Simulating the Long-Term Impacts of the COVID-19 Pandemic on the Sustainability of the Population-Economy-Environment Nexus.

Abstract

The COVID19 pandemic has created a massive shock, unexpectedly increasing mortality levels and generating economic recessions all around the world. In recent years, several efforts have been made to develop models that link the environment, population and the economy which may be used to estimate potential longer term effects of the pandemic. Unfortunately, many of the parameters used in these models lack appropriate empirical identification. In this study, first I estimate the parameters of "Wonderland", a system dynamics model of the population-economy-environment nexus, and posteriorly, add external GDP and mortality shocks to the model. The estimated parameters are able to closely match world data, while future simulations point, on average and regardless of the COVID19 pandemic, to a world reaching dangerous environmental levels in the following decades, in line with consensus forecasts. On the other hand, the effects of the pandemic on the economy are highly uncertain and may last for several decades.