Economic transition required in midst of global health crisis

July 31, 2020 | 14:00
Due to the ongoing pandemic and a virus that is likely to be associated with climate change and pressure on natural resources, the world economy is going through a period of uncertainty, leading to a blockade in most economic activities.
1502p11 economic transition required in midst of global health crisis
By Miguel Santos - CEO, Green and Circular Economy Investments

In the United States alone, the pandemic has already sent tens of millions of workers into unemployment, and in Europe there will be estimated losses of more than 7 per cent of GDP. The planet is going through a crisis across all continents without precedent, creating a global problem for the economy, forcing governments to redouble their efforts in budget management and with serious risks for the financial systems of each country on every continent. But as in previous crises, the world economy can recover and achieve post-crisis growth.

Analysing the problem from another perspective, this crisis has been very beneficial for the environment, verifying that the levels of pollution and the pressure on the planet are temporarily well below the levels prior to the crisis caused by the COVID-19 pandemic.

We can then say that the current economy model, the linear model, causes numerous problems to the environment and in turn to the economy. It is true that there is no solution for the pandemic in sight, and it is uncertain when everything returns to normal. Economic activities will be greatly set back, and in some areas even their reinvention will be necessary. In this sense it would be an excellent opportunity for the initiation of the transition from the linear economy to the green, blue, and circular economies, being more sustainable and environmentally friendly.

After the end of the pandemic, there will have to be a huge investment to reactivate the economy, and it may be the ideal time to transfer these investments to alternative economic theories, since it would probably multiply employment and capital. The linear economy not only damages the planet and human health, it also hinders balanced economic development and progress because it extracts resources in the poorest regions without benefit to the local populations, and this is confirmed by the difference in income between the US and Europe compared with the rest of the world. This paradigm can be changed since the whole world economy is largely stopped and so it could be a good time to correct the problems and mistakes of the past.

At the end of 2019, the European Union approved the Green Deal, with the target of zero carbon emissions by 2050 and 55 per cent less by 2030. Recently, with the COVID-19 problem, a financial package of €700 billion ($810.87 billion) was created to revive the European economy, so it would be urgent and necessary for some of this investment to be allocated to the Green Deal.

Asia is the region that suffers the most from climate change, but it is also the region that has done the most to reverse the problem. It would be very interesting to invest in environmental policies to boost the economy, bringing numerous advantages to the region. The economic transition will have a double positive impact, first directly on the environment and then on the economy.

In a vision of economic transition, the presentation of some examples of macro investments supported by the three most sustainable and balanced economic models we have, the green economy, which focuses on improving human welfare and social equity, reducing the risk of ecological scarcity and environmental problems.

In this case, we may consider some of the following to boost the economy: In a forest, planting trees with new technologies supported by adapted drones and with rotating machines transforming the planting of trees, enabling the reforestation of large areas in a short period of time; in agriculture, with biological productions using biofertilisers and the return to multiculture; in renewable energies, with solar, wind, micro-hydro, plasma, ocean energy ,and solid and organic waste energy, and in water resources, such as nanofiltration, desalination, purification, conservation and capture.

In another model, the blue economy, also known as sea economy, results from the sustainability and balance of economic activity and the capacity of ecosystems to support a resilient, healthy, and sustainable future. By considering biodiversity an important point for the balance, investments in conservation and creation ecosystems with underwater platforms; in the cleaning of the ocean of all plastic waste that causes enormous pressure on marine animal life; and in renewable energies such as wind energy offshore, floating solar energy offshore, technology of water injection, and tidal energy turbines and ocean currents.

Finally the circular economy, which is a strategic concept based on the principles of reduction, reuse, recovery, and recycling of materials and energy, assumes itself as a key element to promote the decoupling between economic growth and increased consumption of resources.

The COVID-19 pandemic has shown that in cases of a high emergency the economy can stop, forcing the confinement of populations in order to solve public health problems. At that point, it would be the right time to seriously bet on the future of the economy in favour of the environment and health with the introduction of economic transition throughout the planet. Climate change, environmental problems, and the risk of the collapse of the planet’s natural structures underpin the linear economy.

This issue allows room for the green, blue, and circular economy to be the main solutions to the need for an urgent and innovative reinvention of the organisation of the world economy. This futuristic aspect of the economy will be based on the sustainability of natural resources with the aim of achieving a true and deep balance of relationship and connection between nature, the human being, and the economy. The pandemic has demonstrated to the world that we live in a technological age, and that anything is possible.

By Miguel Santos

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