Should we replace the environment? Limits of economic growth in the presence of self‐protective choices

Abstract

Purpose

To protect against the increasing environmental degradation many agents choose today to replace consumption of depleted environmental goods with that of privately produced substitute goods. The present paper aims to highlight how this “self‐protective” behaviour that is increasingly frequent in modern societies may affect the welfare of the individuals.

Design/methodology/approach

The paper presents a combination of narrative with argument and analysis. It first provides several examples of self‐protective choices to give a heuristic view of this phenomenon and then examines their effects through a simple evolutionary model that leads the reader beyond a purely intuitive understanding of the substitution mechanism described in the first part.

Findings

The paper shows that replacing environmental goods with artificial substitute goods may give rise to an “undesiderable growth” process, that is, a vicious circle between environmental degradation and private consumption which contributes to economic growth but may have negative effects on the welfare of the agents.

Originality/value

The paper investigates an aspect of the link between environmental degradation and economic growth that has been mainly ignored in the literature so far. While most contributions have underlined that self‐protective choices can boost economic growth, the paper goes one step forward and shows that they can actually give rise to a self‐reinforcing growth process in which environmental degradation increases economic growth and viceversa, leading the economy on a welfare‐reducing path.

Citation

Antoci, A., Borghesi, S. and Galeotti, M. (2008), "Should we replace the environment? Limits of economic growth in the presence of self‐protective choices", International Journal of Social Economics, Vol. 35 No. 4, pp. 283-297. https://doi.org/10.1108/03068290810854556