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Investing in a green recovery from COVID-19 will deliver rapid short-term growth and long-term economic gains while also tackling climate change, according to a new study from Oxford University.
Researchers from Oxford’s Smith School of Enterprise and the Environment looked at whether economic stimulus packages in the wake of coronavirus would help or harm progress on measures to limit climate change. They found that, far from impeding growth, investing in green policies and infrastructure would lead to both a robust economic recovery and long-term positive outcomes for society.
In addressing the twin problems of the global downturn and climate change, the authors, who include the Nobel prize-winning economist Joseph Stiglitz, wrote: “The recovery packages can either kill these two birds with one stone—setting the global economy on a pathway towards net-zero emissions—or lock us into a fossil system from which it will be nearly impossible to escape.”
In their paper, to be published in the Oxford Review of Economic Policy, the researchers surveyed 231 key figures from G20 countries, from central bank officials to economists, about the relative performance of 25 types of stimulus measures. The survey found that experts and officials worldwide believe recovery measures can and should be in line with climate goals, and furthermore that such measures produced better economic outcomes than “business-as-usual” models.
“Many climate-positive policies were perceived by our respondents to have high overall desirability; most climate-negative policies had relatively low desirability,” the authors note. “This was true even for climate-positive policies that took more time to implement.”
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The researchers further found that recovery packages “will reshape the economy for the longer-term, representing life and death decisions about future generations, including through their impact on the climate.” In their final analysis, the authors conclude that green stimulus measures “have better prospects for increasing national wealth, enhancing productive human, social, physical, intangible, and natural capital.”
The authors also cite a range of “co-benefits” yielded by green spending, such as decreased social and health inequalities, and emphasize the importance of international collaboration in tackling economic and climate challenges. They also list five policy items that they claim would support the short- and long-term goals of a green recovery, namely: low-carbon infrastructure investment; retrofitting buildings for energy efficiency; training and education investment to alleviate unemployment caused by COVID-19 and decarbonisation; natural capital investment for ecosystem regeneration; and investment in green research and design.
Speaking to Forbes.com, Brian O’Callaghan, a researcher at Oxford’s Smith School of Enterprise and the Environment and one of the study’s authors, said: “We understood early on in the coronavirus crisis that a significant amount of capital would be spent in recovery. Given the need for more spending in the climate space, we asked the question: why couldn’t we combine them?”
Drawing comparisons between the coronavirus crisis and the threat of climate change, O’Callaghan said: “Decisive government intervention, through ambitious green recovery spending, could change emissions trajectories in much the same way that decisive health interventions, through lockdowns and social isolation, have changed COVID-19 infection trajectories.”
Nevertheless, some officials maintain reservations about green spending in times of economic crisis. “Specifically on stimulus spending, policy makers worry that you won’t have the same economic outcomes from green spending as ‘normal’ spending,” he said. But instead, the team found that on economic terms alone, the outcomes of green spending were either equal to or higher than business-as-usual spending.
Countries also had an opportunity to show leadership in the aftermath of coronavirus and lead a green recovery, O’Callaghan said. Referring to the delayed United Nations Climate Change Conference, COP26, due to be held in Glasgow in November but now slated to take place in 2021, he said the U.K. should “look to establish a position of climate leadership. We talk about a Global Recovery Alliance, which would be a set of countries who are all coming together to pursue a green recovery.”
Such an initiative would follow last month’s announcement by EU states and companies of an informal Green Recovery Alliance. Under that plan, European states and major corporations called on “business and financial leaders, trade unions, NGOs, think tankers [and] stakeholders, to support and implement the establishment of Green Recovery Investment Packages acting as accelerators of the transition towards climate neutrality and healthy ecosystems.”
O’Callaghan said that while governments have in the recent past focused more on near-term economic effects, the current crises should reinforce the benefits of spending for long-term goals.
“Stimulus policies of the past have been very ‘short-termistic’,” he said. “They’ve been focused more on next the quarter’s GDP or next year’s GDP, whereas our overall argument is that stimulus should be thought of as part of the long-term restructuring of society.”
“I think there’ll be a realization that, as we borrow more and more from the future, we should think more about future outcomes as well.”
