07.04.2021

Is the world building back better?

Wind power

Renewable energies play an important role in a Green Recovery. Photo: Phillip Bittner

In the face of the climate and biodiversity crisis, governments and non-state actors across the world have called for a green recovery from the COVID-19, one that does not invest in environmentally harmful sectors but promote sustainability. But, are we really building back better? In March 2021, the Oxford Smith School of Enterprise and the Environment and UNEP officially launched a tool to help us keep track.

The Global Recovery Observatory aims to provide transparency on government spending in response to the COVID-19 pandemic by systematically assessing its environmental, social and economic impact. “This Observatory shall help people to hold their governments accountable”, explained Brian O’Callaghan, lead of the Oxford University Economic Recovery Project, at the launching event which featured, among others, the heads of United Nations Environment Programme (UNEP), International Monetary Fund (IMF), as well as Svenja Schulze, Federal Environmental Minister.

Building on a framework from an Oxford Smith School study from May 2020 , the Observatory initially assess the impact of more than 3500 individual policies from 50 leading economies (by March 2021) in comparison to a scenario where no interventions occur. With all Economic Commission for Latin America and the Caribbean (UN ECLAC) and UN Partnership for Action on Green Economy (UN PAGE) countries set to join, the Observatory is expected to include 89 countries by the end of March, according to O’Callaghan. Policies and the respective assessments will be updated weekly.

While there is a series of similar tools already available, the Observatory aims to set a new standard by providing a larger dataset and a more granular assessment of fiscal spending based on a comprehensive framework that looks beyond the environmental impact, to include economic (including multiplier effect, speed of implementation) and social factors (wealth, inequality, quality of life, rural livelihood). To assess the environmental impact of measures, the Observatory not only considers climate impact by GHG emissions, but also air pollution and natural capital, thereby making the link to broader circularity and green economy issues. GHG assessments include a temporal component, as users have the possibility to filter the results by short-term and long-term effects.

Spending has not lived up to the promise of a Green Recovery

The first results indicate that, thus far, “government spending has not lived up to the promise of a green Recovery“, said O’Callaghan. Of the14.6 trillion US-dollars spent to date, the largest share has flowed into short-term rescue measures, whereas long-term recovery measures account only 1.9 trillion. Only 18 percent of the latter can be classified as green, according to the Observatory’s first report. “This tool is indispensable because it shows that we need to better include climate change into our assessments of the stability of the economy”, stated Kristalina Georgieva, Managing Director of the IMF, who intends to include the Observatory’s insights in the IMF’s future Article IV consultations.

Regarding the potential uses of the Observatory, it does more than merely point out missed opportunities of spending sustainably. “The Global Recovery Observatory allows us to see how other countries are responding to the pandemic, providing us with a menu of options” Inger Andersen, Executive Director of UNEP, pointed out. Building on the notion that the tool provides an empirical basis for the pursuit of a green recovery, the German Minister of the Environment, Svenja Schulze, emphasized that the tool serves as evidence that investing in the environment and economic growth are not at odds, but that they are aligned. Brian O’Callaghan, who is leading the research behind the data, supported the Minister’s argument, saying, “it does not matter whether you believe in climate change or not. The economic argument for environmentally sensitive spending is striking.”

The data also highlights the fact that the pandemic threatens to further increase global inequalities. To date, per capita spending in advanced economies is 17 times as high as in emerging market and developing economies. According to O’Callaghan, these findings should prompt advanced economies to step up and provide generous support. Minister Schulze also emphasized the importance of multilateral action, as the COVID-19 pandemic would hit the most vulnerable hardest. To overcome this, joint action is needed, she said.

About the Global Recovery Observatory

The Global Recovery Observatory is a joint initiative between the Oxford University Economic Recovery Project (OUERP) and the Green Fiscal Policy Network (GFPN). The OUERP is housed in the Smith School of Enterprise and the Environment and is supported by the Children’s Investment Fund Foundation (CIFF), and the ClimateWorks Foundation. The Green Fiscal Policy Network is a partnership between the UNEP, the IMF and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to promote knowledge sharing and dialogue on green fiscal policies. It is supported by International Climate Initiative (IKI) via the project ‘Green Economy Transformation in Cooperation with the Partnership for Action on Green Economy (PAGE) – Synergies between Low-carbon Pathways and Sustainable Development Goals (SDG)’. Observatory data visualisations are developed by the United Nations Development PRogramme (UNDP) and presented on the OUERP website, the GFPN website, and UNDP’s COVID-19 Data Futures Platform.