The Relationship between Economic Growth and Sustainability

Chart 32 - Ambient Sulfur Dioxide, Various Nations

Even when more exacting definitions of sustainable development are offered, confusion still persists because of honest scientific disputes and uncertainties about the facts, and differing opinions about how economies adapt over time to changing resource constraints. Consider Herman Daly's definition that sustainable development is "development without growth in throughput of matter and energy beyond regenerative and absorptive capacities."

Scientists can point to favorable trends in resource bases, increasing efficiencies of production, and falling amounts of pollution, reaching the conclusion that we are on the way to achieving, if not already achieving, Daly's definition. Yet Daly and many others take a dimmer view, arguing that the imperative of sustainable development requires "steady state" economics, which would include zero population growth, centralized command of natural resources, and controls on individual incomes and personal wealth.

Some economists have called Daly's "steady state" idea "a return to a regulated caveman culture."66 His view throws a spotlight on the implication some have drawn that economic growth itself is unsustainable and should be stopped or drastically curtailed.67 The most stark expression of this view is found in Paul and Anne Ehrlich's equation for human environmental impact,

I = P x A x T

where I = environmental impact, P = population, A = affluence, and T = technology.


In other words, any increases in population, wealth, and technology are inherently damaging to the environment, no matter what mitigating measures are possible. It is a schematic for the most extreme pessimism and would require wholesale transformation of human society and political institutions if it were made the basis of policy.

Indur Goklany offers an elegant and compelling refutation of the Ehrlichs' equation, and in the process explains why the signs point to a sustainable future.68 The most significant flaw is the assumption that population, affluence, and technology are wholly independent factors with no relation to each other. To the contrary, these three factors are highly interdependent, mostly in favorable ways.

Rising affluence, for example, cuts fertility rates. The richest nations of the world have negative fertility rates and falling populations, a condition that would be true of the United States in the absence of high rates of immigration. The world fertility rate has fallen by nearly half since 1960, from 5.58 to 2.75, and with it the global rate of population growth, from 2.07 percent in 1967 to 1.33 percent in 1998. The stabilization of world population can be expected as the rest of the world grows more affluent.

The environmental impact of technology is exactly backward from what the Ehrlichs' equation suggests. The amount of energy used and pollution emitted per dollar of economic activity has been falling for as long as reliable long-term data exist. In the United States, energy intensity has been falling by one percent per year since 1800. That is, it takes one percent less energy each year to produce the same amount of goods.

Goklany has examined specific air pollutants in the United States, finding, for example, that a dollar of economic activity today generates only .084 times as much sulfur dioxide emissions as a dollar of economic activity in 1900. In other words, changing technology has delivered a more than tenfold reduction in SO2 pollution per unit of economic output in the twentieth century. Other pollutants show even larger declines—30-fold for volatile organic compounds and particulates, and 100-fold for lead.

This trends means, among other things, that today's worldwide carbon emissions are nearly 60 less than what they would have been were we still using 1950 technology. As developing nations become wealthier, we can expect to see a convergence of environmental performance that approaches the progress of the United States and other western nations. An example of what this convergence should look like can be seen in Chart 32 which shows sulfur dioxide trends in the U.S. and some of the eastern European nations that have embraced market economies in the last decade.

Goklany's conclusion is worth quoting at length:

The future could see a world in which the population has stabilized, is richer, cleaner, and with room for both humanity and the rest of nature, or one which is more populated, poor and polluted and where the rest of nature is pinched for space and water. The odds of the former are increased by bolstering the co-evolving, mutually reinforcing forces of economic growth, technology, and trade by strengthening the institutions that are their mainstays. These institutions are free markets; secure property rights to both tangible and intellectual products; fair, equitable and relatively transparent rules to govern those markets and enforce contracts; institutions for accumulating and converting knowledge into useful and beneficial products; and honest and predictable bureaucracies and governments . . . [I]ndustrial ecology can play an important role in moving such solutions closer to perfection, and in accelerating society's various environmental transitions so that technological change and economic growth are transformed from being problems to becoming solutions in the quest for a sustainable industrial society.69