The Case for Negative Growth

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The Case for Negative Growth

By Norton Smith

The Elephant in the Room

In a world powered by petroleum and constructed of steel, cement and plastic, one would expect that some consideration would be given to limits. Governments around the world, however continue to advocate for a growing GDP and spend only a pittance to fund worldwide family planning. As if to excuse the impossibility of continued growth, some writers have coined the oxymoron of “sustainable growth”. Can this be excused, or is it a case of suicidal myopia? Let’s examine these two issues, economic growth and population growth.

It is difficult to grasp the effects of compound growth over a long period of time, but once understood it is obvious why continuous growth is unsustainable. For example, let’s imagine that in Rome during the reign of Augustus (let pick the year one) the economy was growing at 3.5% per year. Assume each Roman consumed an equivalent of 500 kilograms (0.5 metric tons) of wheat per year for all his energy and food needs. In the year two his consumption will be 518 kg, no problem. In 10 years it will be 705kg, still manageable. But by the year 2011 the one half ton of wheat required for one Roman would have compounded to 5.1×1029 metric tons of grain. To put this almost incomprehensible number in perspective, in 2009 the world wheat production was 685,000,000 metric tons. In other words the consumption of just one Roman would be 7.5×1020 (750,000,000,000,000,000,000) times the world production of grain. Clearly a growing economy is not sustainable in the long run.

In present time, resource use is directly correlated to GDP which is tracked with some accuracy. It is true that over time the amount of resources, energy and materials, required to produce one dollar of GDP have decreased as more spending is allocated to acquiring information and digital entertainment. We cannot, however, eat digital food nor drive a car that exists only on a computer. As the developing countries continue to improve their standard of living, they will demand increasing material goods and eat higher on the food chain, both of which require energy and materials. For the last 10 years, the world GDP has grown at an average of 2.6% per year. Between 2000 and 2010 the world population grew at an annual rate of 1.3%. Based on these figures the estimated rate of increase in consumption of resources is 3.9% (1.3%+2.6%). An estimate of the transition to a less material society can be made by the looking at the figure for the energy consumed to produce one dollar of GDP. In constant dollars this figure has decreased at a rate of 0.34% per year between 2001 and 2009 in the U.S.. Inputting this into the estimate yields a annual rate of increase in resource use worldwide of 3.56% (3.9%-0.34%). In 11 years at 3.56% growth we would require an input of 1.5 times the current levels of material and energy. In 40 years, with the population estimated at over 9.1 billion, the annual consumption of material would be 2.8 times the current level. Where will this material and energy come from? To see if this is feasible let us look first the known reserves and consumption rates of various inputs to our society. There has been a lot of focus on energy and in particular oil and gas. They have provided the power to boost civilization to its present frenetic level of consumption. Known oil reserves are1,184 billion barrels in 2009. In that year we consumed 84,389,000 barrels per day. At that rate we have 44 years of oil left. If we keep growing obviously it will go sooner.

A similar analysis can be done for minerals. The USGS lists U.S. reserves of copper at 35,000,000 metric tons which would last 31 years at the current rate of production. Gordon, M. Bertram, and T. E. Graedel of Yale University calculated the supply of critical minerals and concluded that the supply of many of them is even more constrained than copper. The New Scientist published a graphic depicting this information.

That said, it is difficult and often misleading to use known reserves as an estimate of when a resource will be exhausted. For example, technological improvements have made it possible to drill for oil in places that could not be exploited in the past. There is an environmental and dollar cost to this technology which became apparent with the BP oil spill, and $4 gasoline prices at the pump. Minerals are no different. The U.S. Geological Survey has the following interesting note on its annual assessment of copper reserves.
For example, in 1970, identified and undiscovered world copper resources were estimated to contain 1.6 billion metric tons of copper, with reserves of about 280 million metric tons of copper. Since then, about 400 million metric tons of copper have been produced worldwide, but world copper reserves in 2010 were estimated to be 630 million metric tons of copper, more than double those in 1970, despite the depletion by mining of more than the original reserves estimate.

What is not stated here is the quality of copper ore. Kennicot Copper was founded in 1903 to mine a claim in Alaska. In 1911 the first trainload of ore containing 75% copper was shipped to the smelter. By 2005 the copper content of ore mined in the U.S. declined to 0.37%. Since then it has gone up slightly with the opening of new mines, but the point is that the rich deposits of copper are gone and copper is being extracted from ore with only 1/200 the copper content of the early mines. This is only possible because of the increased use of energy to mine and refine a huge volume of material to recover the copper. The web site for Kennecott states that their mine is 2-3/4 miles across at the top and 3/4 of a mile deep, an excavation only made possible by cheap oil. In other words the increase in listed reserves comes mostly from counting ore deposits that could not be economically mined in the past rather than the discovery of new rich deposits.

Rather than dwell on calculating the length of time a particular mineral will last, the intention here is to affirm that there is a finite supply of all minerals and that supply is quite limited in some cases. This is confirmed by the dramatic increase in mineral prices since 2008 which reflects the inelastic supply relative to demand. We have been living in the illusion of an infinite world because for most of the last century technology and cheap energy have kept prices stable as demand increased. Perhaps we will learn to extract copper from ore with only 0.1% copper or less, but ultimately we will encounter the limit. Ultimately any extraction of copper from the earth faster than its formation is unsustainable. Unlike fossil fuels which can in theory be replaced by renewable energy from the sun and wind, minerals are not being formed in the lithosphere at a rate that is meaningful in a human time frame.

The problem of oil depletion has received a lot of press coverage and it is well known that oil supplies are limited and being used up rapidly. It is now generally accepted that we need to replace oil consumption with renewable energy sources both because of limited supplies and climate change caused by the release of CO2 into the atmosphere.

Coal supplies will last longer but the CO2 released in burning coal will accelerate global warming faster than oil or natural gas. New techniques for extracting natural gas such as hydraulic fracturing and have temporarily increased the recoverable reserves of gas, but there is a financial and environmental cost. Neither is a panacea.

Those that support business as usual point to technical solutions, but each solution has its own limitation. If we turn to hydrogen fuel, we need to build fuel cells to convert the hydrogen into electricity to run automobiles. According to a paper by Gordon, Bertram, and Graedel “Metal Stocks and Sustainability” platinum reserves are known quite accurately and while adequate for present use would be depleted in 15 years if we began mass-producing fuel cell automobiles. The other side of the equation is how to produce the hydrogen. Silicone photovoltaic cells use only minor quantities of rare minerals but more efficient cells such gallium arsenide require extremely rare materials. David Cohen writes that gallium arsenide cells could never contribute more than 1% of the total solar energy because of lack of raw material. To sum up, the continued application of improved methods of extracting resources from the earth over the past 100 years has created the illusion that resources are infinite. They are not. In fact many of the resources that we depend on have been significantly depleted and extraction involves the use of ever-greater energy and causes increasing environmental degradation.

The second myth is that we can support the present 6.8 billion people much less the projected peak of 10 billion. According to the UN food and Agriculture Administration world production of cereal grains has increased nearly 5% since reaching a plateau in the 1990’s. The increase is largely a response to the increase in price due to diversion of food crops to energy production. In the USA wheat prices rose form $102 per metric ton in 2001 to $249 per metric ton in 2008. This price increase of nearly 250%, which was typical worldwide, only resulted in an output increase of 5% which indicates an inelastic supply. It is therefore unlikely that even another dramatic increase in price over the next years will result in an increase in production capable of feeding the predicted increase in population. In addition many of the agricultural inputs will limit the ultimate ability to raise more food. Arable land is decreasing as cities and roads cover up farmland. Aquifers are being depleted worldwide limiting the ability to increase production by increasing irrigation. Agricultural production has become dependent on chemical fertilizers which are either mined, or in the case of nitrogen produced from natural gas, both of which are finite. Production is also dependent on fuel for agricultural machinery, processing and transportation. Climate change is having an adverse effect on production which will only increase as temperatures increase and weather patterns become more extreme. During this century, the IPCC models predict up to a 20% decrease in rainfall across North Africa, Southern Europe, Central America and Brazil. The effects of such a change would dramatically reduce the food production capacity of the world.

Sizing the Economy and the population to fit the world

So where will we find the food to feed 10 billion people and resources to supply 2.5 times as much material and energy by 2050? Most likely we will not. We must scale the economy and the population to fit the planet we live on. At minimum that requires that we stabilize the economy and the population at its present level and if we desire to maintain a standard of living comparable to the present developed world, we must allow both the population and resource consumption to decline over time. If we do not take an active role in creating a sustainable system, the earth will do it for us as it has done in the past both with human populations and animals. Biologists are familiar with the classic population dynamic characterized by overshoot and collapse that occurs when a population grows unimpeded in an environment with limited food supply. Civilizations from Mesopotamia to the Mayan city-states to Easter Island have all followed the same path as resources were depleted.

It is possible to have a health economy with full employment and a decreasing GDP, but it takes a major redirection in the thinking and strategy of leadership. First there must be a political will that is supported by the population at large. At present there is little public recognition that there is even a problem. Any mention of diminishing resources, is countered by the argument that technology will continue to solve the problem either through substitution or by the invention of new technologies that can extract more resources. They point to Malthus and the fact that he did not anticipate the industrial revolution. They assume that some other revolution will take place to save us from fulfilling Malthusian predictions. What they do not take into account is the difference in scale from a world in 1798 when An Essay on the Principle of Population was published. Then population was around 900 million and most of the mineral and carbon wealth of the earth remained untapped. We built the present industrial complex using cheap oil and plentiful mineral deposits. To rebuild the system based on solar power and renewables will take enormous amounts of energy and material at a time when both are becoming increasingly expensive.

Once there is a consensus that we need to establish a different set of goals and work toward quality of life, not quantity of things, initial steps could be made with minimal disruption. By phasing in a tax on resource use in conjunction with a reduction in income tax, industries would be encouraged to substitute labor for resources rather than the present income tax which encourages the substitution of energy and machinery for labor. The change could be revenue neutral both to the consumer and the government. Jobs would be created and resources conserved. Taxes also need to be place on pollution and other activities that damage the environment to adjust the price of goods to reflect the true cost of manufacturing them. The capitalistic system has depended on not paying for these externalities and the result is a highly skewed and unsustainable system. We have made significant progress with the clean water act and clean air act, but there is a long way to go. We still subsidize the oil industry both with tax policy and with military policy. Outdated mining laws contribute to environmental degradation that is not included in the cost to the consumer. Another example is fracturing gas wells to increase output which leads to water pollution in the surrounding area.
Rather than subsidize industries that are destroying our environment, like oil, subsidies should be used to encourage sustainable technologies, improvement in efficiency, and recycling. Lester Brown in Plan B2.0 writes that if one-half of the military budget was devoted to converting the world to a sustainable society, we could eliminate poverty, and stabilize the world population. If that was accomplished there would be little need for maintaining the military even at half its present size.

A second driver for continued growth is population. In order to create jobs for an increasing population the standard belief is that the economy must grow. Controlling population growth is critical. In order to have negative growth rate in the economy the population must decrease at a comparable rate. Population must be reduced as well in order to have sufficient food as the century progresses. Food production will decline under the present industrial farming system as resources become more expensive or unavailable. The question of how many people can the earth support depends on what standard of living we are willing to accept. Most of the authors who take a guess come up with a figure at one billion or less. Using footprint calculations Dell Ericson arrives at a figure of 1.5 to 2.5 billion with a western standard of living, but does not take into account future depletion of resources. At the very least it needs to be stabilized at fewer than 7 billion.

The other major driver of growth is debt. Governments especially need to be constrained in their ability to create debt that can only be paid off by continuous growth. If we immediately converted to a no growth economy the debt could only be paid off through controlled inflation. On the other hand inflation will consume our wealth if we do nothing due to the increased prices paid for energy and materials. Balancing the budget and reducing the debt is probably the most difficult task since it means immediate sacrifices by a population of individuals that are conditioned to seek the maximum benefit to themselves in the present moment with little concern for the future.

How far do we need to go? Some writers have concluded that capitalism is incompatible with sustainable society and true democracy because it is dependent on competition and in a limited world, we need to develop cooperative society not a competitive one. Corporations are structured to maximize profits at the expense of the environment and individual. On the other hand, history has shown that the free market is the most efficient way to distribute goods and services. Herman Daly has produced a list of 15 steps to control capitalism and move toward a zero growth economy. By doing so society maintains the basic benefits of the free market by controls the negative aspects that threaten to destroy our way of life.

Controlling democracy may be more difficult. In a representative government elected by popular vote there may be no way to prevent the leaders from buying votes by giving away government support to individuals and corporations.

A constitutional amendment requiring the budget to be balanced would be a first step, but would not change the fundamental conflict. The incentive to buy votes would still be driving the representatives to create unsustainable programs to gain short-term popularity or garner large contributions from corporations.

We have created a rich and complex society by using fossil fuels and irreplaceable mineral resources. These resources are insufficient even now to bring the world population up to a western standard of living yet we continue to advocate the policy of economic growth in spite of guaranteed disastrous consequences. We must size the economy and the population to the capacity of the earth to support it. We must reduce government spending, properly fund family planning and education worldwide, and change existing tax laws and subsidies to move toward a negative growth economy with a world population that is decreasing in step with the economy. In a democratic society we as citizens need to take back the responsibility of thinking for seven generations not just ourselves. It is clear that our representatives are incapable of making choices that are beneficial in the long term if voters are not willing to accept the consequences in the short term. The time to choose is now, before resources are depleted to the degree that we no longer have the ability to build a new sustainable infrastructure.