Are the Benefits of Further Economic Growth Worth More Ecological Destruction?: Herman Daly

smokestack pollution photo

photo: Agustín Ruiz via flickr

Following up on my recent post on more eco-friendly was of measuring progress than GDP, I came across a recent post by renowned ecological economist Herman Daly over at the Center for the Advancement of the Steady State Economy's blog. Daly talks about framing the classic economic concept of opportunity cost in a modern environmental context. This is about as a succinct outline of the central eco-conundrum as can be made. If you read nothing else about eco-philosophy this week, this month, this year, make it this:Daly writes,

The new economic question is: Are the extra benefits of physically transforming more of the ecosystem into the economy worth the extra opportunity cost of the ecosystem services lost in the transformation? Has the macroeconomy reached, or surpassed, its optimal physical scale relative to its containing and sustaining ecosystem? Is the economy now too big for the ecosystem from the point of view of maximum human welfare? Or from the point of view of all living species and the functioning of the biosphere as we know it? If these questions about the opportunity costs of growth sound too abstract, think of the following concrete examples: wholesale extinction of species, climate change, peak oil, water scarcity, topsoil loss, deforestation, risks from more powerful technologies, a huge military to maintain access to world resources, and an increase in the risk of wars over resources, etc.

As the marginal costs of growth have increased, what has happened to the marginal benefits? Studies in the U.S. and other countries show that, beyond a threshold of sufficiency, growth in real GDP does not increase happiness. In sum, growth has become uneconomic at the margin, making us poorer, not richer. Uneconomic growth leads to less available wealth to share with the poor, not more. And such growth in the U.S. in recent years has been accompanied by increasing inequality in the distribution of income and wealth - that is, the marginal benefits of growth have gone overwhelmingly to the rich (third cars and second homes) while the marginal costs (polluted neighborhoods, unemployment and foreclosures) have gone mainly to the poor.

Read the whole thing: Opportunity Cost of Growth
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More on Ecological Economics:
What Are More Eco-Friendly Ways For Measuring the Economy Than GDP?
What If the Global Economy Was a Giant Hamster? or Infinite Growth on a Finite Planet (Video)
Book Review: Prosperity Without Growth - Economics for a Finite Planet

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