Is the Recession Good for the Environment?

Recessions – extended periods of negative growth in GDP – are almost universally considered bad.  As you might have heard, the U.S. has been in recession for over a year.  Hundreds of thousands of people are losing their jobs every month, with few prospects for new employment.  Those with jobs are saving their money in fear that they might be next, which in turn worsens the recession and increases the likelihood that they will lose their job.  Depression levels rise, health problems increase (“I can’t afford my gym membership or colonoscopy or mammogram right now”), and standard of living decreases. 

But are recessions good for the environment?  Yes and no.  The answer depends on what aspect of the long-term health of our finite planet you are talking about, and how people react to the new situation.  If we are destined to continue consuming until we are left with nothing, then the recession buys us and the planet a little more time.  But if we are going to live in a more sustainable manner, the recession is a setback. 

Scalpel, Not Hatchet

A shrinking economy is caused by reduced consumption.  During a recession, people buy less.  When people don’t buy as much, fewer trees need to be cut down, mineral extraction slows, and less energy is consumed (meaning fewer greenhouse gas emissions). 

The problem is that reducing stress on the environment by cutting GDP is like removing a cyst by amputating the arm.  That is, its tremendously inefficient.  Not only does this make peoples lives more difficult than other methods of reducing greenhouse gas emissions or other environmental degradation, but a shrinking economy hampers activities that have a positive effect on the environment as much, probably more, than it prevents damage.  There are plenty of practical, not just political, reasons why I’ve never heard anyone propose that to prevent global warming, we should reduce gross economic output.

In order to reduce the risk of global warming and prevent sudden and catastrophic shortages of resources (petroleum, helium, lead, tin, copper, indium, etc.), we need to change the type of economy we have.  Economic activities will always have some impact on the environment.  People need to eat, need shelter, need to have something to live for. 

The trouble is that most of the infrastructure in the United States and other developed countries, both public and private, was built in the twentieth century.  Since at least the 1950’s, we’ve been a driving nation.  Drive-throughs, suburbs, hamburgers, freeways, cul-de-sacs, McMansions, vast parking lots – this infrastructure reflects our history, and it won’t change overnight.  We need lots of investment in high-speed rail, bus networks, a new electric grid, walkable communities, light rail, etc. 

So in a business-as-usual scenario, the recession would have many negative impacts on limiting future emissions.  Not only are investments freezing up, but the price of petroleum and natural gas have plummeted.  As a result, clean energy alternatives are much less competitive than they were when gasoline was selling for $4 a gallon.  Even billionaire T. Boone Pickens has delayed his large wind farm project.

The good news is that the stock market crash has sent the interest rates on 10 year treasury notes to 2.7%, meaning that the government is in a position to invest in the nation’s infrastructure at a much lower cost than they will in years to come.  Prices for other resources such as steel have dropped as well, making this a good time for the government to invest in long-term infrastructure – think the New York subway, which opened its first line over a hundred years ago – that will pay dividends for years and years.  While Obama’s stimulus plan has some of this, we also need separate bills geared toward longer-term investment. 

Time will tell whether or not whether our actions during this recession will hurt or hamper the long term health of our environment.  Its up to us.