Friday, February 11, 2011

Environmental Sustainability without Economic Growth?

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Energy, Economic Growth and Environmental Sustainability: Five Propositions (26 page pdf, Sustainability 2010, 2(6), 1784-1809, June 18,2010)

This article addresses 5 propositions that are counter to those assumed widely. The point made, especially in the 4th one, is that a broader definition of sustainability must go beyond (and may even lessen the importance of) economic growth to include quality of life and human well-being. This clarification of sustainability applied to urban planning shifts priorities from being solely or mainly focussed on economic development – often associated with a focus on roads and sprawl - to development of the natural environment and greenspace and cleaner air and water.

Key Quotes:

Rebound Effects are Significant and Limit the Potential for Decoupling Energy Consumption from Economic Growth -An example of a rebound effect would be the driver who replaces a car with a fuel-efficient model, only to take advantage of its cheaper running costs to drive further and more often”

“increases in energy prices should reduce the magnitude of such effects by offsetting the cost reductions from improved energy efficiency. This leads to the policy recommendation of raising energy prices through either energy/carbon taxation or emissions trading schemes”

The Contribution of Energy to Productivity Improvements and Economic Growth Has Been Greatly Underestimated- Ecological economists consider that the orthodox models ignore how economic activity is sustained by flows of high quality energy and materials which are then returned to the environment in the form of waste and low temperature heat”

“ecological perspective suggests that rebound effects are large, improvements in energy productivity make an important contribution to economic growth and decoupling is both difficult and expensive“

Sustainability Requires Both Improved Efficiency and a Principle of “Sufficiency” - the preferred strategy to achieve sustainability is consuming more efficiently, which implies reducing the environmental impacts associated with each good or service.or .. consuming differently, which implies shifting towards goods or services with a lower environmental impact”

“sufficiency as a guiding principle would require a major change in lifestyles. .. requires a minimum level of financial security, deeply held values and considerable determination. If adopted successfully by enough individuals, it could demonstrate a viable and attractive alternative to consumerism”

Sustainability Is Incompatible with Continued Economic Growth in Rich Countries - a key point is that the goal of economic development should not be to maximise GDP but to improve human well-being and quality of life. Material consumption is merely a means to that end and GDP is merely a measure of that means”

“human well-being is not determined solely by the consumption of goods and services but also by ―human capital (e.g., health, knowledge), ―social capital‖ (e.g., family, friends and social networks) and ―natural capital (i.e., ecosystems and the services they provide)—none of which are necessarily correlated with GDP“

A Zero-Growth Economy Is Incompatible with a Fractional Reserve Banking System - The health of the economy is therefore entirely dependent upon the continued willingness of businesses and consumers to take out loans for either investment or consumption”

“raising the reserve requirement for banks, capping the amount of credit that they can create and using high-powered money to finance investment in public goods and critical infrastructure. Governments would not use taxation to raise revenue but instead to achieve environmental and distributional objectives and to reduce the inflationary effect of government spending “
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