Citizen Action Monitor

More evidence and arguments explain why green economic growth won’t be our salvation

Where is the empirical evidence that green growth is compatible with environmental sustainability?

No 2639 Posted by fw, July 1, 2020 —

Timothee Parrique

“Is economic growth compatible with ecological sustainability? To answer this question, we need to talk about decoupling. The term ‘decoupling’ refers to the possibility of detaching economic growth from environmental pressures. Economic growth is a measure of market activity, most often Gross Domestic Product (GDP), while environmental pressures include all the consequences an economy has on nature – a useful distinction being between resource use (materials, energy, water, and land) and environmental impacts (e.g. climate change, water pollution, biodiversity loss). … Relative or weak decoupling, for example between GDP and carbon emissions, refers to a situation where the emissions per unit of economic output decline but not fast enough to compensate for the simultaneous increase in output over the same period, resulting in an overall increase in total emissions. Said differently: even though production is relatively cleaner, total environmental pressure still goes up because more goods and services are produced. Absolute or strong decoupling, on the other hand, is a situation where, to stay with the same example, more GDP coincides with lower emissions. … The validity of the green growth discourse relies on the assumption of an absolute, permanent, global, large and fast enough decoupling of economic growth from all critical environmental pressures. As Parrique et al. (2019) have recently showed, there is no empirical evidence for such a decoupling currently happening.”Timothée Parrique, Uneven Earth

Timothée Parrique holds a PhD in economics from the Centre d’Études et de Recherches sur le Développement (University of Clermont Auvergne, France) and the Stockholm Resilience Centre (Stockholm University, Sweden). Titled The political economy of degrowth (2020), his dissertation explores the economic implications of the ideas of degrowth and post-growth. Tim is also the lead author of “Decoupling debunked – Evidence and arguments against green growth” (2019), a report published by the European Environmental Bureau (EEB).

To support the case for building crude oil pipelines, PM Trudeau frequently claimed that we can grow the economy AND concurrently prevent environmental degradation caused by our use of carbon-emitting nonrenewable and renewable energy resources. What was suspicious about his claim was that the PM never responded to requests to present the empirical evidence to support his assertion.

In fact, Trudeau could not have presented evidence to support his claim because there is none. As expert Timothée Parrique points out, “Decoupling should today be recognized as what it is, a figment of statistical imagination.

And to prove his point, in his article, reposted below, Parrique presents seven reasons why decoupling is impossible, and why Green Growth will not be our salvation.

Just to be clear, as mentioned in the opening excerpt above —

… decoupling refers to the possibility of detaching economic growth from environmental pressures. Economic growth is a measure of market activity, most often Gross Domestic Product (GDP), while environmental pressures include all the consequences an economy has on nature – a useful distinction being between resource use (materials, energy, water, and land) and environmental impacts (e.g. climate change, water pollution, biodiversity loss)

Below is my repost of Timothée Parrique’s clear and precise explanation of decoupling, featuring my added subheadings, text highlighting, and bulletted reformatting. Alternatively, read his original piece by clicking on the following linked title.

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Decoupling by Timothée Parrique, Uneven Earth, June 29, 2020

“Given the historical correlation of market activity and environmental pressures, relying on decoupling alone to solve environmental problems is an extremely risky and irresponsible bet.”

[DEFINITION OF KEY TERMS]

Decoupling refers to the possibility of separating economic growth from environmental degradation

Is economic growth compatible with ecological sustainability? To answer this question, we need to talk about decoupling. The term ‘decoupling’ refers to the possibility of detaching economic growth from environmental pressures. Economic growth is a measure of market activity, most often Gross Domestic Product (GDP), while environmental pressures include all the consequences an economy has on nature – a useful distinction being between resource use (materials, energy, water, and land) and environmental impacts (e.g. climate change, water pollution, biodiversity loss).

What does it mean for two variables to be “coupled”?

Generally speaking, two variables are said to be ‘coupled’ if one evolves in proportion with the other (e.g. more of A means more of B), and they decouple when they cease to do so.

For the environment to be sustainable, 4 variables must achieve measurable environmental targets

What matters for sustainability is the nature of that decoupling: its magnitude, scale, durability, and how effective it is in achieving environmental targets [such as lower carbon emissions].

The difference between ‘relative’ or ‘weak’ decoupling and ‘absolute’ or ‘strong’ decoupling

Relative or weak decoupling, for example between GDP and carbon emissions, refers to a situation where the emissions per unit of economic output decline but not fast enough to compensate for the simultaneous increase in output over the same period, resulting in an overall increase in total emissions. Said differently: even though production is relatively cleaner, total environmental pressure still goes up because more goods and services are produced. Absolute or strong decoupling, on the other hand, is a situation where, to stay with the same example, more GDP coincides with lower emissions.

‘Local’ versus ‘global’ decoupling

Local decoupling refers to cases where decoupling is observed in one specific place (e.g. decoupling of water consumption and GDP in Australia), while global decoupling occurs at the planetary scale.

‘Temporary’ versus ‘permanent’ decoupling

Also, decoupling can be temporary or permanent –just as GDP and environmental pressures can decouple at one point in time, they can also recouple later on.

Decoupling can also be rated according to its ‘magnitude’ and ‘fairness’

Finally, decoupling can be evaluated based on its magnitude and fairness. Decoupling can be either sufficient or insufficient in reaching a specific mitigation target. And following the principle of shared but differentiated responsibilities, decoupling needs to be sufficiently large in affluent countries in order to free the ecological space necessary for consumption in regions where basic needs are unmet.

 

GREEN GROWTH VS. DEGROWTH

The debate on decoupling has two main sides.

  • Proponents of “green growth” expect efficiency to enable more economic activity at a lower environmental cost;
  • Advocates of “degrowth” appeal to sufficiency, arguing that less goods and services is the surest road to ecological sustainability.

Green Growth economists’ hypothesized that economic growth inevitably leads to more efficiency and, therefore, to reduced environmental costs

Many proponents of the green growth narrative have put forward that economic growth inevitably leads to more efficiency and, therefore, to reduced environmental costs. In the 1990s several economists conducted empirical work that led them to believe that economic growth was negatively correlated with environmental pressures. Environmental damages would first grow but then decline. This inverted bell-shaped development came to be referred to as an Environmental Kuznets Curve, named after economist Simon Kuznets, who, in the 1950s, proposed that, as a society industrializes, it would first become more unequal, and then less.

Later came the ‘theoretical bases’ to support the Green Growth case

Over the years, scholars developed several theoretical reasons to explain such phenomena.

  • For example, as income per capita grows, basic needs get satisfied and nations can afford to dedicate more of their attention and resources towards environmental protection.
  • Another explanation is that richer nations’ industries are able to develop and afford cleaner and less resource-intensive technologies.
  • They also transition from industrial activities to services, which are assumed to be less natural resource-intensive.

However, it is now generally accepted that merely increasing GDP does not naturally result in decoupling

However, it is now widely recognized that decoupling does not occur naturally by the mere fact of a country increasing its GDP—thereby complicating the Environmental Kuznets Curve hypothesis.

In response, Green Growth backers are betting on things like carbon taxes, clean energies, carbon capture and storage and so on…

For green growth advocates, decoupling is either inevitable or has not yet occurred because of lack of adequate policies and technological development. In response —

  • some argue that policies such as
    • carbon taxes,
    • quota markets,
    • and other regulations could foster it.
  • Many also argue that
    • a shift to clean energies,
    • the establishment of a circular economy,
    • incentives for environmentally-friendly consumption,
    • turning products into services, and
    • ecological innovations like, for example, exhaust filters, water-saving irrigation systems, and carbon capture and storage could make decoupling happen.

Seven reasons why decoupling is impossible

Degrowth proponents, however, argue that the reason why this long-awaited decoupling has not yet occurred is that because it is impossible. Here is a list of seven reasons why this is so:

(1) Rising energy expenditures. It takes energy to extract resources. The less accessible the resource, the higher the energy bill. Because the most accessible resources have already been used, the extraction of remaining stocks is a more resource- and energy-intensive process, resulting in a rising total environmental degradation per unit of resource extracted.

(2) Rebound effects. Efficiency improvements are often partly or totally compensated by a reallocation of saved resources and money to either more of the same consumption (e.g. using a fuel-efficient car more often), or other impactful consumption (e.g. buying plane tickets for remote holidays with the money saved from spending on meat). It can also generate structural changes in the economy that induce higher consumption (e.g. more fuel-efficient cars reinforce a car-based transport system at the expense of greener alternatives, such as public transport and cycling).

(3) Problem shifting. Technological solutions to one environmental problem can create new ones and/or exacerbate others (e.g. the production of electric cars puts pressure on lithium, copper, and cobalt resources; nuclear power generation produces nuclear risks and logistic concerns regarding nuclear waste disposal).

(4) The underestimated impact of services. The service economy can only exist on top of the material economy, not instead of it. Services have a significant footprint that often adds to, rather than substitutes, that of goods.

(5) Limited potential of recycling. Recycling rates are currently low and only slowly increasing, and recycling processes generally still require a significant amount of energy and  raw materials. Most importantly, in the same way that a snake cannot build a larger skin out of the scraps of its previous, smaller one, a growing economy cannot rely on recycled materials alone.

(6) Insufficient and inappropriate technological change. Technological progress is not targeting the factors of production that matter for ecological sustainability

  • (it saves labour and not natural resources) and not leading to the type of innovations that reduce environmental pressures;
  • (it is more profitable to develop new extraction techniques than it is to develop new recycling techniques);
  • it is not disruptive enough as it fails to displace other undesirable technologies (solar panels are being used in addition to coal plants and not instead of it);
  • and it is not in itself fast enough to enable a sufficient decoupling.

(7) Cost shifting. In competitive, growth-oriented economies, firms have incentives to relocate activities where environmental regulations are the lowest. What has been observed and termed as decoupling in some local cases was generally only apparent decoupling resulting mostly from an externalisation of environmental impact from high-consumption to low-consumption countries enabled by international trade.

 

EMPIRICAL EVIDENCE FOR DECOUPLING

Reliable, valid empirical evidence to support green growth case for decoupling is nonexistent

The validity of the green growth discourse relies on the assumption of an absolute, permanent, global, large and fast enough decoupling of economic growth from all critical environmental pressures. As Parrique et al. (2019) have recently showed, there is no empirical evidence for such a decoupling currently happening.

  • Whether for materials, energy, water, greenhouse gases, land, water pollutants, and biodiversity loss, decoupling is either only relative, and/or observed only temporarily, and/or only locally.
  • In most cases, decoupling is relative.
  • When absolute decoupling occurs, it is only observed during rather short periods of time, concerning only certain resources or impacts, for specific locations, and with very small rates of mitigation.

 

DEBUNKING THE DECOUPLING HYPOTHESIS

Decoupling should be recognized for what it is – A figment of statistical imagination

The decoupling hypothesis has played an important role in legitimating a growth-based economy with a disastrous record in terms of social-ecological justice. Its meagre achievements in the last two decades cast serious doubt as to whether prospects for the future are better. Given the historical correlation of market activity and environmental pressures, relying on decoupling alone to solve environmental problems is an extremely risky and irresponsible bet. Until GDP is actually decoupled, any additional production will require a larger effort in reductions of resource and impact intensity to stay away from resource conflicts and ecological breakdown. Decoupling should today be recognized as what it is, a figment of statistical imagination.

This should prompt us to reframe the debate altogether: what we need to decouple is not economic growth from environmental pressure but prosperity and the good life from economic growth.

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Further resources

Parrique et al., 2019. Decoupling debunked: Evidence and arguments against green growth. The European Environmental Bureau. A report reviewing the empirical and theoretical literature to assess the validity of the decoupling hypothesis.

Mardani et al., 2019. ‘Carbon Dioxide (CO2) Emissions and Economic Growth: A Systematic Review of Two Decades of Research from 1995 to 2017’. Science of The Total Environment 649 (February): 31–49. The latest literature review of the empirical literature concerning the decoupling of economic growth from carbon dioxide emissions.

Smith et al., 2010. Cents and Sustainability: Securing Our Common Future by Decoupling Economic Growth from Environmental Pressures. The Natural Edge Project. Routledge: London. A good example of a case for decoupling and green growth

Hickel J. and Kallis, 2019. Is Green Growth Possible? New Political Economy. A good example of a case against decoupling and green growth.

UNEP, 2011. Decoupling natural resources use and environmental impacts from economic growth. A Report of the Working Group on Decoupling to the International Resource Panel. Fischer-Kowalski et al.

UNEP, 2014. Decoupling 2: technologies, opportunities and policy options. A Report of the Working Group on Decoupling to the International Resource Panel. Von Weizsäcker et al. The two reports published by the United Nations Environment Programme, the first on the state of resource decoupling, and the second on policies to foster decoupling.

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