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PRESS RELEASEOctober 30, 2022

Climate Action Can Boost Economic Growth in Argentina, World Bank

A new report identifies opportunities to strengthen resilience and decarbonize the economy by 2050.

BUENOS AIRES, Nov. 3, 2022. Argentina can attain more robust economic growth by transitioning to a low-carbon economy, particularly transforming its energy and agricultural sectors, according to the World Bank Group’s Country Climate and Development Report (CCDR) launched today.

The report finds that expanding investments in the water, agriculture and energy sectors are a priority to reduce the country’s vulnerability to climate change and increase economic growth. Annual GDP could increase by 2.7 percent by 2030 if investments in water infrastructure are made.

It also recommends the implementation of techniques to reduce deforestation and boost the country’s agricultural competitiveness. If Argentina does not act to reduce emissions from agriculture, 4 percent of its exports could be affected by climate regulations from other countries, which would mainly harm producers who do not implement sustainable practices.

“Argentina is determined to increase its climate commitments and to transition to a low-carbon economy. In doing so, it can significantly increase its economic growth and the well-being of its people,” says Jordan Schwartz, World Bank director for Argentina, Paraguay and Uruguay. “The World Bank supports Argentina’s efforts to deepen its understanding of the impact of climate risk, to enhance resilience of those most vulnerable, and to identify the opportunities for decarbonization.”

The report analyzes climate change impacts that Argentina is already facing, mainly through losses caused by droughts and floods. By 2050 drought losses could account for 4 percent of Argentina’s GDP. Furthermore, floods cause up to $1.4 billion average annual asset losses and $4 billion of welfare losses.

“Incorporating climate perspective in the design of development policies is urgent to minimize impact, reduce losses and be prepared for a carbon-neutral future,” said Julie Rozenberg, senior economist and co-author of the report.

Since 2010, in line with Argentina's commitment to achieve carbon-neutral development by 2050, the country has begun to reduce its emissions mainly through a decrease in deforestation. The report presents a possible roadmap for reducing greenhouse gas (GHG) emissions by 16 percent by 2030 and by 65 percent by 2050.

Pursuing decarbonization in agriculture, livestock and land use change is key since it represented 39 percent of GHG emissions in 2018. According to the report, climate‑smart agriculture practices for soils, livestock, and in value chains are the options for reducing emissions and increasing carbon sequestration in Argentina’s agrifood sector.

The energy sector, led by fossil fuels, contributes 37 percent of GHG emissions. Continuing to develop the great potential for renewable energies and investments in energy efficiency would be important during the transition. Moreover, lithium from Argentina could cover almost 20 percent of the global demand in 2030,

making the country a relevant player in the energy transition. This would also mean important economic benefits, especially for the provinces of Jujuy, Salta and Catamarca in the north of Argentina.

Including the transport sector in the decarbonization strategy is another key area of proposed action. Reforms in the efficiency of logistics activities together with the adoption of low carbon emissions technologies (such as biofuels, green hydrogen and electromobility) could help. Additionally, electromobility could create 21,000 new jobs in the battery and vehicle sectors.

“The Argentine private sector is called to play a central role in the transition towards a low-carbon and climate-resilient economy through investments that allow innovation in climate-smart agriculture, renewable energies and green hydrogen, the development of the lithium’s value chain and the creation of green financing mechanisms, such as bonds and loans linked to sustainability”, said David Tinel, International Finance Corporation's regional manager for the Southern Cone.

About Country Climate and Development Reports (CCDRs)

The World Bank Group’s Country Climate and Development Reports (CCDRs) are new core diagnostic reports that integrate climate change and development considerations. They will help countries prioritize the most impactful actions that can reduce greenhouse gas (GHG) emissions and boost adaptation, while delivering on broader development goals. CCDRs build on data and rigorous research and identify main pathways to reduce GHG emissions and climate vulnerabilities, including the costs and challenges as well as benefits and opportunities from doing so. The reports suggest concrete, priority actions to support the low-carbon, resilient transition. As public documents, CCDRs aim to inform governments, citizens, the private sector and development partners and enable engagements with the development and climate agenda. CCDRs will feed into other core Bank Group diagnostics, country engagements and operations, and help attract funding and direct financing for high-impact climate action.

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