CLIMATE CHANGE IS EXPECTED TO COST LATIN AMERICAN COUNTRIES AT LEAST 1% OF ANNUAL GDP

Santiago, December 9- Climate change is expected to causes losses of around 1% of annual GDP in the region's countries between 2010 and 2100 unless a global consensus is reached on mitigation actions, according to the ECLAC report Economics of Climate Change in Latin America and the Caribbean. Summary 2010.

The study considers global warming to be a determining factor in the characteristics of and options for this century's regional economic development, and was presented today as part of the XVI Conference of the Parties to the United Nations Framework Convention on Climate Change (known as COP 16) taking place in Cancún, Mexico.

The report provides supplementary socio-economic analysis of the implications of climate change, based on national and sectoral studies being carried out in the region. The initial version was presented by ECLAC at the previous World Conference (COP 15), held in Copenhagen in 2009.

The 2010 report supplements the previous version and states that, in the region's temperate countries, climate change may cause losses that represent around 1% of annual GDP between 2010 and 2100 in the scenario of highest emissions (A2 of the Intergovernmental Panel on Climate Change). The cost would be higher in Andean, Central American and Caribbean countries.

The 1% of GDP is higher than the average annual figure that the region's governments spend on research and development (0.63% of GDP in 2007), as well as being higher than the budgets of most ministries of the environment.

In the 2009 version of the report, ECLAC was already warning that global climate change would cost around 137% of the 2007 GDP of Latin America and the Caribbean by 2100. In other words, growth will be restricted unless serious global mitigation measures are introduced and national plans to adapt to and mitigate climate change are implemented.

According to Alicia Bárcena, ECLAC Executive Secretary, "Spontaneous technological change will not be enough to reduce global concentrations of greenhouse gases. What is required is far-reaching reform of national and global markets so that they function well from the point of view of climate change, that is to say that they work in favour of a less carbon-intensive economy, in the framework of sustainable development with equality and social inclusion".

"This requires a succession of large-scale public-private partnerships and the social consensus to back them up", she added.

The 2010 report states that, although Latin America and the Caribbean is the second least polluting world region in terms of greenhouse gas emissions, the region could suffer significant consequences from climate change in terms of its impact on the population, ecosystems and economic activity.

The region is highly vulnerable to extreme climate events, increases in temperature, changes in precipitation patterns, reduction of the cryosphere (surface of the earth covered by ice), rises in sea level, drought, flooding and hurricanes.

If the necessary measures are not taken, by the end of the century we can expect major losses in the agricultural sector and in terms of biodiversity, as well as huge pressure on the region's infrastructure.

Central America is extremely vulnerable to climate change as a result of its socio-economic situation, its exposure to extreme events and its high level of biodiversity.

ECLAC calculates that, by 2100 in Central America, the rise in atmospheric and sea temperature, declining and unstable rainfall, rising sea levels, droughts and hurricanes will have repercussions on production, infrastructure, livelihoods and health and safety of the population, as well as weakening the environment's capacity to provide vital services and resources.

The cumulative cost of the phenomenon by 2100 in the most pessimistic scenario is the equivalent of US$ 73.0 billion, which is 54% of 2008 Central American GDP in present values, with a discount rate of 0.5%. This cost is related to the impact in the following four areas: agriculture, water resources, biodiversity and increased frequency and intensity of hurricanes and tropical storms.

Belize, for instance, could post losses the equivalent of its total 2008 GDP by the end of the century.

In contrast, in Bolivia, Chile, Ecuador, Paraguay and Peru, land degradation could affect between 22% and 62% of the territory. Water availability will also fall, especially in Central America and in parts of South America.

Rising sea levels are expected to cause population displacement and loss of land due to constant flooding. Mangroves on the low-lying coasts of Brazil, Colombia, Ecuador, French Guyana and Guyana could also disappear. In addition, a global 3ºC increase in temperature would reduce precipitation over the Amazon region, thus threatening the planet's greatest area of biodiversity.

The combination of climate variability and additional extreme events, in a pessimistic scenario and with a low discount rate, would make 2100 a year where climatic disasters in Central America amount to an economic cost of around 15% of 2008 GDP.

For Chile, the general temperature for the country as a whole is predicted to rise by around 4ºC by the end of the century, and a significant reduction in glaciers is also expected. Precipitation is forecast to fall by 30% in the central part of the country during this period. Generally speaking, Chile could lose the equivalent of 1.1% of GDP annually by 2100 (between around US$ 22.0 billion and US$ 320.0 billion in the pessimistic scenario, depending on the discount rate applied and the period considered).

In the case of Ecuador, the end of the century is expected to see the temperature increase by an average of over 4.2ºC throughout the territory, and possibly more in the Amazon region. Precipitation would also change significantly, with increased water shortages in mountain areas and greater rainfall in coastal areas.

This would reduce the agricultural production capacity of some parts of the country and some crops, causing major losses to biodiversity and its carbon storage capacity and would reduce the water supply potential. There could also be a rise in epidemics due to vector transmission and, owing to rising sea levels, the unique ecosystem of the Galapagos Islands could be seriously affected. The increase in extreme climate events associated with climate change will have serious consequences for infrastructure works in vulnerable areas.

In Uruguay, the total impact of climate change could have a cumulative cost for the country's economy of almost US$ 20.0 billion over the next few decades, with a discount rate of 4% and in the most adverse climate scenario (the equivalent of 50% of 2008 GDP). In terms of annual losses, these figures could represent 1% of GDP by 2100.

"The atmosphere is a global public good to which access has been free. It is an inescapable duty to preserve it for future generations, and we must therefore develop the institutions and policies for a timely and informed adaptation", emphasized ECLAC.

The report was produced by ECLAC in close collaboration with the governments of Denmark, Germany, Spain and the United Kingdom, as well as with the European Union, the Inter-American Development Bank (IDB), the Global Mechanism of the United Nations Convention to Combat Desertification and a broad network of academic and research institutions.

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