crest-1.JPG
Search
  • Crest Economics

COVID-19 and the Environment- May 2020

Attention has in recent weeks been paid to the startling declines recorded in air pollution across the world as lockdowns have rolled out. Satellite data from Italy reveal a marked decline in nitrogen-dioxide concentrations, particularly in the Po valley, the original focus of the country’s epidemic, and where Italy’s shelter-at-home rules were first imposed. South Korea also saw a drop, starting in mid-February. And in New York City, data collected by TomTom, a GPS-navigation firm, show peak-hour traffic down between 13.5% and 26%. (https://www.economist.com/science-and-technology/2020/03/26/the-epidemic-provides-a-chance-to-do-good-by-the-climate). This has prompted suggestions that, having experienced clean air and water, voters around the world will prioritise environmental concerns in future.


However, most governments have instead argued that deregulation - particularly of environmental exploitation - is instead a desirable path to improve GDP growth prospects. This is the case both in the US (https://www.nytimes.com/2020/03/26/climate/epa-coronavirus-pollution-rules.html) and Australia (https://www.smh.com.au/politics/federal/scott-morrison-flags-company-tax-cuts-ir-reform-as-key-to-covid-19-economic-recovery-20200417-p54kvq.html). Accordingly, speculation that government and social perspectives regarding the value of regulatory and market protection of environmental resources - leading to a lasting improvement in environmental sustainability - seems to be unfounded.


The decrease in emissions may also be illusory. As Glen Peters, Research Director for the Centre for International Climate and Environment Research reports, the GFC caused a slowdown in carbon efficiency improvements, leading to a long-term deterioration of climate outcomes. Moreover, says Peters:


"The GFC prompted big, swift stimulus packages from governments around the world, leading to a 5.1% rebound in global emissions in 2010, well above the long-term average.


Previous financial shocks, such as the collapse of the former Soviet Union or the 1970s and 1980s oil crises, also had periods with lower or negative growth, but growth soon returned. At best, a financial crisis delays emissions growth a few years. Structural changes may happen, such as the shift to nuclear energy after the oil crises, but evidence suggests emissions continue to grow." (https://theconversation.com/how-changes-brought-on-by-coronavirus-could-help-tackle-climate-change-133509).


Thus, while emissions have fallen in recent months due to COVID-19, a more complex picture is suggested by the data. Governments have responded to the crisis with deregulatory programmes, which will likely worsen environmental outcomes. Moreover, the crisis may weaken investment in energy efficiency and lead to a rebound in emissions as the world economy gets back on its feet.



3 views

(+61) 451 038 644

(+61) 452 426 388

Copyright © 2020 all rights reserved CREST

Subscribe for Free Economic Updates and HSC exam tips

EMD Logo White.png