by From Peter Newell and RWER issue 101 All wealth in the end is ecological. Economists contend that growth can continue indefinitely because they measure growth in terms of economic value rather than material throughput (Jackson and Victor 2019). Yet we diminish natural wealth and undervalue its exhaustion at our peril. Even in a highly financialised and service oriented economy, where direct connections to patterns of resource extraction and consumption are sometimes less observable, circulations of finance and the constant manufacture of ‘needs’ through advertising and exchange require resource inputs and lock in unsustainable behaviours. Assuming (often more by implication and neglect than explicitly), as many economists often do, that the environment is an infinite sink for waste and
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from Peter Newell and RWER issue 101
All wealth in the end is ecological. Economists contend that growth can continue indefinitely because they measure growth in terms of economic value rather than material throughput (Jackson and Victor 2019). Yet we diminish natural wealth and undervalue its exhaustion at our peril. Even in a highly financialised and service oriented economy, where direct connections to patterns of resource extraction and consumption are sometimes less observable, circulations of finance and the constant manufacture of ‘needs’ through advertising and exchange require resource inputs and lock in unsustainable behaviours. Assuming (often more by implication and neglect than explicitly), as many economists often do, that the environment is an infinite sink for waste and byproducts in pursuit of ever greater levels of production and consumption through market means is both naïve and dangerous (Daly 1996). Assessments of how economies perform, and wealth is generated, now need to start from a basic recognition of our dependence on the natural world and metrics adapted accordingly so that we can measure progress (or the lack of it) in building an economy compatible with life on earth and conserving the stocks and resources that sustain it.
This is not about efficiency gains and relative decoupling, for which there has been some progress and where environmental economics has made some useful contributions (Pearce et al 1989), but rather absolute decoupling. For example, the carbon dioxide intensity of the global economy fell from about 760 g of carbon dioxide per dollar (g CO2/$) in 1965 to less than 500 g CO2 /$ today, a decline of almost 35% in half a century. But, as Jackson and Victor show, ‘relative decoupling is barely half the story’ (Jackson and Victor 2019: 950). This is where the attempt to reinvent growth as ‘green’ falls down (OECD 2011). The so-called Jevon’s paradox looms large here. Writing about coal nearly 150 years ago, Jevons showed how efficiency savings have the ironic and unfortunate effect of encouraging further energy use with the money saved (Jevons 1865). The phenomena whereby efficiency gains in a growth economy are often redirected towards overall increases in consumption highlights many of the limits of green economy thinking. For example, the development of more fuel-efficient cars has not led to reduced car use. Rather, people can drive them further or more frequently without paying more. Hence incremental efficiency gains are more than overshot by increased resource use in a growth-orientated economy. Evaluating 36 OECD jurisdictions, Vogel and Hickel found that 11 countries managed absolute decoupling from 2013-2019, yet based on this trajectory, these countries would need an average of 223 years to achieve a 95% reduction in their 2022 emissions, in the process overshooting their national fair-share of the global carbon budget for 1.5°C by an average of 27 times (Vogel and Hickel 2023). read more