Luis Alberto Moreno and Henry M. Paulson
WASHINGTON, DC – While lockdowns have slowed the spread of the coronavirus in many countries, their economic impact has been devastating. At the same time, with fewer commuters, factories at a standstill, and limited construction, the havoc that humans wreak on the environment has become apparent.
Around the world, people are experiencing a revitalization of their natural surroundings, even as they deal with the tragic human toll of the COVID-19 pandemic. Many city dwellers are seeing blue skies, hearing birdsong, and breathing clean air for the first time in years.
This “return of nature” proves that even in lower-income countries, decisive policies and collective action can transform lives in a matter of weeks. Governments should take note of this as they craft policies for a post-pandemic recovery. Near-term measures will understandably be aimed at alleviating the immediate economic pain. But long-term success requires addressing the structural problems that fueled public frustration long before the pandemic.
Six months ago, major cities in Latin America and the Caribbean were in turmoil. Many factors triggered the mass protests that engulfed the region, but recurring themes were rage over limited job opportunities, poor public services and infrastructure, and environmental degradation. People were tired of long commutes on overcrowded buses in smog-choked cities. They were fed up with unsafe tap water and unreliable electricity supplies. And they were anxious about their prospects in economies buffeted by natural disasters and weak leadership.
The devastation of the pandemic has temporarily eclipsed such concerns. But, a year from now, if their lives feel like a replay of 2019, people in these countries will be justified in asking why policymakers have not met their demands with concerted action.
Similarly, the threat from climate change has not diminished. If unaddressed, future devastation is inevitable, threatening the economic security, political stability, and the health of our planet and its citizens. That is why the policy choices made in the pandemic’s aftermath will be more critical than the virus itself in determining our future.
Developing countries have a historic opportunity to adapt their economic model in preparation for these challenges. They should start by embracing a “green recovery” based on sustainable infrastructure in transportation, energy, sanitation, logistics, and communications.
For example, as a result of COVID-19, governments everywhere are rethinking transportation systems to accommodate social distancing. In Europe, some cities are creating large “car-free” zones to facilitate walking and cycling. Emerging economies should seize this moment to build next-generation public transport systems, such as electric buses, trains, or subways that reduce emissions while enabling large numbers of people to get to school or work safely.
Similar choices can be made with energy. Instead of extending their reliance on fossil fuels to generate electricity (which is especially tempting now, given the current plunge in petroleum prices), governments should take advantage of recent breakthroughs that have made renewable energy much less expensive.
Countries in or near the tropics are also disproportionately affected by the floods, droughts, and hurricanes associated with climate change, and by the warming temperatures expected to encourage more pandemics in the future. Now is the time to protect and restore wetlands and rebuild coastal infrastructure, and to invest in low-cost housing and water systems that can withstand weather-related shocks.
Investments to protect and restore the rich biodiversity of fragile ecosystems primarily located in the tropics would also yield high returns. In addition to the critical role they play in storing carbon, tropical forests are vitally important to the indigenous people who inhabit them, as well as for eco-tourism, implying that the restoration of natural habitats could create many jobs.
We can pay for these efforts through a combination of smarter public spending and aggressive incentives for private investment. A large proportion of the huge sums allocated for fiscal stimulus should be channeled toward sustainable infrastructure and related initiatives. The tens of billions of dollars that were previously spent on fuel subsidies could now help to fund clean transportation. According to a recent University of Oxford study, “green recovery” projects deliver more jobs and higher returns on government spending compared to traditional fiscal stimulus measures.
Emerging economies can also draw on external sources of income to fund such initiatives. Investors are currently seeking opportunities to invest in green bonds, which attracted $255 billion in private capital last year. Moreover, billions of dollars are potentially available from global NGOs and foreign governments to protect and restore natural habitats, and holders of fiscally constrained countries’ debt may be willing to forgive part of it to protect tropical biodiversity.
The pandemic has forced us to stop and think about our impact on the planet, and to imagine the kind of world we want. There is still time. By planning for a green recovery, governments can help ensure that the coronavirus leaves a positive legacy for future generations.
Luis Alberto Moreno is President of the Inter-American Development Bank and a member of the World Economic Forum’s Foundation Board. Henry M. Paulson, Jr., a former US Secretary of the Treasury, is Founder and Chair of the Paulson Institute.
Copyright: Project Syndicate, 2020.