The FINANCIAL — Environmentally sustainable post-COVID-19 spending in Latin America and the Caribbean lags behind the rest of the world, according to a new platform co-developed by the University of Oxford that showcases real-time data from 33 countries.
The tool’s 2020 data showed 0.5 percent of total spending and 2.2 percent of long-term recovery spending in the region was environmentally friendly, compared with a global spend of 2.8 percent and 19.2 percent respectively.
The platform is based on the Global Recovery Observatory, an initiative led by the Oxford University Economic Recovery Project (OUERP), and supported by UNEP, the International Monetary Fund and GIZ through the Green Fiscal Policy Network (GFPN).
It revealed that only six of the region’s 33 countries dedicated more than 0.1 per cent of their GDP to recovery spending; a similarly small number allocated a significant proportion of their budgets to post-COVID-19 efforts, including Chile (14.9 percent), Saint Kitts and Nevis (13.3 percent), Saint Lucia (11.3 percent), Bolivia (10.5 percent) and Brazil (9.26 percent).
However, to date a higher proportion of the region’s recovery budget has been spent on unsustainable sectors ($7.4 billion) than on environmentally sustainable initiatives ($1.5 billion). Around 74 percent of environmentally negative spending has been directed to fossil energy infrastructure, and 13 percent to unsustainable port and airport infrastructure, which is expected to lead to an increase in carbon emissions, University of Oxford notes.
Brian O’Callaghan, lead researcher at the Oxford University Economic Recovery Project, said: ‘The region has reached an economic crossroads. Either governments continue to support the old, dying industries of the past or invest in sustainable industries which will drive future prosperity. The new economic opportunities for the region are monumental and wise leaders will embrace them.’
Furthermore, the examination of over 1,100 policies showed that approximately 77 percent of the region’s total spending of $318 billion was allocated to rescue measures addressing short-term threats and saving lives, while only 16.1 percent has focused so far on long-term recovery plans to revitalize the economy, given the limited financial resources of many of the region’s countries. On average, Latin America and the Caribbean has allocated $490 per capita expenditure to post-COVID-19 recovery, compared with $650 in emerging markets and developing economies, and $12,700 in advanced economies.
The region has been severely affected by COVID-19. Home to 8 percent of the world’s population, Latin America and the Caribbean has reported some 29 percent of deaths from the pandemic, while it is estimated that in 2020 the region had a GDP contraction of 7 percent.
Piedad Martin, Acting Director of UNEP’s Regional Office for Latin America and the Caribbean, said: ‘I applaud the initiative of Latin American and Caribbean ministers to track their progress towards greener recoveries. Our Tracker shows that overall, the region’s green spending does not yet match the severity of the triple planetary crises of climate change, biodiversity loss and pollution, University of Oxford notes.
‘In order to transition to more sustainable and inclusive economies, nations in the region must build from this good start of tracking to further align their development priorities with green recovery.’
Costa Rica’s Minister of the Environment and Energy Andrea Meza, who will chair the XXIII meeting of the regional Forum of Ministers of the Environment in 2022, said: ‘The situation of the region is dire, the response to the pandemic is leading us to an increase in debt, limiting our capacity to direct investments to environmental sustainability. Yet, placing climate action as the engine of recovery has never been as important. Our survival and the competitiveness of the region is at stake due to climate change.
‘I call on governments, the international community and the private sector to support Latin America and the Caribbean in responding to this crisis through investments that allow us to meet the Paris Agreement.’
High-impact chances for the region are numerous and require a mix of policy measures. Key opportunities await in sustainable energy, in particular non-conventional renewable energy and energy efficiency; investments in zero-emission transport with a special focus on public transport; and investments in nature-based solutions to ensure adaptation in key sectors, such as agriculture, and urban centres, where most of the population lives.