What Policies Address Both the Coronavirus Crisis and the Climate Crisis?

48 Pages Posted: 23 Jun 2020

See all articles by Gustav Engstrom

Gustav Engstrom

The Beijer Institute of Ecological Economics

Johan Gars

The Royal Swedish Academy of Sciences - Beijer International Institute of Ecological Economics

Niko Jaakkola

University of Bologna

Therese Lindahl

The Royal Swedish Academy of Sciences

Daniel Spiro

Uppsala University, Dept. of Economics

Arthur van Benthem

University of Pennsylvania - Business & Public Policy Department

Date Written: 2020

Abstract

The coronavirus pandemic has led many countries to initiate unprecedented economic recovery packages. Policymakers tackling the coronavirus crisis have also been encouraged to prioritize policies which help mitigate a second, looming crisis: climate change. We identify and analyze policies that combat both the coronavirus crisis and the climate crisis. We analyze both the long-run climate impacts from coronavirus-related economic recovery policies, and the impacts of long-run climate policies on economic recovery and public health post-recession. We base our analysis on data on emissions, employment and corona-related layoffs across sectors, and on previous research. We show that, among climate policies, labor-intensive green infrastructure projects, planting trees, and in particular pricing carbon coupled with reduced labor taxation boost economic recovery. Among coronavirus policies, aiding services sectors (leisure services such as restaurants and culture, or professional services such as technology), education and the healthcare sector appear most promising, being labor intensive yet low-emission—if such sectoral aid is conditioned on being directed towards employment and on low-carbon supply chains. Large-scale green infrastructure projects and green R&D investment, while good for the climate, are unlikely to generate enough employment to effectively alleviate the coronavirus crisis.

Keywords: coronavirus, climate policy

JEL Classification: Q540, E620

Suggested Citation

Engstrom, Gustav and Gars, Johan and Jaakkola, Niko and Lindahl, Therese and Spiro, Daniel and van Benthem, Arthur, What Policies Address Both the Coronavirus Crisis and the Climate Crisis? (2020). CESifo Working Paper No. 8367, Available at SSRN: https://ssrn.com/abstract=3633650

Gustav Engstrom (Contact Author)

The Beijer Institute of Ecological Economics ( email )

Stockholm, SE-104 05
Sweden

Johan Gars

The Royal Swedish Academy of Sciences - Beijer International Institute of Ecological Economics ( email )

The Royal Swedish Academy of Sciences
P.O. Box 50005
S-104 05 Stockholm, SE-104 05
United States

Niko Jaakkola

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Therese Lindahl

The Royal Swedish Academy of Sciences ( email )

United States

Daniel Spiro

Uppsala University, Dept. of Economics ( email )

Box 513
Uppsala, 751 20
Sweden

Arthur Van Benthem

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States
215-898-3013 (Phone)

HOME PAGE: http://bepp.wharton.upenn.edu/profile/21174/

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