4. Environment and Economic Growth

Environmentally friendly economic development is important for promoting long-term development. Economic growth, environmental preservation, social fairness, and institutional capacity are the four fundamental components of sustainable development.
The natural environment is vital in supporting economic activity. It helps :

• Directly, by providing raw materials and resources such as water, wood and minerals, which are needed as inputs in generation of product and services.
• Indirectly, through ecosystem services like carbon sequestration, water purification, flood risk management and nutrient cycling.

As a result, natural resources are critical for ensuring economic growth and development not just now, but also for future generations.

The link between economic growth and the environment is complicated. Several factors are at work, including the scale and composition of the economy, notably the percentage of the GDP that is made up of services, as opposed to primary industries and manufacturing - and technological innovations that have the potential to reduce the environmental impacts of production and consumption decisions while simultaneously boosting economic growth.
Different economies have varied approaches towards the environment. Ideally, the developed nations should focus more on environmental restoration, while the developing countries will focus more on the consumption of resources to ensure survival.

The developed countries are historically responsible for nearly 79% of the climate change.^[2]

With many crucial natural resources and ecosystem services becoming scarce or under strain, attaining sustainable economic development would need a complete decoupling production of products and services from their environmental implications. It is believed that the economic growth results in the degradation of the environment. The concept of ‘decoupling’ tries to prove otherwise. This entails sustainably using environmental resources, whether by increasing resource efficiency or by implementing innovative manufacturing processes and product designs. It also helps prevent significant threshold breaches, beyond which natural assets cannot be replaced and can no longer maintain the necessary level of economic activity. Existing promises to avert disastrous climate change demonstrate the necessity for total decoupling, necessitating a decrease in greenhouse gas emissions even while the global economy expands.
The transition from fossil fuel-based energy systems to renewable sources (such as solar, wind, and hydropower) is one of the best examples of decoupling.

While empirical data suggests that globally we're trying absolute decoupling for many air pollutants and carbon emissions, this does not apply to all environmental resources or to all developed economies. Furthermore, it has been found that the decoupling is partially explained by movements in production location, with many goods and services consumed globally being produced in other nations. This demonstrates the importance of technology and innovation in lowering environmental consequences, as well as the possibilities this brings for businesses and sectors.^[3]