Recession a double-edged sword for the environment

30th July 2009

Simon Harding

The global economic downturn may lift the pressure on the environment as consumers in the US begin to reign in their spending. Sales of household appliances like air conditioners and TV sets have fallen dramatically. Consequently, Waste Management, a large US-based refuse and recycling company, reports that landfill volumes on the other side of the Atlantic are down 13.6% on last year. But Americans are not only starting to make-do-and mend, they are also using their cars less and travelling by public transport more frequently, despite tumbling petrol prices.

‘Certainly in the short term we are using less resources’, said economist Dean Baker, co-director of the Washington-based Centre for Economic and Policy Research, ‘(but) I’d much rather see a healthy economy’. As unemployment rises and disposable incomes drop, Americans are becoming thriftier, consuming less and using fewer resources. ‘There's an unavoidable benefit, in the sense that they do consume less. There's no getting around that. Fewer houses are being built, less sprawl,’ said David Cassuto, professor of environmental law at Pace University.

However, the recession may be stifling long-term green investments in renewable energy. Tight credit and low oil prices mean the US will see the development of wind power fall for the first time since 2004. T. Boone Pickens, a billionaire oil man, has recently reduced his ambitious plan to build the largest wind farm in the country. ‘A lot of deployment of solar and wind were on a very aggressive schedule and now they are being pared back a bit because of the recession’, said Andy Stevenson, financial analyst for the National Resources Defence Council. Recycling schemes have also been hit as municipal governments strive to cut costs in the face of falling tax takes.

Irrespective of the short-term environmental benefits, the recession can only damage the long-term transition to a low carbon economy. Environmentally friendly entrepreneurs who take into account the environmental impact of their goods and services in their pricing cannot compete on cost with established non-green competitors. As prudence becomes the dominant principle amongst consumers, they will lose out. Prosperity and sustainability are not necessarily best achieved by restricting people’s ability to consume, but by providing viable green alternatives to everyday goods and services within a buoyant growing economy.


See also: ‘Recession cuts pollution but also green investment’, Rebekah Kebede, Yahoo Finance, 27/7/09. Available at: http://uk.biz.yahoo.com/27072009/325/recession-cuts-pollution-green-investment.html