Following the spring meetings of the International Monetary Fund and World Bank and the recent gathering of G7 finance ministers, the world got a taste of what the future may look like as countries struggle to recover from COVID-19 and the collateral impacts of the Great Lockdown.
First, a warning from United Nations Secretary-General Antonio Guterres that many countries are facing looming debt vulnerabilities, and that far from having the resources to invest in greener recoveries, they are instead struggling to make ends meet and keep up a positive current account.
Second, we may be witnessing a “K-shaped” recovery, where advanced and emerging and lower-income economies are following different paths. Data from the Global Recovery Observatory launched by the University of Oxford and the United Nations Environment Programme (UNEP) confirms this concern. Advanced economies have been outspending emerging and low-income economies by a factor of 17 – and this was before the $1.9 trillion Biden administration rescue package was approved.
Third, and perhaps most importantly, even where countries have the monetary and fiscal wherewithal to fund greener recovery efforts, little is being done. Most, if not all, of the funding is still geared towards rescue – keeping families and firms and consumer demand afloat. Of the $16 trillion in announced spending by the top 50 economies, less than 3% is geared towards greener recoveries.
Of course, the recovery is far from over and even with the return to growth projected by the IMF and Organisation for Economic Co-operation and Development (OECD), structural imbalances and fragilities will persist. The most glaring among them are the growing inequalities already made worse by lockdowns and other disruptions to supply chains.
To take one example, the digital divide clearly separated those on front-line service industries with little protection from the pandemic or the lockdown. Even in the US, only a minority of workers could afford to work remotely. Think of tourism or the hospitality industry, which have suffered job losses in the hundreds of millions, or essential service industries – such as nurses, police officers, firefighters and municipal waste management workers – that continue, but with low wages.
With over 114 million jobs lost and global labour incomes falling by $3.7 trillion, or 4.4% of global GDP in 2020, the disruption to labour markets far overshadows the impact of the 2008 financial crisis. The pandemic has also created the worst education crisis in a century, including 11 million girls who might not go back to school, to millions of graduates who cannot find a place in the job market. Contrast this with the surge in incomes and wealth of the leading financial and digital service billionaires, who experienced double-digit growth and a net gain of over $5 trillion – almost commensurate with the hole created by the economic contraction of the global economy last year.
All this leads to an inescapable conclusion: unless structural issues are addressed, this recovery will leave us with a world vastly more unequal and unfair than before COVID-19.
And there are strong reasons to believe that if it isn’t fair, it won’t be green. Much of the three environmental crises we are facing – climate, nature, pollution – are a tragedy of the commons, driven by shortsightedness.
Adopting new sustainable models and parting with harmful ones is a challenge for governments, corporations and consumers everywhere. For those facing growing inequalities, acute shortages and poverty, it is easy to put the environment into the backseat. But simply restarting the economic engines – in a world where the digital divide has turned into a gulf, where concentrations of wealth and opportunity are more exclusive than ever – will not address the triple planetary crisis the world is facing.
The volume of liabilities and risks that our economies are producing are legion and they fall heaviest on the poor and most vulnerable: those who cannot avoid contaminated air that clogs over 90% of our cities; those who are uprooted by extreme weather events that have displaced around 25 million people in 2019 alone; those whose only source of water may be contaminated with human and toxic waste; and the marginalized communities disproportionately affected by plastic pollution.
We have a narrow window to pivot away from the legacy of a linear, polluting, brown economy towards a future that is greener, more equitable and more circular. But it will take a concentrated effort, one that requires countries to step up their efforts to make recoveries both fairer and greener.
What is required is a combination of wide deployment of clean, resource efficient technologies, circular services and products, redirected investment, policy reform and responsible consumer choice to drive this transformation to the scale and at the speed required by the 2030 Agenda for Sustainable Development.
COVID-19 recovery packages offer a unique opportunity to shift our economies towards more sustainable consumption and production.
But if it isn’t both fair and green, it won’t be sustainable – we will simply be heading for another, larger existential crisis that will be of our own making.
