Making the economy greener will bring long-term payoffs for all Colombians
BOGOTA, July 25, 2023 – Colombia can achieve its ambitious climate change goals and provide a better economic future for its people at the same time, a new World Bank Group report says. Through reforms to make its economy more resilient to climate change, the country can rapidly cut carbon emissions and protect its most vulnerable people.
The Colombia Country Climate and Development Report says inaction on adapting to climate change poses bigger risks for the country in comparison with regional and global peers. For example, by 2050 the number of people in Colombia affected by floods is forecast to triple, the number of days with temperatures exceeding 35°Cwill soar almost six-fold, and climate-caused infrastructure disruptions could affect 60 percent more Colombians.
“This report shows that it is not a matter of ’either or,’ Colombia can grow economically and at the same achieve its target of becoming more climate resilient and carbon neutral by 2050 if it acts decisively now,” said Mark Thomas, World Bank Country Director for Colombia. “Climate investments and policies are an enormous opportunity to modernize Colombia’s economy, reduce climate risk, and bring greater prosperity to more Colombians.”
The report says Colombia can both address climate change and grow economically if it pursues three priorities. The first is to invest in resiliency. Colombia’s transport and energy sectors can be made more resilient to future shocks such as droughts, floods, or landslides. These measures should go hand in hand with conserving and restoring forests, making farming more climate-resilient, and building on Colombia’s already strong disaster risk management systems.
A second priority is to generate a rapid reversal in Colombia’s rising greenhouse gas emissions. In addition to more aggressively stopping deforestation, this will require quickly reducing emissions in the livestock sector and the amount of land required for production. To meet Colombia’s growing energy needs sustainably, renewable energy (especially solar and wind) needs to be ramped up, together with electricity transmission and energy efficiency measures. The transport sector would require a shift to electric mobility and expanding public and non-motorized transport infrastructure.
A third priority is to protect the most vulnerable members of its society. Inevitably, some people will suffer income or job losses from the coming global shift away from fossil fuels. Measures are needed to help workers and regions in the coal and oil industries, whose jobs and local economies will be at risk, find new jobs and activities, in tandem with more adaptive social protection programs to protect the poorest.
As a fossil fuel producer, Colombia stands to lose up to 10 percent of its export revenues, 6 percent of government revenues, and 8 percent of its gross domestic product by 2050, as a result of global decarbonization. Wide-ranging reforms will be needed to make up for fiscal shortfalls and finance climate action.
While implementing this climate agenda could cost some $92 billion by 2050, these actions also have the potential to produce annual net gains of about $7 billion for the economy. Importantly, the report finds that climate action does not run counter to reforms to raise living standards, but that it adds to their urgency: with the right reforms, the private sector could provide up to $74 billion of the additional investment needed for climate action.
“Colombia only represents 0.6% of global CO2 emissions, but it’s among the most vulnerable countries to climate change. The only way Colombia can address climate change successfully is through close collaboration between the public and private sectors, focused on supporting renewable energy solutions, building sustainable urban infrastructure, and expanding green finance,” says Elizabeth Martínez de Marcano, IFC´s regional director for Colombia, Mexico, Central America and the Caribbean.
To foster access to credit in rural areas, the government could partner with financial institutions to expand the provision of guarantees and insurance. Encouraging longer grace periods adapted to crop cycles could promote technology adoption. A clearer regulation for public private partnerships should increase investment on more resilient infrastructure projects. The promotion of development finance and philanthropic funds to mobilize private capital flows might reduce risks for the private sector and leverage public funds. Finally, the development of carbon credit markets and a common system shared by financial institutions to determine whether an investment is sustainable or not, a classification known as “Green Taxonomy”, could scale up green finance.
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.