The budget dedicated to environmentally positive post-pandemic economic recovery measures is now almost double the funds allocated for measures that have negative or mixed environmental impacts according to the OECD Green Recovery Database. However, research has revealed that the largest share of recovery funding does not qualify as being environmentally friendly.
Figures on COVID-19 recovery efforts, published by the Vivid Economics and Finance for Biodiversity reveal that US$17.2 trillion of public stimulus money dedicated for recovery from the Coronavirus pandemic in 15 of the G20 countries and in five of the other 10 countries analyzed, affects climate and nature negatively even though some countries, including the US, the UK, and Norway, have improved the ‘greenness’ of recovery funding.
Jeffery Beyer, Economist at Vivid Economics and lead author of the report “Greenness of Stimulus Index”, noted “With stimulus programs winding down, it is the end of the beginning of the COVID-19 recovery. We can only build back better sustainably if we protect the climate and nature. Unfortunately, it is impossible to justify the fact that public stimulus money is doing more harm than good to our climate and biodiversity which underpin our economy. Nature has been particularly neglected, with fewer than 10 of the countries we studied investing in nature-based solutions such as reforestation or wetland restoration. Ignoring nature misses out on the triple-win opportunity for jobs and the economy, climate, and biodiversity.”
According to recent figures published by the OECD, while US$677 billion has been allocated for environmentally positive COVID-19 economic recovery measures for future years, countries still continue to support fossil-fuel producers and consumers with US$345 billion being used to subsidize fossil-fuel use in G20 and emerging economies in 2020. Furthermore, the agency states that 79% of total recovery spending cannot be referred to as environmentally neutral, with 10% being acknowledged as particularly mixed or negative for the environment and 69% as unlikely to be benign for the environment.
Fig.1. The impact of policies on the environment is illustrated by the following colours: positive, negative, or mixed impact.
Source: OECD Green Recovery Database (2021)
Overall, the OECD Green Recovery Database has 1,380 measures with 39% of these being green measures related to grants or loans, 19% related to tax reductions or other subsidies, and 14% to legislative changes. Out of 60% of sector-specific green measures, energy and surface transport are those most targeted both in terms of measures and funding whereas agriculture and forestry are less targeted than these two sectors.
Fig.2 Total COVID-19 recovery spending with environmental impact by sector (in USD Billion)
Source: OECD
Furthermore, about 90% and 64% of the funding budget positively or negatively affects climate change mitigation and air pollution which are the most common environmental dimensions affected by the COVID-19 economic recovery measures. For comparison, only 11% of the funding is allocated for biodiversity and just 5% of positive measures are related to water. Meanwhile, waste and recycling are barely represented.
Fig.3. Share of total funding across environmental dimensions (as a % of total spending)
