Introduction

Economic crises never happen overnight. They are the results of years of global economic change, policy errors, and misjudgments. What has turned out to be the worst recession in 70 years began with the collapse of the US subprime house mortgage market in 2007, which then spread to the entire financial sector in other developed countries, Massive financial sector losses then spilled over to real estate and caused one of the deepest global economic slowdowns ever. The recent financial crisis that has engulfed Asia, has reduced economic growth in many countries—which depend on exports to the United States (US) for their growth. The International Monetary Fund (IMF) that the world economy contracted 1.4% in 2009, the worst performance since World War II. But everywhere economists point out green shoots sprouting in the gloom. Japan, Germany, and France have emerged from recession in the third quarter, and faster recovery is predicted for the US. After a brief pause, the People's Republic of China (PRC) and India have returned to their accelerated growth path, lifting much of Asia with it. Yet even if recovery is on track, this recession will not be like most others, when what went down slowly simply came back. The downturn is fundamentally affecting the Asian economic future, as well as environmental sustainability and the livelihood options available to the poor. As both the economic prosperity and environmental health of a nation are interlinked with poverty, this financial crisis also has social dimensions which need to be explored further.

This paper centers on the use of energy and other related services, the human activity with probably the largest impact on the global environment. This has the advantage that there is a fairly good correlation between economic activity, energy use, and the human development index (Kawai and Anbumozhi 2009). The consequences of energy use are larger for climate change, and we shall focus on this aspect, with some discussions on land use, which is closely related to the livelihood of the poor. Next the paper explores the linkages between poverty incidence and vulnerability to the global financial crisis, identifying the interactions between poverty reduction and green stimulus measures. Finally, key longterm policy issues that are closely related to environment and poverty are introduced.

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