As an economics student, one occasionally gets questioned about the sustainability of economic growth and the problems coming from our increased standard of living. Some people just seem to believe that environmentalism and economic growth can not coexist. This is far from true, it is rather the opposite, environmentalists must embrace the concepts of economics in order to develop a more sustainable economic- and climate-friendly environment.
There are few reasons to believe that the human impact of the environment is insignificant. It is on the contrary rather possible (some would say obvious) that the human lifestyle and the way our society is created has had a negative impact on the environmental state of the earth. However, the notion among environmentalists that there are so called “limits to growth”, meaning, the economy can not grow without depleting and eroding the earth’s resources, can be challenged. This view is popularly expressed through a famous quote by former US president John F. Kennedy’s environmental advisor Kenneth E. Boulding; “Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist.”
Rational arguments made by economists are, by some, considered mad, so what is it they know that others do not? Well, economists know that economic growth and economic prosperity is the key to saving the environment, and that is why environmentalists with anti-growth beliefs could be stepping on their own toes. The anti-growth thoughts springs from the ideas of the 18th century economist Robert Malthus, explaining how population growth would grow exponentially while food and other resources at best grew linearly, theoretically resulting in great food scarcity and poverty. Further, Malthus saw population growth as a sign of economic growth. As income rises, families would get more children and immigration would increase. But as population grows, food and resources will eventually become scarce, and hence, he claimed there were “limits to growth”.
The legacy of Malthus is problematic as his views, unfortunately, still exists as of today. The threat of population growth is not as valid today as it was in the 18th and 19th century, in fact world population growth rate has steadily declined for the past 50 years. And the reason behind this? Economic growth of course! Contrary to what Malthus thought, increased income will in fact reduce birth rates and population growth. World population will reach its estimated peak within 100 years and start declining thereafter. So, in terms of world population depleting natural resources, it is unlikely that we would “run out of ” resources, given that technological and economic progress remains. This was also proven by Danish UN economist, Ester Boserup, who in the 1970s found that when population density increased, food production increased as well through land intensification and technical innovation.
After all, the stone age did not end because they ran out of stones, human kind simply found more efficient ways of dealing with resources at hand. This is what we need to keep doing in the future, we have to start a new sustainable era, leaving the age of fossil fuel behind us. Surely, mankind has left a huge footprint on earth in terms of air and sea pollution, deforestation, climate change and loss of biodiversity, which future generations will have to repair. Why can economic growth not be a part of the solution? When environmentalists worry about economic growth, they forget about the fact that growth is not only the product of the amount of resources used, but rather about how efficiently we can use these resources. If we want a more sustainable environment, economic growth, in terms of increased efficiency, must play an important part.