New World Bank report urges fresh look at Latin American solutions

Press Release No:2009/161/LCR

In the midst of the most severe global financial crisis in decades, the World Bank today urged the international community to look to Latin America for innovative solutions to avert a climate crisis. The region is in a position to lead middle income countries in reducing emissions from deforestation, breaking the impasse on hydropower development, improving energy efficiency, and transforming urban transport, a new Word Bank study concludes.

Such an approach could simultaneously support economic recovery and encourage growth in areas that mitigate the impact of climate change. By promoting a shift towards low carbon economic activities, governments can not only help avoid dangerous climate change impacts but can also make the region more competitive, contributing to a faster recovery from the current economic slowdown,” says Pamela Cox, World Bank Vice President for Latin America and the Caribbean.

With oil prices falling, World Bank Chief Economist for Latin America and the Caribbean Augusto de la Torre acknowledges that “increased investments in green technologies are not going to be an easy sell.” However, he underlines that “there is growing support from businesses, government and civil society for the idea that the crisis itself provides an opportunity to create incentives for a low carbon development path.

Low Carbon, High Growth: Latin American Responses to Climate Change” released today, is the World Bank's flagship report on Latin America and the Caribbean (LAC). It explores how the region is exposed to climate change impacts and what it can do to avert its effects, both unilaterally and with the incentives of a global climate agreement to be negotiated next year in Copenhagen by the United Nations. According to the report, LAC, the most biodiverse region in the world, has the resources and the leadership to be part of the global solution needed to move the world towards a low carbon path.

The region is suffering the impact of climate change; however, it is not a main source of emissions that are driving global warming, thanks to its clean energy matrix and its innovative policies to promote low carbon growth. Latin America produces only about six percent of global energy-related greenhouse gas emissions, or 12 percent of emissions from all sources, including deforestation and agriculture,” says the report, written by World Bank economists de la Torre, Pablo Fajnzylber and John Nash.

This is the first time that the office of the Chief Economist for Latin America has selected climate change as the main theme of research for the annual flagship publication.

Of the world’s ten most biodiverse countries, five are in the Latin American region: Brazil, Colombia, Ecuador, Mexico, and Peru. These are also five of the 15 countries whose fauna is most threatened with extinction.

According to the report, Latin America’s countries and citizens —especially those living in extreme poverty— are highly vulnerable to the effects of climate change. Developing country engagement must be based on the understanding that industrialized countries “carry an historical responsibility for the existing greenhouse gas concentrations causing climate change.” Therefore, a committed Latin American engagement should be based on the idea that improved environmental management can go hand-in-hand with economic growth.

Many of the actions needed to reduce the region’s emissions and adapt to climate change make sense from economic and social perspectives – and often from a financial perspective as well -- regardless of climate concerns,” the report emphasizes. Adopting a low-carbon development path will be beneficial for the region’s competitiveness, especially if the world’s technological frontier moves in the direction of low carbon technologies.

The region has piloted new technologies and approaches to reduce emissions:

• Mexico’s 2007 National Strategy on Climate Change adopts long-term, nonbinding targets. In the energy sector, the strategy identifies a total mitigation potential of 107 million tons of greenhouse gasses by 2014, a 21 percent reduction from business as usual over the next six years.


• Brazil is moving towards energy independence through the expansion of alternative energy sources such as hydroelectricity, ethanol, and biodiesel. Its sugar-based ethanol production is financially and environmentally sustainable without diverting land from food crops.


• Public and environmentally friendly public transport policies demonstrated by Curitiba (Brazil) and expanded in Bogota (Colombia) are now underway in dozens of cities in the region.


• Costa Rica has received worldwide recognition for its efforts to place a financial value on preserving ecosystems, through several initiatives on “payments for ecosystems services.


• Argentina is moving forward with renewable energy in rural areas which provides affordable and reliable electricity to communities and has an impact on productivity and jobs.

Despite these innovations, Latin America has been moving to a higher carbon growth path. Based on current trends, from 2005-2030 the projected growth of per capita CO2 energy emissions in the region is 33 percent (above the world average of 24 percent). The study finds that keeping LAC on a high-growth and low-carbon path will require a coherent policy framework on three levels:

1. An international climate change architecture that creates enough momentum and is friendly to Latin America’s specific features, including: clear financial incentives to reduce deforestation; the expansion of carbon trading mechanisms to sectors; mobilization of financial flows to Latin America to facilitate deployment of “green technologies;” and the creation of a global market for sustainable bio-fuels, removing tariffs and other barriers.


2. Domestic policies to adapt to the inevitable climate change impacts on the region’s ecosystems and societies,  incorporating climate-related threats into the design of long-term infrastructure investments, improving weather monitoring and forecasting, enhancing social safety nets so as to allow households to better cope with climate shocks, and improving the functioning of land, water and financial markets.


3. Domestic policies to exploit mitigation opportunities to make Latin America part of the global climate change solution. Many of the actions needed for mitigation are also good development policies. For example, increasing energy efficiency often can save money; reducing deforestation has social and environmental benefits; improving public transport can reduce congestion and local pollution with impacts on health, productivity and welfare; and expanding off-grid renewable energy can help reach rural populations without access to electricity. If the region moves ‘ahead of the pack’ it could take advantage of international cost-sharing mechanisms for deploying low-carbon technologies and build new comparative advantages,” says Pablo Fajnzylber.

The report emphasizes that good adaptation to climate change is an indispensable part of good development policies and that action is needed from all countries.

“Latin America has demonstrated a consistent commitment to fight climate change beyond political cycles. Now is the time when the region can act as a leader within developing nations in articulating constructive global solutions. If governments make the right short-term decisions, it could mean significant progress towards a more sustainable market economy,” concludes John Nash.

Contacts:

Sergio Jellinek (202) 294-6232
sjellinek@worldbank.org

Gabriela Aguilar (202) 473-6768
gaguilar2@worldbank.org