Economic Growth and Environmental Sustainability - Essay Example

Running head: Economic Growth and Environmental Sustainability Your name Course name Professors’ name Date Outline How to build a sustainable macro-economy Energy consumption and economic growth Developing macro-economic capability Investing in jobs, assets and infrastructure Increasing both tax and financial caution Improving macro-economic description and accounting Tackling general inequality Improving social and human capital Eliminating the culture of consumerism Imposition of stringent resource/emission caps Tax reforms for sustainability Encouraging technological transfer and protection of ecosystem Introduction For economic growth to be sustainable, environment must be protected from irresponsible use. Man on the surface of the earth always attempts to improve his or her welfare by utilizing either available resource. Industrialization, agriculture and emission of hydro-carbons into the environment have paved way for global warming. If pollution and other harmful activities are not monitored closely, it is possible that next generation will suffer from adverse climatic conditions. Suitable development which meets the needs of the present and those of the future generation is the perfect approach to economic growth. In order to strike a balance between economic growth and environmental sustainability, greater emphasis must be placed on: education; formulation and implementation of policies guiding on environmental use; government aids; campaigns covering on proper land utilization and international participation in wildlife management. This paper presents steps that lead to achievement of economic growth and environmental sustainability. How to build a sustainable macro-economy A macro-economy built on borrowing so as to consume is unsustainable ecologically, problematic socially and has features of unstable economy. It is now important to develop macro-economics that ensures sustainability and increased output. Some of the ideas to consider include: regulating energy consumption; developing macro-economic ability; investing in jobs, assets and infrastructure; increasing financial and fiscal prudence; improving macro-economic accounting and strengthening human and social capital (Alain, 2000). Energy consumption and economic growth Improvement in energy efficiency throughout history has reduced its consumption. Even though intensity of energy in the industrialized economies has fallen, its consumption is still on the rise. This forms a reason for perpetual increase in carbon emission. The objective of the recent convention in Copenhagen was to address global warming emanating from misuse of the environment (Sorrell, 2010). To achieve such an objective, western and industrialized nation must reflect on deriving alternative source of energy. Effort must be applied to separate energy consumption and economic growth. In this case, policies which will encourage efficient use of energy should be put in place. More funds must also be directed to energy conservation measures. Regulations, standardization and financial support in addition to pricing of carbon emissions are some of the macroeconomic procedures to be included in the policy framework. Since locomotives emit a bigger percentage of carbon into the environment, manufacturing industries are obliged to supply vehicles which are environmental friendly. In this case, the locomotives must consume less fuel and subsequently emit minimum carbon into the environment. Treatment of waste from industrial sector contributes to growth and environmental sustainability. Improvement of energy efficiency cuts down associated costs. It has the effect of expanding consumption of travel services consequently expanding income. This is described as direct rebound effect of improved energy efficiency. On the other hand, indirect rebound effect may take place where there is a shift of resources to energy intensive sector. The indirect rebound effect increases real income and improves general welfare. On the contrary, shifting resource to energy intensive sector affect negatively climate and general environment. Developing macro-economic capability It involves capturing macro-economic variables and relating them with environmental elements. Challenge lie on pointing out investment demand which will capture a sustainable economy (Ekins, 2002). Investigation into the implication of strict rules on resources and emission must be conducted. Growth and sustainability is realized if economic activities do not affect negatively the environment. It is also prudent to evaluate changes in innate assets, flora and fauna which are working on economic steadiness. An example of a model to develop economic stability is the Green Revolution aimed at preserving forest cover in East Africa. The movement guarantees sustainable exploitation of the forest cover both in Africa and beyond (Alain, 2000). In terms of investment, developed countries are evaluating nuclear energy as an alternative source of energy apart from oil. Scientists are also examining viability of biogas to supplement on non-renewable source of energy. Investing in jobs, assets and infrastructure Economic growth and environmental sustainability is further achieved by investing in jobs, assets and infrastructural network. Employment in public and private sector ought to be expanded so as to ensure efficient and maximum utilization of public resources. In recent times, countries have resorted to renewable energy, construction of public transport infrastructure to aid trade and ultimately concentrating on maintenance and protection of ecosystems (Todaro, 2009). As stated earlier in the text, green revolution was intended to make environment pollution free and subsequently eradicate desert like features. Subsidy i.e. cutting down taxes is a good fiscal strategy to motivate people of a country. Training for green revolution, use of environmental friendly technologies and efficient exploitation of natural resource go along way in economic growth and environmental sustainability (Northcott, 2007). In UK, there exists a pre-budget report on ‘green stimuli’. This is a stringent step into developing the economy while taking care not to harm the environment. Increasing both tax and financial caution Over the years economic growth has been realized through debt-driven materialistic utilization. Reliance on this contributed to the present global financial crisis due to its difficulty of maintenance. Both financial and fiscal reforms should be done in order to: reshape local and international monetary markets; demand and supply of money; savings and investment criteria and formation of bonds for green revolution (Begg, 2003). Any sensitive government will reconsider scrubbing unhealthy market practices such as damping of products. Regulating manufacture of quality products and protecting consumers against unscrupulous activities are clear recipes of growth and development with environmental sustainability (Hall, 2005). During Obama’s administration, protecting borrowers against exploitation by selfish individuals remains top priority. This enhances borrowing and consequent invest. Furthermore, G20 summit in 2008 resolved to formulate policies on regulation of currency and finance. Improving macro-economic description and accounting It is important to develop a stronger measure of growth away from the conventional output based or consumption based GDP. A robust criterion enumerates the changes in asset base, unequal distribution of income, account for depletion of natural resources and amount of carbon emission. Measurement of output must concentrate on other forms of natural capital and social cost of environmental degradation. All these elements are necessary in order to offer a good description of an outward looking economy. They are also necessary for planning purposes and projecting into the future like Kenya’s vision of 2030. French commission recommended on rigorous measures of economic performance and social welfare. Tackling general inequality Inequality exposes low income earners to lower life satisfaction through minimum consumption and undermines social capital. In relation to micro-economic variables, reduced consumption by the poor majority affects national income. To counter inequality, redistribution acts as an excellent approach. This is affected through: a more progressive tax structure; setting income limits; availing good education to citizen and implementing legislation to guide on discrimination and improving marginalized areas. Migration is another impediment to economic growth and environmental sustainability. People constantly migrate to places where resources are sufficient thus putting pressure on them. It is therefore the responsibility of a government to practice regional development. Republicans in United States proposed high taxes for high income earners. Prosperity plan formulated by president Barrack also covered on medical bill aimed at improving health of United States citizens. Improving social and human capital Economic growth depends entirely on human participation in utilization of economic resource of a country. Flexibility of a community is particularly important during periods of economic shocks. Special policies are critical to create and protect common resource like space. A guideline which strengthens community-based sustainability initiatives has and end result of economic growth and development while also protecting environment. Reduction in mobility of labor contributes to regional development. Non governmental organization should be allowed to participate in training for green jobs. Such strategies play a key role in dissemination of information pertaining to growth and development in addition to environmental sustainability. Critiques argue that climate change results from misguided population. An example of social and human stratagem is Environmental Action Fund targeting at building a clean and sustainable environment. Eliminating the culture of consumerism Consumerism simply developed from its role of protecting consumption-driven economic growth but it has adverse effects on psychology and wellbeing of the people (Zygmunt, 2007). To reverse the trend, major media advertisement, effective standards of trading and stronger protection of the consumer in terms of product durability, sustainability and fair trade should be conducted by the government via different agencies. Imposition of stringent resource/emission caps Perpetual level of economic growth is achieved by paying attention to ecological level of economic activity. Imposing resource and emission caps is important for an economy which is focusing on sustainable prosperity. Contraction and convergence model developed for emissions should be applied indiscriminately (Stanford, 2008). In relation to non-renewable resources, declining caps should be applied on output. On the other hand, sustainable yields must be pointed out for renewable resources. Limits for emissions and wastes must be classified in close association with per capita. In a rapidly growing economy, flows of resources ought to be supervised for homogeneity purposes. After setting the criteria for waste and emission management, they should be embodied into macro-economic framework. An example of resource and emission caps is the Kyoto and post Kyoto or Copenhagen negotiations which tackled issues to do with climate change. Tax reforms for sustainability Tax burden placed on ecological bad such as waste disposal is a widely accepted environmental sustainability strategy in the western world (Jackson, 2009). The structure of tax must reflect emissions and resources. This measure will ensure that exploitation of natural resources is sustainable. In the same vein, restrictions placed on exploitation of resources like oil or natural gas ensures its efficient use and accountability. Fiscal reform is not an easy process to legislate and subsequently execute but if achieved would become a long term solution to environmental disuse. Slow pace of implementation of green taxes is a clear indication of the difficulty of tax reforms. All factors considered there should a defined effort by government to shift the burden of tax from incomes onto wealth, pollutions, wastes and emissions. Encouraging technological transfer and protection of ecosystem If a global technology fund is established, it will aid investing in renewable energy, carbon reduction strategies like protecting forests which acts as carbon sinks and capturing biodiversity in growing nations. Such funds are obtained from resource levy on imports. An example measures to protect ecosystem is the funding provisions by UN Biodiversity convention. Economic growth can further be realized through recycling of waste into other products. Summary The steps discussed in this paper clearly enumerate measures to ensure economic growth and environmental sustainability. Growth of the economy simply highlights increase in output of an economy while environmental sustainability describes how resources are exploited while making sure that future generation gains access to the same resources. Sustainable growth is realized by building a sustainable macro-economy, taking note of ecological limits and guarding capabilities to flourish. We further noted that economic activities take place on a specified macro-environment. For this reason, this literature discussed policy framework for environmental sustainability and economic growth which will be achieved simultaneously. Read More