{"id":15462,"date":"2021-12-09T01:01:00","date_gmt":"2021-12-09T01:01:00","guid":{"rendered":"https:\/\/www.economicsobservatory.com\/?post_type=question&p=15462"},"modified":"2021-12-09T10:02:25","modified_gmt":"2021-12-09T10:02:25","slug":"how-have-economists-thought-about-the-environment","status":"publish","type":"question","link":"https:\/\/www.economicsobservatory.com\/test\/how-have-economists-thought-about-the-environment","title":{"rendered":"How have economists thought about the environment?"},"content":{"rendered":"\n

\u2018Human-induced climate change is already affecting many weather and climate extremes in every region across the globe.\u2019 This statement comes from the\u00a0sixth Intergovernmental Panel on Climate Change (IPCC) assessment report<\/a>, published in August 2021, which has called for urgent action to prevent worsening climate outcomes in coming years.\u00a0<\/p>\n\n\n\n

The report landed after the summer of 2021 had seen extreme weather events affect all corners of the globe. Extreme temperatures have plagued the world from northern Africa to southern Russia, the German town of Erfstadt was hit with unprecedented floods, extreme temperatures scorched Lytton in British Columbia, and streets were turned into canals in the Chinese city of Zhengzhhou, to name but a few.\u00a0<\/p>\n\n\n\n

The causes and effects of these extremes are being hotly debated (pun intended) in mainstream media outlets, including a cover of\u00a0The Economist<\/em>\u00a0with the gloomy forecast, \u2018No Safe Place: The 3\u00b0\u00a0Future<\/a><\/a>\u2019. Following the UK\u2019s hosting of the United Nations climate summit (COP26) in Glasgow in November 2021, the issue of how we protect our environment has never been so pressing.\u00a0<\/p>\n\n\n\n

There is a mistaken impression that economists do not engage with the subject of climate change and the environment more broadly. For example, it is likely that attendees at COP26 \u2013 and most people with an eye to sustainability \u2013 will have heard the phrase (widely attributed to Kenneth Boulding, a former president of the American Economic Association, 1968), \u2018Anyone who believes in indefinite growth in anything physical, on a physically finite planet is either mad \u2013 or an economist\u2019. This quip is based on a caricature of economists as being only interested in economic growth.\u00a0<\/p>\n\n\n\n

Not only is the taunt widely quoted, it has been used by influential members of the global intelligentsia, including as a punchline by David Attenborough in his\u00a02011 RSA president\u2019s lecture<\/a>\u00a0and by the environmental scientist Vaclav Smil in a 2019 op-ed in the\u00a0Financial Times<\/em><\/a>. The sentiment is echoed by high profile environmentalists such as Greta Thunberg who remarked, \u2018we are in the beginning of mass extinction, and all you can talk about is money and fairy tales of eternal economic growth<\/a>\u2019, at a speech to the United Nations in 2019.\u00a0The view that economic growth is at odds with environmental issues is even familiar to the person on the street (as evident in a recent letter to the\u00a0Irish Times<\/em><\/a>). But this view appears to conflate the functioning of economic systems with economic thought.<\/p>\n\n\n\n

Kenneth Boulding wrote one of the\u00a0most influential essays<\/a>\u00a0on environmental policy, which presented a template for a sustainable society. He made the distinction between an open or \u2018cowboy\u2019 economy, which assumes an infinite supply of resources, and a closed or \u2018spaceship economy\u2019, with finite supplies of resources and solar power being the ultimate source of energy once all fossil fuels are consumed.\u00a0<\/p>\n\n\n\n

As Boulding was writing, there were concerns about resource scarcity and the issue came to the fore in the publication of\u00a0Limits to Growth<\/em><\/a>\u00a0<\/em>in 1972, which warned of a sudden and uncontrollable decline in economic growth on the planet within the next 100 years due to resource scarcity. But Boulding was more prescient, noting that \u2018it seems to be in pollution rather than in exhaustion that the problem is first becoming salient\u2019.<\/p>\n\n\n\n

But is it accurate to say that economists are largely unconcerned with the environment and focus only on growth? This article presents an overview of economists\u2019 views on the environment over time to illustrate how economic thinking has engaged with these issues, how it has evolved and how it has shaped our understanding of the challenges of pollution, natural resource management and the value of nature today.\u00a0<\/p>\n\n\n\n

Environmentalism and economics<\/h3>\n\n\n\n

Environmentalism first came to the fore with greater awareness of the pollution associated with economic activity. The great London smog of 1952 \u2013 caused by a combination of severe cold, anticyclone conditions and residential coal burning \u2013 killed an estimated 8,000 Londoners (Stone, 2002<\/a>). Smog is a similar problem that plagues China today (Wang et al, 2016<\/a>) with 1.24 million deaths in 2017 attributed to air pollution (Yin et al, 2020<\/a>).\u00a0<\/p>\n\n\n\n

Elsewhere, industrial activity was linked with other adverse environmental and health effects. A new disease of epidemic proportions was discovered in Minamata Bay in Japan in 1956. Minamata disease, as it became known, was caused by mercury poisoning resulting from effluent from a new industrial plant (Takeuchi et al, 1962<\/a>). News that the pesticide DDT was entering the wider food chain also caused public outrage when highlighted in Rachel Carson\u2019s 1962 book\u00a0Silent Spring<\/em><\/a>\u00a0(Sabin, 2013<\/a>;\u00a0Macekura, 2015<\/a>).\u00a0<\/p>\n\n\n\n

Events such as these, combined with photographs of the planet from space, made the idea of planetary boundaries on economic activity tangible (Pearce, 2002<\/a>). The late 1960s and 1970s saw the emergence of environmental awareness as several provocative works caught people\u2019s attention, such as\u00a0Paul Ehrlich\u2019s\u00a0Population Bomb\u00a0<\/em>published in 1968<\/a>: at the time it was written, global population had approximately doubled in the first 60 years of the 20th<\/sup>\u00a0century (see Figure 1). There were also critiques of the prevailing economic system from mainstream economists (Mishan, 1967<\/a>;\u00a0Georgescu-Roegen, 1971<\/a>; Schumacher, 1973<\/a>).<\/p>\n\n\n\n

Figure 1: Global population and population growth, 1900-2020.<\/h4>\n\n\n
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