Are We Building Back Better? Evidence from 2020 and Pathways for Inclusive Green Recovery Spending

February 2021 in partnership with the Green Fiscal Policy Network (International Monetary Fund, United Nations Environment Program, and German Agency for International Cooperation)

Abstract: The COVID-19 economic crisis has precipitated enormous fiscal spending from governments around the world. Despite considerable evidence suggesting that environmentally restorative fiscal policies may be among the most effective tools for economic recovery, very little green spending of this kind was announced in 2020. This paper records USD14.6tn in announced spending across the world’s largest fifty countries in 2020, of which USD1.9tn (13.0%) was directed to long-term ‘recovery-type’ measures and of that, USD341bn (18.0%) to green recovery initiatives. Considering total spending, only USD368bn (2.5%) was announced for green initiatives. Green investment has largely been driven by a small group of high-income nations, who also happen to have made the largest recovery announcements to date. With growing climate instability, rising inequality, and worsening global poverty, it is crucial that governments build back better through a green and inclusive recovery.