Does Environmental Sustainability Contradict Prosperity?

Does Environmental Sustainability Contradict Prosperity?

Continuous economic growth, understood as an increase of consumption, is often seen to be incompatible with ambitious climate protection. In this article we aim to structure the debate by asking two questions: is economic growth possible with regard to achieving ambitious climate targets? And, is economic growth desirable? We argue that foregoing economic growth would neither be sufficient to achieve ambitious climate targets, nor would it reduce the need of partially contested mitigation technologies, such as nuclear energy or Carbon Capture and Sequestration (CCS). In addition, we argue that economic growth should not be an end by itself but rather a means to achieve prosperity. We propose to define guardrails and specific goals for prosperity that need to be achieved, in analogy to the Millennium Development Goals. One example could be to provide minimum access levels to specific infrastructure services, e.g. access to water, electricity or sanitation. Their provision could be financed by revenues from taxing the overuse of (global) commons, e.g. a carbon tax.

Policy Implications

  • Slowing down economic growth will not save the climate.
  • Economic policy should focus on welfare, not on growth.
  • Welfare is multi-dimensional, including environment and access to essential services.
  • Resource rent taxation can levy funds for public infrastructure.
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