The economics of climate change in Central America: summary 2010

Abstract

Although it is estimated that Central America will continue to generate only a minimal part of the planet's Greenhouse Gasses, it is already one of the regions most vulnerable to the consequences of these emissions. Central America's historical socio-economic vulnerabilities are exacerbated by the region's location on a narrow isthmus that serves as a land bridge between two continents, surrounded by two oceanic systems, the Pacific and the Atlantic. The region is gravely affected by droughts, cyclones and the El Niño-Southern Oscillation phenomenon. Given that economic activities such as agriculture are especially climate-dependent, climate change will increasingly have a bearing on the region's economies throughout the current century. In fiscal terms it constitutes a contingent public liability that will have an effect on public finance over a period spanning several generations. At the same time, Central America is home to a precious reserve of ecosystems and biodiversity that need to be preserved for the products and services they contribute to the development of current and future generations. These ecosystems are already overexploited due to the existing unsustainable pattern of development, and this depletion will be further aggravated by climate change. The relatively young populations of these countries, with their rich cultural, ethnic, linguistic and life-style diversity constitute a treasure that requires recognition and investment to develop their capabilities, including those related to adaptation to climate change. This is especially the case of the region's indigenous peoples and those of African descent. This document is a product of the project The Economics of Climate Change in Central America" which aims to conduct an economic impact study on the effects of climate change in Central America based on various development scenarios and emissions trajectories, estimating the potential costs and benefits of a response of inaction (i.e. a business-as usual approach) or of public-policy adaptation and mitigation options to prevent or reduce adverse impacts. The study projects growth trajectories for each national economy as a whole and for major economic sectors. The impact of climate change on key sectors or areas of concern, such as agricultural yields and water availability and demand, is assessed. The costs of these impacts are estimated in order to establish the possible changes in the trajectory of economic development as affected by climate change. The Project is being carried out by the Economic Commission for Central America and the Caribbean (ECLAC), the Ministries of Environment and Treasury/Finance of the seven Central American countries, the Central American Commission for Environment and Development (CCAD) of the Central American Integration System (SICA) and the Secretariat for Central American Economic Integration (SIECA), with funding from the Government of the United Kingdom (DFID). Go to the Spanish version: La economía del cambio climático en Centroamérica. Síntesis 2010 "