Last year around this time, the entire world was shaken by a pandemic that has forever changed our lives. This year, the world is still coping with the devastating impacts of the Covid-19 crisis, however with a significantly changed outlook. While a year ago many unanswered questions made it hardly possible to predict how the pandemic would unfold, we now have answers on how to get back to a post-pandemic life. The continuous rollout of vaccines raises the expectations for a return to a pre-pandemic “normality” in the next 18 months – an effort that needs to consider the challenges to secure a sustainable and inclusive future following the pandemic.
Earth Day highlights the importance of immediate climate action
For the past 50 years, Earth Day has not only reminded us of the importance of immediate climate action, but it has also been a platform to create and increase momentum for the climate change action agenda.
Within the new post-pandemic reality, the global community will be facing three main challenges.
- First, the immediate social costs of the pandemic need to be further mitigated and effective policies implemented to reverse the negative impact of the pandemic on social issues, such as the rise of extreme global poverty with an additional 150 million people expected to live in poverty by the end of 2021.
- Second, mid-, and long-term strategies need to be crafted to ensure a swift and sustainable economic recovery. These strategies need to aim at enabling net-zero emission pathways by 2050 and implementing effective climate resilience to ensure that a green, inclusive, and resilient economic recovery is achieved. Bold public and private action will be necessary to meet this challenge.
- Third, while both short- and long-term actions are necessary, public financial resources are constrained. In 2020 alone, public spending related to the COVID-19 crisis reached levels of 20%-50% of GDP in high income countries. Low- and middle-income countries reported significantly lower numbers due to already existing financial constraints. Limited public spending resources will have to be used both efficiently and effectively in 2021 and beyond.
Earth Day 2021 provides us with the unique chance to revive and strengthen a climate change action momentum for the post-pandemic era. On April 22-23, the Leaders Summit on Climate will be hosted by U.S. President Biden in Washington D.C. A main topic will be how climate ambition can be combined with pandemic relief and result in economic growth, increased wealth, and improved climate change resilience. Moreover, a recent joint statement by the U.S. and China calls for cooperation and increased climate ambition on the road to COP26 in Glasgow. More than ever, now is the perfect moment to accelerate a just transition to a green, inclusive, and resilient future.
How is climate action progressing in Latin America and the Caribbean (LAC)?
As the most affected region with an estimated economic contraction of 7.4% in 2020, the pandemic has impacted not only health systems in the region, but also the job markets, education, infrastructure and the economy as a whole. In the efforts to overcome the economic and social challenges exposed by the pandemic, Latin American and Caribbean countries have an opportunity to link climate and biodiversity action to deliver a sustainable Covid-19 recovery.
At the Inter-American Development Bank (IDB), we developed a rapid approval mechanism to respond to governments’ needs in the region. In 2020, the IDB increased approvals by 11% and disbursements by 55% for a total of US$ 12.6 billion approved by the IDB sovereign window.
Green, just and sustainable recovery action can ensure that the negative economic impacts are not only reversed but new opportunities and innovation are created throughout the region. Experience from the LAC region shows that the expansion of renewable energy generation, emission-free transport, reduction of deforestation, strengthening sustainable land management practices, sustainable transport and sustainable urban development result in direct and indirect positive economic impact while creating various co-benefits.
For instance, a recent study focused on the costs and benefits of decarbonization investments in Costa Rica has shown that decarbonizing the economy leads to significant net benefits of estimated US$ 41 billion between 2020 and 2050, with especially high growth potential in sectors like agriculture, fisheries and forestry.
Another example shows that investing in electric mobility in Lima could trigger additional investments in the transport ecosystem and thereby create more employment.
In the LAC region, transitioning towards a carbon neutral economy also creates positive impact on the labor market and is estimated to create up to net 15 million jobs until 2030. Enabling sectors such as agriculture and tourism to transform to net-zero carbon sectors establishes new opportunities for job creation, economic growth and social improvements while increasing the protection of environment and biodiversity.
NDC INVEST is supporting countries to increase their climate ambition
To bring these insights to life and achieve the climate ambition of the region, the IDB Group platform NDC INVEST has been supporting countries to design and implement three main elements of a successful climate change action agenda:
- Design of Long-Term Strategies (LTS) for net-zero emissions and climate resilience: A long term strategy provides the climate vision for a country and is the base for aligned and forward-looking climate policy. In the region, Chile, Colombia, Costa Rica, and Peru created or are in the process of creating their LTS with support of the IDB Group’s NDC INVEST. These LTS offer a great platform for formalizing ambitious goals such as net-zero by 2050 and long-term climate resilience.
- Design of aligned Nationally Determined Contributions (NDCs): NDCs are the backbone of a countries approach to reach the Paris Goals, detailing mitigation ambitions and adaptation actions. Within the LAC region, 12 countries have so far updated their NDCs in preparation of COP26 in Glasgow in November 2021. Amongst these countries, four (Chile, Costa Rica, Mexico, Suriname) received support through NDC INVEST to create their NDCs and present more ambitious climate actions aligned with their national climate strategies.
- Design of Investment plans and finance strategies: Defining and closing the financial gap for climate action is another key element to reverse the climate crisis. Through NDC INVEST, we aim at matching investment demand and offer through various instruments. For instance, the IDB Group through the NDC INVEST platform have been actively involved in designing the first finance strategy aimed at achieving the mitigation and resilience ambitions of Chile, and to build a base for a just transition within the next decades. Another example is the cooperation with the Climate Investment Funds (CIFs) to support climate mitigation and adaption action throughout the LAC region. So far, more than a hundred IDB Group operations have received support from the CIF.
Together, we want to take advantage of Earth Day 2021 and continue our efforts in the LAC region to design and implement a just transition and green, inclusive, resilient Covid-19 recovery. With support from the IDB Group’s NDC INVEST platform, countries are ready to double down on the efforts to translate this momentum into just and sustainable climate action that creates social improvements and economic growth throughout Latin America and the Caribbean.
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Photo: Andreas Fazekas