Prosperity with growth: economic growth, climate change and environmental limits

Abstract

Debate about the relationship between environmental limits and economic growth has been taking place for several decades. These arguments have re-emerged with greater intensity following advances in the understanding of the economics of climate change, increases in resource and oil prices and the re-emergence of the discussion about “peak oil”. The economic pessimism created by the great recession of 2008-2012 has also put the spotlight back on the prospects for economic growth. This chapter provides a conceptual and synthetic analysis of the relationship between economic growth and environmental limits, including those imposed by climate change. It explores two related questions. Will environmental limits, including limits on the climate system, slow or even halt economic growth? If not, how will the nature of economic growth have to alter? It is concluded that continued economic growth is feasible and desirable, although not without significant changes in its characteristics. These changes need to involve ultimately the reduction of the rate of material output, with continued growth in value being generated by expansion in the “intellectual economy”.