What is sustainable economic growth?
Sustainable economic growth is the increase in an economy’s output in the present that does not limit productive potential in the future. It ensures that the future generation will be able to grow by reducing the environmental impact of present economic growth.
As an economy exploits resources to create more products, resources are being depleted and carbon emissions increase. This has long-term consequences; fewer resources are available in the future and poor health caused by pollution reduces the productive potential of future generations.
Technological innovation, a major driver of sustainable development, researches into the use of processes and materials that have minimal impact on the environment, e.g., alternative and renewable energy, waste recycling and recyclable materials.
Why should resources not be conserved?
Low demand in the future
It is better to use resources now rather than later if there will be a substantial fall in the demand for those resources in the future. For example, the use of fossil fuels as energy sources will decline considerably in the future because they contribute to global warming. Many countries are finding alternatives to fossil fuels due to the level of pollution they generate. For example, the UK government and many other countries will place a ban on the sale of new petrol and diesel cars from 2035.
To improve a country’s revenue
A country with a limited amount of resources that finds it difficult to finance government projects will rather exploit for sale now. This will reverse the budget deficit and reduce the need to borrow to finance infrastructural and critical industry development. Borrowing also impacts future development because it has to be serviced and paid back.
Cheap to extract
An economy will use certain resources now because they are cheap to extract. This gives the country a comparative advantage in the international market. It will produce more sales revenue.
Why should resources be conserved?
More demand in the future
The demand for renewable resources will continue to grow. They will be of great value in the future. Countries with vast amounts of renewable resources would be able to use them for future economic growth.
Tourism
Forests are destroyed as sources of raw materials and land for productive activities. Some species and habitats, which have educational value, are lost to deforestation.
There is substantial tourism potential in the preservation of some natural resources, such as wildlife habitat. They can attract tourists from different parts of the world, thereby generating revenue and jobs.
Reverse global warming
Certain resources may be left unexploited owing to the commitment to reduce global warming. Through conferences, countries have pledged to reduce their carbon footprint by reducing emissions, financing climate change and accelerating energy transition from non-renewable to renewable sources.
Global warming affects the quality of the air and the health of people. Thus, conservation improves access to cleaner air and better health which increases life expectancy and productivity of the workforce.
Rising sea level caused by global warming leads to flooding which can wipe out low-lying islands and countries. Lives and means of livelihood will be lost if global warming is not curtailed.
Cost of extraction
An economy will fail to use certain resources now because they are expensive to extract. This is because people will shift to cheaper alternatives, thereby leading to a loss of sales revenue for the country with the resources.
Policies to promote sustainable economic growth
Pollution permit
This allows a firm to pollute up to a certain limit. It can be traded – any firm that exhausts its limit has to buy from others that pollute less. The cost of the license should discourage firms from polluting and encourage them to invest in cleaner technology.
Subsidies
Subsidies can be given for clean and renewable energy to reduce climate change. It may be in the form of grants or tax breaks to firms which reduce costs for producers and enable them to pass the benefit to the consumers by way of lower prices.
Information provision
The provision of information on the amount of greenhouse gases that we generate through our activities, that is, our carbon footprint, would encourage us to change our behaviour willingly. We will want to reduce our pollution because we are aware of the damage our actions are causing our planet. Government environmental protection agencies provide this information. The U.S. Environmental Protection Agency, through its website, enables everyone to estimate his footprint in three areas: home energy, transportation and waste. There are online platforms that allow us to calculate our carbon and ecological footprint.
Taxing the polluters
Taxing the firms that pollute is another policy that will promote sustainable economic growth. It will serve as a deterrence because costs will increase for firms. Tax will only be effective if the amount of tax is equivalent to the value of pollution created by the firm.
Outright ban
Some products should be banned by the government because of their environmental impact, for example, polystyrene food containers, plastic straws, plastic cotton buds, and so on. Some are difficult to recycle, and do not decompose naturally for a very long time.