The Environmental Effects of the Economic Downturn

Posted by Laurence O'Sullivan Nov 25, 2008

It was good to hear Barack Obama mention the environment in his acceptance speech. He used the words “planet in peril” and promised a large financial investment in green, environmental projects especially in relation to U.S. energy independence. Since then of course we have had a huge financial downturn and there is a danger that the environmental peril to the planet will be overshadowed by the financial peril.

While writing and researching the articles “Energy Conservation and U.S. Energy Independence”, “Depleting the Earth's Environmental Resources” and “Current Environmental Impact on Biodiversity” it became clear to me that the planet is indeed in peril and the major reason is our overriding drive for economic growth. In a staple environmental climate it is possible to strive for sustainable growth while cutting back on damage to the environment, but this comes with an economic cost. Now that the world is experiencing financial difficulties the extra cost of tackling climate change and avoiding damage to our environmental resources such as the oceans, rivers and rainforests may be sacrificed again to the drive for economic growth.

There are environmental gains and losses in an economic downturn. One the one hand, as growth slows so too should the use of energy, the majority of which comes from fossil fuels, hopefully slowing the rate of increase in atmospheric carbon dioxide with some positive environmental results. But just as people were beginning to look at alternative sources of energy, the price of fossil fuels has plummeted due to the poor economic outlook. The high price of oil was in effect a “carbon tax” and the downturn has now removed this, with a twofold effect on the environment. Firstly, as oil becomes cheaper people will tend to use more of it, diluting any attempts to lower the world’s output of greenhouse gases and secondly it makes alternative fuels such as biofuels, solar electricity and hydrogen much more expensive alternatives. Most alternative sources of energy are relatively new technologies and as such need a large initial investment to bring to fruition and this extra investment will now be harder to come by.

I came across two quotes recently which struck me as entirely appropriate to our present environmental predicament. One was from James P. Leape, Director-General of WWF who said “The recent downturn in the global economy is a stark reminder of the consequences of living beyond our means. But the possibility of financial recession pales in comparison to the looming ecological credit crunch.” The other quote was on a tee shirt on a person in the center of Bangkok which said “We did not inherit this planet from our ancestors; we’ve just borrowed it from our descendants.”

The economic turmoil now enveloping the world is a serious threat to the people of this planet, but like all economic crises in history it will pass. The environmental threat may not be so kind to this planet in peril.