What is sustainable economic growth? (And how it works)

Updated 4 November 2022

Sustainable economic growth means maintaining growth without creating economic problems or complications. It's the practise of supporting long-term economic growth without depleting resources. If you're interested in the factors that affect sustainable development and economic growth, it may be helpful to understand what it is and why it matters. In this article, we define 'What is sustainable economic growth', its objectives and its impact on living standards and the environment.

What is sustainable economic growth?

The answer to 'What is sustainable economic growth?' is that it's economic development that aims to meet the population's needs whilst protecting natural resources and the environment. It involves monitoring and managing these resources to ensure they remain accessible to future generations. It means maintaining an economic growth rate that doesn't generate price pressures, doesn't deplete resources and doesn't significantly damage the environment.

Economic growth is when the gross domestic product (GDP) increases over a period of time. Sustainable growth means maintaining the growth rate without causing other economic problems. Rapid growth may deplete resources, create environmental problems and contribute to global warming.

Why is sustainability important for economic growth?

Sustainable development practices help to protect natural resources. The economy relies heavily on trade, much of which depends on natural resources to produce goods or provide services. This includes water, waste, energy and food. Sustainable growth depends on green growth, sustainable development and renewable energy strategies.

Related: Sustainable growth rate: plus benefits and challenges

Green growth

While green growth doesn't replace sustainable development, it supports more sustainable growth. Green growth strategies aim to ensure natural resources can sustainably realise their economic potential. These strategies include:

  • Productivity incentives: Encourage greater efficiencies in the use of natural resources, waste reduction and energy consumption.

  • Boost investment: Increase investor confidence by more accurately predicting how governments deal with major environmental issues.

  • New markets: Stimulate demand for green goods and services in new markets.

  • Green taxes: Increase revenue by raising green taxes and eliminating environmentally harmful subsidies.

  • Reduce risks: Develop strategies to prevent environmental damage.

  • Improve infrastructure: Introduce technologies to increase efficiencies in the infrastructure that deliver water and energy and transports goods to communities.

Sustainable development

There are ongoing debates about whether sustainable development policies create jobs, reduce poverty or bankrupt businesses once they enforce the policies. It's possible to separate environmental issues into two categories. Protection, which includes protecting land and water resources, and regulation, which includes prohibiting deforestation and regulating toxic and hazardous waste disposal. There are three core areas of sustainable development:

  • Environmental: Previously regarded as the main reason for sustainability, environmental issues are now integrated into the corporate world.

  • Economic: This can combine sustainable practices, technology and revenue-earning activities.

  • Social: This focuses on health, education and quality of life.

Related: Economics of growth and development: relationship defined

Renewable energy

Renewable energy comes from natural resources. These resources are self-replenishing and produce little or no harmful emissions. The aim of renewables is to replace fossil fuels, such as coal, oil and gas, that are non-renewable and produce harmful greenhouse gases. The expanding renewable energy sector helps generate many jobs with its constantly developing technologies.

Wind power

Onshore and offshore wind farms generate electricity by harnessing wind power. The system converts kinetic energy into electric energy and feeds it into the national grid. Technology has evolved over the last few years to maximise electricity production, with taller turbines and larger blades.

Solar energy

Sunlight is one of the most freely available energy resources. Solar panels capture sunlight and generate electricity using photovoltaic technology. Solar energy can deliver heat, cooling, natural lighting, electricity and fuel for many applications. The manufacturing costs of solar panels have dropped significantly over the last decade, making them more affordable, often the cheapest form of electricity, with a lifespan of approximately 30 years.

Hydroelectric power

Hydropower uses tidal, flowing or falling water, such as dams and waterfalls, to generate electricity. Underwater turbines and a generator convert the energy into electricity, and transformers convert it to a higher voltage for long-distance transmission to the national grid. While energy production is more environmentally friendly than fossil fuels, the infrastructure required may negatively affect the ecosystem.

Related: 8 renewable energy careers (descriptions and salaries)

Examples of economic sustainability

Sustainability encompasses five basic elements including food, energy, water, waste and ecology. Many organisations are taking steps to create a prosperous society that functions through sustainability. Here are five examples:


Micro-farming means farming on residential or commercial property with less than five acres of land. It can reduce carbon emissions, increase local economic growth and improve food security. Micro-farming is typically a low-pesticide activity, which helps to reduce toxins that may cause chronic health conditions or infiltrate drinking water supplies.

Solar power

Solar energy is a fast-growing industry. Solar power can reduce electricity consumption and consumers' costs. The government offers several incentive schemes, such as grants and subsidies for solar panel installations. The boost in solar energy popularity has generated many jobs for manufacturers and installers.

Related: 20 jobs that help the environment (with duties and salaries)

Creating water

Technological developments have created a method of transforming air into water. This is particularly relevant for hot, dry regions like North Africa and desert regions elsewhere. The technology captures air, absorbs moisture and filters out dust and pollutants. Some systems add minerals to make the water taste like spring water. The technology is suitable for domestic, industrial and agricultural use.

Waste recycling

Waste recycling is a cost-effective way of re-using waste or older items instead of discarding them. Recycling is typically selling or giving away items that are still usable. Upcycling means repairing or refurbishing discarded items to create better quality products than discarded ones. It includes processes to transform by-products into new materials. One example is the transformation of plastic waste into building bricks by mixing sand and plastic at high temperatures and compressing it into bricks.

Recycling benefits communities in several ways. It reduces the waste in landfill sites and the cost of transporting it there. Many websites offer consumer-to-consumer networks where buyers can find items like clothing, toys, furniture, appliances and vehicles at reasonable prices and sellers benefit financially. Some people choose to donate their used items. Freecycle is a non-profit organisation that provides a free online platform to connect people giving things away with those looking for things. People can search listings in their local area.

Related: How to become a sustainability consultant (with steps)

Fish farming

Fish farming, or raising fish in a confined space, is an alternative to ocean fishing. Overfishing in many oceans has depleted certain fish species. Besides being a food source for humans, fish provide protein for predators and waste that fertilises algae and seagrass, so overfishing negatively impacts coastal ecosystems.

Related: UK's green companies (sustainable business examples)

How sustainable development is relevant to growth

Many economies around the world struggle to increase their GDP and eliminate poverty. Impoverished societies depend on natural resources for survival and are the most vulnerable to environmental deterioration. According to National Geographic, the Great Pacific Garbage Patch spans the ocean from the North American West Coast to Japan. It comprises mainly non-biodegradable plastics, 80% of which come from land-based sources and the rest from boats and other marine sources. This debris harms the marine ecocycle, directly impacting the fishing industry and, consequently, can cause major economic issues in many parts of the world.

As populations increase, mass manufacturing and production rates increase to meet demand. But the earth's resources are not limitless. Land and water resources conservation can help reduce water treatment costs and improve air quality, positively impacting people's health.

Benefits of sustaining a growing economy

Sustainable growth means providing more productive and lucrative possibilities for future generations. A robust economy means people have more disposable income to buy more products, build a bigger house, go on holiday or improve their standard of living in other ways. This boosts many industries, including manufacturing, housing and travel and tourism. Conserving or replenishing resources may enable a country to reduce its imports and increase its exports. All of this contributes to a country's GDP.

Efficient recycling programmes reduce ground and water contamination and the resulting clean-up costs. Reducing carbon emissions improves air quality. A healthier population may contribute to a more productive workforce, lower healthcare costs and a better quality of life.

Please note that none of the companies, institutions or organisations mentioned in this article are affiliated with Indeed.

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