Below is my attempt to answer question "Can we have economic growth and environmental sustainability?".
Please correct me if I got something wrong in my reasoning.
Let's see what is counted as economic growth and environmental sustainability:
a)Economic growth happens when we produce more goods and services than our Production Possibility Frontier (aka PPF) previously allowed. In its turn, this usually happens when we have more labor and/or capital and/or land than previously. The exception for this are gains from specializing in producing and selling goods in which given country holds comparative advantage. If we just started using our labor/capital/land more efficiently we still would be inside our Production Possibility Frontier, although it would lead to increase in production of goods and services.
b)Environmental sustainability happens when following conditions are met, according to Herman Daly:
For renewable resources, the rate of harvest should not exceed the rate of regeneration (sustainable yield);
[For pollution] The rates of waste generation from projects should not exceed the assimilative capacity of the environment (sustainable waste disposal); and
For nonrenewable resources the depletion of the nonrenewable resources should require comparable development of renewable substitutes for that resource.
- Considering this, we can have economic growth thanks to producing and selling goods in what we have comparative advantage, while reducing production of goods in what have have comparative disadvantage. To put it simply, more free trade, less subsidies of uncompetitive industries - more growth. And it's compatible with environmental sustainability.
- We can increase labor (which is understood as amount of work done) by, say, curing people who are unable to work due to an illness. Or by punishing people who can work, but don't want to work (like USSR did). Or by making people work for longer hours. Or by making sure that workers are really working instead of, say, wasting time playing games and checking their Facebook. Or by training part-time workers to be qualified for a full-time job. Such measures can lead to economic growth and are environmentally sustainable.
- As for land, there does NOT seem to be any environmentally sustainable way to get more of it. If only you don't seriously consider scenario when one country gets territory that previously belonged to another country. But it's a zero-sum game.
- Capital is understood here as all man-made goods which are used for further production of wealth. We can increase our capital in an environmentally sustainable way if we will increase capital thanks to more efficient use of existing labor, land and capital. Again, increased production of capital (and other goods) due to more efficient use of existing labor, land and capital does NOT itself mean economic growth. But after capital will be increased it will be possible to produce outside previously established PPF, meaning that economic growth have occured.