The No-Growth Economy: Is it the only way to save the planet?

Rathbone Greenbank Investments is an enthusiastic supporter of the Bristol Festival of Ideas. In November 2015 we were delighted to sponsor an event at the Festival of Economics – part of the Festival of Ideas programme of events.

Rathbone Greenbank Investments is an enthusiastic supporter of the Bristol Festival of Ideas. In November 2015 we were delighted to sponsor an event at the Festival of Economics – part of the Festival of Ideas programme of events.

A panel of experts debated the idea of “The No-Growth Economy: Is it the only way to save the planet?”

John David opened the event by stating how Rathbone Greenbank, as a leader in ethical and sustainable investment, was proud to support Bristol’s fourth Festival of Economics.

The festival’s programme leader, Diane Coyle (Enlightenment Economics), then introduced the four event speakers, providing a brief overview of their environmental and economic backgrounds.

Katherine Drayson (Environment & Energy Unit, Policy Exchange) theorised about human ingenuity as a possible solution to the problem of sustainable economic growth, describing in particular how technology might address the issue of growth continuation and its impact on the planet. She referenced Airbnb as an example of technology enabling an efficient use of existing resources to generate an economic output, in this case without an associated need for additional construction.

Dr Alex Bowen (Grantham Research Institute on Climate Change, LSE) suggested that comparatively small reductions in rates of annual growth are all that is required to tackle the impact of economic growth on climate change. While he recognised it would require coordinated political action, he did not believe that the challenge was any greater than advising electorates of the need to break with conventional expectations of continuing economic growth.

Kate Raworth (Environmental Change Institute, University of Oxford) phrased the problem by describing how the present economy has to grow whether or not it makes us thrive. She felt that we instead needed an economy that makes us thrive whether or not it grows. By means of a visual illustration, Kate described how resource use in the UK, US and Europe increased by the same amount as GDP between 1990 and 2008. She then outlined some of the ways in which we could proceed without being tethered to conventional economic growth, examples including the waste-reducing, restorative principles of the circular economy and the return of essential natural and cultural resources to ‘common’ rather than private ownership.

Professor Cameron Hepburn (Institute for New Economic Thinking, University of Oxford) identified natural capital assets such as climate, biodiversity and ecosystems as being key to the issue as they have no price, are not being protected, and are being depleted at unsustainable rates. Such rates of depletion, if continued, might bring the planet closer to the 2-degree warming benchmark which climate scientists argue could serve as the catalyst for an increase in global natural disasters. As such, Professor Hepburn advocated moving towards a moderate-growth and low-inflation ‘Goldilocks’ economy to increase at a steady rate while we focus on the technological advances required to address our future growth and sustainability needs.

A discussion then followed which included questions such as: if not GDP, then what measurement instrument or instruments of economic growth should we use; could the definition of GDP evolve to include natural capital?

The panel came to some consensus that work needed to be done to value and measure natural capital while wealth was mentioned as a more meaningful alternative to GDP. Carbon prices, efficient use of taxation, and the interplay between politics and technology were also considered key to formulating potential no-growth solutions.