Middle class prosperity can save the planet
By Homi Kharas, deputy director, global economy and development programme, Brookings Institute
“The best things in life are free”, says the old song. When it comes to the global commons – clean air, healthy oceans, conservation of diverse species – this is no longer true. We’ve abused the great systems of our planet for centuries and now it’s time to pay the bill.
There are two ways of protecting the commons. The first is to reduce the human footprint. This was the early message of the Club of Rome in its famous The Limits to Growth (pdf) treatise, published in 1972. The second is to innovate technology or approaches.
Agenda 2030, and the consensus on the global goals, is all about the second way forward, where the key to success is to create bridges between environmentalists, who argue for the primacy of sustainability, and development practitioners who put people first.
It would be naive to dismiss the tensions between these communities, despite the fact that they share common goals. Everyone wants both prosperity for individuals and a healthy planet. But the tools that are used to try to achieve these aims often have conflicting effects.
The most obvious example of this tension is the divergent views on coal-fired energy plants. The low upfront financial costs of such plants make them appealing to many policymakers interested in economic growth, while the devastating environmental costs (in terms of both global climate change and domestic health hazards) make them anathema to environmentalists.
In this case, technology now provides a suitable alternative. In India, the cost of solar power may now be cheaper than coal. Win-win solutions based on renewables and energy efficiency can provide both growth and lower carbon emissions.
In other instances, however, technology is not the answer, at least not at current rates of adoption. The modern version of constraints to growth is the ambivalence of many environmentalists towards the emerging middle class in developing countries. People in this class consume more goods and services than poorer ones. They pollute and degrade more: plastic bags from their shopping; carbon emissions from their cars; degraded land from the food they waste; reduced water tables from irrigation needed to produce animal feed grain production; coral reef destruction from sun-screens used on vacations. The list is long.
It is no use trying to fight against middle class progress. The economic and political forces are too strong. The middle class – now about 3 billion people – is growing more rapidly than at any other time in history, thanks to fast economic growth in China, India, and other Asian countries. It probably took 150 years from the start of the Industrial Revolution to create the first 1 billion middle class consumers, somewhere around 1985. The second billion took 21 years to cross the threshold; the third billion just 9 years. If the global economy recovers along the lines projected by the International Monetary Fund, 2 billion more will be added to the middle class by 2028 – a total of 5 billion people.
The fundamental issue, then, is how to reconcile this massive middle class expansion with a healthy planet. Appealing to people’s good nature will not work. Individuals do not see themselves and their normal daily habits as doing significant harm to the Earth. There is a large collective action failure – each individual thinks they can leave the problem to someone else to deal with – so few people change their behaviour and habits. And when they do, the impact is small. In the US, a single person’s carbon emissions only decline by about 5% when he or she becomes more conscious of his or her carbon footprint and switches to using LED light bulbs and driving electric cars.
Equally, trying to use economic incentives like taxes and regulations could backfire if these are seen as harming prospects for growth and prosperity. The middle class may be sympathetic to the cause, but they also care deeply about their wallets. Data from the World Values Surveys suggest that many in the middle class are not prepared to pay higher taxes to support a better environment even within their own country, let alone globally.
There are, however, other ways through which the middle class impact on the global commons can be mitigated. In the long-run, a larger middle class can be a powerful force for halting population growth. Look at Europe today: its population growth rate is only about 0.2% per year. Indeed, almost all the world’s projected population growth is happening in places with small middle classes like Nigeria and the Democratic Republic of Congo.
The link between the middle class and population growth is clear. Middle class households are more educated and more urban. They invest more in their children. Their daughters go through secondary school and on to higher education in many places. This has a dramatic effect on fertility. A woman with no schooling has, on average, four to five more children than one who completes high school.
Added up across the world, the impact can be considerable. The United Nations, which puts out different scenarios for population, thinks the most likely global number for 2100 is 10.9 billion (compared to 7.4 billion today). But demographers at the International Institute for Applied Systems Analysis in Vienna figure that the population in 2100 could be only 9 billion people, if better education is taken into account.
This reduction by 2 billion shows what can happen if a package of access to schooling and family planning is made available to middle class households. In fact, total aid for education would be doubled if just one-eighth of the $100bn (£79.8bn) promised annually in climate aid was redirected to it: this would help build prosperity and protect the planet at the same time. Win-win propositions like this can help create bridges between the environmental and development communities – a coalition that is desperately needed to safeguard the global commons and achieve the global goals.