The following two readings introduce major themes on the question of whether growth is inherently bad for the environment.

Herman Daly and Kenneth Townsend: Sustainable Growth, an impossible theorem
http://dieoff.org/page37.htm
From "Valuing the Earth: Economics, Ecology and Ethics"
In this selection Daly and Townsend differentiate between the "growth" of material usage and the "development" of potential of materials. In short, they suggest using the term "growth" to describe quantitative increases and "development" to describe qualitative increases.

Lester Brown: The Designing of an Eco-Economy
http://www.popco.org/press/articles/2005-11-brown.html
Brown outlines a vision of an economy that rations its materials in a way that recognizes it is in a closed material system.

Analysis
One way to interpret Brown's vision is to think in terms of what economists call the "velocity of money." On any given day, there is a fixed quantity of money (eg. cash and equivalents). However, that money can be used over and over again, with each iteration of its use bringing increased benefits.

In much the same way, increasing amounts of benefit can be derived from the same physical material by recycling it. So there can be an increase in welfare, enjoyment, wage income and profit with minimal or no increase in material usage.