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If the earth must lose that great portion of its pleasantness which it owes to things that the unlimited increase of wealth and population would extirpate from it, for the mere purpose of enabling it to support a larger, but not a better or a happier population, I sincerely hope, for the sake of posterity, that they will be content to be stationary, long before necessity compels them to it. The relationship between economic growth, human well-being, and the achievement of a sustainable future has a long and complex intellectual history.
A contrasting perspective on the challenge of reconciling economic activity, social welfare, and the needs of future generations was put forward by Donella H.
Natural resource use and pollution per unit of industrial output was cut by at least 75 percent. Industrial production was stabilized at the level prevailing in the late twentieth century. Goods and services were redistributed from the rich to the poor to provide a high quality of life for all members of the global community. The present paper will address these issues by advancing two separate yet interrelated arguments, focusing especially on the example of climate change. Second, I will argue that the premise that economic growth necessarily leads to an enhanced quality of life and improved human flourishing in high-income societies is also problematic from a social science perspective. The approach taken under the Kyoto Protocol would have required the United States to make deep and immediate cuts in our economy to meet an arbitrary target. Because claims of this sort have major policy implications, it is fair to ask whether they hold up under scrutiny.
A second point is that a 1 percent reduction in economic output would involve an annual cost of roughly $150 billion per year in the context of the current U.S. Why are the impacts of climate policies on the rate of economic growth predicted to be small? A related and important point is that climate stabilization may be viewed as an investment in ecological capital that will provide a stream of long-run economic benefits. I have argued that climate stabilization could be achieved without large impacts on the rate of short-run economic growth and that, in the long run, the result would be a world of enhanced life opportunities for members of future generations.
On this front, authors such as Daly and John Cobb[27] have produced a very striking conclusion. In standard economic theory, individuals’ preferences are assumed to be fixed and independent of social context.
What are the implications of Frank’s approach for balancing the economy, human welfare, and environmental quality over the long term? Given plausible assumptions about the importance of social status in motivating behavior, however, Brekke and I found that substantially larger emission reductions were economically justified. In this paper, I have argued that accepting substantial reductions in the future rate of economic growth may be unnecessary to safeguard and sustain the biophysical systems that provide the basis and underpinnings for human livelihoods and well-being.
Rich Howarth, Pat and John Rosenwald Professor of Economics at Dartmouth College, is an environmental and ecological economist who studies the interface between economic theory and the ecological, moral, and social dimensions of environmental issues.


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It is simultaneously dystopian and utopian, presenting a narrative that combines an apocalyptic warning with the possibility of a type of secular renewal achieved through a process of personal and (especially) collective transformation. First, I will argue that the perception that there is a hard tradeoff between the goals of economic growth and environmental sustainability rests on a contestable empirical premise. As Herman Daly argued in his landmark book Steady-State Economics,[8] economic growth provides a mix of benefits and costs in terms of its contribution to human well-being. An analogous argument, however, is offered by analysts who favor free-market energy policies over the interventionist policies needed to put the economy on course towards the achievement of a sustainable energy system. On this point, the research literature depicts a more complex and subtle set of relationships.[16] For one thing, the USEIA study found that well-designed policies could achieve the goals of theKyoto agreement at a substantially lower cost. One reason is that engineering studies have shown that a wide variety of low-cost emissions abatement technologies are currently available or projected to become available given appropriate investments in research, development, and technology diffusion. We demand high-carbon goods because fossil fuels remain cheap and because current market prices do not reflect the costs that climate change will impose on ecosystems’ future generations. But suppose, for the sake of argument, that we rejected this claim in favor of the proposition that achieving ecological sustainability would require substantial reductions in future economic growth.
More tellingly, the introduction of an optimal tax to balance the private benefits and social costs of consumption would support a 19 to 25 percent reduction in consumption levels and a 25 percent increase in the enjoyment of leisure. In the long run, the growth of material production and consumption is limited by natural resource constraints, and achieving a sustainable future will require policies and institutions that maintain the economy within the bounds set by nature.
In a growth-oriented society, it provides an answer to critics who warn that the costs of achieving ecological sustainability would put the economy at risk. This point is supported by data on trends in the Index of Sustainable Economic Welfare, subjective well-being, and a wide variety of social and environmental indicators. A sustainable future will emerge if we build institutions that, on a practical level, sustain the natural environment and the social and technological conditions that will empower future generations to define and pursue their own conception of the good life. Like Pinchot and the WCED, this vision emphasizes the need to conserve natural resources and ecosystems as the foundation of a sustainable future, combined with the need to redistribute wealth to achieve equity in an ecologically limited world. While it is of course true that the transition from a high-carbon to a low-carbon energy economy would carry positive economic costs, a large body of literature in the fields of engineering and economics establishes that those costs would be too small to substantially affect the overall rate of economic growth. In poor societies, growth can provide material goods that can satisfy urgent needs given just institutions that allocate goods and services to the impoverished. Instead, environmentalists may be better served by the WCED approach to sustainable development, which de-centers growth to focus more directly on the achievement of social justice and the conservation and protection of ecosystem services. The 4.3 percent output loss occurred in a single year based on the assumption that emissions cuts were implemented precipitously in a way that failed to limit costs through measures designed to achieve a smooth and efficient transition.
A recent study by McKinsey and Company, for example, identified a set of specific technologies sufficient to reduce U.S. It does not, however, follow that transition to a low-carbon economy would require major changes in the standard of living, noting that gross domestic product (GDP), is a measure of subjective value and that the level of value per unit of energy or material throughput can be increased substantially within the limits set by human psychology and the laws of thermodynamics.


While non-economists sometimes assume that mainstream economics is concerned narrowly with the monetary value of market goods and services, in fact, economics textbooks very much stress the contributions that public goods and environmental quality make to human well-being. But in high-income societies, economic growth generates diminishing marginal returns, so that large increases in production and consumption have almost no effect on average well-being in society. Stated somewhat differently, all individuals face pressures to maintain high income and consumption levels to avoid falling behind in relative terms. It would provide an incentive signaling the full social cost of private decisions that would serve to align individual self-interest and community well-being.
If one ignored the social costs of consumption externalities, then standard cost-benefit analysis would justify emissions reductions of no more than 9 to 15 percent relative to baseline levels, with no appreciable impact on economic growth or the amount of time allocated to paid labor. In the pursuit of growth, our society has told itself that our social and environmental values are too expensive to afford.
As the Nobel Prize winning economist Amartya Sen wrote in his book Development as Freedom,[45] the path to enhanced human flourishing will be built by expanding the scope of choices and opportunities.
Behrens, III, in their 1972 book, The Limits to Growth.[4] Based on a dynamic simulation model in which businesses and households make myopic decisions without regard for the long-run implications of short-run production and consumption, Meadows et al. A good case can be made that failing to stabilize climate poses a major risk to the livelihoods of future generations.
This hardly implies that unlimited growth is possible or desirable, though it provides a framework for balancing the costs and benefits of growth and for directing goods and services to ends that best reflect society’s values.
Energy Information Administration (USEIA) predicted that implementing the Kyoto Protocol would reduce U.S. On the other hand, Stern’s analysis implies that climate change policies would have almost no impact on the rateof economic growth. The question is, then, how the benefits of improved environmental quality compare with the costs of reduced private consumption.
Still, a concern for relative economic status can lead people to pursue higher income and consumption levels even when, from a social perspective, these activities generate negative costs of the kind measured by the ISEW.[35] Since these costs are excluded from the standard measure of economic output, it is not surprising that the economic growth that has occurred in the United States since 1970 has not been matched by a corresponding increase in ISEW or subjective well-being. The paradox is that nobody thereby gets ahead, while all of us would be better off if scarce social resources were reallocated to increased leisure, environmental quality, and the benefits of community life. While policies that promote sustainability may well lead to (some, but not unlimited) economic growth, the converse is certainly not assured. But capping growth may not in itself be necessary to alleviate the risks posed by today’s production and consumption patterns. A carbon dioxide tax of $50 per tonne would favor lower-emission technologies and a shift towards low-carbon goods and services. The problem, then, is not a lack of technical potential but a lack of policies and price signals that promote the transition to a green energy system.



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