Dubai, CMC- The Economic Commission for Latin America and the Caribbean (ECLAC) released a document on Monday that stresses the climate financing needs for Latin America and the Caribbean (LAC) in the region’s fight against global warming.
The document, titled “The Economics of Climate Change in Latin America and the Caribbean, 2023: Financing needs and policy tools for the transition to low-carbon and climate-resilient economies,” was unveiled on the sidelines of the ongoing United Nations Climate Change Conference (COP 28).
ECLAC executive secretary José Manuel Salazar-Xirinachs, speaking at the launch of the new report at COP 28
ECLAC executive secretary José Manuel Salazar-Xirinachs said the document presents current regional emissions trends, climate action commitments, and estimates of the investment required to fulfill the Nationally Determined Contributions (NDCs), in addition to establishing guidelines to follow to achieve inclusive, sustainable, and just development for the region.
“Climate change is one of the greatest challenges of our time. For years, ECLAC has been analyzing its impacts in Latin America and the Caribbean and has found that the cost of inaction outweighs the cost of action, that these impacts are non-linear and exponential, and that global warming will exacerbate the negative effects of extreme weather events,” Salazar-Xirinachs said at the “Economic cooperation between Spain and Latin America for climate finance,” event.
“Our document shows that, by 2030, the loss of labor productivity due to heat stress could reach 10 percent in some countries, directly impacting the region’s growth potential. Additionally, the impact of extreme events must be considered,” he told the delegates, including Ricardo Marshall, from the Roofs to Reefs Programme (R2RP) of the Prime Minister’s Office of Barbados.
The report stresses the importance of financing in vital economic sectors such as land-use change, agriculture, livestock, and forestry, which represent 58 percent of greenhouse gas emissions at a regional level.
Despite this, financing is focused mainly on mitigation to the detriment of adaptation and cross-cutting actions. In fact, in 2020, the report noted that 89 percent of global climate finance was allocated to mitigation, 8% to adaptation, and 3% to cross-cutting actions.
“Latin America and the Caribbean are deeply committed to climate action, having set an emissions reduction target of between 24 and 29 percent by 2030, concerning a business-as-usual scenario,” Salazar-Xirinachs said, adding, “but to achieve these targets, the region’s current decarbonization rate (0.9 percent) would have to be four times faster”.
According to the study, fulfilling climate action commitments necessitates an investment of between 3.7 and 4.9 percent of regional gross domestic product (GDP) per year until 2030.
By comparison, climate finance in Latin America and the Caribbean in 2020 amounted to just 0.5 percent of regional GDP.
Salazar-Xirinachs said that closing the climate financing gap requires increasing domestic and international resource mobilization by seven and ten times.
“Investment in climate action can yield both environmental and economic and social gains, as the levels of investment and financing for mitigation and adaptation measures will provide a major boost to growth, employment, and social development,” he added.
In terms of recommendations, the document also stresses the need to coordinate policies and align the financial system to channel investment flows toward productive activities that boost sectors that drive the economy to achieve more effective, inclusive, and sustainable development.
Salazar-Xirinachs said the LAC should intensify and escalate its productive development policies. He reiterated that ECLAC had identified numerous dynamic sectors, which are areas of opportunity for economic growth and collaboration that include the energy transition, electromobility, the circular economy, the economy, the pharmaceutical and medical device industry, modern (digital) services, and the care economy.
“ECLAC remains committed to and will continue working for an environmentally sustainable, socially inclusive, and economically competitive future in Latin America and the Caribbean,” Salazar-Xirinachs added.
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