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6th Year HL · Economics
The challenges of the Spanish economy in a globalised context · Democracy and the welfare state

Degrowth and the Sustainable Development Goals

Humanity now consumes as if it had $1.7$ planets. That figure sums up the problem: economies keep growing, but the planet does not expand with them. Think of a Leaving Cert Economics question on Ireland's Climate Action Plan: should we grow faster, or consume less? You will see the answers proposed, from the Sustainable Development Goals to degrowth.

The Sustainable Development Goals

Block diagram showing the three interconnected dimensions of the Sustainable Development Goals: economic, social and environmental. economicpoverty, work socialhealth, education environmentalclimate, oceans

Some goals you should know by number: SDG 1 no poverty, SDG 3 good health and well-being, SDG 4 quality education, SDG 7 affordable and clean energy, SDG 8 decent work and economic growth, SDG 11 sustainable cities and communities, SDG 12 responsible consumption and production, SDG 13 climate action, SDG 14 life below water, SDG 15 life on land. A local action usually serves one goal directly: a free library supports SDG 4, a cycle lane SDG 11 (and 13), and solar panels SDG 7.

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Explain what the Sustainable Development Goals are, who promotes them, and name three of them, describing their content in one sentence.

Explain what the Sustainable Development Goals are, who promotes them, and name three of them, describing their content in one sentence.

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The $17$ SDGs are grouped into three broad dimensions: economic, social and environmental. Classify these four goals into their main dimension: no poverty, climate…

The $17$ SDGs are grouped into three broad dimensions: economic, social and environmental. Classify these four goals into their main dimension: no poverty, climate action, decent work and economic growth, and life below water. What does that classification show about how broad the concept of sustainability is?

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Sustainable development was defined as "meeting the needs of the present without compromising the ability of future generations to meet their own". Explain the…

Sustainable development was defined as "meeting the needs of the present without compromising the ability of future generations to meet their own". Explain the definition with a forestry or fishing example: what does exploiting a resource "without mortgaging" those who come after mean?

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Match each local action to the SDG it promotes and justify the relationship: a free library, a cycle lane, a soup kitchen, and solar panels at the sports centre.

Match each local action to the SDG it promotes and justify the relationship: a free library, a cycle lane, a soup kitchen, and solar panels at the sports centre.

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The ecological footprint and planetary boundaries

Comparative chart of the planet's biocapacity and the global ecological footprint, highlighting the date on which Earth Overshoot Day occurs. regenerated 1.7 planetsconsumedOvershoot Day (illustrative): c. 20 Jul 1 : 1.7

Planetary boundaries

The footprint is one measure; economists and scientists also talk about planetary boundaries: biophysical limits within which humanity can operate safely. They include climate change, loss of biodiversity, the nitrogen and phosphorus cycles, freshwater use and ocean acidification. Cross a boundary and the risk of sudden, hard-to-reverse change rises. Unlike a price, these limits cannot be bargained over.

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What is the ecological footprint and what does it mean that humanity consumes "as if it had $1.7$ planets"? Explain which resources are being used up faster than the…

What is the ecological footprint and what does it mean that humanity consumes "as if it had $1.7$ planets"? Explain which resources are being used up faster than the Earth regenerates them and what "Earth Overshoot Day" is.

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What is energy poverty (not being able to keep your home at an adequate temperature or pay for basic utilities)? Describe the case of an affected family and explain…

What is energy poverty (not being able to keep your home at an adequate temperature or pay for basic utilities)? Describe the case of an affected family and explain which SDGs it relates to (affordable energy, no poverty, health).

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Green growth, degrowth and decoupling

Time graph of economic decoupling in which the GDP curve rises while the greenhouse gas emissions curve falls. GDPtime emissions GDP rises, emissions fallindex

In Ireland, the Climate Action Plan sets legally binding carbon budgets, and the carbon tax is one tool for meeting them. It raises the price of fossil fuels, so firms have an incentive to cut energy use and invest in cleaner technology, though it raises their costs in the short run. Public policy must balance these costs against the long-term gain of staying within the carbon budgets.

Why decoupling can disappoint

Two effects explain why efficiency gains often fail to cut total pressure. Jevons' paradox (the rebound effect): when a resource is used more efficiently it becomes cheaper, so people use more of it. Also, offshoring: a country's own emissions can fall because polluting production moves abroad, while its consumption footprint (including imports) keeps rising.

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What does the degrowth theory advocate? Explain how it differs from an economic recession and why its proponents stress this distinction so strongly.

What does the degrowth theory advocate? Explain how it differs from an economic recession and why its proponents stress this distinction so strongly.

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The figure shows the trend of GDP and CO₂ emissions of an imaginary country over ten years, using index numbers where year $1$ equals $100$. a) Describe what the graph…

The figure shows the trend of GDP and CO₂ emissions of an imaginary country over ten years, using index numbers where year $1$ equals $100$.

index (year 1 = 100) years 100 GDP emissions
  1. a) Describe what the graph shows: is economic growth "decoupled" from emissions?
  2. b) Explain what would need to happen to both curves for growth to be genuinely green.
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A country grows by $3\ \%$ a year and manages to make its emissions fall by $1\ \%$ a year. Its climate target is to cut emissions by half within $30$ years. a)…

A country grows by $3\ \%$ a year and manages to make its emissions fall by $1\ \%$ a year. Its climate target is to cut emissions by half within $30$ years.

  1. a) Calculate what percentage of the initial level emissions remain after $30$ years of falling by $1\ \%$ a year (you may use a calculator or estimate year by year). Does the country meet its target? Roughly what annual rate of decline would be needed?
  2. b) Draw the conclusion for the debate between "green growth" and "degrowth": what does this number say about the necessary speed of decoupling?
Solve

Responsible consumption and greenwashing

Infographic contrasting a product with verified environmental certification against another with misleading greenwashing claims. labelofficialcertified "eco"no datagreenwashing

Changing everyday habits

Responsible consumption is also about habits: buying less and repairing or reusing, choosing a Leap Card or cycling over a car, cutting food waste, buying seasonal and local produce. One shopper's change is small, but habits spread and shift demand, which pushes firms to change. Habits are shaped by price, convenience and values, so policy (for example the plastic bag levy) often helps them stick.

Fair trade and the consumer's dilemma

Fair trade coffee costs more than conventional coffee, so the shopper faces a trade-off between price and impact. Fair trade promotes SDG 1 (no poverty), SDG 8 (decent work) and SDG 12 (responsible consumption) through a minimum price to the producer, safe working conditions and a community premium.

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What is "greenwashing"? Give an example of a suspicious advertising campaign (an oil company advertising its three planted trees, an uncertified "natural product") and…

What is "greenwashing"? Give an example of a suspicious advertising campaign (an oil company advertising its three planted trees, an uncertified "natural product") and give three clues for detecting it (vague data, invented labels, the real share of "green" in the company).

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A fair-trade coffee brand costs $30\ \%$ more than the supermarket's conventional coffee. a) Which SDGs does fair trade promote and through what mechanisms (a minimum…

A fair-trade coffee brand costs $30\ \%$ more than the supermarket's conventional coffee.

  1. a) Which SDGs does fair trade promote and through what mechanisms (a minimum price to the producer, working conditions, premiums for the community)?
  2. b) Set out the consumer's dilemma (price versus impact) and reason what information you would ask for on the label to decide whether the mark-up is justified.
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In a supermarket, you find two laundry detergent options: Detergent A (conventional): costs $\text{€}\ 3.20$ ($\text{€}\ 0.08$ per wash). It contains non-biodegradable…

In a supermarket, you find two laundry detergent options:

  • Detergent A (conventional): costs $\text{€}\ 3.20$ ($\text{€}\ 0.08$ per wash). It contains non-biodegradable petroleum derivatives, and its virgin plastic packaging comes from a plant located $4,000\text{ km}$ away.

  • Detergent B: costs $\text{€}\ 7.80$ ($\text{€}\ 0.195$ per wash). It has official EU Ecolabel certification, locally sourced plant-based raw materials, and $100\ \%$ recycled cardboard packaging.

Next to them, a third brand costs $\text{€}\ 6.50$ and features a label with leaf illustrations and the phrase "natural formula", without any official certification.

  1. a) Apply Life Cycle Assessment (LCA) to compare detergents A and B: identify the specific negative externalities in the extraction, transport, use, and end-of-life phases, and justify why the $\text{€}\ 3.20$ price of option A constitutes a market failure due to the underestimation of social costs.
  2. b) Interpret the third brand using the economic theory of asymmetric information: explain why greenwashing arises in unregulated markets and what adverse selection effect it can cause for producers who genuinely invest in sustainability.
  3. c) Design an economic policy proposal (combining a Pigouvian tax and a mandatory certification standard) aimed at correcting price signals on store shelves to promote responsible consumption (SDG 12).
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A textile company wants to align itself with SDG $12$ (responsible consumption and production). Propose three specific measures for its production chain and explain what…

A textile company wants to align itself with SDG $12$ (responsible consumption and production). Propose three specific measures for its production chain and explain what cost and benefit each one might have.

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A municipality recycles $35\ \%$ of its waste and regulations require it to reach $55\ \%$. a) Design a plan with three measures (compulsory organic waste collection,…

A municipality recycles $35\ \%$ of its waste and regulations require it to reach $55\ \%$.

  1. a) Design a plan with three measures (compulsory organic waste collection, more nearby recycling points, incentives or per-bag charges) and explain how you would measure the effect of each one separately.
  2. b) What costs does the plan have and who bears them (residents, the council, recycling companies)? Reason how you would make the transition more acceptable.
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A hotel chain decides to "adopt" SDG $8$ (decent work) and SDG $13$ (climate action). a) Propose two specific, measurable commitments for each goal (contracts, training,…

A hotel chain decides to "adopt" SDG $8$ (decent work) and SDG $13$ (climate action).

  1. a) Propose two specific, measurable commitments for each goal (contracts, training, energy efficiency, phasing out plastics).
  2. b) What tensions can arise between the two goals (replacing equipment costs money that could go to wages, seasonal closures)? Explain how you would manage those tensions without giving up either goal.
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Indicators: measuring sustainability

An indicator is a measurable figure that tracks progress towards a goal. Good indicators have a clear data source (for example the CSO or the EPA), are measured regularly and cover all three dimensions. Economic: employment rate, median income. Social: share of people at risk of poverty, access to housing, perceived safety. Environmental: CO₂ emissions per person, recycling rate, air quality, green space per resident. GDP alone misses most of these, so a dashboard of several indicators gives a fuller picture (this is also why GDP is a poor measure of sustainability: it ignores environmental damage, unpaid work and inequality), though it can be slow to collect and open to choosing only the flattering figures.

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Your council wants to measure its progress on SDG $11$ (sustainable cities and communities). a) Propose four measurable indicators (air quality, public transport use,…

Your council wants to measure its progress on SDG $11$ (sustainable cities and communities).

  1. a) Propose four measurable indicators (air quality, public transport use, square metres of green space per inhabitant, affordable housing) and explain what specific data you need for each one and how it is collected.
  2. b) Choose a fifth, social indicator (safety, accessible public spaces) and justify why a sustainable city is also measured from within.
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A mountain village chooses sustainable tourism: a cap on visitor numbers, electric transport, local produce, and stable employment. a) Design four indicators (economic,…

A mountain village chooses sustainable tourism: a cap on visitor numbers, electric transport, local produce, and stable employment.

  1. a) Design four indicators (economic, environmental, and social) to evaluate the success of the model over five years.
  2. b) What risks of "success" could make it unsustainable (overcrowding, price increases)? Analyse them.
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Design a project for your school or neighbourhood aligned with two SDGs. a) Define the project, its measurable objectives, and its approximate budget. b) Explain how you…

Design a project for your school or neighbourhood aligned with two SDGs.

  1. a) Define the project, its measurable objectives, and its approximate budget.
  2. b) Explain how you would evaluate it after one year and what you would do if the indicators do not improve.
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It is proposed that a country's budget law stop being guided only by GDP and instead be evaluated with an "SDG dashboard" of indicators. a) Choose five indicators for…

It is proposed that a country's budget law stop being guided only by GDP and instead be evaluated with an "SDG dashboard" of indicators.

  1. a) Choose five indicators for the dashboard (economic, social and environmental) and justify each one for what it adds that GDP does not see.
  2. b) Analyse the practical and political problems of the change (measurement and data delays, comparability, pressure to choose comfortable indicators, communication to the public).
  3. c) Design the pilot: which ministry or policy would you start with and how would you check in three years that the dashboard changes decisions?
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Design the "$2050$ scenario" for sustainability in your area or city. a) Set quantified, staggered targets ($2030$, $2040$, $2050$) on four fronts: energy, mobility,…

Design the "$2050$ scenario" for sustainability in your area or city.

  1. a) Set quantified, staggered targets ($2030$, $2040$, $2050$) on four fronts: energy, mobility, green jobs and local food. Justify that they are ambitious but realistic.
  2. b) Estimate where the funding would come from (European funds, the municipal budget, private investment) and what transition cost each sector would bear.
  3. c) What risks of non-compliance do you see and what correction mechanisms would you include (annual indicator reviews, adjusting measures)? Explain how you would prevent the plan from remaining on paper.
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When the SDGs conflict

Diagram showing the tension between two conflicting goals: keeping 400 jobs versus the demand for an unpolluted river. jobs400 jobs clean riverlower emissions
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An industrial estate employs $400$ people but discharges waste into the river and emits large amounts of CO₂. The local council is hesitant between tightening…

An industrial estate employs $400$ people but discharges waste into the river and emits large amounts of CO₂. The local council is hesitant between tightening environmental regulations or protecting jobs.

  1. a) Frame the conflict as a clash between two SDGs and identify them.
  2. b) Propose a solution that does not force a choice between jobs and the planet, and analyse its timescales.
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A village is debating whether to install a large solar farm on what is now farmland. a) Which SDGs does the project promote (affordable and clean energy, climate action)…

A village is debating whether to install a large solar farm on what is now farmland.

  1. a) Which SDGs does the project promote (affordable and clean energy, climate action) and which can it put under strain (food production, life on land)? Identify them and explain the clash.
  2. b) What conditions would you set to accept it (agrivoltaics combining crops and panels, residents sharing in the benefits, restoring the land)? Justify each condition.
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Climate justice and the old-age dependency ratio

The old-age dependency ratio is the number of people aged 65 and over per 100 people of working age (15-64). If it is $30$, there are 30 older people for every 100 workers. A rising ratio puts pressure on health and pensions funded from taxes on work, which is why some argue we need growth, while others ask how to fund care without more material output.

On climate justice: poorer countries have contributed little to cumulative emissions but suffer severe droughts and floods. The principle of common but differentiated responsibilities says all countries must act, but richer ones, which emitted most historically and have more resources, should cut faster and help fund adaptation. Emissions are an international negative externality; the unpaid cost is sometimes called ecological debt.

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Observe the following data for an advanced economy: between 2005 and 2023, its GDP grew by $18\ \%$ and its direct CO₂ emissions fell by $22\ \%$. However, its total…

Observe the following data for an advanced economy: between 2005 and 2023, its GDP grew by $18\ \%$ and its direct CO₂ emissions fell by $22\ \%$. However, its total ecological footprint (which includes the impact of imported manufactured goods) grew by $6\ \%$, and absolute consumption of material resources remained stagnant.

  1. a) Critically analyze whether these data support the "green growth" or the "degrowth" hypothesis: distinguish between relative and absolute decoupling, and interpret what role Jevons' paradox (the rebound effect) and the international offshoring of polluting production play in this discrepancy.
  2. b) An international committee proposes to legally mandate a GDP growth rate of zero (economic freeze) immediately for all countries in the world. Refute the viability and economic fairness of this proposal, distinguishing its impact on mature high-income economies versus developing economies with high poverty rates.
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In climate summit negotiations, a group of countries from Africa and Southeast Asia (accounting for $40\ \%$ of the world's population but less than $8\ \%$ of…

In climate summit negotiations, a group of countries from Africa and Southeast Asia (accounting for $40\ \%$ of the world's population but less than $8\ \%$ of cumulative CO₂ emissions since the Industrial Revolution) suffers extreme droughts and floods that annually destroy between $3\ \%$ and $5\ \%$ of their GDP. A delegation of wealthy countries argues that each state must handle its own energy transition and adapt by taking on debt in global financial markets.

  1. a) Dismantle the wealthy countries' stance using the economic concepts of international negative externality, ecological debt, and opportunity cost in states with limited fiscal space.
  2. b) Design an alternative international climate finance mechanism based on criteria of distributive justice and efficiency: determine which economic variables should quantify the contribution of each donor country (historical emissions per capita, per capita income...), through what financial instrument resources should be channeled (non-repayable grants versus loans), and what economic incentives would prevent misappropriation or inefficiencies in recipient countries.
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Topic Challenge. Can we sustain healthcare and pensions without growing economically indefinitely? Become an economic advisor to the Government and draft a reasoned…

Topic Challenge. Can we sustain healthcare and pensions without growing economically indefinitely? Become an economic advisor to the Government and draft a reasoned proposal.

  1. Data collection: Go to the CSO (cso.ie) and note down the old-age dependency ratio (over 65 years old) of your county or region (for example, if it is around $31.5\%$) and its 15-year projection.

  2. SDG diagnosis: Contrast that demographic pressure with the dilemma between SDG 8 (decent work and economic growth) and SDG 12 (responsible consumption and production). Analyze whether it is possible to safeguard social spending without continuous increases in production.

  3. Degrowth debate: Evaluate the consequences that a deliberate degrowth policy (reducing GDP by $1.5\%$ annually to cut the ecological footprint) would have on tax revenue.

  4. Final proposal: Draft a brief report with two innovative measures that ensure the sustainability of the welfare state in a scenario without GDP growth.

Assessment criteria:

  • Thorough use of demographic data extracted from the CSO.

  • Critical integration of the SDGs and the ecological limits of growth.

  • Economic feasibility and argumentative coherence in the proposed measures.

Solve

For exercise DIFICIL-09, the data source is the CSO (cso.ie): find the old-age dependency ratio (aged 65 and over) for your county and its projection, then apply the SDG 8 versus SDG 12 reasoning above.

Back to the beginning: To bring consumption down from those $1.7$ planets to just one, the economy must choose between radically speeding up technological decoupling (green growth) or accepting a planned reduction in material consumption in rich countries (degrowth).

Summary

See all the exercises in this section