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Will the Coronavirus Spur Action on Climate Change?

Summary:
TweetOctober 3, 2020 — From early on in this pandemic, a common reaction has been “at least, maybe now we will get serious about addressing climate change.”  One can see the logic.  The terrible toll taken by Covid-19 should remind us of the importance of three things: the need for science, the role for public policy, and the usefulness of international cooperation.  With these three revelations firmly in mind, we can see that we also need them to respond to the problem of climate change. We should listen to the scientists who have been warning for decades that greenhouse gas emissions, if left unchecked would also have terrible consequences.  That some of these consequences have dramatically appeared in this same coronavirus year  – the wildfires, cyclones, and even a plague of

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October 3, 2020 — From early on in this pandemic, a common reaction has been “at least, maybe now we will get serious about addressing climate change.”  One can see the logic.  The terrible toll taken by Covid-19 should remind us of the importance of three things: the need for science, the role for public policy, and the usefulness of international cooperation.  With these three revelations firmly in mind, we can see that we also need them to respond to the problem of climate change.

We should listen to the scientists who have been warning for decades that greenhouse gas emissions, if left unchecked would also have terrible consequences.  That some of these consequences have dramatically appeared in this same coronavirus year  – the wildfires, cyclones, and even a plague of locusts in Africa – would seem to reinforce the message.

The parallels between the coronavirus and climate change are logically sound. I fear, however, that the inferred political connection may be a non sequitur. If some leaders and their followers — in such countries as the United States, Brazil, Mexico and even the once-sensible United Kingdom — can downplay the significance of the pandemic and override the recommendations of the relevant scientific experts, they can do the same for climate change.

Three revelations

The three revelations are worth underscoring.   In the first place, the coronavirus should remind everybody that the facts of nature cannot be wished away, and that progress follows the road of science.  Conspiracy theories are no more valid when they take the form of “climate change is a hoax perpetrated by China” than when it is “Covid-19 is a plot perpetrated by China”.  We should listen to the experts, not to mention common sense.

Second, contagious disease and environmental damage are both classic examples of what economists call externalities: problems that markets cannot handle on their own because people who sneeze while maskless or who pollute the air do not  bear the full costs of their own actions.  The recognition that there is a critical role for government policy in the neglected area of public health might lead the political pendulum to swing away from small-government ideology.  But government intervention should be designed intelligently, targeted to achieve its goals efficiently.

Thirdly, while some diseases and some kinds of pollution are primarily domestic in their effects and so can be handled by individual national governments, global pandemic and global climate change are both global externalities, and so call for some amount of global cooperation, whether through the World Health Organization and Paris climate agreement or in other ways.

Direct links between contagion and climate

There are many other, more direct connections between global health and global environment. Some of them indeed offer a bit of hope that progress on one of the two goals could imply progress on the other.

Destruction of forests simultaneously adds to the carbon dioxide in the atmosphere and forces bats and other animals who may be carrying disease into contact with humans, which was likely the origins of this coronavirus in China.

The wildfires in the Western US (and parts of Australia, Siberia, and Europe) are in large part a consequence of global warming: hot weather and drought created the conditions. But they are also a contributor to it: the wildfires have sent many tons of carbon into the atmosphere.  But even before that happens, the Particulate Matter from the smoke can do immediate damage to the lungs of the same people already endangered by Covid-19.

The recession has decreased the demand for oil, sending its 2020 price down to where it was five years ago, around $40/barrel.  For developing countries that use subsidies to keep the domestic price of energy artificially low (particularly oil-exporting countries), the present would be a good time to reform the policy and to let the energy price be determined by the market.  These subsidies are harmful to the environment, to economic efficiency, and to the budget. A lose-lose-lose policy. Eliminating them is a win-win-win reform, though very fraught politically.

When oil prices fell sharply in 2014-15, a number of countries wisely took advantage of the opportunity to eliminate consumer subsidies at a time when it would not result in rising retail prices.  There was relatively little political protest at the time.  Unfortunately, most of these governments did not take full advantage of the opportunity to institutionalize a system that would let retail prices fluctuate day-to-day with free market prices.  Citizens had not lost the habit of holding the government responsible for determining the retail price, by the time the global price of oil edged back up (2016-2018).  As a result, politically, subsidies had to be reinstated in some countries.

Besides the positive correlations between the pandemic and climate change, some direct connections go the other way, aspects of the pandemic that work to slow climate change.

As the recession of 2007-09 already demonstrated, a reduction in economic activity carries with it a reduction in carbon emissions.  This is particularly true of air travel, which has been uniquely impacted by the risk of contagion.

The recession is presumably temporary.  But the moderation of air travel might be partly permanent.  Tourism will bounce back.   But for many of us, flying somewhere to watch PowerPoint presentations has lost some of its charm, relative to staying home to watch the same presentations.  Rather than bailing out the entire airline industry so generously as to prevent any bankruptcies, consolidation, or long-term shrinkage, governments should require the use of airplanes to reduce emissions to a comparable extent as the use of automobiles.

Politics

It’s hard to predict whether the pandemic will politically galvanize support for more aggressive action on climate change.  There are some who say, “with high unemployment and sky-rocketing debt, we can’t afford to spend money on the climate change issue.”

Perhaps the most immediate silver lining to the tragedy of hundreds of thousands of lost lives is the effect that Donald Trump’s mismanagement of the coronavirus has had on his re-election prospects in the US.  (That is, even assuming that he survives in good health having contracted Covid-19 himself.)  If the Democrats take back the White House and the Senate in November, we are likely to see a return in respect for scientific expertise, well thought-out public policy, and international cooperation.  This should have wide-ranging payoffs, from environmental protection to rejoining the Iran nuclear treaty, to addressing inequality, aside from much-needed leadership in fighting the pandemic.

Solutions

What does well thought-out public policy on climate change look like in current economic circumstances?  “Spend green today, tax green in the future,”  I wrote in the 2009 depth of the Great Recession.  With unemployment back up to 7.9%, the prescription applies again today.  In the short run, we need a renewal of fiscal stimulus.  So take advantage of the opportunity — to “Build back better,” as US Democratic presidential candidate Joe Biden says — to help the environment while also helping the economy.

But looking past the recession to the more distant future, there must be some element of fiscal limits. This recognition distinguishes what a Biden Administration would do from the “Green New Deal,” at least if that proposed legislation is taken literally.  A phased-in carbon tax would be a win-win-win solution, as economists of both parties agree.

The choice is up to American voters, whether to bring back respect for science, sensible public policy, and awareness that we live in an inter-connected world.

[This column — also at — appeared in shorter form at Project Syndicate and The Guardian.  Comments can be posted at those sites

Jeffrey Frankel
Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He directs the Program in International Finance and Macroeconomics at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

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