COVID-19: Green policies good for economy too, says study
Environment-friendly projects create more jobs, deliver higher short-term returns per dollar and lead to an increase in long-term cost savings
Several countries across the world could boost their economies — most of them shut down amid the novel coronavirus disease (COVID-19) pandemic — if they included climate-friendly policies in recovery packages, according to a study released by Oxford University on May 4, 2020, that included Nobel prize winner Joseph Stiglitz and climate economist Nicholas Stern.
An analysis of possible economic recovery packages showed climate-friendly policies can be better for the economy and environment, the study said.
Green projects created more jobs, delivered higher short-term returns per dollar and led to increased long-term cost savings, when compared with traditional fiscal stimulus, according to the study.
The direction of such green measures over the next six months will largely determine whether the worst impacts of global warming can be avoided, it said.
Stiglitz and Stern together assessed the economic and climate impact of taking a green route out of the crisis.
They catalogued more than 700 stimulus policies into 25 broad groups and conducted a global survey of 231 experts from 53 countries, including senior officials from finance ministries and central banks.
Noting that ‘green’ policies can be widely defined, the study focused on the reduction of greenhouse gas emission as the key environmentally-beneficial criteria.
The study — to be published in the Oxford Review of Economic Policy — pointed out that ‘green’ policies have a large return on investment, can be enacted quickly and have strong, positive impacts on the climate.
Investment in renewable energy production such as wind or solar energy were some examples.
Clean energy infrastructure was particularly labour-intensive in the short term, according to the study — citing previous research — adding that it created twice as many jobs per dollar as fossil fuel investments.
The study said there were certain types of set of fiscal recovery policy packages that offered high economic multipliers and positive climate impact.
The emergency rescue packages were “colourless”, said the study, listing five such policy types:
- Clean physical infrastructure investment in the form of renewable energy assets
- Building efficiency spending for renovations and retrofits including improved insulation, heating and domestic energy storage systems
- Investment in education and training to address immediate unemployment from COVID-19
- Natural capital investment for ecosystem resilience and regeneration including restoration of carbon-rich habitats and climate-friendly agriculture
- Clean R&D spending
For developing countries, rural support scheme spending, including on sustainable agriculture, was also highly ranked.
Poorly-designed recovery policy is likely to be ineffective in delivering economic, climate, and social outcomes, regardless of theoretical potential, it added.
COVID-19 fell like a “daily hammer blow” on the economy of the United Kingdom (UK) and put livelihoods and employment prospects of millions at risk, said Dave Reay, executive director of the Edinburgh Centre for Carbon Innovation in the University of Edinburgh.
“By aggressive investment in green skills and the creation of a swathe of green economy employment opportunities, the UK can buffer COVID-19’s impacts and simultaneously deliver a safer climate future,” he said.
A truly sustainable recovery plan for the UK that is resilient, just and climate-smart can serve as a beacon for all nations of the world, Reay added.