Economic Growth Shouldn’t Be a Death Sentence for Earth

(Bloomberg Opinion) -- Among some intellectuals and environmentalists, it’s an article of faith that economic growth must be brought to a stop. If we fail to act, we’ll use up the planet’s resources and growth will suffer a disastrous collapse. For example, British writer George Monbiot has been advancing this point of view for quite some time. In April, he declared:

Perpetual growth on a finite planet leads inexorably to environmental calamity. The absolute decoupling [of growth from resource use] needed to avert environmental catastrophe…has never been achieved, and appears impossible while economic growth continues. Green growth is an illusion.

Monbiot is simply incorrect. There are good reasons, both theoretical and empirical, to believe that economic growth can be decoupled from resource use. For many resources, this is already becoming a reality.

In the U.S., for example, gross domestic product has continued to rise, even though energy use has stayed basically constant:

In terms of many other resources, the decoupling is even starker. Even as the U.S. keeps growing, its consumption of many minerals has declined:

Perhaps no resource is more precious than fresh water. Here, too, economic growth has coincided with falling resource extraction:

Of course, if climate change makes the planet uninhabitable, then decreasing resource use will be for naught. Should the world continues on its current trajectory, this may yet happen. For many countries, growth still means more fossil-fuel use. But for some developed nations, emissions are falling, even accounting for the products they import:

These and other examples of resource-growth decoupling can be found in technologist and writer Andrew McAfee’s new book, “More from Less: The Surprising Story of How We Learned to Prosper Using Fewer Resources -- and What Happens Next.” McAfee documents how until about 1970, growth and resource use really were inseparable, as humanity spread out across the land and bent the natural world to its will. But in the past half-century, technological progress and the rise of the environmental movement have combined to change the nature of growth, so that developed countries keep getting richer while inflicting less and less harm on the planet. People who take the long view, looking mainly at data from the 19th and early 20th centuries, tend to miss this shift.

But how can this decoupling be possible? The answer lies in the nature of economic growth. Economic growth, stated simply, means that the things people pay for do a better job of satisfying their desires. Now, that’s not a perfect measure of human happiness and GDP does leave out plenty of important things. But it’s also not something that depends on always feeding more of nature’s resources into the hungry maw of industrialization.

When an economy grows by simply doing more of the same, that’s called extensive growth. It entails more resource use. But when an economy does more with less it’s called intensive growth. And there are several ways of doing that.

One way is to use existing resources more efficiently. A good example is crop rotation, which gives soil time to recover from one crop while another grows. Another example, from McAfee’s book, is the production of soda cans using less and less aluminum.

Another type of intensive growth is to substitute common resources for rare ones. The soda can example applies here as well; cans were originally made of tin, which is rare, but manufacturers later switched to the more abundant aluminum. The most important example is the transition from fossil fuels, which are in finite supply and degrade the Earth’s climate, to abundant energy sources like the sun and wind.

The purest form of intensive growth lies purely in the realm of information and ideas. The creation of better stories, games, art, philosophy and so on is a type of growth. Modern video games use much less energy than the arcade games of 30 years ago, but are more entertaining and valuable.

With intensive growth, humanity can keep getting richer even as its environmental footprint shrinks.

This isn't to say, of course, that green growth is inevitable. Even as advanced nations do more with less, the planet as a whole is still on an unsustainable course. Developing nations continue to use more resources as they lift their citizens out of poverty, and rich countries aren’t dematerializing their economies fast enough to cancel out rising resource use in poor ones. If the planet is to be saved, a strong and global environmental movement will be needed in order to force companies and consumers around the world to embrace intensive growth rather than the extensive kind.

But it can be done. The doomsayers are wrong; environmental sustainability can coexist just fine with economic growth, as long as it’s the right kind.

To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

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