The world is currently facing an environmental crisis, this affects everyone whether they choose to acknowledge it or not. The reasons people may not acknowledge may be due to lack of awareness or due to ignorance of the problem, some even choosing to try and disprove the fact that there’s an environmental crisis at all. Economists have looked into a number of potential ways to find a solution, the main ones being ‘green growth’ and degrowth. Green growth is ensuring economic growth and development whilst maintaining the environment and making sure of sustainability. The main focus of the strategies is to ensure “natural assets can deliver their full economic potential on a sustainable basis” (OECD, 2018). Degrowth is a term used for the idea of reducing growth and completely changing the way we live to combat climate change. In this essay I will compare the two strategies and form my own opinion on what I believe the best strategy for the future.
So, what is green growth? Green growth is a strategy for tackling the environmental crisis whilst allowing the economy to grow in a sustainable way, this means that we have to make sure that natural resources are protected and can be renewed for further use again in the future. If we don’t change the way we are currently growing then the effects on the future could be irreversible, problems such as water scarcity in certain areas of the world, the knock-on effects of this would mean we would have increased migration. Furthermore, we will see heightened pollution levels, increased climate change and potential loss of wildlife and biodiversity (OECD, 2011). The advantages supporting a green growth approach are that it will actually not have any drastic changes to current life, as it’s more focused on changing the way we currently operate as opposed to creating a whole system. Furthermore, it may potentially open up new markets with all green and completely renewable products to be sold, this will not only help stimulate growth in the economy but also reduce carbon emissions and not add to the ever-increasing temperature of the world. Workers in firms may experience better working conditions due to air and water supplies being generally cleaner due to these changes in strategy, this in turn could increase productivity and make the work place a more efficient. Additionally, the world could see accelerated growth and innovation in green policies allowing the economy to find even better ways to produce at the same efficiency as they would have using fossil fuels. (Hallegatte et al., 2012) The disadvantages of following green growth strategies are, that firms will have costs of changing their physical capital and this in turn will reduce the amount of disposable income they have available. Which could reduce aggregate demand of the economy lowering GDP and growth in the short run. There could be potential drop in productivity in the economy due to moving from fossil fuelled systems to newer green ones, generally we have found businesses to have higher costs if producing in an energy efficient way or with biodegradable packing. On a consumer level we may find that general products are more expensive due to the increased prices on the supply side, the impact of this is that we could lose demand especially if the price increase is significant, then we may see certain sectors struggle in the future. Furthermore, if only certain countries implement their green growth initiatives then the countries that using them may see their exports fall, due prices of products not being as competitive worldwide, this could be avoided with certain international agreements such as the one made in Paris.
The other solution for the environmental crisis that I’ll be covering in this essay is degrowth, the word itself comes from the Latin “la décroissance” (Anon, 2018) and the idea itself dates back to 1972 when André Gorz said “Is global balance, which is conditional upon non-growth—or even degrowth—of material production, compatible with the survival of the (capitalist) system?” (Gorz, 1972). Degrowth tries to increase the quality of life for all and solve the environmental crisis by changing the way we live and how we think. This will include processes such as reducing production and consumption which will causes this degrowth. The benefits of degrowth are that due to reducing growth and/or achieving zero growth we will have less production and this causes less pollution, which will help towards combating greenhouse gases that had been released in the past, also less growth will have a positive effect on global warming, which if left unchecked will cause many problems in the future, currently at 1º above global mean temperature, without the changes made we could hit 4º by 2100. Another benefit of degrowth is that due to the reduction in working hours. This reduction will have positive social benefits as workers will have more time to spend with friends and families. Additionally, if the government decides to make many resources free or perhaps have more cooperatives then we will have better wealth distribution around the economy, to make up for the potentially income loss. Degrowth can also open new markets even with a potential rise in unemployment, caused by reduction in GDP, by paying people to help restore eco systems or helping the ageing population. (Bliss, 2015) Overall, degrowth will increase our quality of life by sharing a surplus and moving wealth better around the economy and tackle the environmental crisis head on. The potential drawbacks of implementing degrowth, are that at its purest degrowth or zero growth would cause firms to have lower outputs and profit, for some firms this would cause the knock-on effect of reducing their workforce and so we would see a rise in unemployment. The only way they could perhaps negate the effects of this would be if policies were put in place to reduce work hours to maintain employment. Additionally, it would make society change the way they think and act in life, this is due to in a capitalist society everyone tries to maximise utility, but this isn’t the aim of degrowth. It would take time for the world to adapt a new way of thinking. Another problem with degrowth is that it would lack backing from private sector executives, CEO’s and government officials and due to this they would have to promote the ideas and advantages of taking this approach, because without the endorsements from them it would struggle to convince everyday consumers. Furthermore, converting to a degrowth system would require large amounts of preparation as it’s not something that can simply be achieved overnight, also would require all officials to communicate throughout the process to ensure the effects are steady in order to achieve its goals. (Anon, 2010)
To compare green growth and degrowth I will look at the positives and negatives of both and then give my personal view on which strategy I believe to be best to lead the world to a better future. If we were to take the green growth strategy then we wouldn’t have any sudden changes to day to day living however, the same cannot be said for degrowth so looking at these points green growth will allow for an easier transition. Although, perhaps a big change is what the world needs in order to effectively deal with this ever-increasing issue. Moving to either strategy will create new markets to replace the existing ones which will create wealth in the economy, increasing employment rates and potentially reducing government spending on benefits. The positives of this is are that the government can reduce it deficit whilst tackling climate change. However, the degrowth policy will reduce working hours which has many social benefits but on a pure economic standpoint will reduce aggregate demand and overall growth in the economy. Green growth could potentially see unemployment due to the increased costs that come with becoming more economically friendly. The aims of degrowth are obviously zero or negative growth however, this will increase domestic costs of production and make exports less competitive, the same can be said for green growth as with increased production costs and drop of productivity in the short term, both strategies could lead to a worse balance of payments. Green growth has the ability in the long run to lead to increased productivity and also accelerated growth as more investment will go into innovating green production, this helps the economy grow efficiently and sustainably. Degrowth will not have the same investment as the economy will be sharing the surplus around, this helps quality of life of those in the economy however, this will have negative effects in the long run. My personal view is that green growth is the optimal strategy moving forward to deal with the environmental crisis, this is due to my thoughts that although degrowth is a great concept I believe It would be far too difficult to put into practice. The culture change I believe would be far too sudden, having to completely change the way we all view life. Green growth would allow us to continue to grow and prosper but also combat the environmental issues we have been faced with. There are many ways it can be implemented, and I believe it will be a much smoother and more effective transition compared to degrowth.
To conclude, there are many advantages and disadvantages for the two strategies to deal with the environmental crisis, regardless of which one the world actually chooses to implement. Its paramount that something is done, so that we have can preserve the world in which we live. Personally, I believe that green growth would be better of the two strategies however, they could in future take policies from both to create a new and improved strategy.