Green Growth vs. No Growth: Not Which, but When

Richard Lipsey picture - carbon pricing
Climate and Energy Technology and Innovation

For deeper analysis and references supporting the perspective expressed in this blog, see the full paper.

Music fans divide the world into two camps: Elvis vs. Beatles. Coffee drinkers: Starbucks vs. Tim Hortons. People concerned about climate change, and its implications for our current economies, also divide themselves into distinctive, and seemingly mutually exclusive groups: Green Growth vs. No Growth.

Both camps agree that the world faces serious environmental problems that, in a worse case scenario, threaten disaster. Where they vehemently disagree is on the necessary approach for dealing with this problem. The green growth group argues that smart policies, for example carbon pricing, in tandem with green innovation and technological change can set the course for a sustainable economy compatible with growth. On the contrary, the no growth camp posits that green policies, while desirable, won’t go far enough, or fast enough to do the job. The whole growth process must be stopped, they argue, if we are to avoid catastrophic consequences.

On the surface these two perspectives appear irreconcilable. Who is right? But what if “who is right” isn’t actually the point? Arguably, the most important issue at hand is how can we get started—as quickly and efficiently as possible—in making progress. From where I stand, that doesn’t mean choosing between a “green growth” or “no growth” approach. Rather, it means deciding what to start moving forward first.

For a number of reasons, leading with green growth makes a lot of sense. To start, the tools for green growth—including ecofiscal policies and strategies to leverage and grow increasingly available and accessible green technologies—already exist. These tools have been road-tested in many jurisdictions across the world. We’ve learned what works and what doesn’t. And we have strong evidence from a number of countries that we can implement these policies with little to no negative impact on our economies. In fact, these examples illustrate that there can be, indeed often are, economic benefits to this approach. Smart revenue recycling from pollution-pricing can be used to off-set growth retarding taxes, for example. The side-benefits of lower health costs due to reduced pollution are also good for our economies, not to mention our quality of life. Of course, no one is saying that a transition to a green growth economy is easy. There are real political challenges and policy details that must be worked through. However, there is increasing momentum—globally and within Canada—to pursue this agenda. The window for green growth has never been more open.

None of this precludes pursuing a no growth strategy, if the transition to green growth proves insufficient. However, huge questions surround the tools and strategies for actually implementing a no growth agenda in the context of democratic, market-based societies. We don’t have great examples of how such tools would work or what their side-effects might be. Needless to say, the practical and political challenges to no growth far exceed the admittedly difficult path to green growth. But one thing we know for sure, and that no growth advocates admit, is that even if we halted all economic growth tomorrow— to achieve a healthy climate and environment, we would still need all those policies and new technologies that are on the green growth agenda. So it is sensible, both economically and politically, to pursue green policies first, falling back on the much more difficult job of designing and adopting policies to slow or even stop growth only if the green policies prove insufficient.

The truth is, no one can know for certain which group is right. But spending time trying to figure that out isn’t worth delaying action. The door is opening for a national and global movement toward green growth. Let’s seize the opportunity for progress we all agree is critical.

About the Author

Richard Lipsey is a Professor Emeritus at Simon Fraser University in the Department of Economics, as well as a Commissioner of Canada’s Ecofiscal Commission.

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