In this chapter, Kathleen Day and R. Quentin Grafton explore the relationship between the economy and the environment. One approach sees economic growth leading to environmental degradation by imposing stresses on limited natural resources and ecosystems and by increasing emissions of pollutants. A second perspective argues the opposite relationship holds. Economic growth, once a certain level is achieved, leads to a cleaner environment as the higher income shifts societal preferences toward a better quality of the environment and at the same time provides the resources to produce such an environment. In addition, it is argued that economic growth is increasingly service-based, decoupling pollution from economic activity. The authors examine the relationship between economic growth and environmental degradation in Canada. The implication of their findings is that economic growth by no means resolves environmental problems.