Debate: is economic recession good for the environment?

Eighteen months ago, in a landmark review of the economics of climate change, former World Bank chief economist Nicholas Stern warned that international action needed to be taken immediately if we are to avoid the worst impacts of global warming. His message was clear: act promptly or pay a far higher price later.

“Our actions now and over the coming decades could create risks of major disruption to economic and social activity, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20^th century,” Stern wrote. “And it will be difficult or impossible to reverse these changes.” Unless governments invest in the technologies necessary to create a low-carbon economy, he said, a global recession could slice 5% to 20% off the world’s wealth.

Given the increasing flow of greenhouse-gas emissions from developing counties (including China), Stern now thinks that some of his figures were too conservative, that “we underestimated the risks”. Meanwhile, many developed countries around the world, led by the United States, are believed to now be in economic recession. Such a downturn may seriously affect business and governmental willingness to make the kind of investment for the future that Stern and many others view as critical.

How serious the steep economic slide becomes, and for how long, remains to be seen. But amid the forecasts of gloom and doom, there are some who think recession can be a good thing for the health of the planet. For example, the British environmental campaigner and writer George Monbiot asked, in an October 2007 article on his website, headlined “Bring on the recession”:

“Is it not time to recognise that we have reached the promised land, and should seek to stay there? Why would we want to leave this place in order to explore the blackened waste of consumer frenzy followed by ecological collapse? Surely the rational policy for the governments of the rich world is now to keep growth rates as close to zero as possible?”

Journalist Brett Robertson, on the Australian website newmatilda.com, wrote in a February 2008 article that “Only a recession can save us now.” Like Monbiot, Robertson acknowledges the pain that accompanies recessions, particularly regarding jobs and housing for ordinary workers. Still, he is critical of “growthism”, the belief that economic growth is “unambiguously good”. Monbiot views growth is “a political sedative, snuffing out protest, permitting governments to avoid confrontation with the rich, preventing the construction of a just and sustainable economy”.

In Robertson’s words: “[W]e should be looking at the easing of global demand with relief, not with dread. As well as buying us some time to deal with climate change, a global slowdown would ease the pressure on inflation, ease the housing affordability crisis and give us time to ease the skills deficit. In the long run, we would not be missing out on any opportunities in the resources sector. One of the advantages of relying on non-renewable resources is that anything we leave in the ground today, we are bequeathing to the next generation.”

The main problem with “growthism”, argues Robertson, is that “it denies the physical limitations of the economy” – an economy that “represents real stuff”, such as minerals, corn, oil and other resources. He continues: “Real things originally come from nature, and nature has limits on the things it can provide for us, and the rate at which it can absorb our waste. […] Economists hope to ignore these limits through the magic of price signals and resources substitution. […] Running out of tuna? Use salmon. Running out of pine? Use redwood. Running out of the atmosphere’s ability to absorb carbon dioxide without leading to catastrophic climate change? Just use … oh, wait, there’s no substitute for that.”

So, will a recession help to put a useful brake – from an environmental point of view – on consumption, waste and excess use of resources? The US Department of Energy (DoE) has already reported a small decline in petrol (gasoline) use — about one-half of 1% — since the beginning of this year.

Meanwhile, there is the issue of “recession ethics”. Will an economic downturn blight the growing trend toward ethical goods, services and business practices? Ethical Corporation – a London-based independent publisher and conference organiser – asked in a March 2008 report if economically squeezed shoppers will “hang up their ideals” and opt for the cheapest commodities, while corporate social responsibility programmes fall to budget-cutters’ axes.

“In a rational world,” writes journalist Rikki Stancich, “facing climate change issues and tighter budgets, consumers will shift from the throwaway culture toward a more sustainable one – paying slightly more for higher quality, longer-wearing products and investing in good that are more energy and cost efficient.” But in a world in which people do not know how NOT to consume, “the credit crunch may therefore be a good thing in that it might prompt consumers to take a longer-term view on the product choices they make.”

So, is recession good for the environment? Only in the short term? How much will it harm ethical producers in developing countries? Or are ethics recession-proof?

Let us know on the forum what you think.