Output growth less important than structure for the environment

George Monbiot, in his Guardian column today, is right about the big picture. We are indeed in denial about the threat to the planet of climate change, resource depletion and pollution. His tireless insistence on this fact is much-needed.

However, he misleads readers in identifying economic growth, and specifically that in the already advanced countries, as the environmental threat. In fact it is an exacerbating factor. The real problem is the existing volume and the structure of production. It’s easy to show this with a little basic arithmetic.

The economic output of any country is associated with a given amount of CO2 emissions, pollution and resource depletion. I’ll lump this together and call it “environmental damage”. This depends on what we produce and how we produce it. (To keep things simple we‘ll leave aside the complication that, thanks to trade, what a country produces and consumes is not the same.) The environmental damage is cumulative, resulting every year from the production in that year. If we think about the sort of time-scales that are in the public (climate) debate, and which Monbiot mentions in his article – i.e. up to 2050 – then the amount of damage done by an economy that does not grow at all and keeps its production structure unchanged is 33 times (2018-2050 inclusive) the current annual damage. So if, by way of illustration, we say that is 100 units a year, the cumulative damage amounts to 3300. That’s the straight blue line in the figure.

If this economy grows, but keeps its structure, what happens to total environmental damage? Well, considering the sort of growth rates we have in industrialised countries, not all that much. The cumulative damage would be 3887 by 2050 if growth is at 1% a year and 4611 at 2% a year. (Shown by the very slightly curved red and green lines, respectively). These are not entirely trivial differences: at the faster growth rate the cumulative harm inflicted by 2050 is about 40% higher. But another, and I would argue more telling, way of looking it is that, at the 1% growth rate, the total damage of 3300 units would be reached in late 2045 (and at 2% growth in mid-2043) rather than 2050. Over this horizon, a no-growth scenario buys us a few years’ extra time. But given that, we hope, time marches on past the arbitrary end date of 2050, this does not help us in any fundamental sense.

Clearly, then, whether or not we have additional economic growth (at the pace expected in advanced economies) is not in fact the crucial issue. The crucial need is to shift the structure of production and consumption. The decision to chop down Germany’s Hambacher forest to make way for lignite mining – an example cited by Monbiot – is a (woeful) political choice, but not one greatly influenced by how fast the German economy will grow in the coming years. At growth rates typical in parts of Asia and Africa – recall that at 7% growth per annum output doubles roughly every ten years – this is not the case. But then material living standards are also far below those to which most people are accustomed in the West. We all agree that this raises thorny global justice issues; see for instance Branko Milanovic.

What is correct is that the task of limiting environmental damage in the West, and buying time for technological developments and structural changes, will be facilitated if economic growth is reduced. If people are still to have employment opportunities this implies the need to progressively reduce working time. This, in turn, will scarcely be possible without addressing prevailing, and in many cases widening, income and wealth inequalities. Alongside familiar tools such as promoting technological fixes, changing relative prices through taxation and investing in public infrastructure, this is where policy efforts should be concentrated. It needs to be recognised that, if we are not able to achieve this, another conclusion follows from the above analysis: “zero growth” will in no way be enough. Either we will have to organise a sustained, historically unprecedented, contraction of production or, more likely, it will be imposed on humanity by ecological catastrophe and/or starvation or war.