Financing the climate future of Latin America and the Caribbean requires unprecedented investments

The Economic Commission for Latin America and the Caribbean (ECLAC) published the report “Financing needs and climate objectives in Latin America and the Caribbean”, which highlights the significant financial effort that the region will have to make to meet the climate commitments agreed in its Nationally Determined Contributions (NDC). The report estimates that the annual investment required to achieve these objectives ranges between 3.7% and 4.9% of regional GDP, equivalent to an annual flow of between US$215 and US$284 billion until 2030.

The document reveals that current financing for climate action in the region is considerably insufficient. Climate finance flows barely reach 0.5% of regional GDP, which means that they must be multiplied between 8 and 10 times to close the existing gap and meet the established goals. This insufficiency affects both mitigation and adaptation actions to climate change, both of which are essential to guarantee the sustainability of the countries of Latin America and the Caribbean.

The ECLAC report highlights that the sectors with the greatest investment needs include transport, energy and reducing deforestation, which are crucial for mitigating emissions. Transport is the sector with the greatest investment requirement due to the urgency of transforming mobility systems and adopting cleaner technologies, such as electromobility.

Investments in adaptation, estimated at between 1.4% and 1.8% of the region’s annual GDP, are equally critical to address the adverse impacts of climate change. Key areas of investment in adaptation include early warning systems, water and sanitation infrastructure, coastal protection and biodiversity preservation.

The study also indicates that financing requirements vary significantly between countries, depending on their specific characteristics, such as their dependence on fossil fuels, the level of deforestation and the infrastructure gap. In addition, it notes that current estimates do not consider all sectors that require attention, such as agriculture, waste management and health, suggesting that actual financing needs could be even greater.

In summary, the document concludes that mobilizing the necessary resources for climate action in Latin America and the Caribbean is imperative to move towards more resilient, sustainable economies with inclusive economic growth.