Going green after COVID-19 will help MENA economies recover better

The coronavirus crisis is a window of opportunity to transform the economy and especially, to make it "green." Previous economic crises such as the financial crisis in 2008/09 and the oil crises of the 1970s have triggered significant reductions in emissions in their immediate aftermath. But unfortunately, these lower emission levels did not last. In the ensuing recovery phase, emissions accelerated and outweighed earlier emissions reductions.

Not maintaining emissions at permanently lower levels was a missed opportunity from those crises. But this time around with COVID-19, global emissions have been reduced by about 17% (compared with last year’s Spring months). For countries not to miss the opportunity to keep emissions levels down for the future, it is critical to make their economic recovery green and use the momentum to get to a zero-carbon future.

Government fiscal incentive programs all over the world will influence the global emission paths for decades to come. So in this way, the response to the current pandemic will at the same time also be the response to the climate crisis. 

Emissions reduction isn’t just important for the global climate but also for improving air quality. A green growth path out of the crisis is especially important for MENA, as it will be the region hardest hit by extremely hot temperatures, which will push the limits of human adaptability. Moreover, MENA is home to several of the most air-polluted cities in world, and more than 100,000 lives are estimated to be lost prematurely every year due to ambient air pollution levels, according to a World Bank study.

Human suffering caused by high air pollution also causes significant economic consequences — annual labor income losses in the MENA region due to air pollution are estimated at over US$9 billion per year. In addition, COVID-19 has been strongly correlated with air pollution (as shown by studies looking at the US and European cases). A similar correlation with air pollution was found with the previous coronavirus pandemic of SARS, with a study looking at data from China (we do want to point out at this stage however, that much more research is needed for more clarity of the causal relationships and effect sizes between COVID-19 and air pollution).

We can prevent the next climate crisis with our response to this current crisis. One crucial lesson we should learn from the COVID-19 crisis is that prevention is by far superior than any cure can ever be. Therefore, if the response to the current crisis could at the same time be the prevention of the next crisis, this would clearly be the best course of action. The cost of inaction to a warming climate looms large and outweighs the costs of action, just merely by looking at climate change alone. If one factors in the health and economic costs of air pollution on top of it, the case for action becomes even more compelling.

A green recovery will bring jobs and growth.  Making the recovery from the COVID-19 crisis the solution to the climate crisis is key, and as more than 200 surveyed economists in central banks, finance ministries and academia, from all corners of the world, tell us: It's actually the smarter move — not only from an environmental perspective, but also from an economic perspective (see Hepburn et al, 2020). A green recovery strategy actually has higher economic multipliers than the alternative business-as-usual model of 'brown' growth. Policies highlighted by the experts surveyed include investing in natural capital for terrestrial, marine, and coastal ecosystem resilience; restoration of carbon-rich habitats; resource efficiency; integrated land management systems; sustainable agriculture; and clean energy production are the prime policies for green growth.

These policies have the potential to create more net jobs in the short-term and sustainable growth in the long-term. The New Climate Economy report estimates that if we were to embark on a global green growth pathway, the amount of new green jobs will by far offset old brown jobs that will be shed — a gain of 65 million additional jobs for low-carbon activities by 2030, versus losses of 28 million jobs in high-carbon activities such as coal, manufacturing of fuels, and the supply of electricity and gas. In turn, fiscal stimulus plans that do not take into consideration green opportunities would be colossal missed opportunities, as the window of opportunity closes, due to the shrinking fiscal space and increasing debt that countries will face owing to their fiscal interventionism.

In a nutshell, growing-back greener and more resilient is the key to getting countries out of recessions and preparing them for the new-normal, as opposed to the world from yesterday which locked them into their traditional growth paths. The COVID-19 pandemic, despite all of its adversity, offers us a window of opportunity for building back a better economy, an economy of the future, as opposed to building back an economy of the past. A green fiscal stimulus would provide an effective boost to the economy by increasing labor demand in a timely fashion and building the foundations for a sustainable strong growth performance in the future for MENA countries.

Stay tuned for next week’s follow-up blog which will detail a blueprint for green recovery in MENA.