Login
Copyright

What is Sustainable Economic Growth? - Definition & Overview

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: What is Economics? - Definition & Principles

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:01 What Is Sustainable…
  • 1:51 The Debate
  • 3:08 Growth vs. Sustainable Growth
  • 3:56 Lesson Summary
Add to Add to Add to

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Login or Sign up

Timeline
Autoplay
Autoplay
Create an account to start this course today
Try it free for 5 days!
Create An Account

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Shawn Grimsley
Sustainable economic growth is a hot issue in economics. In this lesson, you'll learn about sustainable growth and some of its important concepts. You'll also have a chance to take a short quiz after the lesson.

What Is Sustainable Economic Growth?

Sustainable economic growth is economic development that attempts to satisfy the needs of humans but in a manner that sustains natural resources and the environment for future generations. An economy functions in the ecosystem. We cannot separate the economy from it. In fact, an economy cannot exist without it. The ecosystem provides the factors of production that fuels economic growth: land, natural resources, labor, and capital (which is created by labor and natural resources). Sustainable economic growth is managing these resources in a manner that they will not be depleted and will remain available for future generations.

While many economists and people disagree about the importance of the environment regarding economic activity, the following facts are seldom disputed:

1. The extraction and depletion of natural resources, as well as pollution and permanent changes made to the landscape, are caused by economic activities and can do harm to the environment.

2. Many of the costs of the harm created by economic activities are not borne by those who cause it but by other people who neither obtain the benefits from the economic activity or agree to pay the costs related to it. Pollution is a perfect example. Businesses are permitted to pollute to a certain degree (less now than in the past). They don't have to pay for the pollution, but society does by dirty air, water, and contaminated soil that affect the quality of our air, water, and food. This pollution can lead to serious health effects, which may reduce the quality of life and health of the population. We call a cost borne by someone who did not agree to bear it an externality.

3. Humans live in an ecosystem and cannot survive without it. If we destroy the environment, we will eventually destroy ourselves.

The Debate

A large majority of traditional economists don't believe sustainability is a problem. They believe that we can replace depleted natural assets with manufactured assets. Plastic can be used instead of wood, for example. They also argue that since prices are a good indication of resource scarcity, there is no sustainability problem because the prices for natural resources have been fairly stable.

Ecological economists counter that this argument of traditional economists is flawed. They argue that price is not a good indicator of the need for sustainability. The market does not include goods and services that are not priced, such as air, nature, healthy populations, and equality. Additionally, markets do not account for the reality of externalities—the costs society bears but does not agree to do so. In other words, price does not truly reflect the real cost of economic activity.

Another fatal flaw in the traditional economic argument is that it ignores the fact that you still need natural resources to produce the manufactured goods the traditional economists argue can replace natural resources. The argument presupposes that technology will always find a solution, which is not necessarily the case. There may be, and probably are, technological limits.

To unlock this lesson you must be a Study.com Member.
Create your account

Register for a free trial

Are you a student or a teacher?
I am a teacher

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back

Earning College Credit

Did you know… We have over 95 college courses that prepare you to earn credit by exam that is accepted by over 2,000 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it free for 5 days!
Create An Account
Support