International Policy Digest

World News /26 May 2020
05.26.20

Economy vs Environment Post-COVID-19: The Complex Battle Begins

A battle is looming. The coronavirus recovery phase is fast approaching and as political leaders across the globe come under pressure to provide instant economic relief, there are decisions to be made.

Do governments cut through the layers of “green tape” that environmentalists have fought for over the years to revive the highest levels of economic growth possible? Or do they respect the protective measure won over decades and use the pandemic to shift towards slower, more sustainable economic growth?

So far, it seems that most leaders are already reaching for the scissors as they begin snipping away at that tape layer by layer. An executive order signed by U.S. President Donald Trump this week gave agencies “tremendous power” to get rid of regulations that inhibit economic recovery with environmental policies at the top of the list.

Australia is following suit. Their commonwealth government has stopped assessing threats to native wildlife posed by potential developers and is aiming to modify environmental laws to save $300 million annually. Then there is the South African government that suspended the environmental regulatory process for the entirety of the lockdown phase and the government of India has allowed projects to go ahead without the usual environmental assessment clearance.

It would be easy to condemn these moves as hasty, short-sighted, and a major threat to a sustainable future. However, it is hard to deny that for the time being, repairing our ravaged economy is goal number one.

There are also other factors involved in the economy versus environment battle. After the devastating hit of COVID-19 that depleted profit, factories would rather relocate to countries with weaker regulations to get back on their feet than deal with production restrictions. This trend is not new. Studies have found that as environmental laws have been made increasingly stringent, the U.S. and other firms in Western countries shifted production to poorer, less regulated countries.

Interestingly, many Canadian companies have stayed put despite being hounded and halted by environmental laws. A prime example is Northern Pulp, a pulp and paper factory that has provided jobs to thousands and has recommitted to staying in Nova Scotia despite being forced into hibernation after their proposed effluent plan was rejected in January.

Yet, this is not so for companies in the U.S., Japan, and other Western countries. In the last ten years firms in these areas have relocated a large percentage of factories to Mexico, China, and other less regulated nations simply redirecting their pollution. Offshoring production is just one of several factors that makes the environmental legislation versus economic restoration stand-off that much more complex.

If maintaining stringent environmental regulations simply means that these desperate companies will relocate and redirect their pollution, who wins?

This is just the beginning of a battle that is bound to get dirty. Of course, the ultimate solution is building a new economy in which we all have secure livelihoods based on sustainable work. But in our battered and bruised post-coronavirus-economy, it is hard to practice patience. We need jobs, and we need them now.

From Trump’s new regulation to easing up on restrictions in India, South Africa, and other parts of the world- it seems job creation has ‘won’ round one….Let’s hold on tight as this nuanced battle continues to play out before us.