HONOURABLE MINISTER OF HOUSING
AND THE ENVIRONMENT
A Review of the Economics of Climate Change in the Caribbean
September 26th 2011
The Inter-Governmental Panel on Climate Change (IPCC) recognizes that Coastal and Small Island Developing States (SIDS) are particularly vulnerable to climate change due to increased temperatures, anticipated sea-level rise, consequent coastal zone erosion and consequent changes to ecosystems. Many Caribbean states are a maximum of a few meters above sea level in coastal areas and have a substantial portion of their population and infrastructure located in those areas and therefore in highly exposed areas.
In the Barbados Plan of Action (BPOA) for the sustainable development of SIDS, addressing the impacts of climate change and sea level rise on small island states is the first of fourteen (14) priority areas underscoring the seriousness of the issue that threatens the very existence of island nations and low lying coastal states of the Caribbean. SIDS have long been recognized by the international community as being in need of resource support and adaptive action given their inherent characteristics that contribute significantly to their vulnerability such as limited land space, limited technological and technical capacity, limited human resources and perhaps most importantly limited financial resources. These characteristics limit the capacity of these countries to adapt to the adverse impacts of climate change. Caribbean states face difficulty in obtaining and accessing cost-effective and appropriate risk sharing and risk transfer mechanisms. There is limited capacity to spread risk geographically and insurance markets are vulnerable to changes in the international markets. In many instances, these countries lack the economic and financial capacity to adapt to the adverse effects of climate change and also the capacity to manage financial risks arising from the direct and indirect impacts of climate change.
The permanent shocks and changes from extreme climatic events are expected to result in a loss of livelihood, degradation of the natural resources and physical damage to infrastructure. Coastal ecosystems would be severely affected by rising sea levels and storm surges. This will have a direct impact on the tourism sector throughout the Caribbean. Loss of some agricultural crops would occur as growing conditions are altered by changing weather patterns, which would also affect the availability of fresh water supplies in the Caribbean islands. Changing weather and climate will also affect the incidence of diseases in the Caribbean including the higher incidence of vector borne or communicable diseases. It has already been estimated by the Inter-American Development Bank that over the last three decades the Caribbean region has suffered direct losses of approximately USD $3.2 billion due to natural disasters associated with extreme weather events.
The impacts on already inherently vulnerable Caribbean states can only be dire. According to some observers, the pledges for global greenhouse gas emission reductions further to the Copenhagen Accord have already set the path for a global temperature increase of between 3-4 degrees Celsius, if more stringent reductions are not committed to and actually made. Given these projections and impacts, the economic costs of adaptation for Caribbean states, if they can be met at all, are likely to exceed the Gross Domestic Products of these countries by many orders of magnitude. The costs of climate change are therefore not optional.
A full consideration of the economics of climate change in the Caribbean therefore always has to be done in the context of risk management if countries are to adequately plan and integrate adaptation options. In addition to the need for the quantification of the economic costs of climate change, there is also a need for the building of capacity in Caribbean countries for risk management associated with climate change impacts, including on risk management techniques, which can be informed by the outputs of the present study being undertaken UNECLAC.
I therefore wish to acknowledge and commend the initiatives undertaken by UNECLAC at this time to continually provide much needed empirical data to inform the region on the economic costs of climate change and inform decision-making and negotiating positions at international fora. It is obvious that an assessment of the economic costs of climate change be determined, not only on a sectoral basis, but within a holistic framework given the inter-relationships between sectors. Planning for, and integrating adaptation into, national planning is a critical component of overall adaptation actions if the climate resilience of sectors and economies are to be built.
Trinidad and Tobago has recently approved its national climate change policy which aims to provide policy guidance for the development of an appropriate administrative and legislative framework, in harmony with other sectoral policies, for the pursuance of a low-carbon development path for Trinidad and Tobago through suitable and relevant strategies and actions to address climate change, including sectoral and cross sectoral adaptation and mitigation measures.
The policy is guided by the following mutually interactive objectives:
These objectives will be achieved through both mitigation and adaptation. One such adaptation strategy is the assessment of sectoral vulnerability to climate change by conducting vulnerability analyses and formulating adaptation options, including technological application, in biophysical and socio-economic systems.
The UNECLAC Report on the Economics of Climate Change 2011 explored several sectors throughout the Caribbean including, water, health, agriculture, energy and tourism all of which are being affected by the impacts of climate change. It is anticipated that this report will be instrumental in the decision making process as it relates to both mitigation and adaptation options in all case study countries and by extension utilised by other SIDS in order to build resilience.
I would like to congratulate UNECLAC and all participating countries and consultants on the preparation and completion of the, “Report on the Economics of Climate Change” and look forward to examining the findings of this report.