A big job for small countries

Climate change
Environmental policy
Environmental Economics

What should Chile do about climate change? More concretely, what can Chile do about climate change? The same could be asked for Paraguay, or Suriname, or The Bahamas.

At first glance the answer seems to be “Not much.” Latin America and the Caribbean accounts for only 3.9 percent of worldwide emissions of carbon dioxide, the main greenhouse gas generated by human activities. (In comparison, the United States accounts for 23.8 percent.) Besides, many of the region’s countries emit only a negligible share of that total. They are among what have been called “environmentally small economies.” If Chile, Uruguay or Honduras somehow stopped generating greenhouse gases, the world’s emissions path and related climate change would remain virtually the same.

But that answer considers only mitigation of climate change—and only in the short term. In the decades ahead environmentally small economics will be just as vulnerable as high-emissions countries to the effects of climate change, and often more so. Those effects might include rising sea levels and storm surges, more frequent droughts and floods, disruption of growing seasons and deterioration of high-revenue tourist attractions such as beaches and coral reefs.

What then, can an environmentally small economy do about climate change, especially with scarce resources? On further consideration, the answer is “Quite a bit, especially if action is taken soon.”

If the region’s small countries can’t undertake mitigation of climate change in the short term, they can still do a great deal in terms of adaptation in order to protect both human welfare and economic production. Infrastructure such as roads, bridges, ports and sanitation can be designed and sometimes retrofitted to face a changing and increasingly volatile climate. Regulations and tax codes can create incentives for the private sector to build and invest in ways that promote resiliency. Protecting productive capacity in turn protects welfare and ensures that resources remain available for further adaptation, and eventually for joining mitigation efforts with assistance from developed countries.

Waiting too long to take action, though, will risk economic growth as countries devote scarce resources to alleviating instead of anticipating the effects of climate change.

Countries face potentially hard choices that will demand vision, political will and the ability to enlist public opinion to support long-term measures. This still looks far better than the alternatives, in which failing to prepare is preparing to fail.

This post is based on IDB Working Paper 417, “Optimal Adaptation and Mitigation to Climate Change in Small Environmental Economies,” by Omar Chisari, Sebastián Galiani and Sebastián Miller at http://www.iadb.org/en/research-and-data/publication-details,3169.html?pub_id=IDB-WP-417.


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