Environmental protection and economic growth – a conflict?

Environmental protection and economic growth – a conflict?: Water supply and climate protection as examples

Executive Summary

• At the latest in 1972, when the Club of Rome drew attention to the ‘limits to growth’, political and economic decision-makers became aware of the significance of environmental protection. This change in thinking was accelerated by the first oil crisis, which made the industrial countries painfully conscious of their dependence on this major source of energy.

   

• Since then, many countries and industries have made considerable progress with environmental protection. So far, however, this has been almost exclusively in industrial countries. But in future the developing countries will become much more important.

   

• The provision of adequate supplies of clean drinking water for the world’s inhabitants will be one of the greatest environmental and social challenges in the coming years. One of the crucial sectors as regards water supply and distribution is agriculture, as irrigation accounts for more than 70% of global water consumption. The efficiency of irrigation has to be stepped up. It is even more important, though, that countries with extremely low rainfalls gradually abandon the goal of becoming self-sufficient in basic foodstuffs, as this can help reduce water consumption in their farm sector.

   

• In order to achieve sustainability in climate issues, there needs to be an instrument to limit emissions of greenhouse gases. There should also be intensified research on technologies that increase energy and resource efficiency and reduce dependence on fossil fuels.

   

• Through technological progress and the resultant rise in factor productivity the ‘limits to growth’ can be pushed back. It would be possible to have a higher standard of living – including a clean environment – for everyone, while at the same time consuming less resources and respecting the well-being of future generations. This is definitely an enormous challenge that can only be met on a longer-term horizon and with international cooperation. But it can be mastered if the rich industrial countries are prepared to share some of the wealth they have achieved with the developing countries.

Eric Heymann and Norbert Walter, 7 February 2002
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Deutsche Bank Research