Blad and bladder

Starting with the assumption that a mature, diverse economy works efficiently with around 2% annual growth, a shift to a green economy would increase the volatility of the overall economy and require a higher overall rate of growth.

A true green shift would be toward reduced consumption, which is equivalent to an economic contraction. To compensate, sectors of the economy that are not affected by the green shift would need to grow at a faster than 2% rate to keep the overall rate around 2%. This would increase the volatility of the overall economy.

But when the growth is not diversified and there is more market volatility, the business cycles have more effect and a 2% overall growth rate may not be sufficient for efficient markets. A higher growth rate may be required.

In other words, not only would the growth rate need to increase, but the efficiency with which resources are consumed would also decrease.

A similar (other side of the coin) idea is explained here (http://en.wikipedia.org/wiki/Uneconomic_growth):

"...innovation- or knowledge-driven growth still may not entirely resolve the problem of scale, or increasing resource consumption (see Jevons paradox).[9][10] For example, given that expenditure on necessities and taxes remain the same, (i) the availability of energy-saving lightbulbs may mean lower electricity usage and fees for a household but this frees up more discretionary, disposable income for additional consumption elsewhere (an example of the "rebound effect")[11][12] and (ii) technology (or globalisation) that leads to the availability of cheaper goods for consumers also frees up discretionary income for increased consumptive spending."

"In economics, the Jevons Paradox (sometimes called the Jevons effect) is the proposition that technological progress that increases the efficiency with which a resource is used, tends to increase (rather than decrease) the rate of consumption of that resource. It is historically called the Jevons Paradox as it ran counter to popular intuition. However, the situation is well understood in modern economics. In addition to reducing the amount needed for a given output, improved efficiency lowers the relative cost of using a resource – which increases demand. Overall resource use increases or decreases depending on which effect predominates."