Game on for Green Growth
Countries in a sustainable world will still have opportunities to grow, trade, innovate, and move up the value chain to secure a brighter future. But they will need to realize these opportunities in an economy that is at one with nature, not external to it.
NEW YORK – Research into economic growth has a long and distinguished history, but the recent introduction of sustainability into the debate has given the field a necessary and overdue shake-up. In particular, a report on the economics of biodiversity, commissioned by the UK government and led by Partha Dasgupta of the University of Cambridge, represents a tectonic shift in thinking, rather than only a logical extension of previous growth models. While this may be unsettling to some, it provides a great opportunity to use the power of data and analytics to put growth and finance on a more sustainable path.
In a nutshell, the new economics of growth no longer regards the environment as external to the economy. Rather, the economy is embedded in the environment, and can prosper and grow sustainably only as long as we manage nature wisely. While some “exploitation” of the environment is possible, there exists a tipping point beyond which it can never recover.
There is thus a new bottom line for thinking about growth. Bigger is no longer better; nowadays, sustainable is better. Previous growth models regarded the accumulation of human and physical capital – through education and training, and investment in plants, equipment, and infrastructure – as good, because they expanded the economy. Combining these factors in more efficient ways through technological innovation was seen as beneficial for the same reason. The problem was that these models never explicitly considered the environment, or natural capital.