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Economics of Climate Change in Latin America and the Caribbean
Summary 2009
Alicia Bárcena
Executive Secretary
Antonio Prado
Deputy Executive Secretary
Joseluis Samaniego
Director
Sustainable Development and Human Settlements Division
Susana Malchik
Officer-in-Charge
Documents and Publications Division
The boundaries and names shown on this map do not imply official endorsement or acceptance by the United Nations.
The figures and tables shown in this document were prepared by the authors, unless otherwise indicated.
United Nations publication
LC/G.2425
Copyright © United Nations, November 2009. All rights reserved
Printed in United Nations — Santiago, Chile
Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to
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Summary 2009
Economics of
Climate Change
in Latin America
and the Caribbean
This document was prepared under the supervision of Joseluis Samaniego, Director of the Sustainable Development and Human
Settlements Division of ECLAC. The coordination and overall drafting of the document was undertaken by Luis Miguel Galindo
and Carlos de Miguel, expert and Environmental Affairs Officer, respectively, with the Sustainable Development and Human
Settlements Division.
In the preparation of this document, valuable inputs were received from José Eduardo Alatorre and José Javier Gómez,
Economic Affairs Officers with the Sustainable Development and Human Settlements Division of ECLAC; Julie Lennox,
Programme Officer at the ECLAC subregional headquarters in Mexico, Charmaine Gomes, Environmental Affairs Officer at the
ECLAC subregional headquarters for the Caribbean and Oscar Cetrángolo, expert with the Commission’s country office in
Buenos Aires; Ricardo Zapata, regional focal point, and Sergio Saldaña, Economic Affairs Officer, both of the Disaster
Assessment Unit of ECLAC; Karina Caballero, Horacio Catalán, Karina Martínez and international experts Daniel Bouille,
Graciela Magrin, José Marengo, Lincoln Muniz and Gustavo Nagy, consultants with the Sustainable Development and Human
Settlements Division of ECLAC.
The Division is grateful for the contributions of Francisco Brzovic, César Morales and their team at the Global
Mechanism of the United Nations Convention to Combat Desertification and for the comments and suggestions received from
Juan Pablo Bonilla, Alejandra Palma and Ana Ríos of the Inter-American Development Bank (IDB) and from officials of the
governments of the region, the United Nations Development Programme (UNDP), the Andean Community and the Southern
Common Market (MERCOSUR) who took part in technical discussions on the national studies under way, and from the
coordinators of those studies Pedro Barrenechea, Leonidas Osvaldo Girardin, Sandra Jiménez, Ana María Loboguerro, Roger
Loyola, Rubén Mamani, Rossana Scribano and Sebastián Vicuña.
Thanks are also due to Peter Bainbridge, Catherine Ghyoot, Conchita López, Ana Pinto, Doris Thurau and Tine Uldahl
Lund for their constant support in the project work, which has made this document possible.
ECLAC would like to thank the following for their collaboration and financial support in the preparation of this document:
MINISTERI O
DE ASUN T OS EXTERIORE S
Y DE COOPER A CIÓ N
MINISTERI O
DE MEDIO AMBIEN T E
Y MEDIO R URAL Y MARIN O
EUROPEAN UNION
5
CONTENTS
Page
Foreword............................................................................................................................................
9
I.
INTRODUCTION....................................................................................................................
11
II.
METHODOLOGICAL CONSIDERATIONS.........................................................................
12
III.
CLIMATE CHANGE SCIENCE.............................................................................................
13
IV.
CLIMATE CHANGE IN LATIN AMERICA AND THE CARIBBEAN ..............................
14
V.
THE MACROECONOMIC SITUATION...............................................................................
23
VI.
ECONOMIC IMPACTS OF CLIMATE CHANGE IN LATIN AMERICA
AND THE CARIBBEAN ........................................................................................................
28
VII. MITIGATION PROCESSES...................................................................................................
1. Emissions and energy in Latin America and the Caribbean..............................................
2. Energy demand and energy intensities ..............................................................................
3. Emissions, productivity and convergence in Latin America and the Caribbean ...............
4. Emissions and land-use change in Latin America and the Caribbean ...............................
5. Emissions and deforestation rates......................................................................................
6. Total CO2 emissions in Latin America ..............................................................................
7. Mitigation in Central America...........................................................................................
8. Mitigation costs: preliminary aggregate estimates using international data......................
9. Main messages...................................................................................................................
35
36
44
46
49
55
58
59
60
62
VIII. ECONOMIC VALUATION AND OBSERVATIONS ON PUBLIC POLICY......................
63
BIBLIOGRAPHY..............................................................................................................................
68
Tables
Table IV.1
Table IV.2
Table VI.1
Table VII.1
Table VII.2
Central America: projected changes in temperature and precipitation,
2020, 2050 and 2080 ............................................................................................
The Caribbean: climate scenarios.........................................................................
Latin America (5 countries): estimated losses caused by land degradation .........
Latin America: estimated energy demand elasticities, 1985-2007 .......................
Latin America and the Caribbean: current value of the costs of mitigating
climate change up to 2100 as a percentage of 2007 GDP ....................................
19
20
29
44
61
6
Figures
Figure II.1
Figure V.1
Figure V.2
Figure V.3
Figure VI.1
Figure VII.1
Figure VII.2
Figure VII.3
Figure VII.4
Figure VII.5
Figure VII.6
Figure VII.7
Figure VII.8
Figure VII.9
Figure VII.10
Figure VII.11
Figure VII.12
Figure VII.13
Figure VII.14
Figure VII.15
Figure VII.16
Figure VII.17
Figure VII.18
Figure VII.19
Figure VII.20
Figure VII.21
Climate change: economic impact and mitigation scenarios................................
Latin America and the Caribbean: annual standard deviation and average
growth rate of per capita GDP ..............................................................................
Latin America and the Caribbean: distribution of economic growth rates,
1950-1980 and 1980-2008....................................................................................
Latin America and the Caribbean: per capita GDP versus average
per capita GDP growth rate ..................................................................................
Latin America and the Caribbean: cost of climate disasters, 2009-2100 .............
Latin America and the Caribbean: share in total GHG emissions
(including land-use change)..................................................................................
Latin America and the Caribbean: average growth rates of
CO2 emissions, 1990-2005 ...................................................................................
Latin America and the Caribbean: average annual growth rates of
CO2 emissions and their components, 1990-2005 ................................................
Latin America and the Caribbean: growth of energy consumption, 1970-2007...
Latin America and the Caribbean: ratio of energy consumption to
per capita GDP, 2007............................................................................................
Latin America and the Caribbean: ratio of per capita energy consumption
to per capita GDP, 2007 .......................................................................................
Latin America and the Caribbean: per capita GDP and energy intensity, 2007 ...
Latin America and the Caribbean: per capita CO2 emissions and
per capita GDP, 1990-2005 ..................................................................................
Latin America and the Caribbean: per capita CO2 emissions and per capita
energy consumption, 2005....................................................................................
Latin America and the Caribbean: per capita CO2 emissions and
per capita GDP, 2005............................................................................................
Latin America and the Caribbean: average annual growth rates of energy
intensity and of carbon intensity, 1990-2005 .......................................................
Latin America and the Caribbean: CO2 emissions per unit
of GDP, 2005........................................................................................................
Latin America and the Caribbean: per capita GDP growth and rate of
decoupling of CO2 emissions from GDP, 1990-2005...........................................
Latin America and the Caribbean: per capita emissions and growth in
per capita emissions, 1990-2005...........................................................................
Latin America and the Caribbean: CO2 emissions from land-use change,
1980-2000.............................................................................................................
Latin America and the Caribbean: per capita GDP and CO2 emissions
from land-use change, 1990-2000 ........................................................................
Latin America and the Caribbean: average annual growth in the LUC CO2
emissions intensity of per capita GDP, 1990-2000 ..............................................
Latin America and the Caribbean: LUC emissions intensity of per
capita GDP, 1990-2000 ........................................................................................
Latin America and the Caribbean: rate of change in LUC emissions intensity
of per capita GDP (α1t+1 - α0t), 1990-2000 ...........................................................
Latin America and the Caribbean: projections of growth in LUC
CO2 emissions, 2000-2100 ...................................................................................
Latin America and the Caribbean: land use changes............................................
13
23
24
25
33
35
36
37
38
39
39
40
41
41
42
42
46
47
48
49
50
51
52
53
54
55
7
Figure VII.22
Figure VII.23
Figure VII.24
Figure VII.25
Figure VII.26
Figure VIII.1
Figure VIII.2
Latin America and the Caribbean: annual average growth in forested areas,
1990-2005.............................................................................................................
Latin America and the Caribbean: proportions of forested and agricultural
areas, 1990, 2000 and 2005 ..................................................................................
Latin America and the Caribbean: proportions of forested area and of
rural population, 1990, 2000 and 2005.................................................................
Latin America and the Caribbean: projected total CO2 emissions,
2005-2100.............................................................................................................
Mexico: marginal cost curve of mitigation, 2020.................................................
Latin America (15 countries): average preliminary economic costs of the
cumulative impact of climate change and mitigation, up to 2100 ........................
Latin America and the Caribbean (23 countries): preliminary cumulative
economic costs of mitigation up to 2100..............................................................
56
57
58
59
60
64
64
Boxes
Box IV.1
Box V.1
Box VI.1
Box VI.2
Box VII.1
Box VII.2
The Caribbean: A2 and B2 climate scenarios.......................................................
Latin America and the Caribbean: per capita GDP projections............................
Central America: effects of temperature and precipitation on agriculture ...........
Biodiversity in Central America...........................................................................
Public policies laboratory .....................................................................................
Latin America and the Caribbean: empirical evidence of absolute
convergence in per capita emissions.....................................................................
20
26
30
32
45
South America: temperature projections ..............................................................
South America: projected changes in precipitation ..............................................
Latin America and the Caribbean: multi-model averages of spatial patterns
of changes in extremes under scenario A1B.........................................................
Central America: average temperatures in the months of January, April,
July and October, 1950-2000................................................................................
Central America: average precipitation in the months of January, April,
July and October, 1950-2000................................................................................
Latin America and the Caribbean: summary of climate change patterns
projected for 2100.................................................................................................
15
16
48
Maps
Map IV.1
Map IV.2
Map IV.3
Map IV.4
Map IV.5
Map IV.6
17
18
19
22
9
FOREWORD
Global climate change, which is associated basically with increases in the average temperature, changes
in precipitation patterns, rising sea levels, the reduction of the world’s ice masses and snow deposits, and
the modification of extreme weather patterns, is one of the major challenges facing humankind this
century. Its impacts on economic activities, populations and ecosystems are significant and in many cases
irreversible. The challenge of simultaneously adapting to new climatic conditions and participating in an
international mitigation strategy entails costs of such a magnitude that climate change will heavily
condition the nature of economic development in the decades ahead.
The socio-economic, institutional and geographical features of Latin America and the Caribbean
make climate change a particularly pressing issue in the region. The high sensitivity to climate shifts of
some of its economic activities, such as agriculture and tourism, the potential loss of biodiversity or of
human life and the exposure to extreme weather events show how important it is to conduct an economic
analysis of climate change in order to formulate a sustainable, long-term development strategy that is
based on sound science and backed by broad social consensus. The global scope of climate change, its
impact as a negative factor in economic development, the high levels of uncertainty surrounding the
subject and the need for an effective risk management scheme are fuelling a heated debate about ethics
and equity, the size of the phenomenon across different periods of time, the channels through which the
damages are transmitted, the economic costs involved and the best options for confronting them.
This document presents an aggregate economic analysis of climate change in Latin America and
the Caribbean based on the national and subregional studies carried out on the topic in the region. It
summarizes the results obtained and examines only certain topics in detail. The conclusions are still
preliminary; they seek to enhance understanding of the economic dimension of climate change and
contribute to the search for possible solutions. This study was carried out during a relatively short time
frame in close collaboration with the Governments of Germany, Denmark, Spain and the United
Kingdom, as well as with the European Union and Governments of countries in the region, the InterAmerican Development Bank (IDB), the Global Mechanism of the United Nations Convention to Combat
Desertification and a broad network of academic and research institutions. Responsibility for the
economic estimates presented herein, however, should be wholly attributed to the authors and not to the
aforementioned institutions.
The national studies reveal the diversity of situations present in the region, as well as the richness
and intensity of the debate surrounding the topic. They also spell out the significant, non-linear economic
consequences of climate change in the region, which vary according to each country’s socio-economic
conditions. Furthermore, failure to tackle the issue is shown to be gradually turning into a new limitation
on economic growth. These analyses have generated new information and new capacities in the countries
of Latin America and the Caribbean; the next step is to establish a forum for ongoing research and
dialogue on the economics of climate change.
In the twenty-first century, the economies of Latin America and the Caribbean will have to take
on the challenges posed by climate change, including the costs of adaptation and mitigation. They will
simultaneously have to address other outstanding issues, such as sustained economic growth, job creation
and poverty reduction. The region moreover faces the paradox of being a minimal contributor to climate
change, while nevertheless suffering from a sizeable proportion of the worst consequences. Its position
will be made much more vulnerable by failure to engage in mitigation efforts within the framework of
multilateral agreements entered into with the problem’s main instigators.
10
International agreement on the topic must recognize the different levels of development and the
asymmetries between the countries or regions that most contribute to climate change through their past
GHG emissions and those that suffer the worst consequences. Proposals and strategies to tackle climate
change should not be seen as running counter to economic growth. Solutions to the problems that climate
change poses will be attainable only within an equitable multilateral international agreement that
acknowledges not only the global scope of the issue and the shared responsibilities involved, but also the
historical differences between countries, and that provides for additional financial resources to be made
available for tackling the challenges of mitigation and adaptation in developing countries. Unilateral
actions that curb existing flows of funding and access to additional financial resources are not long-term
solutions and will only exacerbate the region's problems.
The private sector, the public sector and citizens in general must in their own ways actively
contribute to the adjustments that will have to be made to secure a more viable future. Innovative
solutions to the problems brought about by climate change will involve redirecting the economy towards
low-carbon growth compatible with sustainable development. The atmosphere must be viewed as a global
public good and its preservation for future generations as an inalienable duty.
The countries of Latin America and the Caribbean must thus build their future on the actions of the
present and seize the opportunity to improve quality of life and move towards a more sustainable pattern of
development. The fifteenth session of the Conference of the Parties to the United Nations Framework
Convention on Climate Change (Copenhagen, 2009) represents an invaluable opportunity for the international
community to formulate an inclusive, fair and equitable strategy in which the exercise of the precautionary
principle can prevent irreversible damage. At the same time, fundamental development problems persist in the
region, and these need to be tackled hand in hand with those arising from climate change.
Alicia Bárcena
Executive Secretary
Economic Commission for Latin America
and the Caribbean (ECLAC)
11
I. INTRODUCTION
Climate change is, without a doubt, one of the greatest challenges facing humanity in the twenty-first
century. The increase in greenhouse gases (GHGs), which is fundamentally linked to various
anthropogenic activities, is causing evident climate changes, such as gradual but steady increases in
temperature, alterations in precipitation patterns, the reduction of the cryosphere (the world’s ice masses
and snow deposits), rising sea levels and changes in the intensity and frequency of extreme weather events
(IPCC, 2007a).1 The consequences of climate change for economic activity, populations and ecosystems
are certainly significant. They will also increase over the course of the century and in many cases be
difficult to reverse (IPCC, 2007b and Stern, 2007). In this context, the estimated economic costs, both of
the impacts (including those associated with adaptation) and of mitigation, seem to suggest that climate
change will play an essential part in determining the characteristics of and options for economic
development in this century. Hence, the countries of Latin America and the Caribbean will have to
simultaneously tackle the challenges of adapting to new climate conditions and participating in various
international mitigation strategies. They will also have to ensure their economies are on the road towards
sustainable development. The magnitude of the task requires the formulation of a long-term strategy
backed by sound science and a broad social consensus.
The economic analysis of climate change provides essential input for identifying and drawing up
strategies to help move countries closer towards solving the problems associated with climate change and
towards attaining sustainable development. However, such analysis is complex: natural, economic, social,
technological, environmental and energy processes are involved, as are certain aspects of international
politics. It deals with very long time-frames and has to take into account planet-wide natural phenomena,
non-linear impacts, specific limits, asymmetric causes and effects, intense feedback processes, high levels
of uncertainty and complex risk management, as well as ethical considerations. In this regard, it is
important to acknowledge two fundamental aspects of the economic analysis of climate change:
1
•
The uncertainty margins are large because the analysis includes the complex process of
assessing the risks associated with weather events that are sometimes catastrophic. The
projections are thus merely scenarios that have a certain probability of occurring; they are not
specific prognoses. There is an ethical component to the economic analysis of climate change
as it refers to the well-being of future generations and touches on matters that have no explicit
market value, such as biodiversity and human life.
•
Formulating proposals and strategies to solve climate-change problems should not be seen as
countering economic growth. On the contrary, it is failing to address the issue that will have a
negative impact on economic growth. Tackling the problems brought about by climate
change means redirecting the economy towards low-carbon growth that is compatible with
sustainable development.
GHG emissions are expressed in equivalent CO2 in terms of global warming potential measured over 100 years
as set out in the IPCC Second Assessment Report (IPCC, 1996). The GHGs included are: carbon dioxide (CO2),
methane (CH4), nitrous oxide (N2O) and those with high warming potential, such as hydrofluorocarbons (HFC),
perfluorocarbons (PFC) and sulphur hexafluoride (SF6 ). In keeping with the reports submitted by countries for
the United Nations Framework Convention on Climate Change (UNFCCC), the energy sector, industrial
processing and agriculture are taken into account, as well as land-use change, forestry and waste levels. The
energy sector is subdivided into electricity and heating, transportation, manufacturing and construction, other
types of fuel burn and fugitive gas emissions.
12
The purpose of this study is to present an aggregate economic analysis of climate change in Latin
America and the Caribbean based on national studies carried out on the topic, with a view to increasing
understanding of the economic dimension of the issue and contributing to the discovery of possible
solutions and alternatives. It should be noted that the estimates presented are preliminary and incomplete.
They are the result of various restrictive assumptions made about the economies of the region based on
data that are comparable but do not necessarily coincide with official figures. In all events, the goal of the
analysis is to identify aggregate trends for the region, not to present specific cases. The estimates for each
country do not necessarily coincide with the aggregate results and are reported in the individual country
studies (www.eclac.cl/dmaah/).
II. METHODOLOGICAL CONSIDERATIONS
The economic analysis of climate change is subject of heated debate. It employs a range of methods and
techniques (Nordhaus and Boyer, 2000 and Stern, 2007), each with its own advantages and biases, and no
single one stands out as superior to the others. All start with the definition of the baseline or business as
usual (BAU) scenario as a point of comparison for estimating the economic impacts of climate change
and the processes of adaptation and mitigation. Two basic strategic lines of enquiry are in use:
•
The analysis of the economic impacts of climate change starts with the identification of a
baseline scenario for economic activity that does not take the impact of climate change into
account and then projects economic growth for each sector and the economy as a whole under
the impact of climate change (see figure II.1(a)). The difference between the two curves,
which are adjusted according to the chosen discount rate, represents the economic
consequences of climate change. It should be borne in mind that adaptation to climate change
will significantly modify the final result and that some of the more important effects of
climate change have no direct economic value.
•
The economic analysis of mitigation is based on the construction of the baseline scenario for
GHG emissions by the economy as a whole or by certain economic sectors or activities. The
costs associated with lowering GHG emissions from this baseline level according to specific
targets (through what are known as “wedges”) are then estimated and a discount rate is
applied (figure II.1(b)).
13
Figure II.1
CLIMATE CHANGE: ECONOMIC IMPACT AND MITIGATION SCENARIOS
(a) Economic impact scenarios
(b) Mitigation scenarios
Scenario with positive
impact from
climate change
Baseline (BAU)
scenario
Scenario with
negative impact
from climate change
GHG emissions
GDP
Baseline (BAU)
scenario
t
Target
t
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Given the diverse situations in the region and the existence of conditions and effects that are
specific to individual countries, a range of analytical methods were used in this study. In all instances,
however, rigorous methodologies based on a consistent theoretical framework were applied wherever
possible, and certain empirical regularities have made it possible to present an informed and comparable
overview of climate change from an economic perspective. All the studies define a baseline as the point
of reference and then consider the inherent features of climate change, which determine the specific type
of analyses that are to be performed.
III. CLIMATE CHANGE SCIENCE
According to the global scientific evidence available (IPCC, 2007a), significant changes in climate are
occurring, basically as a result of a set of anthropogenic activities, the symptoms of which include:
•
A gradual and steady increase in the average temperature of the planet, albeit with significant
differences between regions and between land and sea temperature patterns (IPCC, 2007a).
The average temperature in fact rose by 0.8oC between 1850-1899 and 2001-2005, with the
sharpest rises being recorded in the last few decades. This has been reflected in an increase in
the number of extremely hot days and a decline in the number of extremely cold days (IPCC,
2007a). Historical data confirm that the current average temperature is the highest in the last
500 years, that the temperature during the last 50 years is unusual in relation to the last 1,300
years, and that 11 of the 12 hottest years since 1859 were registered between 1995 and 2006
(IPPC, 2007a, page 5).
•
Significant changes in global precipitation patterns, with an intensification of hydrological
patterns. Furthermore, the correlation between higher temperatures and lower precipitation
levels heightens the impact of weather phenomena (Madden and Williams, 1978; and
Trenberth and Shea, 2005).
14
•
Ocean temperatures are rising, although at different rates, in association with a gradual but
significant reduction of the cryosphere and the melting of glaciers in both hemispheres
(IPCC, 2007a, page 5). The melting of the ice caps contributes to the rise of the sea level
(IPCC, 2007a, page 5).
•
Modifications in the types and in the intensity and frequency patterns of extreme weather
events. Temperature rises make alterations in the frequency and intensity of extreme weather
events more likely, although doubts still surround the expected changes in their probability
distributions (Vincent and others, 2005; Aguilar and others, 2005; Kiktev and others, 2003;
IPCC, 2007a, page 300; Marengo and others, 2009a and b).
The influence of anthropogenic activity on the climate is strong according to various models and
at different levels of uncertainty, and there is high confidence that current climate patterns are associated
with GHG emissions (IPCC, 2007a). Climate change can therefore only be properly simulated by
considering both natural and anthropogenic forcings (IPCC, 2007a). The increase of GHGs in the
atmosphere since the start of the industrial revolution has been notable. Current concentration levels are
the highest in 420,000 years (Siegenthaler and others, 2005 and IPCC, 2007a, page 465). The projections
and simulations performed using climate models (IPCC, 2007a and 2007b) seem to indicate that if the
inertial growth in GHG emissions continues unabated, the average temperature this century could rise by
between 1ºC and 6ºC, depending on the emissions scenario used. This increase in temperature would be
accompanied by a rise of 18-59 centimetres in sea levels as well as by other climate phenomena such as
changes in global precipitation patterns, a reduction of the cryosphere and glaciers and an increase in the
number and intensity of extreme weather events. The effects of feedback are likely (albeit with a high
degree of uncertainty) to intensify the projected changes in global climate.
IV. CLIMATE CHANGE IN LATIN AMERICA AND THE CARIBBEAN
Climate projections for Latin America and the Caribbean indicate that the average temperature will
continue to rise gradually but persistently, albeit at different rates across the region, and that there will be
changes in the volume, intensity and frequency patterns of precipitation (see map IV.1). Climate will
become increasingly variable, and the incidence of extreme temperature events, such as heat waves, will
therefore increase. The average temperature in South America is projected to rise steadily, by between
1oC and 4oC under the lowest-emissions (B2) scenario, and by between 2°C and 6°C under the highestemissions (A2) scenario (see map IV.1).2
2
The A2 scenario is based on a dynamic international economy and intensive fossil fuel consumption that
generates GHG concentrations in the atmosphere far above those observed at present. The B2 scenario is based
on lower GHG concentrations and hence on lower impact from global warming.
15
Map IV.1
SOUTH AMERICA: TEMPERATURE PROJECTIONS a
(Centigrade)
Scenario A2
Scenario B2
2011-2040
10N
10N
10
7
5
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
-1
5N
EQ
5S
10S
15S
10S
25S
30S
35S
40S
5S
10S
15S
10S
25S
30S
35S
40S
90W
80W
70W
60W
50W
40W
30W
10
7
5
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
-1
5N
EQ
20W
90W
80W
70W
60W
50W
40W
30W
20W
2041-2070
10N
10
7
5
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
-1
5N
EQ
5S
10S
15S
10S
25S
30S
35S
40S
90W
80W
70W
60W
50W
40W
30W
10N
EQ
5S
10S
15S
10S
25S
30S
35S
40S
20W
10
7
5
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
-1
5N
90W
80W
70W
60W
50W
40W
30W
20W
2071-2100
10N
10N
10
7
5
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
-1
5N
EQ
5S
10S
15S
10S
25S
30S
35S
40S
90W
80W
70W
60W
50W
40W
30W
20W
10
7
5
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
-1
5N
EQ
5S
10S
15S
10S
25S
30S
35S
40S
90W
80W
70W
60W
50W
40W
30W
20W
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from National
Institute of Spatial Research (INPE) of Brazil.
a
Annual atmospheric temperature changes projected for 2011-2040, 2041–2070, 2071–2100 for the A2 and B2 scenarios
derived from the HadRM3P model. The colour scale, representing degrees Centigrade, is shown to the right of each image.
16
Projections of changes in precipitation patterns are more complex, and the ones for the region are
particularly uncertain. Precipitation forecasts for the central and tropical regions of South America range
from a 20%-40% reduction to a 5%-10% increase over the period 2071-2100 (see map IV.2).
Map IV.2
SOUTH AMERICA: PROJECTED CHANGES IN PRECIPITATION a
(Percentages)
Scenario A2
Scenario B2
2011-2040
10S
50
30
20
15
10
5
0
-5
-10
-15
-20
-30
-50
5S
EQ
5S
10S
15S
20S
25S
30S
35S
40S
90W
80W
70W
60W
50W
40W
30W
10S
EQ
5S
10S
15S
20S
25S
30S
35S
40S
20W
50
30
20
15
10
5
0
-5
-10
-15
-20
-30
-50
5S
90W
80W
70W
60W
50W
40W
30W
20W
2041-2070
10S
50
30
20
15
10
5
0
-5
-10
-15
-20
-30
-50
5S
EQ
5S
10S
15S
20S
25S
30S
35S
40S
90W
80W
70W
60W
50W
40W
30W
10S
5S
10S
15S
20S
25S
30S
35S
40S
20W
50
30
20
15
10
5
0
-5
-10
-15
-20
-30
-50
5S
EQ
90W
80W
70W
60W
50W
40W
30W
20W
2071-2100
10S
50
30
20
15
10
5
0
-5
-10
-15
-20
-30
-50
5S
EQ
5S
10S
15S
20S
25S
30S
35S
40S
90W
80W
70W
60W
50W
40W
30W
20W
10S
50
30
20
15
10
5
0
-5
-10
-15
-20
-30
-50
5S
EQ
5S
10S
15S
20S
25S
30S
35S
40S
90W
80W
70W
60W
50W
40W
30W
20W
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from National
Institute of Spatial Research (INPE) of Brazil.
a
Annual atmospheric precipitation changes projected for 2011-2040, 2041–2070, 2071–2100 for the A2 and B2 scenarios
derived from the HadRM3P model. The colour scale is shown to the right of each image.
17
Climate projections show a steady increase in extreme weather events (see map IV.3). Rainfall is
expected to increase over central Mexico and the tropical and south-eastern parts of South America.
Climate models reveal a 10% average increase and a rising trend in precipitation in north-eastern Ecuador,
Peru and south-eastern South America and a drop in rainfall in eastern Amazonia and the north-east of
Brazil, the central-northern parts of Chile and most of Mexico and Central America. Continuous dry spells
will tend to increase in Mexico, Central America and all of South America (except Ecuador, north-eastern
Peru and Colombia) because precipitation levels are projected to change (rise or fall) by less than 10%.
Although the intensity of precipitations is expected to increase in general in Latin America, dry spells
between rainy periods will become longer and average precipitation levels will drop. Temperatures are
rising in most of South and Central America and heat waves are expected to become increasingly common
all over the region, especially in the Caribbean, south-eastern South America and Central America. There
is also expected to be a steady and significant increase in hotter nights across Latin America, especially in
Mexico and Central America and the subtropical parts of South America.
Map IV.3
LATIN AMERICA AND THE CARIBBEAN: MULTI-MODEL AVERAGES OF SPATIAL PATTERNS OF
CHANGES IN EXTREMES UNDER SCENARIO A1B a
Days with precipitation of over 10 mm
-2.5
-2
-1.5
-1
-0.5
0
0.5
1.5
1
2
2.5
Consecutive dry days
-1.25 -1 -0.75 -0.5 -0.25 0
Daytime temperature range
-2.5
-2
-1.5
-1
-0.5
0
0.5
0.25 0.5 0.75
Precipitation intensity
1 1.25
-1.25 -1 -0.75 -0.5 -0.25 0
Hot nights
1
1.5
2
2.5
-7.5
-6
-4.5
-3
-1.5
0
1.5
0.25 0.5 0.75 1
1.25
Heat waves
3
4.5
6
7.5
-3.75 -3 -2.25 -1.5 -0.75 0 0.75 1.5 2.25 3
3.75
Source: C. Tebaldi and others, “Going to the extremes: an intercomparison of model-simulated historical and future changes in
extreme events”, Climatic Change, vol. 79, 2006.
a
The figures show the difference between the averages for two twenty-year periods (2080–2099 and 1980–1999). The values
for each model were standardized, and then a multi-model average was calculated. The dotted sections indicate areas in
which at least five of the nine models concur that the change is statistically significant.
18
The available evidence on Central America for 1950-2000 shows higher temperatures and more
volatility (see map IV.4). Precipitation maps reveal the concentration of rainfall in the period spanning
approximately May to October and the difference between rainfall patterns along the Atlantic and Pacific
coasts and between the northern and southern parts of the isthmus (map IV.5). Year-on-year variations in
rainfall are high, associated with El Niño - Southern Oscillation. The projected changes in climate are
summarized in table IV.1.
Map IV.4
CENTRAL AMERICA: AVERAGE TEMPERATURES IN THE MONTHS OF JANUARY, APRIL,
JULY AND OCTOBER, 1950-2000
(Centigrade)
January
April
20N
20N
28
28
26
26
24
15N
22
22
20
20
18
18
16
10N
24
15N
16
10N
14
14
12
12
10
10
5N
-95W
-90W
-85W
-80W
5N
-95W
-75W
-90W
July
-85W
-80W
-75W
October
20N
20N
28
28
26
26
24
15N
22
22
20
20
18
18
16
10N
24
15N
14
16
10N
14
12
12
10
5N
-95W
-90W
-85W
-80W
-75W
10
5N
-95W
-90W
-85W
-80W
-75W
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the
Atmospheric Sciences Centre, National Autonomous University of Mexico (UNAM).
19
Map IV.5
CENTRAL AMERICA: AVERAGE PRECIPITATION IN THE MONTHS OF JANUARY, APRIL,
JULY AND OCTOBER, 1950-2000
(Millimetres)
January
April
18N
450
400
16N
350
300
14N
18N
450
400
16N
350
300
14N
250
250
12N
200
150
10N
100
50
8N
-94W -92W -90W -88W -86W -84W -82W -80W -78W -76W
12N
200
150
10N
100
50
8N
0
-94W -92W -90W -88W -86W -84W -82W -80W -78W -76W
July
0
October
18N
450
400
16N
350
300
14N
18N
450
400
16N
350
300
14N
250
250
12N
200
150
10N
100
50
8N
-94W -92W -90W -88W -86W -84W -82W -80W -78W -76W
0
12N
200
150
10N
100
50
8N
-94W -92W -90W -88W -86W -84W -82W -80W -78W -76W
0
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the
Atmospheric Sciences Centre, National Autonomous University of Mexico (UNAM).
Table IV.1
CENTRAL AMERICA: PROJECTED CHANGES IN TEMPERATURE AND PRECIPITATION,
2020, 2050 AND 2080
Season
Changes in temperature (Centigrade)
2020
2050
2080
Dry
+0.4 to +1.1
+1.0 to +3.0
+1.0 to +5.0
Rainy
+0.5 to +1.7
+1.0 to +4.0
+1.3 to +6.6
Changes in precipitation (Percentages)
2020
2050
2080
Dry
–7 to +7
–12 to +5
–20 to +8
Rainy
–10 to +4
–15 to +3
–30 to +5
Source: Intergovernmental Panel on Climate Change (IPCC), Climate Change 2007: Impacts, Adaptation and
Vulnerability.Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on
Climate Change. Summary for Policymakers, M.L. Parry and others (eds.), Cambridge University Press, 2007.
20
There is a high degree of uncertainty about the climate scenarios for the Caribbean (IPCC,
2007a). Nevertheless, the projections for both the Atlantic and the Caribbean are presented in table IV.2.
Evidence points to an increase in extreme weather events, mainly in the form of hurricanes.
Table IV.2
THE CARIBBEAN: CLIMATE SCENARIOS
Variable
Temperature
Scenario
Increase of between 0.8°C and 2.5°C by 2050 and of between 0.9° and 4°C by 2080
Variation of between -36.3% and +34.2% by 2050 and of between -49.3% and +28.9%
by the end of the century
Could rise by 35 cm by the end of the century
The frequency of hurricanes increases by 5%-10% over the course of the century
Precipitation
Sea level
Extreme weather events
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Intergovernmental Panel on
Climate Change (IPCC), Climate Change 2007 - The Physical Science Basis. Contribution of Working Group I to the
Fourth Assessment Report of the IPCC, Cambrigde University Press, 2007 and Climate Change 2007- Impacts,
Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the IPCC,
Cambrigde University Press, 2007.
Box IV.1
THE CARIBBEAN: A2 AND B2 CLIMATE SCENARIOS
The different climate scenarios seem to suggest that changes in temperature and rainfall patterns could vary
significantly in the Caribbean, as shown in maps 1 and 2. Nevertheless, average temperatures are expected to rise by
between 2.3oC and 3.4oC for the region as a whole by the end of the century (Centella and others, 2008).
Map 1
ANNUAL TEMPERATURE VARIATIONS
ECHAM4
HadAM3P
30N
27N
24N
21N
18N
15N
12N
9N
6N
90W
85W
80W
75W
70W
65W
60W
55W
90W
85W
80W
75W
70W
65W
60W
55W
90W
85W
80W
75W
70W
65W
60W
55W
85W
80W
75W
70W
65W
60W
55W
30N
27N
24N
21N
18N
15N
12N
9N
6N
3N
90W
(Celsius)
3N
5.4
5.2
5.0
4.8
4.6
4.4
4.2
4.0
3.8
3.6
3.2
3.0
2.8
2.6
2.4
2.2
2.0
1.8
1.6
1.4
21
Box IV.1 (concluded)
Map 2
PROJECTED CHANGES IN PRECIPITATION LEVELS
ECHAM4
HadAM3P
30N
27N
27N
24N
24N
21N
21N
18N
18N
15N
15N
12N
12N
9N
9N
6N
6N
3N
3N
90W
85W
80W
75W
70W
65W
60W
55W
90
70
50
30
10
0
90W
30N
30N
27N
27N
24N
24N
21N
21N
18N
18N
15N
15N
12N
12N
9N
9N
6N
6N
85W
80W
75W
70W
65W
60W
55W
(%)
30N
-10
-30
-50
-70
-90
3N
3N
90W
85W
80W
75W
70W
65W
60W
55W
90W
85W
80W
75W
70W
65W
60W
55W
Source: A. Centella, A. Bezanilla and K. Leslie, A Study of the Uncertainty in Future Caribbean Climate Using the PRECIS
Regional Climate Model. Technical Report, Belmopan, Caribbean Community Climate Change Centre (CCCCC), 2008.
The climate change patterns projected for 2100 in Latin America are summarized in map IV.6.
The figures are based on the projected changes in climate averages and extremes as shown in Meehl and
others (2007, chapter 10), Christensen and others (2007, chapter 11, cited in IPCC, 2007a), and Magrin
and others (2007, cited in IPCC, 2007b).
22
Map IV.6
LATIN AMERICA AND THE CARIBBEAN: SUMMARY OF CLIMATE CHANGE PATTERNS
PROJECTED FOR 2100 a
Projected changes:
Glacier melting
Increase in temperature
Increase in precipitation
Decrease in precipitation
Increase in precipitation extremes
Longer dry spells periods
Shorter dry spells periods
More heatwaves
Fewer frost days
More intense hurricanes
Confidence level
High
Medium
Low
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from National
Institute of Spatial Research (INPE) of Brazil.
a
The confidence levels are based on the statistically significant levels of coincidence determined for the sign of change by a
certain number of models (at least 80% for high confidence, 50%-80% for medium confidence and less than 50% for low
confidence).
Main messages
The available scientific evidence shows that the global warming associated with the increase in GHGs
generated by anthropogenic activity is creating noticeable changes in climate, such as: higher
temperatures, alterations in precipitation patterns, the reduction of the cryosphere, rising sea levels and
changes in extreme weather patterns. Projections suggest that it is highly likely that temperatures will rise
on average by between 1oC and 6 oC and that precipitation patterns will change, with rainfall rising in
some cases by 5%-10% and falling in others by 20%-40%. Furthermore, part of the glaciers in the
Andean countries are expected to melt, extreme weather events in the Caribbean, Central America and the
tropical and subtropical parts of South America will probably increase, and changes may occur in climate
events like El Niño.
23
V. THE MACROECONOMIC SITUATION
The long-term growth of the economies of Latin America and the Caribbean is without a doubt shaped by
a complex web of factors and interdependencies. Nevertheless, it is possible to identify a set of regular
empirical patterns on which to base future scenarios and their respective baselines or BAU counterparts.
Altogether, in the economies of the region, as in modern economies on the whole, over the long term
GDP and per capita GDP follow an upward trend with oscillations that are usually auto-correlated
(Hodrick and Prescott, 1997, Blanchard, 1997, Fisher, 1994). The adequate identification of the trend and
its respective probabilities distribution allows for long-term projections to be made by taking into
consideration the levels of uncertainty determined on the basis of the historical evidence available for
each country.
Historically, GDP and per capita GDP trends in the region have varied considerably, with average
growth rates differing across countries and periods (see figure V.1). In Latin America and the Caribbean
as a whole, growth was more sluggish in 1980-2008 than in 1950-1980 (see figure V.2), while GDP and
per capita GDP, to different degrees, remained volatile (see figure V.1), as reflected in the oscillations
around an average growth rate that varied from country to country and sometimes changed over time.
Figure V.1
LATIN AMERICA AND THE CARIBBEAN: ANNUAL STANDARD DEVIATION AND AVERAGE
GROWTH RATE OF PER CAPITA GDP
(Percentages)
3
0.85
CHL
COL
0.8
Standard deviation
PAN
CRI
0.75
MEX
2
ECU
PRY
PER
GTM
ARG
URY
VEN
HND
1
SLV
0.7
BOL
NIC
Average growth 1950-2008
BRA
DOM
0
0.65
HTI
Average: 1.54
0.6
-1
1950
1960
1970
Standard deviation
1980
1990
2000
2010
Average growth
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Economic Indicators and
Statistics Database (BADECON) for GDP at 2000 constant prices and Social Indicators and Statistics Database
(BADEINSO) for population data.
24
Figure V.2
LATIN AMERICA AND THE CARIBBEAN: DISTRIBUTION OF ECONOMIC GROWTH RATES,
1950-1980 AND 1980-2008
(Percentages)
0.4
Density
0.3
0.2
0.1
0
-2
0
2
4
Growth in per capita GDP
1980-2008
1950-1980
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Economic Indicators and
Statistics Database (BADECON) for GDP 2000 constant prices and Social Indicators and Statistics Database
(BADEINSO) for population data.
The available evidence suggests that the per capita growth curves of the countries of Latin
America and the Caribbean are not on course for absolute convergence (β-convergence) or for
convergence of the dispersion in per capita GDP (σ-convergence) (Barro and Sala-i-Martin, 1992). In
other words, the growth of the countries with lower per capita GDP is not greater than the growth of the
countries with higher per capita GDP. As shown in figure V.3, the relationship between these variables
alters over time, and, for some decades, there has been no statistically significant relationship between
them whatsoever not even a slightly positive one. During the entire period 1950-2008, the relationship
between average per capita GDP growth (as a percentage) and per capita GDP (in 2000 dollars)
weakened.
25
Figure V.3
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP VERSUS AVERAGE
PER CAPITA GDP GROWTH RATE
(Percentages and 2000 dollars)
(a) Convergence 1950-2008
3
DOM
MEX
BRA
CHL
COL
PRY
URY
PER
GTM
ARG
VEN
HND
1
PAN
CRI
SLV
BOL
NIC
0
Average growth rate 1960-2008
ECU
2
DOM
PAN
BRA
Average growth rate 1950-2008
(b) Convergence 1960-2008
3
2
CHL
MEX
URY
GTM
HND
ARG
PER
BOL
1
CRI
COL
ECU
PRY
SLV
0
VEN
NIC
HTI
HTI
-1
-1
0
1 000
2 000
3 000
4 000
5 000
1 000
2 000
(c) Convergence 1970-2008
4 000
5 000
(d) Convergence 1980-2008
3
DOM
3
3 000
Per capita GDP 1960
Per capita GDP 1950
CHL
ECU
2
PRY
BRA
CHL
PAN
MEX
HND
GTM
1
ARG
PER
BOL
PAN
2
URY
CRI
COL
Average growth rate 1980-2008
Average growth rate 1970-2008
DOM
SLV
VEN
0
COL
1
URY
CRI
PER
HND
ECU
0
ARG
MEX
BRA
SLV
PRY GTM
BOL
VEN
NIC
-1
HTI
NIC
-1
0
-2
2 000
4 000
6 000
8 000
HTI
0
2 000
4 000
Per capita GDP 1970
TTO
PAN
2
NIC
COL
HND
SLV
BOL ECU
GTM
ARG
URY
CRI
Average growth rate 1990-2008
PER
Average growth rate 1990-2008
6
CHL
DOM
8 000
(f) Convergence 1990-2008 a
(e) Convergence 1990-2008
4
6 000
Per capita GDP 1980
MEX
BRA
VEN
PRY
0
4
GUY
PER
DOM
VCT
2
NIC
SLV SUR
HND
BOL ECU COL
GTM
PRY
KNA
CRI
GRD
DMA
URY
BLZ
BRA CUB LCA
VEN
ARG
ATG
MEX
BRB
JAM
0
HTI
CHL
PAN
HTI
-2
-2
0
2 000
4 000
Per capita GDP 1990
6 000
0
2 000
4 000
6 000
8 000
Per capita GDP 1990
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Economic Indicators and
Statistics Database (BADECON) for GDP 2000 constant prices and Social Indicators and Statistics Database
(BADEINSO) for population data.
a
Includes the countries for which per capita GDP figures have been available since 1990: Antigua and Barbuda, Barbados,
Belize, Cuba, Dominica, Grenada, Guyana, Jamaica, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Saint Lucia,
Suriname and Trinidad and Tobago.
26
This does not mean, of course, that no conditional convergence is observed in per capita GDP or
no convergence among groups of relatively similar countries, when adjustments are made for a set of
variables (Barro and Sala-i-Martin, 1992) and the probability of changing group is low.
The results show that the GDP and per capita GDP paths projected per country are consistent with
the historical data available and that the historical evidence on each country can provide a reasonable
prediction of the future. The economies of the region are thus expected to perform over the next few
decades as they have done historically.
Box V.1
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP PROJECTIONS
The trend for per capita GDP in Latin America and the Caribbean is upward, but with oscillations and at different
paces. The average growth rate of per capita GDP over 1950-2008 was 1.8%, but in 1950-1980, the rate was much
higher, over 2%. In 1980-2000, per capita GDP growth fell and was even negative for some of those years before
picking up again as of 2001. The projections suggest that per capita GDP growth for the region as a whole will be
1.8%, with a 60% probability that it will be between 1.1% and 2.5%.
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP AND PER CAPITA GDP GROWTH, WITH
THE HODRICK-PRESCOTT FILTER AND THE RESPECTIVE FAN CHART, 1950-2008 a
(a) Per capita GDP
(Logarithms)
(b) Growth rate
(Percentages)
8.6
6
8.4
4
8.2
2
8.0
0
7.8
-2
7.6
-4
7.4
-6
1950
1955
1960
1965
1970
1975
Per capita GDP
1980
1985
1990
1995
2000
2005
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Hodrick-Prescott filter
Per capita GDP
Hodrick-Prescott filter
(c) Projected per capita GDP growth, 2009-2100
(Percentages)
10
8
6
Scenario
probability
60
20
10
4
2
0
-2
Lower
limit
1.1
-2.0
2.6
Average
Upper limit
1.8
-0.7
4.3
2.5
1.1
5.7
-4
-6
1960
1980
2000
2020
2040
2060
2080
2100
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Economic Indicators and
Statistics Database (BADECON) for GDP 2000 constant prices and Social Indicators and Statistics Database
(BADEINSO) for population data.
a
Only those countries for which data have been available from 1950 onwards are included in the per capita GDP calculations
for Latin America and the Caribbean.
27
Main messages
The analysis of climate change uses various methods but generally involves the construction of a baseline
(business as usual) scenario as a point of reference. In the analysis of the economic impact, this baseline is
compared with scenarios including and excluding the effects of climate change. Mitigation scenarios are
projected using a baseline scenario of GHG emissions.
The economic analysis of climate change requires the construction of long-term economic
scenarios that should not be used for making short-term projections. The macroeconomic scenarios
constructed for each country are based on historical evidence and regular patterns detected in the region’s
economies over the last 50 years. These reveal three notable characteristics:
•
The basic trend in the economies of Latin America is positive growth with oscillations.
•
Annual growth rates oscillate considerably, and structural changes in their average trajectories
can be used to mark the divisions between growth periods. This shows that an initial period of
relatively high growth was followed first by a period of more sluggish growth and then by a
period of recovery witnessed in more recent years prior to the present crisis.
•
There is no absolute convergence in per capita GDP among the countries of Latin America.
These characteristics suggest that:
•
The projected economic scenarios are consistent with the evidence that there is no absolute
convergence under way in the region.
•
The projected per capita GDP growth rates are based on the assumption that growth will
continue to be similar to that observed in the last two decades.
28
VI. ECONOMIC IMPACTS OF CLIMATE CHANGE IN LATIN AMERICA
AND THE CARIBBEAN
The impacts of climate change in the region are multiple, heterogeneous, nonlinear and of differing
magnitudes, and they are certainly significant despite some considerable lingering uncertainty about their
transmission channels and their exact magnitude (Samaniego, 2009). Also, vulnerability to extreme
climatic events is high (for example the increase, over the past three decades, in the occurrence of El Niño
and Southern Oscillation events, in the frequency and intensity of hurricanes in Central America and the
Caribbean, and in extreme rains in the south-east region of South America). On the basis of information
available from Regional Economics of Climate Change Studies (RECCS), these impacts through 2100
can be synthesized in the following points:
The results clearly show that there is solid evidence to support the argument that climate change
is associated with significant economic impacts on the agricultural sector in the Latin American and the
Caribbean region. These impacts are, however, very heterogeneous by country and region and moreover
demonstrate nonlinear behaviour. Some regions and countries will thus enjoy temporary windfalls as a
result of moderate increases in temperature and changes in precipitation, though the negative impacts will
prevail in the long term. The main effects of climate change on the agricultural sector in the Latin
America and the Caribbean region are likely to be as follows:
(i)
Countries situated in the southern region of the continent, such as Argentina, Chile and
Uruguay, could see temperatures rising by between 1.5°C and 2°C over the period 20302050, generating possible positive effects in agricultural productivity, though this does not
take into consideration potential problems related to the appearance or the spread of pests
and diseases, or water-supply constraints as a result of melting glaciers (especially in Chile
and western Argentina). However, beyond this threshold the effects on agricultural
production will turn negative.
(ii)
In Paraguay, under global emissions scenario A2, significant drops in wheat and cotton
yields are expected as of 2030, with soy production decreasing as of 2050, whereas corn,
sugar cane and cassava production may increase.
(iii)
In the Plurinational State of Bolivia, the agricultural frontier is expected to continue to
expand and agricultural production and employment will continue to be essential to the
country throughout the remainder of the century. The results of crop analyses at the local
level show that, on the whole, agricultural yields will be higher in areas with moderate
temperatures and precipitation and might increase in higher-altitude areas, though impacts
would be significant in regions that have extreme temperatures and precipitation.
(iv)
In Chile, the forestry and agriculture sector will be affected differently. While yields will
increase for some crops and regions as restrictively low temperatures rise (southern Chile),
other crops and regions of the country will see sharp declines due to shortages in irrigation
water and rainfall (central and northern regions of the country).
(v)
In Ecuador, climate change will have consequences that differ among agricultural production
units. For example, for subsistence farms, a 1°C rise in temperature would cause an increase
in crop yields, but this would be reversed once a 2°C threshold is crossed. For intermediate
farms, a 1°C increase would affect banana, cocoa, and plantain production.
29
(vi)
In Colombia a possible 4°C rise in the average temperature is forecast by the end of the
twenty-first century, which will mean an approximate 700-metre rise in the altitude band
that marks the optimal temperature threshold for some crops.
(vii) In Central America it is observed that, on average, the maximum temperature has already
exceeded, by several degrees, the optimal for the crop yield index for several crops, which
suggests further losses if temperatures continue to rise. Also, during the rainy season
cumulative precipitation levels are greater than the optimal for maximizing productivity,
which suggests that a minor reduction could improve yields, but a significant reduction
could mean losses. A more disaggregated analysis suggests possible losses in basic grains
in regions with less precipitation, such as the Pacific slope.
(viii) For the Caribbean, the results obtained show that increasing precipitation levels could
cause positive impacts on agricultural production in Guyana, whereas yields in Trinidad
and Tobago could decline, owing mainly to increased incidence of farmland flooding. In
the Netherlands Antilles, rising temperatures would benefit agriculture as a whole; the
Dominican Republic would experience a similar impact. Generally, rising temperatures are
not expected to affect sugar cane production any significant way, whereas crops, such as
plantain, cocoa, coffee and rice are likely to be more susceptible.
The final net result of climate change impacts on agriculture also depends on a wide range of
variables (these include the spread of pests, diseases and weeds, soil degradation and shortages of water
for irrigation) and can change according to the capacity of CO2 in fertilization for reversing the negative
effect of rising temperatures and water deficits and as a function of the processes of adaptation and
technological innovation.
Soil degradation is without a doubt a fundamental long-term problem in the Latin American and the
Caribbean region and will increasingly affect production conditions for the agricultural sector. Available land
degradation evidence is summarized in table VI.1, which shows that in the Plurinational State of Bolivia,
Chile, Ecuador, Paraguay and Peru the areas that will potentially be degraded by the year 2100 are significant
and vary from 22% to 62% of the territory, with Paraguay and Peru standing out as extreme cases.
Table VI.1
LATIN AMERICA (5 COUNTRIES): ESTIMATED LOSSES CAUSED BY LAND DEGRADATION
(Square kilometres and percentages)
Current
degraded
area (Km2)
Current
Degraded
degraded
area in 2050
territory
(Km2)
(Percentages)
Degraded
area in 2100
(Km2)
Degraded
Degraded
territory in
territory in
2050
2100
(Percentages) (Percentages)
Bolivia (Plurinational State of)
60 339
5.5
123 301
243 979
11.2
22.2
Chile
77 230
10.2
157 818
312 278
20.8
41.2
Ecuador
40 136
14.2
82 017
162 289
28.9
57.2
Paraguay
66 704
16.4
136 308
269 716
33.5
66.3
197 211
15.3
402 996
797 418
31.3
62.0
Peru
Source: Prepared by the Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Global
Mechanism of the United Nations Convention to Combat Desertification, Global Land Degradation Assessment
(GLADA), Regional Economics of Climate Change Studies (RECCS) of ECLAC.
30
Box VI.1
CENTRAL AMERICA: EFFECTS OF TEMPERATURE
AND PRECIPITATION ON AGRICULTURE
Generally, the impacts of climate change are heterogeneous and nonlinear, as different crops have specific limits of
tolerance and resistance. Accordingly, inflection points can occur in impact patterns. Conventional specifications for
identifying climate impacts on agriculture assume a concave relationship to yields and production or both; this
means that temperature and/or precipitation initially stimulate crop growth and later stymie it (Stern, 2007).
Effects of temperature on agricultural output index
Temperature at
maximum yield
26.8° C
106
105
Crop production index
Production index
104
150
100
103
Temperature 2005
32.4° C
102
101
100
Production index
99
50
98
19
20
21
22
23
0
24
25
26
27
28
29
30
31
32
33
34
Annual maximum temperature
-50
Effects of precipitation on agricultural output index
3 500
3 000
2 500
2 000
1 500
1 000
Cumulative precipitation (May-October)
500
0
0
5
10
15
20
25
30
35
40
45
Annual maximum temperature
Precipitation at
maximum yield
1 334 mm
104
50
102
Production index
-100
4 000
Precipitation 2005
1 813.2 mm
100
98
|
96
94
500
750
1 000
1 250
1 500
1 750
2 000
2 250
Cumulative precipitation in rainy season
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Areas of South America that are currently relatively dry will experience a further decrease in the
availability of water. A decrease of up to 30% in annual precipitation may be observed as a result of a 2°C
increase in global temperatures and of between 40% and 50% with a 4°C increase (Warren, and others,
2006). This will substantially increase the number of persons who will have difficulty accessing clean
water in 2025. Some areas of Latin America are expected to experience severe water stress, which will
affect the water supply and hydroelectric power generation (particularly in the Andean countries and in
the subtropical region of South America, which are highly dependent on hydroelectric energy). In
addition, some glaciers will shrink or disappear, which will also cause water shortages and reduce
hydroelectric power generation (CEDEPLAR/UFMG/FIOCRUZ, 2008). Under any climate scenario,
Central America is expected to see its water availability affected by variations in temperature and
precipitation, particularly on the Pacific slope, with increased salt content in coastal aquifers and in
aquifers with high evaporation rates. The region is also expected to face greater problems with water
quality and higher demand. For the Caribbean subregion, reduced water availability is expected, despite
31
projected increases in precipitation, as a consequence of the variability of rainfall. Furthermore, there is
evidence that the number of dry days has increased. Cloudiness is also expected to increase, as is the
number and intensity of tropical storms and cyclones.
The health impacts of climate change in the region will be related mostly to heat stress, malaria,
dengue fever, cholera, respiratory illnesses and other conditions related to changes in precipitation, the
availability of water and air quality (Githeko and Woodward, 2003; CEDEPLAR/UFMG/FIOCRUZ,
2008). Also, as a result of the loss of stratospheric ozone and increased ultraviolet rays, cases of nonmelanoma skin cancer will increase in the southernmost regions of the continent (parts of Chile and
Argentina) (Magrin, and others, 2007), as will morbidity and mortality due to heat waves. It is worth
mentioning that the northeastern region of Brazil will be especially sensitive to climate-change-related
health issues.
The rise in sea level will increase the number of people displaced and the land lost due to
permanent flooding. Small Caribbean island states will be strongly impacted. The rising sea level will
cause the disappearance of mangroves on the lower coasts (northern coasts of Brazil, Colombia, Ecuador,
French Guyana and Guyana), damaging fishing grounds. Coastal flooding and land erosion will affect
water quantity and quality. The intrusion of seawater could exacerbate socio-economic and health
problems in these areas (Magrin and others, 2007). Furthermore, there are serious threats to the coastal
areas of the River Plate (Argentina and Uruguay) due to increasing storm waves and rising sea levels.
According to some weather models, a 3°C increase in global temperatures could translate into
sharp declines in precipitation in the Amazon region, which will cause substantial deterioration of the
jungles that are home to the world’s greatest biodiversity (Stern, 2008) and the risk even exists that some
parts of the Amazon jungle will become savannah. On the continental and insular coasts of the Caribbean
Sea, 1°C to 2°C increases will trigger increasingly frequent incidents of coral reef bleaching. Due to the
concentrations of endemic species in the region, Latin America hosts seven of the world's 25 most critical
biodiversity sites. Thus, climate change is putting at risk a significant portion of the planet’s biodiversity
(see box VI.2).
The countries of the Latin American and Caribbean region will be affected by climate variations
and extreme events, which include, for example, the El Niño-Southern Oscillation (ENSO) and its
counterpart, La Niña, extreme precipitation events and tropical storms (Zapata-Martí and SaldañaZorrilla, 2009). In 2100 the cost of climatic disasters, in constant 2008 prices, will move from an annual
average of almost US$ 8.6 billion for the 2000-2008 period to i) US$ 11 billion at a 4% discount rate;
ii) US$ 64 billion at a 2% discount rate; and iii) US$ 250 billion at 0.5% discount rate. (see figure VI.1)
(Zapata-Martí and Saldaña-Zorrilla, 2009).
32
Box VI.2
BIODIVERSITY IN CENTRAL AMERICA
According to the National Institute of Biodiversity (INBio) of Costa Rica, Central America’s great geologic,
geographic, climatic and biotic diversity represents 7% of the planet’s biodiversity. Multiple factors, that vary from
country to country, such as deforestation, soil and air pollution, have negative effects on biodiversity. Beyond
existing pressures, climate change will exert additional pressure through altered precipitation patterns, rising
temperatures and larger numbers of extreme events, all of which translate into greater losses of biodiversity. A
potential biodiversity index has been constructed to identify the impacts of climate change. The figure below
presents results of climate change simulations under scenario A1B, which show a decline in the index for all
countries of the region.
CENTRAL AMERICA (7 COUNTRIES): EVOLUTION OF THE POTENTIAL BIODIVERSITY INDEX,
BASED ON SCENARIO A1B
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
Belize
Guatemala
Panama
Costa Rica
Honduras
2079
2076
2073
2070
2067
2064
2061
2058
2055
2052
2049
2046
2043
2040
2037
2034
2031
2028
2025
2022
2019
2016
2013
2010
2007
0
El Salvador
Nicaragua
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
The direct market costs of biodiversity related to ecotourism, live animals, animal products, certified forest
production (sustainable), organic farming, non-timber forest production and bioprospecting are estimated at
US$ 179.81 million for the entire Central American region. Indirect costs were obtained using an agricultural
production function that includes the biodiversity index, estimating the marginal contribution of biodiversity to
production and, thereby, the shadow price for ecosystem-related services. The average estimated cost for the region
in 2080, with a discount rate of 0.5%, could be around 8.33% of GDP. The direct costs are estimated based on
biodiversity market values and the indirect costs have to do with agricultural production. As in other cases, the costs
are relatively low up to 2030 and then start to climb, rising exponentially after 2050.
Scenario A1B
CENTRAL AMERICA: PRESENT VALUE OF ESTIMATED CUMULATIVE COSTS BY CUT-OFF YEAR
IN THE BIODIVERSITY SECTOR UNDER CLIMATE CHANGE SCENARIO A1B
(Percentages of 2008 GDP)
Years
2020
2030
2050
2080
2100
0.50%
0.17
0.55
2.06
8.33
19.63
Discount rate
2.0%
0.15
0.44
1.36
3.95
7.26
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
4.0%
0.12
0.34
0.82
1.65
2.33
33
Figure VI.1
LATIN AMERICA AND THE CARIBBEAN: COST OF CLIMATE DISASTERS, 2009-2100
(Millions of constant 2008 dollars)
450 000
400 000
350 000
300 000
250 000
200 000
150 000
100 000
50 000
2097
2093
2089
2085
2081
2077
2073
2069
2065
2061
2057
2053
2049
2045
2041
2037
2033
2029
2025
2021
2017
2013
2009
0
Year
Rate of 4%
Rate of 2%
Rate of 0.5%
No discount rate
Source: Zapata-Martí and Saldaña-Zorrilla, 2009.
Main messages
The empirical evidence for the Latin American and Caribbean region shows that climate change does
have significant impacts on the region’s economies. However, these effects are extremely heterogeneous
by regions and over time, with nonlinear behaviour, different magnitudes and, in some cases, irreversible
consequences. Examples of these impacts are:
•
The impacts of climate change in the agricultural sector differ by crop, region, type of land
and economic agents. In certain parts of Argentina, Chile and Uruguay and in some regions
of countries with temperate climates, a moderate rise in temperature could have positive
impacts on the agricultural sector for a certain time frame. On the other hand, in tropical
regions and in Central America, rising temperatures will have gradually worsening negative
impacts. Furthermore, the impacts of climate change on soil degradation are significant and
negative in all instances.
•
Climate change will generally cause additional pressures on water resources in Argentina,
Chile, Brazil, Ecuador, Peru, Central America and the Caribbean, as a consequence of changes
in precipitation, rising temperatures and increased demand. This will have major negative
consequences principally for agricultural production and the use of hydroelectric dams. Shortterm, in some regions, a phenomenon might occur by which water availability will increase as
a result of glacial melting, but long-term this may actually exacerbate water stress.
34
•
Great uncertainty persists about the possible impacts of climate change on morbidity and
mortality related to diseases such as malaria and dengue fever. However, the information
available suggests that the spread of these diseases will extend beyond current geographical
boundaries, increasing the number of people affected.
•
The rise in sea level will cause the disappearance of mangroves in lower coastal areas (the
northern coasts of Brazil, Colombia, Ecuador, French Guyana and Guyana), as well as coastal
flooding and land erosion. It will also affect infrastructure and buildings near the coasts, such
as along the River Plate (Argentina and Uruguay), and will significantly damage activities
such as tourism, particularly in the Caribbean.
•
Climate change will cause significant, often irreversible, losses in biodiversity, which is
particularly serious in a region that encompasses several of the most biodiverse countries in
the world. Nevertheless, these physical losses have no economic value because a significant
portion of ecosystem-related services cannot be adequately quantified or included in the
market.
•
The evidence available about extreme events, such as intense rains and prolonged dry periods
and heatwaves, suggests that changes in patterns, frequency and intensity will result in
increased costs. These changes will have major impacts on subregions, such as Central
America and the Caribbean, and on economic activities such as tourism, as well as triggering
extreme precipitation events over a large portion of Latin America and the Caribbean.
Seventy per cent of the continent currently suffers recurrent flooding, and intense droughts
are punishing the region’s most important productive systems.
In this context, it is essential to design a regional strategy aimed at reducing the severest impacts
of climate change and preventing those that are unacceptable, such as the irreversible loss of biodiversity,
human lives and livelihoods.
35
VII. MITIGATION PROCESSES
The projected emission scenarios have climatic consequences that are unquestionably significant. They
imply, for example, a high probability of a temperature rise of 2oC by 2050 and 3oC or even 4oC by the
end of the century (IPCC, 2007b).
Emissions of greenhouse gases by the Latin American and Caribbean region show complex
behaviour over time, as a result of the interaction of multiple factors. Latin America’s total emissions
represent a small share at the global level and, moreover, decreased as a proportion of total emissions
between 1990 and 2000. South America’s share dropped from 11.5% of the total in 1990 to 9.71% in
2000; Central America’s fell from 0.94% to 0.71% and that of the Caribbean edged up from 0.28% to
0.30% (see figure VII.1).3 This pattern is the net result of two opposing trends: a steady rise in emissions
from energy consumption and, recently, an overall reduction in emissions from land-use change. In
absolute terms, emissions are concentrated in a few countries, especially Argentina, the Bolivarian
Republic of Venezuela, Brazil, Colombia, Mexico and Peru, with the other countries accounting for a
smaller proportion.
Figure VII.1
LATIN AMERICA AND THE CARIBBEAN: SHARE IN TOTAL GHG EMISSIONS
(INCLUDING LAND-USE CHANGE) a
(Percentages)
1990
Rest
38.72
2000
Annex I
47.03
Annex I
42
Rest
45.64
Caribbean
0.28
Central America
0.94
Mexico
1.57
South America
11.46
Caribbean
0.3
Central America
0.71
Mexico
1.64
South America
9.71
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009.
a
Includes carbon dioxide (CO2), ammonium sulphate (NH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons
(HFCs), and sulfur hexafluoride (SF6). Land-use change data are not available for Antigua and Barbuda, Barbados, Dominica,
Grenada, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago.
Globally speaking, 60% of emissions come from the burning of fossil fuels and cement
production, followed by those generated by land-use change and the agricultural sector. In South
America, however, the energy sector generated only 21%, land-use change 51% and agriculture 24% of
3
For purposes of comparability, the information on emissions is taken from the Climate Analysis Indicators Tool
(CAIT) Version 6.0 (WRI, 2009), which occasionally does not coincide with the official emissions inventories.
For that reason, this information should be treated with due caution.
36
total emissions. In Central America, the energy sector produced 13% and land-use change 85% of the
total. In the Caribbean, the energy sector represented 97% of total emissions, although data are lacking for
most of the countries of the subregion. So, compared with world averages, the Latin American and
Caribbean region produces more emissions from land-use change and fewer from the energy sector.
GHG emissions from the energy sector and cement production in Latin America and the
Caribbean still represent a small proportion of total global emissions, although they have been on the rise:
from 7% in 1990 to 8.2% in 2000. In 1990-2000, this category of emissions posted a growth rate of 2.9%
for South America, 3.0% for Central America and 1.2% for the Caribbean, compared with the worldwide
rate of 1.0%. This is evidence that, overall, emissions from the energy sector in the Latin American and
Caribbean countries are still relatively small, although they are increasing faster than the world average,
albeit with large differences from one country to another. Urbanization, access to energy,
industrialization, and changes in lifestyles and modes of transport, among other things, are factors driving
this pattern.
1. Emissions and energy in Latin America and the Caribbean
CO2 emissions associated with energy consumption and cement production in the region overall are tending
to rise, showing a growth rate of 2.2% (simple average) for the period 1990-2005 (see figure VII.2).
Figure VII.2
LATIN AMERICA AND THE CARIBBEAN: AVERAGE GROWTH RATES OF
CO2 EMISSIONS, 1990-2005
(Percentages)
8
HND
GTM
BLZ
SLV
VCT
6
PAN
DOM
CRI
BOL
LCA
KNA
CHL
4
DMA
ECU
BRA
GRD
PRY
HTI
ATG
2
NIC
JAM
COL
ARG
GUY
MEX
PER
TTO
URY
SUR
VEN
BRB
BHS
0
CUB
-2
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009 and Economic
Indicators and Statistics Database (BADECON) for GDP 2000 constant prices.
37
The relations between GHG emissions originating in the energy sector and generated by cement
manufacturing and energy consumption, GDP and population may be formalized using the IPAT or Kaya
identity (O'Neill and others, 2001). Greater economic growth (reflected in rising per capita GDP) or an
increase in the population may be expected to lead to higher levels of emissions and greater energy
consumption. However, a gradual process of energy decoupling (ratio of energy to GDP) and
decarbonization (ratio of emissions to energy) may be expected to occur in the higher per capita income
countries.
⎡ PIBt ⎤ ⎡ ENRGt ⎤ ⎡ CO2t ⎤
CO2t
= Δ⎢
⎥ ∗ Δ⎢
⎥ ∗ Δ⎢
⎥
POBt
⎣ POBt ⎦ ⎣ PIBt ⎦ ⎣ ENERGt ⎦
(1)
Δ
(2)
⎡ PIBt ⎤ ⎡ ENRGt ⎤ ⎡ CO2t ⎤
ΔCO2t = Δ[POBt ]∗ Δ ⎢
⎥ ∗ Δ⎢
⎥ ∗ Δ⎢
⎥
⎣ POBt ⎦ ⎣ PIBt ⎦ ⎣ ENERGt ⎦
Historical trends in GHG emissions in the Latin America and Caribbean region indicate that,
generally speaking, emissions are negatively correlated with energy decoupling and decarbonization, and
positively correlated with population and per capita income, although to different extents from one
country to another (see figure VII.3).
Figure VII.3
LATIN AMERICA AND THE CARIBBEAN: AVERAGE ANNUAL GROWTH RATES OF CO2
EMISSIONS AND THEIR COMPONENTS, 1990-2005
(Percentages)
10
8
6
4
2
0
-2
Population
Per capita GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
Carbon intensity
Honduras
Guatemala
Panama
El Salvador
Dominican Republic
Costa Rica
Grenada
Energy intensity
Bolivia (Plur. State of)
Chile
Paraguay
Haiti
Nicaragua
Ecuador
Peru
Brazil
Trinidad and Tobago
Uruguay
Jamaica
Argentina
Colombia
Mexico
CO2 emissions
Venezuela (Bol. Rep. of)
Suriname
Cuba
Barbados
-6
Guyana
-4
38
The evolution of energy consumption in Latin America and the Caribbean shows an overall
upward trend, reflected in a higher growth rate than the world average. Energy consumption rose at a rate
of 3.15% for Latin America and the Caribbean overall in 1970-2007, above the global average of 2.11%,
with the level of consumption and rate of increase varying among countries (see figure VII.4). Energy
consumption rose at a faster rate than emissions.
Figure VII.4
LATIN AMERICA AND THE CARIBBEAN: GROWTH OF ENERGY CONSUMPTION, 1970-2007
(Percentages)
TTO
8
Average Latin America: 3.15
World average: 2.11
6
BOL
4
CRI
BRA
ECU
VEN
MEX
GTM
CHL
ARG
PAN
GRD
HND
DOM
NIC PRY
SLV
COL
2
HTI
BRB
JAM
PER
CUB
GUY
URY
SUR
0
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Latin American Energy
Organization (OLADE), Energy-Economic Information System (SIEE), for total energy consumption statistics.
The evidence available for Latin America and the Caribbean shows a strong positive correlation
between energy consumption and per capita GDP (see figure VII.5) and between per capita energy
consumption and per capita GDP (see figure VII.6).
39
Figure VII.5
LATIN AMERICA AND THE CARIBBEAN: RATIO OF ENERGY CONSUMPTION TO
PER CAPITA GDP, 2007
(Thousands of barrels of oil equivalent and 2000 dollars)
1 500 000
Energy consumption
BRA
1 000 000
MEX
500 000
ARG
VEN
HTI
0
BOL
GUY
GTM
ECU
COL
SLV
NIC HND
SUR
PRY
PER
JAM
CHL
CUB CRI
DOM
BRB
GRD
0
TTO
URY
PAN
5 000
10 000
Per capita GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from Latin American
Energy Organization (OLADE), Energy-Economic Information System (SIEE), for total energy consumption statistics and
Economic Indicators and Statistics Database (BADECON) for data on per capita GDP at 2000 constant prices.
Figure VII.6
LATIN AMERICA AND THE CARIBBEAN: RATIO OF PER CAPITA ENERGY CONSUMPTION TO
PER CAPITA GDP, 2007
(Thousands of barrels of oil equivalent and 2000 dollars)
12
VEN
JAM
SUR
Per capita/Energy consumption
10
ARG
CHL
8
CUB
PAN
BRA
GUY
MEX
BRB
CRI
6
URY
ECU
DOM
GTM
PRY
HND SLV COL
NIC
PER
BOL
4
GRD
HTI
2
0
2 000
4 000
6 000
8 000
10 000
Per capita GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from Latin American
Energy Organization (OLADE), Energy-Economic Information System (SIEE), for total energy consumption statistics and
Economic Indicators and Statistics Database (BADECON) for data on per capita GDP at 2000 constant prices.
40
Energy intensity (the ratio of energy consumption to GDP) varies by country in Latin America
and the Caribbean (see figure VII.7a) and, in general, is still below the world average. There is an inverse
correlation between energy intensity and per capita GDP (see figure VII.7(b)). However, this process of
energy decoupling is not yet enough to halt the growth of energy consumption in Latin America and the
Caribbean in absolute terms, as the current style of growth still requires high energy consumption.
Accordingly, any agreement that caps total energy consumption must be approached with extreme caution
by the region.
Figure VII.7
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP AND ENERGY INTENSITY, 2007 a
(Thousands of barrels of oil equivalent and 2000 dollars)
(a)
(b)
GUY
800
GUY
800
TTO
TTO
600
HTI
400
NIC
Energy intensity
Energy intensity
600
SUR
JAM
ECU
BOL
200
0
CUB
BRA
CHL
COL
CRI
ARG BRB
PRY
HND
HTI
NIC
400
BOL
200
GTM
PAN
SLV
GRD
MEX
DOM
PER
VEN
URY
SUR
JAM
PRY
HND
ECU
GTM
CUB
BRA
COL
DOM
PER
GRD
SLV
PAN
CRI
VEN
CHL
BRB
MEX
URY
ARG
0
0
5 000
10 000
Per capita GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from Latin
American Energy Organization (OLADE), Energy-Economic Information System (SIEE) for total energy consumption
statistics, and Economic Indicators and Statistics Database (BADECON) for data on per capita GDP at 2000 constant
prices.
a
The size of the circumferences in figure VII.7a is relative to the per capita GDP of the respective country.
Per capita CO2 emissions with respect to energy consumption and cement production in Latin
America and the Caribbean also show an upward trajectory, although with non-linear oscillations and
major differences among countries (see figure VII.8). These per capita emissions trajectories in the
countries are positively correlated with the evolution of energy consumption and per capita GDP (see
figures VII.9(a) and VII.9(b)). So, for all Latin American and Caribbean countries, there is a positive
association between per capita emissions, per capita energy consumption and per capita GDP (see figure
VII.10) (Stern, 2007).
41
Figure VII.8
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA CO2 EMISSIONS AND
PER CAPITA GDP, 1990-2005
(Metric tons and dollars)
7
6
CO2 emissions per capita
5
4
3
2
ARG
ATG
BLZ
BOL
BRA
BRB
CHL
COL
CRI
CUB
DMA
DOM
ECU
GRD
GTM
GU Y
HND
HTI
JAM
KNA
LCA
MEX
NIC
PAN
PER
PRY
SLV
SUR
URY
VCT
VEN
1
0
0
2 000
4 000
6 000
8 000
10 000
Per capita GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute (WRI),
“Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009 for CO2 emissions statistics and
information from Economic Indicators and Statistics Database (BADECON) for per capita GDP at constant 2000 prices.
Figure VII.9
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA CO2 EMISSIONS AND
PER CAPITA ENERGY CONSUMPTION, 2005
(Tons per inhabitant and barrels of oil equivalent per inhabitant)
(a)
(b)
6
20
VEN
TTO
SUR
15
MEX
DOM
2
BOL
PER
COL
GRD
CUB
ECU
URY PAN BRA
CRI
ARG
CHL
CO2 emissions per capita
CO2 emissions per capita
BRB
4
JAM
GUY
10
VEN
SUR
BRB
MEX
ARG
CHL
JAM
5
HND
GTM
SLV
PRY
NIC
0
HTI
2
GRD
CUB
ECU
GUY
DOM
PAN
BRA
URY
CRI
COL
BOL
PER
HND
SLV
GTM
NIC
PRY
HTI
0
4
6
8
Energy consumption per capita
10
12
0
20
40
60
Energy consumption per capita
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009, for CO2 emissions
statistics and information from Latin American Energy Organization (OLADE), Energy-Economic Information System
(SIEE) for total energy consumption statistics.
42
Figure VII.10
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA CO2 EMISSIONS AND
PER CAPITA GDP, 2005
(Tons per inhabitant and barrels of oil equivalent per inhabitant)
8
20
TTO
15
VEN
SUR
4
ATG
BRB
MEX
ARG
CHL
JAM
BLZ
2
0
CO2 emissions per capita
CO2 emissions per capita
BHS
6
LCA
CUB
GRD
BRAPAN
BOL DOM VCT DMA URY
COL
HND PER CRI
NIC
SLV
GTM
HTI PRY
KNA
GUY ECU
0
5 000
10
SUR
5
BRB
JAM
CHLMEX ARG
BLZ
KNA
LCA
GRD
CUB
GUY
ECU DOM
BRA
PAN
URY
DMA
VCT
CRI
COL
BOL
PER
HND
SLV
GTM
NIC
PRY
HTI
0
10 000
15 000
20 000
0
Per capita GDP
BHS
VEN
5 000
ATG
10 000
15 000
20 000
Per capita GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009, and Economic
Indicators and Statistics Database (BADECON) for GDP at constant 2000 prices.
Trends in the CO2 intensity of energy and the energy intensity of GDP for Latin America and the
Caribbean overall are mixed, although reductions are more frequent in energy intensity than in carbon
intensity (see figure VII.11).
Figure VII.11
LATIN AMERICA AND THE CARIBBEAN: AVERAGE ANNUAL GROWTH RATES OF ENERGY
INTENSITY AND OF CARBON INTENSITY, 1990-2005
(Percentages)
HND
Average annual growth of carbon intensity
5
GTM
SLV
CUB
CRI
URY
COL
PER GUY
0
MEX
CHL
PRY
BOL
DOM
BRA
SUR
NIC
BRB ECU
ARG
PAN
HTI
GRD
VEN
JAM
TTO
-5
-4
-2
0
2
4
Average annual growth of energy intensity
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009; Economic Indicators
and Statistics Database (BADECON) for GDP at constant 2000 prices and information from Latin American Energy
Organization (OLADE), Energy-Economic Information System (SIEE), for total energy consumption statistics.
43
Trajectories for energy intensity and decarbonization oscillate somewhat over time and show
large differences from one country to another. This suggests that these two processes may change
significantly and that the BAU scenario is merely one possibility. Consideration of the full array of
variations may even lead to the formulation of opposing scenarios. In general, however, for the region
overall, the only way of reducing emissions in absolute terms would be by means of energy decoupling,
decarbonization or both at the floor level of emissions records for the period. Projections to 2100
(Samaniego and Galindo, 2009a) show that:
•
In Latin America and the Caribbean per capita CO2 emissions will grow at an average annual
rate of 2.3% under the assumptions of the BAU scenario.
•
In the BAU scenario, by 2100 seven countries will have exceeded 19.9 tons of CO2 emissions
per capita —the current figure for the United States— associated with energy consumption
and cement production.4
•
It is important to note that under extreme scenarios, i.e. those with the highest growth rates in
energy and carbon intensity, several countries post rapid and unsustainable growth rates,
reaching over 100 tons of emissions per capita.
•
For most of the countries, scenarios incorporating an increase in energy or carbon efficiency
result in decreases in per capita emissions of CO2, or moderate growth of under 1%, with
very few exceptions.
The importance of energy decoupling and decarbonization may be demonstrated by means of a
simulation exercise estimating per capita CO2 emissions for the Latin American and Caribbean region,
based on comparisons with the world’s largest emitters. Supposing constant per capita GDP in Latin
America and the Caribbean for 2005, the exercise estimates the level of per capita emissions the region
would produce if its energy intensity and decarbonization rates were similar to those of the United
States, the European Union or China. The results show that, in general, the countries of the region
would reduce per capita emissions if their energy intensity and decarbonization structure were similar
to that of the United States and the European Union, and would increase per capita emissions if their
structure were similar to that of China. Overall, the region’s per capita emissions performance improves
under the first two scenarios, with per capita emissions declining from 2.6 to 2.3 tons of CO2 applying
the structure of the United States and from 2.6 to 2 tons of CO2 applying the European Union structure.
However, the region’s emissions rise to 12.8 tons of CO2 per capita if the values corresponding to
China’s economy are applied.
Accordingly, it may be observed that Latin America and the Caribbean needs to maintain a strong
growth rate in the coming decades and that its per capita emissions are notably lower than those of the
developed countries. This means that the region has some room for manoeuvre that it must use to put in
place a long-term strategy for moving onto a trajectory of energy decoupling and decarbonization.
4
This does not include the particular case of Trinidad and Tobago, which already matches the United States in
terms of emissions per capita.
44
2. Energy demand and energy intensities
The evolution of energy intensity depends on a broad range of factors, including: evolution and changes
in the sectoral structure of GDP (for example, stronger development of energy-intensive industries);
relative prices both of energy and of machinery and equipment; technological changes and shifts in modes
of production; the urbanization under way in the region; policies relating to access to new and modern
sources of energy; trends in equipment efficiency and access to it; better satisfaction of needs and
improvements in well-being, reflected in energy services; the existence of institutional barriers; and the
public policies implemented.
Econometric estimates of energy demand run for South America using cointegration methods
indicate that, although demand varies by country, its per capita income elasticity (ηy) is generally very high
(even higher than 1), but its price elasticity (ηp) is very low, moving between values of 0 and -0.2 (see table
VII.1). This points to the importance of income in facilitating access to equipment. Equipment and
equipment prices could therefore be a more important variable in explaining the evolution of consumption
than energy prices themselves, at least in end-consumption sectors. In production sectors, as energy
consumption is a derived demand, activity levels appear repeatedly as the most important variable in
explaining energy demand patterns. All in all, these estimates indicate that continuous economic growth in
the region will be accompanied by rising energy demand. The low price elasticity of energy demand
reflects multiple factors, such as those already mentioned, which would have to be analysed in detail on a
case-by-case basis, and reveals the limitations of a pricing-policy for controlling short-term demand.
Table VII.1
LATIN AMERICA: ESTIMATED ENERGY DEMAND ELASTICITIES, 1985-2007
ηy
t-stat
ηp
t-stat
Argentina
1.20
7.67
-0.02
-4.14
Bolivia (Plurinational State of)
2.36
4.78
-0.01
-0.02
Brazil
1.94
8.29
-0.01
-9.16
Chile
0.99
27.44
-0.07
-4.16
Colombia
0.34
2.38
-0.15
-5.28
Ecuador
1.45
7.76
-0.07
-7.20
Paraguay
0.65
1.95
-0.22
-8.64
Peru
0.70
15.14
-0.01
-6.71
Uruguay
0.63
4.68
-0.03
-3.18
Venezuela (Bolivarian Republic of)
0.36
2.28
-0.11
-17.25
Group
1.06
26.04
-0.07
-20.79
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from Latin American
Energy Organization (OLADE), Energy-Economic Information System (SIEE) for total energy consumption statistics
and Economic Indicators and Statistics Database (BADECON) for data on per capita GDP at constant 2000 prices.
45
Box VII.1
PUBLIC POLICIES LABORATORY
Econometric estimates of energy demand can be used to simulate various public policy alternatives. Generally
speaking, the results show that demand for energy is highly sensitive to income trends, albeit perhaps somewhat
lagged (Galindo, 2009), and that it is fairly insensitive to changes in relative prices. The low price sensitivity of
energy consumption in the region suggests that it is necessary to promote mechanisms to increase that elasticity.
This requires economies to have suitable substitution alternatives. However, the negative externalities associated
with the consumption of fossil fuels suggest that the energy prices are likely to increase in the future, as a result of
either a carbon tax (Nordhaus, 2008) or rising oil prices. This would mean realigning the vector of relative prices in
the economy including wages, the real exchange rate, energy prices and interest rates. With this in mind, the
consequences of different pricing policies were simulated, using the following scenarios:
(i) A per capita GDP growth rate of 2% in all the countries with no changes in relative energy prices.
(ii) A per capita GDP growth rate of 2% in all the countries with a 2% increase in relative energy prices.
(iii) A per capita GDP growth rate of 2% in all the countries with a 4% increase in relative energy prices.
The results show that in scenario I, aggregate energy consumption would rise by an average annual rate of
3.36% up to 2100. A 2% rise in relative energy prices (scenario II) brings an average annual increase of 3.33% for
the same period. Lastly, a 4% rise in relative energy prices (scenario III) would generate an average annual increase
of 3.31% in energy consumption. These simulations are summarized in the figures below, which shows that energy
consumption continues to rise in all cases regardless of price increases. So, given the current price elasticities of
energy demand, it is highly unlikely that demand patterns can be controlled simply by raising prices, although the
effects vary by country. Such a policy would, however, have significant impacts on tax collection.
Scenario II
50
50
30
Argentina
Bolivia (Plur. State of)
Chile
Colombia
Peru
Uruguay
Brazil
Ecuador
Paraguay
Venezuela (Bol. Rep. of)
Argentina
Bolivia (Plur. State of)
Chile
Colombia
Peru
Uruguay
2100
2095
2090
2085
2080
2075
2070
2065
2060
2055
2050
2045
2040
2035
2030
2025
2020
1990
2100
2095
2090
2085
2080
2075
2070
2065
2060
2055
2050
2045
2040
2035
2030
2025
2020
2015
2010
0
2005
0
2000
10
1995
10
2015
20
2010
20
40
2005
30
2000
40
1995
Billions of barrels of
oil equivalent
60
1990
Billions of barrels of
oil equivalent
Scenario I
60
Brazil
Ecuador
Paraguay
Venezuela (Bol. Rep. of)
Scenario III
60
Billions of barrels of
oil equivalent
50
40
30
20
10
Argentina
Bolivia (Plur. State of)
Chile
Colombia
Peru
Uruguay
2100
2095
2090
2085
2080
2075
2070
2065
2060
2055
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
0
Brazil
Ecuador
Paraguay
Venezuela (Bol. Rep. of)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from Latin American
Energy Organization (OLADE), Energy-Economic Information System (SIEE) for total energy consumption statistics
and Economic Indicators and Statistics Database (BADECON) for data on per capita GDP at constant 2000 prices.
46
3. Emissions, productivity and convergence in Latin America and the Caribbean
Emissions per unit of GDP are different for each of the Latin American and Caribbean countries but, in
general, they are lower than the world average (see figure VII.12). Accordingly, the region has a strong
competitive advantage in an international scenario of caps or taxes on CO2 emissions. The emissions
intensity of GDP falls as per capita GDP rises, although at non-linear rates that differ from one country to
the next and by groups of countries. This is borne out by the econometric estimations of smooth transition
autoregressive (STAR) models (González, Teräsvirsta and Van Dijk, 2005), which show the per capita
income elasticity of emissions declining in the region. Reductions in response sensitivities of emissions to
per capita income are, however, insufficient to decouple trajectories of growth in per capita income and in
GHG emissions.
Figure VII.12
LATIN AMERICA AND THE CARIBBEAN: CO2 EMISSIONS PER UNIT OF GDP, 2005
(Thousands of tons and millions of 2000 dollars)
Thousands of tons/millions of 2000 dollars
2.5
2
1.5
1
World: 0.75
Latin America and the Caribbean: 0.58
0.5
Uruguay
Venezuela (Bol. Rep. of)
Suriname
Trinidad and Tobago
Saint Vincent
and the Grenadines
Saint Lucia
Saint Kitts and Nevis
Peru
Dominican Republic
Panama
Paraguay
Mexico
Nicaragua
Jamaica
Haiti
Honduras
Guyana
Grenada
Guatemala
Ecuador
El Salvador
Cuba
Dominica
Costa Rica
Chile
Colombia
Brazil
Belize
Bolivia (Plur. State of)
Bahamas
Barbados
Argentina
Antigua and Barbuda
0
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009, Economic Indicators
and Statistics Database (BADECON) for GDP at constant 2000 prices and Social Indicators Statistics Database
(BADEINSO) for population data.
There is an inverse correlation between the rate of decoupling of emissions from GDP and the
growth rate of per capita GDP (Vivid economics, 2009). Countries with a higher rate of per capita
economic growth are also those that most rapidly reduce their emissions per unit of GDP, though this is
highly variable (see figure VII.13). A high rate of economic growth is therefore not inconsistent with the
ability to reduce emissions per unit of output. Accordingly, economic growth can be combined with
transition towards a low-carbon economy, although at present the decoupling rate is still too low.
47
Figure VII.13
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP GROWTH AND RATE OF
DECOUPLING OF CO2 EMISSIONS FROM GDP, 1990-2005 a
(Percentages)
4
HTI
HND
GTM
Increase in emissions/GDP ratio
LCA
2
PRY
BOL
ECU
VEN
BRB
MEX
BHS
KNA
CRI
URY
NIC
PAN
GRD
DOM
SUR
COL
ATG
CUB
-2
VCT
BLZ
BRA
JAM
0
SLV
DMA
ARG
PER
GUY
CHL
TTO
-4
-2
0
2
4
6
Growth in per capita GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009, Economic Indicators
and Statistics Database (BADECON) for GDP constant at 2000 prices and Social Indicators Statistics Database
(BADEINSO) for population data.
a
The decoupling rate is defined as the inverse of the growth rate of the ratio of CO2 emissions to GDP, i.e., a reduction in this
ratio implies an increase in the decoupling rate, and vice versa.
Trajectories of per capita emissions are seen to show a process of absolute convergence (βconvergence) or convergence in the distribution of per capita CO2 emissions (σ-convergence) (Barro and
Sala-i-Martin, 1992). In other words, the increase of per capita emissions of countries with lower per capita
emissions is higher than that of countries with higher per capita emissions (see figure VII.14). Econometric
analysis of cross section and panel data confirm this process of absolute convergence in per capita emissions
(see box VII.2).5 This suggests that in the coming decades per capita emissions will increase for the region
overall and will tend to converge in absolute terms if the baseline scenario is maintained.
5
Changes in the production structure, gains in production efficiency, relative price trends and more stringent
regulations in more developed countries are some of the factors involved in accounting for this.
48
Figure VII.14
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA EMISSIONS AND GROWTH IN
PER CAPITA EMISSIONS, 1990-2005
(Metric tons and percentages)
6
HND
VCT
Growth in per capita emissions, 1990-2005
DMA SLV
LCA
4
2
GTM
BLZ
DOM
GRD
BOL KNA PAN
NIC CRI BRA
URY
GUY
HTI PRY ECU
PER
CHL
ARG
JAM
MEX
COL
0
TTO
SUR
BRB
ATG
VEN
BHS
CUB
-2
-4
0
5
10
15
Emissions per inhabitant 1990
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009 and Social Indicators
Statistics Database (BADEINSO) for population data.
Box VII.2
LATIN AMERICA AND THE CARIBBEAN: EMPIRICAL EVIDENCE OF ABSOLUTE
CONVERGENCE IN PER CAPITA EMISSIONS
The presence of convergence may be investigated using the following equation:
(1)
⎡ [log(CO 2n]i ,t ) ⎤
⎢
⎥ = α + β ∗ log(CO 2ni ,t −1 ) + ϕχ i + ui
⎣⎢ [log(CO 2n]i ,t −1 )⎦⎥
where a coefficient of β<0 indicates a process of absolute convergence. The coefficient α captures the specific effects by country
and Xt represents a set of additional factors that enable the possibility of conditional convergence to be identified. Estimation of
equation (1), based on cross-section and panel data (Wooldridge, 2002; Baltagi, 2005) for 1990-2005 for the countries of Latin
America is given in equations (2) and (3). Estimation of equation (3) rejects the null hypothesis of the Hausman test (1978),
thereby rejecting random effects specification in favour of fixed effects. Moreover, the statistical significance of the dummy
variables by counties reflects regional differences (Romer, 1989; Barro, 1991). These results indicate that a process of absolute
convergence is under way in the region. The t statistics shown in brackets are robust to heteroskedasticity.
(2)
log[([(CO2n]i , 2005 ))
= 0.40 − 0.15 ∗ log(CO2ni ,1990 ) + ui
[(CO2n]i ,1990 )
(9.90) (-3.99)
(3)
log[([(CO 2n]i ,t ))
= 0.16 − 0.23 ∗ log(CO 2ni ,t −1 ) + ui
[(CO2n]i,t −1 )
χ 2 (1) = 71.50(0.00)
(2.19) (-2.04)
Source: J.L. Samaniego and L.M. Galindo, “Cambio climático y la demanda de energía en América Latina: estimaciones
preliminares”, Santiago, Chile, Economic Commission for Latin America and the Caribbean (ECLAC), 2009, unpublished.
49
4. Emissions and land-use change in Latin America and the Caribbean
GHG emissions from land-use change in the Latin American and Caribbean countries showed a
substantial 6.1% increase between 1980 and 1990, which was partially offset by a 3.5% fall in emissions
between 1990 and 2000 (see figure VII.15).
Figure VII.15
LATIN AMERICA AND THE CARIBBEAN:a CO2 EMISSIONS FROM LAND-USE CHANGE,
1980-2000
(Billions of metric tons)
4
3.5
3
2.5
2
1.5
1
0.5
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Brazil
Peru
Venezuela (Bol. Rep. of)
Colombia
Mexico
Bolivia (Plur. State of)
Ecuador
Argentina
Guatemala
Nicaragua
Panama
Guyana
Belize
Paraguay
Honduras
Chile
Costa Rica
El Salvador
Jamaica
Haiti
Dominican Republic
Suriname
Bahamas
Cuba
Uruguay
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009.
a
The countries are ordered by magnitude of emissions as of 2000. Data not available for Antigua and Barbuda, Barbados,
Dominica, Grenada, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Saint Lucia and Trinidad and Tobago.
Emissions from land-use change generally have a non-linear inverse association with per capita
GDP growth per country (see figure VII.16).
50
Figure VII.16
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP AND CO2 EMISSIONS FROM
LAND-USE CHANGE, 1990-2000 a
(2000 dollars and metric tons)
90 000
80 000
4
32 000
3
30 000
28 000
2
70 000
26 000
1
60 000
50 000
5 000
24 000
0
6 000
7 000
8 000
9 000
22 000
-1
14 000 15 000 16 000 17 000 18 000 19000
Argentina
20 000
2 800
3 000
Bahamas
22 000
3 400
3 600
2 000 000
110 000
1 800 000
100 000
1 600 000
90 000
1 400 000
80 000
850
140 000
900
950
1 000
1 050
Brazil
15 000
-2 000
84 000
14 000
-4 000
80 000
13 000
-6 000
12 000
-8 000
11 000
-10 000
10 000
3 000 3 200 3 400 3 600 3 800 4 000 4 200
-12 000
2 000
76 000
18 000
72 000
120 000
16 000
14 000
3 000
1 200 000
3 200 3 300 3 400 3 500 3 600 3 700
Bolivia (Plur. State of)
Belize
160 000
20 000
3 200
120 000
3 500
4 000
4 500
5 000
100 000
2 000
2 100
Chile
2 200
2 300
2 400
Colombia
6 500
64 000
2 400
Costa Rica
90 000
6 000
68 000
80 000
5 500
2 800
3 200
3 600
60 000
1 240
1 280
Cuba
1 320
1 360
1 400
1 160
1 200
Ecuador
52 000
3 000
26 000
48 000
2 800
24 000
44 000
2 600
22 000
40 000
2 400
20 000
36 000
2 200
18 000
32 000
500
2 000
360
70 000
5 000
60 000
4 500
4 000
1 600 1 700 1 800 1 900 2 000 2 100
50 000
1 200
El Salvador
1 400
1 500
1 600
3 600
140 000
3 200
120 000
2 800
2 960
3 000
16 000
1 040
1 080
1 120
Honduras
30 000
28 000
60 000
26 000
55 000
24 000
55 000
50 000
22 000
50 000
600
45 000
2 800
60 000
80 000
5 200
5 600
6 000
6 400
640
680
720
760
800
Nicaragua
32
2 200
30
2 000
28
1 800
26
1 350
1 400
1 450
1 500
Paraguay
220 000
200 000
160 000
22
180 000
1 600
1 200
1 600
20
1 680 1 720 1 760 1 800 1 840 1 880
2 800
20 000
1 300
180 000
24
2 400
4 000
-28 000
1 400
2 000
3 600
Panama
-24 000
1 600
Dominican Republic
3 200
-20 000
200 000
2 200
520
65 000
2 400
2 000
480
70 000
260 000
Peru
440
Haiti
75 000
280 000
1 800
400
80 000
Mexico
220 000
900
65 000
Jamaica
240 000
800
70 000
100 000
2 920
700
Guyana
160 000
2 880
600
Guatemala
4 000
2 400
2 840
1300
-32 000
Suriname
140 000
-36 000
4 800 5 200 5 600 6 000 6 400 6 800
Uruguay
120 000
4 600
4 800
5 000
5 200
5 400
Venezuela (Bol. Rep. of)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009,Economic Indicators
and Statistics Database (BADECON) for GDP 2000 constant prices and Social Indicators Statistics Database
(BADEINSO) for population data.
a
The countries are ordered by magnitude of emissions as of 2000. Data not available for Antigua and Barbuda, Barbados,
Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago.
51
The reduction in emissions with respect to per capita GDP is captured by identities (3) and (4).
Identity (3) assumes a coefficient that is constant over time. In identity (4), the first term represents the
increase in emissions between time t and time t+1, assuming a constant ratio between emissions intensity
and per capita GDP. The second term represents the increase or decrease in emissions at t+1 caused by
changes in the emissions coefficient. Accordingly, the second term should be negative for an economy
that becomes more efficient over time.
EM t
YPCt = α 0tYPCt
YPCt
(3)
EM t =
(4)
EMt+1 – EMt = α0t(YPCit+1 – YPCit) + YPCit+1 (α1t+1 - α0t)
where EMt represents GHG emissions and YPCt is per capita GDP.
The data available on the ratio of emissions from land-use change (LUC) to per capita GDP in
Latin America and the Caribbean shows mixed trends although the ratio is tending to fall in most of the
countries (see figure VII.16). The simple average annual rate of decrease in the intensity of LUC
emissions for all the countries examined is 4.4% for 1990–2000, although with significant differences
between countries (see figures VII.17 and VII.18).
Figure VII.17
LATIN AMERICA AND THE CARIBBEAN: AVERAGE ANNUAL GROWTH IN THE LUC CO2
EMISSIONS INTENSITY OF PER CAPITA GDP, 1990-2000 a
(Percentages)
5
BHS
0
SUR
HTI
JAM
PRY
ECU
-5
Average: -4.4
BOL
VEN
HND
BRA
COL
BLZ
GTM
SLV
CRI
ARG
CHL
CUB
DOM
NIC
MEX
PAN
PER
URY
GUY
-10
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009, Economic Indicators
and Statistics Database (BADECON) for GDP at constant 2000 prices and Social Indicators Statistics Database
(BADEINSO) for population data.
a
The countries are ordered by magnitude of emissions in 2000. Data not available for Antigua and Barbuda, Barbados,
Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago.
52
Figure VII.18
LATIN AMERICA AND THE CARIBBEAN: LUC EMISSIONS INTENSITY OF
PER CAPITA GDP, 1990-2000 a
(Metric tons and thousands of 2000 dollars)
14
0.0003
12
140
12
0.0002
10
120
10
0.0001
8
100
8
0
6
80
1990
1995
Argentina
2000
1990
1995
Bahamas
2000
1990
7
80
6
70
4
5
60
3.5
50
3
3
40
2.5
1995
2000
1990
Chile
1995
2000
3
2.5
1990
1995
El Salvador
1.3
1.1
60
5
40
1995
Guatemala
2000
2000
1990
1995
Mexico
2000
1
160
140
0.5
80
1990
1995
Peru
2000
1990
1995
2000
Dominican Republic
2000
1995
Guyana
2000
25
100
20
80
15
60
10
20
15
1995
Haiti
2000
1990
1995
Honduras
2000
1990
1995
Paraguay
2000
22
20
18
1995
Nicaragua
2000
-4
0.016
-5
0.014
-6
0.012
-7
1995
Suriname
2000
16
14
1990
0.018
1990
2000
25
1990
120
1990
1990
Ecuador
4.5
1990
120
100
1995
Cuba
50
15
1995
Jamaica
1990
5.5
1995
55
45
2000
2000
60
-4
80
20
0.9
1995
1995
Brazil
65
50
60
1
1990
1990
1990
-3
6
1990
1995
2000
Bolivia (Plur. State of)
-2
100
25
1.2
1990
70
2000
400
Costa Rica
40
2
500
-1
Colombia
3.5
2000
4.5
4
1990
1995
Belize
600
1995
Panama
2000
45
40
35
30
25
1990
1995
Uruguay
2000
1990
1995
2000
Venezuela (Bol. Rep. of)
Year
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009, Economic Indicators
and Statistics Database (BADECON) for GDP at constant 2000 prices and Social Indicators Statistics Database
(BADEINSO) for population data.
a
The countries are ordered by magnitude of emissions in 2000. Data not available for Antigua and Barbuda, Barbados,
Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago.
53
The increase in the efficiency of the Latin American and Caribbean countries is reflected in the
second term of identity (4), which is generally negative for 1990-2000 (see figure VII.19).
Figure VII.19
LATIN AMERICA AND THE CARIBBEAN: RATE OF CHANGE IN LUC EMISSIONS INTENSITY OF
PER CAPITA GDP (α1t+1 - α0t), 1990-2000 a
(Metric tons and thousands of 2000 dollars)
1
0.0002
0
0
0
0
0
-0.5
-5
-20
-1
-0.0002
-2
-0.0004
1990
1995
Argentina
2000
1990
1995
Bahamas
-10
-40
-15
-60
-2
-20
2000
0
0.5
-1
-1.5
1990
1995
Belize
2000
-80
1990
1995
2000
Bolivia (Plur. State of)
1
0
-5
-1
-1.5
1990
1995
2000
-1
Chile
1995
2000
1995
2000
-10
1990
Costa Rica
0
1995
2000
0
-5
-0.4
Ecuador
0.5
0
-1
0
-10
-0.6
-2
-15
-10
-0.8
1990
1995
El Salvador
2000
0.1
0
1995
Guatemala
2000
1990
1995
Jamaica
-5
0
1990
1995
Mexico
2000
-2
-3
-2
-15
-4
-3
1990
1995
Nicaragua
2000
1995
Panama
2000
1.5
5
0.004
1
0
0.5
-5
0
-0.002
1990
1995
Dominican Republic
1990
0.006
0
-20
1995
Peru
-5
-10
2000
2000
1990
1995
Suriname
2000
1990
1995
Honduras
2000
1990
1995
Paraguay
2000
1
-1
0.002
-0.2
1990
2000
0
0
-15
1995
Haiti
-1
0.2
-10
-4
1990
0
2000
0
2000
5
-3
-0.3
1995
Guyana
0
-2
-0.2
1990
1
-1
-0.1
-3
-0.5
-20
1990
1990
Cuba
-5
-0.2
2000
-5
-1
1990
Colombia
0
1995
0
-0.5
1990
2000
0
-0.5
-10
1995
Brazil
5
0.5
0
-0.5
1990
-10
1990
1995
Uruguay
2000
1990
1995
2000
Venezuela (Bol. Rep. of)
Year
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009, Economic Indicators
and Statistics Database (BADECON) for GDP at constant 2000 prices and Social Indicators Statistics Database
(BADEINSO) for population data.
a
The countries are ordered by magnitude of emissions as of 2000. Data not available for Antigua and Barbuda, Barbados,
Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago.
54
A first approach to the evolution of LUC emissions may be simulated by assuming a coefficient
of LUC emissions to per capita GDP falling in line with its historical average (1990-2000) in each
country. These simulations are summarized in figure VII.20 which shows that CO2 emissions from landuse changes tend to decline in the BAU scenario.
Figure VII.20
LATIN AMERICA AND THE CARIBBEAN: PROJECTIONS OF GROWTH
IN LUC CO2 EMISSIONS, 2000-2100
(Millions of metric tons)
80
0,15
30
150
60
0,1
20
100
0,05
10
50
0
0
0
40
20
0
2000
2050
2100
2000
Argentina
2050
2100
2000
150
15
15
100
10
50
5
0
0
0
2000
2050
Chile
2100
2000
2050
Colombia
2100
2000
2050
2100
2000
Bolivia (Plur. State of)
2050
Costa Rica
2100
50
2100
80
60
-5
2000
2050
Brazil
0
60
4
0
40
20
-10
2100
80
6
2050
500
Belize
20
5
1 500
1 000
Bahamas
10
2 000
2000
2050
Cuba
2100
3
30
2
20
1
10
2000
2050
Ecuador
2100
2000
2050
Honduras
2100
40
2
20
0
0
2000
2050
2100
El Salvador
0
2000
2000
150
4
3
0
2050
2100
Guatemala
2050
Guyana
2000
80
100
50
0
2050
Jamaica
2100
300
2000
2050
Mexico
10
0
0
0
200
1,4
2000
2050
Peru
2100
2100
,1
1,6
0
2050
Nicaragua
,2
1,8
100
2000
,3
2
2050
2100
Dominican Republic
2000
2050
Panama
2100
2000
2050
2000
0
200
-10
150
-20
100
-30
50
-40
0
2000
20
20
2100
2,2
30
20
0
2000
2100
40
40
1
2050
Haiti
60
60
2
0
2100
2100
Suriname
Year
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
2050
Paraguay
2100
0
2000
2050
Uruguay
2100
2000
2050
2100
Venezuela (Bol. Rep. of)
55
In general, in this scenario, Latin America and the Caribbean would reduce its LUC emissions by
2.6% per year for the period 2001–2100. This reduction is unlikely, however, since the projected level of
LUC emissions involves complex processes and many variables. Accordingly, constant LUC emissions
are assumed for 2005–2100.
5. Emissions and deforestation rates
Deforestation is one of the principal factors contributing to LUC emissions and the occurrence of severe
negative externalities. In Latin America and the Caribbean, deforestation is also one of the main obstacles
to sustainable development. The surface area of forested land decreased between 1990 and 2005 in the
region overall (see figures VII.21 and VII.22).
Figure VII.21
LATIN AMERICA AND THE CARRIBEAN: LAND USE CHANGES
(Millions of hectares)
1 200
1 000
800
600
400
200
0
1990
1995
2000
Forest
Grassland and
permanent grazing
Agricultural area
Arable land and
permanent crops
2005
Source: Food and Agriculture Organization of the United Nations (FAO), State of the World's Forests, 2007, Rome, 2007.
56
Figure VII.22
LATIN AMERICA AND THE CARIBBEAN: ANNUAL AVERAGE GROWTH
IN FORESTED AREAS, 1990-2005 a
(Percentages)
4
URY
2
CUB
VCT
CHL
0
BOL
ARG
BRA
COL
CRI
JAM
DMA
HTI
PAN
PER
MEX
TTO
VEN
PRY
GTM
SLV
-2
NIC
ECU
HND
-4
Latin America and the Caribbean: -0.48
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of statistics of Food and
Agriculture Organization of the United Nations (FAO).
a
Does not include countries whose forested areas showed no variation.
Deforestation is influenced by economic, social, political, demographic and institutional factors.
Generally speaking, the economic actors with the greatest impact on deforestation are acknowledged to be
agricultural and livestock producers and their array of associated agents (Torres, 2009). This is reflected,
for example, in an inverse correlation between forested and agricultural areas (see figure VII.23).
Demographic pressures, reflected in the proportion of the rural population, also relate inversely to
forested areas, although to a lesser degree (see figure VII.24).
57
Figure VII.23
LATIN AMERICA AND THE CARIBBEAN: PROPORTIONS OF FORESTED AND AGRICULTURAL
AREAS, 1990, 2000 AND 2005
(Percentages)
1990
2000
100
100
URY
SLV
Proportion of agricultural area
Proportion of agricultural area
URY
DOM
CRI
CUB
HTI
PRY
VCT
ARG
MEX
BRB KNA
JAM
GTM
NIC COL
GRD
BOL HND
ATG
ECU PAN
BRA
TTO
VEN DMA
CHL LCA
PER
50
0
GUY
BLZ
BHS
0
50
Proportion land covered by forest
SUR
SLV
DOM
HTI
50
CUB
VCT
ARG
BRB KNA
GRD ATG
CHL
MEX
JAM
NIC
GTM
ECU
LCA
0
COL
BOL
BRA
PANDMA
TTO HND VEN
PER
BHS
0
100
PRY
CRI
50
Proportion land covered by forest
GUY
BLZ
SUR
100
2005
100
Proportion of agricultural area
URY
SLV
DOM
PRY
CRI
MEX
VCT
ARG
JAM NIC
BRB
BOL COL
GTM
KNA
BRA
GRD
ECU HND
DMA
ATG
PAN
VEN
CHL
TTO
PER
LCA
HTI
50
0
CUB
BHS
0
50
Proportion land covered by forest
GUY
BLZ
SUR
100
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of statistics from the Food and
Agriculture Organization of the United Nations (FAO).
58
Figure VII.24
LATIN AMERICA AND THE CARIBBEAN: PROPORTIONS OF FORESTED AREA AND OF RURAL
POPULATION, 1990, 2000 AND 2005
1990
2000
100
100
BRB
HTI
GRD
KNA
50
LCA
ATG
VCT
JAM
SLV
URY
ARG
GUY
GTM
CRI
DOM
CUB
TTO
MEX
PRY
NIC
PAN
ECU BOL
PER COL
HND
BLZ
DMA
BRA
BHS
CHL
Proportion of rural population
Proportion of rural population
TTO
SUR
BRB
HTI
50
0
100
GUY
GTM HND
JAM NIC PRY
SLV
CRI BOL
DOM
PAN
ECU
PER
DMA
MEX
CUB
COL
BRA
BHS
CHL
ARG
VEN
URY
0
0
LCA
VCT
50
VEN
0
KNA
GRD ATG
50
Proportion of land covered by forest
BLZ
SUR
100
Proportion of land covered by forest
2005
100
Proportion of rural population
TTO
BRB
HTI
50
KNA
ATG
LCA
GRD
VCT
GUY
HND
GTM
NIC
JAM
SLV
PRY BOL
CRI
PAN
DOM ECU
PER
COL DMA
CUB MEX
BRA
BHS
CHL
ARG
VEN
URY
0
0
BLZ
50
SUR
100
Proportion of land covered by forest
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of statistics from the Food and
Agriculture Organization of the United Nations (FAO) and Social Indicators Statistics Database (BADEINSO) for
population data.
6. Total CO2 emissions in Latin America
Under the BAU scenario and assuming constant LUC emissions, total CO2 emissions, including energy
consumption, cement production and LUC, increase by an average of 1.5% for 2005-2100, though with
differences from one country to another (see figure VII.25). This means that CO2 emissions will grow
slightly below the average per capita GDP growth rate for Latin America.
59
Figure VII.25
LATIN AMERICA AND THE CARIBBEAN: PROJECTED TOTAL CO2 EMISSIONS, 2005-2100 a
(Billions of metric tons)
16
14
12
10
8
6
4
2
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
2051
2053
2055
2057
2059
2061
2063
2065
2067
2069
2071
2073
2075
2077
2079
2081
2083
2085
2087
2089
2091
2093
2095
2097
2099
0
Brazil
Mexico
Venezuela (Bol. Rep. of)
Peru
Argentina
Colombia
Bolivia (Plur. State of)
Ecuador
Chile
Guatemala
Nicaragua
Panama
Guyana
Trinidad and Tobago
Honduras
Paraguay
Cuba
Dominican Republic
Costa Rica
Jamaica
El Salvador
Haiti
Suriname
Barbados
Grenada
Uruguay
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
a
The countries are ordered by the magnitude of their emissions in 2005.
7. Mitigation in Central America
The Central American countries together contribute less than 0.5% of all GHG emissions at the global
level. However, different mitigation options could be beneficial for the region since, for example, there
are major gains to be obtained from making an early start on decarbonization in terms of the availability
of international financing and access to cleaner technologies. Some of these measures also offer
significant co-benefits.6
Using inventories of sectoral emissions, it is possible to carry out projections assuming specific
growth rates in each of the relevant sectors in the different countries. In the baseline estimate, growth
rates are assumed for sectors of the economy in accordance with the macroeconomic scenarios (Cuevas
and Lennox, 2009) for the cut-off years 2010, 2020 and 2030. Projection of the baseline scenario to 2030
gives total annual emissions of over 300 million tons of CO2e.7 Based on the average cost scenarios per
ton of CO2e reduction in each of the sectors examined, an incremental or marginal cost horizon can be
constructed combining these scenarios with the differences in sectoral emissions between the BAU
scenario and the proposed emissions reduction scenario. These costs do not take into account the potential
6
7
This section is based on Cuevas and Lennox (2009). The database used is not the same as that used for the
comparative analysis for Latin America and Central America overall. Hence, particular figures may not coincide.
In addition, the sectoral growth assumptions used are different to those used in the previous section.
In this exercise the emissions factors were calculated using the IPCC methodology for clean development
mechanism projects, which gives an average for Central America of 627 tons CO2/Gwh.
60
co-benefits such as the conservation of biodiversity and water capture areas, the reduction of local-impact
pollutant emissions, poverty reduction and the development of sustainable economic alternatives. Based
on information from one of the cost curves for Mexico, figure VII.26 gives a graphic representation of the
sequential relationship between average costs and potential emissions reduction up to 2020, which could
be interpreted as a marginal cost curve of emissions reduction for the region overall.
Figure VII.26
MEXICO: MARGINAL COST CURVE OF MITIGATION, 2020
(Millions of tons of CO2 per year)
80
Nuclear
Pemex 3
Other industries
Geothermal
Wind
60
Hydroelectricity
40
Cost in dollars/ton of CO 2
Cattle
Landfill
20
Waste water
Deforestation
0
Pemex 2
Pemex 1
-20
Transport
Residential
-40
Services
-60
0
50
100
150
200
250
Source: L.M. Galindo, La economía del cambio climático en México, Mexico city, Secretariat of the Environment and Natural
Resources (SEMARNAT), 2009.
8. Mitigation costs: preliminary aggregate estimates using international data
For purely illustrative purposes, an initial aggregate economic assessment of the potential costs of
mitigation can be conducted assuming a cost of between US$ 10 and US$ 30 per ton of carbon and that
this value is equivalent to the opportunity cost of emissions. Table VII.2 summarizes the potential costs of
mitigation by country, supposing an emissions reduction of 30% with respect to BAU emissions up to
2100. These results show that the costs of mitigation processes are certainly significant for the region and
can be covered only with additional international financing.
61
Table VII.2
LATIN AMERICA AND THE CARIBBEAN: CURRENT VALUE OF THE COSTS OF MITIGATING
CLIMATE CHANGE UP TO 2100 AS A PERCENTAGE OF 2007 GDP a
Price per ton: US$ 10
Price per ton: US$ 30
Discount rate
Discount rate
0.5%
2%
4%
0.5%
2%
4%
Argentina
0.64
0.31
0.15
1.93
0.92
0.44
Barbados
0.31
0.16
0.09
0.92
0.49
0.27
Bolivia (Plurinational State of)
1.98
0.95
0.45
5.95
2.84
1.36
Brazil
1.89
0.81
0.34
5.67
2.44
1.02
Chile
0.49
0.25
0.13
1.46
0.74
0.39
Colombia
1.62
0.72
0.31
4.86
2.16
0.94
Costa Rica
1.56
0.66
0.27
4.68
1.97
0.80
Cuba
0.50
0.25
0.13
1.51
0.75
0.39
Ecuador
1.96
0.94
0.45
5.89
2.81
1.35
El Salvador
0.45
0.22
0.11
1.35
0.67
0.34
Grenada
8.67
3.33
1.15
26.02
9.99
3.45
Guatemala
1.74
0.77
0.34
5.23
2.32
1.01
Guyana
0.31
0.18
0.11
0.94
0.54
0.32
Haiti
0.39
0.20
0.10
1.17
0.60
0.31
Honduras
0.67
0.34
0.18
2.02
1.02
0.53
Jamaica
0.03
0.02
0.01
0.08
0.05
0.03
Mexico
0.30
0.16
0.09
0.90
0.48
0.26
Nicaragua
2.10
0.97
0.44
6.31
2.90
1.33
Panama
3.05
1.23
0.47
9.16
3.70
1.40
Paraguay
3.38
1.38
0.53
10.13
4.14
1.59
Peru
1.67
0.73
0.31
5.02
2.18
0.92
Dominican Republic
3.40
1.41
0.56
10.20
4.23
1.68
Suriname
3.91
1.83
0.87
11.72
5.48
2.60
-
-
-
-
-
-
0.59
0.27
0.12
1.76
0.80
0.36
-
-
-
-
-
-
Trinidad and Tobago
Uruguay
Venezuela (Bolivarian Republic of)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Resources Institute
(WRI), “Climate Analysis Indicators Tool (CAIT) Version 6.0” [online] www.cait.wri.org, 2009.
a
In the scenario, the target is to reduce CO2 emissions by 30% by 2100.
62
9. Main messages
The empirical evidence available for Latin America and the Caribbean shows that regular relations exist
between GHG emissions and their main determining factors, on the basis of which various deductions and
simulations about alternative emissions scenarios can be made.
The simulations carried out show that, in general, emissions may be expected to increase
throughout this century by an average of up to 1.5%, although with major differences between countries
and emission sources. Emissions from land-use change may be expected to decrease or stand still, while
those from fossil fuel burning and cement production will increase. This increase of emissions from
energy consumption has a number of particular characteristics:
•
Energy consumption tracks output and is fairly insensitive to changes in relative energy
prices. However, energy intensity decreases as per capita GDP increases. There is, therefore,
a gradual decline in energy intensity, or energy decoupling.
•
Emissions are increasing at a lower rate than energy consumption, showing a process of
decarbonization. In addition, the ratio of emissions to GDP varies in inverse proportion to the
growth rate of per capita GDP.
•
Emissions are rising at a faster rate than population growth, so that per capita emissions are
increasing. The evidence also points to a process of absolute convergence in per capita
emissions in the region. Accordingly, emissions in the countries with lower per capita
emissions will increase more quickly than those of countries with higher per capita emissions.
•
The evidence overall suggests that the emissions of the Latin American and Caribbean region
will continue to rise, albeit more slowly than in the past.
The evidence available shows that the region has significant options for mitigation. Some of them
are already being deployed, but at the aggregate level the costs of mitigation are significant. However,
ratios of energy to per capita GDP and of emissions to energy fall as per capita GDP rises. This suggests
that economic growth is compatible with energy decoupling and decarbonization, which also offers major
co-benefits.
63
VIII. ECONOMIC VALUATION AND OBSERVATIONS ON PUBLIC POLICY
Climate change is one of the major challenges of this century. Its impacts on economic activities and
current production, distribution and consumption patterns, on population, on ecosystems and, in general,
on living conditions on the planet make it one of the most daunting issues for humankind. It is therefore
crucial to identify the channels of transmission and the most significant economic costs of climate change.
This is no easy task since a wide range of highly uncertain factors and various ethical considerations must
be taken into account and reflected in the adoption of an optimum risk-management strategy.
The international empirical evidence available on the economic costs and benefits of climate
change is highly varied and mixed (Nordhaus and Boyer, 2000; Nordhaus, 2008; Fankhauser, 1995;
Mendelsohn, 2002; and Stern, 2007), given the wide range of methodologies and time periods, analytical
models and economic assumptions (for example, the inclusion of adaptation processes and the application
of new technologies), as well as different climate projections, differential analysis of sectors, regions or
countries and even varying discount rates and proposed mitigation targets used. The evidence presented
must be examined with caution since it is merely indicative of the scenarios that may emerge in the
future.
At the aggregate level, the economic impacts of climate change calculated so far in the countries
of Latin America and the Caribbean present various characteristics as indicated below:8
8
•
The economic costs associated with climate change are significant and non-linear and they
have been increasing over time. In other words the economic consequences of climate change
have a discernible and significant impact on all economic activity.
•
The economic costs are heterogeneous and climate change may translate into short-term gains
for some sectors and activities and, at the same time, into significant losses in other
geographical areas or sectors.
•
In many cases, the impacts, such as loss of biodiversity or human life, are irreversible.
•
Some endogenous adaptation measures exist in the intrinsic response capacity of the
economic actors. Their costs have not been calculated, but could be reduced by designing
public policies aimed at adaptation.
•
Figures VIII.1 and VIII.2 sum up the valuation of total economic costs and benefits for Latin
America and the Caribbean using currently available information. These estimates are
preliminary, indicative and incomplete, but show that the costs of the impacts generally
exceed those estimated in developed countries. This is not necessarily the case for all
countries, however.
It should be borne in mind that the results do not include the impacts of climate change on all economic sectors,
although they probably do include the most relevant ones. Also, there are fiscal, labour, social and other
implications which should be studied in greater depth in order to gain a comprehensive view.
64
Figure VIII.1
LATIN AMERICA (15 COUNTRIES): AVERAGE PRELIMINARY ECONOMIC COSTS OF THE
CUMULATIVE IMPACT OF CLIMATE CHANGE AND MITIGATION, UP TO 2100 a
(Percentages of 2007 GDP)
Mitigation (US$ 10 per ton): 0.7%
Mitigation (US$ 30 per ton): 2.2%
Impact under scenario B2: 34.3%
Impact under scenario A2: 137.3%
Source: Economic Commission for Latin America and the Caribbean.
a
The mitigation target used is equivalent to 30% of the levels projected for 2100. Includes: Argentina, Belize,
Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua,
Panama, Paraguay, Plurinational State of Bolivia and Uruguay. A discount rate of 0.5% was applied. The impact
and costs correspond to the average of the values recorded in the countries under consideration.
Figure VIII.2
LATIN AMERICA AND THE CARIBBEAN (23 COUNTRIES): PRELIMINARY CUMULATIVE
ECONOMIC COSTS OF MITIGATION UP TO 2100
(Percentages of 2007 GDP)
14
Suriname
12
Paraguay
10
Dominican
Republic
8
Bolivia (Plur. State of)
Ecuador
Panama
6
Nicaragua
Brazil
4
Peru
Guatemala
Colombia
Costa Rica
Honduras
Argentina
2
0
Uruguay
Haiti
Barbados
Chile
Mexico
Cuba
El Salvador
Guyana
Jamaica
Source: Economic Commission for Latin America and the Caribbean.
a
The mitigation target used is equivalent to 30% of the levels projected for 2100. A discount rate of 0.5% was
applied. The price per ton of CO2 was US$ 30.
65
•
For all the countries of Latin America and the Caribbean, the economic costs associated with
the impacts of climate change are higher than those of participating in a mitigation agreement
that recognizes historical responsibility and imposes differential targets by region in
accordance with the principles of equity and co-responsibility.
•
The simultaneous implementation of efficient adaptation and mitigation actions means that
current patterns of production, distribution and consumption will have to be changed
substantially.
When drawing up an international agreement, it must be recognized that those countries that have
contributed most to climate change are not necessarily those that are suffering the greatest impacts and,
indeed, many countries with only a marginal contribution to emissions may be bearing the brunt of these
impacts. Thus, any international agreement on climate change must take into account the need of
developing countries to maintain a good rate of economic growth and obtain additional international
financing in order to make the transition to low-carbon economies. Unilateral solutions may lead to the
imposition of adjustment processes that are inequitable from the perspective of developing countries, that
is, the externalization of mitigation and the concentration of mitigation efforts in those countries, without
reducing their vulnerability to climate change (and the resulting costs of adaptation).
Given the magnitude of the economic costs associated with climate change, a public-policy
strategy must be designed and implemented in which society as a whole can participate, that helps to
reduce the adverse effects of this phenomenon, facilitates adaptation processes and develops options for
reducing mitigation costs. This will mean preparing an adequate risk management strategy. This is an
extremely complex task, however, and one that must be based not only on technical factors, but also on
ethical considerations. Nevertheless, regardless of the climate scenarios or the public policy adopted,
there are a few general points that seem to be common to any such strategy:
•
“Taking out insurance” against the most extreme climate risks and the severest damage
expected.
•
Preserving biodiversity and natural resources for future generations and avoiding irreparable
losses.
•
Realigning relative prices in a manner compatible with sustainable development.
•
Recognizing the need to review lifestyles and promote a cultural change in that regard.
•
Promoting a technological innovation process in the context of sustainable development.
•
Transiting to low-carbon economies. Modern economies are fossil fuel-intensive. It must be
recognized that the era of cheap, almost limitless fossil energy is coming to an end; relative
energy prices must fully reflect the negative externalities generated by it.
Generally speaking, the evidence on the economic consequences of climate change points to the
need to take into account the following considerations when formulating relevant public policies by it:
•
Climate change policies must be at the heart of macroeconomic policy and policies on
development and technological innovation. They must be directed towards changing
66
behaviour and ways of thinking in order to put in place procedures for making decisions that
are sustainable in the long term.
•
Generally, prices and markets are important mechanisms that can contribute to sustainable
economic development, although they are insufficient and have major limitations due to the
low price elasticities currently observed in the region and other market characteristics.
Other mechanisms that complement price measures such as regulatory interventions,
promotion of technological innovation and changes in consumption, distribution and
production patterns must also be taken into account. Thus, the aim must be to apply a
relative prices policy based on a ramp trajectory, which gradually reflects the negative
externalities and allows time for adjustments, and this policy should be complemented with
the necessary regulations. Climate change, understood as a negative externality, can be
reduced by putting a price on CO2 emissions (Stern, 2007). This price must be equitable,
agreed internationally and provide for specific conditions; furthermore all the policies
implemented must be oriented in the same direction.
Regulations must aim to:
•
•
•
Reduce the energy and carbon content per unit of output and per capita and promoting new
technologies at affordable costs.
Conserve natural resources and biodiversity.
Moderate and compensate for the economic impacts attributable to climate change.
When implementing adaptation measures, decision-makers must prioritize those that hold up
under any climate or economic scenario, that generate significant collateral benefits such as reducing
other environmental impacts or poverty and that are consistent with mitigation strategies. They must also
bear in mind that the adaptation measures applied can generate new negative externalities such as
environmental degradation due to expansion of the agricultural frontier in marginal areas (which must be
avoided) or overexploitation of hydric resources.
A set of regular patterns must be considered when designing mitigation processes. In particular,
attention should be paid to the following:
•
Per capita GDP, energy consumption and CO2 emissions have been trending upwards over time,
albeit at different rates and with different intensities. In general, the tendency is towards
decoupling of energy from output and of CO2 emissions from energy although, again, at different
rates, which are insufficient to curtail the absolute increase in emissions or energy consumption.
•
Higher economic output is reflected in a higher level of energy consumption, although the
increases are not proportional. Thus, any drastic cutback in energy consumption will result in
a contraction in output. Sustained economic growth with steady emissions reduction, or at
least some degree of stabilization, is a desirable goal but remains difficult to reach.
•
There is an inverse correlation between per capita income and energy intensity. This energy
decoupling is still insufficient, however, to halt the increase in energy consumption. Moreover,
energy decoupling is more common than decarbonization, which seems to indicate that the
pattern of GHG emissions is not yet being treated as a major concern in the region. The
67
reduction in the energy intensity-to-GDP ratio and in the emissions-to-energy consumption
ratio merely helps to slow growth in emissions, but is insufficient to bring it to a halt.
•
All this translates into a gradual reduction in the ratio between emissions and per capita GDP.
Moreover, the emissions intensity of GDP is tending to decrease faster in countries with
higher per capita GDP growth.
•
In practically all cases, however, there has been a gradual increase in per capita emissions;
the rate of population growth is lower than the rate of growth in CO2 emissions. Moreover,
the region shows a gradual absolute convergence in per capita emissions; in other words,
emissions are increasing faster in those countries where per capita emissions are lower than in
those where they are higher.
•
Simulations point to the likelihood that GHG emissions associated with fossil fuels and cement
production will continue to increase if the BAU pattern is maintained. The historical trend of
energy decoupling and decarbonization is insufficient to control the growth in emissions if
business is allowed to continue as usual. Accordingly, active public policies are required.
Any mitigation strategy defined for Latin America and the Caribbean must take into account the
fact that this region has a common but clearly differentiated responsibility in the mitigation process. The
region should engage in an equitable international agreement that recognizes the following:
•
The low contribution of the energy sector in Latin America and the Caribbean to global
climate change.
•
The need for the region to continue to develop whether on the basis of current growth
patterns or others that are more sustainable.
•
The importance of complying with the provisions of the United Nations Framework
Convention on Climate Change (UNFCCC) in terms of making available additional
international resources to achieve ambitious mitigation targets.
•
The fact that mitigation actions will not by themselves diminish the region’s vulnerability to
climate change and that, therefore, international resources are indispensable for facilitating
adaptation to the effects that this global phenomenon will have on its development and for
reducing poverty in the least developed countries of the region.
•
The implementation of unilateral mitigation processes in the developed countries could make
mitigation in Latin America and the Caribbean more costly than it would have been if
conducted under an international agreement.
In any event, in this century, climate change will require a change in patterns of growth and
development. In the context of an international agreement, this will also mean establishing an institutional
framework capable of mobilizing vast quantities of resources, of verifying their use and monitoring the
attainment of specific targets.
Over the coming years, the Latin American and Caribbean region should demonstrate its capacity
to define its future with full knowledge of the facts, modifying its production, consumption and
distribution patterns, but also adapting to the new circumstances and consequences of a world with a
different climate.
68
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