Economic Growth and the Environment

The threat of climate change is raising important questions regarding how could we organize our economic activity in order to deal with the imminent increases in temperature and their consequences. In Chap. 4, we analysed how could the negative externalities from production be internalized, and studied the possible benefits and disadvantages of relying on a tax or cap-and-trade system. Finally, we looked at alternatives to dealing with climate change, such as adaptation and geoengineering strategies. Indeed, many important questions arise when considering the different options, and relying on one strategy or the other is by far not an easy choice. However, besides the practicalities of dealing effectively with climate change, this threat might as well be an opportunity to fundamentally question our entire socio-economic system that created the problem in the first place. Is the climate crisis an unavoidable outcome of a system that always tries to evolve, and should we, thus, find the best way to deal with it? Or, are there some fundamental flaws in this system that we could avoid? This chapter focuses on the link between economic growth and the environment.