Latin America and the Caribbean will need 1.5% of their GDP to transition to a green economy
Latin America and the Caribbean will have to mobilize 1.5 to 5% of their Gross domestic product (GDP) by 2050 to finance its transition to a green economyand thus deal with climate change which, if not addressed, will aggravate poverty and inequality.
During the presentation of Latin American Economic Outlook (LEO) 2022, as part of the COP27 in Sharm el-Seheik, Egyptthe report warns that in a scenario of an increase in global warming of up to 2.5 degrees Celsius, it is essential that “governments phase out subsidies and take advantage of the potential of environmentally related taxes”.
The report submitted jointly by the Organization for Economic Co-operation and Development (OECD), the Development Bank of Latin America (CIF) and the Economic Commission for Latin America and the Caribbean (ECLAC) proposes to use both public and private financial instruments, or even financing through green or linked bonds.
The urgency is that after the pandemic, and the impact of the conflict in Ukraineinequalities in the region have increased, this year alone it is estimated that at least 33.7% of the population of LAC is plunged into poverty, and 14.9% more in extreme povertya situation that will worsen with the effects of climate change.
He cited that of the 50 countries identified as most affected by the climate emergency, at least 13 are from LAC. The high risk is disproportionate considering that the Latin American region is only responsible for 8.1% of total emissions of greenhouse gases, unlike developed countries which are major polluters.
However, the risk is high, because in the last 30 years a total of 11,000,933 weather phenomena have been recorded worldwide and 17.1% of them have occurred in LAC and the worst is that we expects that with the global warming these events are intensify.
Urgent international green transition
About, Mathias Corman The Secretary General of the OECD, during a press conference, reiterated the need to design fair fiscal policies, to phase out environmentally harmful subsidies and ensured that an effective green transition could potentially generate 10.5% more jobs by 2030.
For its part, Jose Manuel Salazar-XirinachsECLAC Secretary General explained that the just green transition could help improve the economy of the region and is “a hope to overcome inequalities, even to advance access to energy in the countries of America Latin”.
Ultimately, Sergio Diaz Granados, Executive Chairman of CAF Development Bank of Latin America agreed on the need to mobilize more resources, for which this international institution authorized a capital increase of 7 billion dollars, and to support the recovery of the region, the stock market. As for green projects, it will raise them to 40%.
Source: El Heraldo De Mexico
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