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Sustainability, Phoenix, and the myth of perpetual economic growth II

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In many instances, economic growth is an unalloyed blessing. In developing nations today (and in earlier periods of U.S. history), growth which brings a population out of poverty and provides services such as access to electricity, indoor plumbing, and sewage treatment leads to unambiguous improvement in that population’s quality of life. The central question for sustainability theory is whether, at the present moment in the U.S. and other advanced economies, marginal increases in economic growth still deliver profound improvement in quality of life. Absent such profound improvement, do the costs imposed by resource depletion and environmental pollution exceed the benefits of continued growth?

In economic terms, the theory of diminishing marginal utility implies that beyond a certain point on an economic growth curve, the actual value of continued growth flattens. A real life example of this effect can be seen in the “happy hour” ritual of enjoying a pint of beer at a pub after work. The first pint will likely deliver many glad feelings to the consumer. The next pint may have a similar, cheering effect. However, after x number of pints, the beneficial tidings lessen and the potential for undesirable side effects increases.

The environmental economist Herman Daly* provides insight into the limits to economic growth: “All economic systems are subsystems within the big biophysical system of ecological interdependence. The ecosystem provides a set of physical constraints to which all economic systems must conform.” To grossly simplify matters: there are a finite number of natural resources that may be utilized and depleted to finance economic growth. After a certain point, these resources will dwindle, become increasingly expensive, and then be extinguished. Before this point, continued pursuit of perpetual economic growth in already-wealthy nations will have become disadvantageous.

(*All Herman Daly quotes are taken from Valuing the Earth: Economics, Ecology, Ethics, 1993 edition.)

Daly further distinguished between “sustainable growth” and “sustainable development.” Because the economy is but a sub-part within a physically-limited ecosystem, Daly found the idea of sustainable growth oxymoronic – no rate of growth can be sustained over the long term within a closed loop.

Conversely, “sustainable development” is a biophysical possibility. Such an outcome occurs where “development” is defined as encompassing change in the economy beyond “growth.” For Daly, this meant a “qualitative improvement of a physical economic base that is maintained in a steady state by a throughput of matter- energy that is within the….assimilative capacities of the ecosystem.” Thus, the concept of sustainability does not presuppose a static, stagnant economy – instead, sustainability envisions continual adaptation, renewal, and improvement within a fixed framework of resource exploitation.

In lieu of glowing reports on the prospect of a growing economy, policymakers ought to be questioning whether a wiser, more sustainable course for the future would be choosing to limit the nature of further growth. This way, growth may be better balanced against the physical scarcity imposed by the environment – both in terms of scarce natural resources for production and scarce environmental “sinks” to contain the resultant pollution. As resource exhaustion is approached, the likelihood of decreased quality of life through ecosystem degradation increases. The U.S. may not be at this stage yet, but must prepare for the eventuality that it will be reached at some future point, if perpetual growth is insisted upon.

As the previous series on the future of solar power development in Arizona made clear in an energy context, the continued use of non-replicating resources can only persist as long as such resources remain. An economy based on renewable, comparatively permanent energy sources such as solar will face fewer future problems with resource scarcity. In this way, growing the segment of the economy not dependent on depletable mineral deposits and the production of fungible consumer goods does not implicate the biophysical limits to economic growth Daly observed.

Phoenix should be commended for making sustainability a conscious part of its economic decision-making. Environmental consciousness is but the first step on a path towards a sustainable economy – one based on qualitative benchmarks, rather than a slavish adherence to metrics of the past. The existence of amenities such as the Sonoran Reserve are positive signals of a forward-looking approach – recognizing the need to set aside some portion of land that will not be developed; that will not contribute to future population growth; and that will not be used to further accretive consumption. Rather than using “gross metropolitan product” as its lodestar, a truly sustainable Phoenix will focus on maximizing ineffable, subjective well-being by redeploying the resources already on hand within a closed loop.

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