Climate Action in Latin America and the Caribbean

Brazil is in a strong position to give its people a better life while also successfully overcoming the threat of climate change, according to the World Bank Group’s Country Climate and Development Report (CCDR).

Curent impact of climate change

Climate change is already changing temperature and rainfall patterns in Brazil, resulting in reduced water availability and extended droughts, and these problems are expected to worsen with time. This has implications for hydropower, agriculture, and urban water use, and also threatens Brazil’s unique ecosystems, especially the Amazon and Cerrado biomes. Extreme weather events such as droughts, flash floods, and riverine floods in cities are causing losses averaging R$13 billion (US$2.6 billion, or 0.1 percent of 2022 GDP) per year. Disasters also significantly disrupt Brazil’s transport and power infrastructure, affecting economic competitiveness. The urban poor, especially residents of informal settlements, are particularly vulnerable.

Even without considering possible tipping points, climate shocks could push another 800,000 to 3 million Brazilians into extreme poverty as soon as 2030. Although Brazil had sharply reduced the share of people living in extreme poverty in the past three decades, the share of extreme poor has risen since the economic downturn of 2015–2016, and is estimated to have reached 5.8 percent in 2021. Climate-related reductions in agricultural income, extreme weather events, food price changes, impacts on health, and reduced labor productivity due to heat could exacerbate poverty. Depending on the underlying development pathway, the resulting increase in extreme poverty could range from 0.4 to 1.3 percent of the population by 2030.

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Exceptional opportunity

Brazil’s emission profile presents low-cost options for reducing the country’s overall emissions while enhancing its resilience to climate risks and mitigating the risk of reaching a tipping point. Meeting the government’s commitment to stop illegal deforestation by 2028 and reach zero net deforestation by 2050 (as per the 2012 Forest Code) could create significant carbon dioxide (CO2) removals while also preserving vital ecosystem services for the agriculture, energy, and urban sectors. Prioritizing efforts to curb deforestation would also enable Brazil to gradually decarbonize other sectors and avoid reaching the Amazon’s tipping point.

Almost half of Brazil’s energy supply, including over 80 percent of its electricity, already comes from renewables, compared with world averages of between 15 and 27 percent. This gives the country a competitive advantage in supplying products required for decarbonization, including green minerals, green hydrogen, and green manufactured goods. While renewable options are the most cost-effective for domestic energy needs, Brazil’s offshore oil and associated gas reserves will remain competitive in global markets in the coming decades. Relatively low production costs mean that Brazil’s fossil fuel production and associated revenues are expected to increase over the medium term.

Overall, total economic costs of the resilient and net-zero pathway proposed in the Brazil CCDR are about 0.5 percent of GDP, without accounting for the domestic and global benefits from avoided climate change impacts and the economic and non-economic benefits from preserving the unique biodiversity and ecosystem services offered by native forests.

Key facts

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