How do we take on lessons from the threat today for the threat of tomorrow?
The world has experienced disasters and huge economic impact in the past – whether from hurricanes, floods, droughts, earthquakes, or the myriad different ways nature asserts itself. But it normally happens in one place or another. There has been no other known time in our living history when everyone in the world has experienced the same thing at the same time. While the World Wars may have come close, they still had the world divided. Unlike COVID-19.
And while of course each of us individually will experience the fall-out from this pandemic in different ways, it is undeniable that each of us will be touched by it in some form or the other at the same time.
So it isn’t a stretch here to draw parallels to the other global threat looming large upon us: climate change.
Like the coronavirus, climate change will affect everyone globally, albeit on a scale of decades and centuries rather than months and years. It too will not distinguish between caste, color, creed, religion, or national boundaries, and like the coronavirus, climate change will have its greatest impact on the poor and most vulnerable.
Everyone acknowledges that the priority at the moment must be to address the pandemic and its social and economic aftermath. However, without taking anything away from the urgency of acting that the pandemic imposes on us all, it behooves us to look closely at how the lessons and challenges of dealing with the COVID-19 crisis are relevant and useful for addressing the climate challenge.
For one thing, in the wake of this pandemic, there is bound to be this huge surge of global empathy that will be ripe to be harnessed for improving the conditions at the human-planetary boundary.
Let that not simply be left behind in marveling at anecdotes and pictures of wild goats wandering the deserted streets of a Welsh village or dolphins reappearing off Mumbai’s coast. Let’s remember that air pollution reversed itself in the world’s most polluted cities like Delhi – where the AQI has been in the recently unheard of double digits. And while the human and economic toll that has been extracted is not acceptable to achieve that, it is a demonstration of the fact that the earth will regenerate, and we can deploy technologies and economic incentives to achieve that in a more orderly transition.
The most important thing governments can do is to address the gaping shortcomings in the social safety nets. Whether this is to address the lack of sufficient health care in most parts of the world and the ability of people to afford it (for that matter, even have access to running water for the most basic rule in this pandemic of washing hands frequently) or the ability to provide for those who are suffering the most – the daily wage earners whether they be waiters in America or the construction labor in India.
The people of the world must remember this and demand of their governments that they make all this right. The bonus: a world much more economically and socially resilient and so much better equipped to deal with the impacts of climate change.
Considerations should also be integrated into the economic stimulus programs so that the macroeconomic impetus leads to building resilience against future systemic shocks to society and the financial markets. With oil prices at another historic low, governments should eliminate fossil fuel subsidies. The consumption subsidies themselves are worth $400 billion per year. Over ten years that is $4 trillion – or real money that can make a difference. Governments could issue bonds for that amount today – to be paid by savings from avoided fossil fuel subsidies that are instead earmarked in their budgets for repayment – and deploy the proceeds to build the woefully inadequate social safety nets and enhance social and economic resilience. And yes, it will enhance countries’ abilities to address impacts of climate change in the future.
And what of lessons for the semi-public and private sectors?
Development finance institutions, particularly the multilateral development banks, play a critical role in bridging public and private finance to maximize benefits to recipient countries. Many usually play a counter-cyclical role at times like this, that is interestingly different from the usual risk-averseness they exhibit. With outflows from emerging markets happening at the fastest pace ever and a potential debt crisis looming, development finance institutions need to ensure that their enhanced capital flows adhere to stated goals of supporting low-carbon development pathways and making these economies more resilient. Whether it is providing financing for sustainable infrastructure or funding domestic financial institutions to help integrate small and medium enterprises into more agile supply chains to minimize disruption. And this time perhaps the demonstrated ability of development finance institutions to take higher risk to achieve desireable outcomes will stick because climate change will certainly test us on this repeatedly.
And while many might see the private sector’s main role as a recipient of government stimulus, in fact business and finance have a role to play too. In particular, the financial sector must ensure that investment capital doesn’t flow into creating or sustaining assets that are likely to be stranded in the near-mid term. In addition to accelerating the shift to a low carbon, resilient economy already being supported by capital markets, asset owners and managers should ensure that investment flows into sectors that will create the most jobs today like in clean energy, construction, and transportation – all while making society more resilient to climate change.
Every one of these actions will help us recover from the current crisis we are in and prepare us for the next one. It will also garner the goodwill of the people of the world. We can all agree that they deserve it.
This blog originally appeared on Innovate4Climate.