

Can Economic Growth Continue Forever?

To allow economic growth to continue forever, it might be accurate to say that it would need to be sustainable.

 

According to plos.org: Absolute decoupling is the only true way to achieve true sustainable economic growth

 

So, unless we can achieve absolute decoupling, whether that’s via technology or a change in human behaviour and society, economic growth may not be able to continue forever.

But, it also depends on whether economic growth and decoupling are referred to in the absolute sense, or whether it’s for particular types of economic growth, resource use, and environmental impact.

This can be a nuanced answer.

 

Absolute Decoupling vs Relative Decoupling

[Relative decoupling and absolute decoupling are two separate things] (plos.org)

 

Temporary Decoupling vs Permanent Decoupling

[There is a difference between temporary decoupling and permanent decoupling] (plos.org)

 

Decoupling May Be Possible For Some Types Of Environmental Impact, & Not Others

One example of this is …

 

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) (plos.org)

 

Decoupling May Be Possible For Some Resources, & Not Others

One example of this is …

 

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

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

– plos.org

 

Illusions Of Decoupling

It can appear decoupling has occurred in some instances, but, in reality, a resource or environmental footprint has just been transferred elsewhere, or there’s the same footprint, but it’s just showing up differently in the data (such as lighter products, but more products in general, or, lighter products with the same environmental footprint) 

Examples of this are …

 

[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)

– plos.org

 

From carboncommentary.com:

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

 

Key Metrics For Measuring GDP Growth vs Sustainability, & Variables To Consider

Some resources may be more important to track than others

Some types of environmental impact might be more important to track than others

Some industries may be more important to track than others

Some economies have different variables and events to track compared to others

 

Paraphrased and summarised from Chris Goodall’s carboncommentary.com article:

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

[Weight of resources entering an economy, and where resources and products end up as waste might be tracked as metrics]

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

 

Other than resources suggested above, we may consider what resources we might be running out of in the near future, and also what might happen if we run out of certain resources in the future.

 

Potential Challenges To Achieving Decoupling In The Future

Population growth and increases in affluence may may provide problems for trying to achieve decoupling in the future (plos.org)

 

There may be other challenges in addition to these though too.

 

GDP Growth As A Potentially Misleading Metric

GDP may only track some forms of economic benefit, and not others.

 

There’s also way that GDP can grow, but the end result isn’t always a financial benefit for all within a country

… [the result is that] the benefits might only apply to a small group of people, and economic growth actually contributes to economic inequality across a society)

– plos.org

 

Considering Other Social Goals Other Than GDP Growth

Some suggest other social goals for future social well being other than GDP growth or traditional measures of economic growth.

 

[If GDP growth is seen as a poor measure or goal for social well being and the well being of natural assets, society may need adjusted social goals or social measures other than primarily GDP growth]

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))

– plos.org

 

Some may argue with the above though, and say that social goals are separate to economic goals.

They may argue that economic goals can be pursued separately, and in a complimentary way to social goals, without sacrificing or compromising one or the other.

 

Sources

1. https://static1.squarespace.com/static/545e40d0e4b054a6f8622bc9/t/54720c6ae4b06f326a8502f9/1416760426697/Peak_Stuff_17.10.11.pdf

2. https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0164733

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