COVID-19 pandemic: Ecological lessons to prevent future economic crisis

COVID-19: Ecological lessons to prevent future economic crisis due to a pandemic

The COVID-19 pandemic has made it abundantly clear that there is a very strong relationship between ecology and economy. To prevent future economic crisis due to the annihilation of resilient ecosystems, any assessment of a company’s performance should include an analysis of its impact on nature.

According to experts from the World Economic Forum ecosystems, the disturbance has significantly increased the risk of pandemics. 

Human activities like deforestation, pollution, unsustainable land use, global warming and the ever-growing international transportation of both people and goods have led to a world in which viruses are not only transmitted from animals to humans more often but are also easily spread around the globe.

Economic depression is likely

Economic activities thus increase the risk of pandemics, but pandemics also have a huge impact on economic activities. COVID-19 has resulted in an economic meltdown that can only be compared with the effects of war. 

Not even the 2008 financial crisis has had this impact on sales, household incomes and the world’s GDP. A severe and long-lasting global economic depression is very likely, threatening the development of Africa.

All efforts by governments and companies are now focused on containing the virus and finding a cure and a vaccine. Along with this medical approach, measures are taken to alleviate the economic consequences for companies and households. 

The mandatory use of facemasks, the curfew, suspension of air travel, tax cuts and the waiver of M-Pesa transaction fees by Safaricom, for example, all are aimed to reduce the burden to the citizenry between the initial outbreak and a post-corona situation.

Respect for ecological boundaries

To reduce the risk of a similar pandemic paralyzing the world economy in future, an entirely different set of measures is required. To respect ecological boundaries.

One way to balance economy and ecology is ‘degrowth’, a strategy that focuses on downscaling of production and consumption to fight environmental issues.

A contraction of the economy would decrease the pressure on ecology.

Less air traffic means less pollution; less transport leads to a reduction of greenhouse gas emissions; less production reduces the need for scarce natural resources. 

The economy comes to a standstill, nature recovers. This is exactly what we are experiencing now because of COVID-19, and it is not a situation many people are happy with.

Business and ecology are interlinked

The other option is to change the way the economy works and secure a thriving society without devastating the very planet we are dependent on. 

However obvious this may sound; it is easier said than done. It is not difficult to understand that pandemics are bad for business but aligning business activities with nature in practice still is very challenging. 

There are very few companies which can precisely describe their dependence on ecological processes and biodiversity, or what impact they have on nature and ecosystems.

This lack of business knowledge about ecology, nature and ecosystems, and the way this interacts with economic activities, global trade and use of natural resources must be addressed if we want to prevent any future virus to force us to experience an economic crash again.

Our health is our wealth

Therefore, it is key that every entrepreneur, every banker, accountant, investor and shareholder understand the connection between economic activities and nature. 

Not only on a global level but also the level of individual companies. The dependence on natural resources and the impact on the environment should be part of every risk assessment and annual report. 

It should be discussed when applying for credits, it should be part of the financial analysis of every company.

If not, it is just a matter of time before the next virus not only ruins our health but also our wealth.