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34

Global Financial Crisis and the Environment – A Blessing in Disguise?

During financial crises, individuals think twice before spending money on luxury products and conveniences. The environment can be considered one of these luxuries, as priorities change on a whim once the ‘survival instinct’ engages.

During financial crises, individuals think twice before spending money on luxury products and conveniences. The environment can be considered one of these luxuries, as priorities change on a whim once the ‘survival instinct’ engages. In Britain, Lord Stern of Brentford, amongst others, voiced his concern over the “danger” of the environment being sidetracked whilst other issues such as the economy, are dealt with.

When individuals are cutting back on their spending, they are less likely to use their conscience and more likely to look at their prospects for personal survival. The environment influences everyone but its damage does not proportionally affect those who cause it e.g. acid rain often falls in a different place, sometimes a different country hundreds of miles away from its cause. Thus, it is rational that one considers the environment to be an unworthy cause on which to spend their tight budget. The uncertainty of the financial future seems to override the certainty of the environmental future, and the fact that we could well suffer more from the latter than the former is masked by the present high profile of the global economic problems.

However, the problem of the environment does not disappear simply by ignoring it. Last week EU Environment Commissioner Stavros Dimas put the situation into perspective stating, "There is an economic crisis, a financial crisis, an energy crisis and there is a climate crisis". He continued, "The climate crisis is permanent. All the other crises today, tomorrow, I hope will pass but the climate crisis is a permanent threat for the globe".

Although the Commissioner speaks wise words, encouraging governments and individuals to act accordingly is another matter. Or is it?

The current financial crisis could bring hope for the environment. Individuals are making lifestyle changes that are beneficial to the environment. Car sales have reduced dramatically whilst bicycle sales have risen. Holidays booked abroad have decreased thus reducing pollution by cutting the use of fossil fuels. Some analysts say that further steps will occur naturally if the economy continues its current trend.

Individuals may grow their own food as opposed to buying imported goods that carry high carbon footprints. Families could revert to manual means of performing certain jobs in the home currently done by powered machines. Walking and using bicycles could become much more popular means of transport.

Although the action may not be intentional, the effect of the financial crisis may not be as harmful to the environment as some may think - at least in terms of the countries that are hardest hit.

On the flip side, being proactively environment friendly is less attractive and more difficult. When liquid assets are tight, governments will prioritize spending on saving failing banks for example, and individuals will be unwilling to spend more on environmentally friendly cars.
We have witnessed the changing priority of the US presidential candidates from the environment to the domestic economy which only proves this point. The election is in a few days time, and voters are much more likely to be persuaded by the prospect of home and job security in the next few years, rather than the preservation of things which won’t affect them for perhaps a few decades.

The fall in demand for products which are sourced abroad such as oil, may be just what countries need to reduce their foreign trade deficit. The credit crisis could prove to be what is needed to force us to be more environmentally friendly. Depending on supply restrictions, oil prices could fall if demand for oil drops. Recent days have seen oil fall to $88 per barrel already and some predict they could fall as low as $50.

In a free market the price of a commodity is determined by the relationship between supply and demand. Whilst an oil producer can affect supply volumes, the demand can only be influenced by the consumer, thus the price will always to some extent be determined by factors outside of the control of any one nation.
Fluctuations in the oil price will always produce both winners and losers, as do interest rates, the cost of food etc. Whatever damage the current financial crisis has done to certain individuals, institutions and nations, and despite the danger of self preservation and short-term planning, the current financial crisis may be the environment’s blessing in disguise.



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Author: Jo Amey

Source : Neftegaz.RU