PUBLICATION Beijer Discussion Paper

What policies address both the coronavirus crisis and the climate crisis?

The coronavirus pandemic has led many countries to initiate unprecedented economic recovery packages. There have been widespread calls to prioritize dealing with a second, looming crisis—climate change—when designing these economic stimulus packages. In this paper we identify policies that promote both goals simultaneously. 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 emissions data, employment and corona-related layoff data across sectors and on previous research. Our main findings are that, among the 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 like restaurants and culture, or professional services like technology), education and the healthcare sector appear most promising, being labor intensive yet low-emission. Such sectoral aid should be 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.

Engström, G. J. Gars, N. Jaakkola, T. Lindahl, D. Spiro and A. van Benthem. 2020. Beijer Discussion Paper 271: What policies address both the coronavirus crisis and the climate crisis?. Beijer Discussion Paper Series.