The incompatibility of the objectives of economic growth and environmentally sustainable futures

Cambridge Econometrics Annual Conference, 6-7 April 1992 ‑ Transport, Communications and the 21st Century.

The issue of global warming represents an imperative over-arching all aspects of public policy and, therefore, commercial, institutional and private practice and behaviour. We now know much more about the planet’s capacity to act as a reservoir for greenhouse gases. The problem stems from man-made activities exaggerating the planet’s natural greenhouse characteristics which have so far enabled it to support life.

Concern about this was highlighted by the Inter-Governmental Panel on Climate Change (IPCC) two years ago. Its Report indicated that a reduction of carbon dioxide emissions of at least 60 per cent is needed to stabilise the world’s climate, and a recent review has confirmed this assessment. Even this may prove insufficient because of the probable doubling of the world population in the next 50 years, with most of the increase in developing countries which are understandably aspiring to the standards of living in more affluent ones and are therefore in the process of industrialising their economies in ways that require intensive use of fossil fuels and therefore intensive output of greenhouse gas emissions. Nor is our desire for higher standards satiated by any means.

Responding adequately to the ecological imperative of dramatically lowering greenhouse gas emissions may be the most critical issue that the world has ever had to face. Three months ago, a joint report of the UK Royal Society and the National Academy of Sciences in the US stated that ‘… The future of our planet is in balance …’ It provided cold comfort for optimists who assert that science and technology will come up with realistic answers, for instance by the so-called decoupling of GNP and fuel consumption through investment in energy efficiency so that there is no need to make drastic changes to our non-renewable resource-dependent and energy-intensive lifestyles.

So, how have governments around the world responded to this? Some have taken it more seriously than others. Most appear to believe or hope that it will require no more than some belt-tightening. Others cling to the view that the climate scientists could prove to be wrong. Conflicting messages are put out by the media with, for instance, TV programmes drawing attention to the prospect of ecological catastrophe but at the same time projecting images indicating a ‘business as usual’ future. More commonly, the reaction of politicians appears akin to one in which the scientists’ warning is just a bad nightmare from which we will awaken and be able to proceed along the gradus ad parnassum towards an ever-expanding economy and material prosperity. We can carry on, it is implied, oblivious of the increasingly likely fact that we no longer have a choice if world-wide catastrophes induced by climate change are to be avoided. When pressed to admit that time may be up for our extravagantly damaging patterns of activity, politicians have shielded themselves behind a claim that the necessary resolute action cannot be imposed upon an unwilling public.

Nevertheless, public attitudes to the environment are changing rapidly. Many people now acknowledge that our lifestyles contribute to pollution and accept that increasing restrictions, for example on the use of cars, may be required for environmental protection. The conflict between what we wish to do to improve our material standards of living and the actions that have to be taken to intervene where these decisions run counter to wider environmental considerations is becoming widely recognised. There is also growing awareness that many environmental impacts are not contained within natural boundaries and that therefore more urgent attention will have to be paid to the environmental implications of our actions at both the local and global levels.

A major problem from a policy perspective stems from the fact that conventional indices of prosperity, in particular Gross Domestic Product (GDP), provide largely inadequate and in many cases irrelevant measures of improvement to the environment and quality of life generally. Associated with this is the absence of appropriate indices, and therefore the statistical bases which enable trends to be evaluated for the development of policy.

The task for any government attempting to achieve improvements in the future is likely to entail changes in many domains. Some of these have the prospect of realising the necessary objectives of environmental policy in the years ahead. In the case of others, the outlook is bleak. One can consider three of these domains which are especially relevant ‑ energy, transport and tourism.

It is clear that patterns of energy use in building, transport and industry play a major role in relation to environmental protection. In Western countries, some of the changes in consumption patterns in the last two decades have been advantageous. The transfer from manufacturing to service sector activity has also led to reduced fuel use, indeed more so than the limited programmes on energy conservation and improved energy efficiency.

However, continuing economic growth has resulted in unsustainable demands for fuel. Whilst considerable efforts are being made to reduce the consequent pollutants from their combustion, the more urgent need – to limit carbon dioxide emissions because of their contribution to global warming – is not being addressed with any degree of urgency. Although per capita emissions in this country have not risen in the last decade or so, this is primarily due to a combination of the world recession, less use of coal, and more use of natural gas, which, per unit of heat, is far less damaging, the fact that we now rely on importing manufactured goods with the result that the emissions are rising in the exporting countries.

The most disturbing domain of growth from an environmental and ecological perspective, and the one that is getting worse, is transport. The policy of most Western governments on this reflects the absence of any determination to limit it. Traffic has in fact increased by 50 per cent in the last ten years and more than doubled in the last 20. The quantity of goods shipped across the Channel in the last ten years has doubled, and a clear intention of catering for and, in many respects, encouraging this growth can be discerned through strategies that have been adopted over the years and look set to be continued in the future. Governments object to restrictions on the use of motor vehicles for two main reasons. First, they interfere with market forces which are thought to be the optimal way of providing for improvements in the economy and material standards of living. Second, they run counter to a largely overriding objective of government not wishing to intervene where that could be construed as running counter to people’s revealed preferences.

However, there is a powerful link between land use planning and the adoption of lifestyles which are increasingly motor-based, and this is poorly appreciated in current policy. Politicians as well as strategic and local planning authorities pay inadequate attention to the energy implications and, associated with this the environmental impacts, of the decisions they make on the form of settlements, on land use and on transport patterns.

Our current lifestyles are having serious deleterious effects both on the natural and built environment – the polluting effects of fuel used for transport purposes, the spread of noise, and the increasing danger, and consequently enforced behavioural changes, from the rising volume and speed of traffic, not to mention the loss of finite resources on which future generations should have obvious claims.

If traffic grows, as is assumed it inevitably will grow, it is clear that the effect will be to make far more difficult the resolution of the inherent conflict between this growth and the objective of improving the quality of the environment. In particular, meeting the objective of lowering carbon dioxide emissions will require substantial reductions in motorised activity rather than the reverse. A major U-turn in the policies of all governments will be called for if looming environmental dangers are to be averted.

The political and planning systems certainly do not make use of taxation, incentives and regulation on the required scale. Nor are advance warnings being given: populations in low density developments will become especially vulnerable to the effects of the steep rise in fuel taxes which will have to be introduced as a result of international agreements on reducing greenhouse gas emissions.

Tourism has made a significant contribution to the economies of many countries in the First, Second and Third Worlds. Nevertheless, it is the source of many adverse environmental impacts, including those from air traffic and congestion at tourist attractions. Continued expansion of the tourist industry is forecast as the world comes out of recession, economies grow, and more people have leisure time and can afford to travel more frequently and further. In the last ten years alone, international air passenger movements to and from the UK have doubled are predicted to double again by the end of the century and to double yet again by 2015.

It is possible, however, that the high environmental and energy taxes on fuel now being considered to combat global warming will, at the least, contain the expansion, particularly that sector of it dependent on air and car travel. In my view, it seems inevitable that it will result in its contraction with consequent environmental relief – but a harsh outcome for countries whose economies are heavily dependent on it.

It is clear that the most significant issue arising in these three domains of activity relates to action on lowering carbon emissions. The low targets being considered by Western governments fly in the face of the warnings of the great majority of 300 leading scientists from all over the world, which I mentioned in my introduction.

In practice, the ecological imperative and political implications of global warming may require a dramatic shift from all governments’ dedication to greater efficiency and productivity – indeed from the current demand-led approach of the economies of affluent countries, and discussion of population control in the Third World in particular. This could pose a major challenge to two conventional assumptions: first, that demand should be met if at all possible, and second, that growth is desirable and sustainable in a resource sense and only causes environmental problems that can be resolved satisfactorily. It may be that the objective of rising material wealth and current policy and practice on population control may have to be abandoned in favour of solutions derived from an ecologically-sustainable policy base.

At the heart of the matter lies the widely-shared view that environmental problems should be tackled through the medium of market forces and a minimum of regulation, and that their solution can realistically only be afforded from the proceeds of economic growth. Much emphasis in public policy is placed on fuel switching, improving energy efficiency, and on a so-called decoupling of economic growth and energy consumption. But few targets by which to monitor progress have been set.

As economies grow, so environmental problems intensify. As yet, however, governments around the world have given no warning that the public may have to be called upon to make changes entailing substantial rather than modest alterations to the lifestyles that they have only been able to adopt because their environmental implications have been largely ignored.

I referred to the climate scientists’ call for a reduction of carbon dioxide emissions of at least 60 per cent to stabilise the world’s climate. Obviously the reduction will have to vary according to a principle other than one of average. The populations of the Third World cannot be expected to reduce the impact of their lifestyles by making the same contribution that we do in the affluent West. On a per capita basis – and there are neither moral grounds nor political prospect of obtaining international agreement on any other basis – the UK must cut its emissions by about 90 per cent, that is a five per cent annual reduction from now to 2040, which is a very tall order. But the rate rises to six per cent if we do not start until 2000.

What does such a reduction mean for the typical UK household when related to its current annual average emissions of over 25 tonnes? At present, each household’s share for the operation of power stations and refineries is about 11 tonnes; for industry, 5.5 tonnes; for domestic uses, mainly heating, 3.5 tonnes; and for transport, mainly car use, 4.5 tonnes. Clearly, the household ‘ration’ of 2.5 tonnes, that is one tenth of the current level, will only stretch to the most essential of energy-intensive activities. If a family were to choose to fly across the Atlantic – or to Israel ‑ that would use up a significant proportion of its annual ration and could leave insufficient for heating during the winter or for car commuting.

The task of managing the transition to lifestyles and patterns of development, with greatly reduced use of fossil fuels, is an enormous challenge to policy makers. The figures to which I have referred point urgently to the need for governments, particularly in the developed world where resource consumption in any lifetime can easily be 20 times that in poor countries, to face up to the fact that economic growth cannot be sustained indefinitely. Indeed, economic growth and consumerism in the forms which we have witnessed over many decades and which politicians believe to be the primary means of improving public welfare are incompatible with responsible stewardship of the planetary environment. Yet the bedrock of all their policies reflects a fundamental failure to recognise this. And our current political institutions and economic systems appear unable to take due account of the urgency of addressing this central issue of the natural limits on greenhouse gas emissions that the earth can support.

The longer we delay in reforming our systems of production, and in acknowledging that it is resource consumption and pollution rather than income that should be taxed, the worse the problems of global ecological degradation will become. Finding adequate responses to these problems in industry, commerce and other domains of decision-making is likely to pose a severe test of democratic institutions as necessarily harsh policy changes will have to be introduced. The general election ought to have been a time when such great issues were debated strenuously. Unfortunately, our politicians showed little sign of even acknowledging the lateness of the hour and the scale of the challenge to ‘business as usual’.

International collaboration and co-operation are needed on a scale never seen before, though the approach has already been indicated by the strategies adopted on combating the problems of the depleting ozone layer. Witness, too, one of the principal objectives set out in the Maastricht Treaty signed in February, namely the promotion of sustainable growth respecting the environment (Article 2). High carbon taxing, well in excess of the level under discussion within the European Community, and the rationing of carbon emissions are needed urgently, with a phased introduction in the immediate years ahead. In their absence, the ecological balance of the planet will be put at great risk.

Unless we act in a far more dedicated way than we seem to be prepared to do at present, dedication to the Biblical injunction regarding our stewardship of the Lord’s creation, and the urging of some politicians on the world stage ‑ for instance, signatories of the Brundtland Commission Report on sustainable development ‑ that the interests of future generations must be incorporated into the mainstream of current policy, will prove to be just pious and unfulfilled expressions of hope and intention.

It would seem that the twin objectives of economic growth, as is commonly understood, and the maintenance of what is slowly becoming recognised as a fragile planetary eco-system are incompatible and that affluent nations will have to reconcile themselves to this whether they like it or not. Their lack of enthusiasm for the clear implications of this simple equation may just reflect an inability of governments to face unpalatable truths.

The world is at a turning point, requiring a vision of a truly fair and sustainable future developed from new indicators of prosperity and welfare. No longer can higher levels of consumption or GNP growing at an annual average rate of two per cent be considered to reflect ‘progress’. It is incompatible with resource conservation and protection of the global environment, and it renders even more horrendously difficult the implementation of policies on reducing greenhouse gas emissions on the scale required in the coming decades.

I would like to finish on a sanguine note. Consider then how we are to account for our behaviour to our children, grandchildren and generations succeeding them if we do not make the appropriately drastic reductions in our material standards of living in order to be able to pass over the planet to them in at least as wholesome a state as we had it passed on to us. To anyone with a sense of history, the daily viewing of the tragic consequences of economic and ecological failure makes the response ‘We did not know’ poignantly inadmissible.


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