How sustainable has Colombia’s economic recovery been?

RIO DE JANEIRO, BRAZIL – For more than a year, one of the main challenges on a global scale has been to reduce the spread of the SARS-CoV-2 virus, a type of coronavirus that put the world on the ropes. One of the most effective measures to reduce transmission was strict containment, but one of the sectors hardest hit by that strategy was the economy.

In its report “Bank’s World Economic Outlook”, the World Bank estimates that the global economy shrank by 5.2% during 2020, being the worst recession since World War II.

To recover, several countries developed economic recovery plans. They were supposed to push for a green, fair and resilient recovery as an opportunity to generate higher economic growth, meet global environmental goals and address structural inequality. However, an analysis of spending by major economies, led by the Oxford Economic Recovery Project and the United Nations Environment Programme, noted that only 18% of announced spending is “green.”

And the latest report published by the Green Stimulus Index showed that major economies announced stimulus packages that will inject nearly US$4.6 trillion into sectors with a large impact on carbon emissions and nature – something that runs counter to the conservation of the planet. This index measures economic packages to assess how sustainable they are. There are thirty countries in this study: the G20 countries and ten others, including Colombia.

Helena García, general secretary and researcher at the Private Competitiveness Council, says that “there are countries such as Russia, which is at the bottom of the list, to Denmark, which is the most sustainable. It is an interesting exercise because it measures which sectors they support and under what conditions. For example, some countries help certain traditional emission-intensive sectors, but they can do so with certain conditionality”.

And, although in the case of Colombia, there is a vision of green reactivation and of promoting nature-based solutions through reforestation, conservation, and protection of nature, the country’s score in the green stimulus index is still negative, given that the actions proposed are not enough to compensate for the support to national industries, such as the hydrocarbon and mining sectors (which have a great impact on nature). As a result, the country is in twentieth place out of the thirty countries evaluated in the index.

Ximena Barrera, director of government relations and international affairs for WWF Colombia, explains that, on a national scale, economic reactivation has occurred in two phases. The first, at the beginning of the pandemic, focused on providing an immediate response to prevent and reduce the possible spread of the virus promptly, as well as on developing priority activities necessary to mitigate the humanitarian and socio-economic impact that confinement would have, especially on the population in vulnerable conditions.

The second, with the recent approval of Conpes 4030, establishes the policy and materializes an investment plan for more than US$135 billion. The strategy comprises 33 lines of work and 141 specific actions, which seek to consolidate processes such as energy transformation, the bioeconomy, and the circular economy, with plans such as mitigating the increase in poverty, the economic vulnerability of households, and the deaccumulation of human capital. It also aims to achieve higher and more sustainable growth.

The policy will allocate US$4 million to finance 27 renewable energy projects and establish government credit lines that provide a green stimulus by supporting the public transportation sector. Most of Colombia’s credit lines will support SMEs, the coffee sector, and the tourism industry. The economic recovery plan considers other policy instruments that have guided the country’s environmental agenda, such as Conpes 3934, better known as the Green Growth Policy, and the National Development Plan 2018-2022.

But, “for it to be framed in a green, fair and resilient recovery, one of the opportunities and challenges we have is in aligning it with the implementation of the climate commitments that the country recently assumed through its Nationally Determined Contribution (NDC), the contribution it will make to the fight against climate change.”

In that document, Colombia committed to reducing 51% of its estimated greenhouse gas emissions by 2030 and developing a carbon-neutral by 2050, following the Paris Agreement.

Barrera warns that it is necessary to align public and private financial flows that are low in emissions and climate-resilient to promote the energy transition necessary to strengthen its competitiveness. The energy transition is a determining element for an economic reactivation that effectively transforms the sectors and reduces Colombia’s dependence on fossil fuels (the burning of contributing to global warming).

The Conpes also proposes to put people at the center of the recovery. But to achieve this, the plan needs to provide social benefits and resilience, based on the principle of a just transition for all. “Although it has a strong component on poverty alleviation and economic vulnerability, in implementing it, it is important to strengthen the roles and responsibilities of indigenous peoples, black communities, and local peasant communities,” says Barrera.

Another key point is to maintain and strengthen existing environmental standards and policies and develop fiscal and tax policies that allow for the incorporation of inclusive and sustainable socio-economic considerations into national economic planning to strengthen convergence and alignment between the climate, biodiversity, and economic development agendas.

And although the basis of the document is to promote a sustainable development approach by identifying interactions between the world economy, global society, and the physical environment, Barrera assures that “the issue of resilience is fundamental to consider it not only as of the economic capacity that allows a region or entity to overcome and adapt to the forces of change. We must also consider fundamental aspects for economic recovery, such as ecological and climate resilience”.

This is especially important considering that, according to the Swiss Re Institute (2020), more than half (55%) of the world’s GDP – equivalent to US$41.7 trillion – depends on biodiversity and high-functioning ecosystem services. More than 20% of the world’s countries are at risk of ecosystem collapse due to a decline in biodiversity and related beneficial services.

So Colombia has a great opportunity: to implement a policy that, instead of exacerbating the environmental crises and social inequalities that Latin America is experiencing, ensures a truly green, fair, and resilient economic recovery.

Source: El Espectador