Published at 2020, May 6th
A survey done across several major English universities shows policies betting on climate change mitigation and environmental protection will help economies recover better from the impact of the new coronavirus.
Across the globe, different countries have ended their lockdowns and freedom is slowly returning as restrictions are being lifted. One thing looks clear: the countries that continue fighting the pandemic by imposing long lockdowns will sooner or later have to worry with an increasingly fragile economy and its social repercussions.
Faced with these economic difficulties, countries risk having an increase in their unemployment rates, a higher number of companies going bankrupt, public debt increases, and even inflation. But then as lockdown measures end, how can countries improve their economic situation without falling into a wild economic recovery that degrades the environment even more than what it already is?
According to a study by several major English universities (Oxford, Columbia, Cambridge, London School of Economics), an economic recovery centered on ecological investment programs could be the solution.
Surveying International Economic Leaders On Economic Recovery
The results of this study are based on the analysis of surveys conducted with +200 major economic leaders from central banks, finance ministries or large economic organizations in the G20 countries. The researchers asked these leaders to analyze the impact of various fiscal and economic measures that could boost economic growth after Covid-19.
Some of the instruments presented to these leaders can be considered as “clean” or “green”. These include supporting low-carbon technologies, eco-construction, or eco-design policies or investments in R&D for ecological purposes. Other, more conventional instruments such as subsidizing polluting air or road transport manufacturers or fossil fuel companies, were also presented.
The researchers asked the experts to rate these and more measures according to 3 criteria: their speed of implementation, their ability to generate long-term economic benefits, and their ecological impact (climatic impact in particular).
As a result, the majority of the major economic experts surveyed considered “clean” stimulus policies to be better able to create a strong and long-term stable economic recovery after the lockdown.
Major Ecological Sectors That Should Be Prioritized
According to the study, five particular sectors have the potential to lead the economies affected by the new coronavirus to a quicker recovery while improving their climate impacts.
One of them is betting on more ecological infrastructures such as low-carbon energies, the improvement of energy storage systems, smart management of electricity and heat networks or low-carbon mobility alternatives… By investing more massively in these sectors, which are also supported by Green New Deal proponents, we could revive the economy while having a more positive impact on ecological indicators.
Another priority sector is education, in the sense of preventing future unemployment. In this way, it is important to foster a transition to the development of new skills that will be needed for the jobs of tomorrow. These include, for instance, jobs related to greener energy production (for instance, wind turbine technician is currently the fastest growing profession in the US) or regenerative agriculture where more ecological methods are re-taught and used.
The investment in “natural capital” also appears to be critical: restoring ecosystems and forests, working on soil protection and restoration or keep investing in ocean protection. The long term goal: protect the global environment.
Finally, experts also believe that it is necessary to bet on R&D, particularly in the eco-compatible sectors: energy, storage, waste reduction and the circular economy, the study of ecosystems… The goal: to develop new ways of responding to our needs while respecting the planetary limits.
It should also be noted that a majority of experts consider the rescue of airlines to be undesirable, as well as investment in fossil fuels.
Among other subjects discussed, respondents believe the economic revival is the right opportunity to implement the deep, structural and long term changes a healthy planet and a fairer society need. Indirectly, the mobility changes caused by the coronavirus enabled new ways of working (from home), avoided unnecessary travels and consumption.
In the same way, there is now an opportunity to adopt new habits and create new structures. For instance, in terms of governments, new ways of connecting consumers with local actors such as farmers, promote the participation of scientists in social discussions, increasing decentralization when relevant…
Towards a Shift of Paradigm?
This study indicates a certain paradigm shift in the technocratic spheres of the economic world. More and more executives in economic organizations now advise addressing as quickly as possible stimulus measures related to ecology, education, and the fight against inequality.
This is a major change from the logic that was still operating massively at the time of the 2008 crisis: recovery through supply and massive investment in polluting sectors.
However, for such a paradigm shift to take place, an indicator will be needed at some point to measure progress. In an economic world still largely dominated by the omnipresence of solely financial indicators (like GDP), it will certainly be difficult to assess the multiple benefits of such investment policies.
Nonetheless, frameworks such as FTSE4GOOD, the Carbon Disclosure Project (CDP), or the Natural Capital Protocol, together with the Global Reporting Initiative or the SDGs framework, show things are changing and new, more relevant metrics on social and environmental issues can and should be assessed.