Latin American governments need to take more action to combat climate change, as the recurrence and severity of natural phenomena will lead to a deterioration in productive capacity.
Moody’s Analytics warned of this on Thursday (4).
In the report ‘Latin America at risk from climate change,’ the analytics firm said that governments, companies, and financial institutions should take preventive measures to reduce carbon emissions to mitigate the damage caused by climate change.
“One of the recommended strategies is the implementation of an emissions tax,” said the document, prepared by Alfredo Coutiño, head of Latin America analysis at Moody’s Analytics.
“Although most Latin American countries have signed the Paris Agreement on climate change and have committed to reducing emissions, some countries still favor the production and use of fossil fuels,” he added.
Complacency and underestimating the impact of climate change could cost the region about 6% of gross domestic product (GDP) by the middle of this century and nearly 20% by the end of the period, according to economic modeling by Moody’s Analytics, the analytical arm of the rating agency.
In 2021, carbon emissions in Latin America accounted for 4.4% of the global total, with Brazil, Mexico, and Argentina the largest emitters, accounting for about 70% of the GDP generated in the region, according to the report.
The Economic Commission for Latin America and the Caribbean (ECLAC) estimates economic growth in the region at 1.2% in 2023.