RIO DE JANEIRO, BRAZIL – Despite the fact that various international organizations suggest that fiscal policy to restore the environment is among the most effective tools for post-pandemic economic recovery, the expansionary plans being prepared by Latin American countries barely include investments in the green economy.
The creation of millions of new jobs and the drive for egalitarian and inclusive growth are the arguments put on the table to correct the crisis’s adverse effects by promoting an economic transition towards net-zero emissions activities. Still, this response has not yet taken shape.
“There is still not enough investment in green sectors in our region,” said Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC).
“There are few sectors in which we are investing and few companies. And the governments in this pandemic have taken budget away from the environmental issue, which for us is very worrying,” she continued.
The representative of ECLAC indicated that if the budgets are analyzed, green investment does not reach 0.5% of the countries’ gross domestic product (GDP).
ONLY SOME RICH COUNTRIES INVEST IN GREEN, BUT VERY LITTLE
The United Nations Environment Programme (UNEP) revealed in a recent report that to date, the Covid-19 related fiscal recovery and rescue efforts of 50 leading economies amount to US$14.6 trillion, of which “only” US$341 billion corresponds to “green” spending, representing 18% of the total.
According to this study, in the three Latin American countries present at the G20, Argentina, Brazil, and Mexico, spending on green recovery as a percentage of 2019 GDP is non-existent. From the region, only the investment in electric public transport made by Chile stands out.
The report concludes that it is not building better despite the opportunity to leverage post-pandemic recovery spending on policies that combat climate change, achieving economic growth, and addressing inequalities.
“We don’t think there can be a post-covid-19 recovery that is not fair and inclusive. Governments have to think about this when they project their recovery plans,” Beatriz Martins, a specialist with UNEP’s Resource Efficiency Unit in Latin America and the Caribbean, told Efe.
JOB CREATION, ONE OF THE MAJOR INCENTIVES
One of the greatest attractions for overcoming the crisis of covid-19 by advancing in the green economy was shared by the Inter-American Development Bank (IDB) and the International Labor Organization (ILO) in a joint report in which they illustrated that the region of Latin America and the Caribbean could create 15 million net jobs in green sectors by 2030.
This study estimates that in the transition to a zero net emissions economy, 7.5 million jobs will be destroyed in fossil fuel electricity, fossil fuel extraction, and animal food production.
In parallel, new employment opportunities will emerge that will offset this loss by creating 22.5 million jobs in agriculture, plant-based food production, renewable energy, forestry, construction, and manufacturing.
“REPRIMARIZATION” OF THE LATIN AMERICAN ECONOMY
However, far from moving towards these sectors, what is happening is a “reprimarization” of the Latin American economy due to the increase in the price of commodities exported by the region, said Bárcena.
“Commodity prices will rise, and we will once again turn to extractive industries, and this will once again have a strong impact on the environment,” said the ECLAC representative.
The way to avoid this is to “convince private and public actors that there are renewable alternatives” in which to invest and offer them the appropriate framework for them to do so, she continued.
“The foreign direct investment that comes to Latin America already arrives with this quality and goes to these sectors, but there must be regulatory clarity on the part of governments to encourage and ensure these investments,” concluded Bárcena.