Saving the environment will help fighting the coronavirus crisis

In light of the coronavirus crisis our environmental challenges can be approached in two ways. Delaying implementing ecological solutions or implementing them immediately as a tool to fight the economic crisis.
Saving the environment will help fighting the coronavirus crisis

(Catherine Weetman, CC BY-SA 4.0)

The increasing frequency of droughts, which devastate not only agriculture, is the result of excessive human interference in the natural environment. This included many decades of mass-scale drainage of wetlands and regulation of rivers, which involves the “straightening” of the river channel and the elimination of the natural flood plains.

Such a “straightened” river is characterized by faster water flow, which is conducive not only to droughts, but also to floods. We can add one more thing: do we really need to convince anyone that polluted air and polluted rivers both harm the environment and generate huge costs burdening the economy?

Smog leads to increased incidence of illness, sick leave, hospital stays, disability pensions, premature deaths. Meanwhile, due to polluted rivers the Baltic Sea is dirtier, has a lower fish population, and is less attractive to tourists. Additionally, the pollution of rivers increases the cost of the treatment processes performed on the municipal tap water in large cities (in the biggest Polish cities the water in the municipal water supply networks generally comes from rivers). The above examples should be enough to disprove the opinion that environmental protection is a whim of the rich, which should be discarded in light of the current economic crisis.

Many arguments against this point of view can be found in the report entitled “Eight myths about the circular economy,” prepared by two economists from ING Bank Śląski SA, Karol Pogorzelski and Leszek Kąsek. In their work the authors made extensive use of the ING Financial Barometer.

“Right now, the most important thing is to suppress the COVID-19 pandemic, and then to rebuild the economy. States will be able to stimulate economic growth in two ways. Either by ignoring global environmental problems, or by taking these factors into account. We believe that the second approach will ultimately prevail,” wrote the authors. According to them environmental problems are becoming “increasingly difficult to ignore” and are now considered very important by the majority of the population in developed countries, which is confirmed by public opinion surveys, including in Poland.

Secondly, the European Union, its authorities and elites, have taken the position that the coronavirus crisis cannot be treated as a reason to abandon what is currently the EU’s most important program, that is, the Green Deal, whose goal is to transform the EU member states into more environmentally friendly countries.

The EU decision-makers do not want to abandon this program because in their opinion the continued emphasis on environmental protection in the Community not only won’t harm the EU economy, but will actually help in the recovery and reconstruction from the devastation caused by the coronavirus crisis.

We need to reduce the consumption of raw materials

Such an approach can be convincingly justified in many ways. The first is renewable energy, which further development, assumed under the Green Deal, would bring a double benefit to the EU member states. On the one hand, they would use more of their own resources, which would be conducive to economic development, and on the other hand, they would reduce imports of natural resources and their dependence on these imports.

The EU member states do not have sufficient resources of oil, gas, coal, and uranium to meet their needs. However, these shortages are more than compensated by the abundance of renewable energy sources.

This is not limited to energy, but also to fuels, as the traditional fuels, derived from oil or gas, can be replaced by electricity produced from renewable energy sources and by hydrogen. The technologies that enable us to use electric and hydrogen vehicles are among the previously mentioned expensive, environmentally friendly solutions, whose development and dissemination we could now suspend in the name of fighting the economic crisis.

And yet we shouldn’t do that. One of the reasons is that shallow oil reserves, which allow for low-cost production, are starting to run out. This means that sooner or later this raw material will once again become expensive — not to mention the fact that countries producing the most oil have formed an oligopoly (OPEC) and are trying to artificially inflate prices.

For the same reason we shouldn’t now abandon the efforts to implement the circular economy. This concept is usually associated with recycling, waste management and the recovery of secondary raw materials. It is based on the idea that instead of throwing used items to landfills, we should re-use them and recover the raw materials that they contain.

However, the circular economy is a much broader concept. It involves the belief that the manufactured goods should be more durable, that we should be once again able to repair them, and thirdly, that fewer materials should be consumed in their production. The implementation of each of these proposals would lead to a reduction in raw material consumption and, consequently, a reduction in prices.

A vicious cycle

We can therefore imagine the following vision of the future: the items that we buy are more durable, but they aren’t more expensive. This is because their production doesn’t cost more as a result of the lower prices of raw materials.

Thus far, due to the increasingly fierce global competition companies wanted to produce goods as cheaply as possible. As a result, their products were less durable, but were still becoming increasingly expensive. This was due to the fact that much more frequent replacement of old products with new ones led to increased consumption of raw materials and the resulting price increases.

As a result of the global effort to lower production costs, in recent decades manufacturing activity was moved on a mass-scale to countries where labor costs were lower, but also where no one cared about environmental protection. This resulted, among other things, in the devastation of the natural environment in China. In that country, in order to reduce the production costs, millions of tons of waste are thrown straight into the sea, rather than safely processed.

Since China has become the world’s factory, each year hundreds of millions of tons of goods are transported from there over great distances, reaching thousands of kilometers. This process requires the consumption of huge amounts of fuel.

And if we take into account the impact of transport on prices and on the environment, as well as, for example, the economic effects associated with the shrinking of the manufacturing base in Europe and the United States (which was the result of moving production to China and other Asian countries), then it could turn out that on the whole, we may not be saving much money at all by purchasing cheaper goods from Asia. That our savings are purely illusory.

The circular economy is cost-effective

Another example of the trap that we are being pushed into in our pursuit of the lowest possible costs is the practice of replacing rapeseed oil or sunflower oil with the cheaper palm oil, as well as replacing native feeds with imported soybeans, which guarantee faster weight gain in livestock.

Unfortunately, these practices lead to the destruction of thousands of hectares of tropical forests in Asia or South America — including in the Amazon region — which are being cleared in order to make room for the cultivation of these crops. This, in turn, accelerates the process of climate change, which hurts the entire world. The effects of these changes include, among others, the increasingly frequent droughts, floods, hurricanes, or very heavy rainfall, leading to the so-called flash floods, which are already also affecting Polish cities.

In other words, environmental protection and sustainable development do pay off, but in order to fully appreciate that we need to take into account all of the costs, including the indirect costs. Therefore, in the face of the pandemic and the economic crisis that it caused, we should not abandon our growing consideration for environmental protection. It is particularly worth striving for in terms of the circular economy, even if today it seems to us that we can wait until we get out of the current difficult economic situation.

Why shouldn’t we wait in the current circumstances? Let’s examine the arguments presented by the authors of the report “Eight myths about the circular economy”.

The first myth is the widespread belief that this idea is merely a “fad which will soon fade away”. This is simply not the case, if only due to the fact that — according to opinion polls — the majority of Poles, and Europeans in general, now see the excessive amounts of plastic waste as a major environmental concern, and that people are willing to pay more for environmentally friendly products that “promote sustainable growth”.

This is being reflected in the European Union’s environmental policy, but also in the policies of Western corporations, which are increasingly boasting about initiatives to reduce the consumption of plastic, e.g. by lowering its content in the packaging.

According to the authors of the report, another myth has already been mentioned above: the equally popular belief that the circular economy, like other green solutions, simply isn’t cost-efficient. The authors of the report refute this myth using multiple arguments. One of them is that on average the cost of acquiring materials accounts for 40 per cent of all the costs of EU industrial companies.

These companies would increase their profitability by reducing the consumption of materials, including plastics, e.g. by introducing thinner layers of packaging. At present the size of packaging is often very extensive, many times larger than the product it contains. This is true, among others, in the case of jewelry items.

As already mentioned, producing more durable items, and facilitating their repairs (at present it makes no sense to fix them also due to the fact that they aren’t very durable) would lead to a reduction in material consumption.

This is one of the main objectives of the circular economy, even though some erroneously assume that is boils down to recycling, which, of course, is very important in its own right.

Insufficient recycling rates

The low recycling rate of plastics is a huge problem in the European Union member states. Across the EU, only 42 per cent of the consumed plastics are recovered and re-used. In Poland, this rate reaches 35 per cent, and in some EU countries it is even lower: in Austria it is 33 per cent, in Ireland it reaches 31 per cent, and in France, Finland and Estonia it is only 27 per cent.

Among other things, this is due to the fact that packaging is frequently manufactured in a way that hinders and increases the cost of recycling, which means that it is not economically viable. For example, paper labels are glued onto plastic, or the packaging is composed of various types of synthetic materials (such as plastic bottles, which have a glued-on foil label). One real nuisance are juice and milk cartons, which consist of a layer of paper, polyethylene foil and aluminium foil.

Therefore, according to the economists from ING, the next myth is the claim that simply changing consumer habits would suffice to change the current situation.

Unfortunately, that won’t be enough. Let’s start with the idea of repairing equipment, which is now expensive, because many companies prefer to only sell new products instead of offering the repairs of used ones. Another example is the widespread lack of solutions allowing customers to return used glass bottles. As for the recycling of plastics, the plastic bags used in stores, which the customers can replace with reusable bags, are just the tip of the iceberg.

In order to reduce the consumption of plastic and to increase its recovery, we need regulations that will force manufacturers to take responsibility for the recycling process and to bear the associated costs. Then it will make economic sense for them, for example, to replace the existing packaging with new designs that will be easier to recycle, e.g. ones consisting of only one type of material.

This is doable, and many companies are already using such packaging. But the other manufacturers need to be encouraged to do that. Both by consumer pressure, but also by appropriate regulations. The so-called packaging fee, which is included in the price of each packaged good, is widely used in Western countries.

Poles support sustainable development

There is no shortage of solutions that would contribute to a circular economy. The only thing that is needed is the will to implement them. Interestingly enough, according to the research conducted by ING, in Poland the public is the most supportive of such initiatives. The percentage of people supporting the circular economy in Poland is higher than in Germany, which is where the contemporary recycling movement started. It is also higher than in Austria, France, the United Kingdom, and the Benelux countries. Why? Probably because the Polish society is still relatively poor, which means that people use various items for longer and are more willing to repair broken ones. After years of poverty during communism, the Poles are still quite frugal, and they don’t like wastefulness. This is a very desirable virtue in our times, and practicing such values is pretty much synonymous with sustainable development and the circular economy.

(Catherine Weetman, CC BY-SA 4.0)

Tags


Related articles

The long way to a Circular Economy

Category: New trends
The global economy consumes much more resources than it is able to replenish or reuse. The issue of decoupling economic growth from the consumption of resources is becoming a key element of the development policies in many countries.
The long way to a Circular Economy

Innovation is created from private capital

Category: New trends
The state does not have its own capital and in order to create something it first needs to take resources from someone else, says Professor Robert Ciborowski, the President of the University of Białystok.
Innovation is created from private capital

No one knows how long this crisis will last

Category: Macroeconomics
“The longer the lockdown lasts, the more likely it is that there will be changes in consumer tastes, changes to production techniques and supply chains, and we will build more capacity for emergencies into health systems,” says Paul Tucker, former Deputy Governor of Bank of England
No one knows how long this crisis will last