Life after growth: a formula for a more sustainable economy

Formula for a sustainable economy

Continuous economic growth is unrealistic in a world with finite resources. But how do we change mindsets and limit consumption in a fair and acceptable way?

When Australia’s economic growth reached a ten-year low in the first quarter of this year, politicians began to panic. The Reserve Bank cut rates and the country braced itself for the prospect of recession.

Governments worldwide view economic growth as a key measure of progress and prosperity – any decline is seen as cause for alarm. They argue that greater output and productivity equals a better standard of living, even though it also results in greater pollution, increased use of natural resources and in some cases, widening divisions in society.

Now, there is a growing recognition that constantly increasing consumption is simply not sustainable – that we should be seeking ways to reduce our environmental impact and replenish the resources we consume.

In the mainstream world when a business begins to fail financially, government and industry bailouts such as loans or cash infusions may be offered as a safety net. However, what happens when the ecological resources which businesses depend on dry up? When we take more than we give back to nature and overshoot our ecological budget.

Dr Cle-Anne Gabriel, a sustainability expert and researcher at The University of Queensland (UQ) Business School, is addressing these issues in her research. She analyses potential future models of business within a ‘degrowth’ economy.

“Essentially, degrowth means de-emphasizing economic growth as a primary indicator of success, especially in the richest nations. Degrowth nations would eventually reach a steady state that offers wellbeing and equity for all, and operates within our planet’s biophysical limits,” says Cle-Anne.

She admits that despite its admirable aims, degrowth struggles to win popular support in the English-speaking world. “The word ‘degrowth’ can be problematic for those unfamiliar with it. It seems to suggest we are moving backwards towards a more primitive form of society, when instead it is the next stage in our evolution, or so-called ‘development’.”

Degrowth’s French and German translations, décroissance and postwachstum, seem to be more widely accepted and understood in the non-English speaking world.

Cle-Anne says, “perhaps we need to find a more palatable way to communicate the vision”.

“What people do understand, is that we cannot continue to grow indefinitely in a world with finite resources, and they want to see change.”

She suggests that societies and businesses should consider the environment in the same way they manage other resources and look to ‘balance the budget’. Currently, businesses are living beyond their means and unless they start repaying this environmental debt, they are heading for ecological collapse. However, unlike the banking system, there is no effective type of bailout.

“Ecological debt is the result of overspending our natural capital, to the point where we use more ecological resources than the planet can renew in an entire year,” says Cle-Anne. “Without nature, businesses cease to exist – their very survival is dependent on it."

The beauty of this approach is that there is already a range of systems in place to measure impact. On the one hand, we measure negative impact in terms of carbon footprints and waste accumulation, for example. On the other hand, we measure positive impact in terms of trees planted and biodiversity preservation. Therefore, it is possible to assess the impact of entire states and countries right down to individual communities and businesses to allocate ‘budgets’.

However, in setting consumption budgets, a ‘one size fits all’ policy may be inappropriate and decisions may need to take account of a range of factors. But with strong competition for limited resources, any system would need to be underpinned by a series of defined principles.

Cle-Anne says, “natural capital consumption is a genuine and justifiable means to an end – such as mining, farming and recreation. However, societies cannot exploit finite natural capital indefinitely. At some point, they will need to replenish the stocks of natural capital on which they depend.”

She argues that priority should be given to those who do so – for example, by planting trees to offset those they have harvested. By contrast, businesses which failed to balance the budget and exist in a state of ecological debt could be expected to make reparations, though not necessarily in monetary terms.

Similarly, future generations who lose out as a result of current ecological ‘overspending’ should be entitled to compensation; as should developing countries which suffer as a result of the ecological debts of richer nations. For example, Western economies can support relief efforts in developed countries affected by climate change.

Cle-Anne believes that there is an enormous, but critical, task ahead. She adds:

“The challenge of our age is to transition from exploitation to becoming stewards of natural objects and spaces, creating a net replenishment of natural capital. Our ability to achieve this will directly affect quality of life for generations to come."

Learn about UQ Business School's sustainability research