Table of Contents

Handbook of Sustainable Development

Handbook of Sustainable Development

Second Edition

Edited by Giles Atkinson, Simon Dietz, Eric Neumayer and Matthew Agarwala

This timely and important Handbook takes stock of progress made in our understanding of what sustainable development actually is and how it can be measured and achieved.

Chapter 16: Economic growth and the environment

Matthew A. Cole and Andrea Lucchesi

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental geography, valuation


The complex relationship between economic growth and the environment has been a focus of academic attention since the 1970s. During the 1970s opinion was polarized between the pro-growth ‘technological optimists’ on the one hand and the anti-growth ‘technological pessimists’ on the other. The former placed great faith in our ability to find technological solutions to environmental problems, to change the composition of output and to find substitutes for scarce resources, thereby removing potential environmental limits. Technological pessimists argued that such benefits were likely to be short term and stressed the irreversibility of fossil fuel exhaustion. The advent of sustainable development saw the emphasis move from resource scarcity towards sink limits (the ability to absorb unwanted by-products from economic activities), but differing opinions regarding the impact of economic growth on the environment remained, largely a result of differing views of the capital stock that is to be maintained over time. More recently, quantitative analyses, such as the estimation of environmental Kuznets curves and the decomposition of emissions into scale, technique and composition effects, have illuminated the debate to an extent. These studies suggest that economic growth does not have to be damaging to the environment and can co-exist alongside reductions in environmental pollution. Emissions of local air pollutants appear to have benefited from new technology and increased energy efficiency which, particularly in slow-growing (for example developed) countries, more than compensates for increased emissions resulting from the pure scale effect.

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