“Can Economic Growth Really Solve Climate Change?” – Duncan Austin

Are you looking for information about the interactions between economic growth and environmental (un)sustainability?

Duncan Austin has put together a helpful presentation about why economic growth will not solve climate change, accessible in a pdf form.

The presentation is meant for everyone – students, educators, interested laypeople as well as high-level policymakers – interested in the topic, and provides an overview of current debates on the environmental effects of continued economic growth and the environmental Kuznets curve hypothesis.

“Can Economic Growth Really Solve Climate Change?” or “What if the Environmental Kuznets Curve can bend backwards? (And why would economists not have contemplated that possibility?)”

All sustainability reflections inevitably wend their way back to the issue of economic growth, yet public debate continues to shy away from this reality. The central question is: is economic growth good or bad for the environment? And, if the latter, what are the implications for how to address environmental and development challenges?

Duncan Austin has put together a presentation with information about why economic growth poses a fundamental challenge to sustainability, and why the Environmental Kuznets Curve hypothsis (EKC) or decoupling hypothesis.


As Duncan explains, for obvious reasons, the prevailing attitude is that ‘growth is the solution’, as demonstrated by enthusiasm for ‘green growth’ political goals and ‘winwin’ ESG strategies. As the science that has formalized and promoted ‘economic growth’, economics must have a theory that encourages this attitude.

It does. It is called the Environmental Kuznets Curve hypothesis (EKC, top diagram), often presented in generalist media as the ‘decoupling’ hypothesis (bottom). The EKC posits that growth may initially increase environmental damage but will then reliably reduce it.

Alas, the EKC hypothesis is not reassuring at all.

The empirical problem is that the evidence base for the EKC, now comprising hundreds of studies is very mixed.

The conceptual problem is that the EKC fails to recognize thresholds and ‘tipping points’ that ecologists are at pains to point out constitute the defining feature of global ecological challenges. The empirical problem is that metaanalyses of hundreds of EKC studies find very mixed evidence for whether the EKC holds or not. A typical conclusion: “…absence of consensus throughout the EKC literature on the existence and shape of the curve…”

Roughly half of EKC research studies do not support the theory. Similar conclusions are found in reviews of ‘decoupling’ studies. An important subfinding is that the EKC hypothesis seems to be weaker for global longlagged problems (notably GHG emissions) than for more localized, shorterlagged problems such as air and water quality, where it was first hypothesized.

A major flaw in the invocation of the EKC, then, is in the casual extrapolation of success with some ‘short loop’ problems to ‘long loop’ and still ongoing global climate and biodiversity problems.