Economic Growth and Environment: Evaluation of the Intrinsic Link

Economic Growth and Environment: Evaluation of the Intrinsic Link
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Introduction
Since the beginning of the Industrial Revolution, the economy of the industrialized nation has gone through remarkable transformations from peasant-based economies to highly complex industrial economies. This transition accelerated economic growth characterized by urbanization and rising standards of life: the two indicators of modernization. Nevertheless, the unscrupulous pursuit of economic development and the proportional increase in environmental pollution exposed the intrinsic relationship between the environment and economics (Liang & Yang, 2019). Scholars have highlighted the inexorable relationship between the natural environment and economic growth by identifying the direct and indirect contribution of the natural environment to economic activities. However, this relationship is highly complex as several factors, such as the scale and scope of the economy, level of technological advancement, and use of techniques to reduce environmental impact, define this relationship (Everett et al., 2010).
However, the increase in economic growth has resulted in the depletion of natural resources and environmental pollution, and these problems have jeopardized sustainable economic growth, as governments are under pressure to decouple economic activity from environmental resources. Nevertheless, for sustained economic growth, an effective government-based environmental policy is required; this policy should be based on the principles of sustainable use of natural resources to manage pollution and retain the economic growth curve. Therefore, the following discussion provides an in-depth analysis of the relationship between the environment and economic growth to highlight the requirement of this environmental policy.
Discussion
The Role of Environment in Economic Growth
The natural environment is essential to human economic activity as it provides raw materials such as water, timber, fossil fuel, minerals, and land for establishing factories and industrial hubs. Without this supply of material goods, economic growth will remain a far-fetched dream, as without this input, the economy cannot produce the goods and services required by the modern consumer (Everett et al., 2010). Besides this direct contribution, the natural environment also runs and maintains economic activity indirectly through its natural mechanism of recycling materials. Moreover, the natural ecosystem plays a vital role in carbon sequestration (capturing and storing atmospheric carbon); in this way, they provide a regular supply of carbon compounds to the industrial sector (Everett et al., 2010). This natural process is the driving force behind the smooth flow of resources in the economic system.
The natural ecosystem also contributes to economic growth and sustainability by providing free-of-cost services in natural water purification and prevention and management of flood risks. This aspect of the natural environment is the most significant as consuming the natural environment jeopardizes the natural recycling of materials in the ecosystem and weakens the indirect input of the environment in the economic sector (Everett et al., 2010). Without natural minerals and materials, economic growth will face critical challenges. Resultantly, halted economic growth will affect GDP growth, standards of life, and social stability. The upward level of economic growth ensures maximum employment opportunities; furthermore, it provides developing countries to improve the quality of life of their citizens (Everett et al., 2010).
Environmental Destruction and Risk to Economic Growth
Scholars are almost unanimous in their opinion regarding the detrimental effect of environmental degradation on industrial and economic activities. According to some renowned research scholars, higher economic activity is directly linked with excessive depletion of natural resources such as water and fossil fuel. Resultantly, an increase in the level of environmental pollution and depletion of natural resources will put a check on economic growth by decreasing the quality of human life despite economic prosperity (Panayotou, 2016).
Urbanization is a crucial aspect of economic growth, which ensures a higher level of social and living standards and eradication of poverty; for instance, between 1978 and 2016, China's urbanization increased exponentially from 20% in 1978 to 57.35% in 2016 (Liang & Yang, 2019). Experts attribute economic growth as the core factor behind growth in urbanization and the subsequent improvement in quality of life; nevertheless, the core principle of modern economic growth is the consumption of natural capital or natural resources. Since natural capital is mainly based on non-renewable resources, any negative changes in environmental resources are virtually irreversible (Liang & Yang, 2019). For the same reason, economic growth faces significant challenges due to growing environmental issues.
Scholars have identified various aspects of natural capital that make it intrinsically linked with economic growth; for instance, using natural capital is linked with critical threshold limits of use. Hence, crossing these limits may result in dramatic changes in industrial production and environmental balance (Everett et al., 2010). In the same way, using natural capital for industrial consumption also faces the challenge of maintaining the fine limit of use, as depletion of natural resources beyond their fine limit will make an impact felt by the incoming generations. Although scholars generally admit the significance of limited use of non-renewable natural resources, they should also impose cautious limits t...