I believe this report shows two things. Firstly, it shows that making the economy more sustainable takes more than just ‘scoring tons’ as part of the drive to reduce greenhouse gas emissions. Secondly, and even more importantly, it shows that we really must start to think differently about prosperity and must stop making economic growth the be-all and end-all.
The illusion of sustainability
For those who do not believe in climate change, the IPBES report on biodiversity should be compulsory reading. We are witnessing a measurable reduction in the number of plants and animal species due to human activity. This fact cannot be ignored and cannot be glossed over by arguing that temperature has fluctuated since time began.
Since 1900 the number of plant species has diminished by around 20%. The report finds that 1 million species are threatened with extinction, more than ever before in human history. The decline in biodiversity is mainly due to human economic actions, which, due to their focus on constant growth, are threatening to permanently unbalance our planet’s ecosystem.
No matter how noble, essential and sustainable the development goals that we have set ourselves are, there is no chance that we will reach them if we do not drastically change our behaviour and rein in our greed. The UN commission therefore believes that “the evolution of global financial and economic systems to build a global sustainable economy, steering away from the current limited paradigm of economic growth” is the only option.
This is a radical appeal, let there be no misunderstanding about this. More radical than virtually any other appeal that finds its origin in the scenarios for which the climate impact has been and is being calculated by the IPCC. Because these scenarios are based on the assumption that economic growth must continue, by hook or by crook. The idea that the climate goals are achievable is based on the optimistic assumption that an unprecedented sea change will occur: an actual absolute, global decoupling of economic growth and increases in greenhouse gas emissions. Innovative but partly unproven techniques, such as large-scale underground storage of greenhouse gases, should ensure this. Other assumptions too, for instance regarding productivity improvements and innovation, are more optimistic than is realistic on the basis of historical averages. This is remarkable, to say the least. Because when working with scenarios for the future, it is good practice to stay very close to historical trends. And the only historical trend that is indisputably maintained is that of economic growth. And that is exactly where the problem lies.
If you were being optimistic, you could argue that the decoupling of economic growth and greenhouse gas emissions is perhaps a possibility,albeit a remote one. There is no way, however, that this argument can be substantiated with regard to the relationship between biodiversity and economic growth, because the loss of biodiversity is, of course, due to many other factors besides the emission of greenhouse gases. They include all aspects of economic activity that impact our environment. And that makes it very difficult to combine any increase in the scale of activity with the care for that environment, however carefully we try to handle this. That is why the authors of the UN report advocate a radically different setup of our economy.
And that is where it starts to get tricky. A 180 degree turnaround, throwing decades of economic theory overboard, letting go of something that we have believed in for years; that is what giving up on our addiction to economic growth requires from us. A standard economists’ story about how everyone knows that economic growth is not an indicator of prosperity will not do. We will really need to start taking a different approach to the institutional set-up of the global economy.
The fact that we have still not managed to accept and respect the limits that our planet sets - not even in the global climate discussion (and therefore also not in the Netherlands) - proves how difficult this is: policies that do not result in economic growth are unacceptable. Our policies are and remain focused on and limited by the economy, not by ecology.
Letting go of growth
As an economist, I try to envisage especially how we can maximise - broadly defined - prosperity for the current and future generations, given the scarce resources, including nature, that we have available to us. The only thing that I can establish, is that this discussion takes place mainly on the basis of a narrow definition of economic growth. For that reason, I want to present five recommendations for steering the necessary discussion about economic thinking and our economic system in the right direction.
Whichever way we are going to organise our economy, we should first and foremost act on the basis of the limits that the ecological system sets us. In my view this implies that we must accept lower economic growth as a possible outcome. Secondly, we should organise our institutions accordingly, by limiting the use of natural resources. For instance, as Europe is now doing with respect to greenhouse gas emissions. And by making natural resources and consumption, instead of labour, a bigger source of tax revenue than they are now; a greening of tax revenues.
My third recommendation: embrace the fact that populations are growing less rapidly. Because in addition to the activities of the human race, the expansion of the global population is another big challenge. Active birth control would be taking things too far, of course, but in my view encouraging having children is the other extreme.
Fourth: encourage people to work less. In the Netherlands, we have already made quite a bit of progress on this. Working fewer hours, for adequate pay, results in less economic activity. Many people see more leisure time as an attainment that improves the quality of life. Fifth: reduce the differences in prosperity. It appears that in countries with greater inequality, economic growth has to be higher in order to give people the idea that they are getting on in the world. The smaller the inequalities, the more stable an economy can be. On a global scale, this means that for certain countries, such as the Netherlands, it is easier to accept lower economic growth than for other countries, such as Bangladesh, where economic growth directly results in a higher quality of life and a longer life expectancy for large segments of the population.
We will try, obviously, and we will of course manage to preserve some of that biodiversity. Except, we do not have a lot of time left.
This article was previously published in Dutch on Duurzaam Nieuws.