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Financial crisis: A blessing in disguise for the green economy?

by / 0 Comments / 10/10/2014

In 2009, the world underwent a major financial crash, causing a global economic crisis and significantly reducing states’ capacities to provide for their populations. Ranging from increased taxes to public spending cuts, states are attempting to save their resources and limit the impact of the crisis on national economies. Given the circumstances, it is only natural to assume that sustainable development has been delayed, if not paused. However, in a world where human activities have had a dramatic impact on the environment, what is the future of sustainable development?

The UN’s department of economic and social affairs noted: ‘The world is currently facing extremely difficult challenges to sustainable and environmental management.’ A study of the United Nations Global Compact shows that only 33 per cent of CEOs ‘report that business is making sufficient efforts to address global sustainability challenges.’

In the developing world, the impact of the economic crisis on sustainable development has been serious, in particular in Africa. The 2008 increase in food and oil prices caused a severe food crisis. The global recession of 2009 contributed to exacerbating this situation. In addition to increased unemployment and falling growth rates, the deepening hunger has lead to an exacerbation of gender malnutrition with women eating last and less. The increased deforestation and desertification in Africa has led to serious water supply problems and political instability.

However, all is not lost. States have introduced a series of sustainable policies such as Germany’s ecological tax reform, the ‘Ecotax’ in France and UK’s Green Deal, all of which aim to promote a more sustainable way of life and reduce the greenhouse effect. Also, using European and international funds, South Pacific islands have introduced sustainable equipment such as composting toilets to reduce their impact on the ocean and the soil, which has contributed to a significant decrease of waterborne diseases and water crisis in times of severe droughts.

Ironically, it would appear that the depletion of economic activity caused by the crisis has contributed to reducing carbon emissions. For example, the USA has decreased its emission by 17 per cent since 2005. The crisis has also pushed states to use more cost-saving ‘green’ energies such as China’s investment in sustainable industries. Indeed, economists such as Michael Levi and Daniel Ahn have shown that investing in green energies is less costly both economically and politically for states than introducing painful and unpopular austerity measures.

Therefore, even though climate change appears to be a faraway priority for many national governments, it would seem that the global economic crisis has pushed states to take actions towards sustainable development.

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