Examensarbete i Hållbar Utveckling 105
Sustainable Economies:
The Case of Turkish Economy within Steady-State Economics
Sustainable Economies:
The Case of Turkish Economy within Steady-State Economics
Evrim Demirel
Evrim Demirel
Uppsala University, Department of Earth Sciences Master Thesis E, in Sustainable Development, 30 credits Printed at Department of Earth Sciences,
Geotryckeriet, Uppsala University, Uppsala, 2012.
Master’s Thesis
E, 30 credits
Supervisor: Eva Friman Evaluator: Leif Bratt Examensarbete i Hållbar Utveckling 105
Sustainable Economies:
The Case of Turkish Economy within Steady-State Economics
Evrim Demirel
Content
Content ...
Abstract ...
Summary ...
List of Figures ...
List of Tables ...
1. Introduction ... 1
1.1. Aim and Research Questions ... 1
1.2. Method ... 2
1.3. Selection of the Case and Data, Limitations, Scope ... 2
2. Literature Analysis and Historical Background ... 3
2.1. Discussions on Growth, Limits of Growth and Steady-State Economics ... 3
2.1.1. Classical Economists’ Thoughts on Growth and Steady-State ... 3
2.1.1. Discussions on Growth after the Classical School of Economics ... 4
2.1.2. Discussions on Growth in the Post World War II Period ... 4
2.1.3. Contemporary Criticism of Growth and the Emergence of Steady-State Economics ... 4
2.1.4. The Emergence of Sustainable Development and Current Growth Discussions ... 5
3. The Concept of Steady-State Economics ... 6
3.1. Herman Daly’s Criticism on Growth ... 6
3.2. Approaching the Relationship between Economy and the Environment within Ecological Economics ... 6
3.3. The Concept and Working of Steady-State Economics ... 8
3.4. Transition towards Steady-State Economy ... 10
3.4.1. Limiting Resource Use and Waste Production ... 10
3.4.2. Stabilising Population and Consumption per Capita ... 11
3.4.3. Distributing Income and Wealth... 12
4. Assessing the Turkish Economy within Steady-State Economics ... 12
4.1. Growth as an Indicator of Economic Activity in Turkey ... 12
4.2. Resource Use in the Turkish Economy ... 13
4.2.1. Sectoral Energy Consumption in the Turkish Economy ... 14
4.2.2.1. Total and Sectoral GHG Emissions in the Turkish Economy ... 16
4.2.3. Estimations and Policies on Energy Consumption in Turkey ... 18
4.3. Stabilizing Population and Consumption per Capita ... 19
4.3.1 Population Growth in Turkey ... 19
4.3.2. Consumption per Capita in Turkey ... 20
4.4. Income Distribution in the Turkish Economy... 21
5. Analyzing The Case: Discussion and Suggestions ... 23
6. Conclusion ... 24
7. Acknowledgement ... 25
8. References ... 26
Sustainable Economies: The Case of Turkish Economy within Steady-State Economics
EVRİM DEMİREL
Demirel, E., 2012, Sustainable Economies: The Case of Turkish Economy within Steady-State Economics.
Master thesis in Sustainable Development at Uppsala University, No. 105, 30 pp., 30 ECTS/hp
Abstract: The main aim of this paper is to reveal if development and current state of the Turkish Economy are sustainable. Instead of the research tools offered in environmental economics, the holistic approach of ecological economics is used to answer this question. Within that context, the Turkish Economy is assessed within the concept of steady-state economics. Having assessed the data related to the three institutional changes suggested within the concept, this study shows the obstacles and advantages of the Turkish Economy to move towards the steady-state, in other words, sustainability.
Keywords: Sustainable Development, Ecological Economics, Steady-state Economics, Sustainable Economies
Evrim Demirel, Department of Earth Sciences, Uppsala University, Villavägen 16, SE- 752 36 Uppsala, Sweden
Sustainable Economies: The Case of Turkish Economy Within Steady-State Economics
EVRİM DEMİREL
Demirel, E., 2012, Sustainable Economies: The Case of Turkish Economy within Steady-State Economics.
Master thesis in Sustainable Development at Uppsala University, No. 105, 30 pp., 30 ECTS/hp
Summary: Economies are a sub-system of the ecosystem in their physical dimensions. Accordingly, economies obtain natural resources that are needed in economic processes from the environment and then return them as waste materials back to it. This process does not only constitute the underlying dynamic of the relation between environment and economy, it also reveals how economies are bilaterally dependent on the environment. Thus, as a sub-system of the ecosystem, all economies are limited by the regeneration capacity and waste absorption speed of the environment. Therefore, economy-environment relationship and environmental problems should not only be discussed as a pricing problem in the discipline of economics, instead, they should be discussed within a more holistic approach. The concept of steady-state economics which is developed within ecological economics enables to carry out such an assessment. Within this context, Turkish Economy has been analyzed within that concept in this paper. In parallel with this purpose, current state and development of the economy have been compared with the ideal sustainable economy by assessing the indicators related to institutional changes proposed in that concept.
Keywords: Sustainable Development, Ecological Eonomics, Steady-state Economics, Sustainable Economies
Evrim Demirel, Department of Earth Sciences, Uppsala University, Villavägen 16, SE- 752 36 Uppsala, Sweden
List of Figures
Figure 1. Empty World ... 7
Figure 2. Full World... 7
Figure 3. Economy As Isolated System ... 8
Figure 4. Economy and Environment in Steady-State Economics ... 9
Figure 5. GDP by Production Approach by Kind of Main Economic Activity in Constant Prices (1987) in Turkey, 1990-2006 ... 13
Figure 6. Primary Energy Resources Consumption in Turkey (1990-2010) ... 14
Figure 7. Final Sectoral Energy Consumption in Turkey (1990-2010) ... 15
Figure 8. Development Trend of GHG Emissions in Turkey (1990-2009) ... 16
Figure 9. Contribution of Natural Resources Used to CO2 Emissions in Turkey (1990-2009) ... 17
Figure 10. Sectoral CO
2Emissions in Turkey (1990-2009) ... 17
Figure 11. Population Growth and Estimated Population in Turkey (1990-2025) ... 19
Figure 12. Population Growth Rate and Expected Growth Rate in Turkey (1990-2025) ... 19
Figure 13. Final Private Consumption per Capita in Turkey (1987=100) ... 20
Figure 14. Change in Ecological Footprint and Biocapacity in Turkey (1960-2007) ... 21
Figure 15. Distribution of Household Disposable Income as Groups of 20% in the Turkish Economy (2002- 2009) ... 21
Figure 16. Gini Coefficient in OECD Countries ... 22
List of Tables
Table 1. Change in Gini Coefficient Over Years in Turkey (1985-2009) ... 22
Abbrevations
CASSE: Center for the Advancement of Steady State Economics EC: European Commission
EIE: General Directorate of Electric Power Resources Survey and Development Administration EMRA: Republic of Turkey Energy Market Regulatory Authority
EU: European Union
GDP: gross domestic products GHG: greenhouse gases GWH: gigawatt hour
IEA: International Energy Agency IMF: International Monetary Fund
ISEE: The International Society for Ecological Economics
MENR: Republic of Turkey Ministry of Energy and Natural Resources MIT: Massachusetts Institute of Technology
OECD: Organization for Economic Co-operation and Development SEEA: System of Integrated Environmental and Economic Accounts TOE: Tonne of oil equivalent
TURKSTAT: Turkish Statistical Institute UN: United Nations
WB: The World Bank
WCED: The World Commission on Environment and Development
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1. Introduction
Growth has been one of the major concerns in the discipline of economics for a long time. Despite the fact that its ideological roots can be traced to the 14
thcentury, when Ibn Khaldun wrote Muqaddimah, emergence of the thoughts shaping conventional growth conception is based on the criticism of mercantilism, Physiocrats’ and Adam Smith’s thoughts on growth. Affluence and welfare became frequently-cited issues in the period between the mid-1700s and late-1800s when Industrial Revolution began and Adam Smith’s The Wealth of Nations got published. Since then to increase economic activity and welfare, determinants of these and their effects on the society have been subject to a great number of debates in economics literature.
Due to the fact that environmental problems started to occur after the Industrial Revolution and dramatically increased in the last fifty years; environmental impacts, limits and sustainability of increasing economic activity have been added to debates on growth. In this period, high growth rates and population increase have caused to a substantial raise in natural resource consumption, and therefore to an increase in the amount of waste generation.
As a result, human-beings are faced with various environmental problems, notably including energy crises, climate change, loss of biodiversity and deforestation.
Increasing environmental problems have resulted in new approaches, methods and solution suggestions regarding environmental issues in the presence of international organizations and in various disciplines. The economics discipline has been affected by these developments as well. It has become clear that environmental economics, which is a sub-discipline in economics based on the fundamentals of neoclassical economics, does not comprise adequate tools to handle environmental issues and to provide coherent solutions (Venkatachalam, 2007). Therefore, the need for more holistic approaches to handle these issues deepened. As a consequence, ecological economics and various concepts within it have been developed.
Steady-state economics which deals with the relationship between economy and environment within ecological limits and the laws of thermodynamics stands out as the most developed one among the concepts developed in ecological economics. The concept and the institutional changes suggested within it have an importance since they enable to assess the relationship between national economies and environment in a holistic way and at macro level. As environmental problems become more severe each passing year and thereby create a significant economic and social cost for both developed and developing countries, such an assessment becomes even more essential.
The sustainability discussions, the concepts existing in this inter-disciplinary subject and in ecological economics are either unknown or at least recent in Turkey. As one of the most rapidly growing economy in recent years and the 18
thlargest economy in the world, Turkey urgently needs a holistic assessment regarding environmental impacts and sustainability of its economy and growth (IMF, 2012; WB, 2011). Therefore, in this paper, the development and current situation of Turkish Economy is assessed through the data associated with three institutional changes
*existing in the concept of steady-state economics. In this context, data of the Turkish Economy related to growth, natural resource consumption, GHG emissions, population growth, ecological footprint, consumption and income distribution is discussed.
In the introductory chapter of this paper, background of the problem, methods used, the aim and research questions, boundaries and difficulties of this assessment, reasons and manner to assess Turkish Economy are presented. Later on, bases, contents and the institutional changes of steady-state economics and therefore theoretical framework of this study are put forward. In the third chapter, development, changes and the current situation of the Turkish Economy regarding these three institutional changes are presented and interpreted.
Finally, possible and applicable policy options and obstacles to move the economy towards steady-state or, in other words a sustainable state are discussed.
1.1. Aim and Research Questions
The purpose of this paper is above all to understand current state and development of the Turkish Economy within the concept of steady-state economics and compare that state and the development of it with an ideal sustainable economy put forward within the concept.
This is done by help of the following research aim and questions:
*
Limiting resource use and waste production, stabilizing population and consumption per capita and income
distribution are the three institutional changes proposed by Herman Daly (1991) and in CASSE (O’Neill, Dietz
and Jones, 2010). Turkish Economy is thus assessed within these institutional changes.
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1) Analysing historical background and literature of the concept of steady-state economics.
2) How is development and current situation of the Turkish Economy seen through the lens of the indicators that are related to the three institutional changes proposed within steady-state economics?
3) Which obstacles and disadvantages exist against to move the Turkish Economy towards steady-state and thereby making it more sustainable?
4) What kind of policies can be implemented to move the Turkish economy towards steady-state?
Herman Daly (1991, p.52), who has developed the concept of steady-state economics, reflects that it is more essential to implement the transition towards steady-state and then to stabilize the economy at whatever the current state is than to compare the current state of the economy with the optimal steady-state. However, the latter approach is embraced in this paper and Turkish Economy is compared with ideal steady-state due to some reasons in regard to the specificity of the economy and to the concept itself. First of all, there is no national economy where the institutional changes proposed within steady-state economy have completely been implemented yet. Despite that the growth and population growth rates are around 0 % in some developed countries such as Japan, these economies don’t serve as examples of steady-state nor are their current state outcomes of policies implemented to shape the economy within steady-state. Therefore, there is not any national economy that can be taken as a model for stabilizing the speed of economic activity and make a transition towards steady-state. Yet another, and probably the most important reason is to avoid taking the concept as truth but instead to discuss it through a selected economy. Even though the theoretical foundations of the concept are based on physical laws, institutional changes suggested rely on a certain paradigm, thus the concept is always questionable and open for change. For these reasons, in this paper, the current situation and development of Turkish Economy is compared with the ideal steady-state economy and obstacles and possible policy options to move the economy towards steady-state are discussed.
1.2. Method
A literature review of the conceptual framework of steady-state economics and data related to indicators of Turkish Economy constitute the method of this study. In that context, the ecological economics’ perspective on the relationship between economy and environment is presented, and the fundamentals and process of steady- state economics are introduced. Besides, three institutional changes developed by Herman Daly and also supported by CASSE determine the framework, while data related to these are provided from various sources such as TurkStat, MENR, WB and IMF.
1.3. Selection of the Case and Data, Limitations, Scope
It could perhaps at first seem curious to assess a developing economy like Turkey within steady-state economics.
Therefore, this point should be elaborated. It is a true that a transition towards steady-state can only be achieved in some developed economies today. Besides, it is reasonable and more just to start this transition in developed countries at first. As Daly (1991, p.148) expresses “It is absolutely a waste of time as well as morally backward to preach steady-state doctrines to underdeveloped countries before the overdeveloped countries have taken any measure to reduce either their own population growth or the growth of their per-capita resource consumption.
Therefore, the steady-state paradigm must first of all be adopted and applied in the overdeveloped countries”.
The author continues “That does not mean, however, that the underdeveloped countries can be left out of consideration” (Daly, 1991, p.148). Similarly, Philip Lawn (2010, p.931) argues that developed economies should move towards steady-state within five years, developing economies on the other hand should make this transition within twenty to forty years.
The approach to the Turkish Case in this paper matches with these opinions mentioned above. Because, any proposal that suggests Turkey to immediately move its economy towards steady-state would first contradict with historical facts. Such a suggestion in fact means to propose a developing country not to follow the development path that has been used by today’s developed countries. In other words, this would correspond to Chang’s (2003, pp.127-128) figuration of “throwing away the ladder in front of the developing countries”.
On the other hand, the laws of thermodynamics which constitutes the theoretical foundations of steady-state
economics rule in all economies regardless of their level of development. The relationship between economy and
environment presented in ecological economics is valid in developed and developing countries alike. In other
words, all economies are subsets of the environment and have an input-output relationship with it. All economies
eventually need to adapt themselves to regeneration speed of the environment. A developing country like Turkey
therefore does not have to be left out of this consideration, as Daly (1991, p.148) mentions. On the contrary, the
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developing countries should aware that in the near future they would need to re-organize their economies within the limits of environment. These countries can thereby start discussing the sustainability of their growth and possibly measure and plan a set of arrangements for the future. Even though GDP per capita can be seen as below an adequate level in these countries, this fact does not prevent them from reducing income inequality, to keep down population growth and to implement regulations that restrict environmentally unfriendly activities.
As a developing country, Turkey also needs to go beyond the tools existing in environmental economics and assess the relationship between its economy and environment through a holistic approach. This approach should be followed by proposing policies to adapt the economy within environmental limits, in other words, sustainability. In that sense, institutional changes suggested in steady-state economics could be a guideline for Turkey and many other developing economies.
Data selection regarding the Turkish Economy is based on data presented by the author in papers about steady- state economics and the three institutional changes proposed. In order to be able to compare these data with each other, so far as possible, only data from 1990 to present are taken into consideration. Firstly, data related to the institutional change of limiting resource use and waste production are presented. Within this context, data regarding growth rate, content and amount of natural resources used, increase in GHG, ecological footprint and biocapacity are selected to assess development of the economy within this institutional change. Growth rate here is selected to understand the amount of material and energy flow, throughput, in the Turkish economy. Besides, content and amount of total natural resource use represent how total resource use and content have changed in Turkey. Data of GHG is selected to present the change in waste generation since there is unfortunately no other related data about the Turkish economy. Ecological footprint and biocapacity is selected as supplementary data to understand environmental effects of economic activity in Turkey.
Developments in the Turkish Economy regarding the second institutional change, namely stabilising population, is represented and discussed through data of population growth and expected trend for future, final consumption and energy consumption per capita. Thereby, increase in number of people and level of consumption is attempted to understand. The final institutional change in steady-state economics, namely distributing income and wealth, emphasize inefficient effects of growth on increasing wealth and the importance of equitable distribution of total production within the society. Developments in the Turkish Economy regarding this are represented by change in percentage distribution of wealth and Gini coefficient
*.
In addition to all these indicators, data regarding health care, life expectancy and biodiversity are also vital for an assessment within steady-state economics. However, not only due to the lack of sufficient data but also due to the desire to keep the study within certain boundaries data related to these indicators are not taken into consideration. Instead, indicators that are directly connected to the three institutional changes and that are available to show changes in the last twenty years are presented and analyzed.
2. Literature Analysis and Historical Background
2.1. Discussions on Growth, Limits of Growth and Steady-State Economics
2.1.1. Classical Economists’ Thoughts on Growth and Steady-State
Adam Smith and the classical economists often mentioned about increase in welfare, limits of the economy and stationary state in their writings. Although their thoughts on determinants of increase in economic activity differ, they all agree that growth is desirable in order to increase welfare and affluence in the society (Zweig, 1979, p.511). Nevertheless, they were aware of the factors that can limit to increase economic activity such as population growth, natural resource scarcity and decreasing returns and profits. Due to these limiting factors, they reckoned that economic activity couldn’t be constantly increased in long term and economies can face with stationary state which was found undesirable and even catastrophic by them, except John Stuart Mill (Kerschner, 2010, p.545). As distinct from others, Mill (2004, p.331) believed that increase of capital can overcome the negative effects of population increase and therefore argued that human-beings will not face with a possible famine, the catastrophic scenario put forward by Robert Malthus. He argued that stationary state would be beneficial to improve current state of the economy and stated that the main objective in the developed countries
*“The Gini coefficient is a number between zero and one that is a measure of inequality. The meaning of the Gini coefficient is that if the suppliers in a market have near-equal market share, the Gini coefficient is near zero. If most of the suppliers have very low market share but there exist one or a few supplies providing most of the market share then the Gini coefficient is near one” (About.com, 2012).
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should be to fairly distribute the wealth, not to increase it. According to him, limiting the population growth is the key to achieve this goal (Mill, n.d., p.266, pp.329-330). His thoughts on stationary state and limits of the economy inspired Herman Daly, who developed the concept of steady-state economics.
2.1.1. Discussions on Growth after the Classical School of Economics
After Mill, the last classical economist, and the mid-1800s content of these discussions started to change. Rapid technological advancement occurred during and after the Industrial Revolution, the discovery of oil and its usage as an energy source and the following dramatic increase in production played a crucial role in this change.
Classical economists’ worries about stationary state and their approach that deals with economy through physical reality were brushed aside; economic activity was dealt as it is not limited by any factor (Kerschner, 2010, p.545). As a result, discussions on the determinants and limits of economic activity lost its significance in the discipline of economics.
Nevertheless, some economists thought about economies in a stationary state in this period. While Joseph Schumpeter emphasized the importance of innovations to quicken a stationary economy, John Maynard Keynes criticized neoclassical economists’ emphasis on the positive effects of technological improvements and defined a quasi-stationary community in where population is stable and employment is full over the generations (Zweig, 1979, p.520; Keynes, 1936).
2.1.2. Discussions on Growth in the Post World War II Period
The aim of increasing economic activity became an important economic policy goal and theories and models upon this issue got developed after the World War II. In this period, many countries experienced high growth rates. In parallel to this, especially onwards 1960s and 1970s, discussions on economic activity, on growth after it was conceptualized, revived the issue of how to increase economic activity once again gained an importance in economics. On the other hand, due to the increasing environmental pollution and energy crises occurred, debates on the need and sustainability of growth became a current issue. Ecological economics and the concept of steady-state economics emerged in this period as well.
Proponents of growth in this era argued that growth plays an essential role for social improvements, reducing unemployment and eradicating poverty; and put forward that growth and environmental conservation are compatible policy goals. This opinion is adopted by many countries and international organizations today and constitutes the mainstream paradigm (Commission on Growth and Development, 2008, pp.2-3). Many governments aim to reach high rates of growth due to the belief that growth increases quality of life. Similarly, majority of the scholars working on growth argue that growth should be taken as the most important goal in the process of development (Shin, 1980, pp.199-200).
Besides the increasing importance of growth in the discipline of economics, a paradigm that emphasizes the limits of growth emerged; various organizations started organizing conferences on environmental problems and sustainability of growth. In parallel with the developments in environmental economics, which shares the same premises with neoclassical economics, the field of ecological economics started developing as well. The prime contributions to this emerging field in which neoclassical approach to the relation between environment and economy is criticised and instead more holistic approaches are embraced, were also made in this period. Kenneth Boulding was one of the first contributors to this field. He suggested abandoning the conventional approach in economy policy and argued that natural resource scarcity should constitute the basis of economic analysis of environmental problems (Lavallois, 2010, p.2272). According to him, the emphasis on consumption and production which takes an important place in neoclassical analysis should be replaced by the view defending to preserve the current stock of goods in the economy (Boulding, 1966; Pin and Hutao, 2007). This view provided a basis for the concepts of steady-state economics, degrowth, sustainable growth, zero growth, social growth and sustainable development; however, these concepts rendered it differently and suggested different solution offers as well.
2.1.3. Contemporary Criticism of Growth and the Emergence of Steady-State Economics
1970s were the years when debates on growth and environmental issues were so intensive and the most key
contributions to these debates were made. One of most radical contributions was Nicholas Georgescu Roegen’s
book titled The Entropy Law and Economic Process. This work and Roegen’s thoughts contributed a lot to the
emergence and development of ecological economics, constituted the theoretical basis of Daly’s (1995, pp.150-
151) steady-state economics concept.
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Roegen (1971) emphasized that laws of thermodynamics apply to all economic processes and therefore there are some physical limits that can’t get overcome regardless the level of technological advancement. He argues that entropy, which can be defined as a thermodynamic property or useful energy which is subject to get dissipated during all natural processes, irreversibly increases in all economic processes. Roegen and others supporting this argument defends that scarcity of low entropy energy and materials is the main limit against economic processes and therefore argues that growth is ultimately limited by the increase in entropy (Ekins, 1993, p.272; Pin and Hutao, 2007). Scarce low-entropy natural resources are consumed throughout the economic processes and return to the environment as high entropy output and waste. Thus, using low entropy resources in most efficient and sustainable way should be the fundamental of the concept of efficiency (Pin and Hutao, 2007, p.21). In order to preserve and save the low entropy energy sources for future generations, Roegen (1975, p.367) believes that growth rates should be slowed down (Levallois, 2010, p.2273).
Although Roegen’s thoughts influenced growth debates and ecological economics a lot, The Limits to Growth published by Club of Rome was the study that accelerated these debates at public opinion and political sphere. In the leadership of Donella Meadows from MIT, the research team made projections for future and put forward different scenarios regarding growth. In the report, they emphasized that the most key factors limiting growth are ecological factors and stated “(...) under the circumstances that there will be no vital change in the system, the most possible outcome of reaching to limits of growth is a sudden and uncontrollable drop in population and industrial production” (Meadows, 1972, p.23). Even though their methodology was criticized from many aspects, their report inspired many further studies (Levallois, 2010, p.2275).
In addition to the studies questioning the limits and sustainability of growth, studies approaching with suspicion towards the need of growth and its contribution on welfare increase were put forward in these years as well. The results of these studies, especially Richard Easterlin’s (n.d., pp.118-120), falsified the assumption that growth makes people happier (Xue, 2010, p.5). Various empirical findings obtained in 1970s supported Easterlin’s studies, proved that effect of growth on happiness differ within developed countries (Duncan, 1975, p.267; Shin, 1980, p.216). Besides, studies conducted in the following years showed that effect of growth on happiness can differ in developed and developing countries (Easterlin, 1995, p.42). Proponents of this argument put forward that increase in GDP in poor countries improves happiness, life expectancy and education participation more than it does in developed countries (Jackson, 2009, p. 42, pp.56-58).
Herman Daly was one of the most predominant names during the 1970’s growth discussions. He criticized in his own words “growthmania” in social, ecological and moral respects and put forward stead-state economics as an alternative to it. He discussed growth through the notions of wants and scarcity; emphasized that accepting these as relative or absolute reveals completely different solution offers (Daly, 1974, p.152). While criticizing the modern economic theory for assuming wants as only unlimited and unsatisfiable, the author emphasized the division between relative and absolute scarcity as well (Daly, 1974, p.153). According to the conventional view in natural resource economics, the nature only comprises relative scarcity and there is no absolute scarcity that can’t get overcome (Barnett and Morse, 1963, p.11). On the contrary, Daly (1974, p.152) argues that natural resources are absolutely scarce and this scarcity increases due to an increase in population and consumption. He states that technological progress and pricing are of no use to overcome it, and that the view arguing that scarcity is relative and wants are endless contributes to growthmania (Daly, 1974, pp.152-153).
2.1.4. The Emergence of Sustainable Development and Current Growth Discussions
Intensive debates on growth in 1970s did not produce any action plan which all agrees on. Nevertheless, international organizations started involving to these debates and Daly developed the concept of steady-state economics. The first major international conference in which the current environmental problems, population growth and natural resource use were discussed was Stockholm Conference organized in 1972. However, the most significant milestone was the Our Common Future report published by WCED in 1987. In this comprehensive report, social and environmental problems that human-beings face were put forward in detail; the notion of sustainable development were defined for the first time and presented as a common global goal.
Accordingly, “sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED, 1987, p.43). In the report, WCED (1987, p.43) states that “(...) Thus the goals of economic and social development must be defined in terms of sustainability in all countries - developed or developing, market-oriented or centrally planned.
Interpretations will vary, but must share certain general features and must flow from a consensus on the basic
concept of sustainable development and on a broad strategic framework for achieving it”. The commission took
a milder stand compared to debates and solution offers put forward in 1970’s and therefore their approach was
criticized by Daly (1990, p.1) and Roegen. Still, this report has brought a new dimension to the debates on
environment and growth, became a guideline for the solution offers regarding environmental issues.
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Our Common Future was followed by Rio Conference held in 1992 in which environmental problems that human-beings face were repeated and responsibilities of governments were discussed (Xue, 2010, p.12). In parallel, both in Johannesburg Conference held in 2002 and in Climate Change Conference held in 2009 environmental problems were the focal point, growth was only implicitly criticised. Therefore, Our Common Future still remains as the key report regarding the relationship between growth and environmental problems.
Developments and studies put forward in ecological economics remained limited from the end of 1970s until the beginning of 1990s, in other words ecological economics entered to a gestation period, as Ropke (2004, p.293) states. Foundation of ISEE in 1988 made ecological economics institutionalized, while Daly’s writings that are about limits of economy and Robert Costanzo’s studies emphasizing human-beings’ dependency on the ecosystem made the main contributions to this field in 1990’s (Ropke, 2005, pp.266-267). One of the most important development in ecological economics during 2000s was the emergence of degrowth concept. This concept represents “an equitable downscaling of production and consumption that increases human wellbeing and enhances ecological conditions at the local and global level, in the short and long term” (Schneider, Martinez and Kallis, 2010, p.512). Although degrowth is based on the same foundations with steady-state economics, its proponents underlines a necessary and constant downscaling of economic activity. While some scholars judges it as a transition process towards steady-state, others argue that degrowth is the only way to make economies sustainable (Kerschner, 2010).
In 2000s, the most key event related to steady-state economics was the first The Steady-State Conference held in 2010. As a result of it, the report titled Enough is enough: Ideas for a sustainable economy in a world of finite resources got published. In the report, environmental problems caused by growth and the decreasing positive impact of growth on happiness are emphasized. Besides, ten institutional changes to move economies towards steady-state are put forward. The main institutional changes among these are the same with the ones proposed by Herman Daly that are to stabilize population, limiting natural resource use and waste generation and equal income distribution (O’Neill, Dietz, and Jones, 2010).
3. The Concept of Steady-State Economics
Although the roots of steady-state economics concept are based on classical economists’, especially Mill’s, thoughts; its formulation was done in 1970s. Daly, who was inspired by Mill and Roegen, emphasized the limits of economy and put forward the concept as an alternative way to growth.
3.1. Herman Daly’s Criticism on Growth
Herman Daly, who contributed a lot to 1970’s growth debates, mainly emphasized on limits of economy and growth. The author defined the limits against growth as in physical, biological, economic and social aspects and argued that these limits are subject to physical processes (Daly, 1974, pp.150-151). He believes that the first and second law of thermodynamics, which form a basis for his arguments and steady-state economics, determine the physical limits of the economy. The first law indicates that inexistent energy can’t be created; on the other hand, existential energy and material can’t be dissolved but can be transformed into another form. In this regard, human-beings extract low entropy natural resources, utilize them in economic processes and leave them back as high entropy wastes to the nature. Recycling can only decelerate this process, but can’t stop it. The second law refers to this fact by indicating that increase in entropy is an irreversible process.
In brief, Daly (1974, p.151) argues “Clearly we should stop physical growth at the economic limit. But to recognize that limit at macroeconomic level requires vastly improved economic concepts, theories, and accounting conventions”. He put forward two alternatives regarding this limit “ Either we learn to recognize and institutionalize the economic limit, allowing a considerable safety margin in view of our ignorance, or we adhere to growthmania and leave it to nemesis of social, biological and physical limits to do the job wastefully and without pity”(Daly, 1974, p.152). The first alternative refers to the concept of steady-state economics. Before clarifying the concept, it is essential to understand how relationship between economy and environment is approached within ecological economics.
3.2. Approaching the Relationship between Economy and the Environment within Ecological Economics
In the paper titled Steady-State Economics: A New Paradigm, Daly explains in a plain language how the
relationship between economy and environment is approached within ecological economics. This approach
constitutes the basis of the concept of steady-state economics together with the laws of thermodynamics.
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Solar Energy
Isı
Heat
All economies are a subset of the ecosystem in the sense of physical dimensions (Daly, 1993, p.811). Ecosystem on the other hand is a limited, nongrowing and self-enclosed system. The word of self-enclosed here indicates a system in which matter doesn’t enter nor exit but in which energy enters and exits (Daly, 1993, p.811). This energy is the solar power and it supplies the biogeochemical cycle providing the life on the earth. Within the ecosystem, economy is an open sub-system in which both energy and matter enters from and exits to ecosystem.
All physical processes related to the life and economy is dependent on this flow of energy and matter (hereafter throughput) provided from and returning to environment (Daly, 1993, p.811). At this point, Daly compares economy to an animal and states that economy lives off the inputs provided from the environment, just as an animal does (Daly, 1993, p.811). Accordingly, the economy derives the low entropy raw materials and energy from the ecosystem, utilizes and finally leaves them back as high entropy wastes. Rest of the ecosystem, in other words natural capital, absorbs this waste and transforms certain parts of it to utilizable raw materials thanks to the biogeochemical cycle performed by the sun (Daly, 1993, p.811).
The relationships and flows explained above are shown on the Figure 1. “M” and “E” in the figure represent matter and energy, respectively. The figure presents a state in which economic activity continues within the environmental limits, named as “empty world” by Daly. While inner side of the circle represents natural capital, ecosystem in other words, inner side of the square represents the economy or manmade capital.
Figure 1. Empty World
Source: Daly, 1993, p.812
Accordingly, as physical dimensions of the economy expand, it utilizes a bigger percentage of the ecosystem. As a result, the nature’s capacity to provide sources and recycle waste materials diminishes (Daly, 1993, pp.811- 812). In other words, the space for biogeochemical cycle, which is vital for the life, becomes smaller. Daly represents this state in which the economy reaches environmental limits as it is shown on the Figure 2 and names it as full world.
Figure 2. Full World
Kaynak: Daly, 1993: 812 Kaynak: Daly, 1993: 812
Solar Energy
I Heat M M
E E
economy
ECOSYSTEM recycyle
M M
E E
,economy
8 Source: Daly, 1993, p.182
As a self-enclosed system, ecosystem is not able to grow in physical dimensions, but is able to develop qualitatively. Therefore, as a subsystem of the ecosystem, economy has to adapt itself to the principle of development without growth (Daly, 1993, p.813). Daly (1993, p.813) argues that the notion of sustainable development should be interpreted as this adaptation. On the contrary, conventional economics or neoclassical economics approaches to the economy as a self-enclosed and isolated system, as can be seen on the Figure 3. In this approach, the economy is only considered as where circular flow of income takes place.
Figure 3. Economy As Isolated System
Source: Daly, 1993, p.813
Although this approach is useful to reveal the income flow between the household and firms, it doesn’t enable to analyze the relationship between economy and environment, and alienates economy for the nature. It implies that the growth is not subject to any limits by approaching to the economy as an independent system (Daly, 1993, p.814). However, when the economy is dealt as a subsystem of the nature which is nongrowing and scarce in terms of resources, these limits of the economy can be clearly understood (Daly, 1993, p.814). Daly (1993, p.814) thus states that the economy should get adapted to steady-state after a certain point, continue growing in terms of quality, not quantity. Scale of such an economy is sized that doesn’t deplete the nature’s regenerative capacity nor pollute it beyond its absorptive capacity (Daly, 1993, p.814). It should develop in aspects of knowledge, organization and efficiency without utilizing more throughput from the nature, on the contrary, the level of throughput should remain at rate that ecosystem can function and regenerate itself. This ideal of steady- state economy refers not to static, but to continuously renewing economy which is a steady-state subsystem with a relationship with the nature at a dynamic equilibrium (Daly, 1993, p.814).
3.3. The Concept and Working of Steady-State Economics
Herman Daly was influenced a lot by Mill’s thoughts and Roegen’s flow-fund model while developing the concept of steady-state economics (Kerschner, 2010, p.545). His teacher, Roegen (1970, pp.4-9), mentions about four major magnitudes in the economy, respectively stocks, funds, flows and services while approaching to the economy. In this approach, stocks correspond to natural resources and are used as inputs and are transformed into flows. Flows are used by funds and are turned into useful consumer goods and wastes. The notion of funds here includes human capital, physical capital and land. Capital converts flows into services, as stocks provide flows. Roegen’s approach can be best understood by the example of bakery given by Kerschner. Accordingly,
“in a bakery, the baker (human capital, fund) uses a furnace (physical capital, fund) to transform a flow of heat (stock) and flour into a flow of bread and ash (waste) (Kerschner, 2010, p.545). Although Daly was influenced by this approach, he defined services and stocks in a different way, didn’t distinguish flows and funds but put forward the notion of throughput for these instead.
Daly (1991, p.17) defines steady-state economy as “an economy with constant stocks of people and artifacts, maintained at some desired, sufficient levels by low rates of maintenance “throughput”, that is, by the lowest feasible flows of matter and energy from the first stage of production (depletion of low-entropy materials from
Goods and Services
Circular Flow of Income
Factors of Production
Firms Households
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the environment) to the last stage of consumption (pollution of the environment with high-entropy wastes and exotic materials)”. The expression of desirable here has importance. Because, in order to keep the population constant at a desirable level and to keep the quantity of physical fund stable, birth rate and death rate should be equal and depreciation of physical fund should be compensated by maintenance and production, respectively.
One of the most main aim in such an economy is to make life expectancy and durability of physical funds long lasting, in order to keep social and economic cost of production and pollution as low as possible (Daly, 1991, p.17).
Throughput is the key concept in steady-state economics. If matter and energy used in economic activities were abundant, use of these in the economy wouldn’t cost. However, these sources are scarce in the nature and this reality is one of the most important factors determining the limits of economic activity in steady-state economics.
As long as the amount of throughput doesn’t exceed the amount provided by renewable and solar energy, it doesn’t create an important cost. However, Daly (1991, p.34) emphasizes that due to the current level of population and consumption human-beings are highly dependent on non-renewables and overexploitation of renewables. Having exploitated low-entropy sources from the nature and left them back to it as high-entropy wastes, human-beings create a bilateral pressure on the environment. As the amount of low-entropy sources used and high-entropy sources created increase, this pressure becomes higher and thus creates a higher social and environmental cost. At that point, Daly (1991, p.34) refers to sustainable development in a way by adding potential capital loss that can be capitalized for future generations needs to these costs.
In the Figure 4, the working of steady-state economy and relationship between major magnitudes in the economy are explained.
Figure 4. Economy and Environment in Steady-State Economics
Kaynak: Daly, 1991: 35 Source: Daly, 1991, p.35
In the figure, the relationship between economy and environment, flow of commodity and energy are put forward as well. In this analysis, Daly (1991, p.35) defines services as satisfaction felt by meeting the wants.
Services are provided by economy and environment. In the economy, they are done so through stocks and the intensity of services is determined by the quality and quantity of stocks. Daly (1991, p.35) states that services can’t be measured but the pleasure gained through them can be felt. Accordingly, services are magnitude of flow, but they can’t be accumulated.
On the other hand, stocks include production goods, consumption goods and human existing in the economy (Daly, 1991, p.35). In other words, stocks comprise goods and human capital that meet human needs (Daly, 1974, p.156; Hauser, 1992, p.379). According to Daly (1991, p.35), stocks can be defined as all kind of physical objects that meet human needs and that are subject to ownership. Stocks act as intermediate good by needing
Solar Energy Depletion - Production throughput Heat
Pollution - Depreciation
Service
Flux of Service from Flux of Service from Natural Ecosystem Human Economy
Ecosystem Economy
(Stocks)
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throughput for operation, maintenance and renewal; and by providing services. Throughput is not enough to provide services by itself.
Throughput, which could be the most key magnitude for steady-steady economics, is needed to provide services through stocks. In this sense, throughout can be seen as the cost to sustain and maintain the stocks. It spreads to the entire process of exploiting resources from the nature, production, consumption and waste generation (Hauser, 1992, p.379). This magnitude is closely related to the entropy law, since economic process explained above starts with exploiting low-entropy resources and ends with transforming them into high-entropy wastes.
Daly (1974, p.156) thinks that throughput corresponds to GDP since it reflects the change in stocks and flow of energy and matter used for providing services.
To sum up, services are the ultimate utility and throughput is the ultimate cost created by economic activities.
Throughput can’t create services itself and is needed to be used as input of stocks in order to provide them (Daly, 1991, p.36).
3.4. Transition towards Steady-State Economy
It is quite clear that some certain changes in the current institutions and new institutions are needed to move the economy towards steady-state. Although there are some divergences between the proponents of the concept, there is a generally accepted action plan to make this transition. This plan is put forward at the conference organized by CASSE in 2010 and are mainly based on the institutional changes proposed by Daly since 1970s.
Nevertheless, Daly (1991, p.50) indicates that these proposed institutional changes shouldn’t be understood as completed and perfect, and stated that there would be more suitable and applicable ones.
All institutional changes proposed are built on the current price system and private ownership and don’t require any changes within the current economic system. These institutional changes are basically made up of the extension of the execution area of current price system and private ownership (Daly, 1991, p.51). Since price controls can’t prevent the increase in absolute scarcity, planned controls over population and capital stock are practiced through physical quotas.
There are some main principles that should be followed while implementing these institutional changes. First of all, possible negative effects of these changes upon individual freedom should be minimized and planned constraints in the economy should be implemented at macro level, instead of micro (Daly, 1991, p.51; Hauser, 1992, p.384). The aim here is to protect the diversity at micro level while implementing the stabilization at macro level. The second principle is to interspace between carrying capacity of the environment and the effects of environmental pollution. Since it is not possible to accurately measure these two, Daly (1991, p.51) suggests minimizing environmental pollution. The last principle is to understand distinctive circumstances of the economy and to gradually implement the transition with respect to these circumstances.
Regarding to the transition, Daly (1991, p.52) emphasises that it is more important to stabilize the throughput and capital stock in the economy than to define the optimal magnitude of these two: “Stability and viability are more important than, and logically independent of, question of optimality. If we knew the precise optimum without knowing how to be stable at that optimum, it would profit us nothing. If we knew the how to be stable without knowing the precise optimum, it would profit us a great deal. Survival requires limiting physical growth, achieving stability. Optimality is nice, but feasibility is essential. We must learn to be stable at existing or nearby levels, simply because that is where we are. Later we can chase the optimum”. Therefore, Daly believes that the first step is to reach to steady-state and the second step is to understand how far it is from the optimal level.
Based on these principles, there are three main institutional changes to move the economy towards steady-state (O’Neill, Dietz and Jones, 2010; Daly, 1991, p.53). While the first one aims to stabilize the population and consumption per capita, the second one is needed to stabilize the capital stock and keep the magnitude of throughput under the ecological limits. The third one is related to make income distribution more equal and aims to make distribution of goods and services more equal within the society.
3.4.1. Limiting Resource Use and Waste Production
The first institutional change proposed within steady-state economics is limiting resource use and waste
production in the economy. As a subset of the environment, the economy can only be sustainable as long as
throughput is limited according to regenerative and absorptive capacities of the environment (O’Neill, Dietz and
Jones, 2010; Daly, 1991, p.43). In order to practice this limitation, resource use and waste production should be
dealt within a new approach. The main aim of this institutional change is to limit resource use thanks to
especially quotas and various tools, and to efficiently monitor and manage resource use and waste production
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(O’Neill, Dietz and Jones, 2010; Daly, 1991, p.43). Daly’s (2005) three principles for sustainable resource use is a good directive to achieve this aim. Accordingly, in steady-state economies:
1) Use of all resources should be limited at rates that ultimately result in levels of waste that can be absorbed by the ecosystem.
2) Renewable resources should be exploited at rate that doesn’t exceed the ability of the ecosystem to regenerate the resources.
3) Non-renewable resources should be depleted at rates that, as far as possible, don’t exceed the rate of development of renewable substitutes.
The amount of resource use and waste production in an economy should be set down by scientific data and within these principles. In case of uncertainty about whether resource use and waste production exceed ecological limits, the limitation should be settled thanks to precautionary principle (O’Neill, Dietz and Jones, 2010; Daly, 1991, pp.43-44). According to this principle, necessary measures should be taken regarding negative effects of a certain economic activity, even though the cause and effect relation are not revealed yet (Science &
Environmental Health Network, 2012).
In his book titled Steady-State Economics, Daly (1991, p.61) states the following regarding limiting resource use and waste production: “The strategic point at which to impose control on the throughput flow seems to me to be the rate of depletion of resources, particularly non-renewable resources. If we limit aggregate depletion, then, by the law of conservation of matter and energy, we will also indirectly limit aggregate pollution. If we limit throughput flow, then we also indirectly limit the size of the stocks maintained by that flow. Therefore, it physically easier to monitor and control depletion than pollution”. This approach emphasized that environmental problems can be controlled in a most efficient way by limiting natural resource use, not by controlling pollution.
In order to make an implementation regarding these principles, it is essential to have an environmental law enforcing efficient governance and monitoring on resource use and waste production. Measuring the level of throughput in the economy, starting to use green national accounts that include economic and social costs of production to GDP calculations would be useful. In the conference organized by CASSE in 2010, participators agreed on assessing economies within SEEA. In this accounting system, it is aimed to calculate matter and energy consumption and pollution in sectors, the cost and for conservation and environmental governance, and the natural capital in the country and externalities (O’Neill, Dietz and Jones, 2010; Daly, 1991, pp.44-45; UN, et.
al., 2003). Such a system of monitoring and governance should also include the possible socio-economic outcomes of the current resource use and planned limitations on it. Therefore, this system should be in-depth and updated as new information get obtained (O’Neill, Dietz and Jones, 2010, p.45). Although implementation of this institutional change at micro level is not put forward in detail, it is clear that individuals should become more conscious regarding environmental problems and resource use.
3.4.2. Stabilising Population and Consumption per Capita
Population growth and control have been ongoing issues for a long time. This phenomenon is closely related to migration, poverty, human rights, health, culture and religion; and maybe that is why many avoid approaching to it. In steady-state economics, this is approached within Malthus’ thoughts on population. Accordingly, constant growth in population seen in many countries can’t be supported by non-renewable resources regardless the technological advancement. Within this institutional change, environmental impacts of increase in population and consumption are approached through I-PAT equation suggested by Daily and Ehrlich (1992). Resource use increases when number of people or resource use per capita increase in a country. Therefore, not only consumption per capita, but also population growth should be contained in order to move the economy towards steady-state (O’Neill, Dietz and Jones, 2010, p.50). Thus, I-PAT equation emphasises the need to stabilise population growth:
I = P × A × T
In this equation; I, P, A and T represent total impact on environment, population, affluence measured by income
per capita and environmental impact per unit income, respectively (O’Neill, Dietz and Jones, 2010, p.50). Even
though T and A can be limited by technological advancement and less consumption in order to decrease
environmental impacts, this limitation is subject to some certain limits. Thus, it is necessary to limit population
growth as well in order to accord increasing economic activity with environmental protection (O’Neill, Dietz and
Jones, 2010, p.51; Ehrlich and Holdren, 1973, pp.76-81). According to the estimations made by UN, the world
population, which is already 6,9 billion, is expected to be between 8 to 10,6 billion by 2050 (UN Department of
Economic and Social Affairs, 2010). Such an increase in population would possibly increase the negative
impacts on environment and natural resources.
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Daly suggests using transferable birth licenses proposed by Boulding in order to contain population growth.
However, this implementation inholds many inconveniences, especially human rights violation, and contrasts with the principles regarding the transition towards steady-state. Instead, implementation of social policies such as increasing individual awareness with regard to possible low wages caused by population growth, increasing pressure on natural resources, limited social rights and freedom seem more appropriate and applicable. Martin Roger’s presentation at CASSE Conference would be a guideway for how and through which policies population growth can be contained. According to his plan, international organizations, NGO’s and the government should co-ordinately work to stabilise population growth (Martin, 2010, p.2). Roger suggests promoting to have fewer children, to increase intra-family awareness regarding population planning and environmental consciousness, to broaden woman rights and to establish an unit under the related ministry researching the impacts of population growth.
Even though these suggestions seem large scaled and hard to implement at a single stroke, application of birth licenses is even harder and its advantages are open to discussion. On the other hand, participants of CASSE Conference are aware of the challenges against the implementation of their suggestions (O’Neill, Dietz and Jones, 2010, pp.54-55). Nevertheless, it is clear that population growth and increase in consumption should be contained in order to accord the economy with the nature. Despite that there is no general consent on how to contain them; these two factors should be monitored and limited. First steps for these would be to remove prejudices in public opinion and prevent overconsumption (O’Neill, Dietz and Jones, 2010, p.56).
3.4.3. Distributing Income and Wealth
Growth is generally accepted as one of the most key tools to eradicate poverty and resolve inequality today.
Even though this view can be taken for granted in some respects, differences between income groups and the extent of social and health problems in many developed countries don’t support this argument (The Guardian, 2009; The Equality Trust, n.d.). Similarly, statistics on happiness and innovation in developed countries show that inadequacies in these areas are related to unequal income distribution (Wilkinson and Pickett, 2010, pp.50- 57). With reference to the fact that growth doesn’t always increase welfare of individuals, proponents of steady- state economics suggests distributing welfare equally in order to increase social welfare. Accordingly, equally distributed wealth make life expectancy longer, level down the crime rates and increase the individuals’ reliance on government (O’Neill, Dietz and Jones, 2010, pp.58-59; Wilkinson and Pickett, 2010, pp.48-49). Such a distribution can also help carrying out the institutional change regarding population and consumption, as it can enhance education quality, increase individuals’ awareness on social issues and prevent overconsumption arising due to higher social status and high inequality. Besides, more equal distribution of welfare can reduce the need for growth to increase individuals’ wealth.
As a result of implementing institutional change regarding limiting resource use, total production in the economy is expected to decrease and therefore the income flow will be limited. In addition to social and environmental concerns, such a decrease in total income would result in the need of redistributing wealth in a more equal way.
Therefore, in an economy in which a sustainable relationship between the economy and environment is aimed, the emphasis on growth should be replaced by equal income distribution (O’Neill, Dietz and Jones, 2010, pp.58- 59; Wilkinson and Pickett, 2010, p.58). At this point, the question of how to redistribute the wealth arises. Daly suggests that implementation of this institutional change can be done by putting some certain low and high limits to income. According to him, income gained through depletion quotas, cumulative multi-stage taxes and marginal taxes would be used to practice this change. In CASSE Conference on the other hand, suggestions put forward are based on several policies implemented in different places such as Sweden, Japan and U.S.A.
(O’Neill, Dietz and Jones, 2010, pp.60-61).
Besides these possible implementations, contributors to CASSE Conference emphasize on improvement and implementation of economic democracy. This concept means participation of workers working at all public and private companies and of individuals consuming these companies’ products to their management and operation (Pickett, n.d., p.2). Democratic property rights and bottom-up policies that can make these individuals have a voice on policies of those firms and can be helpful to equally distribute the income.
4. Assessing the Turkish Economy within Steady-State Economics
4.1. Growth as an Indicator of Economic Activity in Turkey
As economic activity increases in an economy, resource and energy use increase as well and so consequently
does waste production. Therefore, in an assessment within steady-state economics, it is crucial to present the
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magnitude and growth of the economy. In general, GDP is used as an indicator of the magnitude of economic activity in a certain period of time.
Accordingly, GDP is the market value of all the goods and services produced by labour and property located in a region, usually a country, within a year (About.com, 2012a). In steady-state economics, it is argued that GDP corresponds to throughput as well. In Figure 5, growth in GDP by kind of main sectors in Turkey is represented.
*Figure 5. GDP by Production Approach by Kind of Main Economic Activity in Constant Prices (1987) in Turkey, 1990-2006
Source: Turkstat, 2012
Data presented in Figure 5 reveals that GDP in constant prices based on general level of prices in 1987 in Turkey nearly doubled from 1990 to 2006. The large part of this increase occurred especially after the economic crises in the late 2000 and early 2001. In this period, while contribution of agricultural sector to GDP remained almost the same; services and industrial sectors and their share in GDP significantly increased. Rapid growth in some sub- sectors in this period was remarkable as well. Accordingly, the manufacturing and energy sectors are included in the industrial sector, and these grew more than 2 and 2,5 times respectively; transport, storage and communication sector in services sector grew around 2 times (Turkstat, 2012). The Turkish Economy kept on growing rapidly after 2006; growth rate reached to 9 % in 2010 and 8,5 % in 2011. However, due to the negative effects of Mortgage Crisis in 2008, the economy averagely grew around 3,6 % from 2006 to 2011 (Turkstat, 2012a). These data regarding main and sub-sectors become more meaningful if they are dealt with the relationship of economy and environment presented in Figure 4. Therefore, growth and GHG emissions in these sectors should be assessed together in order to understand environmental sources and outcomes of growth in the Turkish Economy.
4.2. Resource Use in the Turkish Economy
In order to analyse an economy in steady-state economic terms, it is essential to understand to what degree that economy is depended on the environment. Because, all economies live on primary energy sources and mines;
requires more natural resources to keep on growing. As it is growing, the Turkish Economy’s demand on natural resources is increasing as well. As a result of this, the mining and energy sectors are growing, and waste production and GHG emissions are increasing. Since MENR state that natural resource consumption will keep increasing, the question of how sustainable the Turkish Economy is grows in importance.
*Since Turkstat started using data series based on general level of prices in 1998 from the year of 2007 and has not integrated it with the series based on general level of prices in 1987; GDP between from 1990 to 2006 and 2007 to 2012 are presented separately.
