Economic Growth Remains Ultimately Dependent on Growth in Material and Energy Use

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* Article / study: Is Decoupling GDP Growth from Environmental Impact Possible? By James D. Ward , Paul C. Sutton, Robert Costanza et al. PLOS One, October 14, 2016

URL = http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0164733

Abstract

"The argument that human society can decouple economic growth—defined as growth in Gross Domestic Product (GDP)—from growth in environmental impacts is appealing. If such decoupling is possible, it means that GDP growth is a sustainable societal goal. Here we show that the decoupling concept can be interpreted using an easily understood model of economic growth and environmental impact. The simple model is compared to historical data and modelled projections to demonstrate that growth in GDP ultimately cannot be decoupled from growth in material and energy use. It is therefore misleading to develop growth-oriented policy around the expectation that decoupling is possible. We also note that GDP is increasingly seen as a poor proxy for societal wellbeing. GDP growth is therefore a questionable societal goal. Society can sustainably improve wellbeing, including the wellbeing of its natural assets, but only by discarding GDP growth as the goal in favor of more comprehensive measures of societal wellbeing."

Discussion

Nafeez Ahmed:

"Economic growth remains ultimately dependent on “growth in material and energy use,” as a study in the journal PLOS One found last October. That study, lead authored by James D. Ward of the School of Natural and Built Environments, University of South Australia, challenged the idea that GDP growth can be “decoupled” from environmental impacts.

The “illusion of decoupling”, Ward and his colleagues argued, has been maintained through the following misleading techniques:

  • substituting one resource for another;
  • financialization of GDP, such as through increasing “monetary flows” through creation of new debt, without however increasing material or energy throughput (think quantitative easing);
  • exporting environmental impacts to other nations or regions, so that the realities of increasing material throughput can be suppressed from data calculations.
  • growing inequality of income and wealth, which allows GDP to grow for the benefit of a few, while the majority of workers see decreases in real income —in other words, a wealthy minority monopolises the largest fraction of GDP growth, but does not increase their level of consumption with as much demand for energy and materials.

Ward and his co-authors sought to test these factors by creating a new economic model to see how well it stacks up against the data. Insight: They found that continued economic growth in GDP “cannot plausibly be decoupled from growth in material and energy use, demonstrating categorically that GDP growth cannot be sustained indefinitely.” (https://medium.com/insurge-intelligence/the-new-economic-science-of-capitalisms-slow-burn-energy-collapse-d07344fab6be)