Although the COVID-19 pandemic and climate change represent different types of crises, they are both considered to be exogenous shocks that alter a system as a whole. The economic effect of climate change, as well as that of COVID-19, needs to be addressed with strong actions, not incremental changes. We could translate the effects of the pandemic into climate change. Although the exposure and vulnerability of this outbreak are undeniable, there are several lessons we can learn and turn to our benefit as a society. It is worth exploring the similarities and differences between climate change and COVID-19 to fully understand the implications, whether positive or negative, of both of them and how to respond in a practical and decisive manner, taking into account the lessons learned from this pandemic, to mitigate climate change.
In addition to its socio-economic impacts, the current pandemic and climate change are characterized by physical shocks. These physical shocks can only be dealt with by addressing the physical causes that triggered them. This pandemic is a clear example of what a future climate crisis would be like in terms of multiple exogenous and global variables, which are out of control and have ripple effects.
But what do these two crises have in common? According to a report by McKinsey (2020), both climate change and COVID-19 represent a systematic threat with effects felt across all industries, markets, and countries due to current connectivity. They are also non-linear, which means that their economic effects are disproportionate and catastrophic. Third, both climate change and the current pandemic act as risk multipliers that worsen vulnerabilities and failures in economic and health systems. Lastly, both types of crises are "regressive" in that they mainly affect the most vulnerable communities. Another major issue is that they also reflect collectivity. The fact that individuals seek to contribute to the greater good at a global scale is an extremely valuable asset that must be treasured.
On the other hand, the main differences lie in its momentum. That is, while the pandemic requires immediate and direct action for human survival, climate change is gradual and, most importantly, incremental. Its effects can be random, but with severe consequences in the extent of its impact, which can trick us into assuming that there is no correlation or relevance because of the distance between these events over time.
Given these differences, we can also identify the contribution of climate change in the spread of pandemics. A good example can be appreciated in the rising temperatures, which according to the World Health Organization (2020), can create suitable environments for the incubation of certain infections and the disappearance of animal habitats, which increases the risk of exchange of pathogens between species and towards humans. Air pollution is another element of climatic risk, as it has a greater effect on respiratory diseases. According to the WHO, it is estimated that polluted air kills approximately 7 million people worldwide, mainly by increasing the mortality in diseases. The answer to this is to be prepared.
According to the “Financial Preparedness for Pandemics” report issued in 2019 by the World Bank and the WHO, zoonotic diseases (transferable diseases between animals and humans) that evolved into pandemics amounted to a cost of 6.7 billion dollars between 1997 and 2009. Today, Covid-19's global costs are estimated at $4 trillion - and counting - that's more than 5% of the cost of the global economy. This report teaches a valuable lesson: every dollar invested in preparation would eventually translate into sparing two dollars. Had that money been invested in proper preparation, human losses might have been avoided and the economic effects might not have been as severe. This is one of the most important lessons we must take away from the other persisting crisis: climate change.
On the other hand, emergency shutdowns of factories and industrial activities in countries such as China and India, as part of the extreme measures to combat the pandemic, temporarily reduced air pollution which allowed for the skies of the most populated cities to clear, something that had not happened for a long time. This shut-down resulted in satisfactory air quality index levels of about 80% in most cities around the world (Air Quality Index Org). However, once the pandemic is over, economic activation is likely to ignore or loosen emission standards in order to encourage consumption again. This closure is resulting in enormous human and economic costs. The key is to find out exactly how to promote economic and environmental sustainability.
The goal of this information is to reflect on the issues that can accelerate climate change effects as a result of the current crisis. According to McKinsey (2020), adjustments in work schemes such as the use of video-conferences and digital communications could still be carried out in the long term, which would reduce the demand for transportation and emissions.
For instance, each market could assess risks by witnessing the physical and systemic disruptions. Moreover, the low-interest rates that will be introduced to activate the economy could accelerate the development of sustainable and resilient infrastructure. Finally, the appreciation of scientific advice could increase when addressing systemic issues such as climate change.
These days, governments are aware that they must play a more active role in ensuring economic and social resilience. Surely climate measures could be a solution to accelerate recovery in the long term, particularly to build a presence in the environmental sector, for example, by taking an active role in the transition of the energy sector to a low carbon economy. In September 2019, the World Bank published a study outlining that investing 1.8 trillion dollars in environmental measures would yield more than $7.1 trillion in economic benefits within a decade.
However, the low prices of hydrocarbons could increase their use and delay the energy transition. In addition, the priorities of governments and people could change in terms of incorporating environmental measures, giving preference to economic recovery. This could affect environmental regulations and policies in the long term, depending on the impact of the crisis in each country. The clean energy sectors are beginning to show areas of opportunity when it comes to financing these types of projects. COVID-19 is taking its toll by reducing cash flow conditions to an extreme, which in turn has increased the flight of capital to projects that represent less risk.
However, EU countries are calling for a green way out of the current economic crisis arguing that investments in sustainable mobility, renewable energy, and energy efficiency can revive the economy by providing jobs. Yet again, in Latin America, there is no strong proclamation on this issue. The common ground is the competitive advantage of these countries in providing cheap labor and lax environmental protections that lead to investment and employment.
We must curb climate change by taking into account the lessons we have learned from this pandemic, but what can the government do? First, take advantage of the current situation to promote and encourage business opportunities in clean technologies to increase economic resilience, as well as seizing current global alignment to foster collaboration to solve “the environmental pandemic”. And finally, it can measure and evaluate the climate impacts on the local economy. Without adequate data collection and metrics, nothing can be controlled.
Following my initial phrase where I pointed out that although COVID-19 and climate change are different types of crises with colossal economic impacts, I believe that we have not yet grasped the following: the pandemic will be over in a few months, especially if a vaccine is developed and marketed. Climate change will wreak havoc in the coming decades, even if emissions are curbed. There is no technological cure to ease this consequence, but we can learn the lessons that this pandemic has taught us to raise awareness of the impact of a climate crisis that will be of great magnitude and duration.