Hostname: page-component-5d59c44645-kw98b Total loading time: 0 Render date: 2024-02-26T14:39:04.431Z Has data issue: false hasContentIssue false

The impact of the COVID-19 enforced lockdown and fiscal package on the South African economy and environment: a preliminary analysis

Published online by Cambridge University Press:  07 September 2021

Margaret Chitiga-Mabugu
Affiliation:
University of Pretoria, Pretoria, South Africa
Martin Henseler
Affiliation:
Thünen Institute of Rural Studies, Braunschweig, Germany Partnership for Economic Policy (PEP), Nairobi, Kenya EDEHN – Equipe d'Economie Le Havre Normandie, University of Le Havre Normandie, Le Havre, France
Ramos Mabugu
Affiliation:
Sol Plaatje University, Kimberley, South Africa
Helene Maisonnave*
Affiliation:
EDEHN – Equipe d'Economie Le Havre Normandie, University of Le Havre Normandie, Le Havre, France
*
*Corresponding author. E-mail: Helene.maisonnave@univ-lehavre.fr

Abstract

This paper offers a quantitative assessment of the impacts of the COVID-19 pandemic-induced lockdown and government fiscal plan, containing ‘green’ elements on the economy and the environment of South Africa. The analysis uses a dynamic computable general equilibrium model operationalised using a social accounting matrix coupled with a greenhouse gas balance and emissions data. We find that while the economy is harshly impacted by the pandemic in the short term, the government fiscal package ameliorates and cushions the negative effects on poor households. Importantly, an adaptation of the fiscal package towards a ‘greener’ policy achieves the same economic outcome and reduces unemployment. Carbon dioxide emissions decrease in the short run due to economic slowdown. This improvement persists until 2030. These results can be used as decision support for policy makers on how to orient the post COVID-19 policies to be pro-poor and pro-environment, and thus, ‘build back better and fairer’.

Type
Research Article
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aguiar, A, Chepeliev, M, Corong, E, McDougall, R and van der Mensbrugghe, D (2019) The GTAP data base: version 10. Journal of Global Economic Analysis 4, 127.CrossRefGoogle Scholar
Ahmad, M and Khattak, SI (2020) Is aggregate domestic consumption spending (ADCS) per capita determining CO2 emissions in South Africa? A new perspective. Environmental and Resource Economics 75, 529552.CrossRefGoogle Scholar
Arndt, C, Davies, R, Gabriel, S, Harris, L, Makrelov, K, Modise, B, Robinson, S, Simbanegavi, W, van Seventer, D and Anderson, L (2020) Impact of Covid-19 on the South African economy – an initial analysis. SA-TIED Working Paper 111, South Africa.Google Scholar
Bhorat, H, Köhler, T, Oosthuizen, M, Stanwix, B, Steenkamp, F and Thornton, A (2020) The economics of Covid-19 in South Africa: early impressions. Development Policy Research Unit Working Paper 202004. DPRU, University of Cape Town.Google Scholar
Blanchflower, DG and Oswald, AJ (1995) An introduction to the wage curve. Journal of Economic Perspectives 9, 153167.CrossRefGoogle Scholar
Burger, RP, Coetzee, LC, Kreuser, CF and Rankin, NA (2017) Income and price elasticities of demand in South Africa: an application of the linear expenditure system. South African Journal of Economics 85, 491514.CrossRefGoogle Scholar
Chitiga-Mabugu, M, Henseler, M, Mabugu, R and Maisonnave, H (2021) Economic and distributional impact of COVID-19: evidence from macro-micro modelling of the South African economy. South African Journal of Economics 89, 8294.CrossRefGoogle Scholar
Decaluwé, B, Lemelin, A, Robichaud, V and Maisonnave, H (2013) The PEP standard single-country, recursive dynamic CGE model. PEP. Available at https://www.pep-net.org/pep-standard-cge-models#1-t.Google Scholar
Department of Environmental Affairs (2016) GHG National Inventory Report for South Africa 2000–2015. Department of Environmental Affairs, Republic of South Africa. Available at https://www4.unfccc.int/sites/SubmissionsStaging/NationalReports/Documents/32895176_South%20Africa-BUR3-1-Final%202000%20-%202015%20GHG%20Inventory%20v2.pdf.Google Scholar
Department of Water and Sanitation (2017) Benchmarking of water loss, water use efficiency and non-revenue water in South African Municipalities (2004/05 to 2015/16). Department of Water and Sanitation, Pretoria. Available at https://africacheck.org/wp-content/uploads/2018/04/National-benchmark-2017-09-12-final.pdf.Google Scholar
Government of South African (2020) The South African economic reconstruction and recovery plan. Republic of South Africa. Available at https://www.gov.za/sites/default/files/gcis_document/202010/south-african-economic-reconstruction-and-recovery-plan.pdf.Google Scholar
Helm, D (2020) The environmental impacts of the Coronavirus. Environmental and Resource Economics 76, 2138.CrossRefGoogle ScholarPubMed
Jung, HS and Thorbecke, E (2003) The impact of public education expenditure on human capital, growth, and poverty in Tanzania and Zambia: a general equilibrium approach. Journal of Policy Modeling 25, 701725.CrossRefGoogle Scholar
Kerr, A and Thornton, A (2020) Essential workers, working from home and job loss vulnerability in South Africa. A DataFirst Technical Paper 41. Cape Town: DataFirst, University of Cape Town.Google Scholar
Kingdon, GG and Knight, J (2006) How flexible are wages in response to local unemployment in South Africa? Industrial and Labor Relations Review 59, 471495.CrossRefGoogle Scholar
Laborde, D, Martin, W, Swinnen, J and Vos, R (2020) COVID-19 risks to global food security: economic fallout and food supply chain disruptions require attention from policy-makers. Science (New York, N.Y.) 369, 25.CrossRefGoogle Scholar
Le Quéré, C, Jackson, RB, Jones, MW, Smith, AJP, Abernethy, S, Andrew, RM, De-Gol, AJ, Willis, DR, Shan, Y, Canadell, JG, Friedlingstein, P, Creutzig, F and Peters, GP (2020) Temporary reduction in daily global CO2 emissions during the COVID-19 forced confinement. Nature Climate Change 10, 647653.CrossRefGoogle Scholar
Letsoalo, A, Blignaut, J, de Wet, T, de Wit, M, Hess, S, Tol, RSJ and van Heerden, J (2007) Triple dividends of water consumption charges in South Africa. Water Resources Research 43. doi: 10.1029/2005WR004076.CrossRefGoogle Scholar
Maliszewska, M, Mattoo, A and van der Mensbrugghe, D (2020) The potential impact of COVID-19 on GDP and trade a preliminary assessment. Policy Research Working Paper No. 9211, World Bank, Washington, DC.CrossRefGoogle Scholar
Matete, M and Hassan, R (2006) Integrated ecological economics accounting approach to evaluation of inter-basin water transfers: an application to the Lesotho Highlands Water Project. Ecological Economics 60, 246259.CrossRefGoogle Scholar
National Treasury (2010) Reducing greenhouse gas emissions: the carbon tax option. Discussion Paper for public comment. National Treasury Department, Republic of South Africa. Available at http://www.treasury.gov.za/public%20comments/Discussion%20Paper%20Carbon%20Taxes%2081210.pdf.Google Scholar
National Treasury (2017) Carbon tax bill. Available at www.treasury.gov.za.Google Scholar
Ndiili, N (2020) Unprecedented economic attack on Sub-Sahara African economies: coronavirus. Environmental Systems and Decisions 40, 244251.CrossRefGoogle ScholarPubMed
Ntombela, SM, Kalaba, M and Bohlmann, H (2018) Estimating trade elasticities for South Africa's agricultural commodities for use in policy modeling. Agrekon 57, 221232.CrossRefGoogle Scholar
Ntombela, SM, Bohlmann, HR and Kalaba, MW (2019) Greening South Africa's economy could benefit the food sector: evidence from a carbon tax policy assessment. Environmental and Resource Economics 74, 891910.CrossRefGoogle Scholar
Ranchhod, V and Daniels, R (2021) Labour market dynamics in South Africa at the onset of the COVID-19 pandemic. South African Journal of Economics 89, 4462.CrossRefGoogle ScholarPubMed
Ratha, D, De, S, Kim, EJ, Plaza, S, Seshan, G and Yameogo, ND (2020) Phase II: COVID-19 crisis through a migration lens. Migration and development brief 33: KNOMAD-World Bank, Washington, DC. License: Creative Commons Attribution CC BY 3.0 IGO.Google Scholar
Sarkodie, SA and Owusu, PA (2020) Global assessment of environment, health and economic impact of the novel coronavirus (COVID-19). Environment, Development and Sustainability 23, 50055015.CrossRefGoogle Scholar
UNEP (2004) Climate policy frameworks beyond 2012: development and climate change in South African context. Energy Research Centre. University of Cape Town.Google Scholar
Van Heerden, J and Roos, EL (2021) The possible effects of the extended lockdown period on the South African economy: a CGE analysis. South African Journal of Economics 89, 95111.CrossRefGoogle Scholar
van Seventer, D, Bold, S, Gabriel, S and Davies, R (2019) A 2015 Social Accounting Matrix (SAM) for South Africa. SA-TIED Working Paper #35.Google Scholar
Zidouemba, PR, Kinda, SR and Ouedraogo, IM (2020) Could Covid-19 worsen food insecurity in Burkina Faso? European Journal of Development Research 32, 13791401.CrossRefGoogle ScholarPubMed