Assessing Short-Term and Long-Term Economic and Environmental Effects of the COVID-19 Crisis in France
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Assessing Short‑Term and Long‑Term Economic and Environmental Effects of the COVID‑19 Crisis in France Paul Malliet1 · Frédéric Reynès1,2,3 · Gissela Landa1 · Meriem Hamdi‑Cherif1 · Aurélien Saussay1,4 Accepted: 13 July 2020 © Springer Nature B.V. 2020
Abstract In response to the COVID-19 health crisis, the French government has imposed drastic lockdown measures for a period of 55 days. This paper provides a quantitative assessment of the economic and environmental impacts of these measures in the short and long term. We use a Computable General Equilibrium model designed to assess environmental and energy policies impacts at the macroeconomic and sectoral levels. We find that the lockdown has led to a significant decrease in economic output of 5% of GDP, but a positive environmental impact with a 6.6% reduction in C O2 emissions in 2020. Both decreases are temporary: economic and environmental indicators return to their baseline trajectory after a few years. C O2 emissions even end up significantly higher after the COVID-19 crisis when we account for persistently low oil prices. We then investigate whether implementing carbon pricing can still yield positive macroeconomic dividends in the post-COVID recovery. We find that implementing ambitious carbon pricing speeds up economic recovery while significantly reducing C O2 emissions. By maintaining high fossil fuel prices, carbon taxation reduces the imports of fossil energy and stimulates energy efficiency investments while the full redistribution of tax proceeds does not hamper the recovery. Keywords Carbon tax · CO2 emissions · Macroeconomic modeling · Neo-Keynesian CGE model · Post-COVID economy JEL Classification E12 · E17 · E27 · E37 · E47 · D57 · D58
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s1064 0-020-00488-z) contains supplementary material, which is available to authorized users. * Paul Malliet [email protected] 1
OFCE - French Economic Observatory, Paris, France
2
NEO - Netherlands Economic Observatory, Rotterdam, The Netherlands
3
TNO - Netherlands Organization for Applied Scientific Research, The Hague, The Netherlands
4
LSE - London School of Economics, London, UK
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P. Malliet et al.
1 Introduction Appearing in China in late 2019, the COVID-19 outbreak has spread extremely rapidly throughout most countries in the world over the first months of 2020, and was declared a pandemic by the World Health Organization on March 11, 2020 (WHO 2020). To slow down the rate of its spread, most countries have imposed severe measures to encourage people to limit physical interactions, ranging from the banning of public events, closing of schools, non-essential businesses and borders up to complete country-wide lockdown. These unprecedented measures have significantly impacted both the economy and the environment at the global and national levels—at least over the short run. However, the environmental and economic impact of this crisis over the medium and lo
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