Friday, April 22, 2005

Is there such a thing as Sustainable Growth?

Last March 30, 2005, a week after the prepublication draft was approved by the study’s governing board; the tongue-twisting Millennium Ecosystem Assessment (MA) Synthesis Report ( was presented to the public. More than 2,000 scientists, researchers, policy specialists, and reviewers (including several from the Philippines) from 95 countries cooperated in preparing the MA Report. The assessment was prepared in response to the 2000 report of U.N. Secretary General Kofi Annan (We the Peoples: The Role of the United Nations in the 21st Century), which cited the need to document the consequences of global human activities on the environment and to establish the scientific basis for the recommendations drafted.

The findings come as no surprise to those who have worked in the sustainable development sector. It also, once and for all, comprehensively refutes assertions of disingenuous scientists like Bjorn Lomborg (The Skeptical Environmentalist, Cambridge University Press 2001) who insist that the earth is still resilient enough, and with technological innovations, will continue to allow for more breakneck growth. The report in itself can and should be used as a resource material; not only for schoolchildren, but also to everyone especially power holders and capital-wielders to reflect on how human actions may be compromising our society’s survival and sustainability.

The main findings are sobering. Ecosystems provide the basis and linkages for man to meet the constituents of well-being, namely; (a) personal, resource, and (from) disaster security, (b) access to adequate livelihood, nutritious food, shelter, and needed goods, (c) health, well-being, access to clean air and water, (d) good social relations (mutual respect, social cohesion, ability to help others), and ultimately, (d) the freedom of responsible choice and action. Yet, humans have made unprecedented and profound changes to these ecosystems to meet the growing needs of food, potable water, timber, fiber, and fuel.

The rate of change in the last 50 years has been no like other in the past two centuries and is having non-linear (abrupt, accelerating, potentially irreversible, highly complex and interactive) effects. Conversion of land to agriculture has increased the supply of food but has led to the extinction of species (more than 1,000x background rates) and a decline in genetic diversity both of which play important roles in maintaining ecological stability. Around 2 billion people are vulnerable because of the dwindling supplies and limited access to freshwater, while more and new diseases are expected to become more prevalent because of continuing ecosystem degradation. Climate change, mainly due to emissions from fossil fuels, is exacerbating the problems. Fish stocks and the global marine ecosystem are in a dire and crisis state such that the food security of millions of mostly poor communities is in peril. Without a fundamental change in how humans look at, utilize, and care for nature and one another, the next 50 years will lead to horrendous difficulties for humanity.

The MA Report’s recommendations are not new. Philosophers, scientists, religious persons, activists, enlightened businessmen and politicians have written and spoken about what should be done to address ecosystem degradation. What the MA Report does is put into the forefront the truism that ecosystem degradation is in fact a loss of capital assets. It also highlights the growing inequities between the rich and poor and the need to address poverty on a global scale. Sooner or later, even the rich will join the poor in being seriously impacted. The report went to the extent of mentioning that forms of social, behavioral, cognitive, and knowledge responses are needed. It stops short, though, on commenting on whether economic growth and the high-energy lifestyle in industrialized countries should be curtailed.

This, however, is the crux of the matter. Although many subscribe to the tenets of sustainable development, this should not be equated with the term sustainable growth as former World Bank economist Herman Daly writes in Beyond Growth (1996). Sustainable growth is a contradiction in terms. As a species, we need to ask ourselves and more specifically those in the industrialized countries, whether economic growth in their part of the world should continue forever. To Daly, if economic growth of the rate experienced in the G7 countries were to occur in industrializing and poor countries, the global environment’s carrying capacity will collapse immediately. Daly estimated that it “requires about one third of the current annual world extraction of nonrenewable resources to support that 6% (or less) of the world’s population in the United States at a per capita level to which it is thought that the rest of the world should aspire” (p.105). A lot of people think that we can grow ourselves out of our problems be it economic or environmental, but the empirical findings do not support this thesis.

Neoclassical economists have always looked at economic activities as existing in an isolated circular system with firms producing goods and services for households who provide the means for further reproduction of these goods/ services. Further, they note that mitigation of environmental impacts is included in the price of the product (“externalized costs”). Daly says this is a faulty preanalytic vision of how the economy operates. In reality, the economy is an open subsystem of the environment and that many factors of production come from the environment and are finite. Daly called for a new vision, basically asking, “what is the proper scale of the macroeconomy relative to the ecosystem” (p.48)?

Daly recommended that economists read Frederick Soddy and Nicolas Georgescu-Roegen, rather than people like Lawrence Summers, formerly of the World Bank, Clinton’s Treasury Secretary, and now President of Harvard, who once proposed dumping pollution from industrialized nations into the “underutilized” developing countries. Recently, Summers rhetorically asked whether women academicians were up to the rigors of high-level research/teaching. Soddy (1922, 1926, 1933, and 1934) was a Nobel awardee and chemist who insisted that the starting point of economics must be the first and second law of thermodynamics. The first law of thermodynamics states that energy cannot be created/destroyed but transformed, while the second law states that natural processes are directional and irreversible, leading to entropy in the system.

Georgescu-Roegen, a Romanian émigré, was Daly’s professor at Vanderbilt U., who without reading Soddy, wrote The Entropy Law and the Economic Process (1971 Cambridge University Press). Using an hour- glass metaphor, he noted that there are two resource stocks which man uses, the solar stock and the terrestrial stock. The former may seem infinite, but it actually isn’t, while the latter is definitely finite. The flow of this resource stock is only downward and irreversible (the hour-glass cannot be inverted). Unfortunately, man is currently using up the terrestrial stock, degrading ecosystems, and generating high entropy material such as wastes.

In essence, both Soddy and Georgescu-Roegen state that the economy cannot continue to expand at rates that the industrialized world has grown accustomed to. The economy is dependent upon the ecosystem for its inputs. Ultimately, the total scale of key resource throughput has to be limited. Afterall, as Daly wryly asks, of what use are better or more chainsaws when there are fewer trees to cut or better or more fishing boats when there are less fish to catch? Hence, global society should work at sustainable development, which is the qualitative improvement of life indicators without growth beyond environmental carrying capacity (Daly 1996:9). This has serious implications on up to how many mouths we can feed (population) and who gets to own what and use what (resource ownership and utilization). Free trade, for example, has to transform itself into fair trade with the industrialized world having to settle with less.

For the Philippines, we (especially power and capital holders) need to rethink how we look at fair trade, income distribution, natural resource utilization, infrastructure development, education and knowledge management, social justice, even our religious beliefs, morals, ethics and so on. Once we’ve internalized that the economy is an open subsystem of the environment, we can then value our resources and ensure that they benefit the Filipino first and foremost. Free trade should not lead to a country dependent on imports, a culture of consumerism, and without domestic food security. The latest Supreme Court ruling on foreign investment in mining, for example, should generate downstream processing industries and fund: (a) the rehabilitation of degraded areas, (b) economic diversification of mining areas, and, (c) training and education of local/ native environmental scientists, geologists, mining engineers, etc.

Income inequality may be a result of historical and social factors, but the gap needs to close to a level that reflects merit and industriousness, not birthright. The country needs to invest in the education of its youth and ensure its capacity to feed its populace, protect and conserve its natural resources, and integrate the nation through infrastructure, communication and information technologies, as well as promote cultural and social solidarity.

Is growth then sustainable? In the Philippines, there is still room for growth, but we should keep in mind that economic growth should be justly distributive and the focus eventually should be on sustainable development in a steady-state economy. Our natural resource stock should be strategically utilized, meaning, it should lead to clean and green industrialization of the country and not solely as a supplier of raw materials to the richer nations. Daly concludes that “We are creatures endowed with creativity but also subject to limits, and we have obligations to our Creator to care for Creation, to maintain intact its capacity to support life and wealth” (p.224).

Happy Earth Day!