This chapter on growth and sustainability begins by defining the terms it uses. It distinguishes between physical/material growth in the economy, measured in physical units such as tonnes, joules (for energy) or hectares, the growth in economic output, called economic growth and measured as gross domestic product (GDP) or value added, and growth in human well-being, which has a range of contributors measured in different units. It also defines environmental sustainability. On these definitions there is no theoretical contradiction between finite limits to physical growth and the possibility of indefinite economic growth. The question is an empirical one, as to whether growth in economic output can be decoupled from physical resource use and environmental impact, such that resource use and environmental impact are reduced even as economic growth continues. Some evidence is presented on situations where this has been the case in the past with some environmental issues, but not with all. The chapter takes carbon dioxide emissions as a case study, because they contribute to climate change, one of the major environmental concerns; they mainly derive from energy use, which is fundamental to economic activity; only a few countries have managed to reduce them below the benchmark level of 1990; and they have been the subject of much more study than many other environmental impacts. The chapter notes that there are a number of low-carbon technologies; that a number of them are close to being competitive with fossil fuel-based alternatives; that the costs of some of them have decreased markedly in recent years, and seem likely to fall further in the near future; and that there would seem to be numerous opportunities for cost-effective efficiency improvements. These are precisely the characteristics that, if applicable to a range of resource and environmental issues, would be necessary to achieve the progressive decoupling of economic growth from resource use and environmental impacts. The chapter concludes by reflecting on why it seems to be so difficult to reduce carbon emissions, and by analogy to address other issues of concern in respect of resources and the environment, if the costs of doing so seem modest or negative. It concludes that decoupling requires a shift in the composition of economic activity from consumption to investment, and that a necessary stimulus to this shift is increased resource and environmental taxation. The former is by definition problematic in a so-called ‘consumer society’ that values consumption as perhaps the most important contributor to welfare; and the latter would make valued forms of consumption (for example, home heating and mobility) more expensive. These policy interventions are therefore opposed politically. The decoupling problem is therefore viewed as one of political, rather than technological or economic, feasibility.

Recent efforts have made progress in identifying ‘planetary boundaries’ and a ‘safe operating space’ in respect of human impacts on the environment and use of its natural resources. However, at the national level countries still lack robust and resonant metrics that allow them to make judgements as to whether they are operating within this ‘safe operating space’, nationally and locally, and whether therefore their economic activity is environmentally sustainable. This chapter presents the conceptual foundations of an index of environmental sustainability for nations, where environmental sustainability refers to the maintenance of important environmental functions. Target indicators representing environmental sustainability are identified across a whole range of policy-relevant environmental and resource issues. The distance from these targets to the current environmental performance can then be measured, and the information aggregated into a single index to show the extent to which countries are making progress towards environmental sustainability. An illustration of this procedure is given to show how such an indicator could give an overall easily comprehensible overview of progress over time towards environmental sustainability.