What Is Past Is Prologue: Learning from the Global Financial Crisis to Green the COVID-19 Recovery

Abstract

This paper evaluates green stimulus packages that were introduced in response to the global financial crisis (GFC) of 2007–08 and draws lessons relevant for greening the recovery from the Coronavirus (COVID-19) pandemic. It provides evidence that well-designed green stimulus measures can help the economic recovery and bring about environmental benefits. Nevertheless, almost a decade and a half after the GFC unfolded, the ex post evidence of the joint economic and environmental impact of green stimulus measures remains very limited. Drawing on the lessons from the GFC, the paper underscores the importance of proper policy design, more realistic recognition of the potential trade-offs between economic, environmental and social objectives, and of building in impact evaluation mechanisms into green stimulus measures. The paper also highlights that COVID-19 is unfolding in a policy context that is very different from 2007 to 2008 and identifies new challenges as well as opportunities for greening the COVID-19 recovery.