ECLAC Releases Report on Regional Climate Financing
DUBAI – The Economic Commission for Latin America and the Caribbean (ECLAC) has released a report 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, 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 with the aim of achieving 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 labour productivity due to heat stress could reach 10 per cent 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 key economic sectors such as land-use change, agriculture, livestock and forestry, which at a regional level represent 58 per cent of greenhouse gas emissions.
Despite this, financing is currently focused mainly on mitigation to the detriment of adaptation and cross-cutting actions. In fact, in 2020, the report noted that 89 per cent of global climate finance was allocated to mitigation, 8% to adaptation and just 3% to cross-cutting actions.
“Latin America and the Caribbean is deeply committed to climate action, having set an emissions reduction target of between 24 and 29 per cent by 2030, with respect to a business-as-usual scenario,” Salazar-Xirinachs said, adding “but to achieve these targets, the region’s current decarbonization rate (0.9 per cent ) 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 per cent of regional gross domestic product (GDP) per year until 2030.
By way of comparison, climate finance in Latin America and the Caribbean in 2020 amounted to just 0.5 per cent of regional GDP.
Salazar-Xirinachs said as a result, closing the climate financing gap requires increasing domestic and international resource mobilization by between seven and 10 times.
“Investment in climate action can yield not only environmental, but also 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 in order to channel investment flows towards productive activities that boost sectors that drive the economy with a view to achieving development that is more productive, more inclusive and more sustainable.
Salazar-Xirinachs said in this regard the LAC should intensify and escalate their productive development policies. He reiterated that ECLAC has identified numerous dynamic sectors – which are areas of opportunity for economic growth and collaboration – that include the energy transition, electromobility, the circular economy, the bioeconomy, 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.