By Akanksha Khatri, Jeremy Oppenheim
Around the world, governments are starting to roll out COVID-19 stimulus packages – and the scale of investment is stunning. $11.8 trillion has already been earmarked, and trillions more will have to be spent over the course of a long recovery.
Many have noted that this once-in-a-generation spending spree is a unique opportunity to bring about lasting positive change. In fact, it offers the chance to launch a “great reset” that can integrate nature into our economies, deliver good jobs, create new sources of economic value, and protect the natural capital needed for public health and social resilience.
While a handful of countries have put forward stimulus packages that take environmental objectives into account, evidence from around the world shows that countries have not captured this opportunity. Many countries have announced measures that will have negative environmental impacts, favouring bailouts with no green strings attached, and sometimes even pulling back on environmental regulation. In the US alone, $58 billion of stimulus spending is going to the fossil fuel industry, more than twice the amount for clean energy.
A self-defeating stimulus?
Putting the fight for climate change and biodiversity loss on the backburner does not make sense. First, we are fast approaching the cusp of irreversible tipping points with far-reaching effects that are likely to be more devastating for our economies than the current impact of the pandemic.
Second, research from Oxford suggests that green recovery packages deliver greater economic benefit than business as usual alternatives – and that complimentary investments in research, innovation, infrastructure, skills training and institution building will help create a fairer, more resilient, and more sustainable world.
Finally, the benefits of a nature-positive economy could be huge. The Future of Nature and Business report finds that if countries and business prioritize nature they could generate $10.1 trillion in annual business value and create 395 million much needed jobs by the end of 2030.
“We are at a critical juncture for the future of humanity. We are confronting an unprecedented global humanitarian and economic crisis, and the time is now to stave off the worst of the climate and nature crisis.”
To build this better future, a green recovery is only the first step in making sure that our economies are geared to protect and restore nature. Stimulus packages need to be carefully combined with other long-term policy interventions so as to drive a permanent change in our economic pathways, ensuring equity of access and outcomes among people. The Policy Companion report highlights how policy-makers must show political courage to overcome policy distortions and institutional weakness, and rise above the short-term calculus of growth at all costs.
The win-win of nature-positive economic policies
How then can governments create economies that protect and restore nature? This starts with measuring the right things. Over half of the world’s GDP is potentially at risk from nature loss and our existing stocks of natural capital have declined by nearly 40% in the past 20 years. But governments and businesses remain largely blind to these risks, because they are still failing to measure, record or account for natural capital in their budgets or balance sheets. Bhutan and New Zealand have already taken a decisive move towards complementing the single perspective offered by GDP with a multi-indicator understanding of economic performance, human wellbeing and natural resilience. This ensures decision-making goes beyond exclusively maximising for economic growth.
But managing the health of natural assets will only be possible if we can map where natural capital is and how it is used. China is demonstrating how spatial planning allows governments to effectively manage marine and terrestrial assets, and allocate them to their best economic, social and ecological use, while protecting significant ecosystems. Spatial planning will also be needed to allow countries to translate the political ambition of the Paris Agreement and the UN Convention of Biological Diversity’s targets into concrete policy objectives that can be pursued and monitored.
These first two steps will make fixing the structure of public incentives to repurpose and reinvest them in socially and environmentally desirable outcomes easier. Too much public support is today wasted in harmful and destructive practices that do not advance sustainable development goals. The example of how the European Union Common Agricultural Policy reforms successfully reduced nitrogen oxide emissions from fertilizer use by 17%, while at the same time yields increased by 28%, shows that fixing incentive systems can have multiple benefits.
Governments also have a vital role to play in designing “innovation ecosystems”, which encourage innovation to flow towards major societal challenges, through regulation, standards and investments. For example, Japan’s Top Runner programme has allowed the country to achieve the world’s most advanced rates of energy efficiency by setting dynamic performance targets for 23 product groups, creating healthy competition among manufacturers and a culture of R&D.
Along with boosting innovation, governments should invest in human capital across industries, to develop the skills and entrepreneurial mindset that people need to seize nature-positive opportunities. From engineers and urban planners who understand how to design green infrastructure, to farmers that can use geospatial data and bio-based inputs, new skills will be required in every sector.
Finally, policy makers should use a range of instruments to unlock private capital markets. Many nature-positive models suffer from market failures, early-stage funding gaps and longer pay-off periods. However, governments can unlock the powerful role of capital markets in connecting investors to projects that support better stewardship of the planet. Solutions range from innovative instruments such as Seychelles’ blue bonds, and market mechanisms such as Colombia’s carbon tax, to refinancing events like France’s conditional airline bailout.
A fork in the road
We are at a critical juncture for the future of humanity. We are confronting an unprecedented global humanitarian and economic crisis, and the time is now to stave off the worst of the climate and nature crisis. A clear commitment to building back better in the long term is needed from business, government and individuals, or whatever pandemic recovery we achieve will lack resilience and be short-lived.
We have the insights, data, tools and knowledge to make this ambitious and needed transformation. Now is the time to treat the ecological emergency as just that – and mobilize the political courage to enact change.
– Akanksha Khatri, Head of Nature Action Agenda, World Economic Forum, and Jeremy Oppenheim, Founder and Senior Partner, SYSTEMIQ
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