Euston Quah and co-author: Qiyan Ong, Straits Times 24 Mar 09;
THERE is a common misperception that the current global financial crisis will mean that concern for the environment will come to a standstill.
The reasoning is as follows: During a recession, creating jobs and jump-starting economic growth are paramount. Thus governments around the world are busy crafting stimulus packages, the main motivation being the creation and preservation of jobs. With most resources channelled towards economic revival, many fear that nothing will be left for the environment. This presumption, however, is flawed.
A financial crisis is often accompanied by a drastic fall in global demand. This translates to lower production and consequently less pollution, less carbon emissions and lower rates of resource depletion. Environmental awareness is never stronger than in times like these and the market for renewable energies has already taken off.
Last month, United States President Barack Obama announced that Washington will invest more than US$20 billion (S$30 billion) in green technology. His intention was to achieve the dual task of creating jobs and fighting climate change. This shows that the global environmental agenda has not been forgotten - and more importantly, that protecting the environment and the pursuit of economic growth do not always have to be a zero- sum game.
The dual focus on reviving economic growth and sustaining the environment is also evident in Singapore's 2009 Budget. Being a small open economy that relies heavily on international trade, Singapore has little chance of averting a sharp downturn regardless of the amount of money it pumps into its economy.
The Singapore Government has thus adopted the pragmatic approach of cushioning the impact of the financial crisis while continuing or bringing forward its plans for non-economic concerns such as the environment. The Government plans to spend $1 billion over the next five years on sustainable development initiatives. These include promoting energy efficiency in industries and households and investing in green transport, clean energy and the greening of our living spaces.
Investing in the environment is an economically sound decision during a financial crisis. Lower global demand means that transactions will be slow in most industries. This, in turn, will affect the cost of raw materials which now may be lower. With lower opportunity cost, industries will have more incentive to incorporate energy efficiency considerations into the design of their industrial facilities as well as adopt energy efficient technologies if there is some financial support and/or subsidy from the government.
From the business perspective, undertaking such investments will lead to improvement in production efficiency and consequently lower business cost in the long run. This prepares the firm for the good times ahead by keeping it competitive in the global business arena.
From the country's perspective, encouraging energy efficiency will enhance business competitiveness and also energy security, besides reducing greenhouse gas emissions. These goals can be achieved together with the goal of job creation.
Singapore has set aside $10 million for the MND Research Fund to support research and development in green building technologies and energy efficiency. It is also actively trying to attract renewable energy firms to set up their plants in the country. Such efforts will further enhance Singapore's energy security, protect the environment - and create jobs.
The Singapore Government has also allocated $24 million to transforming a network of drains, canals and reservoirs into beautiful and clean streams, rivers and lakes, surrounded by parks and green space. A further $695 million has been allocated to transform Singapore into a 'City in a Garden' - by constructing Gardens by the Bay, building a park connector network and promoting skyrise greenery. These projects will not only provide leisure space but also beautify the city state and reduce urban heat. People will have more time to spend on leisurely pursuits, visiting parks and enjoying recreation . Some may even become healthier - and thus, more productive when economic growth resumes. More will become environmentally aware. All this will benefit the green economy in the long run.
Although the current financial crisis is vicious in causing unemployment, it provides opportunities nationally for transformation towards sustainable development. At the individual level, busy city dwellers may finally find time to appreciate and preserve the gifts of nature.
And far from hurting the environment, the consequences of the financial crisis for the environment will probably be positive.
Euston Quah is professor of environmental economics and head of economics at Nanyang Technological University. Qiyan Ong is pursuing her PhD degree at the same university.
