The False Dichotomy: The Economy and Environment aren’t conflictual

by James Resnick, British student reading BA International Relations at the War Studies Department of King’s College London. From September outgoing study abroad student at Science Po, Paris.

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Too often the debate among policymakers rests upon a false dichotomy between choosing economic growth or environmental sustainability. What initially comes to mind when I think of this manufactured dichotomy is the doomsday 1972 book ‘The Limits to Growth’ which highlights how sustaining current developments with finite resources would lead to disaster. Though the mindset of arguing that environmental regulation distorts the markets and ruins the economy is profound, this mindset is especially destructive at a time when the focus within public policy should be on combining economic growth with environmental sustainability, as advocated by economists such as Jeffrey Sachs who argues that, “today’s mounting threats cannot be covered up. The Age of Sustainable Development must be built on openness, participation, and science.” This sentiment is gaining traction as policymakers look to the Paris Conference in December where 196 countries will meet to sign a critical new climate change agreement.

As part of an overarching goal to stabilise and reduce greenhouse gases to less than 2 degrees celsius above pre-industrial levels, a combination of targeted investments as well as regulatory reforms need be made. Criticism of this manufactured dichotomy, however, does not rest on the notion that regulations can’t negatively affect job-creation. Cass Sunstein notes, “…the Republicans claim that ‘job-killing regulation’ is a redundancy is as ridiculous as the left wing view that ‘job-killing regulation is an oxymoron.” Not all regulation is beneficial to meeting these two objectives, economic growth and environmental sustainability, though the evidence suggests that there is a false dichotomy between the two.

Take global health for instance. Critics of increased environmental standards on air pollution argue that such regulations lead to job losses and those criticisms are correct to an extent, such as the widescale closure of factories in Hebei province in China. While the restrictions are restrictions to production, surely what is critically important, without the intention of being facetious, is an ability for workers to breathe. Urban pollution is estimated to cost approximately 2% of GDP in developed countries and 5% of GDP in developing countries. Sidelining the critical wellbeing of labour, a factor of production, is negatively consequential when trying to boost GDP. Added to this, indoor and outdoor air pollution costs European economies as much as $1.6 trillion each year in deaths and diseases according to a new study published by the World Trade Organisation. While on the one hand businesses that don’t commit to such standards end up being fined and having to cut back on workers, on the other hand the current stock of workers will be vastly more productive.

A Columbia University research paper titled ‘Particulate Pollution and the Productivity of Pear Packers’ showed how an ‘increase in PM2.5 outdoors leads to a statistically and economically significant decrease in packing speeds inside the factory, with effects arising at levels well below current air quality standards.’ The opposite effect on productivity occurred where air pollution was very low in concentration. Addressing the issue of air pollution is critical but the effects of pollution in the long run aren’t factored into GDP. Hence, one issue that is frequently raised is the flaws in how GDP is measured; the fundamental flaw being that GDP only takes into account the production and consumption of goods and services in the short run, and excludes any possibility of long-run projections. If GDP were higher, that is always assumed as a positive; though the basis of future GDP growth rests on a host of assumptions including the condition of the environment, quality of health as well as factors such as population growth and demographics.

The issue of conserving the environment to boost economic growth extends to resource sustainability. The myth of perpetual growth is destructive and rests on the notion of infinite resource and environmental security; this would seem obvious to most people, let alone economists, with land being a crucial factor of production. The costs of environmental security can be seen today with the Californian droughts.A preliminary analysis by the UC Davis Centre for Watershed Sciences that the estimated total statewide economic cost was $2.7 billion, largely through the loss in crop revenues.

Economic performance, environmental security, and global health standards are all interdependent and policymakers cannot compromise or pick and choose which of the three are most important. The cruciality in encompassing all three into public focus is in light with a study by the Lancet and University College London that states climate change “is the biggest global health threat of the 21st century.” This cruciality extends to shifting away from a public policy vice of short-term thinking towards long-term planning with long-term objectives for investments that create effective returns over time. Dr Jim Yong Kim, current president of the World Bank in 2014 stated, “Taking action now will not only solve the problem of protecting the planet, but it will be a tremendous boost for economies.” Investments today can prevent or merely curtail eventual resource scarcities, slowing down the point at which we will reach peak oil and meet critical aggregate water scarcity, crises that would breed conflicts within and across national borders. It is why The Pentagon refers to the impacts of climate change as a “threat multiplier” which aggravates poverty, political instability and social tensions.

Environmental regulations can lead to job losses and economic activity as seen in Hebei but also protect labour and land, both factors of production essential to economic growth. Sachs notes that, “We have been walking blindly into tragedies and more will come unless we learn to open our minds and our ethical reasoning to the current crisis.”Perhaps this reasoning will be implemented if policymakers acknowledged the importance of protecting and sustaining standards for the environment, global health as well as economic growth, advocated sustainable development and rejected this false dichotomy.

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