Limits to Growth

Limits to Growth is a phrase coined by Donella Meadows and collegues in their 1972 book, The Limits to Growth: A Report for the Club of Rome's Project on the Predicament of Mankind. The research, commissioned by the Club of Rome, models the world system to examine the consequences of economic growth and development when that growth does not account for the scarcity of the Earth's resources and its capacity to absorb wastes. The model, World3, was designed to examine the impact of accelerating industrialization, rapid population growth, food production, depletion of nonrenewable resources, and environmental degradation. The report concludes that humans will inevitably overshoot the Earth's ability to support the total human population, or carrying capacity, if growth continues unsustainably. The result would be economic collapse and a decline in human population. However, humans have the ability to avert potential disaster by achieving equilibrium between human demands for scarce resources and population growth at the global scale. The concept of Limits to Growth is often described as Neo-Malthusian, since the model assumes exponential growth in human populations.

Population growth, rising consumer demands, industrialization, and environmental degradation strain the world's resources since the world's population is also growing in prosperity. The authors reached the conclusion that the limits to growth would be reached within the 21st century, citing the most likely outcome as sudden and unrecoverable decline in human population and industry. In the years after its publication, critics were quick to attack. American economist Robert Solow, one of the book's greatest critics, cited weak data to support the authors' claims and conclusions. Bjørn Lomborg, in The Skeptical Environmentalist, repeatedly denounced Limits to Growth for missing the mark on the stated prediction of running out of oil by 1992. The authors in their own criticism stated that their confidence in numerical parameters was mixed; however, their confidence in the basic qualitative assumptions, predictions, and conclusions was strong.

The neoclassical economics argument would suggest that economic forces spur technological solutions prior to any impending doom predicted by Limits to Growth. Scarcity of natural resources drives prices higher. As prices increase, society begins to conserve its resources and to seek out innovations to enhance the efficiency of the resource use or to [Page 265]substitute away from that resource in favor of another. In essence, economists focused on relative scarcity.

For example, as oil reserves are depleted, the market will observe increases in price for oil. When oil prices rise, people begin to use less oil. In Europe, taxes on oil serve to impose a much higher price per gallon of oil than in the United States. The difference is noticeable in that the average European consumes much less oil than the average American. When prices are higher, the demand for alternative resources increases. Wind, solar, geothermal, and other energy resources are becoming important alternatives to nonrenewable resources.

Today, Limits to Growth is receiving renewed attention as global climate change and the failure of economic systems dominate public discourse. American economist Joseph Stiglitz, who once criticized Limits to Growth, has recently agreed that oil is underpriced relative to the cost of carbon emissions from the burning of fossil fuels. The observation is consistent with the criticism that economic models do not account for the finite nature or absolute scarcity of the Earth's resources or its finite ability to absorb wastes without consequence. Moreover, in 2008, resource use and costs of the resource use have continued to rise with increasing demand from a growing and industrializing population.

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