Planning for the economic recovery from COVID-19: A sustainability checklist for policymakers

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Children riding bikes and chasing paper airplanes and kites at sunset
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This blog is part of a series looking at COVID-19 (Coronavirus) and pathways to a sustainable, low-carbon and resilient recovery.

 

As the coronavirus (COVID-19) pandemic continues, governments and emergency services are focusing on immediate needs: boosting capacity in hospitals, addressing hunger, and protecting firms and families from eviction and bankruptcy. The majority of the funds flowing so far from the World Bank, the IMF, other regional development banks, or central banks seek to provide funds for protective gear at hospitals, stabilize financial institutions, pay companies to provide goods and services to essential workers, or provide direct cash support to households.

In parallel, preliminary work has started in some countries on what the next phase of recovery will look like and the role of strong public action in boosting demand, providing replacement income, and facilitating new investments. In a previous post, we made the point that the recovery phase can help build prosperity and resilience, by contributing to the long-term potential and sustainability of a country’s development pathway. There are encouraging signs from some countries – including China, Germany, and South Korea – that are looking at green elements as part of their recovery.

The choices that governments make to restart their economic engine, including the long-term social, economic, and environmental co-benefits they seek to achieve through their stimulus investments, will be extraordinarily consequential in ensuring that they can build back stronger and better. 

 

A Sustainability Checklist
There are many factors that governments must weigh in putting together their stimulus package: immediate needs, local institutional capacity, market conditions, borrowing headroom, and the legacy of past infrastructure investment decisions. Other criteria to assess for stimulus interventions or investments include their potential for job creation, the lead time involved in breaking ground on the project, whether government funds might help mobilize private finance to further support a project, and the impact on the country’s long-term carbon trajectory. 

Factoring in sustainability in the broadest sense means also including longer-term criteria: decarbonization, long-lasting resilience and adaptive capacity, the impact on physical, natural and human capital, among others.  To provide this more granular guidance for policymakers, we have developed a draft of a sustainability checklist (to be refined in the coming months) that government ministries can use to assess or rank stimulus proposals. 

The checklist essentially raises questions that governments should consider to assess projects and zero in on the most promising.  Many governments already have sophisticated decision protocols in place, so this should be seen as complementary guidance, part of our contribution to the ongoing discussions on sustainable recovery pathways. 

This checklist draws heavily on analyses of the 2008 economic crisis and, in particular, considers whether complementary policy or institutional changes are required to ensure that projects are shovel-ready. One of the key lessons of the 2008-09 programs was how failure to enact basic market reforms or supportive policies places many green projects at a disadvantage to incumbent technologies or did not have the momentum to disrupt long-standing development approaches.

This checklist can be applied to any list of projects or policies, from cash transfers to direct investments in new infrastructure, that are proposed as part of a stimulus package.  It can be applied to existing project lists – for instance from national development plans, transport or water master plans, or Nationally Determined Contributions under the Paris Agreement – or to new proposals created specifically for the post-COVID stimulus.  It covers two timescales: short-term needs to deliver as many jobs, income, and economic demand as quickly as possible, and the longer-term need to deliver sustainable growth and prosperity.

Over the short term, there are three main considerations:  

  • Job creation, looking at the number of jobs created per dollar invested, but also the types of jobs created and who benefits from them, and the match between the skills needed and those  available in the local workforce.
  • Boost to economic activity, focusing on the economic multiplier each intervention can deliver, the ability of a project to directly replace missing demand, and its impact on import levels or the national trade balance.
  • Timeliness and risk, assessing whether the project generates stimulus and employment benefits over the very short term and whether they are durable even in the face of possible re-imposition of local quarantine measures.

Over the longer term, a project must also support countries on three different dimensions: 

  • Long-term growth potential, looking at its impact on human, natural, and physical capital. For instance, some projects do better at improving human capital, by building the future skills and health of the population, especially if air and water pollution can be reduced, or access to improved drinking water is improved. Others may promote the use of more efficient technologies, provide important public goods like modern energy or sanitation, or address market failures, such as distortive subsidies that are obstacles to long-term growth.
  • Resilience to future shocks, with interventions to build capacity for societies and economies to cope with and recover from external shocks, like COVID-19 today, but also other forms of natural disasters and future climate change impacts. 
  • Decarbonization and sustainable growth trajectory, with actions to support and disseminate green technologies, like grid investments that facilitate the use of renewable energy and electric vehicles, or low-tech options like afforestation and landscape and watershed restoration and management. It will be particularly important to ensure that investments from stimulus packages do not impose large stranded asset costs on the economy in coming decades, for instance because they bet on declining technologies or place projects in high-risk flood zones.  

 

Guiding Policymakers for the Recovery
Governments seeking to apply this framework may wish to use it in two phases. 

First, it can be used as a quick cut, “yes-no-maybe” assessment identifying the “worst offenders.” The goal is to ensure that governments don’t invest in projects that are attractive for their stimulus characteristics but detrimental over the long term.

In a second phase, the proposed indicators can help decision makers prioritize among any remaining projects, identifying “best in class” projects that deliver multiple benefits to society. 

Policymakers have a lot on their plate right now, and economic recovery plans cannot move faster than efforts addressing the current health crisis. But as governments shift their focus to recovery, the choices that countries make will define what tomorrow looks like and whether we are better able to manage future global crises. This checklist will hopefully make these decisions a bit easier.
 

Download the Sustainability Checklist for Assessing Economic Recovery Interventions.

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Coronavirus sustainability checklist

Join the Conversation

Evans
April 20, 2020

Insightful.

Emily Hamilton
April 20, 2020

This is a really useful guide for thinking about sustainability holistically. Thank you. Can't help but think that natural capital and decarbonisation should have been out first? Or were you saving the most important lens to consider to until last?

Mattia Rogers
May 11, 2020

I Agree

Sandra Sabrowsky
April 20, 2020

Highly interested to be part of the conversation free of charge!

Harrison Simumba
April 20, 2020

During pandemic
Africa will be the most hit and the economical recovery really may not be now.
Africa will need economical help

Angelita Fasnacht
April 20, 2020

Pls keep sending information. Happy to discuss

Thayyil Sethumadhavan
April 20, 2020

I find that the Check List is comprehensive and may help in the long term; but as of now, the following issues are more important or relevant, especially from the point of emerging economies:

1.Impact on Employment.

Does the intervention help to revive or restore the jobs lost during the Lock Down? If so, how many or to what extent ?

2. Impact on Economic Activity.

i) Does the intervention help to increase the domestic production of goods and services?
ii) Does the intervention help to restore the supply chain in the short term to meet the surge in demand likely to occur after the Lock Down is lifted?
iii) Does it result in putting money in the hands of the poor and unemployed consumers to augment demand to the pre-corona virus regime?
iv) Does the intervention help the local manufacturing and service industry to resume operations ( lost during the Corona Crisis) by providing regulatory and monetary support ?

Ram
May 11, 2020

In Urban Local bodies jurisdiction there r large no of venders who have become jobless now similarly financed smaller projects upto 200 thousand Currency are in red we can think of sudpendion of debt over this period snd lowering theintrrest rate in long run

Andrew DeWit
April 20, 2020

Good arguments. Japan is already emphasizing holistic, decarbonizing resilience in its fiscal stimulus (starting from last December, in response to climate and seismic disasters). Japan also emphasizes securing critical raw materials, a logistical matter that the "green new deal" advocates need to examine more carefully: http://www.unece.org/info/media/presscurrent-press-h/sustainable-energy…

Sujata Subudhhi Sahoo
May 04, 2020

Potential economic measures is the most essential thing to addresss now

Yuuri Daiku
May 11, 2020

I commend the World Bank for developing and offering this checklist. What I find missing, however, is a definition of "growth".
Sadly, as long as in discourse and practice "growth" means "growth in production and consumption", our recovery efforts are doomed to fail, since such a notion is disconnected from the laws of nature that we understand in terms of the hard sciences (physics, chemistry, biology). In other words, "sustainable ecomonic growth" in a material sense is an oxymoron, and our belief in it being possible is a false belief.
Unless and until we unambiguously and exclusively define "growth" in terms of qualityy, there can be no real, sustained, recovery. And that definition needs to be applied retroactively, as well, meaning that we (humans) have to acknowledge that we have made a fundamental mistake, and that we need to actively counteract the many problems that we are facing now, such as global warming, rapid species depletion, the accumulation of persistent chemcials and toxic waste (including nuclear waste, deliberately obsoleted consumer electronic devices, and plastics) in the biosphere, or the factory farming related increase in viruses that have crossed species boundaries and bacteria that have developped resistance to antibiotics.
In this context we will need to make political decisions that are compatible with nature, that is decisions toward increasing natural, economic, and social diversity. In practice this means that we develop national and regional self-sufficiency, move aweay from using or exporting non-renewable resources, sustantially reduce the material goods trade, and drastically reduce and slow down the movement of humans and animals across bioregions. On the other hand, there is not need to curtail the development of means and and procedures that allow for a waste-free movement of information and ideas - on the contrary: information and ideas re necessary for, and contribute to, diversity and resilience.
All in all a tall order... but I am fairly optimistic that we (humans) will "get it" after the NEXT pandemic.

Janice Cox
December 14, 2020

Excellent comment Yuuri Daiku!
The pursuit of endless economic growth has fuelled unsustainable consumption and production. There needs to be a new development paradigm which prioritises the wellbeing of people, animals and nature. And realisation that real development is qualitative, as opposed to quantitative.

Ludovic Subran
April 21, 2020

Congrats to authors for their two consecutive insightful blogs on policy guidance for a sustainable recovery. Happy to discuss a missing building block which is the financial sector’s job in this?

heloisa schneider
May 04, 2020

thanks! just in time!

marcelo Furtado
May 11, 2020

The social and economic consequences of this pandemic will be devastating. This explains the enormous volume of resources announced by several countries to face and recover from this battle. The G20 recently declared it would inject USD 5 trillion into the global economy . How can we guarantee that this money will be used to serve the most impacted and vulnerable? How to take advantage of this opportunity to innovate and foster a new economy? One that more focused on people and the planet?
In addition to the G20 commitment, each country is designing their own strategies to recover its economy and ensure the inclusion of the poorest, who will be the most impacted. However, we know that these investments will follow the status quo in the old economy. The same that generated poor health care, strong inequality, deforestation, dependence on fossil fuels, among others.
At this moment, with serenity and responsibility, we must adapt, review strategies and innovate concepts. In times of social distancing, as an act of solidarity, there is an obvious need for leadership, common sense, vision and empathy.

Badri P Bastakoti
May 11, 2020

Good tool, but still so many crucial things are missing which are important to be considered.

Joaquim Leite
May 11, 2020

Very interesting and objective contribution to the stimulus/sustainability discussion. Thanks!

Dr Feroz Iqbal Faruque
May 11, 2020

Good initiative, love to join

Aime Tsinda
June 15, 2020

Is it possible to prepare a brief on this forum as well?

BONNEY DERRICK ATO
July 28, 2020

What would recommend the Government of an African country to do as a stimulus package for rural industries in the wake of global pandemic of covid-19?

Janice Cox
December 14, 2020

A good start, but some vital aspects missing. Most important to build in prevention of future pandemics. “Just transition” to healthy and sustainable food systems. One Health-One Welfare. Also moving away from anything causing biodiversity loss and pollution, as well as climate change.

Nhlanhla Mpondi
January 25, 2021

I am currently doing PhD in Commerce and Leadership