THE IMPACT OF GROWTH ON THE ENVIRONMENT MONDAY, APRIL 2, 1973 U.S. SENATE, COMMITTEE ON PUBLIC WORKS, SUBCOMMITTEE ON AIR AND WATER POLLUTION, Washington, D.C. The subcommittee met at 10 a.m., pursuant to notice, in room 4200, Dirksen Office Building, Hon. Dick Clark, presiding. Present: Senators Clark and Stafford. Senator CLARK. The subcommittee will please come to order. The hearings held by this subcommittee over the past decade have illuminated some harsh facts concerning man's abuse of his environment. The conclusion which we have drawn from those investigations have formed the basis for congressional enactment of new laws to control air, water and land pollution and to protect those critical natural resources. These statutes are among the most stringent Congress has ever passed, yet they may not be strict enough. They are among the broadest laws ever enacted, but they may not apply widely enough. And compliance with their requirements may entail unprecedented expenditures of public and private capital, but even those efforts may not represent a sufficient commitment of our resources. Achieving the levels of environmental quality that the public demands and that we know are necessary to preserve life immediately will require extraordinary changes in our working habits, our spending habits, our living habits, and-most important our growing habits. It is apparent that the pollution control laws which Congress has enacted form only one element of a national growth policy-a policy we desperately need but do not have. The pollution control laws have been a necessary first step, because it is imperative that we cope first with the problems of the past. The enactment of those laws is nearly complete; the major task remaining for the 93d Congress is the passage of a new law to control solid waste pollution. But in dealing with the problems of the past, we have come face to face with the problems of the future. Now we must grapple with those problems and begin to direct and control growth. We should learn what kinds of growth and what rates of growth cause adverse environmental results. We should learn how to predict the adverse impact of growth on the environment. We should learn what kinds of growth are acceptable substitutes for other, more environmentally harmful kinds of growth. We should learn how to encourage those acceptable substitutes. (1) And we should begin to regulate growth itself rather than the adverse by-products of growth-so that we can avoid drastic regulatory measures which become our only recourse. In short, we should learn how to secure the benefits of growth without also becoming its victims. I have phrased these questions in perhaps their simplest terms, but the answers are obviously complex. I hope that this committee and the Congress will pay careful attention to them. In a sense, these hearings are a lecture series for the Congress, and I would like to welcome our first tutor, Dr. Herman Daly. STATEMENT OF DR. HERMAN DALY, LOUISIANA STATE Dr. DALY. Thank you very much, Mr. Chairman. I am pleased to have an opportunity to speak to the committee. My remarks are entitled, "Steady-State Economy or Growthmania?" First I would like to say a few words about the way I see our present attitude and commitments to growth, and then just briefly say something about a conceivable alternative. Our growth-oriented, high mass consumption economy has been accurately characterized in the following words, "Growth becomes its normal condition. Compound interest becomes built, as it were, into its habits and institutions." 1 In other words, we are hooked on the habit of exponential growth. But this is seen as a healthy addiction from the point of view of social stability. One famous economist has told us that, "Growth is a substitute for equality of income. As long as there is growth there is hope, and that makes large income differentials tolerable." 2 Apparently brotherhood doesn't really mean sharing what we have now, it means keeping it and making it grow so we can "some day" share that exponentially swollen sum that we expect to have in the future. Growth is seen as the glue that keeps conflicting interests from tearing apart. Any problems induced by growth are to be met by more growth, "a rising GNP will enable the Nation more easily to bear the costs of eliminating pollution," is a frequent statement. It assumes that rising GNP is in fact making us richer, when actually that is the very point at issue. In 1971 the President's Council of Economic Advisers, in a total surrender to growthmania and non-sequitur, told us that, "If it is agreed that economic output is a good thing, it follows by definition that there is not enough of it." 4 In sum, the growth economists' pet theory of the universe is that continuous growth in real GNP is highly desirable, and "therefore" must be possible. Even if not quite a panacea, growth is thought to make the solution of all problems far less difficult, and thus has become the top priority of economic policy. 1 W. W. Rostow, The Stages of Economic Growth, p. 7. 2 H. C. Wallich, Newsweek, January 24, 1972. 3 Neil Jacoby, "The Environmental Crisis" Center Magazine, Nov./Dec., 1970. 4 Economic Report of the President, 1971, p. 92. Let us pause to consider a remark by Sir Arthur Eddington about pet theories of the universe: "The law that entropy increases the Second Law of Thermodynamics-holds, I think, the supreme position among laws of nature. If someone points out to you that your pet theory of the universe is in disagreement with Maxwell's equations then so much the worse for Maxwell's equations. If it is found to be contradicted by observation-well, these experimentalists do bungle things sometimes. But if your theory is found to be against the Second Law of Thermodynamics, I can give you no hope; there is nothing for it but to collapse in deepest humiliation." 5 6 The cornucopian economists with their pet theories of perpetual physical growth are in the unenviable position described by Eddington. There is no alternative but to accept the humiliation, abandon the pet theory and get on with the job of figuring out how an economy consistent with physical limits, a steady-state economy, can be attained. But ignorance of physical limits is not the only failing of growth economics. For too long we have, in the name of positive science, evaded the ethical and moral issues of just distribution by hoping that growth would mean prosperity for all with sacrifice by none. The sins of present injustice were to be washed away in a sea of future abundance vouchsafed by the amazing grace of compound interest. This evasion was never very honest. It is now exposed as absurd." Let us examine for a moment the nature of the limits that economic growth must come to terms with. With some oversimplification we might classify the limits as physical, biological, social, and economicrecognizing of course that all categories depend on physical processes, so that the physical limits are surely ultimate. Physically the limits are the first and second laws of thermodynamics. We cannot create matter or energy, nor destroy them. We merely transform them. This flow of matter-energy from the environment, from raw materials to waste, is what sustains life and wealth and has been called by some economists throughput, since it is the flow-through of the economy. We deplete the environment by extracting raw materials and we pollute the environment by eventually returning to it the same quantity of waste. There is no way to avoid this. Recycling of materials is often very advantageous, but it costs more energy, and the second law tells us that energy cannot be recycled. Biological limits are interrelated with the physical limits, but involve additional complications. Not only do single physical processes have limits, but complex systems of many interacting processes are likely to have more stringent limits. Large volumes of man-made waste can easily overload natural material cycles. Food chains can concentrate DDT and radioactive materials a thousand-fold. Growing energy use increases the temperature in localized areas and upsets natural processes that are regulated by temperature. Particularly Sir Arthur S. Eddington, The Nature of The Physical World, Cambridge University Press, 1953, p. 74. See N. Georgescu-Roegen, "The Entropy Law and the Economic Problem," reprinted in Toward a Steady State Economy, H. E. Daly, ed., W. H. Freeman Co., 1973. 7 Roger Shinn, Christianity and Crisis, March 20, 1972. troublesome is the introduction of large quantities of new materials to which the biosphere has never been subjected in its entire evolutionary history, and to which the system is consequently not adapted. DDT and plutonium are examples. Large scale, or perhaps even small scale introduction of such exotic materials for the sake of growth is equivalent to playing russian roulette with our life support system. Social limits to growth are less recognizable, but likely to be even more restrictive than biological limits. Complex and powerful technologies make society more vulnerable to human error and perversity, and thus demand complex and powerful social institutions of control, which are likely to be repressive. For example, our present commitment to breeder reactors and plutonium as a major power source is more likely to be limited by the social problem of safeguarding plutonium from human error, random acts of God, and purposeful criminal sabotage, than by the physical limits of thermal and radioactive pollution, or the ecological disruption caused by the latter. A highly vulnerable society cannot tolerate "nuts" and ""political extremists' or even the "accident prone." The necessary social discipline may be more than we are able to tolerate, or more than we are willing to tolerate in exchange for the benefits. The last point leads us to the fourth kind of limit, the economic limit. At some point the rising marginal costs of physical growth will begin to exceed the falling marginal benefits. To grow beyond that point would reduce welfare rather than increase it. Therefore physical growth should stop at that point. This economic limit should be the effective limit. But unfortunately it is the least recognizable of all the limits because, strange as it seems, at the aggregate level we do not measure the costs of growth. We only measure benefits, and we do a poor job of that. Worse yet, we take the cost of protecting ourselves from the unwanted side effects of growth, and add that to GNP, thus implicitly counting costs as benefits. Clearly we should stop physical growth at the economic limit. But to recognize that limit at the macroeconomic level requires vastly improved economic concepts, theories, and accounting conventions. Ideologically we are not particularly anxious to limit growth anyway. For an individual firm or household costs and benefits are measured by the separate and distinct categories of expenditures and receipts. The economic limit to growth is thus financially recognizable for the micro unit. But what is true for the part is not necessarily true for the whole. For the aggregate sum of all firms and households, aggregate receipts and expenditures are not separate, but are identically equal. One unit's receipts are some other unit's expenditures. Aggregate sales always equal aggregate purchases because they are two sides of the same transaction. The economy always generates total income which is sufficient, if spent, to purchase everything produced-and Keynesian policy takes care of the "if spent" proviso. Therefore recognition of the economic limit at the macro level is difficult, and does not automatically follow from the recognizable limits on the growth of any given micro unit. We have two alternatives. Either we learn to recognize and institutionalize the economic limit and restrict physical growth in a way that maximizes welfare, or we adhere to growthmania and leave it to the nemesis of social, biological and physical limits to do the job wastefully and without pity. Let us opt for the first alternative and ask what characterizes a nongrowing or steady-state economy, and how could it be attained? The steady-state economy is basically a physical concept, but with important moral and social implications. It is defined as constant stocks of physical wealth and people, each maintained at some desirable, chosen level by a low rate of maintenance throughput-that is, by physical production flows equal to physical depreciation flows, and births equal to deaths, at low rates. The reason for having the low rates is so that longevity of people and durability of commodities will be high. The throughput is viewed as the cost of maintaining the stocks, which are steady-state open systems that maintain their structure and size by continually importing and feeding on usable matter and energy from the environment, and exporting waste matter and energy back to the environment. It is the existing stock of consumer goods, machines and skilled people that yields services that satisfy human wants. The flow of extraction and transformation of raw materials into cars does not provide services. This flow of production is the necessary cost of replacement and maintenance of the existing stock. If we could maintain a desired, sufficient stock of cars with a lower throughput of iron, coal, petroleum, and so forth, we would be better off, not worse off, even though production declines as a result. Throughput is roughly equivalent to GNP, the annual flow of new production. Although real GNP is expressed in dollars' worth of an aggregate and thus is not a simple physical measure like pounds, or miles, it nevertheless measures something physical. It is a value index of quantitative change in a physical aggregate. The physical aggregate is the marketed flow of annual production of new goods and services. Real GNP is overwhelmingly a measure of throughput. Currently we attempt to maximize the growth of GNP, whereas the above reasoning suggests that we should follow Kenneth Boulding's advice to relabel it GNC-"C" for cost-and minimize it, subject to the maintenance of a chosen level of stocks. To maximize throughput for a given stock would be equivalent to maximizing depletion and pollution, while minimizing product durability. That would be absurd. As absurd as planned obsolescence, for example. To maximize the input or production end of the throughput, while minimizing the depreciation end in order to maximize the growth of the stock makes more sense, but is still a limited process. Not only is it limited by depletion, but since a pollutionless product is impossible, and an infinitely durable product is impossible, eventually the pollution end of the throughput will become very large in spite of our efforts to keep it low. Since pollution per unit cannot fall to zero, growth in the number of units will eventually lead to unacceptable levels of pollution. Physical and ecological limits to the volume of throughput imply the eventual necessity of a steady-state economy. Less recognizable social and economic constraints imply the desirability of a steady state long before it becomes an absolute necessity. |