A new study has attempted to quantify the socio-economic and environmental impact of the COVID-19 pandemic.
It suggests consumption losses of more than US$3.8 trillion, full-time equivalent job losses of 147 million and a 6% fall ($2.1 trillion) in income from wages and salaries, though these may be underestimates.
At the same time, we have seen the biggest-ever drop in greenhouse gas emissions – by 4.6% or 2.5 gigatonnes. The previous biggest falls were during the 2009 global financial crisis (0.46Gt) and as a result of land-use changes under the Kyoto Protocol in 1998 (2.02Gt).
Most directly hit economically have been the travel sector and regions of Asia, Europe and the US, with cascading multiplier effects across the entire world because of globalisation.
The loss of connectivity imposed to prevent the virus spreading triggers an economic “contagion”, the report’s authors say, causing major disruptions to the trade, tourism, energy and finance sectors, while easing environmental pressures, particularly in some of the hardest-hit areas.
The work was led by Australia’s University of Sydney, in collaboration with institutions in the UK, Indonesia, Japan, Ecuador, the US and China. The findings are published in the journal PLOS ONE.
The researchers used “live” data to 22 May (with the exception of air travel, for which only a 12-month forecast exists) and multi-regional input-output (MRIO) to track flows between economic sectors. One strand of MRIO is disaster analysis.
The work was carried out in the Cloud-based Global MRIO Lab, an extension of the University of Sydney’s Australian Industrial Ecology Lab, which can calculate the impact of international trade along billions of supply chains extending to 221 countries.
For the study, 38 regions and 26 sectors were analysed, with data translated from sources in 12 languages ranging from Arabic to Hindi and Spanish.
“We are experiencing the worst economic shock since the Great Depression, while at the same time we have experienced the greatest drop in greenhouse gas emissions since the burning of fossil fuels began,” says corresponding author Arunima Malik.
“In addition to the sudden drop in climate-change inducing GHGs [greenhouse gases], prevented deaths from air pollution are of major significance.
“The contrast between the socio-economic and the environmental variables reveals the dilemma of the global socio-economic system.”
The authors say reductions in individual national economies have amplified one another, leading to even larger economic losses and environmental gains on a global scale.
“Out of the total income losses of $2.1tr, $536bn or about 21% is lost because of a reduction in international trade, demonstrating the importance of international spill-overs that cause the effects of the COVID-19 pandemic to be felt in all countries across the globe,” they write in their paper.
“Given the reliance of many national economies on China, we observe significant losses in supply chains that originate in Mainland China.
“The pandemic has exposed vulnerable businesses whose supply chains are heavily concentrated in countries that are most directly impacted by the crisis. Countries that have significant trade relationships with the most coronavirus-affected countries also experience emission reductions.”
If that’s not sombre enough, the authors note that while reactions to COVID-19 have the have had a greater impact on global emissions caused than “attempts by any government or any international agreement in the 32-year history of intergovernmental climate policy”, the 4.5% fall still falls short of what would be needed every year until 2050 to limit global warming to 1.5 degrees Celsius.
They are not totally without hope, however.
“On one hand the pandemic has shown the risks and fragility of our highly interconnected and interdependent economies and societies, which highlights the need for global cooperation and solidarity, as no country will be ‘immune’ to situations developing elsewhere,” they write.
“On the other hand, it has shown that we can face crises with concerted and decisive interventions and changes in behaviours and lifestyles, which can lead to significant environmental benefits while protecting people’s livelihoods at the same time.”