Production, Environment, and Population Growth

Abstract This paper analyses the joint evolution of production, environment, and population in the long run. The paper demonstrates that the link between output, resources, and population creates obstacles to sustained growth. This is because the law of conservation of mass implies that long-run growth of output would depend on increasing resource use. The amount of resources used in production directly increases pollution and causes environmental deterioration. Income growth and a fall in the quality of the environment raise the relative cost of living and affect fertility negatively. This leads to a trade-off between income growth and population growth. If resource use damages the environment at an increasing rate, then the sustainability of the environment requires that the total resource use should be capped. In this case, any per capita growth comes at the cost of a static or even falling population. The only way to ameliorate such a strict trade-off is to promote ’green’ technologies and policies that allow for growth with lesser pollution.