Thursday, 10 April 2008
Would a recession be good or bad for the environment?
Add or View Comments- Thu, 10 Apr 2008
- View More On: Environomics
Today the Bank of England joined the race to the bottom on the interest rate scale - a 0.25% rate cut - not quite as dramatic as the Fed but then the BoE doesn't have to care about people - only inflation.
They Sound So Mean!
But what would they have done if their primary goal had been to keep carbon emissions down? Let's rename them the "Carbon Bank of England" and have a think.
Recession Good?
A few environmental plus sides:
- decreased consumption is a big one leading to less manufacturing, resource use and transport
- people stay in meaning fewer car journeys
- higher unemployment would mean fewer car journeys and less energy consumed in offices
- pressures on incomes might push people to turn thermostats down a degree
- we all cut back on waste to save money
Recession Bad!
And the other side of the coin:
- more people buy economy food
- people opt for cheap alternatives - green features become less appealing
- people stay in - probably causing increased energy use in the home
- companies outsource more to reduce costs - higher transport costs for goods
- lower investment in home power generation
- lower tax bill pushes government to focus on core needs - health, poverty, education, defense
- lower demand for raw materials would cause prices to fall encouraging consumption (in the medium term)
So that makes it bad?
I have to conclude that a recession would be bad for the environment. So a rate-cut which should provide an economic boost is welcome. Nevertheless it is not completely clear and the next 12 months will undoubtedly show us how serious people, companies and politicians are about the environment and who's all talk.
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