The document discusses climate change and its connection to economic growth and finite resources. It summarizes research from the 1972 book "The Limits to Growth" which used computer models to show that exponential economic growth cannot continue indefinitely given finite resources. Updates to the model in later years confirmed its conclusions. While technology, behavior changes, and policy measures can help reduce emissions, the core of economic growth based on GDP is incompatible with sustainability. Continued growth will likely lead to overshooting and collapse of resource availability and sinks like the climate. Reducing overall growth remains necessary to achieve environmental sustainability.

1. 1
CLIMATE CHANGE AND
ECONOMIC
GROWTH
Arttu Saarinen, Atte Virtanen,
Ekaterina Ohotnikova, Régis Frias

2. 2
Contents
Economic Growth 3
Can exponential growth with finite
resources be sustained? 6
Limits to growth 6
Even infinite is not enough 7
We have been warned but warnings
were ignored 8
So where are we now 9
The current plan 11
Technology 11
Behavior 11
Policy 11
The feasibility of the plan 12
Pathways to sustainability 14
Conclusions 17
References 18
Climate change is arguably the biggest challenge facing humanity in
the beginning of the 21st century. Its main cause is the greenhouse
gases (GHG) emissions by industrialized and developing countries.
But the challenge is tightly connected to the core of our current
economic model: economic growth, as defined by gross domestic
product (GDP).
Current research suggests that economic growth is incompatible
with sustainable development. A success in reaching the current 2ºC
target proposed by the IPCC will most likely put pressure for the
economy to grow in other natural resources and sinks.

3. 3
In its essence economic growth is an
increase in a country’s productive
capacity, measured by comparing its
gross domestic product (GDP) annually.
Some of the reasons for the occurrence
of economic growth are increases in
a nation’s capital stock, technological
advances to produce more efficiently
or improvements in the quality of
people’s lives. Worth mentioning is the
way quality of life works in relation to
economic growth, where increases in
GDP themselves in many circumstances
lead to improved life circumstances.
Hence GDP is a measure for the
wellbeing of a nation’s citizens. For
hundreds of year’s economic growth
has been the systematic goal of every
nation for multiple reasons. However
the strive for growth has been executed
at the expense of the Earth’s ecosystem,
neglecting depleting resources,
increased emissions and the Earth’s
decreasing capability of sustaining and
regenerating itself.
Economic
Growth
It is arguable whether economic growth
is necessary, as its concept can be
considered to be detrimental to our
planet. One of the simple reasons for
seeking economic growth has been the
exponential growth in the population.
As more and more people inhabit the
Earth, more resources and products
are needed in order to at least maintain
the current level of wellbeing humanity
has achieved up to this point — at
least within the mainstream economic
framework. Another reason is the
characteristic of modern western
societies of wanting more. On average
people always want to have and strive
for more, whether it is wealth or goods.
The rich want to become richer and the
poor do not wish to be poor. This basic
human nature has a direct influence
on the population growth. If the global
economy would not grow, the sum of
all of the products of the world would
need to be distributed more evenly. This
would be in direct conflict with the wish

4. 4
ecosystem. Hence economic growth has
not taken the costs it induces on to the
environment into account — the so-
called externalities.
On average global economic growth has
been hovering around the 2 % mark for
the last decades, whilst the population
on Earth has doubled over the last 50
years. Some nations have experienced
more economic growth than others.
However these numbers and GDP have
not taken the costs on the environment
into account. If a monetary value would
be placed onto these costs and were
taken into account, growth would
actually be much less. It has been
estimated that with the costs to the
environment included into GDP, growth
would be reduced by an average of
3%, which would abolish the material
economic growth we have experienced
completely.
Additionally as GDP takes all of the
for more, making others have less of
what they had initially. In order to fulfill
the need for more, more debt would
have to be incurred on a personal level.
Therefore economic growth has been
the concept to fulfill these needs.
In a direct effect more consumption
leads to more production, which in
turn leads to growth in resources used.
The increase in production leads to
more pollution and waste created.
As the Earth’s natural resources
are diminished, its capability to
mitigate greenhouse gases and other
pollutants reduces simultaneously,
creating a vicious circle. The monetary
view of economic growth has been
kept separate from its effect on the
ecosystem and climate, without
recognizing how the economy is actually
a part of the ecosystem itself. Instead
of being its own entity, the economy
and its growth relies on the resources
and capital provided by the Earth’s
GDP versus
GPI, 1950–2004

5. 5
13 %. This demonstrates the direction
global economies have been pursuing:
producing more goods at the expense
of nature and the climate, whilst not
necessarily increasing the production of
goods that develop wellbeing.
Therefore a change in this mentality is
a necessary step in order to prevent
humans from destroying the planet,
where GDP cannot be considered
the true and only metric for the
advancements of mankind and its
sustainability in relation to Earth. Hence
we as inhabitants on this planet must
begin to question Goal 8 set by the
Sustainable Development program,
where the “promotion of sustained,
inclusive and sustainable economic
growth, full and productive employment
and decent work for all” is a goal we can
truly achieve on the scale we need, given
how our monetary approaches to life
have led us to the detrimental effects on
the ecosystem of our planet.
goods produced into account, it does
include goods that are of no concrete
value to society, instead of only vital
goods such as safety or health care.
Worldwide many products and services,
which are included in the GDP, create
no advancements in the wellbeing of
society and could even reduce it.
An alternative to the GDP is the Genuine
Progress Indicator (GPI), created by the
organization called Redefining Progress
(2015). According to them the GDP is
only a shorthand indicator of progress,
whereas the GPI considers only goods
and products that create true value in
the wellbeing of humans and takes the
costs of the environment into account.
An example of the difference between
GDP and GPI can be seen in the U.S.,
where for the last 45 years GDP has
grown by 70 %. However considering
only important goods and services and
the costs on the environment, the true
growth as in terms of GPI has only been
United Nation’s
8th Sustainable
Development
Goal

6. 6
Can
exponential
growth
with finite
resources be
sustained?
The attend to see whether exponential
growth with the existing resource
supplies would be possible, the research
team of Massachusetts Institute
of Technology (MIT) led by Dennis
Meadows made a two year study which
was published in 1972 under the name
The Limits to Growth (LtG).
The study was done on behalf of
the think tank Club of Rome – an
international group of distinguished
business people, state officials and
scientists. Together with Jay Wright
Forrester – pioneering computer
engineer, systems scientist and the
founder of system dynamics, MIT team
has built a computer model World3
based on the theory of system dynamics
Limits to growth
which is dealing with the behavior of
complex systems.
The model was based on a certain
combination of interdependent
exponentially and linearly growing
parameters, accounts for positive and
negative feedback loops, nonlinear
relationships and response delays.
The model took into account relations
between various global developments
and produced computer simulations for
scenarios using different amounts of
possibly available resources, different
levels of agricultural productivity, birth
control or environmental protection.
The authors intended to explore
the possibility of a sustainable
The limits to
growth 1972
edition.

7. 7
feedback pattern that would be
achieved by altering growth trends
among these variables in the frame
of three scenarios: Business as
Usual, Comprehensive Technologies
and Stabilized world. The research
presented and analyzed 12 model runs
for the scenarios and showed other
possible patterns of world development
over two centuries from 1900 to 2100. In
the end all of the Business as Usual and
Comprehensive Technologies scenarios
met overshoot and collapse by the
mid to later part of the 21st century.
And only Stabilized world scenario
resulted in an equilibrium stability. The
only scenarios which indicated human
welfare could be sustained were ones in
which growth was reduced.
Even infinite is not enough
The standard model included a doubled
resource base of what was calculated
to be available back in 1970s and some
model runs included an assumption
where natural, technological or
energy resources were even infinite.
However those model runs still result
in overshoot and collapse from
overgrowth of other variable factors.
Increasing the availability of resources
didn’t increase the lifetime of resource
use in proportion but just insignificantly.
“Unlimited resources thus do not
appear to be the key to sustaining
growth in the world system.”
1972 runs of
the World3
computer
model

8. 8
Common criticism of the LtG research
was that technological innovation and
market signals would allow growth
to continue. It was argued that as
resources became scarce their market
prices would increase because of
scarcity and this would reduce demand
for them. Technological innovation
would then find substitutes so that
growth could continue. But according
to the model runs even when very
optimistic assumptions about technical
innovation are made, limits are still
reached and exceeded at some point.
“We have felt it necessary to dwell
so long on an analysis of technology
here because we have found that
technological optimism is the most
common and the most dangerous
reaction to our findings from the
world model. Technology can relieve
the symptoms of a problem without
affecting the underlying causes.
Our attempts to use even the most
optimistic estimates of the benefits
of technology in the model did not
prevent the ultimate decline of
population and industry, and in fact did
not in any case postpone the collapse
beyond the year 2100. We have shown
that in the world model the application
of technology to apparent problems
of resource depletion or pollution or
food shortage has no impact on the
essential problem, which is exponential
growth in a finite and complex system.”
(Limits to Growth, 1972)
We have been warned but warn-
ings were ignored
The purpose of LtG was not to make
specific predictions, but to explore
how exponential growth interacts
with finite resources. The model runs
clearly showed that by the year 2100
the world might be on a collision
course with catastrophe if then current
rates of growth in such areas as
resource use, industrial output, food
production and population expansion
continued on their then current
course. The projections for the values
of the variables in each scenario were
predictions only in the most limited
sense of the word, and were only
indications of the system’s behavioral
tendencies.
1972 runs of
the World3
computer
model

9. 9
Because of the fact that the model
has no military sector to drain capital
and resources from the productive
economy, it has no wars to kill people,
destroy capital, waste lands, or generate
pollution, it has no ethnic strife, no
corruption, no floods, earthquakes,
nuclear accidents, or health epidemics,
model representations thus are the
uppermost possibilities for the “real”
world. This probably makes scenarios
highly optimistic
So where are we now
The conclusions presented in the
research were novel and even
controversial in 1972. At that time the
world’s population and economy were
still comfortably within the planet’s
carrying capacity. The team found that
there was still room to grow safely while
we could examine longer-term options.
However in 1992, this was no longer
true.
On the 20th anniversary of the
publication of LtG, in the 1992 the team
made an update in a book called Beyond
the Limits. Already in the 1990s there
was compelling evidence that humanity
was moving deeper into unsustainable
territory. Beyond the Limits argued that
in many areas we had overshot our
limits, or expanded our demands on
the planet’s resources and sinks beyond
what could be sustained over time.
The most recent updated version was
published on June 1, 2004 by Chelsea
Green Publishing Company and
Earthscan under the name Limits to
Growth: The 30-Year Update. Donella H.
Meadows, Jørgen Randers, and Dennis
Meadows have updated and expanded
the original version. In this update the
study team point out some lessons
they feel have been learned from
their computer simulations, many of
which explore assumptions about both
technological innovation and resource
substitution:
• If one limit is removed but growth
continues overall, then another limit
will be encountered; they point out
that there are layers of limits which
are likely to unfold in successively
multiple ways. Continued growth will
only accelerate this process.
• If a society is in fact successful in
putting off limits through economic
or technical adaptations, it runs
the risk of later exceeding several
limits at the same time. What such
a society runs out of is the ability to
cope.
• Markets and technologies are tools
that serve goals set by society; if the
primary goal is growth these tools
will be used in service of growth.
• Adjustments by markets or
technology also have costs, and as
limits are approached these costs

10. 10
increase dramatically, making the
adjustments unaffordable.
• Markets and technologies operate
through feedback loops with
information distortion and delays;
such delays facilitate overshoot.
In 2008 Graham Turner at the
Commonwealth Scientific and Industrial
Research Organization (CSIRO) in
Australia published a paper called
A Comparison of `The Limits to
Growth` with Thirty Years of Reality.
It examined the past thirty years of
reality with the predictions made
in 1972 and found that changes in
industrial production, food production
and pollution are all in line with one of
the book’s three scenarios so far that
of ‘business as usual’. In 2014 Graham
Turner concluded that “preparing for a
collapsing global system could be even
more important than trying to avoid
collapse.”
The study team published both a 20
year and a 30 year follow up, adding
measures and making improvements
in their computer simulation model.
But the analyses came to the same
conclusions as the original study –
that continued growth would lead to
overshoot and catastrophe for human
civilization. In their original study in
1972 they warned that overshoot was
a possibility; in the 1992 report Beyond
the Limits they argued that overshoot
had already occurred in a variety of
areas, and that their original warning
were even more urgent.
The study pointed out that once
overshoot of carrying capacity has
occurred it will inevitably lead to
collapse unless the process is reversed
as well as further delays in recognizing
and dealing with the overshoot issue
would actually reduce the options
available for returning the world to a
sustainable state.

11. 11
The current plan
As for now, the international community
plans to restrict the global warming
to two degrees Celsius by decoupling
the CO2 emissions and economic
growth from each other. By effective
decoupling, the economy would
grow practically at the same rate as
before while the amount of emitted
greenhouse gases would decrease to
a sustainable level. The available tools
to make the decoupling happen are
technology and changes in behavior and
policy.
Technology
According to the International Energy
Agency (IEA, 2015), the needed
decoupling for only a 2°C warmer future
Earth can be achieved through the
following technologies.
The technologies in the chart are
already economically reasonable with
the exception of carbon capture and
storage. Therefore we can conclude that
we have the technological knowhow
to limit the warming to 2°C although
innovation would be of great help.
The scope of implementation is what
matters most.
Policy
The politicians have perhaps the most
power to mitigate the climate change.
If the policy makers were to set a price
of $50 for a ton of emitted CO2
and
increase the price 4% every year, the
markets would change so significantly
that the resulted CO2
emissions would
warm the climate only by 2°C. At
the same time the reduction in the
economic growth would be as negligible
as 1,6% over the time period of 2010 to
2050 (Schandl et al. 2015). The economic
growth is explained by a large growth in
the green technology sector.
A government can induce the
implementation of green technologies,
change in behavior and increase in
innovation in various other ways as
well. Through legislation a country can
for example create standards for things
such as energy efficiency or the sorts
of fuel used for transport. In addition
to a carbon tax a government can
help green technology companies by
strategically distributed subsidies. Also
direct investment, relevant education
and influencing in international deals
are instruments that governments can
use to mitigate the climate change.
Another way for rich countries to reduce
the emissions is funding the climate
action of developing countries. At best it
cuts also the global income inequality as
a side effect.
Behavior
To deploy the green technology, there
must also be changes in behavior.
For example to reduce emissions
in transport people have to choose
low carbon options such as public
transport and electric cars. In addition
to direct reduction of CO2
emissions
changes in consumption make the
green technologies cheaper and more
available and it also influences the
governments to pass policies that makes
the use of those technologies easier.
A larger demand for green technology
increases also the amount of innovation
in the field.
Cumulative CO2
reductions by sector and technology in the 2DS to 2050.

12. 12
The feasibility of the plan
Historically, the global CO2
emissions
have increased almost yearly regardless
of the realized decoupling. Basically the
only times when emissions have been
reduced are during depressions when
the economy has grown only little or it
has shrunk. Only exceptionally strong
decoupling like China’s reduction in
the use of coal in 2015 have been able
to reduce the global emissions. The
continuation of the year 2015’s trend is
unclear (Jackson et al. 2015).
On top of that, the current alleged
decoupling is not properly accounted.
The developed countries’ domestic
material consumption (DMC) seems
to be decoupled from economic
growth, although that has been far
Global CO2
emissions from
fossil-fuel use
and industry
since 1990
and emissions
intensity CO2/
GDP.
Relative
changes in
total resource
use (MF and
DMC) and
GDP-PPP-2005
between 1990
and 2008

13. 13
from making the case for decoupling in
OECD countries. The aforementioned
strategies could bring this down to the
desired levels, but the actual material
footprint (MF) in these countries is
following the GDP growth hand in hand.
Also, this doesn’t take into account that
the economic growth requires the so
called clean energies’ consumption also
increases. And each of the alternatives
(hydro, wind, solar, CCS) have a clear
and known limitation.
Therefore we don’t have solid historical
evidence for the decoupling plan
to work which exposes the plan to
surprises. Another weakness of the
plan is that it allows economic growth
to happen even though it increases
emissions or in this case the need
for decoupling. Obviously it’s harder
to decouple more than less. Hence,
it’s useful to consider other ways to
mitigate the climate change as well.

14. 14
The previous sessions demonstrate that even if the
proposed strategies to reducing CO2 emissions
succeed, that doesn’t mean we have a safe framework
to sustain human prosperity throughout the 21st
century. That is because prosperity has been defined
as — or at least tightly linked with — economic growth.
The ultimate solution to our environmental crisis is
then to redefine prosperity.
As Jackson (2009) points out that economists and
policymakers have, for most of our recent history,
focused on GDP growth, even though it has “delivered
its benefits, at best, unequally”. He explains that (id.
ibid.):
Growth in the GDP is taken for granted. Reams and
reams have been written about what it’s based on,
who’s best at making it happen and what to do when
it stops happening. Far less is written about why we
might want it in the first place.
Pathways to
sustainability
The myth of growth has failed us. It
has failed the 1 billion people who still
attempt to live on half the price of a
cup of coffee each day. It has failed
the fragile ecological systems on which
we depend for survival. It has failed,
spectacularly, in its own terms, to
provide economic stability and secure
people’s livelihoods.
Tim Jackson

15. 15
The same plot a hundred years later
(below) clearly shows that more income
actually increases life expectancy.
Beyond about U$ 20,000, increment in
income has little to irrelevant impact on
life expectancy. From that point other
factors are more important than GDP
for a nation’s prosperity.
Tim Jackson (id. ibid.) points out that
[p]rosperity is not synonymous with
material wealth. And the requirements
of prosperity go beyond material
sustenance. Rather, prosperity has
to do with our ability to flourish:
physically, psychologically and socially.
Beyond mere subsistence, prosperity
hangs crucially on our ability to
participate meaningfully in the life of
society.
There is “growing recognition that,
beyond a certain point at least,
continued pursuit of economic growth
doesn’t appear to advance and may
even impede human happiness” (id.
ibid.).
Gapminder world plotting life expectancy
and income per person in 1995 and in
2005
In developed countries the most
important element to predict
health and social problems is
inequality: the more unequal, the
worse the indices (Wilkinson &
Pickett 2011)
Part of the explanation lies in the fact
that up until a point economic growth
does bring more prosperity. The chart
below (Gapminder, 2015) is a plot of life
expectancy as a function of income per
person in 1915 (bubble size represents
population size).
If policy is focused on GDP growth, when
the economy shrinks, governments urge
the population to consume more. This
is part of a perverse mechanism that
puts materialism ahead of prosperity in
policies and our lives.
An element that plays an important
role in prosperity is income inequality.
Wilkinson and Pickett (2011) show, in
a series of comparisons between rich
countries the relationship between
social problems and income inequality.

16. 16
Inequality is also a great driver for
climate change. The Equality Trust, 2015:
The most important obstacle to
achieving sustainability is consumerism
and the opposition to any policy which
appears to be an obstacle to the
maximisation of personal incomes and
consumption. A very important part
of what fuels consumption however
is status competition - keeping up
with others, maintaining appearances,
having the right clothes, car, housing,
education etc, to compare favourably
with others. All these pressures are
intensified by greater inequality.
As a result people in more unequal
societies work much longer hours to
keep up appearances. They spend
more, save less, get into debt more and
aspire to ever higher incomes.
The Sustainable Economies Law center
proposes a description of some of the
elements of a sustainable economy, one
that doesn’t rely on economic growth
just to stay alive:
• Food “is produced locally and/or by
small-scale, sustainable, community-
owned enterprises” and provides
“more opportunities for people to
create rewarding livelihoods working
in the production of food.”
• Cooperatives: they propose a society
where “enterprises and assets
are owned and controlled by the
communities that depend on them
for livelihoods, sustenance, and
ecological well-being.”
• Grassroots Finance: “any project
or enterprise can obtain financing
from members of the local
community, and where the majority
of businesses in a community are
locally owned and locally financed.”
• City Policies: cities have “a diversity
of micro-enterprises, urban farms,
community markets, transportation-
sharing, co-housing communities,
shared housing options, cooperative
enterprises, and a wide variety of
economic solutions developed at the
grassroots level.”
• Community Currencies:
“communities can create diverse
and satisfying means for people to
provide for and exchange with each
other.”
• Community Renewable Energy:
“break barriers to the formation
of community-owned renewable
energy enterprises.”
• Rethinking Home: “world
where every person can live in
economically sustainable homes
without stressful financial burdens
and without diminishing the housing
and land resources available to
others.”
• Work in the New Economy: “every
person has satisfying options for
making their livelihood, including
through participation in cooperative
enterprises, micro-enterprises,
social enterprises, nonprofit
enterprise, low-profit enterprises,
and gift-economy enterprises.”
This is is, of course, by no means
comprehensive, but is a set of
foundation values for a society that
doesn’t rely on GDP growth to exist.

17. 17
The climate change is a real and important challenge, but it is a
symptom of a deeper problem: the impossibility of continued
exponential growth. As long as we depend on economic growth to
be able to maintain our lifestyle, mitigating global warming is a side
issue (albeit a huge one).
The main point is that the end of GDP growth doesn’t have to mean
the end of prosperity. Quite the contrary: the end of growth could
mean a healthier nature as well as a healthier human society,
with less work-related stress, conspicuous consumption anxiety,
inequality and more. GDP is a very questionable proxy for wellbeing
and it is cracking while we approach (or cross) the Earth’s resource
and sink boundaries. Hence the remaining question is whether we as
mankind are able to take a step towards such economics.
Conclusions

18. 18
Club of Rome, 2015, Club of Rome. http://
www.clubofrome.org.
Gapminder, 2015, Gapminder World. www.
bit.ly/1HOxjzc.
Jackson, Tim, 2009, Prosperity without growth:
economics for a finite planet. London:
Earthscan.
Jackson, Tim et al. 2015. Reaching peak
emissions.
Meadows, Donella, J. Randers and D.
Meadows, 1972. Limits to Growth. New
York: Universe Books.
Meadows, Donella, J. Randers and D.
Meadows, 1992. Beyond the Limits.
White River Junction, VT: Chelsea Green
Publishing Co.
Meadows, Donella, J. Randers and D.
Meadows. 2004. Limits to Growth: The
Thirty Year Update. White River Junction,
VT: Chelsea Green Publishing Co.
Wilkinson, Richard & Pickett, Kate, 2011. The
Spirit Level: Why Greater Equality Makes
Societies Stronger. New York: Bloomsbury.
The Equality Trust, 2015. The Equality Trust.
https://www.equalitytrust.org.uk/
equality-and-global-warming
IEA, 2015. Energy Technology Perspectives.
http://www.iea.org/etp/etp2015.
Turner, Graham. A Comparison of ‘The Limits
to Growth’ with Thirty Years of Reality.
CSIRO Working Paper Series 2008-09,
http://www.manicore.com/fichiers/
Turner_Meadows_vs_historical_data.pdf
Turner, Graham & Alexander, Cathy, 2014.
Limits to Growth was right. New research
shows we’re nearing collapse. In: The
Guardian http://www.theguardian.com/
commentisfree/2014/sep/02/limits-to-
growth-was-right-new-research-shows-
were-nearing-collapse.
Redefining Progress. 2015. Redefining
progress. http://rprogress.org/
sustainability_indicators/genuine_
progress_indicator.htm
Schandl et al. 2015. Decoupling global
environmental pressure and economic
growth: scenarios for energy use, materials
use and carbon emissions.
Wiedmann, Thomas O. & Schand, Heinz &
Lenzen, Manfred & Moran, Daniel & Suhf,
Sangwon & West, James, and Kanemoto,
Keiichiro. 2013. The material footprint
of nations. Procedings of the National
Academy of Science of the United
States of America. http://www.pnas.org/
content/112/20/6271.full
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