TRADEOFFS BETWEEN ECONOMIC GROWTH AND ENVIRONMENTAL PROTECTION
"We've been given a warning by science and a wake-up call by nature. It is up to us now to heed them." With increasing awareness about climate change and the need to protect the environment, we are also becoming aware of how economic activities contribute to environmental degradation. After generations of putting economic growth first, climate change now poses a significant threat to our economy. Although it is not yet possible for us to eliminate environmental degradation, we see businesses working hard to consider the social costs and externalities to help control climate change. Just as Greta Thunberg said, "I'm sure the moment we start behaving as if we were in an emergency, we can avoid climate and ecological catastrophe."
The impact of environmental protection will become prominent if we continue on our current path together. We already see rising water levels, heat waves, and a rise in temperatures in general. These are the short-term effects of our heedless actions, which will progressively worsen. The US owns coastal Assets worth thousands of billions. The rising sea levels pose severe threats to these infrastructures, and the damages will be worth hundreds of billions. This is just one of the many threats climate change poses. It is clear that increasing natural disasters affect economic assets on a large scale worldwide. The rising temperatures also affect the productivity levels of labor. Heat not only directly affects the economy but also indirectly raises economic costs. The rise in heat pushes consumers to use air conditioners more often, which also contributes to global warming, and the current heat levels increase the risk of heat strokes that can potentially cause death. There has been an overall drop in labor productivity attributed to rising heat levels.
Agriculture, which is the highest contributor to the economy, will be heavily affected by climate change. Most agriculture depends on following weather patterns and planting crops accordingly to yield the best results. When agriculture's fundamental basis changes, the yield will be adversely affected. New research and recording will have to be carried out to determine the best times to plant each crop to maintain productivity. Crop yields have already dropped significantly and will continue unless controlled. As the temperature continues to rise, arid regions will become drier and cause ruin to temperate and tropical regions. All in all, agriculture will be one of the worst-hit sectors due to climate change.
Christopher Dodd once said, "We learned that economic growth and environmental protection can and should go hand in hand." Economic growth does not have to be exclusive of environmental protection. Through research and development, it is always possible to create greener alternatives to protect the environment while aiding economic growth. Take Tesla, for example- this electric car provides some of the most high-tech and sophisticated services and an economically feasible and sustainable model. It contributes to the environment by reducing pollution and to the economy by creating a competitive market for electric automobiles, creating jobs, and catering to consumers. It is one of the many examples that show that economic growth does not have to be an alternative to environmental protection but an aid.
Getting every business on this planet to take up environmentally sustainable infrastructure may not be possible, and even the ones with the potential will take a long time to implement measures. Meanwhile, government policies can provide the environmental protection required to prevent a catastrophe. Command and Control regulations are one way of imposing protective measures. These regulations have strict emission limits that companies are mandated to follow. While helpful in reducing pollution, command and control regulations do not reach their utmost potential due to the lack of incentives and inflexibility.
Market-oriented tools correct the drawbacks in Command and Control regulations. These are more flexible ways to reduce environmental degradation by incentivizing the social motive to reduce the environmental damage caused by the business. Pollution charges, for example, are a part of market-oriented tools. This is a tax charged based on the emissions of a business. Since there is no lower limit, businesses do their best to figure out ways of reducing harmful emissions to reduce costs since profit-maximizing is the top motive of most businesses. Market-oriented methods are a better way of reducing environmental damage and promoting sustainability.
Market-oriented tools, by far, pose the slightest threat to economic efficiency as they encourage businesses to make considerations for the environment by incentivizing their efforts. Community-oriented marketing is another alternative that is more of a social and self-imposed method. Companies that follow a specific social motive attract customers who appreciate being part of a greater cause. This increases customer loyalty for brands focusing on long-term customer relationships and social concerns. For example, Adidas and H&M made their clothing and apparel more sustainable. Fast fashion's negative impact on our environment is well known, so H&M created a sustainable living loyalty program to recycle old clothing. Adidas plans to make shoes from microplastics and other plastic wastes dumped into the oceans. Small efforts at CSRs, too, can help reduce the burden on the environment. Our priority should be to address the fast-approaching issue of climate change. We need to heed the warnings telling us we are on the wrong path. Though nothing can be changed overnight, small steps to slow down climate change will eventually prove to be significantly impactful in protecting our environment and aiding our economic growth and development.
References:
Risky business. n.d. “The Economic Risks of Climate Change in the United States.” Accessed December 14, 2022. https://riskybusiness.org/report/national/
Khan Academy, n.d. “Pollution as a negative externality.” Accessed December 14, 2022. https://www.khanacademy.org/economics-finance-domain/microeconomics/market-failure-and-the-role-of-government/environmental-regulation/a/the-economics-of-pollution-cnx
Cohen, Steve. Columbia Climate School. n.d. “Economic Growth and Environmental Sustainability.” January 27, 2020. https://news.climate.columbia.edu/2020/01/27/economic-growth-environmental-sustainability/
Singh, Nidhi. Entrepreneur, n.d, “Temperature Impacts Workplace Productivity Too.” September 4, 2018. https://www.entrepreneur.com/en-au/news-and-trends/hot-weather-at-workplace-leads-to-less-productive-employees/319479#:~:text=Can%20Temperature%20Affect%20Productivity%3F,in%20workplaces%20requiring%20manual%20labour.
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