Analysis : Brazil, Russia India, Indonesia and Mexico stimulus handing money to major polluters
Over the past 2 months the world has witnessed unprecedented government financial interventions in response to Covid-19. Governments have rightly put people first and focussed on the immediate implications of the crisis – with roughly 73% of the money going directly to households and those on the frontline.
But new analysis, by Vivid Economics concludes that the remaining 27% of the money- roughly 2.2 trillion- is going to support environmentally intensive business directly, and that most governments are failing to use this support to secure medium-term benefits to their citizens’ welfare and the natural world around them. As a result, the vast majority of the money going to business in the short term could be risking future environmental sustainability.
Vivid Economics is a strategic economics consultancy spanning public policy and support for commercial decision making with a broad, international focus.
Vivid Economics in collaboration with Financing for Biodiversity will be releasing the updated Green Stimulus Index. The analysis adds Brazil, India, Indonesia, Mexico and Russia to a watch list that already includes the US, China and several EU countries.
The report examines the impact of current COVID19 corporate economic stimulus packages on biodiversity and climate change.
The updated index finds that of the 16 major economies analysed, economic stimulus packages will pump approximately USD 2.2 trillion / 27 per cent of the total stimulus flows, directly into sectors that have a large and lasting negative impact on nature.
Countries such as Indonesia, Brazil and Mexico – dependent upon environmentally-intensive sectors and without strong regulatory systems will have the toughest time getting back on track to restore nature.
Currently Indonesia, China, and Russia are performing the weakest. Western European countries stimulus packages are more neutral thanks to existing policies and green strings attached to bail outs.
The stimulus presents an once in a lifetime moment for countries to support sustainable sectors and increase their resilience to future crises.
The Green Stimulus Index highlights that governments so far have failed to harness this chance and in some cases are actively undermining it.
The Green Stimulus Index will be updated on a regular basis as new stimulus packages are announced.
Brazil, Russia, India, Indonesia and Mexico join the US and China on the list of lowest performing countries.
New environment specific announcements include the attachment of ‘green’ strings to the Air France bailout, a bailout of a coal power plant builder in South Korea, and measures by the government in China to restrict wildlife trade.
In 13 out of 16 countries damaging stimulus outweigh those supporting nature.
Corporate bailouts are the most critical for green stimulus measures.
India, Russia and Mexico have reinforced their fossil fuel based future.
The easing of land use permits and regulations in Brazil and Indonesia undermine previous climate commitments.
France and the UK are introducing some more nature friendly stimulus packages.
Spain’s stimulus packages were ranked the worst out of the examined European countries.
The coronavirus shows us that our fate is inextricably linked to that of the natural world. Governments might be inadvertently creating conditions which make things worse when they have the opportunity and responsibility to ensure short-term emergency measures lead to a better more resilient future.