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Economic Impact of Climate Change Concerns IDB

The adverse economic impacts of climate change on Latin American – and especially Caribbean – countries will be a central issue at the Inter-American Development Bank’s annual meeting, which gets under way next week in the Bahamas.

During that gathering, which will take place from April 6-10 in Nassau, the IDB governors will debate a resolution to double the volume of the bank’s climate-related financing between 2016 and 2020.

The IDB also will hold a session titled “Natural Capital, Climate Change and the Future of Coastal Cities” that Michele Lemay, the bank’s lead natural resources specialist, said would be a “wake-up call” aimed at alerting the region to the major economic and social difficulties it faces.

Last October, the IDB announced the goal of doubling the volume of its climate-related financing by 2020.

That would mean increasing its financing for climate-related projects from a yearly average of 14 percent between 2012 and 2014 period to between 25 percent and 30 percent by 2020.

Amal-Lee Amin, chief of the Inter-American Development Bank’s Climate Change and Sustainability Division, explained in an interview with EFE the importance the IDB is placing on the impact of climate change on regional economies, stressing that boosting climate-related financing is a “central” concern for the bank.

Rising sea levels, higher temperatures and changing precipitation patterns will cut Latin American and Caribbean countries’ gross domestic product (GDP) by between 2 percent and 4 percent, studies have shown.

“We have to facilitate financing, but probably what’s even more important now is for the IDB to provide expertise and additional support to governments that are beginning to focus on implementing the Paris accord. That’s a very important role for us,” Amin said.

She was referring to the landmark December 2015 Paris climate change accord that commits nearly every country to reducing its carbon-dioxide emissions starting in 2020.

“Now the Latin American and Caribbean countries have national commitments and are starting to focus on implementing the accord,” Amin added.

The island nations of the Caribbean, as well as Central America and other areas of Latin America, are especially vulnerable to the effects of climate change and its adverse impact on national economies.

Lemay stressed the consequences that rising sea levels alone could have for the region.

“UN studies indicate that a one-meter rise in sea levels would mean that 30 percent of the region’s airports and 20 percent of the main tourist centers would disappear. In the case of the Bahamas, 80 percent of the nation would be flooded. That’s the wake-up call,” she said.

Among those attending the session on natural capital will be finance ministers from Latin America and the Caribbean, who Lemay says are the key audience to reach in terms of raising alarms about the economic challenges of climate change.

“Our main goal is to change the perspective of finance ministers and we’re already seeing that shift. It’s small, but it’s happening in the public sector,” she said.

With regard to the private sector, Lemay said large tourism companies of the Caribbean “are already investing in restoring coral reefs (one of the measures to mitigate climate change), obviously to protect their investments of hundreds of millions of dollars.”

“What we want is for them to understand the true value of natural capital and to incorporate that element into the GDP calculations, which still do not consider the wealth of natural capital,” she added.

The IDB “is undergoing a process of increasing our ability to support the countries on these issues, which are frequently very urgent. So that they make their economies more resistant to the impact of climate change,” Amin said for her part.

Credit: Latin American Herald Tribune

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