The limits to growth debate - University of Vermont



The Limits to growth debate

The 1950s and 1960s were a time of growing awareness of environmental problems, with lethal smog in major cities, warnings that growing air pollution in New York would make the city uninhabitable (Bird 1967), the Cuyahoga river catching fire, and predictions of imminent mass starvation and environmental catastrophe from unchecked population growth. Recognizing a crisis situation, developed nations were taking important steps to address these issues; the United States for example created the Environmental Protection Agency, extended the Clean Air Act and passed the National Environmental Policy Act, Clean Water Act and Endangered Species Act all between 1970 and 1973.

Into this atmosphere Meadows et al. published Limits to Growth (1972), a report on the results of a computer systems-model of the interactions between the human economy and the planetary ecosystem that sustained and contained it. Focusing on population growth, resource depletion, industrialization, pollution and food production, and assuming exponential growth but finite resources, the model showed that existing trends would lead to resource exhaustion in coming decades, with potentially catastrophic consequences by the middle of the coming century, if not sooner. The only way to avoid this outcome was to rapidly stabilize human populations, resource use and waste emissions. The oil crisis of 1973 initially seemed to almost immediately confirm some of their conclusions.

The Meadows report was certainly not alone it its conclusions. In ,The Entropy Law and the Economic Process (1971), Georgescu-Roegen argued that our economic system, like all physical systems, is subject to the laws of thermodynamics. The laws of thermodynamics— matter-energy cannot be created or destroyed, useful energy dissipates and disorder increases —limited the physical size of the economy on a finite planet. The increase in entropy entailed by economic production requires compensating inputs of low entropy energy, and the economy systematically converts low entropy resources into high entropy waste, providing a flux of human welfare in the process. The economy has access to two sources of low entropy to maintain this process—finite stocks of fossil fuels and other natural resources which we can use as fast as we chose, and the finite flow of solar energy, which arrives at a rate beyond our control. As finite stocks become exhausted, the physical size of the economy will be limited by the flow of solar energy. Eventually, all the material building blocks of our economy must become so dispersed that the fixed flow of solar energy will be inadequate to recycle them, and the economy must collapse. Economic growth can only speed our doom.

Herman Daly also recognized the limits to growth, but more optimistically argued that a no-growth, steady state economy could be sustained indefinitely, (1973; l977). However, the raw materials that serve as the inputs into economic production alternatively serve as the structural building blocks of ecosystems. Structure generates function. Along with other valuable services, ecosystems provide life support functions essential to human survival for which no substitutes exist. Both the extraction of ecosystem structure for economic production and the emissions of waste (known together as throughput) degrade ecosystem services. Long before the threshold of collapse, the diminishing marginal benefits of increasing economic output are likely to fall below the rising marginal costs of ecological degradation, at which point continued economic growth—defined as a “quantitative increase in…the rate of flow of matter and energy through the economy…and the stock of human bodies and artifacts”—becomes uneconomic. Economic development—a “qualitative improvement in non-physical characteristics” (Daly 1991), however, remains possible. A sustainable economy cannot extract renewable natural resources faster than they can regenerate, extract non-renewable resources faster than we can develop renewable substitutes, or spew waste emissions into the atmosphere faster than they can be absorbed. This position became known as strong sustainability. In Daly’s view, \the sustainable use and just distribution of resources took precedence over their efficient (wealth maximizing) allocation.

Such claims of limits to growth were met with great skepticism, particularly by conventional economists who branded their proponents as doomsdayers. Those skeptical of limits became known as cornucopians. From the perspective of the cornucopians, the doomsdayers ignored the capacity of human innovation in general and the free market in particular to adapt to scarcity. As resources become scarce, their prices increase, providing a market incentive to develop substitutes. Relative scarcity might exist, but not absolute scarcity (Beckerman 1974). Almost 200 years earlier Malthus had predicted that geometric increases in human population must eventually outstrip linear increases in food production, leading to wide spread starvation (Malthus 1798). Instead, by the time of the Meadows report, humanity was producing more food per capita than at any other time in history, and productivity was continuing to rise. Stanley Jevons, a 19th century English economist warned that society must inevitably run out of coal, and that “we must not dwell in such a fool's paradise as to imagine we can do without coal what we do with it” (Jevons 1865). Both Malthus and Jevons had been proven wrong. In the words of Nobel laureate Robert Solow, "If it is very easy to substitute other factors for natural resources, then there is, in principle, no problem. The world can, in effect, get along without natural resources" (Solow 1974). We can adapt to scarcity simply by dematerializing the economy (see Lawn 2001 for a discussion and critique). Human ingenuity, the ultimate resource, would solve all problems (Simon 1996). The position that human made capital could substitute for natural capital became known as weak sustainability (Neumayer 2003).

In spite of the cornucopians optimism, however, wealthier societies made major investments in environmental protection and as a result, many measures of environmental quality began to improve, some dramatically. The doomsdayers claimed that society had acted appropriately on their recommendations. The cornucopians in contrast claimed that these outcomes were to be expected anyway. Economic growth in fact was not the cause of the problems the doomsdayers presented, but rather the solution. It was an empirical trend that as societies became richer, birth rates declined, so that economic growth was the solution to the population problem. A rising tide lifted all boats, and in the presence of widespread poverty, growth is a moral imperative. In addition, pollution emissions formed an upside down parabola when plotted against per capita GNP—poor countries had clean environments, but as they began industrializing, pollution levels increased. However, as countries got rich enough, their citizens began to demand clean environments, a luxury good (IBRD 1992; Grossman and Krueger 1993). A number of recent books by cornucopians argue that almost all environmental indicators are improving, that resource abundance continues to grow, and that limits to growth theorists have again been proven wrong (Beckerman 1995; Easterbrook 1996; Lomborg 2001).

In recent years, the concerns of the doomsdayers have increased significantly—they argue that improvements are illusory, wealthy nations have simply exported their most environmentally damaging industries to poorer nations, and even if pollution levels taper off with growth, pollution will increase for decades to come (Arrow K., Bolin B. et al. 1996; Rothman 1998). Population growth is slowing, but is expected to stabilize at much higher levels than the planet can sustain. Increasing consumption to slow population growth is counterproductive. Climate change has many convinced that planetary waste absorption capacity is the greatest constraint on growth, and some that we are already doomed to a catastrophically warmer planet (Flannery 2005; IPCC 2007; Pearce 2007). Diminishing fossil fuel stocks and rising prices have convinced others that we have reached peak oil, the point at which increasing rates of use overwhelm declining rates of discovery then begin a steady decline, threatening chaos in a system built on cheap energy (Deffeyes 2003; Heinberg 2003; Simmons 2005) Hall. A third group is concerned with renewable resource depletion and biodiversity loss, resulting in the collapse of ecological life support functions (Balmford and Bond 2005; Hooper, Chapin et al. 2005; Millennium Ecosystem Assessment 2005). Yet others believe that water shortages are the greatest threat, or population growth, or toxic wastes. Many believe that we are exceeding all of Daly’s tenets for sustainability, overwhelming sources, sinks and services simultaneously (Catton 1980; Tainter 1990; Wackernagel, Schulz et al. 2002; Wilson 2002; Diamond 2005). Such systems thinkers believe we are well into overshoot, currently living off natural capital rather than its yield. They also recognize that we are dealing with complex dynamically adaptive systems, in which precise prediction is essentially impossible. This is the position taken by the report Limits to Growth: the 30 year update (Meadows, Randers et al. 2004).

Topping off the doomsdayer’s woes, distribution has become a major concern. Limits to Growth appeared at the end of a 45 year decline in both poverty rates and income inequality which, with the exception of a brief interval in the 1990s, have climbed steadily since (Piketty and Saez 2006; US Census Bureau 2007). Similar trends occur at the global level. In absolute terms, the wealthiest nations have amassed far more additional wealth than the poorest—1% of GDP in the US equals the GDP of the worlds 24 poorest nations (Daly and Farley 2004). In relative terms, China, India and a few other outliers appear to have grown faster than the wealthy nations, but have simultaneously experienced unprecedented increases in domestic income inequality (UNDP 2005). Experiments with green accounting in China have shown that ecological damage and resource depletion accounts for up to 1/3 of GNP in some regions (Qiu 2007). Real incomes in the Sub-Saharan Africa, the world’s poorest countries, and the incomes of the poorest in Latin America have actually declined (Stiglitz 2002). To make matters worse, the environmental costs of growth, such as climate change, are likely to fall disproportionately on the poor (IPCC 2007). Growth has done little if anything to alleviate absolute poverty while exacerbating relative poverty.

Conventional economists nonetheless continue to play the role of optimists, their models frequently suggesting that the potential future costs of climate change, heavily discounted, are less than the current costs of mitigation, and little should be done. The recent Stern Review on the economics of climate change is considered quite pessimistic and a call for action, but in reality it estimates that even if we do nothing about climate change, the economy will double or triple in size by 2050 (Stern, Peters et al. 2006)—the report’s conclusion that we should act to mitigate change is asking that supposedly poorer generations sacrifice for richer ones . The extreme of this cornucopian vision is presented by 2005 Nobel laureate Schelling and other economists who suggest that climate change will matter little, as it primarily affects agriculture, which is only a small percentage of GNP (Schelling 2007). Measured in dollars, any consumer good is apparently a perfect substitute for food.

In a recent twist however, the opponents to economic growth are becoming the neo-cornucopians, arguing that we already have more than enough. Additional income fails to make us happier, while working harder to attain it fills our lives with stress (Schorr 1991; Lane 2000; Diener and Biswas-Diener 2002; Layard 2005). Humans wants and needs are satiable (Gowdy 1998) and beyond a threshold long passed in the wealthy countries, increasing consumption makes us worse off (Max-Neef 1995). Having satisfied our basic needs, it is primarily relative wealth that makes us better off (McBride 2001) and increasing wealth for all helps no one. . In addition to physical limits to growth, we have reached psychological limits (Maiteny 2000), so continued economic growth is undesirable as well as impossible. The horn of plenty is over-flowing. As scientists have reached near consensus on the danger of climate change (IPCC 2007), even some cornucopians and conventional economists are recognizing the need to act (Cline 1992; Easterbrook 2006), and those that don’t may soon fade into irrelevance.

In conclusion, arguments in the growth debate range from inevitable doom no matter what we do, through strong then weak sustainability, to inevitable sustainability as long as we trust in the market. In our complex ecological-economic system with uncertain facts and a sample size of one, absolute proof for any position is impossible—uncertainty cannot be eliminated, and the past is a poor guide to the future (Faber, Proops et al. 1998; Farley, Erickson et al. 2005; Folke 2006). The decision whether to act on predictions of the doomsdayers or cornucopians must therefore be weighted by ethical attitudes towards future generations and towards risk. The worst case scenario is acting on the beliefs of the cornucopians when the doomsdayers are actually correct. In contrast, if we act on the beliefs of the doomsdayers and limit throughput, if the cornucopians are correct market forces will improve efficiency and provide substitutes, and no harm is done (Costanza 1999; Costanza 2000). If the neo-cornucopians are correct, the costs of addressing environmental problems are negligible or negative, so even if the chances of catastrophe are vanishingly small, we should act.

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