International financial and economic institutions are expecting another economic recession due to COVID-19. The notion is substantiated by the worsening economic and financial indicators across the world. Restrictions on mobility has further worsen the economic plight of countries. The chances of recovery have been worsened. Although the impact will vary among the countries, but no one will be immune to the impacts.
However, the least developed and developing countries are witnessing the worst impacts and are under extreme stress. The stress is quite visible now as countries are running pool to pool to find financial resources to sustain the minimum level of living. These countries are also struggling to find relief from international financial institutions. Unemployment is another problem which is haunting and will be haunting world in coming years. According to ILO estimates that almost half of the work force is at risk, especially from the informal sector in developing and least developed countries. Informal sector has already been severely impact, as stated by ILO that about 1.6 billion people has been impact from 2 billion people in informal sector. Moreover, the income loss for them is 60 percent at global level and 80 percent in Africa and Latin America. It will contribute to rise poverty levels.
On contrary, the environmental indictors have started to exhibit a positive trend. International and national organizations and institutions are presenting a positive picture. Many studies are showing that the air quality is improving significantly across the world. The biggest beneficiary are the highest polluter cities. Green House Gas (GHG) emission are also exhibiting a declining trend. According to International Energy Agency the GHG emission will decrease by 8 percent. These are all great news. However, the question is, how long it will stay? Will the air be free of pollution? Or GHG emissions will continue to decrease.
If developed countries wants to lead, they can start by adopting the model of environment and climate compatible development. The model which steer the process of economic growth without compromising on the environment and climate needs
Historical evidences point to other direction. For example, during financial crisis of 2008, the fossil fuel emissions decline by 1.4 percent in 2009. But, in 2010 it increased by 5.9 percent, which is quite scary. On top of that current projections also pointed out that the present decline of GHG emission will have minimum or no impact on climate change. The climate change course will be on track and there is no chance of lowering of the risks related to climate change. Similarly, the improvement in air quality is also very temporary. It will be vanished after the lock down. The past experience also suggests that the situation will be more complicated after lockdown. The countries, especially least developing countries would be in urgency to restore the economic activities and economies. Unfortunately, most these of countries are also highly vulnerable to climate change.
In these circumstances debate is going on how to introduce environment and climate smart interventions after COVID-19. No doubt it is most desired intervention, but it would be extremely difficult for poor countries. As it is open secret that for shifting to climate smart economy huge resources are required. World Bank report estimated that world would be in need of US$ 90 trillion to build climate resilient infrastructure. Countries would need high tech machinery, instruments, ways of production and on top of that the skills. Developed countries can afford it but it would be beyond the capacity of poor countries. Hence, poor countries would be in need of support, which is not available. The present situation of availability of financing for climate change is very discouraging, as developed world is not fulfilling their commitments. It has been analyzed by many experts that the major reason of suffering of poor countries is lack of resources. It is contributing towards higher vulnerability of poor countries.
The other dimension of problem is that developed countries are also not willing to contribute according to demand of climate change. USA, one of the biggest polluter has left the Paris Agreement on Climate Change and promoting fossil fuels at home. Although China is doing a lot on national and international fronts but still it is one of the biggest consumers of fossil fuels. Emerging economies like India, South Africa and others are still dependent on fossil fuels. In India more than 70 percent electricity is produced by coal. So, in this scenario, what we can expect, an era of climate smart investment or an era of heavy reliance of fossil fuels.
The answer is, it is extremely difficult to predict. World will have to choose between the devil and deep sea. On one hand world will have to revive economy and create jobs for billions of people. It would require trillions of dollars. We can observe this from announcement of relief packages across the world. USA has announced more than US$ 2 trill and Germany US$ 1 trillion. On other hand world will have to combat the problem of environmental degradation and climate change. Again, trillions of dollars would be required to fight the challenge. The situation urges us to think rationally, not like an activist. We need to look for rational and balanced approach to tackle the both issues. The approach which can ensure the economic and livelihood revival and also take care of environmental and climatic needs.
For that purpose, world needs a decisive, inclusive and vision-oriented leadership by developed, resource rich countries and strong commitment by developing countries. The leadership by developed world at global level will determine the fate. If developed countries wants to lead, they can start by adopting the model of environment and climate compatible development. The model which steer the process of economic growth without compromising on the environment and climate needs. Second, the model should also ensure job creation, as jobs have been severely impacted by COVID-19, as it has been highlighted by ILO. The job creation would be a tricky subject, especially in the presence of technology. Third, they must be generous in supporting developing and least developed countries. Fourth, assistance for poor countries should focus on achievable targets. It is understandable that it will be a gigantic task, but developed and rich countries can do it. They have financial resources and technology to do that. The only missing thing is willingness to do that. If they are successful to achieve this, then they can ask developing and least developed countries to work on environment and climate compatible development model. But they will also have to keep in mind the development status and needs of countries and be patient for results. For example, the industry or economic activities are primarily dominated by labor force in poor countries. It would be extremely difficult or even impossible for poor countries to shift to high tech industry or modern business or supply chains at once. They will need time to achieve the target.
However, developing and least developed countries should not use it as delaying tactic. They need to show commitment to the subject. They should start working to find ways for smooth implementation in a systematic and orderly manner. They should phase the implementation plan according to development status. For example, Pakistan, despite all its economic and other problems, is focusing on climate environment and climate friendly activities. It has been showing strong commitment by devising new policies and tools like electric Vehicle Policy etc. Even during the COVID-19 Pakistan introduced an innovative idea. It started to concentrate on tree plantation. It is not only helping to fight environmental problem but also it is creating jobs. It is good example to understand the importance of commitment.
This article was originally published at: https://dailytimes.com.pk/612536/the-interplay-of-environment-and-economy-in-post-covid-19-era/
The opinions expressed in this article are the author's own and do not necessarily reflect the viewpoint or stance of SDPI.