The links between pandemics and the climate emergency, including the escalating emissions and deforestation rate, has been reported worldwide. Countries have been issuing numerous economic stimulus packages valued at around 10% of their respective GDPs to rescue the world from economic collapse. The question ‘how are we going to pay back these debts while ensuring that future pandemics will be avoided?’ has been in the minds of many country leaders. We can’t continue to pay our debts through further environmental destruction. The bioeconomy community can play an important role in shaping the future global economy by addressing these environmental issues head on: by providing the alternatives to fossil fuels, and by building responsible and sustainable forestry operations. But these efforts cannot work in silos, these bioeconomy innovations need to be incentivised, such as in new green deals, and supported by the global market.
 

Major Economic Issues in 2020 and in the Decade

Before Covid-19 struck, 2020 was expected to be a year of slow growth across the world. Now it may well witness the worst recession since the Great Depression of the 1930s. Quantifying the shock is difficult for two main reasons: there are, as yet, very few hard data showing the impact of the lock-down so far and there is great uncertainty as to when and how restrictions will be lifted. There will clearly be large declines in GDP in most countries (of the order of -5 to -10 per cent, for instance, in Western Europe). 2021 should see an upswing, but this is highly unlikely to recoup all the lost ground.

The next decade will not see a return to much more rapid growth. For one thing, the consequences of the pandemic will be felt for a number of years – low investment rates and only gradually declining unemployment rates will weigh on prospects as will changes in behaviour (more precautionary savings, less international trade and travel, a likely return to public sector austerity because of very high debt levels, etc.). In addition, the labour force is shrinking and ageing in the advanced countries and in China, while productivity growth remains sluggish. Emerging markets will do better, but the relatively slow moving American, European and Chinese economies will affect them negatively.
 
Impact of Climate-related Issues on the Global Economy

So far the impact has been limited – e.g. slow changes in energy-mix, the (paradoxical) decommissioning of some nuclear plants, a pick up in the production of electrical vehicles, etc. None of these have had significant macroeconomic effects. Expect further slow movement in the same direction. The incentives for policy-makers to take action are weak: beneficial effects are slow to come through while resistance from affected groups (miners, oil companies, polluting industries, etc.) is fierce. Moreover, in the absence of binding international agreements, action by any (small or medium-sized) country in isolation is ineffective. In addition, governments will, initially at least, argue that recovery from Covid-19 takes precedence over all other goals. Public opinion, however, is moving in the right direction and “green” parties may well join governments, at least in Europe. But even greater efforts at curbing emissions are unlikely to have more than a small impact on GDP growth.
 
Could the Bio-economy Become a Force in the Global Economy?

Most people would agree that stimulating the bio-economy is an important step in the right direction. Having less wasteful, less polluting and more sustainable production is obviously desirable. It would also stimulate technological progress and create jobs, possibly on a net basis. At the global level, however, effects are unlikely to be dramatic.