Uneconomic growth is what happens when increases in consumption,
or man-made items, deplete the resources and well being of
a community or nation, which are worth much more than any
product we can produce.
According to Herman E. Daly, professor in the School of
Public Policy at the University of Maryland, uneconomic growth
arises from an undesirable balance of qualities known as
utility and disutility.
Utility describes the level
of a population’s well
being, while disutility refers
to the sacrifices – such
as depletion of resources and exposure to pollution - that
are often the result in an increase of production and consumption.
Increased consumption causes society to lose more than it
will gain until, eventually, a society experiencing uneconomic
growth reaches the futility limit:
consumption depletes more than it benefits. On the other
hand, when utility and disutility are equal,
a society is consuming at a renewable rate and economic growth
is sustained.
Daly was senior economist in the environment department
at the World Bank from 1988 to 1994, where he helped formulate
policy guidelines related to sustainable development. In
his book, Beyond Growth, he argues that natural
capital is not valued and therefore not addressed in economic
analyses
such as reports on the Gross National Product, a commonly
used indicator of a nation's economic success.
When the economy works in blatant disregard for natural
ecosystems in its efforts to produce man-made goods, uneconomic
growth occurs. This is when an economy produces “bads” faster
than it can “goods.” And when this happens, notions
of wealth – ie. status, man-made utilities, ownership
of real estate - no longer mean the same thing. In fact,
our current beliefs about wealth are based upon experiences:
the ownership and use of man-made inventions – utilities
- to better our lives. As Daly writes in an article for The
Scientific American: “Utility is an experience, not
a thing. It has no unit of measure and cannot be bequeathed
from one generation to the next. Natural resources, in contrast,
are things. They can be measured.”
Too few fish in the ocean? The way our current economic
system functions, we build more fishing boats. Yet uneconomic
growth is the reality that these boats are useless if there
are no fish to catch.
Sustainable - growth - economics means that we:
• Do not exploit renewable resources at a rate quicker
than an ecosystem can regenerate the resources.
and that we
• Do not deplete non-renewable resources faster than
we develop renewable substitutes.
Once we’re producing beyond the rate of what we can
renew, growth as we know it becomes incredibly ignorant in
the short term and impossible to maintain in the long run.
The economic status quo as we know it now cannot be maintained
long into the future. Essentially, we are borrowing from
the supply that belongs to future generations.
This is not to say that we should not continue to make products
for our own consumption. Solutions arise in the use of intelligent
and sustainable economic practices that defer to the realities
of the natural world.
Imagine if a watershed, a wetland, or the biodiversity of
a rainforest were worth much more in cash value when left
alone rather then logged or developed?
Initiatives such as Shaman Pharmaceuticals, founded in 1989,
illustrate why it is an economic benefit to not let rainforests
in South America be destroyed by logging. Shaman works as
a “bridge” between
indigenous healers - who can identify plants with beneficial
medicinal qualities – and a corporation like Merck & Co.,
which is working with Shaman to develop medicines for diabetes. In the state of New York, farmers in the Catskill mountains
are being paid to keep stewardship of the water which supplies
90 percent of the residents in New York City. This water
flows untreated and unfiltered, and farmers are paid a certain
amount each year to keep a “buffer” around the
stream flowing through their land to ensure that it does
not become contaminated with pollutants. Farmers also rotate
crops to prevent erosion, reduce their spraying and regulate
their animals’ feed.
What if the “right” to
deplete resources or cause pollution became a scarce asset
that could be bought
and sold on a regulated market?
In a cap-and-trade system, the transfer of wealth from
polluters to non-polluters provides incentives for polluting
firms
to change. Such cap-and-trade policies already exist, for example:
The US began trading emissions after the approval of the
1990 Clean Air Act, which authorized the Environmental
Protection Agency to put a cap on the amount of sufur
dioxide a fossil-fueled
plant was allowed to emit.
The European Union Greenhouse Gas Emission Trading Scheme
is the largest multi-national greenhouse gas emissions
trading scheme in the world. It began in January of
this year and
involves all 25-member states of the EU.
The Kyoto Protocol binds agreeing nations to a similar
system. Participating nations of Kyoto are able to
buy and sell emissions
credits with each other.
Conclusion
Establishing a sustainable economy takes the realization of an enormous collective
change. It may very well seem impossible now, but, as Daly, the founder of
Ecological Economics, writes:
The alternative to a sustainable economy, an ever growing
economy, is biophysically impossible. In choosing between
tackling a political impossibility and a biophysical impossibility,
I would judge the latter to be more impossible and take my
chances with the former.
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