CLIMATE CHANGE
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CREATING INNOVATIVE DEVELOPMENT OPPORTUNITIES

Latin America and the Caribbean are particularly vulnerable to climate change impacts. By 2050, rising sea levels, temperatures increases, changes in rainfall patterns will result in an estimated annual cost of around 2-4 percent of the region’s GDP. Climate change is upending business as usual, leading to new policy priorities and the allocation of resources to previously underfunded areas. But changing business as usual is also an opportunity to do things differently, and an opportunity to innovate.

 

CLIMATE FINANCING

We develop economic tools and financing schemes, which serve to pool international resources and estimate investment impacts. We work together with public and private financial institutions as well as with ministries of finance and planning to implement climate governance systems, develop innovative schemes and instruments to promote investment in emissions reductions projects and programs, as well increase resilience to the impacts of climate change.

Public and private financial institutions, such as national development banks and commercial banks, play a fundamental role in channeling finance toward investment in activities that reduce greenhouse gas emissions. The IDB is working with commercial financial institutions and national development banks in the region to reduce their environmental impact and to develop “green” financial products and services.

Funds also strengthen the IDB’s ability to help Latin America and the Caribbean mitigate and adapt to climate change by leveraging resources. Operations with partner funds give the IDB an additional tool to leverage resources from other sources, including national financial institutions, governments, and international funding sources.

These are the funds we currently work with:

LOW CARBON AND RESILIENT POLICY AND REGULATIONS

At 12%, Latin America and the Caribbean are relatively minor contributors to global greenhouse gas (GHG) emissions. However, under current regional development trends emissions are expected to grow. On a per capita basis, Latin America and the Caribbean citizens contribute more to GHG emissions than other developing countries, including China and India. With growing demands for energy, industrialization and urban development, Latin America and the Caribbean countries must prepare to introduce clean energy alternatives to reduce GHG emissions. The region also has vast areas of forest land that are converted each year to agricultural and other uses, making land use change and reduction of emissions resulting from deforestation a top priority for the region. Which is why setting a strong base of effective policy and regulations that not only reduce emissions but also encourage new, climate friendly business models are key to the region’s sustainable development.

INSITUTIONAL CAPACITY INSIGHTS AND TRAINING

In order to be effective, the region’s development agenda must include further climate change variables into key national strategies involving infrastructure projects, basic services, fiscal reforms, social programs, and economic plans. We help countries design and implement disaster risk management plans focused on risk identification, prevention and mitigation, financial and risk management and institutional strengthening for preparedness.

Ministries of Finance and Planning are key players when working on promoting low carbon and resilient development path. These ministries are the ones responsible for establishing development plans, designing the budget, as well as defining whether how public investments are carried out. The success of new policy choices and their implementation rely heavily on budgetary allocations. Mainstreaming climate change into these processes becomes crucial for advancing the region into a more resilient and less carbon intensive path. The IDB is working with Ministries in the region to provide support capacity building for these ministries.

IDB engages in capacity building with the objective of facilitating access to information on low carbon emissions financing pathways. We facilitate the exchange of knowledge and provide technical assistance with the vision of building the capacity necessary for effective use of current and future international mechanisms for climate actions.

ACCESS TO KNOWLEDGE

At the IDB, we are committed to providing the tools for citizens and governments to make informed and effective decisions. We are part of an active and thriving community of climate change and sustainability experts, renewable energy aficionados and policy conscious tree-huggers. As a result, we are constantly researching, lecturing, updating databases, launching new publications, offering courses and even writing blog posts and tweeting.

The Climate Change and Sustainability Division (CCS) is made up of 50+ passionate specialists working to raise awareness about not only the issue of climate change but also, and perhaps more importantly, the adaptation and mitigation possibilities in Latin America and the Caribbean. We push for synergies between sectors and businesses.

Click here to access all of the IDB Group’s publications on climate change and sustainability, or access a list of pre-selected publications.

THE WAY FOWARD

Innovation can come in different forms —from different processes to new materials, from institutional capacity to financing sources— yet regardless of what we innovate the action itself is made with the goal of achieving a different outcome. Whether the outcome is to encourage more people to take action through community engagement or to increase a country's energy security by diversifying the energy matrix with renewable energy sources, innovation serves as a positive force for change. Innovation creates ideas, exciting exchange of lessons among teams, enabling a virtuous cycle of creation and learning that takes us to a better tomorrow. That is the underlying philosophy we adopted, and the work on climate is no exception.

REPORTING ON RESULTS

The Inter-American Development Bank (IDB) is helping its borrowing member countries adapt to climate change impacts and reduce GHG emissions through lending operations, technical cooperation, and knowledge generation. A minimum of 25 percent of total Bank lending supports operations in climate change, environmental sustainability, and sustainable energy. The IDB is working to support countries with their inclusion of climate change considerations in all aspect of planning- from infrastructure works to financing schemes, to policies- in an effort to foster a sustainable and inclusive development model that improves lives.