After the 2008 stock- and housing-market crash plunged the U.S. and the world into economic upheaval, governments came to the rescue with trillions of dollars in corporate bailouts. Executives at the insurance firm AIG were so happy with their US$152-billion package (more than U.S. and European countries spent in total on developmental aid the same year), they celebrated with a $440,000 trip to a luxury spa resort!
As with the 2008-09 financial crisis, CO2 emissions have dropped during the pandemic. But the 2009 economic stimulus and recovery ignited a renewed spike in emissions. The measures revived struggling economies, and it wasn’t long before industrial interests were again fuelling engines of habitat destruction, pollution, climate disruption, and other environmental devastation.
COVID-19 is revealing that recovery’s unstable foundation. As governments worldwide develop plans to recover from this pandemic’s impacts, we have to ensure it’s a lasting recovery that puts us on track to confront current and future threats, including the climate and biodiversity crises.
An International Institute for Sustainable Development (IISD) study, conducted at the request of leading Canadian environmental organizations, including the David Suzuki Foundation, argues that any corporate bailouts and stimulus spending should come with “green strings” attached. Measures to stimulate the economy shouldn’t make the climate crisis worse and should aim for a sustainable, equitable, and resilient future for all.
As economists and others worldwide have been saying, our recovery from this pandemic will be stronger if we correct course away from activities that cause climate disruption, biodiversity loss, environmental devastation, and increasing disease spread—and exacerbate inequality.
Former Bank of Canada and Bank of England governor Mark Carney says the world can’t afford to miss an opportunity as it did after the 2008 financial crisis. “You can't wish away the systemic risk,” he said. “In the end, a small investment up front can save a tremendous cost down the road.”
Research shows environmentally targeted stimulus measures offer as many or more employment and economic benefits as neutral or harmful measures. Studies of U.S. stimulus policies during the 2008-09 global financial crisis found green policies performed well, especially compared to fossil-fuel infrastructure funding.
A survey of 230 leading economists representing 53 countries, published in the Oxford Review of Economic Policy, found “green stimulus measures” were “among the most beneficial for the economy, as well as having strong potential to cut emissions” and “could help decouple emissions from growth, avoid stranded assets—and stranded jobs—and redirect the global economy towards a more prosperous net-zero emissions pathway”.
The IISD study calls on Canada to adopt a range of measures, from making funding for industry conditional on measurable plans to reduce emissions to net-zero by 2050 to ensuring support goes to workers and not executive perks, buybacks, and dividends.
Study coauthor Aaron Cosbey said government recovery plans will determine our environmental footprint for decades. “We’ll end up spending hundreds of billions of dollars on relief and recovery—an unprecedented investment by Canadian taxpayers. It’s the government’s right and duty to attach conditions to that spending, making sure it drives us toward the future we all want: a green, prosperous Canada.”
The European Union is already taking up the challenge, forming a “green recovery alliance” initiated in response to calls from European environment ministers “for the European Green Deal to be centralised in the EU’s post-pandemic recovery plan”.
“We are choosing to accelerate the ecological transition when the time comes to reinvest in the economy,” said European Parliament environment committee chair Pascal Canfin. “COVID-19 has not made the climate crisis go away.”
Amsterdam is the first city to replace the antiquated economic-growth model with “doughnut economics” as a guide for public-policy decisions. Oxford University economist Kate Raworth developed the model, based on the idea that an economy should meet everyone’s core needs within the means of the planet.
Many are feeling the effects of the pandemic—isolation, job loss, economic upheaval, illness, death—and the desire is to quickly return to “normal”. But “normal” isn’t good enough, as we learned in 2009. To ensure our well-being and survival, we must build back better. We have the knowledge, resources, and research to do it. All we need now is political will.