Can we live within environmental limits and still reduce poverty? Degrowth or decoupling?

Abstract

A debate curated by Simon Maxwell Economic growth has resulted in a twin crisis of climate change and environmental breakdown, while millions still live in poverty, a third crisis. Is it possible to resolve all three, or are there trade-offs? Can the crises be tackled by environmental and social policies within the logic of the existing economic system, or is a new paradigm required that rejects GDP growth as an objective? This debate brings together two discussants in three rounds of conversation, to propose, test, and challenge each other’s ideas. The protagonists are: Jason Hickel is a Visiting Senior Fellow at the International Inequalities Institute at the London School of Economics, and Professor at the Institute for Environmental Science & Technology, Autonomous University of Barcelona. His two most recent books are The divide: A brief guide to global inequality and its solutions (Penguin, 2017), and Less is more: How degrowth will save the world (Penguin, 2020). Stéphane Hallegatte is a lead economist with the Climate Change Group of the World Bank. His books include Green economy and the crisis: 30 proposals for a more sustainable France (Cairn, 2012) and Natural disasters and climate change: An economic perspective (Springer, 2014). He also co-led the World Bank reports Inclusive green growth: The pathway to sustainable development (2012) and Decarbonizing development (2015). I am pleased to participate in this exchange with Stéphane. The question of how to solve the crisis of ecological breakdown while at the same time improving lives and achieving human development goals is one of the most pressing of our time. The good news is that ecological economics and post-growth scholarship11 Post-growth research proposes that, with the right policies, economies can be kept stable and support strong social outcomes without economic growth (Post-growth, 2021). points toward compelling answers. Let me open by making four brief observations. The global economy is presently overshooting several critical planetary boundaries—not only in terms of climate change, but also land-use change, biogeochemical flows, and species extinction (Rockström et al., 2009; Steffen et al., 2015), while risks of tipping points and feedback loops are of increasing concern (Lenton et al., 2019; Steffen et al., 2018). Contrary to what is implied by the general narrative of the Anthropocene, the crisis is not being caused by human beings as such, but rather by an economic system that is organized around, and dependent on, ever-increasing levels of commodity production and consumption, which we gloss as “growth.” The relationship between economic growth and ecological breakdown is well established in the empirical record. Gross domestic product (GDP) growth is tightly coupled to resource use (Wiedmann, 2015; see also Figure 1), which is in turn tightly coupled to ecological damage and biodiversity loss (Steinmann et al., 2017). Global economic growth has caused resource use to rise dramatically over the past half century, reaching 100 billion metric tons per year as of 2020—roughly double what industrial ecologists consider to be the maximum sustainable boundary level (Bringezu, 2015). This has happened despite strong improvements in material efficiency and a dramatic shift toward services over the past several decades. Source: World Bank and United Nations International Resource Panel (UN IRP) (n.d.) Crucially, this overshoot is being driven almost entirely by high-income countries. High-income countries consume on average 28 metric tons of resources per person per year (Figure 2); four times the sustainable per capita level and, as we will see below, significantly in excess of what is required for human well-being. The vast majority of low- and middle-income countries, by contrast, remain well within sustainable levels. Moreover, the excesses of rich countries are maintained by a large net appropriation of resources from the Global South (Dorninger et al., 2021). This means that the ecological impact of consumption in the core is in large part offshored to the periphery. The same is true when it comes to emissions: the Global North is responsible for 92% of emissions in excess of the planetary boundary (Hickel, 2020b), while the impacts of climate change disproportionately affect the Global South. If we are not attentive to the colonial dimensions of the ecological crisis, we are missing the point. Material Footprint of Nations (tons per capita) Notes: The horizontal black line indicates the sustainable per capita threshold in 2008 (Bringezu, 2015) Source: UN IRP (n.d.) In light of this data, the dominant response by economists and policy-makers has been to say we should continue to press on the accelerator of growth but seek to make it “green.” Unfortunately, this narrative has little empirical grounding. permanent decoupling (absolute or relative) is impossible … because the efficiency gains are ultimately governed by physical limits … It is therefore misleading to develop growth-oriented policy around the expectation that decoupling is possible. What about emissions? Unlike with resource use, absolute decoupling of GDP from emissions can be achieved by replacing fossil fuels with renewable energy, and this is already happening in some countries. But it is unlikely that decarbonization can be accomplished fast enough to stay under 1.5 °C or 2 °C if high-income economies continue to grow at usual rates. The problem is that more growth means more energy demand, and rising energy demand will make it more challenging to decarbonize the economy in the short time we have left (Hickel & Kallis, 2020; Schröder & Storm, 2020). This creates something of a bind, as is illustrated in the reports of the Intergovernmental Panel on Climate Change (IPCC). Existing climate mitigation scenarios start with the assumption that all nations should continue to pursue economic growth for the rest of the century, regardless of how rich they have already become. To reconcile growth with the Paris Agreement goals, they gamble on dramatic technological change. Most scenarios rely on speculative negative emissions technologies to get us out of trouble, particularly bioenergy with carbon capture and storage (BECCS), but also direct air capture. Others rely instead on the assumption that productivity improvements will drive an unprecedented decoupling of GDP from energy use. But scientists have questioned both of these approaches (Hickel, Brockway et al., 2021). Scaling BECCS raises serious concerns about land use, water depletion, deforestation, biodiversity loss, and constraints on global food supply (Creutzig et al., 2021); direct air capture, for its part, would require up to 70% of today’s total global energy output (Realmonte et al., 2019). But the main problem is that if negative emissions schemes fail, we will be locked into a hothouse trajectory from which it would be impossible to escape (Fuss et al., 2014; Smith et al., 2016; van Vuuren et al., 2017). As for energy decoupling, the rates assumed in high-productivity scenarios are not supported by the empirical literature (Haberl et al., 2020), and existing scholarship indicates they are unlikely to be achieved in a growth-oriented economy, even under optimistic assumptions (Brockway et al., 2021; Ward et al., 2016). In short, the data we have is clear that growth makes it significantly more difficult for us to achieve our ecological objectives. In light of this evidence, ecological economists call for a fundamentally different approach. High-income nations do not need further growth, and indeed should abandon growthism and reorganize the economy instead around provisioning for human needs and well-being, reducing inequality and guaranteeing universal access to public goods and services. Post-growth policies make it possible to achieve strong social outcomes without growth (Jackson, 2017), and would liberate societies to scale down unnecessary forms of production and consumption, as proposed by degrowth scholarship (Demaria et al., 2013; Kallis et al., 2018). Degrowth is a planned reduction of aggregate resource and energy use in high-income nations designed to bring the economy back into balance with the living world in a safe, just and equitable way. This approach is powerful when it comes to climate mitigation, because the less energy we use the easier it is to transition to renewables (e.g., Keyßer & Lenzen 2021; Kuhnhenn et al., 2020), and it has the added benefit of reducing damages associated with resource use. What does this look like in practice? Instead of assuming that all sectors of the economy should grow, all the time, we should decide what sectors we need to scale up (sectors with clear social and ecological value, like renewable energy, public services, public transportation, etc.), and what industries are ecologically destructive and socially less necessary, and therefore need to shrink: fossil fuels, sport utility vehicles (SUVs), fast fashion, advertising, planned obsolescence, McMansions,22 Large houses built for upper middle classes in the suburbs and exurbs of US cities (McMansion, 2021). industrial beef, personal vehicles, private jets, food waste, cruise ships, the military–industrial complex, etc. Most people would regard this as sensible, except for one sticking point: what about the impact on employment? Post-growth and degrowth scholarship demonstrates that full employment can be maintained by shortening the working week. As our economy requires less labour, we can distribute necessary work more evenly, while enjoying more free time for care and conviviality. To ensure that all have access to good livelihoods, we can distribute national income more fairly, with living wages and progressive taxation. A more egalitarian distribution of income and wealth would allow us to improve people’s lives without having to plunder the planet for more. Of course, scaling down unnecessary commodity production is likely to lead to a reduction in aggregate GDP. This might sound troubling, because people commonly assume that GDP growth is required for social progress. But after a certain threshold, which high-income nations have long surpassed, the correlation between GDP and social indicators breaks down. For instance, Spain significantly outperforms the United States in social indicators (including a life expectancy that is five years longer), despite having 55% less GDP per capita. Portugal outperforms the US with 65% less. There are dozens of similar examples (Hickel, 2020a). GDP is not a proxy for human well-being, or social value, and was never intended to be (e.g., Stiglitz et al., 2010); rather, it is a measure of the total market price of commodity production. Unsurprisingly, there is no causal relationship between aggregate commodity production and social outcomes. What actually matters for human well-being is people’s access to the resources they need to live long, healthy lives: universal healthcare and education, affordable housing, public transport, nutritious food, and so on. Societies that focus on these things are able to achieve high levels of human well-being with modest GDP. Here is the good news: recent research demonstrates empirically that we could deliver good lives for all, including high-quality universal public healthcare, education, transport, etc. with 80% less energy and resources than high-income countries presently use (Lettenmeier et al., 2014; Millward-Hopkins et al., 2020). In other words, if we organize our economies around livelihoods and provisioning for human needs, rather than around elite consumption and capital accumulation, we would be able to bring resource use back within planetary boundaries and achieve a rapid transition to renewables, fast enough to stay under 1.5 °C. Degrowth scholarship poses a challenge to prevailing narratives of international development. According to the dominant discourse, poor countries are regarded as the “problem,” while rich countries are held up as models. This story is problematic for several reasons. First, the level of resource and energy use that characterizes rich nations is not universalizable. If tomorrow the whole world consumed at this level, global resource and energy use would triple. This is not compatible with a habitable planet. Today’s rich nations do not constitute a model for development; on the contrary, they are the problem. Excess throughput in rich nations actively harms developing countries. Climate change alone is already driving food insecurity, conflict, and mass displacement in several regions, including Central America, the Middle East, North Africa, and South Asia. Human development is impossible in a collapsing biosphere. But there is another dimension to this problem. I mentioned above that growth in the Global North relies on a large net appropriation of resources from the South. The figures are staggering: 10.1 billion metric tons of embodied raw materials, 800 million hectares of embodied land, energy equivalent to 3.7 billion barrels of oil, and 379 billion hours of embodied human labour—per year (Dorninger et al., 2021). Rich countries leverage their economic and geopolitical power to appropriate vast quantities of resources and labour from the Global South to service consumerism and elite accumulation: resources that could otherwise be mobilized around meeting local human needs (Hickel, Sullivan et al., 2021). The demand for degrowth in the Global North is about more than just ecology, then. It is rooted in anti-colonial principles. Degrowth scholars align with social movements calling for an end to the imperial patterns of appropriation that underpin growth in the Global North, in order to release the Global South from the grip of extractivism and a future of climate breakdown. Degrowth is, in other words, a demand for decolonization (Hickel, 2021). Global South countries should be free to organize their resources and labour around meeting human needs rather than around servicing growth in the Global North. Dependency theorists have long pointed out that “catch-up” development is impossible within a system predicated on polarized accumulation, where growth in the core depends on exploitation in the periphery. This claim is underscored by the data on ecological breakdown and resource imperialism. The alternative is to call for a trajectory of radical convergence: throughput should decline in the Global North to get back within planetary boundaries, while it should increase in the Global South to meet human needs, converging at a level that is consistent with ecological stability and universal human welfare. This is the only tenable approach to development in the 21st century (Ajl, 2021). This requires a significant shift in development strategy. Over the past four decades, economic policy in the Global South has been organized around extraction, exports, and the interests of foreign financiers, while structural adjustment programmes imposed by the World Bank and the International Monetary Fund have deregulated markets, depressed wages, and cut social spending. This approach has failed to deliver meaningful development (Hickel, 2018). Instead, the goal should be to focus on improving social outcomes directly: better healthcare, education, livelihoods, food, transportation, etc. This requires building sovereign economic capacity focused on provisioning domestic needs, which in turn requires having the freedom to use protective tariffs, subsidies, capital controls, nationalization, social spending, and progressive fiscal and monetary policy. This approach to development has a long history in the Global South. It was championed by anti-colonial leaders including Franz Fanon, Gandhi, Patrice Lumumba, Salvador Allende, Julius Nyerere, Thomas Sankara, and dozens of others who sought economic sovereignty and global justice, before their vision was dismantled by the Washington Consensus. Theirs are the insights that should guide development in the 21st century. Not so long ago in Europe, many children worked in factories. Their lives were harsh: they worked in often terrible conditions, could not go to school, and often ended up physically broken before reaching adulthood. When pressure grew to ban child labour and make school mandatory, many thought it a bad idea: without child labour, total labour supply would drop, industrial production would decline, and the drop in income for poor families would increase poverty (Gubin, 2002). But many countries made school mandatory anyway. After a transition period, healthier, happier, better-educated children grew into adults who could contribute much more to societies and economies than their exhausted, physically broken predecessors. In the end, there was no trade-off between educating children and growing income: we could increase consumption and have healthier, happier children.33 Economists will notice that many schools across the world offer free lunches. Echoing those critics of mandatory education, today we hear the same objections to environmental policies, that protecting the environment will inevitably reduce income. But is it not possible that protecting and investing in our environment could yield the same outcome as protecting and investing in our children, making us happier and richer? Could environmental protection be compatible with continued or even accelerated growth? In this short text, I discuss these questions, building on Jason’s article and great book, which I thoroughly recommend.44 Many thanks to Simon Maxwell for inviting me to participate in this discussion, and to Lucy Southwood for skilfully editing my manuscript. There is consensus that environmental degradation cannot continue at the current pace, that we need urgent action on climate change and biodiversity losses to avoid catastrophic outcomes. I focus on the issues where I may have something interesting to add. I agree with Jason that most environmental degradation is caused by unsustainable lifestyles and technologies in the richest countries, so the action must start there. Note, however, that the share of the world’s population with unsustainable lifestyles is increasing fast, so what happens in middle-income countries is also critical. And the footprint of rich people in poor countries can be as large as that of rich people in rich countries, so environmental action is needed everywhere. We agree also that income growth is necessary in the poorest countries, where many people do not have access to the basic needs for a decent life. Today, 2.8 billion people cook with traditional fuels—which kills millions, especially children, through indoor pollution—and 2.4 billion have no access to improved sanitation. Access to health, education, or mobility is far below what would be considered acceptable in rich countries. Delivering these services will require increased energy consumption and GDP in those countries, and is a priority (Rao, 2019). Can green growth policies deliver both lower footprints and higher living standards? If one thinks only in terms of extraction, everything is a trade-off: if you extract less (labour from children or material from nature), you get less output. But if you think of people and nature as contributors—with healthy people and thriving nature able to contribute more—then trade-offs are less likely or last only the duration of a transition period. When education was generalized, a lot was said about the short-term transition costs, but nobody could have imagined how it would contribute to economic activity over the long run.55 However, it also had a negative impact on the income of some poor families, and free school lunches were one of the many interventions implemented to reduce this impact on family budgets. Let us take the obvious synergies between short-term development priorities and long-term environmental goals. In most of the world, investing in renewable energy—like solar and wind—is now cheaper than using fossil fuels, and their scalability makes it easier to provide electricity in remote villages, with benefits ranging from better learning for children to reduced gender inequality (Zhang, 2019). Improving diets can help fight epidemics of non-communicable diseases such as obesity and diabetes in high- and middle-income countries, stop deforestation, and reduce carbon emissions. Landscape and watershed management (or restoration) investments can revive ecosystems and increase farmers’ incomes (World Bank, n.d.). Actions to cope with and recover from the COVID-19 pandemic offer an opportunity to seize these opportunities for a greener and more sustainable recovery (Hammer & Hallegatte, 2020). Even taxing carbon emissions—arguably not the most popular climate policy—can be designed to reduce poverty and inequality. If revenues were simply redistributed equally per capita, the poorest 60 percent in developing countries would receive net benefits, while the top 20 percent would pay significantly more than they receive (Fay et al., 2015). And because evading an energy or carbon tax is trickier than cheating on labour or corporate taxes, even for the rich, it could make the tax system fairer by ensuring everybody pays their fair share. There is no doubt that we need to ensure that moving one person with a three-ton car becomes unaffordable. To combine higher living standards and lower environmental footprints, the structure of GDP will have to change: we need to produce different things with different techniques, so that our consumption of energy, land, and material can be reduced. But it does not mean that total GDP needs to decline. I want to be clear. I do not claim that any growing economy is compatible with environmental constraints. However, I do think that a very different type of growth and dedicated action can make it possible to maintain growth while reducing environmental pressure. Just as it was possible to break the correlation between the rise of industrial production and child labour in factories, the fact that GDP and our material footprints have grown together does not mean this relationship is a law of nature. Economic growth initially brought with it increasingly polluted air and water, but some of the richest places on earth now have the cleanest air and water. There is no reason we could not do the same with material footprints or carbon emissions. However, this will not happen automatically. Rich places have clean air and water because they imposed rules and regulations, not because they are richer. Economic growth does not protect the environment, environmental policies do. Does that mean I disagree with Jason? Not on this. In his book, Jason defines “degrowth,” not as a decrease in GDP, but as “reducing material and energy use.” I cannot disagree with this definition. Protecting our planet requires reducing material and energy use, but not necessarily income. Indeed, with this definition, degrowth is uncontroversial, as nobody objects to reducing excess throughput. In fact, in this case, degrowth is also indistinguishable from sustainable development or green growth. Economic growth has historically been correlated with poverty reduction and improved living standards (Dollar et al., 2013). Concerns that slowing down growth would hurt poor people and poverty reduction are therefore understandable. And when people hear the term “degrowth,” most think about the effect this will have on what they struggle to afford—a roof in a nice neighbourhood, an education for their kids, and health care—not on their consumption of material goods. So, the challenge is designing environmental policies that target unsustainable consumption without making life harder, especially for the poorest. If there is water scarcity, how to ensure that the first to reduce consumption are those watering the lawn of their mansion, not the small farmers irrigating their crops? It is one thing to say we need to scale down ecologically destructive industries or cap extraction from nature, but it is quite another to design the policies to do so in a way that is efficient, fair, and politically feasible. Options include making firms responsible for recycling their products along their entire lifetime; ensuring that all external production costs (from pumping groundwater to carbon emissions) are regulated directly or accounted for through a fee; reforming tax systems that incentivize wasteful land, energy, and natural resource consumption; and ensuring investors cannot capture short-term gains while escaping long-term costs. Countries need to translate these concepts into policies and regulations. The international community has a major role to play—in helping countries design and implement these policies, and in co-ordinating action on global public goods, from biodiversity hotspots to our climate system. And as noted in the recent Dasgupta Review, individuals have a role to play also: in how they consume, where they work, and most importantly, how they vote (Dasgupta, 2021). One obvious synergy between environmental protection and poverty reduction is reducing inequality. Eradicating poverty is much easier with declining inequality and income redistribution.77 One exception, of course, is that many countries are so poor that redistribution cannot do much to reduce poverty (see Ravallion, 2009). According to a recent World Bank study, reducing the Gini Index (a commonly used measure of inequality) by 1% is more effective for reducing poverty than increasing aggregate growth by one percentage point (Lakner et al., 2020). Reducing inequality also increases poor people’s material and energy consumption while keeping total consumption at an acceptable level, making environmental policy much easier (Chancel, 2020). Reducing inequality is particularly attractive because there are other powerful reasons for doing so. As Jason discusses in his book, large inequalities are bad for well-being and health at all income levels. There is also evidence that inequality is bad for growth (Ostry et al., 2014). It is obvious today that democratic processes are threatened by excessive wealth differences, so even without concern about the environment, rebalancing priorities away from income growth toward poverty and inequality reduction would be fully justified. New ideas to reduce inequality have been proposed, including wealth taxes and universal income, and they need to be considered seriously, especially where our traditional toolbox reaches its limits. Environmental considerations just add one more reason for doing so, as well as a massive element of urgency. I am grateful for Stéphane’s comments, and am glad to see that we agree on quite a lot. We agree that growth does not deliver environmental protection; environmental policies do. We agree that in poor countries energy and resource use needs to increase to meet human needs, while in rich countries it needs to decline to sustainable levels. And we agree that equality is key to improving social outcomes in an ecologically coherent way. So far, so good. Now, let me parse where we differ. First, I want to clarify that my position departs from the mainstream debate about whether any given environmental policy will be good or bad for growth. My argument is that pursuing aggregate growth makes the task of ecological transition more difficult, because more growth entails more energy demand and more resource use. So we should abandon growth as an objective and pursue progressive environmental policy for its own sake, on the grounds that is good for both ecology and human well-being, even if it does not generate growth. After all, we know that high-income nations do not need more growth to improve social and ecological outcomes, so why pursue it? And if we agree that GDP is a problematic metric, and that it is not a proxy for human well-being, why should we frame our vision for a better world in terms of GDP growth? As my colleagues and I put it in a recent article, we need a Green New Deal without growth (Mastini et al., 2021). Stéphane says it may be possible to use aggressive policy to break the relationship between growth and resource use in the future. Perhaps. But, as I mentioned in my opening statement, we have evidence on future scenarios, and it does not support green growth narratives. Dittrich et al. (2012) tested a scenario where all countries follow best practice in efficiency, and assumed that reduced use of one resource would not lead to increased use of another. The result indicated that continued GDP growth still leads to rising resource use. They found relative decoupling, but no absolute decoupling. Schandl et al. (2016) tested a carbon price rising to USD 236 per metric ton, plus a significant increase in the rate of efficiency improvement (from the usual 1.5% per year to an unprecedented, and unproven, 4.5% per year). Again, no absolute decoupling. Two 2017 reports from the International Resource Panel of the United Nations Environment Programme (UNEP) tested a carbon price rising to USD 573, a resource extraction tax, and rapid rates of technological innovation (Bringezu et al., 2017; Ekins et al., 2017). Once again, no absolute decoupling. The same is true of energy. Ward et al. (2016) find that even under highly optimistic policy and technology scenarios, “GDP cannot plausibly be decoupled from growth in energy use.” This is an empirical question, and we have empirical answers. We must be scientific about this. Stéphane’s point about child labour is interesting, but it is a false analogy. Ending the exploitation of children ultimately enabled capital to extract more, and more productive, labour. To extend this analogy to nature, you would have to introduce policy that would somehow enable capital to extract more, and more productive, nature. This doe