Economic Growth and Sustainability: A New Challenge

Abstract

We have the greatest respect for the authors of the Science article (Arrow et al. 1995) and we agree with their arguments. However, we would like to offer some points of clarification and to broaden the base of the discussion. The Science article focused on the inverted U relationship between environmental quality and gross domestic product (GDP). But this empirical relationship adopts a trivial definition of environmental quality: emissions of specific pollutants, compared across vast differences in culture, resources, and scales. A subset of pollutants in a limited number of places cannot be accepted as surrogates for the complex interactions between economic growth and the environment on which that growth depends. Policy discussions and scientific debates often focus on a simplified concept of environmental interactions. Accepting these simple concepts places advocates of growth in a strong position to argue for continued development. At one extreme, the environment is reduced to extractable resources. The environmentalist argues that economic growth will exhaust extractable resources, such as, oil and iron ore. This argument faces a forceful counterargument: most extractable resources are substitutable. Substitutes may be other extractables, human capital, or human-made capital. Don't worry about running out of coal-there is fission, fusion, or biomass fuel crops. The point can be argued, of course, because substitutability varies widely across extractable resources and experience has shown that substitutes, such as nuclear power, may create as many problems as they solve. But if one accepts that the environmental problem can be reduced to extractable resources, the advocates of growth start the debate from a strong position. At another extreme, environmental issues are reduced to amenities-nice places to have a picnic. In this case, the environment has aesthetic value but no direct involvement in the economic process. You are unlikely to win the argument if you maintain that aesthetics are more important than jobs. If you want to preserve Spotted Owls simply because they are pretty, you are likely to be hit in the back of the head with an axe handle. In other cases, analysis focuses on direct physical and health effects of pollution. For example, the assessment of acid precipitation considered direct damage to buildings, agricultural crops, visibility, and trout populations. But eliminating direct impacts of pollutants will not prevent gradual, indirect effects such as climate change or loss of the ozone layer. Underlying all of these simplifications are basic ecosystem services: cleaning the water, purifying the air, decomposing wastes, maintaining CO2 balance, permitting recovery from natural disturbances, filtering ultraviolet radiation, and providing sources of new medicines. These ecosystem functions are not substitutable and not just amenities that can be traded for short-term economic gains. Discussions of economic growth often ASSUME stable, resilient ecosystems that will continue to provide these life-support services. But economic development will impose increasing stress on ecosystems, even if wealthy nations can be expected I Manuscript received 10 July 1995. 2 For reprints of this Forum, see footnote 1, p. 12. 3 The Oak Ridge National Laboratory is managed by Lockheed Martin Energy Systems, Inc., under subcontract number DE-AC05-840R21400 for the U.S. Department of Energy. Environmental Sciences Division Publication Number 4454.