Post-Covid Reconstruction

By Fulai Sheng,
Head, Economic & Trade Policy Unit, UNEP

COVID-19 is killing people and setting our economies on fire. While the world is saving lives and fighting the fire, a lurking question is how we are going to rebuild our economies when the pandemic is under some form of control.

Should we build back our old economic “house” that has contributed to the spread of new diseases in the first place? The old house warms the climate and wakes up dormant viruses. It fragments natural habitats and exposes humans to zoonotic diseases. It pollutes the air, water, and soil, making people vulnerable to health risks. And it devours resources, materials, and finance such that little is left for hospitals and schools that are accessible by the disadvantaged and resilient to shocks. Building back the old economic house is nothing but a recipe for more crises.

As we are clearing the debris of COVID-19, why do we not design and build a new economic house? It would run with clean and renewable energy and generate green jobs. It would keep an “ecological distance” from wildlife, respecting the integrity of natural ecosystems for protecting our own health, among other things. It would be smart, taking advantage of digital technologies and consuming minimal energy, water, minerals, materials, and finance to meet our needs. The latter is acquiring special importance now as many countries are digging deep into their pockets to put out the fire, and few can afford the extravagance of the old economic house.  Moreover, our new economic house requires the provision of inclusive and resilient social infrastructure, which has been heavily underinvested in countries rich and poor.

After the 2008-2009 global financial and economic crisis and before Covid 19, many countries did attempt to repair their economic houses under the schemes of green economy, green growth, and the like. Covid 19 may derail these efforts as countries fast-track to rebuild, in the paradoxically more comfortable polluting, carbon-emitting, biodiversity-losing, resource-sucking and inequitable manner. That would condemn us to square one or worse, making the world even more susceptible to shocks in future.

Building back better is thus the only option. How to make it happen? One way is for development assistance institutions to help countries move in that direction. Post-Covid reconstruction requires trillions of dollars. Many countries are already finding their coffers running dry and seeking cash injections from external sources. Directing post-Covid recovery funds towards the building of the new economic house can be an effective approach.

But how the new economic houses should look like in different countries, which will have different priorities out of Covid 19? This is where analytical support can help. The Integrated Green Economy Modeling developed under PAGE, for example, can take the Sustainable Development Goals as the overarching framework, focus on a few areas based on emerging new priorities (such as health infrastructure, medical waste management, wildlife management, food security, supply chains, SMEs and jobs, informal sector, distant learning, etc.) in countries interested in building the new economic houses, and model the investment and policy scenarios to deliver those priorities over the short, medium and long terms. This analytical support, however, should involve development assistance institutions if it is to play a part in laying the foundation for the new economic houses post-Covid.