Designing a Low-Carbon and Resilient COVID-19 Recovery
Published: 21 September 2020
Recovery interventions should provide not only economic stimulus but also address climate and disaster risk to ensure that gains are sustained.
The world is facing two crises. The coronavirus disease (COVID-19) pandemic is an unprecedented global health crisis with economic losses estimated by the Asian Development Bank between $5.8 trillion and $9.1 trillion. Climate change is also making its impact felt and its effects are becoming more severe every year. Pre-COVID-19 analysis shows that it could push an additional 100 million people into poverty by 2030. COVID-19 has made the situation worse, making it even more urgent for countries to build resilience against future shocks.
Implementing the emergency response to COVID-19 has rightly taken priority. However, as countries begin to emerge from lockdowns and plan their recovery, governments have an opportunity to address both crises and adopt economic stimulus measures and reforms that support a sustainable, inclusive, and resilient future. Designing a low-carbon and resilient recovery can generate economic benefits, create employment, increase food and energy security, and have strong health co-benefits. It will also help countries meet international commitments under the Paris Agreement, Sendai Framework for Disaster Risk Reduction, and 2030 Agenda for Sustainable Development.
This article is adapted from COVID-19 Recovery: A Pathway to a Low-Carbon and Resilient Future from the Asian Development Bank (ADB).
Measures for Recovery and Resilience
Adopting a low-carbon and resilient recovery does not demand economic compromise and does not necessarily require an increase in total investment. There is a long list of possible COVID-19 recovery interventions that support low-carbon development and build climate and disaster resilience, while simultaneously creating jobs and jump-starting economic growth. Among these measures are direct investment, policy reform, and capacity building (i.e., hard and soft measures).
Some examples are
- labor market programs to protect natural assets and green infrastructure;
- health projects promoting disaster preparedness planning (e.g., long-term improvements in post-disaster disease surveillance systems);
- construction of health facilities to disaster and climate resilience standards;
- technical and vocational education projects to promote low-carbon industries and resilient livelihoods;
- energy efficiency schemes, including support for retrofits (e.g., low-interest loans), construction of low-energy buildings, and skill development;
- improvements in regional cooperation for a more sustainable food supply;
- financial incentives, preferential loans, and grants for low-carbon and resilience-building programs, e.g., energy-efficient roofing and residences, low-cost housing, circular economy;
- capacity building of grassroots women’s groups to prepare them for disasters and emergencies;
- rural green infrastructure projects, such as grid expansion and off-grid rural electrification;
- rural low-carbon household programs, such as clean cooking programs (biogas capture, efficient woodburning stoves) and solar lighting; and
- improvements in climate-friendly agriculture value chains and sustainable food supply management programs.
Some recovery interventions may do well in the short term but not be sustainable in the long term unless accompanied by policy or institutional changes. As experience from the Global Financial Crisis of 2008 shows, green measures included in stimulus packages achieved short-term goals, such as creating jobs and boosting clean energy but did not have lasting impact unless reforms were introduced (e.g., removing fossil fuel subsidies).
Countries should adopt a holistic approach (see 7 Steps) to designing robust recovery plans that focus on sustainability and make the systemic changes required to avoid experiencing similar losses in future crises.
7 Steps to Designing a Low-Carbon and Resilient Recovery
A clear vision will build confidence, ensure a unified approach to the recovery, and allow the definition of medium-term and long-term objectives. With this vision, define principles to guide the recovery, such as
- putting people and their health first, to ensure that no one is left behind;
- taking a “build back better” approach to stabilizing the economy, promoting equitable growth and investments that benefit all, and strengthening supply chains;
- promoting a transformational shift to a low-carbon and resilient development pathway (and long-term “net zero”) and supporting a Just Transition, where benefits are shared equally;
- supporting investments that contribute to the productive asset base for the future; and
- committing to policy reforms, institutional change, and capacity building to sustain the results of building back better and adopting transformational change.
Develop a clear understanding of how and why a low-carbon and resilient recovery will help achieve the vision defined in Step 1. This includes a better understanding of negative drivers, such as how COVID-19 has made a difference in current and future exposure and vulnerability to climate and disaster risks; affected different groups, sectors, and regions; exposed underlying drivers of vulnerability, which could worsen when combined with climate and disaster shocks and stresses; and possibly altered their decarbonization pathway and disrupted the process of updating the Nationally Determined Contributions (NDC).
Identify positive drivers, such as the potential economic, social, and environmental benefits that could flow from adopting low-carbon and resilience-building recovery measures, and the opportunity to use the required state interventions combined with significant levels of investment to accelerate progress toward a long-term vision.
The recovery process can leverage existing policies and plans to align recovery packages with existing climate and disaster investment priorities identified in the NDC (including the current updating process), National Adaptation Plan, and National Disaster Risk Reduction Plan. Associated national or subnational climate and disaster risk reduction plans, as well as climate investment plans and pipelines, can be analyzed to identify activities and investments that could potentially be brought forward or expanded as part of the stimulus package (e.g., those related to mitigation, adaptation, disaster risk management, and equity issues). There may also be scope for matching existing commitment focal areas with recovery package components.
Develop an assessment framework (see Table below) to ensure a structured and comprehensive process of evaluating selected recovery interventions that promote low-carbon and resilient development against defined characteristics for a “good recovery.” The framework will differ from country to country, depending on the specific circumstances and on the objectives and approach to recovery.
Investments in “brown” measures may be necessary to provide short-term relief or to meet medium-term objectives. In these circumstances, design conditionalities to ensure that the investments transition toward “green,” and that the support aligns with the long-term vision defined in Step 1.
Conditionalities that could be applied include commitments to reduce emissions, or plan for net zero; and measures to ensure that funds support workers and the creation of good-quality jobs, that recipients invest in skill development for a low-carbon and resilient future, and that funds are also used to build more resilient and lower-carbon supply chains.
Determine how to finance the recovery and incentivize the uptake of identified low-carbon and resilience measures. Options to be explored include domestic revenue raising, e.g., by removing existing subsidies (such as fossil-fuel or damaging agricultural subsidies), or over the longer term, by introducing carbon pricing or environmental taxes, mobilizing private sector finance (including public–private partnerships), bringing in innovative and “green” financial products such as green or climate bonds, and leveraging international climate finance sources.
To support long-term transformation and sustainability of recovery measures, identify the right supporting policies, backed by strong institutions, that provide long-term economic incentives, and the right market signals, beyond the period where stimulus will be available.
Existing policies that discourage low-carbon and resilient development may also have to be dismantled by
- introducing economic incentives for low-carbon products or sectors, and removing existing disincentives (e.g., import duties on solar panels);
- making policy changes, such as introducing carbon pricing or tax regimes, or electric vehicle polices;
- introducing new standards or regulations, such as climate and disaster-proofing standards for infrastructure;
- mainstreaming climate and disaster risk into national development planning and budgeting; and
- providing strategic support for research and development (e.g., development of climate-resilient crops) and pilot projects (e.g., green infrastructure for flood risk management).
ADB has developed an assessment framework for evaluating potential low-carbon and climate- and disaster-resilient recovery interventions against economic recovery criteria. These criteria need to be defined by the country, depending on national context, recovery objectives, etc. but could include: a short implementation timeline; job generation or labor intensity (particularly in the early stages); skill development; minimized supply chain risk; and high economic multipliers. In the longer term, governments may look for measures that contribute to the productive asset base and promote positive transformation, while also delivering environmental and social outcomes.
Framework for Assessing Low-Carbon and Resilient Recovery Interventions
In addition to the economic recovery criteria, countries also need to define the benchmarks for assessing climate and resilience benefits as well as the basis for evaluating the performance of each measure against the criteria. In the example presented in the Table, a qualitative “high”/“medium”/“low” assessment was used. This approach supports a more rapid assessment. A more detailed analysis could be done—by assigning weights or scores to certain criteria or by making a separate assessment for each phase of recovery, for example.
COVID-19 has led to asymmetric socioeconomic impact across sectors, and within and between countries. For this reason, recovery interventions should also target the most affected groups or regions, where possible. In particular, it is critical to address gender-related impact on women and girls, especially those belonging to vulnerable groups.
Asian Development Bank. 2020. COVID-19 Recovery: A Pathway to a Low-Carbon and Resilient Future. Manila.
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