Growing quality, not quantity

With the Globe 2016 conference happening in Vancouver, politicians and leaders from some of the world’s biggest businesses are coming together to try and address “sustainable business” — in other words, how to continue to grow their businesses and the economy while doing so in an environmentally sustainable way.

The implied goal — indefinite, continued economic growth to be accomplished sustainably — presupposes that it’s even achievable in the first place.

The simple fact of the matter is that it is impossible for per capita GDP output worldwide to ever reach the current GDP in the West without bringing planet Earth and its ecosystems to a complete collapse. The only long-term environmentally sustainable solution is to not grow GDP in developed nations but to do the opposite — shrink GDP!


Birds killed as a result of oil from the Exxon Valdez spill. Alaska’s GDP spiked in 1989 because economists included disaster clean-up activity. (Photo courtesy of the Exxon Valdez Oil Spill Trustee Council)

When talking about GDP I’m often reminded of the economic impact of the Exxon Valdez catastrophic oil spill. Even after the best environmental efforts were made to clean up Prince William Sound, permanent damage remained. It’s unlikely this pristine natural ecosystem will ever return to its former health.

But here’s the kicker — Alaska’s GDP in 1989, the year of the spill, actually spiked. This is because economists, when measuring GDP, include all remunerative activities of goods and services produced. Every single dollar spent by Exxon hiring folks to clean up this disaster was added to the GDP.

If tomorrow 90% of all car owners in Metro Vancouver got rid of their cars and took public transit, the environment would obviously be far better off. Arguably, so would our quality of life as streets became much more pedestrian-friendly and quieter. However, because people would now be spending less (public transit is much cheaper than owning your own vehicle), at the end of the year the GDP number would significantly drop.

The point I’m trying to make is that it is long past the time for us to abandon our fixation on GDP growth for the sake of growth. Instead, we should also be paying attention to much more important metrics such as the GPI (Genuine Progress Indicator) based on the work of New Zealand’s Marilyn Waring, who researched biases in the UN’s System of National Accounts; the GNH (Gross National Happiness index) started in Bhutan and now adopted in other countries like South Korea; or the GHI (Green and Happiness Index) Thailand uses.

The World Wildlife Fund ranks nations according to the size of each country’s environmental footprint calibrated to their GDP. In other words, it’s not just measuring a nation’s environmental footprint. Obviously the US, with an economy massively larger than Cuba’s, would have a larger environmental footprint. So instead, WWF measures each nation’s environmental footprint per unit of economic output.

Bottom line: Cuba, even after we adjust for its much smaller economy, has a smaller environmental footprint than the US. In fact, Cuba ranks at the very top of this indicator — this small island nation’s environmental footprint per unit of economic output is smaller than every other nation on the planet.

But back to Globe. Clean technology or not, rather than attempting to achieve a goal that is unachievable, here’s a better purpose. Participants should work toward a world in which developed nations embark upon a fundamental shift away from quantity (namely, economic output for the sake of economic output) to quality — quality of life and with it a reduction in GDP.

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