Climate protection needs growth, but with a view to sustainability

In WIREs Climate Change, Christian Flachsland and co-authors identify ways to rethink our understanding of a dynamic economy.

Scholars have been arguing about "The Limits to Growth" since at least 1972, when the “Club of Rome” – international leaders from business, politics and academia – commissioned the eponymous environmental classic. Do we need "de-growth", i.e. should we shrink the economy to protect the planet? Or can we de-couple economic growth from environmental degradation? In a new paper published in the journal WIREs Climate Change in August 2020, Michael Jakob, William Lamb, Jan Christoph Steckel and Ottmar Edenhofer – all of the Mercator Research Institute on Global Commons and Climate Change in Berlin – along with Christian Flachsland, Hertie School Professor of Sustainability, explore how to keep the climate debate from becoming bogged down in this question.

The authors of the article, “Understanding Different Perspectives on Economic Growth and Climate Policy”, identify four important controversies within the sustainability community overlaid by the growth dispute. These are: (1) how to conceptualise "human well-being" beyond GDP, (2) whether sustained economic growth is feasible and desirable, (3) whether climate policy interventions should mainly aim to stimulate technological progress and substitution or also to change individual lifestyles, and (4) the scope of appropriate policy instruments and agents of change, i.e. if governments and central market-based incentives are sufficient or whether more decentralised initiatives as well as fundamental changes in societal power structures are required.

"Zero growth, or even shrinking of the economy, is not helpful for climate protection either. The Soviet Union, for example, had a devastating ecological balance with little economic dynamism," says Michael Jakob, Senior Researcher at the MCC and lead author of the analysis. "But we note that some de-growth proponents raise important points in relation to each of these four controversies. Many economists are often inclined to dismiss them quickly, but having a closer look we identify important intersections with mainstream climate economics."

For a broader consensus, the authors propose a "sustainable transition perspective", arguing that scholars should consider the limitations of gross domestic product (GDP) as a measure of prosperity. While GDP quantifies the value of goods and services currently produced, society’s real interest lies in how to ensure human well-being for present and future generations. They argue that policymakers should seek to rely on regulation via market forces rather than on imposing bans, which often have a regressive effect, i.e., by placing an excessive burden on low-income-households. Climate policy should also consider how economic and social power structures serving special interests can be altered if these stand in the way of enhancing universal human well-being.

“We should not consider economic growth a problem per se”, says the Hertie School’s Christian Flachsland. “Instead we should ask what it takes to achieve improvements in human well-being, and that certainly involves sound public policy reforms. In our paper we try to build bridges across different intellectual camps within the sustainability research community, and despite some persisting differences in perspective, I think we identify substantial common ground.”

The paper is available via WIREs Climate Change here.

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