After a prolonged economic downturn due to large scale unemployment and disruption of global supply chains during the COVID-19 pandemic, the global economy is inching nearer to a post-pandemic boom. While richer countries are getting there sooner due to their wider access to vaccines, forecasts show that the overall economic lull is going to be replaced by vigour as governments inject stimulus packages, businesses reopen, and people increase their spending.
Morgan Stanley predicts a 6.4% increase in global gross domestic product this year in its global economic forecast. In the United States, the growth estimate is 5.9%, four percentage points higher than the pre-pandemic trend. Similarly, growth predictions for the Eurozone are set at 5%, the United Kingdom (UK) at 5.3%, Japan at 2.4%, China at 9%, and India at 9.8%.
However, while financial prosperity might be around the corner, it might come at the cost of the environment. As pandemic fatigue pushes people around the world to demand their governments to prioritise economic wellbeing, it is likely that environmentally sustainable development policies will be sidelined. This is counterproductive in the long run because zoonotic diseases such as the coronavirus (if lab theories are proven false) are only going to become more frequent and damaging if sustainability is not placed at the core of development and economic policies.
In fact, the environment has historically almost always suffered after a period of economic downturn. For example, carbon dioxide (CO2) emissions dropped during the beginning of the Great Depression but began to increase again from 1932. Likewise, fossil fuel combustion and cement production fell by 1.4% in 2009 when global economies were reeling from the 2008 financial crisis, but as economic stimulus resources were disproportionately allocated to industries contributing to high pollution levels, emission levels rebounded to 5.9% in 2010.
In a similar vein, with economic activity at a standstill during the COVID-19 pandemic, the population-weighted concentration of nitrogen dioxide and particulate matter levels dropped by about 60% and 31% in 34 countries. However, with the easing of lockdowns, air pollution levels across China, the US, India, and Europe were raging again. In addition, studies have also shown that the increased use of one time plastics, such as gloves, masks, needles, etc during this time period has contributed to a twofold increase in the number of plastic debris.
Economic recovery plans for a post-pandemic world thus essentially imply an ensuing period of increased environmental degradation. China has already announced its intention to introduce a trillion-yuan fiscal stimulus package that will boost infrastructure spending in order to revive its economy, and such projects generally highly carbon-intensive. Last March, Czech Prime Minister Andrej Babiš urged Europe to “forget about the Green Deal now and focus on the coronavirus instead.” In the same month, Polish Deputy Minister of State Assets Janusz Kowalski requested that the European Union (EU) drop its Emissions Trading System, which helps combat global warming, or exempt Poland from the scheme in order to allow Warsaw to free up funds to fight the pandemic. Ultimately, EU leaders agreed on an ambitious goal for cutting greenhouse gases by 55% by 2030, rather than 40%, with the inclusion of Poland. Poland was able to participate in the deal because the EU made it the biggest beneficiary of the EU Just Transformation Fund, through which, Warsaw received €8 billion to make the switch to clean energy.
Detailing the economic benefits of such plans, the International Renewable Energy Agency (Irena) recently releaseda report outlining the economic potential of a COVID-19 recovery plan that is dependent on renewable energy. The study found that increased investment in renewables can lead to massive global gross domestic gains of up to $98 trillion by 2050, returning between $3-8 for every $1 invested. This was instrumental in proving that not all forms of economic growth must cause damage to the environment in the process.
Some countries have acknowledged that economic growth need not be sacrificed for protecting the environment, and that environmentally sustainable technological advancements can enable higher output with less pollution. For example, a third of France’s post-Covid package is based on green stimulus, while South Korea has allocated $52 billion, which is equivalent to about 15% of its total recovery package, on green funding over the next five years. Similarly, Sweden has issued a green state credit guarantee for industrial investments, while Australia beat its emissions-reduction targets under the Kyoto Protocol by 459 million tonnes last year. In the same spirit, top diplomats from 38 countries agreed on Monday that post-pandemic economy rebuilding efforts should be guided by green principles during the 2021 Partnering for Green Growth and the Global Goals 2030, or P4G summit. To this end, South Korea has pledged to create a US$5 million fund under the Green New Deal to help speed up developing countries’ transitions to renewable energy.
That being said, while such allocations are easy to make for developed countries, achieving the vision of a green economy is more of a struggle for developing countries. For instance, India, which is the world’s third-largest emitter of greenhouse gases, has been hesitant to commit itself to an enormous reduction goal. A private bill was submitted to the parliament in March that calls for a legally binding net zero commitment, with proponents arguing that it would help India draw investments worth billions of dollars. However, critics are worried that it would this would prohibit the poor from meeting their energy needs as the cost of generating energy from renewable sources is currently far higher than using fossil fuels. Furthermore, at this past week’s BRICS summit between the foreign ministers of Brazil, Russia, India, China, and South Africa, the countries agreed that reducing greenhouse gas emissions will “take longer in developing countries,” who have yet to reach peak emissions, as they are still in the midst of their industrialisation period. Industrialisation, regardless of the accompanying pollution, is generally seen as a gateway for poverty eradication and development, and developing countries argue that they are merely going through a process that richer countries have already undergone.
While roadblocks still exist to achieve this transition, developing countries must acknowledge the billions they could save in the long run by scaling up investment in innovation and sustainability to guard against the threat of such public health crises and their associated economic impacts becoming more frequent. The enormous amounts of money being dedicated to infrastructure as part of the stimulus packages highlight that there is an opportunity to invest in infrastructure plans with longer-term goals on resource efficiency. Putting this to action is going to be exceedingly tough for developing countries, but small steps must consistently be taken towards placing sustainability at the core of our future development policies.
Sustainability Must Be Placed at the Core of Post-Pandemic Development Policies
While economic growth is a global priority as countries begin to conquer Covid, they must pursue it keeping the well being of the planet in mind.
June 5, 2021
SOURCE: SHUTTERSTOCK/ROBERT-LUCIAN-CRUSITU)