That economic growth, however defined, has caused environmental degradation (e.g. pollution, biodiversity loss, depletion of natural resources) is unquestionable. As I discuss below, it does not follow from this premise that policies aimed at halting economic growth are optimal (or even good) for environmental protection. Nevertheless, a sizable minority, if not majority, of ecologists and conservation biologists agree that halting economic growth, in and of itself, is an environmental policy priority that should be pursued. While I agree with some points put forth by the Steady-State economists, I conclude that it is largely a misguided distraction from real issues.
I have known about the ’steady-staters’ for awhile now, but I wasn’t annoyed enough to write about it until I came across a petition to the Ecological Society of America (ESA) imploring them to adopt a policy position against economic growth. My comments below refer primarily to that petition (see here for the text of similar statements).
Economic growth is not inherently associated with environmental degradation
The major problem targeting economic growth, as measured by GDP, is that it has no necessary relationship to environmental degradation. GDP is simply a measure of income that could be received by loggers for cutting down virgin forest or for park rangers protecting pristine areas. GDP growth occurs because population grows or because the productivity per person increases. I agree that population growth increases pressure on natural resources, but then why not issue a statement against population growth instead? Increased productivity can occur for many reasons, from better axes for logging to computers that have more power while using less raw material and energy. Once again, there is no necessary relationship between growth and environmental degradation. In practice, much economic growth has been driven by increased use of energy and other natural resources. Promisingly, as the economy has shifted toward services, the portion of income derived from natural resources has decreased worldwide. Organizations like ESA should not be advocating wholesale positions against economic growth, but against any activities that are unduly harmful to the environments, irrespective of their impact on growth.
Policy aimed at economic growth misses the target
Not only does economic growth not necessarily equal environmental destruction, economic decline does not necessarily improve the environment. For example, a policy that paid half the work force to quit their job and chop down forests would both destroy the environment and dramatically reduce GDP. Nevertheless, the policy statement sent to the ESA recommends that “various policy tools should be carefully and gradually applied toward the goal of a more optimally sized economy.” Why should a scientific organization dedicated to studying the interaction between organizations and their environments have anything to say about the optimal size of the economy? Members of the ESA do have a lot to say about biological conservation and ecosystem services, so why not focus on optimal policies aimed directly at those goals?
A brief look at some alternatives
Traditionally, environmental economists define optimal policies as those that derive some amount of benefit at the least cost. The stead-staters not only abandon this idea, but suggest that we adopt costly policies with no direct environmental benefit. I agree that GDP is mediocre metric of welfare because it does include aspects like the state of biodiversity. Consequently, policies that improve well-being might have a negative effect on GDP, but so be it! This raises the question of what we should be using to assess well-being instead. The proposed statement argues: “It behooves nations and other political units to adopt alternative indices of welfare and monitor them along with GDP, attempting to parse out the net effects of economic growth, whether beneficial or detrimental.” The alternative metric they suggest, the General Progress Indicator, would be an odd one for the ESA to advance. Many of the GPI’s components have absolutely nothing to do with the environment (e.g. deducting medical costs) and, unlike GDP, contain a highly subjective and normative component. It’s not clear to me what ecological science should be telling us about how we ought to measure welfare, but the GPI is surely a poor choice for a scientific organization. Interestingly, the steady-staters do not mention alternative measures that correlate positively with GDP (e.g. the Environmental Performance Indicator). By the logic of steady-staters, if we adopted the EPI as our metric of well-being, then the ESA should recommend increasing GDP to protect the environment. However, following the logic above, there may be no causative relationship between EPI and GDP, and we may find that achieving higher EPI comes at the cost of slower growth. In any case, a metric like EPI makes much more sense for the ESA, since it directly measures environmental well-being; militating against GDP growth is a politically implausible and irrelevant distraction from sensible policies.