Environment vs. Economy: Fact or Fiction?

 “With laissez-faire and price atomic, Ecology’s Uneconomic,But with another kind of logic,Economy’s Unecologic,” — Kenneth E. Boulding, in Frank F. Darling and John P. Milton, eds., Future Environments of North America, 1966

On the first of September, the U.S. government announced plans to increase clean/green energy tax credits by US$5 billion in pursuit of its two-fold aim to grow ‘green job’ generation and expand its renewable capacity.

Doesn’t it sound like a great way to boost the economy and move towards environmental development? On September 9, an article in British broadsheet The Guardian stated that in Europe the continent is installing more wind-power capacity than any other energy source. With around 40 per cent of the continent’s new electricity capacity coming from wind in the past two years, the renewable looks to be blasting Europe towards its 100 per cent renewable-sourced 2050 energy target. Add to this the host of breaking new developments in renewable facilities and increasingly cost-effective technologies that strive to eat up the popular U.S.

Energy star tax credits scheme, and it certainly looks like our worldwide renewable energy appetite is on the up. But at what real economic cost?

Wider than talk of the good and bad aspects of renewable energy facilities and schemes, comes increasing comments about ‘false economy’ created by the various tax credits and incentives aimed at bolstering renewable capacity. Similarly, there is talk of a fragile balance between environment and economy— perhaps even an opposition. What are developing nations, tackling huge issues such as fighting poverty, supposed to do? Install wind farms amidst the wasteland? This idea of a tug-of-war between economic development and environmentally minded moves could call much of today’s green/sustainable investment into question, depending on whether you address it in the short- or long-term. Is it possible that without tax breaks, some forms of renewable energy would be rendered ineffective or even detrimental to an economic development? Discussion of various associated limits to growth is not new, but it is ongoing. This issue of IRJ investigates where exactly the Environment versus Economy: Fact or Fiction quandary sprang up from and what, if anything, we are going to do about this perceived balancing act.

Differentiating issues

A good place to start and a text to later contribute and shape future discussion of environment and economic development is the 1987 Brundtland Report, also known as Our Common Future, from Dr. Gro Brundtland, the United Nations World Commission on Environment and Development (WCED). It is this text which quite simply looked at the equation as one goal, and stated that achieving combined environmental and economic development comes down to “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” which, essentially, tries to tailor solutions to both short- and long-term needs. More recently, Cents and Sustainability: Making Sense of How to Grow Economies, Build Communities and Revive the Environment in Our Lifetime by Michael H. Smith and Karlson ‘Charlie’ Hargroves (March 2009) has responded to the Brundtland Report. Cents and Sustainability argues and updates the premise that separating economic growth from environmental pressures, whilst committing to reducing poverty and preserving/healing our environment, is the key to a defining strategy for playing out the original calls from the 1987 report. This text distinguishes between climate change action, water treatment and conservation, air and waste pollution and beyond. In doing so, it becomes clear that half of the battle in understanding the relationship between environment and the economy is the confusion surrounding the different parts of the quest to truly go greener and facilitate economic growth.

Is it all a myth?

Many voices on the environment versus economy line stem from political, commercial, and media circles which sometimes results in the cost factor being used against environmental conservation, new legislation or sustainable practice improvement as a means of enforcing an underlying democratic point. This often appears in the form of new issues of public interest, such jobs generation in the recovery of the global financial crisis. However aside from making one political or media impact, this tactic also leads some to the conclusion that environment versus economy is a myth used wrongly, sparking headlines such as the popular ‘Green versus Green.’ There are various case studies to support this rejection of the idea that environmental measures might be an economic development roadblock. The work of Stephen M. Meyer, the former Director of the Massachusetts Institute of Technology (M.I.T) Project on Environmental Politics and Policy, is one such source.  Throughout Meyer’s professional life of study, he researched and updated research on many facets within the ‘Environmentalism and Economic Prosperity’ umbrella and other related fields. Meyer even analysed all of the U.S. states to look at how the rigidity of environmental protection practice impacted and/or correlated with economic health, including jobs generation, over a 20-year period. His work, and that of a later study conducted by the Institute for Southern Studies (I.S.S) in North Carolina, essentially outlines that those states with more strict environmental procedure tended to outperform others in terms of job generation and “climate for long-term economic development.” Studies such as this lay to waste claims that investment and development of environmentally minded practice stands in the way of what is affordable and economically beneficial.

A Modern Balance

Whilst environment versus economy may or may not be a myth, there must be a root cause for concern which created the buzz phrase so often banded about. By looking at the specific economic situation of some nations today it may be possible to see why the equation exists and perhaps even how such concerns may be appeased. One voice to tackle the line head on recently is The Times Group of India’s Managing Director, Vineet Jain. At his inauguration, Jain spoke out to emphasise the mainstreaming of climate change and environmental issues today, compared with their relative obscurity a decade ago.

“A rapidly-growing economy such as ours faces a big dilemma: Development versus environment. Capping carbon emission could slow down growth. And growth is the only way out of poverty. The challenge is to look beyond mutually exclusive, zero-sum scenarios,” he stated.

“Can we find win-win paths to growth? I believe we need to hasten the development of clean technologies, and embrace eco-friendly alternatives. We need attractive incentives in the form of tax breaks, lower tariffs and R&D grants to persuade industry to go green. And we need to punish those who violate energy-efficiency solutions.”

In Jain’s words we see the globally-recognised concern—fears for slowed escapement from poverty—coupled with a commitment to environmentally-mindful development. The argument for slowed economic growth to directly reduce environmental impact is not new, but neither is the struggle to identify a truly sustainable solution. It appears, at least at a base level, that there is some ambiguity associated with what practices are considered environmentally and sustainably minded for investing in an economy’s future, and what actions may result in short-term negative economic results. The question is not whether environment can be pitted against economic development, but how immediate seemingly detrimental effects from changing policy, legislation and practice to embrace environmental measures can be considered, restricted and properly counted to best serve within the long-term health of the economy. In the end, we’re all looking for Jain’s “win-win paths.”

Understanding the consequences

In his work Environmental Economics Explained, Dr. Frank Vorhies, Director of Earthmind, makes understanding how to approach the value of the environment within its versus economics idea much more simple.  He explains that in order for a person to understand an environmental cost scenario, such as forest conservation, it helps to take the subject into a context people will more easily understand. “Think of a natural forest as a business. Who are its customers? What goods and services are they interested in? Or are they interested in ground resources, such as cleared land for farming or the minerals under the ground? These interests may threaten the business,” Vorhies writes.

“A business approach to ecosystem management uses economic valuation as a practical tool to assess potential benefits and costs and to identify potential customers and threats.”

It’s certainly a problem that can be applied to many key issues for the environment today, but public education and use of data and/or views as propaganda by media outlets looks to be a big contributor to the confusion on this topic. The dual consideration present is that of short- and long-term results from environmental investment and country development. Striking a balance between what is feasible, what will promote a sustainable future, and what may threaten to scupper a struggling economy looks like the key. Of course as a result, there is no one-size-fits-all solution that can be applied globally, which makes assigning standards more complex. Jaim’s words on the real concern and simultaneous embrace of environmentally minded development offer a rather bright prospect and exemplify the sorts of dilemmas that differ greatly from one nation to another.

Alignment between political factions and their respective agendas, with financial stability and public awareness offers a way out of this long-running supposed opposition between the economy and environment. Many who denounce this line point out that the world is not about to wait for the economy to be healthy enough to further consider environmental development, and this is the great difficulty. In striking a country-specific balance to better our environmental impacts tomorrow, the economy needs to play now. Forecasts today indicate that the cumulative cost of climate change between 2010 and 2050 could be up to US$4.1 trillion and, put simply, it is clear that when it comes to energy consumption against environmental development, we cannot ‘have our cake and eat it too.’ It is time to curtail the short-term viewpoint and consider these sorts of vital long-term environmental and economic stats, to tailor environmental development to best deliver change within the economic boundaries of developing nations, and act now before the world leaves both us and our economies behind. As Thomas Fuller wrote in Gnomologia, right back in 1732, ‘We never know the worth of water till the well is dry.’

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