Climate catastrophes are devastating lives and economies at an alarming pace. This year is the hottest on record, at 1.4°C above preindustrial levels. Combined with a strong El Niño, global warming brought devastating heat waves, floods, wildfires, and hurricanes. Against this dire backdrop, the UN reminds global leaders that pledges to curb emissions remain “critically insufficient” to meet globally agreed temperature limits. But while industrialized nations have overwhelmingly dominated cumulative pollution, Latin American and Caribbean countries are invited to reduce emissions too. Calls for aggressive emissions cuts raise a challenge related to fairness.
What if I told you that decarbonizing could improve lives more than business-as-usual fossil fuel dependence? A new report by the Inter-American Development Bank and the 2050 Pathways Platform investigates this question. The analysis models detailed scenarios spanning agriculture, transport, buildings, industry, and energy to reach net-zero emissions in the region by mid-century. It finds strategic efforts could provide $2.7 trillion in net benefits compared to traditional high-emission development, mainly from substantial energy savings, improved health and safety, and vital ecosystem services as forests regrow.
Critically, the economic benefits of aligned climate plans outweigh costs even before accounting for climate risk reduction itself. As countries update climate pledges, this evidence spotlights that well-designed mitigation need not come at the expense of advancing economic development priorities.
Why Climate Protection Promotes Development
If the region engages in traditional pathways, anchored primarily on unfettered urban sprawl, continued reliance on fossil fuels for power generation and transportation, and an extensive agriculture system that treats nature as free land to be developed, our model predicts a 70 percent emissions surge in the region by 2050. Congestion, accidents, and pollution would impose steep costs amidst this growth, while deforestation erases irreplaceable carbon sinks and biodiversity. Global warming portends far more significant damage over time.
The good news is that clean technology advances challenge old tradeoffs between climate protection and economic returns. Renewable energy costs 80 percent less than a decade prior, conferring substantial electricity savings. High upfront outlays for electric vehicles pay lifelong dividends via far lower fueling and maintenance expenses.
Moreover, ending deforestation also carries a triple dividend. First, standing forests generate invaluable ecosystem services, including the provision of clean water, food production, and tourism revenues. Second, sustainable agriculture practices can help reduce malnutrition, curb obesity rates, and protect the environment at the same time. Third, Indigenous guardianship of forests sustains cultural identity. Altogether, the health, community, and climate benefits of balanced food systems and land conservation outweigh the costs.
Finding the Best Policy Mix
To identify win-wins, the study first models a business-as-usual trajectory. Researchers then specify dozens of options to curb emissions across sectors: physical infrastructure, renewable energy, shifts to public and active transport, dietary changes, improvements in industry, better waste management, and beyond.
The approach reliably identifies high-impact priorities with built-in development benefits by stress-testing outcomes under thousands of scenarios to explore key uncertainties. Three key pillars emerge across resilient scenarios:
• Renewable Electricity – With solar and wind now cheaper than fossil fuels, modernizing generation secures affordable, reliable power for development needs while enabling clean transport, buildings, and electrification.
• Clean, Electrified Transport – Electrifying passenger vehicles and freight with batteries or hydrogen reliably cut emissions while lowering local pollution. This hinges on cleaner electricity.
• Sustainable Land Use – Boosting productivity and choosing the most nutritious and less carbon-intensive foods slows deforestation while improving health, expanding nature’s carbon absorption, and supporting rural and Indigenous communities.
Combined with industry efficiency, universal sanitation access, and context-appropriate interventions, this bundle consistently reduces emissions to near-zero levels while providing net benefits.
Policy Pathways for Shared Prosperity
This study follows our highest technical standards. The initiative achieves academic rigor and practical relevance by pooling world-class analytical capacity and expert insights from sector specialists at the IDB and the French Development Agency.
Its conclusions underscore decarbonization’s hidden synergies with traditional social aims. But raw economics cannot supersede participatory democracy in navigating obstacles like labor transitions or inequality concerns unique to each country. Broad consultation remains essential so climate policy amplifies local priorities.
Ultimately, the analysis reveals that well-designed climate plans can maintain economic growth. Instead, countries can align policies, spending, and incentives to unlock cleaner air, smoother travel, thriving forests, and other dividends valued together in the trillions—all while mitigating shared global warming risks.
With mounting climate threats and cheap, sustainable technology, transition timelines matter more than ever. Download the complete study “The Benefits and Costs of Reaching Net Zero Emissions in Latin America and the Caribbean” and learn about viable pathways to protect communities from intensifying consequences while fostering lasting prosperity.
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