Desafio do Clima e Desenvolvimento na America Latina e Caribe - Opcoes para Desenvolvimento Resiliente e de Baixo Carbono

The Climate and Development Challenge for Latin America and the Caribbean Options for climateresilient lowcarbon development Walter Vergara Ana R Rios Luis M Galindo Pablo Gutman Paul Isbell Paul H Suding and Joseluis Samaniego Preface by R Pachauri The Climate and Development Challenge for Latin America and the Caribbean Options for climateresilient lowcarbon development Walter Vergara Ana R Rios Luis M Galindo Pablo Gutman Paul Isbell Paul H Suding and Joseluis Samaniego Preface by R Pachauri The views and opinions expressed in this publication are those of the authors and do not necessarily reflect views of the InterAmerican Development Bank its Board of Directors the contries they represent or of the proyects partner institutions The unauthorized commercial use of Bank documents is prohibited and may be punishable under the Banks policies and or applicable laws CataloginginPublication data provided by the InterAmerican Development Bank Felipe Herrera Library The climate and development challenge for Latin America and the Caribbean Options for climateresilient lowcarbon development Walter Vergara et al p cm ISBN 9781597821650 Includes bibliographical references 1 Climatic changesCaribbean Area 2 Climatic changes Latin America 3 Greenhouse gas mitigationCaribbean Area 4 Greenhouse gas mitigationLatin America I Vergara Walter 1950 II Rios Ana R III Galindo Luis M IV Gutman Pablo V Isbell Paul VI Suding Paul H VII Samaniego Joseluis VIII InterAmerican Development Bank IX World Wide Fund for Nature X United Nations Economic Commission for Latin America and the Caribbean QC9032L29 C556 2013 Copyright 2013 InterAmerican Development Bank All rights reserved may be freely reproduced for any noncomercial purpose For more information on IDB publications please visit IDB Bookstore 1350 New York Ave NW Washington DC 20005 USA Tel 202 3124186 porticosalesfceusacom 3 The Climate and Development Challenge for Latin America and the Caribbean Acknowledgements 7 Acronyms and Abbreviations 9 Preface11 Executive Summary 13 Introduction 17 Chapter 1 Climate Impacts and Adaptation Responses 19 Climate impacts 19 Impacts on agriculture caused by warming reduction of soil moisture and changes in rainfall patterns 20 Impacts on coastal and marine zones caused by increased sea levels and increased sea surface temperature 21 Impacts derived from changes in the frequency and intensity of extreme weather events in coastal zones 24 Additional exposure to tropical vector diseases and other health impacts caused by increases in ambient temperatures and other changing climate conditions 25 Changes in hydrology 25 Potential rainforest dieback 26 Adverse effects on biodiversity and ecosystem stability 27 Estimate of the damage from physical impacts 31 Adaptation response 35 Recent investments in adaptation in the region 35 Ecosystembased adaptation 35 Overall adaptation costs 38 A fourdegree anomaly 40 Chapter 2 The Regions Carbon Footprint and Pathways to Change by 2050 41 Current emissions profile41 Agriculture and landuse emissions 42 Power generation and transport 42 Emissions intensity 42 Contents 4 The Climate and Development Challenge for Latin America and the Caribbean Energy profile and final demand 43 Recent trends 43 Per capita emissions 44 Country emissions 44 Projected emissions The businessasusual scenario 45 The BAU trajectory 45 Pathways to reach stabilization goals by 2050 47 Wedge analysis 48 Emissions reduction pathways 49 Financial costs of the intervention pathways 55 The financial costs of the landuse or AFOLU pathways 55 The financial costs of the energy moderate and combined aggressive pathways 58 Net additional financial costs of the major interventions required under the aggressive mixI plus pathway 62 The systemwide nature of projections for financial additionality and policy implications 69 Chapter 3 Development Cobenefits from Adaptation and Mitigation 70 Development cobenefits from adaptation 70 Development cobenefits from mitigation 72 References 74 Annexes Annex 1 IPCC Emissions Scenarios82 Annex 2 IIASA GEA Scenarios 85 Distinguishing characteristics features assumptions common benefits and cobenefits of the GEA pathways 87 Annex 3 Basis for Projections for Net Financial Additionality and Activity Costs of Mitigation Efforts 89 Activity costs for landuse or AFOLU pathways90 ZNDD 2020ZNLU 2030 plus pathway 93 Agricultural emissions and the AFOLU pathway 93 The illustrative GEA pathways and our moderate interventionenergy pathways 94 The aggressive or combined pathways 94 Investmentsector intervention components of the aggressive mixI plus pathway 95 Annex 4 Greenhouse Gas Emissions by Sector in 2005 CO2 CH4 N2O PFCs HFCs SF6 excludes landuse change 99 5 The Climate and Development Challenge for Latin America and the Caribbean List of figures Figure 11 Projected Impact of Climate Change on Key Crop Yield Losses in by 2020 and 2050 under the A1B scenario 21 Figure 12 Projection of SeaLevel Rise between 1990 and 2100 based on IPCC Temperature Projections for Three Emissions Scenarios 22 Figure 13 Distribution of Land Surface between Sea Level and 10 Meters above Sea Level in LAC Countries in thousands of hectares 23 Figure 14 Holdridge Life Zone Map of Latin America The Present Climate and a Future in which CO2 Has Doubled 29 Figure 21 Sector Composition of Total Greenhouse Gas Emissions in LAC 2005 43 Figure 22 Country Contributions to Total LAC Emissions 2005 44 Figure 23 Regional BAU Emissions Trajectory by Sector 201050 47 Figure 24 The BusinessasUsual Trajectory vs Emissions Wedges Without Net Carbon Sinks 2020 and 2050 49 Figure 25 Alternative Emissions Pathways 20105051 Figure 26 AggressiveI Pathway 201050 53 Figure A11 Schematic Illustration of SRES Scenarios 83 List of tables Table I1 Likelihood That Selected CO2e Levels Will Result in at least a Particular Temperature Increase 18 Table 11 Climate Change and Economic Impacts on Biodiversity in Latin America 30 Table 12 Estimates of Annual Damages from Some Key Physical Impacts by 2050 33 Table 13 Some Bioclimate Hotspots in Latin America 34 Table 14 Examples of Potential Responses to the Regional Consequences of Climate Change 36 Table 15 Examples of Recent Adaptation Investments 38 Table 16 Adaptation Cost Estimates for Latin America and the Caribbean 39 Table 21 Sector Breakdown of Expected BAU Future Emissions Changes and Key Driving Forces 201050 Gt percent46 Table 22 Summary of Alternative Emissions Pathways to Reach 2050 Goals 52 Table 23 Summary of Emissions Scenarios 19902050 55 Table 24 Selected Estimates of the Opportunity Cost of Halting Deforestation 57 Table 25 Emissions Pathways Cost from 2010 to 2050 60 Table 26 AFOLU Pathway Components Required Financial Additionality 2050 63 Table 27 Moderate Energy MixI Pathway Components Required Financial Additionality 2050 64 Table 28 Priority Mitigation Interventions Required Financial Additionality 2050 66 Table 29 Aggressive MixI plus and Aggressive MixI AFOLU plus Pathway Components 68 Table 31 Adaptation Cobenefits by Sector 71 Table 32 Mitigation Cobenefits 73 Table 33 Additional Benefits of Pursuing Various Objectives Simultaneously at the Global Level 73 Table A11 Projected Global Avarage Surface Warning and Sealevel Rise at the End of the 21st Century Different SRES Scenarios 84 Kanesh Haldar FNS Senior Geologist 7 The Climate and Development Challenge for Latin America and the Caribbean Acknowledgements This report was prepared by a task force of the InterAmerican Development Bank IDB the World Wide Fund for Nature WWF and the United Nations Economic Commission for Latin America ECLAC Leading the task force were Walter Vergara IDB Pablo Gutman WWF and Luis Miguel Galindo ECLAC The team wishes to acknowledge reviews and comments received from Rajendra K Pachauri Michael MacCracken Andrew Steer Dan Kammen Christian Casil las Tomas Serebrisky Alexandre Rosa and Juan Pablo Bonilla Special thanks are due to Mariana Panuncio Alfred Grunwaldt Alejandro Deeb Eduardo Alatorre Patrick Doyle Jennifer Doherty Bigara Angelo Angel Luisa Fernanda Rodríguez Carlos Ludeña Sebastian Miller Jimmy Ferrer Orlando Reyes and Carlos de Miguel The authors are also most indebted to Keywan Riahi Oscar Van Vliet and the team at the International Institute for Applied Systems Analysis IIASA for their support of the scenario work The information and opinions presented are entirely those of the authors they neither ex press nor imply endorsement by the ECLAC WWF IDB the IDB Board of Executive Directors or the member countries of the IDB or the United Nations Organization Photos Jennifer DohertyBigara Text not visible clearly enough to extract 9 The Climate and Development Challenge for Latin America and the Caribbean AF Adaptation Fund AFOLU Agriculture forestry and other land use AR4 Fourth Assessment Report BAU Businessasusual BRT Bus rapid transit CAIT Climate Analysis Indicators Tool CC Climate change CCCCC Caribbean Community Climate Change Centre CCS Carbon capture and storage CDIAC Carbon Dioxide Information Analysis Center CDM Clean Development Mechanism CIF Climate Investment Fund CO2 Carbon dioxide CO2e Carbon dioxide equivalent CONAGUA Comisión Nacional del Agua National Water Commission Mexico CSIRO Commonwealth Scientific and Industrial Research Organization DALYs Disability adjusted life years DIVA Dynamic Interactive Vulnerability Assessment EAF Ecosystem Approach to Fisheries EBA Ecosystembased Adaptation ECLAC Economic Commission for Latin America and the Caribbean EPPA Emissions Prediction and Policy Analysis GDP Gross domestic product GEA Global Energy Assessment GEF Global Environment Facility GHG Greenhouse gas Acronyms and Abbreviations 10 The Climate and Development Challenge for Latin America and the Caribbean GtCO2e Gigatons of carbon dioxide equivalent HLZ Holdridge Life Zone IDEAM Instituto de Hidrología Meteorología y Estudios Ambientales Institute of Hydrology Meteorology and Environmental Studies Colombia IEA International Energy Agency IIASA International Institute for Applied Systems Analysis INAP Integrated National Adaptation Program INRENA Instituto Nacional de Recursos Naturales National Institute of Natural Resources Peru IPCC Intergovernmental Panel on Climate Change LAC Latin America and the Caribbean LED Lightemitting diode LULUCF Land use landuse change and forestry NAMA Nationally Appropriate Mitigation Action NOAA National Oceanic and Atmospheric Administration PPCR Pilot Program for Climate Resilience ppm Parts per million PPP Purchasing power parity REDD Reducing Emissions from Deforestation and Forest Degradation REDD Reducing Emissions from Deforestation and Degradation in Developing Countries SPA Strategic Priority on Adaptation SRES Special Report on Emissions Scenarios tCO2e Tons of carbon dioxide equivalent tpc Tons per capita UNFCCC United Nations Framework Convention on Climate Change WWF World Wide Fund For Nature ZNDD Zero net deforestation and forest degradation ZNDD 2020 Zero net deforestation and forest degradation by 2020 ZNLU Zero net emissions from land use landuse change and forestry ZNLU 2030 Zero net emissions from land use landuse change and forestry by 2030 ZNLU 2030 Zero net emissions from land use landuse change and forestry by 2030 with continued augmentation of sinks producing net negative annual emissions of 350 tCO2e each decade thereafter The word tons signifies metric tons All dollar amounts are US dollars unless otherwise noted 11 The Climate and Development Challenge for Latin America and the Caribbean Preface This report is being issued in the context of the United Nations Conference on Sustainable Devel opment held in Rio de Janeiro from June 20 to June 22 2012 It deals with a matter that is bound to affect the likelihood of achieving sustainable progress in Latin America and the Caribbean Indeed climate change is already affecting the foundations on which Latin American societies rely for sustenance and welfare The report appropriately reminds us of the physical impact of climate change in the re gion which are almost certain to escalate over time The Fourth Assessment Report AR4 of the United Nations Intergovernmental Panel on Climate Change IPCC observed in 2007 that even if the concentration of all greenhouse gases and aerosols had been kept constant at the levels of year 2000 further warming of about 01C would be expected because of inertia in the global sys tem At the same time for the entire range of emissions scenarios used by the IPCC a warming of about 02C per decade has been projected Therefore climate change will continue to affect agriculture biodiversity and water availability Many areas of tropical Latin America will con tinue to face a risk of significant loss of biodiversity through species extinction productivity of some important crops is projected to decrease and livestock productivity to decline with adverse consequences for food security Even if as is expected soybean yields rise in temperate zones the number of people at risk of hunger is projected to rise Changes in precipitation patterns and the disappearance of glaciers are projected to significantly affect the availability of water for human consumption agriculture and energy generation The AR4 also highlighted the fact that anthro pogenic warming could lead to some impacts that are abrupt or irreversible depending on the rate and magnitude of climate change All of these impacts have economic consequences This report includes a necessarily partial estimate of those consequences while also recognizing that no economic estimate can fully cap ture the effects of climate change The case for adaptation if deployed early is forcefully presented The report also recognizes that adaptation can go only so far if impacts are allowed to accumulate In the end adaptation at best buys time while we put in place lasting mitigation efforts which will have to be drastic and embrace global stabilization goals The AR4 noted that adaptation and mitigation pursued together can significantly reduce the risks of climate change but that neither adaptation nor mitigation alone can avoid all climatechange impacts Although the carbon footprint of Latin America and the Caribbean is modest and appears to be decreasing efforts to further reduce that footprint are required if global climate stabilization goals are to be achieved A substantial contribution of this report is the outlining of specific paths expressed as sets of actions toward the achievement of a footprint of two tons per capita per annum in the region 12 The Climate and Development Challenge for Latin America and the Caribbean The carbon budget of Latin America is heavily weighted toward contributions from changes in land use energy and transport For that reason a focus on reductions in these sectors is therefore most appropriate The actions identified and presented here are technologically viable They would result in significant cobenefits for food and energy security health welfare and technology development The budget associated with the actions is substantial but the analysis presented here shows that the cost of inaction would be much greater Rajendra Pachauri Chair United Nations Intergovernmental Panel on Climate Change DirectorGeneral The Energy and Resources Institute Director Yale Climate and Energy Institute and Professor in the Practice of Sustainable Development 13 The Climate and Development Challenge for Latin America and the Caribbean Executive Summary Changes in climate during this century will have broad and deep impacts on human activities and ecosystems The consequences of those changes are likely to be so great that the simultane ous need to adapt to new climate conditions and to reduce carbon emissions to prevent even further damage is almost certain to become one of the global communitys defining challenges over the coming decades Unless drastic and immediate action is taken it is likely that a 2C rise in temperatures will occur in this century Unless drastic and immediate action is taken a rise of 2Cand perhaps even moreover the preindustrial level is now seen as all but inevitable Because of the lagged effect of greenhouse gases already emitted and accumulating in the atmosphere such a temperature rise is now con sidered to be structurally built into our future to result in significant negative impacts on eco nomic activities social conditions and natural assets by 2050 The associated physical and natural damage to Latin America and the Caribbean are expected to be substantial The region of Latin America and the Caribbean LAC is particularly vulnerable to the observed and projected effects of climate change because of its geographic location distribution of popu lation and infrastructure and reliance on fragile natural resources for economic activities and livelihoods Key impacts on the region forecasted to occur by midcentury due to current emis sions trends include the collapse of a significant portion of the coral biome in the Caribbean the disappearance of most glaciers under 5000 meters in the tropical Andes the likelihood of some degree of savannization in the Amazon basin reductions in the agricultural yields of many staple crops increased flooding and inundation of coastal zones increased exposure to tropical diseases the destabilization of the hydrological cycle in major basins and the intensification of extreme weather events More worrisome is the fact that many of these changes are considered to be not only inevitable but also irreversible Climate change will therefore continue to adversely affect the region over the long term The economic impacts of such physical damage will be significant Based on recent analysis and new estimates the projected yearly economic damages in LAC caused by some of the major physical impacts associated with this likely rise of 2C over prein dustrial levels are estimated to gradually increase and reach approximately 100 billion annually 14 The Climate and Development Challenge for Latin America and the Caribbean by 2050or approximately 22 percent of 2010 gross domestic product GDP 46 trillion1 This estimate is conservative and is limited to key impacts on certain geographic locations It is not inclusive of the damage to biodiversity the change in the stock of natural resources or other nonmonetary values such as certain ecosystem services that are intrinsically difficult to value and cultural and social damages Losses of this magnitude will undermine the regions prospects for improvements in quality of life by significantly limiting development options and severely restricting access to natural resources and ecosystem services The damage is already taking place and will intensify as tem peratures increase Economic resources already inadequate to meet competing demands will be further strained The resulting cumulative impact promise to far exceed the indicated 22 percent of 2010 GDP and to also negatively affect equity and poverty levels Rapid and decisive adaptation action could reduce many of the expected economic damagesalthough not all of the losses in natural capitalat only a fraction of the longterm cost of no action The overall investment required to adapt to the unavoidable physical impactsirrespective of even drastic reductions in emissionshas been estimated at 17 billion to 27 billion or ap proximately onefourth to onesixth of the costs of those physical impacts The implication is that adaptation action is clearly costeffective Much of the adverse economic impact otherwise expected can be avoided or compensated for by dedicating sufficient financial resources to adap tation activities The impact of adaptation measures is ultimately limited however Even if they are undertak en some irreversible damages would remain as these measures can only ameliorate the socioeco nomic impacts of climate change Adaptation measures do not generally result in the restoration of lost natural and cultural capital which will likely affect future generations Global mitigation actions are essential to prevent greater damage to the region To contain economic damages and to avoid crossing yet more irreversible and changeaccelerat ing tipping points that would be provoked by temperature increases above and beyond a likely 2C rise global greenhouse gas GHG or CO2 equivalent CO2e concentrations must ultimately stabilize at approximately 450 parts per million ppm For this level to be successfully achieved and credibly maintained no more than 20 gigatons Gt of CO2e annually can be released globally by 2050or about 2 tons per capita tpc of CO2e per year Further no more than 10 GtCO2e can be emitted annually in global terms by the end of the century less than 1 tpc per year There is evidence of some decoupling of economic growth from carbon emissions in Latin America and the Caribbean The total carbon footprint of the LAC region has decreased by about 11 percent since the start of the century to nearly 47 Gt CO2e while its GDP has grown at an annual rate of about 3 percent The decline in emissions is attributed to a decreased rate of deforestation and improvements in energy efficiency While this is far too short a trend from which to draw longterm conclusions the recent pattern in the region seems to imply that it is possible to decouple growth in the value of economic activity from GHG emissions and that there are immediate opportunities to do so 1 All gross domestic product GDP values including future projections are measured in 2005 dollars 15 The Climate and Development Challenge for Latin America and the Caribbean LACs businessasusual BAU trajectory would bring the region to a level of annual emissions nearly five times the level the 2 tpc required as part of global climate stabilization goals 93 tpc Although the LAC regions emissions footprint accounts for only 11 percent of the worlds total climate stabilization goals require all regions including LAC to emit about 2 tpc of CO2e per year by 2050 While landuse emissions are projected to fall significantly and the overall share of agriculture is projected to remain roughly constant the emissions shares of transportation and power generation are anticipated to grow by 50 percentto reach a combined contribution of approximately 2 GtCO2e per year Indeed under the BAU trajectory the LAC region would emit nearly 7 GtCO2e or 93 tpc a year by 2050 Significant mitigation efforts affecting both land use and energy are essential to achieve intermediate stabilization goals of 2 tpc by 2050 Bending the emissions curve sufficiently to achieve the 2 tpc goal is not easy An effort of this magnitude implies significant changes in the structure of the regions economies and patterns of natural resource use Only a pathway that promotes energy emissions mitigation efforts suf ficient to minimize the carbon footprint in the power and transport sectors by 2050 combined with agriculture forestry and other land use AFOLU policies stringent enough to achieve i zero net emissions from deforestation and land use by 2030 and ii 50 percent fewer agricultural emissions than projected in the BAU by 2030 could achieve the 2 tpc target Meeting global climate stabilization goals of 2 tpc by 2050 would cost Latin America and the Caribbean approximately 100 billion per year with an average abatement cost of less than 20 per tCO2e The net additional annual financial costs implied by such actionsabove and beyond the ex pected investment and expenditures required under the current BAU scenarioare estimated to reach approximately 100 billion by 2050 This represents approximately 22 percent of LACs 2010 GDP 05 percent of projected 2050 GDP Such a financial requirement while significant needs to be seen in the context of a global effort to prevent further catastrophic damage caused by exceeding the 2C guardrail Adaptation and mitigation generate significant development cobenefits but these benefits are not yet sufficiently perceived or understood to guarantee the removal of barriers to action against climate change Adaptation and mitigation efforts are essential to sustainable development the generation of co benefits in terms of improved human health and wellbeing enhanced food and energy security more efficient use of natural resources and accelerated technological development At a societal level the value of cobenefits may offset a significant share of the net additional costs Such co benefits are usually local and tend to complement national pollution abatement programs with considerable healthrelated benefits Although these cobenefits provide financial inducements additional resources are required for rapid and decisive actions to confront the climate change challenge in LAC Text not visible clearly enough to extract 17 The Climate and Development Challenge for Latin America and the Caribbean Introduction During this century climate change will have broad impacts on human activities and ecosystems IPCC 2007a The projected consequences are of such a magnitude that the simultaneous need to adapt to the new climate conditions and reduce the carbon footprint to prevent further damage will likely become one of the main driving forces for the global community This document attempts to address several questions related to the threat of climate chal lenge in Latin America and the Caribbean LAC First which key physical impacts and conse quences will most affect the region what will these effects cost regional economies and what adaptation measures may minimize these adverse impacts Second how and at what cost will the region be able to reduce its contribution to the global carbon footprint at a level consistent with climate stabilization goals The global average concentration of carbon dioxide CO2 in the atmosphere has increased considerably rising from a base of approximately 280 parts per million ppm in the late 18th century to 392 ppm of CO2 in 2011 NOAA 2012 This trend is just below the most pessimistic scenario A1FI visualized by the Intergovernmental Panel on Climate Change IPCC in 2000 and might trigger climate feedback effects that are not yet completely understood Ackerman and Stanton 2011 Scientific analyses indicate that a CO2 atmospheric concentration of 450 ppm is consistent with a 2C increase in global temperature relative to preindustrial levels table I1 The 2C threshold is important because an anomaly of this magnitude has been linked to the strong likelihood of dangerous UNFCCC Objective 2 changes in the climate Schellnhuber 2009 IPCC 2007a This threat is the basis behind efforts to stabilize climate conditions includ ing the Copenhagen Accord which was later ratified at the Cancun and Durban summits Despite a degree of uncertainty regarding the future businessasusual emissions trajectory and climate sensitivity there is a growing consensus that emissions need to be reduced to a level consistent with this guardrail to avoid further climate destabilization 18 The Climate and Development Challenge for Latin America and the Caribbean Table I1 Likelihood that Selected CO2e Levels will Result in at Least a Particular Temperature Increase in Stabilization levels in ppm of CO2e 2C 3C 4C 5C 6C 7C 450 78 18 3 1 0 0 500 96 44 11 3 1 0 550 99 69 24 7 2 1 650 100 94 58 24 9 4 750 100 99 82 47 22 9 Source Stern 2009 Stabilizing the temperature rise to no more than 2C above preindustrial levels would require considerable global efforts to reduce emissions and likely require major changes in behavior and resource use Global emissions of greenhouse gases GHGs were on the order of 47 gigatons of CO2 equivalent GtCO2e in 2010 EDGAR database or nearly 7 tons per capita tpc Keeping this rise from exceeding 2C degrees above preindustrial levels would require that annual global emissions go no higher than 20 GtCO2e by 2050 IPCC 2007a which is equivalent on a global basis to 2 tpc2 A stable climate meanwhile would require further reductions in global emissions Adaptation measures play a critical role in any emissions abatement Under present con ditions the global temperature will continue rising even under the most optimistic low GHG emissions scenario Even if GHG emissions are effectively reduced climate change is still likely to impact LAC in large part because of the regions substantial but intrinsically fragile natural capital which includes climatesensitive ecosystems and vulnerable infrastructure Adaptation responses to the impacts of a 2C temperature rise are therefore necessary The costs of such re sponses are small when compared to the risk of no action Costeffective mitigation activities are also needed to avoid the dire projections of tempera ture rise above 2C To minimize the risk of crossing environmental thresholds the global emis sions goal of 2 tpc of CO2e per year by 2050 has been adopted This is i a very challenging goal and ii insufficient in itself Further efforts are required to reach a 1tpc needed for climate stabilization by centurys end Chapter 1 provides an overview of the key physical impacts and associated costs of climate change and identifies adaptation responses Credible pathways to reaching the 2050 goal in LAC and their associated costs are the central subjects of chapter 2 Chapter 3 reviews the cobenefits expected from adaptation and mitigation efforts 2 Stabilization of GHG concentrations in the atmosphere sufficient to maintain a 2C anomaly would require a target of 1 tpc of CO2e per year to be reached by the end of the century 19 The Climate and Development Challenge for Latin America and the Caribbean Climate Impacts and Adaptation Responses Chapter 1 Climate impacts Some now consider a midcentury temperature increase of 2C over preindustrial levels to be virtually unavoidable Hansen Sato and Ruedy 2012 unless drastic and immediate actions are undertaken Climate change of this magnitude will significantly disrupt livelihoods social con ditions and ecosystems IPCC 2007b While the pace of change is somewhat uncertain the impacts are likely to increase over time In addition some adverse climate feedback effects or tipping points are expected that are not yet completely understood IPCC 2007a Ackerman and Stanton 2011 Some of the key physical consequences projected for the region include Loss of soil moisture temperature and changes in rainfall patterns affecting yields and agro ecological zones Higher sea levels and surface temperatures affecting coastal and marine zones Increased frequency and intensity of extreme weather events in coastal zones Additional exposure to tropical disease vectors owing to higher temperatures and changing climates Increased retreat of glaciers in the Andes owing to warming Impacts on hydrological basins from changes in rainfall patterns Potential rainforest dieback Loss of biodiversity and ecosystem integrity Without adaptation measures these physical impacts will have significant economic and social consequences that will likely hinder sustainable development and could delay and increase the costs of achieving higher standards of living for the region Climate change is also likely to occur alongside existing environmental stresses for example mangrove removal and chemical discharge in coastal areas may further weaken coral already affected by ocean warming and acidification As a result adaptation strategies must enhance 20 The Climate and Development Challenge for Latin America and the Caribbean the capacity of human settlements and ecosystems to respond to a combination of climate and nonclimate related stresses In a few instances other factors whether caused by human activity or natural cycles may even lessen the adverse effects of climate change In any case a compre hensive adaptation strategy should anticipate the likely effectsboth adverse and occasionally beneficialof climate change nonclimate driven human actions and changes in natural cycles Even with adaptation measures however the consequences of these changes may limit ac cess to and the availability of natural resources in the future restricting development options Impacts on agriculture caused by warming reduction of soil moisture and changes in rainfall patterns Agriculture plays a key role in the regions economy accounting for approximately 6 percent of regional gross domestic product GDP and 15 percent of employment in 2010 In 2008 food exports represented 16 percent of merchandise exports whereas food imports accounted for 8 percent of imports CEPALSTAT 20123 Agriculture also represents a key factor in food security in Latin American and the Caribbean LAC Overall the impacts of climate change on agriculture must be seen in the contexts of increas ing demand for food and agricultural products Dawson and Spannagle 2009 and exports to the global market Specifically impacts on agriculture are expected to reduce food supply and increase food prices with potentially negative impacts on income food security poverty and nutrition Ahmed et al 2009 Nelson et al 2009 As temperature moisture and rainfall patterns change so will crop yields and the distribu tion of agricultural production Dawson and Spannagle 2009 Shifts in climate variability the intensityfrequency of floods rainfall drought and storms are expected to reduce yields More difficult to assess is the longterm increase in the temperature of the top layer of soil which may eventually surpass the genetic ability of many crops to adjust to different environmental conditions In the short run yields of certain crops may increase or decrease in different areas according to projected rainfall temperature and weather variations4 Over the longer term LACs agricultural output is expected to fall because of combined changes in rainfall patterns and soil conditions ECLAC 2010 Tubiello et al 2008 Mendelsohn and Dinar 2009 A recent study concludes that the negative impacts of climate change on key crops could be significant for LAC and are expected to play a major role in the global food supply chain Fer nandes et al 2012 The analysis also suggests significant impacts over much shorter time frames than those previously reported figure 11 Simulated responses to the use of simple adapta tion alternatives improved varieties change of sowing dates and modest irrigation suggest that these strategies are not sufficient to overcome the projected impacts of climate change but could dampen the yield shocks to a degree The report also estimates that these impacts will reduce the value of annual agricultural exports in the region by 32 billion54 billion by 2050 Impacts of this magnitude particularly in the context of a tight global food supplydemand balance may also trigger other consequences including food market speculation and threats to food security 3 httpwebsieeclacclsisgenConsultaIntegradaasp 4 For instance yields might increase because of a CO2 fertilization effect or more benign weather conditions Nelson et al 2010 Magrin et al 2007 Seo and Mendelsohn 2008a 2008b 2008c Mendelsohn and Dinar 2009 21 The Climate and Development Challenge for Latin America and the Caribbean Figure 11 Projected Impact of Climate Change on Key Crop Yield Losses in by 2020 and 2050 under the A1B scenario Coarse grains Rice XSM COL PER BRA ECU PER CAC CAC ARG MEX COL ECU URY XSM CHL URY MEX ARG BRA CHL 0 20 10 15 20 10 30 5 40 0 2050 2020 Oil seeds Wheat URY PER ARG BRA CHL MEX ECU ECU COL ARG PER URY XSM CHL MEX CAC CAC XSM BRA COL 0 20 40 10 20 10 0 20 20 30 40 40 60 Source Fernandes et al 2012 Note For information on the A1B scenario of the IPCC see annex 1 of this report ARG Argentina BRA Brasil CAC Central America Carribean CHL Chile COL Colombia ECU Ecuador MEX Mexico PER Peru URY Uruguay XSM Rest of South America Impacts on coastal and marine zones caused by increased sea levels and increased sea surface temperature Sea warming and the melting or displacement of landbased ice shields will cause sea levels to rise Globally the sea level rose by an average annual rate of 18 millimeters mm between 1961 and 2003 and by an average annual rate of 31 mm between 1993 and 2003 IPCC 2007a Ander son et al 2009 This rate is expected to increase as warming continues to affect the oceans and ice fields Recent studies suggest that a sealevel rise of 12 meters m is possible during the 21st century figure 12 This suggests the urgent need for more significant contingency planning and adaptation efforts along coastlines 22 The Climate and Development Challenge for Latin America and the Caribbean Figure 12 Projection of SeaLevel Rise between 1990 and 2100 based on IPCC Temperature Projections for Three Emissions Scenarios 200 120 40 160 80 Sea level change cm 0 180 100 20 140 60 20 1950 2000 Year 2050 2100 AR4 B1 A2 A1F1 A1F1 A2 B1 Source Vermeer and Rahmstorf 2009 Note Estimated sealevel rise between 1990 and 2100 is based on IPCC temperature projections for three different emissions scenarios labeled on right see Projections of Future Sea Level for explanation of uncertainty ranges For comparison the sea level range projected in the IPCC AR4 IPCC 2007a 2007b for these scenarios is shown in the bars on the bottom right Also shown are the observationsbased annual global sea level data Church and White 2006 red including artificial reservoir correc tions Chao et al 2008 Recent studies have concluded that Latin America is vulnerable to sealevel rise because of its extended coast its geomorphology the prevalence of coastal settlements and the value of its coastal economic activities Nicholls and Tol 2006 Sugiyama 2007 A study conducted by ECLAC 2011 indicates that Mexico and Brazil have the greatest areas of coastal land within 10 m of sea level figure 13 at least 40 percent of the populations living in the coastal areas of Chile and Uruguay would be affected by a 1 m rise in sea level Sealevel rise and an increased frequency and severity of storm events will likely lead to greater coastal flooding and erosion which may cause substantial property and infrastructure damage ecosystem losses and partial land loss Suarez et al 2005 Jacob et al 2007 Williams et al 2009 The impacts of sealevel rise will very likely harm the transport sector human settle ments Jacob et al 2007 ports and other coastal assets Considering capital and net wetland losses the accumulated costs associated with a 1 m rise in sea level are estimated at approxi mately 255 billion in Latin America a magnitude of loss second only to that projected for North America Sugiyama 20075 An analysis by Dasgupta et al 2007 places the annual cost of a 1 m rise in sea level in the region at approximately 19 billion Moreover recent data show that a 1 m rise in sea level would affect approximately 6700 kilometers km of roads in the region ECLAC 2011 5 Analysis performed using the Emissions Prediction and Policy Analysis EPPA model a computable general equilibrium com bined with a sealevel vulnerability database the Dynamic Interactive Vulnerability Assessment DIVA 23 The Climate and Development Challenge for Latin America and the Caribbean Figure 13 Distribution of Land Surface between Sea Level and 10 Meters above Sea Level in LAC Countries in thousands of hectares PAN SUR CHL COL CUB ECU HND GUY BHS BRA PER VEN NIC ARG MEX 0 50 100 150 200 250 Area ha 300 350 400 450 500 01 m 34 m 67 m 910 m 12 m 45 m 78 m 23 m 56 m 89 m Source ECLAC 2011 Note ARG Argentina BHS Bahamas BRA Brazil CUB Cuba CHL Chile COL Colombia ECU Ecuador GUY Guyana HND Honduras NIC Nicaragua PAN Panama PER Peru SUR Suriname VEN Venezuela Salinization of coastal freshwater supplies Evidence indicates that sealevel rise is increasing hydrostatic pressure on coastal freshwater aquifers some of which play a critical role in water supply in the Caribbean islands and other lowlying areas For example measurements of conductivity in the San Andres Islands INAP 2012 indicate a longterm trend that if continued will eventually render the water supply un suitable for human consumption Such trends add to the pressures caused by unsustainable man agement of aquifers To our knowledge an overall estimate of compromised water supplies in coastal areas is not available at this time Coral bleaching Directly linked to increases in sea surface temperature Because coral reefs support more than 25 percent of all marine species they are the most biologically diverse marine ecosystem and equiva lent in terms of biomass productivity to rainforests within land ecosystems Most corals are 24 The Climate and Development Challenge for Latin America and the Caribbean highly sensitive to changes in environmental parameters When stressed by rising temperatures corals can lose the symbiotic arrangements needed for photosynthesis Loss of photosynthetic ability leads to bleaching and may eventually cause death In the Caribbean Sea gradual and consistent increases in sea surface temperatures have increased the frequency of bleaching events the latest of which affected reefs throughout the region6 The viability of reefs can be partially recovered over time if no subsequent bleaching oc curs but more than one severe bleaching event over a short period can be devastating The Inter governmental Panel on Climate Change IPCC anticipates that during this century temperatures in the Caribbean may reach threshold values that would lead to repeated bleaching and a collapse of the coral biome This phenomenon could lead to significant economic impacts in addition to losses in biodiversity The estimated annual cost derived from losing either 50 percent or 90 per cent of the coral cover in the Caribbean has been estimated at approximately 7 billion and 12 billion respectively Vergara et al 20097 Like corals mangroves appear to be among the ecosystems most vulnerable to the physical consequences of climate change Mangroves will be affected by sealevel rise that changes the salinity of the coastal areas in which they stand Mangroves are also likely to be affected by sea level temperatures and precipitation changes will affect their productivity Most of these impacts will be accumulative But there is a lack of information on their magnitude making it difficult to estimate the net impacts Impacts derived from changes in the frequency and intensity of extreme weather events in coastal zones Climate change has been linked to the intensification of extreme weather events Although the global warming signal in the tropical cyclone count is difficult to discern because of the convolu tion of the decadal climate variations with global warming and the issue of undercounting in the earlier part of the data record Emanuel 2005 and Webster et al 2005 have shown that hur ricanes are intensifying globally An assessment of hurricanes in the Caribbean region concluded that the observed surge in landfalling hurricanes indicates a broader increase in average tropical cyclone wind speeds as seasurface temperature rises and a shift toward a greater number of Category 4 and 5 hurricanes Curry et al 2009 Curry et al 2009 find it likely that the recent increase of major hurricane landfalls in the region is largely due to increasing sea surface temperatures which in turn result from the warm ing caused by higher greenhouse gas GHG concentrations Variability makes precise projections difficult but it appears that the combination of natural and anthropogenic forcing mechanisms will lead to multiple landfalls by major hurricanes in the region during typical years later in the century The economic impact of damages from tropical cyclones is considerable and is projected to be 110 billion149 billion for the period between 2021 and 2025 including 80 billion103 billion for Mexicos Gulf Coast and 30 billion44 billion for Central America and the Antilles Curry et al 20098 An assessment made by Toba 2009 places the annual costs of intensified hurricane activity by 2050 at approximately 5 billion 6 The latest bleaching events were registered in 1993 1998 2005 Vergara et al 2009 and 2010 7 Economic losses by 2050 are in 2008 dollars They include the lost value of coastal protection fisheries tourism and bio chemicals The assessment was performed using results from a COMBO7 simulation linked to the anticipated sea surface temperature increases under SRES A1B Buddemeier et al 2008 The effects of ocean acidification an important side effect of increased CO2 concentrations in the atmosphere may add substantial detrimental consequences to the global marine ecosystem The magnitude of this effect is still difficult to discern 8 This figure was estimated based on tropical cyclone intensification of between 25 percent and an overall increase in fre quency of between 035 percent normalized for increases in population and GDP The upperrange values are for the B2 scenario while the lower range corresponds to scenario A1 25 The Climate and Development Challenge for Latin America and the Caribbean Additional exposure to tropical vector diseases and other health impacts caused by increases in ambient temperatures and other changing climate conditions Climate change has an overall adverse effect on health Key consequences include an increase in exposure to tropical vector diseases greater incidence of respiratory and waterborne illnesses and mortality and higher exposure to heat waves and other extreme weather events These health impacts will likely be stronger in countries with low adaptation capacity or among groups with low income per capita IPCC 2007b Positive health impacts are only anticipated in temperate or very cold regions The main health threats associated with climate change in Latin America are malaria den gue cholera and heat stress Githeko and Woodward 2003 Sensitivity of malaria in response to increased temperature and precipitation will expose the region to a higher transmission risk Magrin et al 2007 The association between spatial and temporal patterns of dengue and cli mate change is described in numerous studies for example Hales et al 2002 Confalonieri et al 2007 Projections for the region indicate an increase in the number of people at risk of contract ing dengue because of changes in both the geographical transmission limits Hales et al 2002 and the distribution of vectorborne diseases Peterson et al 2005 These impacts will require additional resources for the health sector For instance the esti mated cost for LAC to treat the health burden associated with climate change and higher inci dence of diarrheal diseases and malnutrition is around 13 billion annually by 20309 Changes in hydrology A growing number of studies indicate that climate is affecting the terrestrial components of the water cycle In this context the IPCC concludes There is high confidence that hydrological systems are being affected increased runoff and earlier spring peak discharge in many glacier and snowfed rivers and warming of lakes and rivers in many regions with effects on thermal structure and water quality Increasing seasonal variability will also affect hydrological systems IPCC 2007a Intensification of rainfall patterns Global warming will result not only in changes in average conditions but also increases in the am plitude and frequency of extreme precipitation events that would affect the hydrological regime of basins in the region Highresolution models covering Latin America indicate both an intensi fication of rainfall and a lengthening of dry periods For example simulations of the Magdalena River in Colombia indicate changes in the amplitude of seasonal variations as a consequence of climate change Nakaegawa and Vergara 2010 Simulations of the Amazon basin indicate that the hydrology of major rivers will become less stable with probabilities of higher peaks and lower nodes Vergara and Scholz 2011 Mexico has reported an intensification of flooding in the Grijalva basin with costs reaching 30 percent of the regions GDP for 2007 which is equivalent to approximately 250 million CONAGUA 2009 Unusual flooding events have also been reported in the State of Rio de Janeiro in Brazil and over the entire territory of Colombia Less stable hydrological regimes in major basins would result in lower firm capacities in hydropower production and the need for additional storage to maintain reliability in water sup plies De Lucena Schaeffer and Szklo 2010 have concluded that such unstable conditions would 9 This estimate is based on the additional incident cases and average treatment costs reported by Ebi 2008 for a stabilization of 550 ppm of CO2e by 2170 26 The Climate and Development Challenge for Latin America and the Caribbean reduce the firm guaranteed minimum capacity of hydropower reservoirs by 2932 percent under the A2 and B2 scenarios see annex 1 for more information on the IPCC scenarios Without ad aptation this loss would represent an estimated cost of approximately 18 billion annually Glacier retreat disruption of water services and other consequences of warming in the Andes Recent research shows that climate change will be even more pronounced in highelevation mountain areas and that mountain ranges that extend into the troposphere have been warming faster than adjacent lowlands Bradley et al 2006 Ruiz et al 2012 The visible impacts of the changes caused by these new climate patterns are already evident in the Andes Warming tem peratures have caused rapid retreat of glaciated areas and variability and extremes in weather conditions have started to affect Andean ecosystems and human activities For instance higher temperatures are affecting evaporation rates water storage in lakes and reservoirs soil moisture and the evapotranspiration rates of mountain vegetation These changes are expected to have significant repercussions for water regulation and the water and power supply10 Black carbon emissions within the region from land clearance biomass burning and other sources like transportation may also be contributing to glacier retreat Simões and Evangelista 2012 through the atmospheric transport of soot and black carbon to the glaciated basins in the Andes Some have posited that regional black carbon emissions are changing the albedo in the Antarctic Peninsula by means of atmospheric exchanges with South America Bueno Pereira et al 2006 A reduction in the size of glaciers is evident in Venezuela Peru Bolivia Colombia Ecuador and Chile The area of tropical glaciers in the Andes decreased by more than 15 percent in the 19702002 period Kaser 2005 INRENA 200611 Recent analysis indicates a 45 percent loss of glacier surface in the Cordillera Real in Bolivia Ramírez 2012 over the past 25 years A substan tial reduction in the surface area of smaller glaciers and a significant loss in water reserves during the past 50 years have also been registered in Peru National Communication Perú 2001 It is now generally accepted that most glaciers under 5000 m will disappear by midcentury Studies foresee considerable consequences of the ongoing reductions in glacier volume IPCC 2007b Reduced melt water is projected to start limiting stream flow between 2015 and 2025 which would affect water availability and hydroelectricity generation in Colombia IDEAM 2004 In the case of Peru glacier retreat is likely to affect the availability of water for population centers and the power sector where there will be an estimated annual incremental cost ranging from 212 million to 15 billion for the generation of energy Vergara et al 2007 The city of Quito would require an additional investment of 100 million over the next 20 years to guarantee its future water supply Vergara et al 2007 Potential rainforest dieback The Amazon basin is a key component of the global carbon cycle The oldgrowth rainforests in the basin represent a stock of approximately 120 billion tons of CO2 in their biomass Annually these tropical forests process approximately 18 billion tons of CO2 through respiration and photo 10 Tropical glaciers and Andean lakes also contribute to runoff seasonality by serving as storage or buffers during periods of rain and by releasing the water stored over longer periods of time 11 The Chacaltaya glacier in Bolivia has recently disappeared joining a list of glaciersincluding Purace and Cisne in Colombia that have already melted completely The San Quintín glacier in Chile has also been rapidly decreasing in size Additionally the snowcapped volcano of Santa Isabel in Colombia showed a 44 percent decrease in its icecovered peak This decrease has diminished its appeal as a tourist site with significant economic consequences UNEPECLAC 2010 27 The Climate and Development Challenge for Latin America and the Caribbean synthesis This amount is more than twice the rate of global anthropogenic fossil fuel emissions The basin is also the largest global repository of biodiversity and produces approximately 20 per cent of the worlds flow of fresh water into the oceans Despite the CO2 efflux from deforestation the Amazon basin ecosystem is considered to be a netcarbon sink because growth per year on average exceeds mortality Phillips et al 2008 However current climate trends and humaninduced deforestation may be transforming the structure and behavior of the Amazon forest Phillips et al 2009 The probability of a substantial reduction in Amazon forest biomass due to climate change toward the end of this century or Am azon forest dieback is currently the subject of an emerging body of literature Different assess ments based on various methodologies and field measurements drought experiments remote sensing and modeling studies have been conducted to evaluate the Amazon forest ecosystems resilience Malhi et al 2004 2006 Phillips et al 2009 Nepstad et al 2006 Brando et al 2008 Saleska et al 2007 Cox et al 2004 Sitch et al 2008 While individual results vary climate change will likely have an adverse effect on the rain forest biome in the Amazon basin during this century Any drastic changes in the ground cover of the basin will change its carbon storage modify regional water cycles and affect regional and local climate As a result further devastation of the Amazon has been identified as a potential tipping element of earths entire system Lenton et al 2008 Nevertheless the direction and intensity of the future change are still uncertain They will depend on future rainfall and physiological processes such as how rising atmospheric CO2 con centrations affect vegetation growth and plant efficiency in water use commonly called CO2 fertilization Hickler et al 2008 There are no records of tropical rainforests growing under a 23C anomaly Subjecting forests to this temperature increase represents an unprecedented ex periment with potential longterm consequences A recent study Vergara and Scholz 2011 modeled the risk of Amazon dieback In a scenario without CO2 fertilization the results indicate high probabilities of biomass loss In addition the probabilities of dieback events in eastern and southern Amazonia were estimated at 15 and 61 percent respectively Significant Amazon dieback would have regional and global impacts on carbon and water cycles and may even affect the amount of rainfall available for agriculture in southern Brazil and Argentina If strong positive effects of CO2 fertilization are assumed how ever biomass is more likely to increase across all five regions Without those CO2 effects biomass reductions in all modeled regions and dieback in some regions become likely Although further research is certainly needed in the absence of better information the pre cautionary principle strongly suggests that the assumption that CO2 fertilization will significantly enhance the Amazons resilience cannot be used as a basis for sound policy advice Using the information from this study a partial analysis of the likely economic impacts of Amazon rainfor est dieback on ecological resources tourism and other services projects a loss of 4 billion9 billion annually12 Adverse effects on biodiversity and ecosystem stability In addition to impacts affecting human activities climate change will also alter natural ecosys tems and individual species Climate change is accelerating the natural process of biodiversity modifications and thereby affecting vegetation the composition of ecosystems and the distribu tion and migration of various animal species IPCC 2001 and 2007b 12 This figure is estimated by the authors based on TEEDs 2010 valuation of environmental services and Vergara and Scholz 2011 Note that many of the services provided by the biome are transnational and global services their valuations are not considered 28 The Climate and Development Challenge for Latin America and the Caribbean Additionally climate change is affecting food availability predatorprey relationships and competitive interactions which can alter community structures and generate irreversible dam ages such as species extinction Blaustein et al 2010 This point is particularly important for Latin America because of its large share of the worlds biodiversity and because biodiversity in the region is already being affected by other processes such as deforestation forest degradation and hunting ie overexploitation Asner et al 2005 Different methods can be used to evaluate climate change impacts on biodiversity One op tion is the Holdridge Life Zone HLZ Leemans 199013 A HLZ is a global bioclimatic scheme for the classification of land areas that links weather conditions to the characteristics of ecosystems Holdridge 1947 in a way that provides a quantitative basis for estimating the changes in ecosys tems14 Assuming that CO2 concentrations double the distribution of the HLZ in LAC at present and under a climate change scenario is presented in figure 14 The region possesses 37 of the 38 HLZs in the world with 67 percent of the overall land area in the region covered by tropical moist forest subtropical dry forest tropical dry forest and subtropical moist forest15 Climate change scenarios indicate that moist HLZ will diminish and drier HLZ will expand For example an increase of approximately 156 percent in tropical very dry forest and a decrease in rain and moist forest 67 percent of boreal rain forest and 60 percent of warm temperate moist forest are expected In the event of a CO2 doubling the results for the regions four prin cipal HLZs indicate that subtropical moist forest and subtropical dry forest will decrease by 22 and 31 percent respectively while tropical moist forest and tropical dry forest will increase by 63 percent and 50 percent respectively Although assigning monetary values to ecosystems functions entails significant method ological difficulties Arrow et al 1993 Heal 2000 Splash and Vatn 200616 it is possible to use a metaanalysis that includes all possible environmental valuations for all ecosystem functions to identify use and nonuse value before transferring these values to the areas within the same HLZ classifications Using this approach the total value of all HLZs in South America is approximately 344 billion annually with the highest share represented by subtropical moist forests where the consequences of climate change represent a net annual economic loss of 365 billion table 1117 13 A life zone is a group of vegetal associations inside a natural climate division that are determined by taking into account soil conditions and stages of succession Particular life zones are assumed to have a similar appearance everywhere in the world 14 This approach has the following strengths it is based on climatic driving factors of ecosystem processes and recognizes the ecophysiological responses of plants it is hierarchical and allows for the use of other mapping criteria at the association and successive levels of analysis it can be expanded or contracted without losing functional continuity among different levels of ecological complexity and it is a relatively simple system based on limited empirical data Lugo et al 1999 15 This report considers the whole LAC region in terms of vegetation types without subtracting urban productive and degraded areas Therefore it represents only the possible distributions of potential vegetation types under a specified climate scenario 16 The economic valuation of the ecosystem services in Latin America presents mixed results which are attributable to the methodology used the characteristics of the study area conservation type and the perception and social importance of each site The values are in the range of 003289 per hectare per year with an average of 19900 According to the categoriza tion of ecosystem services the valuation is rather variable 17 Results of the metaanalysis are available upon request 29 The Climate and Development Challenge for Latin America and the Caribbean Figure 14 Holdridge Life Zone Map of Latin America The Present Climate and a Future in which CO2 has Doubled Present Double CO2 Tropical rain forest Subtropical desert scrub Subtropical desert Cool temperate desert Tropical moist forest Warm temperate wet forest Boreal wet forest Tropical very dry forest Warm temperate dry forest Boreal dry forest Subropical wet forest Cool temperate wet forest Subporlar dry tundra Tropical desert scrub Warm temperate desert scrub Subporlar rain tundra Subrotpical dry forest Cool temperate sleppe Tropical wet forest Warm temperate rain forest Boreal rain forest Tropical dry forest Warm temperate moist forest Boreal moist forest Subtropical rain forest Cool temperate rain forest Subporlar moist tundra Tropical thorn woodland Warm temperate thorn woodland Boreal desert Subrotpical moist forest Cool temperate moist forest Polar desert Tropical desert Warm temperate desert Subporlar wet tundra Subrotpical thorn woodland Cool temperate desert scrub Source Authors compilation based on data from Leemans 1989 Climate change has other irreversible effects on biodiversity and it may produce significant feedback effects that cannot yet be properly valued For example there is increasing concern that the Amazon region a key component of the global carbon cycle will become destabilized and that its modification or destruction will cause major changes in global climate conditions Vergara and Scholz 2011 The impacts of such irreversible harm to biodiversity are more than merely an economic matter they have significant ethical implications and important feedback ef fects that are not yet fully understood Many of these impacts represent committed changes that will not be easily reversed and will continue over time even if reductions in the rate of emissions are secured Conversely continuing the trend of increasing GHG concentration in the atmosphere will exacerbate the net impacts and will likely trigger additional changes in the biosphere 30 The Climate and Development Challenge for Latin America and the Caribbean Table 11 Climate Change and Economic Impacts on Biodiversity in Latin America Holdridge Life Zones HLZ Average value ha1 HLZ value at present millions of HLZ value at present with doubled CO2 millions of Economic loss millions of Economic loss Number Name 1 Polar desert 9422 326836 150635 176201 5391 10 Boreal rain forest 10625 256224 84694 171530 6695 11 Cool temperate desert 5609 157313 87239 70074 4454 12 Cool temperate desert scrub 11700 307466 207168 100298 3262 13 Cool temperate steppe 9073 333086 312375 20711 622 14 Cool temperate moist forest 8632 264181 300073 35892 1359 15 Cool temperate wet forest 6277 94863 154394 59531 6275 19 Warm temperate thorn steppe 10886 586935 196978 389957 6644 20 Warm temperate dry forest 17146 1769277 630291 1138985 6438 21 Warm temperate moist forest 13058 771684 306108 465576 6033 26 Subtropical thorn woodland 12856 684417 1014497 330081 4823 27 Subtropical dry forest 19684 5197292 3561467 1635824 3147 28 Subtropical moist forest 26370 16987344 13248267 3739076 2201 29 Subtropical wet forest 7706 256323 200064 56259 2195 34 Tropical very dry forest 7716 212515 545421 332906 15665 35 Tropical dry forest 10132 2780389 4168092 1387702 4991 36 Tropical moist forest 14072 3435318 5606900 2171582 6321 Total HLZ in Latin America 34421463 30774665 3646798 1059 Source Authors elaboration based on data from Leemans 1989 31 The Climate and Development Challenge for Latin America and the Caribbean In addition other discernible impacts are emerging such as the impacts of climate on eco system functioning and migratory species The changes induced by seasonal variations in climate and the responses of different species may be affecting the integrity of ecosystems in ways yet to be fully understood Mounting evidence also indicates that migratory species may be casualties of climate change Robinson et al 2005 For instance the migration pattern of raptors in the Central American corridor may be altered by climate changes in the Gulf Coast of Mexico and in the Kikolde area of Costa Rica The concern in this regard is that changes in air temperature and the onset of seasonal variations will affect both the capacity of species to migrate and the compo sition of the habitats on which they depend in their welltimed routes Estimate of the damage from physical impacts The information reviewed above is presented in table 12 along with the caveats and limitations of the estimate The aggregated value of the projected annual economic damages in LAC resulting from some of the major physical impacts associated with this unavoidable 2C increase over pre industrial levels is expected to grow gradually reaching approximately 85 billion110 billion annually by 2050 in current values compared to a GDP of approximately 46 trillion in 201018 The unmitigated annual losses from climate change will increasingly become an impediment to sustained growth acting as a drag on the deployment of human natural and physical capital In the long term the cumulative losses would be manifest in effective annual income losses Several aspects need to be considered when assessing the severity of the economic impact First the available estimates are not comprehensive and include only partial estimates in many cases such as the effects of hydropower loss which are only considered for Brazil and the conse quences of glacier retreat which are only considered for Peru Thus the estimates in table 12 are a conservative calculation of annual damages The actual loss will probably far exceed the annual figure of 85 billion110 billion by 2050 Second the estimates do not include the damage to biodiversity the change in the stock of natural resources or other nonmonetary values for example the intrinsic worth of species extinc tion biome collapse or irretrievable damages in natural capital Certain ecosystem services are intrinsically difficult to value and other cultural and social damages have not been considered Third it is difficult to quantify the longterm effects in economic terms that is GDP losses In the short term increasing investment in infrastructure and production facilities to replace losses may even boost GDP with dynamic multiplier and accelerator effects as the additional in vestment may have growth impacts particularly if there is underutilization of production capac ity In the longer term however the diminished growth of capacities for production of goods and services and even reduced capacities for ecosystem services would limit the ability to produce and generate income For example with respect to fixed capital one would expect Lower returns from production and service facilities due to extreme events and changed weather patterns including hydropower plants coastal industrial and production assets and agriculture production to result in less financing for rehabilitation and expansion invest ment Damage from extreme events that would require investment for repair instead of investing accumulated funds to expand productive capacities Loss in functionality of infrastructure including water supply systems depending on glacier runoff urban or tourism infrastructure threatened by sealevel rise and other impacts that would require investment in new systems 18 All GDP values including future projections are measured in 2005 dollars 32 The Climate and Development Challenge for Latin America and the Caribbean With respect to natural capital the expectation is that In order to maintain production and services producers profiting from the lost ecosystem functions would need to invest in alternative provision of such services Other ecosystem functions particularly those from biodiversity losses may not immediately require replacement investment but obviously will result in the biological impoverishment of affected areas More severely if largescale changes occur for example the potential Amazon dieback this would likely influence the regions development potential and may even set into motion global longterm economic adjustments With respect to human capital Increased health problems would immediately reduce productive capacity and would imply additional costs for the healthcare system Fourth the effects of climate change accumulate over time Damage is already occurring and will intensify as extreme events become more frequent or intense and more gradual changes like temperature increases take effect The responses to these impacts will continuously strain scarce investment resources This is a simplified analysis in macroeconomic terms It is related to a scenario in which ad aptation does not take place which obviously will not be the case People households economic entities and other businesses will adjust in view of climatic changes and continuous losses But unplanned adaptation and learning from losses is still costly and could be preempted by adapta tion programs and measures that increase resilience Nevertheless under any plausible scenario the regions natural assets will be affected Even if forceful action on mitigation is immediately taken and adaptation efforts implemented gla ciers under 5000 m in the tropical Andes will disappear the coral biome will be seriously af fected coldweather mountain ecosystems will shrink coastal wetlands and coastal freshwater lagoons will be flooded and the Amazon rainforest is likely to experience some degree of savan nization While these effects are already discernible the greatest implications will be experienced by future generations whose worth should not be discounted Without prompt and drastic mitigation actions losses will increase tipping points will likely be reached and the rate of extinctions and pace of change in compromised ecosystems will accel erate As a consequence economic damages will increase far beyond what can now be estimated Moreover further irreversible impoverishment of the biosphere will be triggered The value of these losses cannot be measured in economic terms The need for a better understanding of climate consequences in the region is leading to the identification of priority bioclimate hotspots These ecosystems are experiencing rapid change and showing irreversible damage which in turn could translate into substantial losses of natural and economic capital The proposed hotspots for the region are shown in table 13 33 The Climate and Development Challenge for Latin America and the Caribbean Table 12 Estimates of Annual Damages from Some Key Physical Impacts by 2050 Impact Area Projected annual costs 2005 billion Projected cumulative costs Source Loss in net export agricultural revenues wheat soybean maize and rice LAC 2644 Fernandes et al 2012a Sealevel rise 1m LAC 22 Dasgupta et al 2007b Coral bleaching Caribbean 811 Vergara et al 2009c Intensification and frequency increase of extreme weather events CARICOM Mexicos Gulf coast Central America and the Caribbean 5 110149 for 20212025 Toba 2009d Curry et al 2009e Health increase in incident cases of diarrhea and malnutrition LAC 1 Ebi 2008f Amazon dieback Latin America 48 Authors estimationg Glacier retreat Peru 1 Vergara et al 2007h Loss of ecosystem services Latin America 36 Authors estimationi Hydropower generation Brazil 18 Authors estimationj Estimated total LAC GDP 85110 1824 The total reported must be considered a range and a conservative estimate with the following caveats a estimations are gathered from different studies with varying methodologies assumptions and uncertainties b many costs are only partially presented and others are difficult to estimate and c nonmonetary costs are not considered The CPI is used to convert costs to 2005 US dollars Bureau of Labor Statistics When information was not available costs were assumed to be reported in US dollars of the year of publication 2010 GDP measured in 2005 dollars a Projected loss in net export revenues in 2050 b Impact on GDP observed when a 1 m rise in sea level is reached c Estimation derived from losing 90 percent of coral cover SRES A1B scenario Includes the lost value of coastal protection fisheries tourism and biochemicals d Includes impacts of climate disasters floods droughts and windstorms on agricultural production human health tourism government and GDP loss e 2007 US dollars Projected costs correspond to tropical cyclones during the 20202025 period scenario A1 lower range and scenario B2 upper range f Projected costs in 2030 under a scenario assuming stabilization of emissions at 550 ppm of CO2e by 2170 Assumes that an nual cases and treatment costs remain constant g Projected cost in 2100 includes ecosystem services in terms of carbon storage and sequestration agricultural productivity hydropower generation sustainable timber harvest reduced siltation in hydropower reservoirs commercially viable fish popu lations subsistence life styles and improvements in quality of life Information on costs obtained from TEED 2010 Vergara and Scholz 2011 project that climate change will reduce onethird of the rainforest biome by 2100 This value is used in the estimations h Incremental cost for the power sector based on rationing cost i Economic impact assuming a doubling of CO2 Costs estimated in 2000 dollars j Value estimated based on the reduction in firm power hydroelectric generation in 2035 under scenario B2 reported by de Lucena Schaeffer and Szklo 2010 hydropower generation from Brazilian National System Operator ONS and the cost of rationing from Maurer et al 2005 34 The Climate and Development Challenge for Latin America and the Caribbean Table 13 Some Bioclimate Hotspots in Latin America and the Caribbean Climate hotspot Direct effect Immediacy Irreversibility Impacts on natural capital Economic consequences Coral biome in the Caribbean Bleaching and mass mortality of corals Now Once temperatures pass the threshold for thermal tolerance corals in the Caribbean may collapse Total collapse of ecosystem and wideranging extinction of associated species Impacts on fisheries and tourism as well as increased vulnerability of coastal areas Mountain ecosystems in the Andes Warming Now The thermal momentum in mountain habitats will result in significant increases in temperature leading to major uni directional changes in mountain ecology Disappearance of glaciers drying up of mountain wetlands and extinction of cold climate endemic species Impacts on water and power supply displacement of current agriculture and changes in planting patterns with varying impacts depending on location seasonality and ability to adapt Coastal wetlands Subsidence and salinization of aquifers increased exposure to extreme weather decline of coastal mangroves This century Irreversible sealevel rises will submerge coastal wetlands and thereby affect their ecology Disappearance of coastal wetlands as well as displacement and extinction of local and migratory species Impacts on coastal infrastructure fisheries and agriculture Amazon basin Forest dieback This century If rainfall decreases in the basin biomass densities would also decrease Drastic change in the ecosystem that may lead to savannization and disruption of many species endemic to the Amazon rainforest Impacts on global biodiversity global water circulation patterns and regional agriculture water and power supply Source Authors elaboration adapted from Vergara 2009 35 The Climate and Development Challenge for Latin America and the Caribbean Adaptation response Adaptation is broadly defined as an adjustment in human activities or ecosystems to new climate conditions19 Adaptation includes changes in behaviors processes practices and structures as either anticipatory or reactive measures to offset potential damages or exploit climate changes IPCC 2001 and 2007b World Bank 2010 Given the unavoidable physical impacts of climate change and the potential magnitude of the associated costs the region must mount a major effort to adapt Adaptation response to physical impacts The praxis of adaptation is evolving A comprehensive list of possible response measures to impacts in the region cannot yet be compiled However the existing data generally indicate that a broad portfolio of measures already exists table 14 Adaptation measures are being tested widely funded in part by several financing mechanisms linked to the UNFCCC the Clean Devel opment Mechanism CDM and more recently the Adaptation Fund AF In addition many ad aptation responses are likely being internalized locally without being properly counted as such As of today most investments in adaptation focus on agricultural activities water resourc es coastal areas biodiversity and health Some of these measures such as better agricultural management practices or seasonal adjustments in crop mix have very low costs Agrawala and Fankhauser 2008 In other sectors significant investments in for example the protection of coastal areas and assets are needed Recent investments in adaptation in the region Most investments in adaptation in the region have taken place in the context of externally funded programs sponsored by the Global Environment Facility GEF and other bilateral programs The Caribbean region has been the focal point of several adaptation projects funded as part of the GEFs Enabling Facility Program and Strategic Priority on Adaptation SPA Three adaptation projects with a total estimated budget of 40 million have been implemented since 1998 Ad ditionally in the tropical Andes the GEF has funded adaptation responses to glacier retreat With an estimated budget of 35 million the project has funded specific responses and monitoring systems in glaciated basins in Bolivia Ecuador Peru and Colombia In Mexico a project approved in 2009 focuses on developing adaptation measures in coastal wetlands in the Gulf of Mexico The project emphasizes the concept of ecosystembased adaptation EBA and utilizes the restoration and strengthening of coastal wetlands mangroves and dunes as a key adaptation strategy to protect coastal settlements and infrastructure Ecosystembased adaptation Ecosystembased approaches to adaptation constitute a promising option for sustainable and effi cient adaptation to climate change EBA is the use of biodiversity and ecosystem services to help people adapt to the adverse effects of climate change Andrade et al 2011 The use of EBA in the region has already been pioneered under the Integrated National Adaptation Program INAP in Colombia which relies on ecosystembased measures to maintain water regulation flows in 19 Unless specified in the main text adaptation costs and actions are generally referred to under conditions anticipated under scenario A1B and a 2C anomaly 36 The Climate and Development Challenge for Latin America and the Caribbean paramo ecosystems in the Chingaza area Other efforts have been attempted in Belize through the Caribbean Community Climate Change Centre CCCCC to restore the functions of coral ecosys tems affected by bleaching events EBA can be an effective first tool to address climate impacts affecting ecosystems and the services these provide Table 14 Examples of Potential Responses to the Regional Consequences of Climate Change Agriculture Sealevel rise and extreme events in coastal zones Mixed croplivestock systems More efficient use of irrigation water amount and timing Climate monitoring and forecasting to reduce production risks Development and use of heat drought and excess waterresistant crops Development and use of varieties and species resistant to pests and diseases Animal breeding programs Integrated pest and pathogen management Adjustment of planting dates and farming practices Improved land management Liberalization of agricultural trade to buffer regionalized losses Insurance Irrigation Integrated coastal planning and management Coastal watershed management Building standardscodes Living shorelines Coastal development setbacks Coastal wetland protection Coastal defensesseawallsstorm surge barriers Beach and dune nourishment Desalinization of coastal aquifers Flood warning systems Improved urban drainage Land use zoning Communitybased disaster risk reduction Changes in hydrology Glacier retreat Restoration of land cover Water conservation and demand management Land use zoning Watershed management Rainwater harvesting Water storage and conservation techniques Loss reduction leakage control conservation plumbing Recycling of water Irrigation efficiency Water management infrastructure Design of highaltitude reservoirs Adoption of droughttolerant varieties in high altitude agricultural areas Demand management measures Extension and design of water collection networks Exposure to tropical vector diseases Biodiversity and ecosystems Prophylactic and sanitation measures Early response disease surveillance and awareness systems Prevention of waterborne diseases Provision of safe water Vector control programs Improvements in public health Disease eradication programs Heathealth action plans Improved sanitation Modification of park boundaries Adoption of setbacks and buffer zones Reduction in the use of ecosystem services Good practices in the fisheries sector Protection of large areas increased reserve size Improvements in connectivity Increase and maintenance of the number of reserves Increase and maintenance of monitoring systems Land planning Management practices Source Authors elaboration 37 The Climate and Development Challenge for Latin America and the Caribbean The AF has also recently approved projects on water and coastal management issues and farming in Jamaica Honduras and Uruguay respectively for 10 million on food security in terms of climate change resilience in Ecuador for 74 million on the reduction of vulnerability to floods and droughts in Nicaragua for 55 million on climate resilience and land management in Argentina for 43 million on climateresilient infrastructure in El Salvador for 54 million and on climateresilient productive landscapes in Guatemala for 55 million Other activities include a project in Peru to address the impacts of climate change on fisheries In addition Canadian Australian and Italian aid agencies have also helped to implement adaptation projects in LAC These activities have mostly focused on building capacity on adapta tion mainstreaming adaptation concerns in sector policies and deploying specific adaptation measures in coastal zones and water supply The experience with these early projects is being used to design new approaches to adaptation which are being funded by the Pilot Program on Climate Resilience PPCR window of the Climate Investment Funds CIF Under the PPCR a re gional adaptation project and national projects in Jamaica and Haiti are being formulated Table 15 presents examples of recent adaptation investments in LAC Based on the recommendations contained in its Second National Communication the Gov ernment of Colombia launched the ambitious National Program on Adaptation INAP in 2005 This project supported responses to the impacts of warming on mountain habitats insular and coastal zones and the health sector The project which has resulted in the development of pio neering adaptation approaches in these regions and sectors was also used to draft policy ap proaches and strengthen key institutional capacity The project had an estimated budget of ap proximately 30 million 38 The Climate and Development Challenge for Latin America and the Caribbean Table 15 Examples of Recent Adaptation Investments Climate change impact Type of adaptation measure in practice Affected sectors natural assets Countries Accelerated tropical glacier retreat Civil works to replace glaciers capacity to store and regulate water conservation of high mountain ecosystems as an element to retain water Agriculture Colombia Ecuador Peru Bolivia Temporal and spatial changes in precipitation occurrence affecting the availability of water Rainwaterretaining ponds use of ancient knowledge to maximize soil water infiltration and minimize runoff atajados use of efficient irrigation systems Agriculture livestock ecosystems Central and South America Sealevel rise and salinization of aquifers Integrated coastal zone management plans inundation areas restoration of coastal ecosystems Agriculture ecosystems Caribbean countries and countries with coastal areas Increased variability and uncertainty of fishery yields Economic diversification implementation of the ecosystem approach to fisheries EAF Fisheries coastal marine ecosystems Peru Chile Caribbean Changes in distribution of fisheries Biooceanographic monitoring and ecological modeling to predict changes in resource availability Ecological risk assessments of key species for integrated adaptive management Fisheries Peru Chile Increase in climatic extremes precipitation floods storm surges Improved climatic and oceanographic surveillance and deployment of early warning systems Use of scenarios of climate change impacts for ecosystembased adaptation coastal marine zonification and infrastructure planning Agriculture lowlevel coastal settlements Mexico the Caribbean Changes in the spatial distribution of vector diseases such as malaria and dengue Early warning and dynamic monitoring systems Human health Colombia Source Authors elaboration Overall adaptation costs There are different estimations of the overall cost of adapting to a 2C anomaly for LAC table 16 For example the World Bank 2010 estimates annual adaptation costs for the region to be 168 billion215 billion by 2050 while Agrawala et al 2010 estimate adaptation costs to be approximately 28 million by 2105 These estimates have significant limitations and un certainties and are difficult to compare because they use different methodologies sectors time spans geographical regions scales and adaptation definitions and assumptions Agrawala and Fankhauser 2008 Stern 2007 Furthermore these estimates only consider a fraction of the total expenses 39 The Climate and Development Challenge for Latin America and the Caribbean Nonetheless a common finding in these studies is that adaptation costs are an order of magnitude lower than the estimated damages Adaptation investments would thus mitigate the costs associated with the physical impacts of climate change and highlight the importance of de ploying efforts to adapt The cost of adaptation is a small fraction of the cost of physical impacts Some impacts are difficult to estimate and were not included Thus the estimates of the costs provided in this report should be seen as conservative Table 16 Adaptation Cost Estimates for Latin America and the Caribbean billions UNFCCC 2007 World Bank 2010 Agrawala et al 2010 ADWITCH Scenario B1A1B Scenario NCAR CSIRO Scenario Doubling CO2 Year 2030 Year 2050 2050 Year 2105 Agriculture 120 130 Water in agriculture irrigation 430 Fisheries 018035 018035 Water supply 2300 Water supply 550 320 Water infrastructure costs in other vulnerable countries 180 Coastal zones 057068 Coastal zones 11701 11701 Coastal protection costs 775 Extreme weather events 130 070 Early warning systems 500 Investment in climate proof settlements 590 Infrastructure 040172 Infrastructure 350 170 Cooling expenditure 200 Human health 000 000 Disease treatment costs 572 Adaptation RD 007 Total 2150 1680 Total 2770 Source Authors estimate based on UNFCCC 2007 World Bank 2010 and Agrawala et al 2010 Note NCAR National Centre for Atmospheric Research wettest scenario CSIRO Commonwealth Scientific and Industrial Re search Organization driest scenario 1 Medium rise in sealevel scenario 285 cm above 1990 levels in 2050 UNFCCC 2007 estimates are for Latin America only 40 The Climate and Development Challenge for Latin America and the Caribbean A fourdegree anomaly The costs of the physical consequences and the estimates of adaptation costs refer generally to a trajectory consistent with a 2C temperature anomaly But it is likely that actions will not be taken in time to maintain this trajectory In that case the physical consequences will likely esca late and the adaptation costs will become more expensive A 4C rise would place a very significant stress on the natural world The pace of change an ticipated over a century or so would be unprecedented Yet in the face of failure to embark on a drastic path of emission reductions it is a prospect that cannot be discounted As it stands today the actual path of emissions is closer to scenario A1FIa fossilfuelintensive resourceintensive growth that would if continued surpass a temperature anomaly during this century consistent with an atmospheric concentration of CO2 above 800 ppm Under such a future the impacts discussed in this chapter would in most cases intensify For example the onset and extent of coral mortality would likely be more drastic The pace of sealevel rise and Andean glacier retreat would accelerate There would be an increased likelihood of greater rainforest dieback The changes induced in a 4C degree future would likely be long lasting even if emissions patterns could be quickly reversed That said identification of physical impacts and quantification of economic losses and damage under a 4C scenario is beyond the scope of this report 41 The Climate and Development Challenge for Latin America and the Caribbean The Regions Carbon Footprint and Pathways to Change by 2050 Chapter 2 Preventing additional irreversible damage to the biosphere would require global emissions to not exceed a yearly 20 gigatons of carbon dioxide equivalent GtCO2e or 2 tons per capita tpc by 2050and to reduce this to 10 GtCO2e or 1tpc by the end of the century The achievement of such a goal would demand a significant deviation from the current path of global emissions This chapter examines the current carbon footprint of Latin America and the Caribbean LAC and presents some of the available pathways by which the region can contribute to this global climate stabilization goal by 2050 Current emissions profile LACs total greenhouse gas GHG emissions for 2010 are estimated at 47 GtCO2e 108 percent of total global emissions That figure represents a decline of about 11 percent since the start of the century mainly caused by reductions in landuse changerelated emissions and in energy inten sity 20 This drop occurred during a period of robust 3 percent annual net increases in regional 20 For the purposes of this report the Climate Analysis Indicators Tool CAIT Version 90 CAIT 2012 was used as a primary source of emissions for the region This source is one of the best available databases and includes information both on carbon sinks and emissions of GHGs Although all historical emissions data come from the CAIT database all future projections into 2020 and 2050 both for the businessasusual trajectory and the various intervention pathways come from Version 20rc1 of the GEA Scenario Database of the International Institute for Applied Systems Analysis IIASA Furthermore all references to current emissions that is figures corresponding to the year 2010 for which CAIT still does not have com prehensive GHG data are also taken from the GEA Scenario Database to ensure consistency with this reports projection trajectories The CAIT historical data include all GHGs including CO2 CH4 N2O PFCs HFCs and SF6 In contrast all current and projected emissions data which are taken from IIASAs GEA Scenario database include only the three most significant GHGs CO2 CH4 and N2O Finally all CAIT data used in this report were downloaded before the latest updating of the CAIT May 12 2012 Given the demands of the editorial and publication process this report was unable to incorporate any changes reflecting this latest updating of the CAIT database 42 The Climate and Development Challenge for Latin America and the Caribbean gross domestic product GDP which indicates that economic growth has decoupled to some degree from carbon emissions From a historical perspective the region has contributed less than 37 percent of the cumulative global CO2 emissions due to energy use since 185021 Agriculture and landuse emissions In contrast to the global picture the bulk of the emissions in LAC are generated not from energy use but from land use landuse change and forestry LULUCF as well as agriculture Indeed LACs emissions profile was the mirror opposite of the worlds profile in 2005 nearly twothirds of LAC emissions stemmed from agriculture and land use whereas only a little over onequarter came from energy figure 21 This global outlier status with respect to agriculture forestry and landuse AFOLU emissions is referred to as the LAC emissions anomaly Power generation and transport Traditionally energy emissions have been of secondary importance for the region as a whole While LACs energy emissions rose sharply 50 percent between 1990 and 2005 per capita en ergy emissions were 28 tons of CO2e in 2005 well below the world average of 44 tpc Within the subcategory of energy power generation accounted for about 30 percent of the re gions total energy emissions in 2005 whereas the power sector contributed a much higher total 44 percent to global energy emissions22 In addition transportation accounts for a much greater share of LACs energy emissions profile 29 percent than it does within the global profile only 19 percent This anomaly is explained by the dominance of hydropower in the regional power mix and transportation within the final LAC energy demand Emissions intensity As LACs developing economies have continued to mature the sensitivity or elasticity of eco nomic growth to annual emissions levels has declined in recent years The regions emissions intensity fell from 1500 tCO2e tCO2e per million dollars of GDP in 1990 to approximately 1200 tCO2e per million dollars of GDP in 2005 Global emissions intensity has also declined though somewhat less steeply and from a lower base23 21 In its annual historical emissions data series the CAIT database generally includes figures for both energy and landuse emis sions However the data available for cumulative historical emissions do not include landuse emissions and therefore can only be expressed in terms of total cumulative energy emissions over time 22 Note that the sector contributions presented in figure 21 refer to the percentage shares of total LAC GHG emissions while the sector contribution figures presented on power generation and transport refer to the regions emissions within the energy emissions subcategory Therefore while transportation for example accounts for 8 percent of the regions total emissions as seen in figure 21 this sector accounts for 29 percent of LACs energy emissions which account for only 28 percent of LACs total GHG emissions 23 LACs relatively high emissions intensity has been linked to the regions significant land userelated emissions Discounting landuse emissions however changes the picture substantially LACs nonLULUCF emissions intensity has long been lower than that of the world generally constant at 625650 tCO2emillion of GDP from 1990 to 2005 compared with some 825 tCO2emillion for the world in 1990 and approximately 650 by 2005 43 The Climate and Development Challenge for Latin America and the Caribbean Figure 21 Sector Composition of Total Greenhouse Gas Emissions in LAC 200524 Industry Other fuel consumption Manufconstruction Landforestry Electricityheat Fugitive emissions Agriculture Transportation Waste 3 3 8 6 8 2 47 3 20 Source Authors compilation based on WRI 2012 data Note The above sector contributions refer to percentage shares of total LAC GHG emissions Therefore while transportation for example accounts for 8 percent of the regions total emissions as seen above this sector accounts for 29 percent of LACs energy emissions which account for only 28 percent of LACs total GHG emissions Energy profile and final demand In 2010 LACs primary energy mix included more oil 42 percent hydropower 21 percent and biomass 135 percent than the global average mix 32 percent 67 percent and 87 percent re spectively At the same time the regional LAC mix incorporated far less coal 47 percent vs 27 percent and nuclear power 08 percent vs 56 percent than the global mix Furthermore LAC has only small shares of geothermal solar and wind power25 LACs final energy demand differs considerably from that of the global average as well While LAC per capita emissions have historically been higher than the global per capita emis sions level LACs final per capita energy demand 39 gigajoules is lower than the global average 49 Gj Thus not only is per capita energy demand low by global standards but it is also consid erably lower in associated GHG emissions Recent trends The dominance of AFOLU within the LAC emissions profile is changing Evidence points to sig nificant declines in the regional rate of deforestation in recent years which dropped 67 percent in Brazils Amazon since 2004 and onethird in Central America since the mid1990s INPE 2010 Kaimowitz 2008 and Hecht 2012 These achievements if maintained augur well for a signifi cant lasting reduction in landuserelated emissions 24 See footnote 27 for further discussion of the possibility that Brazils recent decline in landuse emissions may have pushed down the landuse sectors contribution to LACs total emissions from 47 percent as reflected in the CAIT data presented above in Figure 21 to less than 35 percent in 2010 as reflected by the IIASA GEA data presented in figure 23 25 Figures for LAC and world primary energy mixes come from estimates for 2010 from IIASAs GEA Scenario database see annex 2 using the substitution method These estimates are projected from historical data series coming from the IEA 44 The Climate and Development Challenge for Latin America and the Caribbean Per capita emissions Total LAC per capita emissions fell from 104 tons WRI 2012 in 1990 to 81 tons IIASA GEA in 2010 driven by a decrease in landuse emissions and improvements in energy efficiency Ac cording to the GEA figures which do appear to incorporate the recent decline in emissions from deforestation the regions total per capita emissions were 85 tons in 2005 and 81 tons in 2010 This recent trend could be reversed however by rising rates of deforestation or an increase in energyrelated emissions Indeed the regions per capita energy emissions rose from 23 tons in 1990 to 28 tons in 2005 and are projected to continue increasing under the businessasusual trajectory Thus LACs projected energy emissions may yet cancel out the emission reductions in land use Country emissions On its own the regional carbon footprint can be deceiving While most countries in Latin Amer ica are small contributors of GHGs with emissions well below 1 percent of the global total the region includes some very large carbon emitters countries with high rates of deforestation coun tries with carbonintensive economies and countries that are in a transition process induced by various structural changes Figure 22 illustrates the relative contributions of principal countries to the regional emissions profile26 Countrybased GHG intensity and per capita emissions are included in annex 3 Figure 22 Country Contributions to Total LAC Emissions 2005 Brazil Bolivia Venezuela Peru Chile Mexico Colombia Guatemala Argentina Ecuador All others 52 12 8 6 4 3 3 2 2 2 6 Source Authors elaboration based on WRI 2012 data These cases do not include landuse emissions 26 See the next footnote for further discussion of the possibility that Brazils recent decline in landuse emissions may have brought its relative contribution to the LAC total down to below 50 percent 45 The Climate and Development Challenge for Latin America and the Caribbean Brazil was the dominant source of LAC emissions 52 percent in 2005 followed by Mexico 12 percent Venezuela 8 percent and Argentina 7 percent WRI 201227 In fact the LAC region is only globally relevant in terms of GHG emissions because of Brazil which alone contrib uted onethird of global landuse emissions and Mexico Nevertheless the probability of reaching any per capita emissions target for the entire region by 2050 increases substantially if medium sized and small LAC countries follow Brazil and Mexico in contributing their own mitigation efforts Projected emissions the businessasusual scenario The peculiar features of the LAC emissions anomalysmall historical and current contributions to global emissions and the concentration of LAC emissions in AFOLU sectorsoften leads ob servers to conclude that the mitigation efforts needed to significantly bend the regions emissions curve are simply unnecessary and too expensive But while landuse emissions have recently fallen sustained economic growth is driving an increase in the regions energy emissions particularly from power generation and transport Energy emissions will soon rival AFOLU emissions within the regions emissions profile see the analysis of LACs businessasusual trajectory below Also the region is now positioned as a major supplier of food stocks and other natural resources which if unchecked may expand its carbon footprint The BAU trajectory While an international accord to reduce GHG emissions has proved elusive the current path of emission trends leads toward a future that must be avoided Most analyses are based on the as sumption that actions will be taken in time to avert dangerous impacts But there is increasing concern that the guardrail for a 2C rise in global temperatures may be exceeded with grave implications for the global biosphere28 For the purposes of this study IIASAs GEA model counterfactual International Institute for Applied System Analysis GEA Message Pathways Database v20 rc129 is used as the busi nessasusual BAU scenario in 2050 Although there are countless other BAU emissions scenar ios IIASAs integrated approach is based on a number of comprehensive databases and provides the only available set of total emissions projections that also includes both energy and landuse emissions for the LAC region as a whole This BAU trajectory also fits well into a global view of how emissions are expected to evolve over time 27 In recent years Brazil experienced a significant decline in the rate of deforestation and presumably in landuse emissions This apparent shift in Brazil has not yet been fully captured in the international databases such as CAIT which serve as global references Nevertheless the figures for the LAC region used in IIASAs GEA Scenarios Database which is the reference for this studys future projections reflect this apparent decline in landuse emissions The emissions level that the GEA model uses for its departure year 2005 is lower than that cited by CAIT which apparently captures this decline The discrepancies that are often found among different international sources for LAC emissions data over the past 10 years are most likely ac counted for by this significant recent decline in Brazils landuse emissions Using IIASA GEA figures for landuse emissions would bring down this categorys share of total LAC emissions from 47 percentas reflected in the CAIT data presented in figure 21to below 35 percent Such a reduction would imply that Brazils total GHG emissions in 2010 would have been only approximately 45 percent of the LAC total instead of 52 percent as reflected in the CAIT data for 2005 presented in figure 22 28 An analysis of the consequences of a much warmer world this century is beyond the scope of this document but such con sequences are being considered in the IPCCs Fifth Assessment Report 29 A full description of this scenario is included in annex 2 46 The Climate and Development Challenge for Latin America and the Caribbean Table 21 summarizes the driving forces within the structure of the BAU scenario for the re gion Even with no significant change in the trajectory of status quo policy and behavior patterns under this scenario LACs large landuse emissions will gradually diminish while the regions energyinduced fossil fuel emissions will continue to increase with the fastest growth expected from transport and power generation These drivers are well tied to the current momentum of change in the region Table 21 Sector Breakdown of Expected BAU Future Emissions Changes and Key Driving Forces 201050 Gt percent Category 2010 2050 Percent change Driving forces LAC BAU trajectory 473 673 42 Electricity 024 054 120 Carbonization Industry 033 066 102 Economic growth Feedstocks 011 023 106 Economic growth Residentialcommercial 018 021 15 Economic growth Transportation 056 120 116 Motorization urbanization Land use 160 067 59 Reduced deforestation CO2 total 330 456 38 Energy demand CH4 100 150 48 Livestock agriculture N2O 034 063 67 Fertilizer use Source Version 20rc1 of the GEA Scenarios Database of the International Institute for Applied Systems Analysis IIASA and authors elaboration For example while LACs energy sector is cleaner than that of any other region economic growth has increased electricity demand strained installed capacity and driven demand for a greater share of fossil fuels in the regions power matrix Additionally climate change threatens the future reliability of hydropower which accounts for about 60 percent of the regions installed capacity and 70 percent of power generation as well as other energy assets Indeed changes in climate and increased exposure to extreme weather events may force the relocation of coastal refineries pipelines and transmission infrastructure Changes in demand caused by shifting temperatures would require different patterns in energy supply Indeed warming in tropical areas could eventually force major increases in space cooling requirements A recent report on the subject Ebinger and Vergara 2011 has concluded that many aspects of the energy sector may be quite vulnerable to impacts from climate change In order to satisfy rapidly rising demand for energy the generation mix is incorporating a growing share of fossil fuel which is projected to grow nearly 5 percent annually over the com ing decade Riahi et al 2011 Rapid urbanization and motorization rates are increasing transport sector demand for gasoline and diesel The substantial growth of food exports has driven higher emissions from the agricultural sector The BAU scenario for LAC is presented in figure 23 47 The Climate and Development Challenge for Latin America and the Caribbean The anticipated reductions in landuse emissions will be overshadowed by increased emis sions from agriculture energy generation and transport While the overall share of agriculture is projected to remain roughly constant the percentage shares of transport and power generation are anticipated to grow by 50 percent under the BAU trajectory reaching an overall contribution of approximately 2 GtCO2e per year Thus under the BAU scenario the region will emit nearly 7 GtCO2e by 2050 when LAC per capita emissions will reach 93 tCO2e But despite the significant increase in projected energy emissions under the BAU trajectory LAC is still expected to have the lowest carbon content of any regional energy mix through 205030 Figure 23 Regional BAU Emissions Trajectory by Sector 201050 LandUse N2O Agric Transportation Industry Electricity Residential commercial Other energy conversion CH4 Agwaste Industrial Feedstocks 8000 93 tCO2 per capita 2050 2 tCO2 per capita 2050 4000 6000 2000 7000 3000 5000 1000 0 2010 2030 2020 2040 2050 MtCO2e Source Version 20rc1 of the GEA Scenarios Database of the International Institute for Applied Systems Analysis IIASA and authors elaboration Note All per capita emissions projections are based on the following population estimates from IIASAs GEA model based on UN projections 585 million in 2010 641 million in 2020 686 million in 2030 714 million in 2040 and 725 million in 2050 Pathways to reach stabilization goals by 2050 Bending the emissions curve enough to bring the regions current 8 tons and projected 93 tons per capita emissions levels down to 2 tCO2e in 2050 would require substantial investment and changes in behavior To visualize how this change can be achieved this study mapped po tential alternative emissions pathways This mapping is facilitated by a breakdown analysis of separate emissions categories or emissions wedges 30 Currently LACs primary energy mix is approximately 35 percent low carbon and 53 percent lower carbon compared with 22 percent and 41 percent respectively for the world as a whole In 2050 LACs lowcarbon and lowercarbon shares will be 40 percent and 65 percent respectively compared with 21 percent and 40 percent respectively for the world The low carbon standard includes hydropower nuclear power and modern renewables including geothermal solar and wind power and other forms of renewable energy The lowercarbon standard would also include natural gas which typically emits from 50 percent to 75 percent of the CO2 released by the use of coal and oil along with fossil fuels using CCS Although there are different ways of calculating the primary energy mix this report has relied on the substitution method by using estimates and projections from IIASAs GEA database 48 The Climate and Development Challenge for Latin America and the Caribbean Wedge analysis This study reconstructed the BAU emissions trajectory to 2050 to present nine abatement wedg es which represent the quantity of emissions available for abatement between 2010 and 2050 in each sector None of these abatement wedges are meant to indicate any particular level of ef fort required or the relative political or financial viability of achieving the full abatement of any particular wedge Nevertheless in each of the wedges shown certain available technologies can be deployed to significantly reduce emissions This analysis shows that even the complete elimination of landusebased emissions would not be sufficient to meet the 2 tpc target by 2050 An emissions reduction strategy capable of reaching zero net deforestation and degradation by 2020 ZNDD 2020 and zero net landuse emissions by 2030 ZNLU 2030 would only reduce the expected BAU emissions by 067 GtCO2e Even the implementation of stronger landuse policies capable of increasing net carbon sinks by 350 tons annually per decade beyond 2030 ZNLU 2030 would bring down emissions in 2050 by only 137 Gt compared to the BAU trajectory leaving LAC emissions at 54 GtCO2e Expanding the scope of landuse changes to include a significant reduction of agricultural emissionsthe socalled AFOLU approachwould substantially increase the abatement poten tial Nevertheless even if LAC were to successfully eliminate all landuse and agriculture emis sions 284 GtCO2e by 2050 this decrease to 39 GtCO2e would correspond to just 53 percent of the necessary effort to reach the 2 tpc goal Similarly an exclusively energyfocused approach will not work In sectors such as transport and power which are characterized by longterm path dependencies and therefore vulnerable to infrastructure and technological lockins transitions to a lowcarbon future would need to be planned and implemented with sufficient lead time In order for emissions to peak between 2020 and 2030 significant reductions of energyinduced GHGs would need to begin almost immedi ately But even if all energy emissions expected in 2050 were completely eliminated the region would only be 56 percent of the way to the 2 tpc goal On the other hand an especially aggressive landuse policyone that successfully and sig nificantly augmented carbon sinkscould relax the required emissions targets in other sectors and thereby expand the range of feasible options available for the future energy mix If such an aggressive landuse approach were combined with an energybased approach designed to decar bonize LACs national economies the region would reach the 2 tpc goal 49 The Climate and Development Challenge for Latin America and the Caribbean Figure 24 The BusinessasUsual Trajectory vs Emissions Wedges Without Net Carbon Sinks 2020 and 2050 317 tCO2e per capita 10 tCO2e per capita 20 tCO2e per capita 2050 Zero Net Transport Emissions by 2050 Zero Net Residentialcommercial by 2050 Zero Net Industry Emissions by 2050 Zero Net Feedstock Emissions by 2050 Zero Net Conversion Emissions by 2050 tCO2e per capita 2050 RHS 067 Gt LULUCF 054 Gt Power 12 Gt Transport 15 Gt Agriculture Waste CH4 1 Gt Agriculture N2O 063 Gt Industry 09 Gt Energy Conversion Zero Net Electricity Emissions by 2050 ZNDD 2020ZNLU 2030 LAC BAU Trayectory Zero Net CH4 Emissions by 2050 Zero Net N2O Emissions by 2050 8000 4000 6000 2000 7000 3000 5000 1000 0 2050 100 60 20 80 40 00 2030 2040 2020 2010 MtCO2e tCO2e per capita Source Version 20rc1 of the GEA Scenarios Database of the International Institute for Applied Systems Analysis IIASA and own elaboration Note a ZNDD 2020 zero net deforestation and degradation by 2020 ZNLU 2030 zero net emissions from land use landuse change and forestry LULUCF by 2030 b LULUCF emissions are cut in half between 2010 and 2020 and reach net zero emis sions ZNLU in 2030 but do not become negative in net terms thereafter Nevertheless this studys base intervention scenario assumes that net deforestation and degradation is halted in net terms by 2020 c Emissions from all other categories are as sumed to peak in 2020 remain flat until 2030 and then fall to zero by 2050 These peaks could actually occur any time between 2020 and 2030 provided that emissions return to their 2020 level by 2030 before continuing their path to zero d Under these landuse assumptions ZNDD 2020 ZNLU 2030 no full abatement of the other emissions sectors by 2050 would bring LAC emissions to zero Emissions reduction pathways A number of pathways can be articulated from the emissions wedges figure 24 Landusechange pathways Under landbased pathways the following is pursued i zero net deforestation and degradation by 2020 ZNDD 2020 and ii zero net emissions from land use landuse change and forestry by 2030 ZNLU 2030 Achieving this dual target would reduce landuse emissions from 19 GtCO2e in 2010 to zero by 203031 31 Zero net deforestation and degradation or ZNDDor the complete halt to deforestation at least in net terms by 2020is probably necessary to achieve zero net GHG emissions in the somewhat broader category of zero net emissions from LU LUCF or this studys ZNLU by 2030 This is because 1 some LULUCF emissions do not come from the forest sector requir ing additional actions beyond ZNDD 2020 and 2 due to the nature of the biological and chemical processes involved there is some degree of time lag involved between the execution of the mitigation actions in the landuse sector and the registering of the effect in terms of net emissions reduction 50 The Climate and Development Challenge for Latin America and the Caribbean The ZNDD 2020ZNLU 2030 pathway would indefinitely maintain this level of zero net land usebased emissions from 2030 into the future The ZNDD 2020ZNLU 2030 plus pathway would continue to reduce net landuse emis sions beyond 2030 through further actions to augment net carbon sinks until annual net negative landuse emissions of 07 GtCO2e are achieved in 2050 The AFOLU plus pathway would intensify the ZNDD 2020ZNLU 2030 plus pathway with an additional 50 percent cut in agricultural emissions by 2050 In addition to innovative livestock and cultivation practices targeting CO2 CH4 and N2O emissions other conservation and forestry practices targeting deforestation and degradation would be required to achieve this pathway Energy pathways32 Energy pathways would bring the regions emissions to between 34 tpc under the supply ver sion of the pathways as explained below and 43 tpc under the efficiency version by 205033 These would require Further improvements upon the historical rate of reduction in energy intensity 6080 percent share of the primary energy mix from renewables 75100 percent share of electricity mix from lowcarbon sources All of these energy pathways also require real reductions in aggregate emissions levels only after 2020 and avoid 3541 GtCO2e annually by 2050 see figure 25 and table 22 Furthermore all of these pathways assume nuclearfree development34 This studys central reference pathway the mixI pathway is characterized by i a reduction of final energy demand in 2050 to roughly 40 percent below the expected BAU level ii the pro gressive electrification of the current conventional liquidsbased transportation sector and iii a full portfolio of available renewable energy sources and technologies35 The mixII pathway is the same as mixI except that it implies that the current conventional liquidsbased transportation system will be maintained The efficiencyI pathway requires i significant improvements in energy efficiency achiev ing a 50 percent reduction in final energy demand by 2050 compared to BAU ii the displace ment of the conventional transport sector with an advanced transport system based on electrifi cation and iii an energytechnology mix that includes carbon capture and storage CCS Finally the supplyI pathway implies i final energy demand only 23 percent below the BAU level in 2050 ii an advanced electrified transportation system and iii the exclusion of existing nuclear power from the primary energy mix necessitating an even more substantial deployment of CCS 32 Our energy or moderate intervention pathways were based directly on a number of IIASAs GEA model pathways except that the landuse emissions reductions and associated intervention costs have been stripped from IIASAs versions to produce pure energy intervention pathways The authors combined or aggressive intervention pathways were derived by com bining in different permutations the pure energy intervention pathways with our landuse or ZNLUAFOLU pathways the latter of which have been based on the authors own elaboration although they rely on IIASA GEAs projections of the financial expenditures necessary to achieve reductions in land use emissions along their model pathways See annex 2 for further explanation of the IIASA GEA model pathways 33 In general IIASA GEAs efficiency pathways would bring down the regions per capita emissions more slowly than the mix or supply pathways but with the enormously beneficial tradeoff of requiring far lower financial expenditures as falling final demand nullifies the need for enormous amounts of energy expenditures otherwise required under the businessasusual tra jectory Among this studys aggressive pathways the least expensive are those in which AFOLU actions have been combined with the energy interventions of the efficiency pathways 34 All energy pathways designated type I also incorporate the gradual transformation of the conventional liquidsbased trans portation systems into advanced transportation systems based on electrification and some use of hydrogen Conversely the pathways designated as type II imply the maintenance of the status quos liquidsbased transportation infrastructure 35 This does not necessarily imply that LAC would eliminate nuclear power from the regional energy matrix completely by 2050 but rather that nuclear power would not be expanded from the current low production levels 51 The Climate and Development Challenge for Latin America and the Caribbean Combined pathways Combined pathways combine energy actions with landuse policies stringent enough to achieve both the goals of the AFOLU that is ZNDD 2020ZNLU 2030 and the energy pathways thus attaining the 2 tpc goal or even in some cases 1tpc or below by 2050 The principal difference between the energy or moderate and combined or aggressive pathways is an aggressive cut in landuse emissions A summary of the extent to which some of these pathways comply with the 2 tpc target is presented in figure 25 and table 22 To reach the 2 tpc goal LAC clearly requires a combined approach In addition reductions in the emissions of shortlived pollutants that contribute to changes in albedo such as soot or black carbon could offer an immediate benefit by delaying the onset of local changes such as rate of glacier retreat in the Andes36 Figure 25 Alternative Emissions Pathways 201050 MtCO2e 8000 100 80 60 40 20 4000 6000 2000 7000 3000 2010 2030 2020 2040 2050 0 00 5000 1000 tCO2e per capita LAC BAU trajectory AggressiveI efficiency MixI Aggressive mixII Aggressive mixI Aggressive mixI AFOLU ZNDD 2020ZNLU 2030 Aggressive mixI AFOLU ZNDD 2020ZNLU 2030 Supply I MixII Source Version 20rc1 of the GEA Scenarios Database of the International Institute for Applied Systems Analysis IIASA and authors elaboration 36 This includes energy and transportation emission reductions and changes in agriculture forestry and landuse changes need ed for example to ensure that the region reduces its radiative forcing by a proportion that if matched everywhere else on the globe would hold overall global warming averages within a certain possible range such as 2C above preindustrial levels That said if other major regions fall short even heroic measures in the LAC would likely be insufficient to realize this global goal 52 The Climate and Development Challenge for Latin America and the Caribbean Table 22 Summary of Alternative Emissions Pathways to Reach 2050 Goals Actions Pathway Land use Energy Other Reduced GtCO2e vs BAU Percentage of 2 tpc target 53Gt Approaches that center on landuse change ZNDD 2020 ZNLU 2030 Zero net deforestation or degradation by 2020 and zero net CO2e from all LULUCF post2030 No change from BAU No change from BAU 067 13 ZNDD 2020 ZNLU 2030 ZNDD 2020 and zero net CO2e LULUCF post2030 as above with annual net negative 035 Gt in 2040 and 07 Gt in 2050 No change from BAU No change from BAU 137 includes the 067 above 26 includes the 13 percent above AFOLU Same as ZNDD 2020 ZNLU 2030 above No change from BAU 50 percent cut in agriculture CO2e compared with BAU in 2050 245 47 Energycentered approaches MixI No landuse emissions reductions compared with BAU Increased efficiency a 70 percent lowcarbon primary energyb 97 percent low carbon generation and no nuclear Progressive electrification of the transportation system significant use of CCS post 2030 390 74 MixII No landuse emissions reductions compared with BAU Same as mixI Maintenance of conventional transp system bioenergy CCS in the long run 400 75 Combined approaches Aggressive mixI Same as ZNDD 2020 ZNLU 2030 Same as mixI Same as mixI 467 88 Aggressive mixI plus Same as ZNDD 2020 ZNLU 2030 Same as mixI Same as mixI 538 102 Aggressive mixI AFOLU Same as AFOLU Same as mixI Same as mixI 640 121 Source Version 20rc1 of the GEA Scenarios Database of the International Institute for Applied Systems Analysis IIASA and authors elaboration Note BAU business as usual CCS carbon capture and storage a Final energy demand is nearly 40 percent less than the demand under the BAU trajectory b This figure is compared with only 36 percent lowcarbon content in 2010 and 41 percent lowcarbon content under the BAU trajectory in 2050 53 The Climate and Development Challenge for Latin America and the Caribbean Table 22 indicates that of the pathways analyzed the combined or aggressive I plus pathway does the job by 205037 Figure 26 illustrates the route assumed under the aggressive I pathway This pathway reflects the relative difficulties associated with agricultural activities which constitute a major part of the remaining carbon footprint by 2050 Still even those emis sions will need to be tackled to reach further climate stabilization goals after 2050 Figure 26 AggressiveI Pathway 201050 BAU N2O agric Transportation Residential commercial Electricity Industrial feedstocks Land use CH4 Agricwaste Industry Other energy conversion MtCO2e 8000 4000 6000 2000 7000 3000 0 5000 1000 2010 2020 2030 2040 2050 Aggressive Pathway BAU Source Version 20rc1 of the GEA Scenarios Database of the International Institute for Applied Systems Analysis IIASA and own elaboration Some of the principal actions considered under the mixI plus pathway include Aggressive actions to stop net deforestation by 2020 This implies acceleration of recent trends that are only likely to be achieved through strong policy regulatory and enforcement action combined with forceful economic incentives Quick action would also be required to combat new and emerging threats including the potential damage from uncontrolled mining in the Amazon and Andes Piedmont regions that could quickly undermine recent gains No net emissions from landuse change by 2030 net accumulation of carbon sinks to 2050 and a 50 percent cut in agricultural emissions compared to the BAU trajectory This would also require major improvements in forestry landuse planning agriculture and animal husbandry practices some of which have not yet been widely deployed Such an effort would include opportunities to increase carbon sinks and a major campaign to recover at least some of the 3 million hectares of degraded lands in the region Innovative forestry conservation and sustainable landuse management practices would need to be implemented 37 Some of the other aggressive plus pathways would also achieve the target but the supply versions could do so only at much greater cost in terms of net financial additionality than the mix versions of the pathway The efficiency versions of the aggressive plus pathway fall somewhat short of the 2 tpc target in 2050 but they do so at a fraction of the financial cost involved in the supply or even the mix versions of this pathway see table 25 54 The Climate and Development Challenge for Latin America and the Caribbean on a progressively wider scale To meet the target the aggressiveI pathway would need to increase carbon sinks enough to achieve annual net negative landuse emissions of 035 GtCO2e by 2040 and 07 GtCO2e by 2050 An effort to abate final energy demand by 40 percent compared to the BAU This can only be achieved through bulk improvements in energy efficiency that is mass evolution of residential lighting toward LED devices efficiency improvements in the delivery of high pressure steam and lowenthalpy heat improvements in the energy efficiency of domestic appliances and space heatingair conditioning to counteract anticipated increase in use as well as other net reductions in demand Arresting and reversing the current carbonization path of the regional power matrix to achieve at least 90 percent zerocarbon installed nominal capacity in the sector This implies a major shift toward quick deployment of the regions substantial renewable energy endowment including solar geothermal wind and other resources Some other resources marine energy for example are not yet commercially available but could quickly become so with a strong technology push targeting barriers to market entry The wide use of marine energy in coastal nations could yield significant technology benefits as techniques are developed to attend to local conditions38 Actions would also be needed to remove barriers to private investment in the power sector Widespread electrification of the transport sector A continuing low or nearzero carbon power matrix would be required to support a transformation of the transport sector by 2050 To decarbonize the transport sector public modes would need to be quickly electrified using novel technologies that allow for highdensity energy storage and fast charging stations Fortunately the large investments already made in bus rapid transit systems BTRs can accommodate with relative ease the adoption of batterypowered vehicles Deployment of these technologies would also benefit local technology development Total decarbonization would also require that automobiles and freight vehicles move away from the use of internal combustion engines While this was merely an aspirational goal a few years ago technology developments now allow for quick electrification of all modes of transport in the region As with all pathways considered in this report expansion of nuclear energy is not considered The future exclusion of nuclear energy does not increase the costs of actions required under this pathway39 38 Such coastal lowcarbon and mitigation efforts should be closely coordinated with adaptation efforts in order to avoid dupli cation and to capture potential synergies in terms of ultimate additional costs and cobenefits 39 Some of the 41 potential pathways elaborated by IIASAGEA for LAC do register a slight increase in the overall net additional financial costs when nuclear expansion is excluded But at least as many other pathways produce some small reduction in expected overall net additional financial costs annually Excluding nuclear power expansion from the definition of the pathways only changes the cost equation in one direction or the other by 10 percent at most Most of the variation is accounted for by combining nuclear expansion or not with the requirement to both electrify the transport sector or not and to achieve very significant lowcarbon levels in the electricity generation mix 75100 percent Given the uncertainties surrounding the future of nuclear power and its attendant cost structures a 10 percent difference is not likely to persuade LAC policymakers and investors to expand nuclear power at least not very rapidly or by very much Indeed all of the IIASA GEA Pathways for more see annex 2 that allow for the expansion of nuclear power in competition with other energy sources within the matrix project only a very minor increase above the already low levels less than 1 percent of the LAC primary energy mix In this sense nuclear power remains nearly irrelevant to this study 55 The Climate and Development Challenge for Latin America and the Caribbean Table 23 presents a summary of the different emission scenarios including the estimated emissions the volume of emissions avoided and the estimated per capita emissions by 2050 Table 23 Summary of Emissions Scenarios 19902050 Scenario Emissions 2050 MtCO2e Percent change in 1990 levels tCO2e per capita in 2050 MtCO2eyr avoided vs BAU in 2050 6727 MtCO2e Percent difference from BAU in 2050 LAC BAU 6727 47 930 ZNDD 2020ZNLU 2030 5360 35 715 1370 25 Energy mixI 2780 39 371 3947 59 LAC 2 tpc target 1450 68 200 5277 78 Combined aggressiveI 1390 70 186 5337 79 Source Version 20rc1 of the GEA Scenarios Database of the International Institute for Applied Systems Analysis IIASA and authors elaboration Note These potential LAC shares of the global mitigation burden are substantially lower by 30 percent60 percent than LACs share of global annual emissions 11 percent in 2005 Financial costs of the intervention pathways Using the financial projections of IIASAs GEA message model this study has estimated the ad ditional financial needs both investment and expenditures required of the LAC economy to achieve the emissions reductions implied in each of the potential pathways The financial costs of the landuse or AFOLU pathways Based on the analysis of the financial cost projections incorporated into IIASAs GEA mix path way scenario we estimate that upwards of 24 billion annually by 2030 would be required to achieve the ZNDD 2020ZNLU 2030 pathway see tables 24 and 25 and annex 3 Additionally the estimate suggests that some 53 billion annually would be required by 2050 to continue aug menting LACs carbon sinks enough to achieve the ZNDD 2020ZNLU 2030 plus pathway The average net cost of abatement required along these pathways is estimated to be 2224tCO2e40 40 This studys estimates for the ZNDD 2020ZNLU 2030 pathways are based on the nonenergy expenditures projected by IIASA for its GEA mixII pathway and assigned to actions to preserve and augment carbon sinks including REDDREDD These projected costs calculated by subtracting the nonenergy expenditures under the GEA mixII pathway with conven tional transport and no sinks from those nonenergy expenditures under the GEA mix pathway with conventional transport and a full portfolio are approximately 22 billionyear by 2020 64 billionyear by 2030 157 billionyear by 2040 and 325 billionyear by 2050 See annex 3 for a fuller explanation of how net additional financial cost projections were formulated for the pathways and the major components of the Aggressive I plus pathway But our refinements to produce the land use pathway estimates assume that the projected GEA mixI and II pathway REDDREDD expenditures are responsible for reducing landuse emissions from their current 2010 levels as opposed to only from the BAU levels between 2020 and 2050 This assumption is made because the IIASA GEA BAUcounterfactual includes no nonenergy expenditures in any year despite the projected 60 percent decline in landuse emissions between 2010 and 2050 under the BAUcounterfactual trajec tory It appears that this decline is assumed by IIASA to come only from the global macro effects of rising income wealth and modernizationa highly uncertain if not unlikely assumption Finally these expenditures are also assumed to include readiness implementation and transactions costs in addition to compensation for opportunity costs 56 The Climate and Development Challenge for Latin America and the Caribbean While such an estimate implies a range of uncertainty it falls clearly within the wide range of global estimates in the existing literature table 24 For example some estimates for a com plete global halt to deforestation by 2030 the ZNDD 2030 scenario are as low as 12 billion an nually to compensate for the opportunity costs of deforestation and forest degradation with an average abatement cost of approximately 2tCO2e Blaser and Robledo 2007 At the other end of the spectrum one of the most widely quoted estimates Eliasch 2008 suggests that 17 bil lion33 billion would be required annually to compensate for opportunity costs associated with only a 50 percent reduction in global deforestation emissions by 2030 Meanwhile the European Commission has estimated that a 50 percent global abatement of deforestation emissions by 2020 would cost 20 billion33 billion a year while a complete global halt to deforestation emissions by 2030 would cost 38 billion96 billion annuallyat an overall average abatement cost as high as 90 per tCO2e see Grondard Martinet and Routier 200841 Of the few existing LAC regional estimates the McKinsey Report of Enkvist Nauclér and Rosander 2007 estimated that the average abatement costs for a 75 percent reduction in defores tation emissions would be 50tCO2e While such topdown estimates tend to be relatively high local bottomup estimates for LAC are much lower Olsen and Bishop 2009 for example estimate the opportunity costs for avoid ing deforestation in the Amazon to be around 5tCO2e of abated carbon 41 Global estimates from the IPCC are even higher and range from 40 billion to as much 350 billion a year Grondard et al 2008 using authors currency conversion of 128euro 57 The Climate and Development Challenge for Latin America and the Caribbean Table 24 Selected Estimates of the Opportunity Cost of Halting Deforestation Level of abatement Cost billionyear tCO2e Source Deforestation 50 percent abatement by 2020 2033 billionyear European Commission 2008 Deforestation complete eradication by 2030 3896 billionyear up to 90tCO2e European Commission 2008 Deforestation 50 percent abatement by 2030 1733 billionyear Eliasch 2008 LAC ZNLU 2030 2040 billionyear Eliasch 2008 adjusted through authors assumptions to LAC region see below Deforestation full halt 40350 billionyear IPCC WGIII AR4 Deforestation 49 percent abatement 22tCO2e Kindermann et al 2008 Deforestation 65 percent abatement 40tCO2e Blaser and Robledo 2007 Deforestation 5tCO2e Olsen and Bishop 2009 Deforestation 65 percent abatement by 2030 112 billionyear 28tCO2e Blaser and Robledo 2007 Deforestation full halt by 2030 12 billion 2tCO2e Blaser and Robledo 2007 LAC deforestation 75 percent abatement 5000tCO2e McKinsey Report by Enkvist Nauclér and Rosander 2007 Avoided degradation 73 billionyear 11tCO2e Blaser and Robledo 2007 LAC ZNDD 2020ZNLU 2030 17 billionyear in 2020 21 tCO2e 24 billionyear in 2030 15CO2e 30 billion in 2040 18tCO2e 37 billion in 2050 23tCO2e Authors estimates based on IIASA GEA projections and assumptions Source Meridian Institute 2009 and authors estimates These cost estimates for landuse change mitigation measures typically compensate for op portunity costs but not all of the additional costs of REDDREDD readiness and implementation Together with transactions costs related principally to landuse governance these additional costs are estimated by some to be approximately onethird of the value of opportunity costs Ol sen and Bishop 200942 Nevertheless our analysis adjusts one of the most widely cited estimates from the existing literaturethe 17 billion33 billionyear estimate for a 50 percent reduction in global landuse 42 Other sources Meridian Institute 2009 place readiness implementation and transactions costs at 50 percent of opportunity costs while some WWF 2011 have estimated that these additional costs can be as much as 100 percent of opportunity costspotentially doubling the current range of financing estimates 58 The Climate and Development Challenge for Latin America and the Caribbean emissions by 2030 Eliasch 2008 to generate an equivalent projection of the total financial cost of 20 billion40 billion annually by 2030 for LAC for complete ZNDD 2020ZNLU 2030 Our adjustment to this regional estimate is based on the following assumptions Total abatement of emissions from deforestation by a particular date will cost roughly twice the amount needed to achieve 50 percent abatement by the same date Readiness implementa tion and transaction costs are approximately 50 percent of opportunity costs43 Roughly 40 per cent of the abatement costs for global landuse emissions can be assigned to LAC44 This estimate 20 billion40 billion by 203045 is in line with our IIASAbased financial projections for LAC presented in table 25 total annual financial costs reach 17 billion by 2020 with ZNDD 24 billion by 2030 with ZNLU 30 billion by 2040 assuming no net additions to sinks as in the aggressiveI pathway and 37 billion by 205046 Although this estimate is based on regional not global cost projections it remains vulner able to the potential overestimation typical of such topdown approaches Olsen and Bishop 2009 One factor that could lower these estimates would be additional synergies not included in these cost projections that may emerge if the combined or aggressive intervention path ways are pursued Nevertheless when incorporated into estimates of the combined net finan cial costs of the aggressive pathways even these relatively high cost estimates do not appear to be prohibitive 47 The financial costs of the energy moderate and combined aggressive pathways The overall costs of the energy pathways presented in table 24 are based on the projected energy expenditure and energy investment requirements generated by IIASAs GEA model pathways see Riahi et al 2011 These estimates are presented in both total and net terms that is in both gross terms and net of the expected BAU expenditures The annual net costs associated with the various alternative mitigation pathways correspond to the additional funds required each year to move from the scenario of the BAU trajectory to any particular energy intervention pathway48 While the gross financial requirements are higher in annual terms over the 40 years to 2050 once the required BAU investment and expenditures are netted out as they will need to be in curred in any event the additional costs are less onerous 43 This result is in line with the Meridian Institutes estimate and between Olsen and Bishops 33 percent and the WWFs 100 percent 44 This figure is derived by using IIASA GEAs LAC landuse figures to adjust CAITs 46 percent share of global landuse emissions assigned to LAC down to 38 percent 45 This projection adjusts existing global estimates to become LAC specific and takes into account readiness implementation and transaction costs 46 The total financial costs beyond 2030 rise more sharply in the case of the ZNDD 2020ZNLU 2030 plus pathway which adds net sinks and reduces net emissions by a further 035 GtCO2e each year in the decade to 2040 and a further 07 GtCO2e each year in the decade to 2050 In this pathway these annual costs reach 36 billion by 2040 and 53 billion by 2050 47 Caution must nevertheless be exercised when considering the potential financial requirements of landuse emissions abate ment interventions Given the wide range of available estimates and the enduring nature of the underlying uncertainties it is difficult to know with any certainty how much these scenarios will ultimately cost in terms of financial additionality 48 The net additional financial costs include the estimated total annual financial costs required to achieve the necessary energy transformations and associated emission reductions implied by each pathway which encompass the total investment and other noninvestment expenditures for energy actions including supply and demand sides minus the total annual financial costs that would be required under the BAU scenario used in this report that is the IIASA GEA message models counterfac tual scenario For example achieving the mixI version of the moderate intervention energy pathway would imply rising total financial costs that would reach 132 billion annually by 2020 and 508 billion annually by 2050 In any case approximately 460 billion in annual investment and other noninvestment expenditures would have to be channeled into the regions energy sector by 2050 just to meet the supply and demand requirements under the current fossilfuel dominated BAU tra jectory even with no specific interventions to transform the energy or landuse systems In this sense the mixI moderate intervention pathway requires only 43 billion in net financial additionality above and beyond the BAU scenario by 2050 59 The Climate and Development Challenge for Latin America and the Caribbean For example the moderate intervention mixI pathway which would electrify LACs trans portation systems while excluding nuclear power from the energy mix would cost 132 billion annually in gross financial terms by 2020 including lower current though still substantial finan cial requirements that would increase each year But this pathway would also imply systemwide net savings of more than 8 billion annually once annual BAU expenditures to 2020 are factored out Thus the pathway yields an average financial abatement cost of 213tCO2e gross and negative 13tCO2e net respectively in that year see table 2449 The mixI pathway would require a gross total of 508 billion annually by 2050 nearly 267 percent of the regions projected GDP in that year or 11 percent of its 2010 GDP In net terms this pathway would require only 43 billion annually with an average net abatement cost of only 11 tCO2e by 2050 This total would represent less than 025 percent of the regions projected GDP PPP in 2050 or 093 percent of LACs 2010 GDP50 However the mixI pathway would only reduce LAC per capita emissions to 371t In order to reach the 2 tpc goal the LAC would need to pursue the combined mixIplus pathway The total gross and net cost estimates for the combined pathways reflect the combina tion of cost projections from both the energy and the landuse pathways51 The combined ag gresive mixI plus pathway would imply total gross and net additional annual costs of nearly 150 billion and 10 billion respectively by 2020 lower but substantial and rising annual sums will be required in each year leading up to that date By 2050 these annual requirements would reach 561 billion in gross terms but only 97 billion in net terms A number of other combined pathways would also reduce LAC emissions to near or below the 2 tpc goal For example the aggressive mixIIplus pathway with conventional transporta tion would result in a level of 188 tpc in 2050 In addition the aggressiveI efficiency plus pathway while only bringing the region to 25 tpc implies net financial additionality of only 39 billion If additional landuse emissions inter ventions could force an adjustment down to 20 tpc such a fortified version of the aggressiveI efficiency plus pathway would cost 48 billion in net financial additionality in 2050 far more economical than the aggressive mixI plus and the aggressive mixII plus pathways On the other hand a similarly fortified version of the aggressiveII efficiency plus pathway with con ventional transportation would ultimately cost only 30 billion annually by 2050 in net financial additionality one of the cheapest ways to reach the 2 tpc goal identified in this study Table 25 makes clear that the efficiency versions of the pathways are cheaper than their mix and supply counterparts The aggressiveI AFOLU efficiency pathway would bring LAC emis sions to nearly 1 tpc by 2050 although the net financial additionality would come to only 49 billion annually while the aggressiveII AFOLU efficiency pathway would reach just below 1 tpc with an annual net financial additionality of 40 billion in 2050 Even the most vigorous and expensive of the presented pathwaysthe aggressive II AFO LU supply pathway which would bring net emissions to nearly zero and per capita emissions to 015 tpcis projected to cost no more than 187 billion annually in net terms by 2050 less than 1 percent of the regions projected 2050 GDP 49 Net financial additionality and net average financial cost CO2e can be negative at certain points in time along some of the pathways as some interventions displace certain rising BAUrelated financial requirements In the case of the mixI pathway the displacement is produced by both the reduction in final demand of 40 percent by 2050 and the shift from con ventional to advanced transportation which displaces more expensive petroleumbased transportation 50 The projected LAC GDP for 205019 trillion measured in 2005 dollarscomes from the IIASA GEA Scenario Databases message model and reflects an assumption of approximately 36 percent average annual growth between 2010 and 2050 for the region For comparative purposes LACs GDP for 2010 in 2005 dollars was 46 trillion 51 Note that the average net financial abatement cost of mitigation is not the same as the wellknown marginal abatement cost or MAC of mitigation activities Rather it is the per tCO2e average of the net additional financial costs that is the nec essary financial resources in addition to those that would be required in any case under the BAU trajectory of any particular mitigation pathway 60 The Climate and Development Challenge for Latin America and the Caribbean Table 25 Emissions Pathways Cost from 2010 to 2050 Alternative pathways based on ZNDD 2020 ZNLU 2030 Financial cost billion year 2020 Financial cost billion year 2050 Percent of GDP LAC PPP 19 trillion 2005 in 2050 Average financial cost 2005 tCO2e in 2050 Total and per capita emissions 2050 GtCO2e and tCO2e ZNDD 2020 ZNLU 2030 18 37 019 23 606 806 ZNDD 2020 ZNLU 2030 18 53 028 23 536 715 AFOLU 19 64 033 19 427 589 Moderate intervention mixI adv transport Total 132 508 267 129 278 Net of BAU 82 43 023 110 371 Moderate intervention mixII conv transport Total 144 485 260 122 276 Net of BAU 31 203 01 51 368 Moderate intervention efficiencyI adv trans Total 115 450 236 128 321 Net of BAU 25 150 007 40 429 Moderate intervention supplyI adv trans Total 162 544 286 131 259 Net of BAU 22 800 042 190 345 Moderate intervention supplyII conv trans Total 203 588 310 141 257 Net of BAU 62 1240 065 300 342 Aggressive mixI adv trans Total 150 545 287 118 209 Net of BAU 100 810 043 174 279 AggressiveI efficiency adv trans Total 133 487 256 117 255 Net of BAU 7 230 012 54 340 AggressiveI supply adv trans Total 180 581 310 121 192 Net of BAU 40 1170 062 240 256 Aggressive mixII conv trans Total 162 522 275 113 210 Net of BAU 21 580 031 125 280 AggressiveII efficiency conv trans Total 136 478 252 113 250 Net of BAU 47 140 007 32 335 61 The Climate and Development Challenge for Latin America and the Caribbean AggressiveII supply conv trans Total 221 626 330 130 190 Net of BAU 805 1610 085 330 253 Aggressive mixI adv trans Total 150 561 295 105 139 Net of BAU 10 970 051 180 186 AggressiveI efficiency adv trans Total 133 503 265 103 185 Net of BAU 7 390 021 80 246 AggressiveI supply adv trans Total 180 597 314 109 122 Net of BAU 40 1330 070 240 163 Aggressive mixII conv trans Total 162 538 283 101 141 Net of BAU 21 740 039 140 188 AggressiveII efficiency conv trans Total 136 494 260 100 181 Net of BAU 47 300 016 60 242 AggressiveII supply conv trans Total 221 642 340 116 120 Net of BAU 80 1770 093 320 160 Aggressive mixI AFOLU adv trans Total 151 571 300 89 031 Net of BAU 11 1070 056 170 041 AggressiveI AFOLU efficiency adv trans Total 134 513 270 86 076 Net of BAU 6 490 026 80 102 AggressiveI AFOLU supply adv trans Total 181 607 320 92 014 Net of BAU 41 1430 075 220 018 Aggressive mixII AFOLU conv trans Total 163 548 290 86 033 Net of BAU 22 840 044 130 044 AggressiveII AFOLU efficiency conv trans Total 137 504 265 84 073 Net of BAU 35 400 021 660 097 AggressiveII AFOLU supply conv trans Total 222 652 340 99 011 Net of BAU 82 1870 098 280 015 Source Version 20rc1 of the GEA Scenarios Database of IIASA and authors elaboration Note All pathways presented here assume nuclearfree development that is to say no nuclear expansion beyond the current reactor infrastructure which in any event only contributes 08 percent of the regions current primary energy mix Financial cost net of BAU projected annual energy capital investment plus annual operation and maintenance costs to the energy system and other nonenergy expenditures related to REDD halting of deforestation net creation of carbon sinks and the abatement of nonCO2e emissions Financial cost net of BAU net financial additionality these costs are incremental costs to the system corresponding to the different potential interventions The average financial cost of abatement is also presented in both total gross and net terms The ZNDD 2020ZNLU 2030 ZNDD 2020ZNLU 2030 and AFOLU costs are derived internally from the GEA mix models landuse expenditures and emissions reductions While these landuse cost estimates are well within the range of other existing estimates the wide variability of existing estimates suggests caution when assessing the potential costs of landuse emissions abatement 62 The Climate and Development Challenge for Latin America and the Caribbean Net additional financial costs of the major interventions required under the aggressive mixI plus pathway To facilitate investment planning this section summarizes the annual projected gross and net additional financial costs by 2050 at the sectoror policy interventionlevel that is deforesta tion and land use agriculture efficiency power and transportation Further elaboration on how projections were formulated can be found in annex 3 A halt to deforestation ZNDD 2020 and landuse ZNLU 2030 emissions and the augmentation of carbon sinks plus pathways In order to reach the goals of zero net deforestation by 2020 zero net landuse emissions by 2030 and net additional sinks by 2050 net additional financial costs would be required beginning immediately and reaching 53 billion by 2050 see table 25 Gross and net financial additionality for the ZNDD 2020ZNLU 2030 pathway are the same 37 billion annually for 2050 given that there are no expenditures projected under the BAU trajectory for the LULUCF sectors52 These net additional landuse expenditures would be spent on Efforts to increase the productivity of forestry and agricultural activities to avoid any addi tional forest cover loss urgent action will be required to combat emerging threats to forests including damage from uncontrolled mining in the Amazon and Andes Piedmont regions The costs of enforcing deforestation restrictions The costs of REDDREDD readiness and implementation which combined with transac tions costs related principally to landuse governance typically make up as much as one third of total net financial additionality for LULUCF mitigation activities Investments in the support and enhancement of carbon sinks among other activities This last cost component 16 billion spent annually by 2050 on the net addition of sinks is likely to be even more challenging than simply arresting deforestation by 2020 and all other LULUCF emissions by 2030 that is ZNLU 203053 This more rigorous pathway would also require major improvements in forestry landuse planning agriculture and animal husbandry practices some of which are yet to be deployed widely54 Innovative forestry conservation and sustainable land use management practices will need to be implemented on a progressively wider scale This implies acceleration of recent trends that are not yet fully consolidated and are only likely to be achieved through strong policy vigorous regulatory and enforcement action and forceful economic incentives A significant reduction of agricultural emissions To cut agricultural emissions in half by 2050 the study estimates that gross and net additional costs of 10 billion would be required no expenditures on nonenergy mitigation activities are projected for the BAU The required expenditures would include the marginal costs for market entry of new lowcarbon agricultural practices the costs of dissemination extension services and awareness investments in new cultivars that reduce the need for agricultural inputs such as synthetic fertilizers and pesticides the conversion process to maximize local and organic ag riculture and others 52 These gross and net figures for financial additionality required to achieve the ZNDD 2020ZNLU 2030 pathway come directly from table 25 see the relevant section in annex 3 for a detailed explanation of how these projections were formulated 53 To meet the 2 tpc target the aggressive mixI pathway would need to increase carbon sinks enough to achieve annual net negative land use emissions of 035 GtCO2e by 2040 and annual net negative land use emissions of 07 GtCO2e by 2050 54 There are significant areas of overlap between LULUCF mitigation activities and agricultural mitigation activities Major syner gies might be exploited through pursuit of the more inclusive and holistic approach implied in the AFOLU pathway Although we have projected LULUCF net financial additionality separately from that of agriculture there is clear potential to reduce financial requirements by integrating the approaches and taking advantage of such synergies 63 The Climate and Development Challenge for Latin America and the Caribbean Table 26 AFOLU Pathway Components Required Financial Additionality 2050 billions Sector components Gross additional annual total by 2050 Annual total expenditures under BAU by 2050 Net additional annual total by 2050 ZNDD 2020ZNLU 2030 net zero deforestation by 2020 and net zero landuse emissions by 2030 37 No expenditures projected under the BAU 37 ZNDD 2020ZNLU 2030 Additional net carbon sinks An additional 16 No expenditures projected under the BAU An additional 16 Agriculture 50 percent reduction against BAU by 2050 An additional 10 No expenditures projected under the BAU An additional 10 AFOLU pathway 63 63 Source IIASA GEA model database and authors elaboration Note AFOLU cost projections here assume the development of the mixII conventional liquid transportation pathway But each GEA illustrative pathway implies slightly different AFOLU costs This accounts for the slight deviation between the total gross additional financial requirements of the aggressive I plus pathway 560 billion annually in 2050 and a simple summation of AFOLU costs assuming mixII and energy costs assuming mixI or 571 billion in 2050 Such a 10 billion20 billion variation is typical among gross financial additionality projections particularly in the realm of AFOLU for the various pathways See table 24 Increased energy efficiency In order to improve energy efficiency enough to reduce final demand by 40 percent compared to BAU the necessary net additional expenditures would reach 88 billion annually by 2050 once all related projected expenditures under the BAU have been discounted see table 27 Required gross additional annual expenditurescompared to the current level of expenditures in 2010 would rise to 104 billion in 2050 see annex 3 for a detailed explanation of projected efficiency related expenditures under the BAU 64 The Climate and Development Challenge for Latin America and the Caribbean Table 27 Moderate Energy MixI Pathway Components Required Financial Additionality 2050 billions Sector components Gross additional annual total by 2050 Annual total expenditures under BAU by 2050 Net additional annual total by 2050 Energy efficiency final demand 40 percent below BAU by 2050 104 16 88 demandside investment 83 0 83 electricity transmission distribution 21 16 5 Decarbonization of electricity more than 90 percent of installed capacity 133 67 66 investment in nonfossil electricity 62 31 31 electricity transmission and distribution 21 16 5 unallocated IIASA noninvestment expenditure 50 20 30 Electrification of transportation 50 20 30 unallocated IIASA noninvestment expenditure 50 20 30 Carbon capture and storage 17 17 investment in CCS 7 0 7 unallocated IIASA noninvestment expenditure 10 0 10 Other energy actions 204 362 158 investment in fossil fuel extraction 54 170 116 investment in fossil electricity generation 2 4 2 other supplyside investment district heat oil refineries bioenergy extraction production of hydrogen synfuels 42 38 4 unallocated IIASA noninvestment expenditures fuel and other energy inputs both private spending and public subsidies 106 150 44 Moderate energy mixI pathway 508 465 44 Source IIASA GEA model database and authors elaboration Note This energy pathway a requires over 21 trillion in cumulative gross additional investment in transmission and distribution including storage and in nonfossilfuelgenerated electricity b achieves 978 percent lowcarbon generation by 2050 counting biomass without CCS and all forms of generation with CCS as lowcarbon sources These financial requirements stem from the estimated marginal additional costs of adopting new energy conservation and efficiency practices and technologies the dissemination costs of adopting new energy efficiency practices and additional operational and maintenance costs Any effort to abate final energy demand by 40 percent compared to the BAU can only be successful through bulk improvements in energy efficiency as well as other net reductions in demand 65 The Climate and Development Challenge for Latin America and the Caribbean Decarbonization of the power sector By 2050 the costs of achieving 97 percent decarbonization of the LAC power sector would require 133 billion annually in gross financial additionality and 66 billion annually in net terms once fossilfuel electricity and gridrelated investment expenditures projected under the BAU have been discounted Such net additional expenditures would cover i the additional annualized costs of generation caused by entry of renewable energy resources ii the costs of upgrading and expanding transmission grids including the expenditures required to incorporate intermittent sources that is the costs of additional reserves to manage firm capacity of intermittent sources and iii costs related to additional capacitybuilding and training of grid operators Arresting and reversing the current carbonization path of the regional power matrix by 2050 would imply a major shift toward rapid deployment of the substantial renewable energy endow ment in the region Fortunately there is a sizable endowment of solar geothermal wind and other resources in the LAC region that can be put to use Some other resources marine energy for example are not yet commercially available but could be if a strong technology push is ad opted that would target barriers to market entry Largescale entry of marine energy in the coastal nations may revert in substantial technological benefits as techniques and practices are devel oped to attend to local conditions Actions would also be needed to remove barriers to private investment in the power sector Electrification of transport To achieve widespread electrification of the transport sector our estimated projection foresees net additional expenditures of about 30 billion annually by 2050 50 billion annually in gross terms compared with 20 billion annually projected under the BAU by 2050 see table 28 and annex 3 This would include the additional capital and net additional operation and mainte nance costs of electric systems power storage and charging stations training for operators of public transport systems and maintenance stations and rollout of an electric vehicle fleet A continuing low or nearzero carbon power matrix would be required to support a low carbon transport sector by 2050 To decarbonize the transport sector public modes would need to be quickly electrified using novel technologies that allow for high density energy storage and fast charging stations Fortunately the large investments already made in bus rapid transit systems BTRs can accommodate with relative ease the adoption of batterypowered vehicles Deployment of these technologies would also benefit local technology development Total decar bonization would also require that automobiles and freight vehicles move away from internal combustion engines Whereas this was just an aspirational goal a few years ago recent technol ogy developments allow for the possibility of quick electrification of all modes of transport in the region Together the six principal interventions analyzed above halting deforestation augmenting carbon sinks reducing agricultural emissions improving energy efficiency decarbonizing the power sector and electrifying transport would entail total gross additional financial expendi tures of 350 billion annually by 2050 see table 29 But this is still some 210 billion annually below the total gross financial additionality the total amount of finance that must be mobilized Furthermore because a projected 103 billion required annually under the BAU will be displaced or saved in terms relative to the BAU under the reference intervention pathway aggressive mixI the net financial additionality required to implement these six interventions would only be 247 billion annually by 2050 66 The Climate and Development Challenge for Latin America and the Caribbean Table 28 Priority Mitigation Interventions Required Financial Additionality 2050 billions Sector components Gross additional annual total by 2050 Annual total expenditures under BAU by 2050 Net additional annual total by 2050 ZNDD 2020ZNLU 2030 37 0 37 ZNDD 2020ZNLU 2030 16 0 16 Agriculture 50 percent reduction against BAU by 2050 10 0 10 Energy efficiency 104 16 88 Decarb power 133 67 66 Electrification of transportation 50 20 30 Subtotal 350 103 247 Source IIASA GEA model database and authors elaboration Other interventions and financial requirements of the aggressive mixI plus pathway There are other costs associated with actions to be taken under the reference pathways First CCS efforts under the intervention pathways would require an additional 17 billion annually by 2050 in both gross and net terms as no CCS expenditures are projected under the BAU see table 28 Second a range of other energy actions are incorporated into the reference pathways includ ing i investment in fossil extraction 54 billion annually in 2050 versus 170 billion annually under the BAU or negative 116 billion annually in net terms once displaced BAU expenditures have been discounted ii investment in fossil electricity generation 2 billion annually in 2050 versus 4 billion annually under the BAU iii other supplyside investment 42 billion an nually in 2050 including investments in oil refineries district heat and bioenergy extraction as well as production of hydrogen and synfuels versus 38 billion annually under the BAU and iv other noninvestment expenditures that are estimated within the overall intervention pathways but which are not allocated to any specific line items by IIASA as discrete projections 106 bil lion annually by 2050 versus 150 billion annually under the BAU55 These other financial expenditures required under the aggressive mixI plus pathway are projected to reach 204 billion annually in 2050 in gross terms But in terms of net financial ad ditionality this other category turns out to be negative 158 billion annually by 2050 This implies that compared to the BAU trajectory the aggressive mixI plus pathway in volves significantly fewer new additional annual expenditures in certain subsectors in which large savings are reaped because of lower future investment in expensive fossilfuel extraction and generation by far the largest crosssectoral savings from the aggressive mixI plus path way around 118 billion annually in savings in 2050 when compared with the BAU and from lower noninvestment spending on increasingly costly fossil fuels for transportation and elec tricity consumption 44 billion annually in savings in 2050 see tables 26 and 28 55 Much of this large projected additional financial requirement under the BAU trajectory stems from the rising price of fossil fuels in particular and of carbon in general projected to occur in the future Increasingly expensive fossil fuel extraction transport refining and processing and distribution represents much of the potential savings available through a displace ment of the BAU trajectory by our reference intervention pathways 67 The Climate and Development Challenge for Latin America and the Caribbean The projected additional financial requirements described above are presented in both gross and net terms56 Nevertheless this is not the most relevant category of required financial addition ality given that current financial expenditures on energy and AFOLU sectors will be insufficient to meet the rising demands of both over the decades until 2050 Indeed total additional financial expenditures required under the BAU are also much greater than the current financial expenditures required to maintain the status quo an additional 464 billion in financial expenditures will be required annually by 2050 compared to those required at present just to meet rising LAC energy demand projected under the BAU trajectory and with out any additional emissions mitigation efforts This means that even if LAC actors do nothing to change the current policy trajectory required annual financial additionality will rise to 464 billion annually by 2050 Meanwhile LAC emissions would increase from around 47 GtCO2e in 2010 to around 67G tCO2e or from over 6 tCO2e to over 9tCO2e in per capita terms see the previous section on projected emissions in the BAU scenario In that context a more relevant category of financial additionality for the evaluation of policy and budget options would be what we have termed total net additional financial requirements the result of discounting the addi tional financial expenditure required under the BAU from the total gross financial additionality required to achieve a particular intervention pathway 56 For the six principal intervention components identified and analyzed above these gross and net additional financial require ments are projected to collectively total 350 billion and 247 billion annually respectively by 2050 For the entire aggres sive mixI plus pathway gross and net additional financial requirements are projected to reach 561 billion and 96 billion annually respectively in 2050 This distinction between gross and net financial additionality required is important and easily misunderstood It should be remembered that our projections for the total amount of additional financial resources required for any intervention component that is decarbonization of the electricity sector or any pathway like aggressive mixI pluscome directly in the case of energy interventions and indirectly in the case of the LULUCFAFOLU interventions and pathways from the financial projections contained in IIASAs GEA model database see annex 3 for a full explanation of our use of IIASAs emissions and financial projections to generate our own AFOLU and energy pathways But IIASAs financial projections are presented explicitly only in what we have termed gross terms that is the amount of additional investment and noninvestment expenditures required to achieve the aggressive mixI plus pathway by 2050 starting from the current situa tion or more accurately 2010 In the case of the aggressive mixI plus pathwayas can be seen in tables 24 and 28 and in annex 3this required financial additionality comes to 561 billion annually by 2050 above and beyond what is currently being spent on energy and landuse change across LAC These gross financial requirements are additional relative to past and current financial requirements In other words it represents the increase in annual financial requirements compared to the present 68 The Climate and Development Challenge for Latin America and the Caribbean Table 29 Aggressive MixI plus and Aggressive MixI AFOLU plus Pathway Components billions Sector components Gross additional annual total by 2050 Annual total expenditures under BAU by 2050 Net additional annual total by 2050 ZNDD 2020ZNLU 2030 37 0 37 ZNDD 2020ZNLU 2030 16 0 16 Energy efficiency 104 16 88 Decarb power 133 67 66 Electrification of transportation 50 20 30 CCS 17 0 17 Other energy actions 204 362 158 Aggressive mixI plus pathway total 561 465 96 Additional Aggressive mixI AFOLU plus pathway component Agriculture 50 percent reduction against BAU by 2050 10 0 10 Aggressive mixI AFOLU plus pathway total 571 465 106 Source IIASA GEA model database and authors elaboration Note Electricity output under the aggressive mixI plus pathway is 12 percent higher than in the BAU pathway due to greater electricity use from the electrification of transportation The aggressive mixI plus pathway implies savings over the BAU path way in the areas of fossilfuelgenerated electricity and fossilfuel extraction of 128 billion annually by 2050 Significant additional finance will indeed need to be mobilized between now and 2050 in any case 561 billion annually by 2050 and approximately 112 trillion in cumulative terms under the aggressive mixI pathways and 464 billion annually by then and 93 trillion cumu latively under the BAU In other words the gross financial additionality will not be much higher than that required simply to move from the status quo present into the future along a businessas usual trajectory Even without any additional mitigation policy actions LAC will still have to spend 464 billion annually by 2050 under the BAU trajectory or approximately 93 trillion in cumula tive terms to 2050 These financial expenditures projected under the BAU are equivalent to more than 80 percent of what would be required to achieve the aggressive mixI plus pathway The implication is that for less than 100 billion annually in 2050 or less than 2 trillion cumulatively in incremental or net additional financial requirements the region could reduce its emissions from its projected level in 2050 under the BAU 93 tCO2e per capita to a level consistent with defending the 2C guardrail analyzed in the introduction 2 tCO2e far below the current level of 64 tCO2e Indeed the marginal additional finance required to meet the 2 t CO2e per capita target would be less than 20 percent over what the amount that will need to be mobilized anyway In this sense the most relevant category for determining pathways and poli cies remains the net additional financial requirement While gross financial additionality indicates the funds needed to achieve any emissions mitigation objective net financial additionality represents the additional effort required in com parison to the BAU trajectory The net additional financial requirements category can also be thought of as the savings implied by displacing or taking advantage of the additional financial resources that are necessarily built into the status quo trajectory In sum if LAC can afford to spend an additional 464 billion annually by 2050 under the 69 The Climate and Development Challenge for Latin America and the Caribbean BAU trajectory while continuing to rely on fossil fuels and allowing regional emissions increase by more than 40 percent then the region can certainly afford to spend an incremental 97 bil lion annually over what must be spent in the BAU by 2050 This is particularly clear given the additional economic social political environmental and technological cobenefits see chapter 3 that should stem from a significant mitigation effort The systemwide nature of projections for financial additionality and policy implications Finally it is important to keep in mind that the IIASA projections for required financial addi tionality and the extensions of their projections are systemwide incorporating all expenditures required across the regions entire energy system regardless of the nature of the actors involved that is public and private sectors producers and consumers Investment includes all public and private investment and noninvestment expenditures include not only operations and main tenance of public and private aspects of the system but also all of the expenditures required to purchase the final energy product Such expenditures are undertaken both by private household commercial and industrial consumers on the one hand and by states in the form of subsidies to maintain price controls or other types of public support for private purchase of final energy on the other The nature of such financial projections facilitates evaluation of policy and investment pri orities across the entire system Often this makes it easier to compare the substantial builtin financial costs of the status quo BAU trajectory with the financial additionality required under available intervention options 70 The Climate and Development Challenge for Latin America and the Caribbean Development Cobenefits from Adaptation and Mitigation Chapter 3 Climate impacts will impose substantial costs on development This report estimates these costs at approximately 100 billion per year by 2050 equivalent to approximately 22 percent of 2010 gross domestic product GDP Reducing the carbon footprint of the region to levels consistent with global climate stabilization goals will require a similar annual figure These costs would add to the regions already pressing investments needs which include poverty eradication and better health education food water and energy security and housing But these costs must be addressed because pursuing a path that ignores adaptation and mitigation needs would likely make development efforts less effective As posited by Wilbanks et al 2007 the physical impacts of climate change depend on atmospheric concentrations of greenhouse gas GHG emissions and the capacity to adapt to these changes Thus mitigation and adaptation targets are interrelatedmitigation attenuates the risks of global climate change while adaptation ameliorates specific impacts in a particular location Additionally some mitigation and adaptation actions might interact with one another to create synergies or might offer different alternatives to tackle a climate change impact Development cobenefits from adaptation The magnitude of the adaptation problem and the associated financial needs for the region are far in excess of the resources available today for this purpose That said the information at hand implies that the cost of adaptation efforts is probably lower than the costs of physical damages as seen in chapter 1 This finding highlights the need to invest early in adaptation Unless ad dressed physical impacts will represent a heavy burden to development agendas in the region Adaptation has the potential to not only reduce the net impact of climate consequences but also support the overall sustainability of development in Latin American and the Caribbean LAC Rather than being viewed as separate from development Leary et al 2008 adaptation should be seen as an integral component of development 71 The Climate and Development Challenge for Latin America and the Caribbean Whereas development needs are immediate the problems created by climate change though substantial are perceived as gradual far off and in some cases uncertain But a lack of action on adaptation will only generate more development needs in the future as the effects of climate change limit access to and the quality of natural resources Thus adaptation measures should be tightly intertwined with development to increase the longterm sustainability of development policies Adaptation actions can contribute to sustainable development practices and produce coben efits Table 31 summarizes some of the cobenefits expected from adaptation actions by sector or area of concern These cobenefits include improved water and food security technology develop ment and progress toward longterm development goals Adopting adaptation policies would also improve the use of natural resources which would trigger associated gains in productivity For example investments today to adapt the water sup ply to the impacts of climate change would result in better management practices and a reduction in waste Likewise improvements in the management of fisheries to address climate impacts would generate more sustainable practices further reductions in waste and additional improve ments in productivity Even with forceful adaptation actions in place only a major reduction in GHG emissions will affect the longterm future Mitigation is the ultimate firewall against lasting damages to the biosphere and the human activities it sustains Table 31 Adaptation Cobenefits by Sector Adaptation investment Development cobenefit Adapting agriculture to new climatic conditions Technological development and innovation Maintenance of natural land cover and services of ecosystems Arrest of land degradation Recovery of degraded lands Minimizing the impact of sealevel rise on coastal zones through protection and retreat Longterm land zoning Development of resilient infrastructure and coastal settlements Improved waste and sanitation management Reduced health impacts Recovering coral biome Maintenance of environmental services including coastal protection tourism and fisheries Adapting to new hydrology regimes Improvements in productivity Maintenance of ecosystem services Minimizing exposure to tropical vector diseases Improved public health and longer life expectancy Improved productivity and reduced loss of life Adapting based on biodiversity and ecosystems Maintenance of ecosystem services Maintenance of environmental services Source Authors compilation 72 The Climate and Development Challenge for Latin America and the Caribbean Development cobenefits from mitigation The mitigation effort required for LAC to reach the 2 tons of carbon dioxide equivalent tCO2e per capita goal by 2050 would also generate significant cobenefits for the region including im provements in human health and welfare enhanced energy security and more technological development These cobenefits valued at 2196tCO2 for air quality alone Nemet Holloway and Meirer 2010 could make the mitigation investments and expenditure outlays analyzed in chapter 2 appear more feasible Beyond the direct mitigation benefits of avoiding costly future climate change and adaptation policies such cobenefits also provide further economic incentives for LAC countries to engage more fully in the effort to forge an effective and workable post2012 global climate agreement Potential mitigation cobenefits are large enough to encourage a number of mitigation actions see table 32 Mitigation cobenefits have been estimated to amount to anywhere from 30 per cent to 100 percent or more of total abatement costs Bollen et al 2009 Pearce et al 1996 IPCC 2001 Most 70 percent90 percent of these estimated cobenefits are health related stemming from lower levels of local air pollution improvements in water quality and superior sanitation Aunan Aaheim and Seip 2000 This concentration of healthrelated cobenefits suggests that within the regions overall mitigation efforts lowcarbon energy strategiesparticularly trans portation policy interventions in urban zones and the promotion of distributed renewable power including modern cook stoves in rural areasshould be prioritized along with mitigation inter ventions in the waste and sanitation sectors Furthermore the cobenefits of emissions mitigation are usually local whereas the direct benefits of mitigation tend to be global in nature These locally accrued cobenefits table 32 can potentially stimulate key stakeholders from the public and private sectors as well as at the grassroots level to actively engage the problem of climate change Because climate change is a global phenomenon it is often perceived to be irrelevant to local interests In the end however emissions mitigation is not a purely international public good it is often a local public good as well OECD 2002 For example lowcarbon energy actions can cut emissions but they also tend to reduce en ergy demand through efficiency measures or provoke shifts in the energy mix toward cleaner sources through the rollout of renewables As a result mitigation policies reduce local air pollu tion leading to lower morbidity and mortality Additionally by reducing acid rain these policies can generate higher crop yields and lower maintenance costs for buildings and other structures Similarly transportation activities could produce further cobenefits beyond those stemming just from lower air pollution These cobenefits include reduced urban congestion lower noise levels and possibly even fewer road fatalities as a consequence of fewer vehicle miles traveled Finally cutting emissions by halting deforestation and creating carbon sinks forestry agriculture and other landuse miti gation practices could also protect biodiversity and related ecosystem services as well as reduce soil erosion and agricultural productivity losses through intensified reforestation and tree farm ing changes in agricultural practices and technologies and the creative rethinking of the role of forest and agricultural landuse policies in sustainable development Hecht 2012 73 The Climate and Development Challenge for Latin America and the Caribbean Table 32 Mitigation Cobenefits Area Cobenefit Economic Employment net job creation and income Human capital accretion Technological development and innovation National competitiveness valueadded chain Development environmental Energy access and reduction of energy poverty Local community benefits Biodiversity and other ecosystem services Reduced soil erosion Improved agricultural productivity Reduced acid rain Human health Reduced air pollution Improved water quality Improved waste and sanitation management Improved public health longer life expectancy reduced emergency room visits and fewer work days lost Strategic Energy security National competitiveness Source Riahi et al 2011 and authors elaboration In addition climate change pollution and energy security goals could be simultaneously achieved with significantly reduced energy costs if multiple economic benefits are properly ac counted for Note that the investment and savings figures presented in table 33 are global in scope While the savings in LAC would correspond to a smaller fraction of these global figures for cobenefit gains their significance should still be noteworthy for the region57 Table 33 Additional Benefits of Pursuing Various Objectives Simultaneously at the Global Level Cobenefit Investment required if pursued in isolation billionyr Benefits Additional synergistic benefits from an integrated approach billionyr Universal modern energy access provision of electricity and modern heating and cooking fuels 2238 24 million DALYs disabilityadjusted life years saved in 2030 Tightened pollution controls 200350 by 2030 10 percent20 percent of total energy costs 21 million DALYs saved in 2030 Up to 500 billion saved annually by pursuing stringent climate objectives at the same time Enhanced energy security reduced import dependence increased exports and diversification Strengthened macroeconomic positions heightened geopolitical influence Decarbonization could reduce the need for fossil fuel subsidies oil and coal to affluent populations 70 billion140 billionyr by 2050 The extensive decarbonization required by the pathways climate objective could translate into global costs savings of 150 billionyr Source Riahi et al 2011 and authors elaboration 57 IIASAs GEA message pathways model does not break down such cobenefits and savings on a regional 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and QP Humphrey Crick 2005 Climate Change and Migratory Species BTO Research Report 414 Thetford Norfolk Ruiz Daniel Douglas G Martinson and Walter Vergara 2012 Trends Stability and Stress in the Colombian Central Andes Climatic Change 112 71732 80 The Climate and Development Challenge for Latin America and the Caribbean Saleska S R A Huete P Ratana H Da Rocha R Tannus N Restrepo B Kruijt and C von Ran dow 2007 What is the Future of Amazon Forests under Climate Change Paper presented at the American Geophysical Union Spring Meeting Acapulco Mexico 2225 May Schellnhuber Hans Joachim 2009 Tipping Elements in the Earth System Proceedings of the National Academy of Science of the United States of America PNAS 106 492056163 Seo S Niggol and Robert Mendelsohn 2008a A Ricardian Analysis of the Impact of Climate Change on South American Farms Chilean Journal of Agricultural Research 68 1 6979 2008b An Analysis of Crop Choice Adapting to Climate Change in Latin American Farms Ecological Economics 67 110916 2008c Climate Change Impacts on Latin American Farmland Values The Role of Farm Type Revista de Economia e Agronegocio 6 2 15976 Simões Jefferson and Heitor Evangelista 2012 Black Carbon Signal of Global Pollution and its Impact on Ice Masses Brazilian National Institute for Cryospheric Sciences Brazilia Sitch S C Huntingford N Gedney P E Levy M Lomas and S L Piao R Betts P Ciais P Cox P Friedlingstein CD Jones and IC Prentice 2008 Evaluation of the Terrestrial Carbon Cycle Future Plant Geography and ClimateCarbon Cycle Feedbacks Using Five Dynamic Global Vegetation Models DGVMs Global Change Biology 14 201539 Splash C L and A Vatn 2006 Transferring Environmental Value Estimates Issues and Alterna tives Ecological Economics 60 2 37988 Stern Nicholas 2009 Changing Economics In Climate Change and Energy Insecurity The Chal lenge for Peace Security and Development ed Felix Doods Andrew Higham and Richard Sherman 8091 Earthscan London Suarez Pablo William Anderson Vijay Mahal and T R Lakshmanan 2005 Impacts of Flood ing and Climate Change on Urban Transportation A Systemwide Performance Assessment of the Boston Metro Area Transportation and Research Part D Transport and Environment 10 3 23144 Sugiyama Masahiro 2007 Estimating the Economic Cost of SeaLevel Rise MSc dissertation Massachusetts Institute of Technology TEED 2010 The Economics of Ecosystems and Biodiversity Ecological and Economic Foundations ed Pushpam Kumar London and Washington Earthscan Toba Natsuko 2009 Potential Economic Impacts of Climate Change in the Caribbean Commu nity In Assessing the Potential Consequences of Climate Destabilization in Latin America ed Walter Vergara Washington DC World Bank Tubiello Francesco Josef Schmidhuber Mark Howden Peter G Neofotis Sarah Park Erick Fer nandes and Dipti Thapa 2008 Climate Change Response Strategies for Agriculture Chal lenges and Opportunities for the 21st Century Agriculture and Rural Development Discus sion Paper 42 World Bank Washington DC UNEPECLAC United Nations Environmental ProgrammeEconomic Commission for Latin America and the Carribean 2010 Vital Climate Change Graphics for Latin America and the Caribbean Panama UNEP UNFCCC United Nations Framework Convention on Climate Change 2007 Investment and Financial Flows to Address Climate Change Bonn Germany UNFCCC 81 The Climate and Development Challenge for Latin America and the Caribbean Vergara Walter 2009 Climate Hotspots ClimateInduced Ecosystem Damage in Latin America In Assessing the Potential Consequences of Climate Destabilization in Latin America ed Wal ter Vergara Washington DC World Bank Vergara Walter and Sebastian M Scholz 2011 Assessment of the Risk of Amazon Dieback Wash ington DC World Bank Vergara Walter Natsuko Toba Daniel MiraSalama and Alejandro Deeb 2009 The Potential Consequences of Climateinduced Coral Loss in the Caribbean by 20502080 In Assessing the Potential Consequences of Climate Destabilization in Latin America ed Walter Vergara Washington DC The World Bank Vergara Walter A M Deeb A M Valencia R S Bradley B Francou A Zarzar A Grünwaldt and S M Haeussling 2007 Economic Impacts of Rapid Glacier Retreat in the Andes EOS 88 25 26168 Verneer Martin and Stefan Rahmstorf 2009 Global Sea Level Linked to Global Temperature Proceedings of the National Academy of Sciences of the United States of America 106 51 2152732 Webster P J G J Holland J A Curry and HR Chang 2005 Changes in Tropical Cyclone Num ber Duration and Intensity in a Warming Environment Science 309 184446 Wilbanks Thomas J Paul Leiby Robert Perlack J Timothy Ensminger and Sherry B Wright 2007 Toward an Integrated Analysis of Mitigation and Adaptation Some Preliminary Find ings Special issue Mitigation and Adaptation Stratrategies for Global Change 12 71325 Williams S J B T Gutierrez J G Titus S K Gill D R Cahoon E R Thieler K E Anderson D FitzGerald V R Burkett J P Samenow and D B Gesch 2009 Chapter 1 Sealevel Rise and Its Effects on the Coast In Coastal Elevations and Sensitivity to Sealevel Rise A Focus on the MidAtlantic Region ed James G Titus 1124 Washington DC US Environmental Protection Agency World Bank 2010 Economics of Adaptation to Climate Change Synthesis Report Washington DC World Bank WRI World Resources Institute 2012 CAIT Climate Analysis Indicators Tool Version 90 Washington DC WRI WWF World Wide Fund for Nature 2011 Living Forest Report 2011 Switzerland WWF 82 The Climate and Development Challenge for Latin America and the Caribbean Annex 1 IPCC Emissions Scenarios In 1996 the Intergovernmental Panel on Climate Change IPCC decided to develop a new set of emissions scenarios the socalled Special Report on Emissions Scenarios or SRES that pro vided input to the IPCCs Third Assessment Report TAR in 2001 The scenarios of SRES were also used for the Fourth Assessment Report AR4 in 2007 Since then the SRES scenarios have been subject to discussion because the emissions growth since 2000 might have rendered these scenarios obsolete It is clear that the fifth assessment report of the IPCC will develop a new set of emissions scenarios The SRES scenarios cover many of the main driving forces of future emissions which range from demographic to technological and economic developments None of the scenarios include any future policies that explicitly address climate change although all scenarios necessarily en compass various policies of other types and for other sectors The set of SRES emissions scenarios is based on an extensive literature assessment six alternative modeling approaches and an open process that solicited wide participation and feedback from many scientific groups and individu als The SRES scenarios include emissions of all relevant greenhouse gases GHGs and sulfur and their underlying driving forces For the scenarios the IPCC developed different narrative storylines to describe the relation ships between emission driving forces and their evolution over time figure A11 Each storyline represents different demographic social economic technological and environmental develop ments Each emissions scenario represents a specific quantitative interpretation of one of the four storylines All scenarios based on the same storyline constitute a socalled scenario family58 The A1 storyline describes a future world characterized by rapid economic growth a global population that peaks by the mid21st century and declines thereafter and the rapid intro duction of new and more efficient technologies The major underlying themes are convergence among regions capacity building and increased cultural and social interactions with a substan tial reduction in regional differences in per capita income The A1 scenario family develops into three groups that describe alternative directions of technological change in the energy system fossilintensive energy sources A1FI nonfossil energy sources A1T or a balance across all sources A1B 58 For each storyline several different scenarios were developed using different modeling approaches 83 The Climate and Development Challenge for Latin America and the Caribbean Figure A11 Schematic Illustration of SRES Scenarios SRES A1 Storyline A2 Storyline B1 Storyline B2 Storyline A1 family B2 B1 A2 A1B A1T A1FI A2 family Scenario groups B1 family B2 family Source Adapted from IPCC 2000 The A2 storyline describes a more heterogeneous world The underlying theme is selfreli ance and preservation of local identities The global population increases continuously Economic development is primarily regionally oriented and per capita economic growth and technological change are more fragmented and slower than in the other storylines Similar to the A1 storyline the B1 storyline describes a convergent world where the global population peaks in midcentury and declines thereafter But in the B1 storyline there are rapid changes in economic structures toward a service and information economy with reductions in material intensity and the introduction of clean and resourceefficient technologies The empha sis is on global solutions that include improved equity without requiring additional climate ini tiatives The B2 storyline describes a world that emphasizes local solutions to achieving economic social and environmental sustainability It includes a global population increasing continuously at a rate lower than A2 intermediate levels of economic development and technological change that is less rapid and more diverse than that in the B1 and A1 storylines The scenario is also ori ented toward environmental protection and social equity because it focuses on local and regional levels 84 The Climate and Development Challenge for Latin America and the Caribbean Table A11 summarizes the likely temperature changes under each of the abovedescribed scenarios Table A11 Projected Global Average Surface Warming and Sealevel Rise at the End of the 21st Century Different SRES Scenarios Case Temperature change C at 20902099 relative to 19801999ab Sea level rise m at 20902099 relative to 19801999 Best estimate Likely range Modelbased range excluding future rapid dynamical changes in ice flow Constant year 2000 concentrationsc 06 03 09 Not available B1 scenario 18 11 29 018 038 A1T scenario 24 14 38 020 045 B2 scenario 24 14 38 020 043 A1B scenario 28 17 44 021 048 A2 scenario 34 20 54 023 051 A1FI scenario 40 24 64 026 059 Source IPCC 2007 Notes All scenarios above are six SRES marker scenarios Approximate CO2 eq concentrations corresponding to the computed radiative forcing due to anthropogenic GHGs and aerosols in 2100 see p 823 of the Working Group I TAR for the SRES B1 AIT B2 A1B A2 and A1FI illustrative marker scenarios are about 600 700 800 850 1250 and 1550 ppm respectively a Temperatures are assessed best estimates and likely uncertainty ranges from hierarchy of models of varying complexity as well as observational constraints b Temperature changes are expressed as the difference from the period 19801999 To express the change relative to the period 18501899 and 05C c Year 2000 constant composition as derived from AtmosphereOcean General Circulation Models AOGCMs only 85 The Climate and Development Challenge for Latin America and the Caribbean Annex 2 IIASA GEA Scenarios The moderate intervention or energy pathways presented in this report were derived from the three principal Global Energy Assessment GEA transformation pathways GEA efficiency GEA supply and GEA mix of IIASAs GEA message model and its GEA scenario database59 The GEA scenario database aims to document the results and assumptions of the GEA transformation pathways and serves as a central data repository for the dissemination of GEA scenario informa tion60 For the purposes of this report in order to contrast the potentials for Latin America and the Caribbean LAC to pursue landusebased mitigation approaches versus energybased strategies the GEA transformation pathways have been stripped of their landuse emissions interventions leaving purely energybased intervention pathways and reductions of greenhouse gas GHG emissions produced solely from energy activities and use On the other hand our landuse path ways ZNDD 2020ZNLU 2030 ZNDD 2020ZNLU 2030 and AFOLU have then constructed upon the projected relationships between i projected financial costs investmentexpenditures required and ii the emissions reductions observed in the landuse and agricultural intervention realms of the original full GEA transformation pathways of the GEA scenario database see an nex 3 for a fuller explanation of our pathways and the projections Each of the three principal modified GEA illustrative pathways represents high efficiency low supply or intermediate mix levels of energyefficiency improvements into the future This is the first critical defining difference between these three respective groups of pathways In turn each of the 41 GEA pathways shares this defining efficiency feature with its particular groups il lustrative case in a similar fashion to the family of storylines used by the IPCC for the creation of its scenarios see annex 1 While all three pathway groups assume at least some improvement in the historical rate of decline in energy intensity the GEA efficiency pathway assumes the most significant reduction whereas the GEA supply pathway registers only minor improvements over the historical rate into the future Meanwhile the GEA mix pathway exhibits an intermediate level of energy efficiency and decline in energy intensities Additionally depending on the following factors each GEA pathway can differentiate itself at least slightly from each of the other pathways even within the same group by 59 See httpwwwiiasaacatwebappsenegeadbdsdActionhtmlpagepageaboutintro 60 For a complete and indepth description of the GEA Message Model and its respective 41 pathways including in particular the three illustrative pathways mentioned in this report see Riahi et al 2011 86 The Climate and Development Challenge for Latin America and the Caribbean The type of transportation system that is a conventional traditional liquids transport infrastructure versus an advanced transport infrastructure based upon electrification and in some cases some use of hydrogen assumed to dominate the economy in the future The energy sourcesor technologiesassumed to be included or excluded from the en ergy and technology mix along any particular pathway Therefore the first branching point of a single possible future energy reality into distinctly separate scenarios or pathways concerns the level of preferred or potential future energyeffi ciency The second major split of these three scenarios into still more pathways would be the type of assumed transportation system conventional versus advanced Finally the third branching point of distinct scenarios into 41 potential pathways includes the range of energy sources and technologies assumed to be included in or excluded from the future mix What this study refers to as the moderate intervention pathways are basically identical to the three GEA illustrative pathwaysmix efficiency and supply in our study mixI efficiencyI and supplyI In addition this studys versions of the three moderate intervention or energy pathways assumes the following Only the energy interventions expenditures and emissions reductions of the pathway are to be included nonenergy expenditures and emissions reductions have been stripped from the pathway and used as the foundation for the construction of the distinct landuse pathways The transportation system is assumed to be transformed over time from the current conven tional liquidsbased system to an advanced transportation system based on electrification Each pathway experiences nuclearfree development The inclusion of a second moderate intervention mixII pathway into this reports analysis is done for comparative purposes and allows for the consideration of two different infrastruc ture development paths for the transportation sector in the future The mixII conventional transport pathway follows practices that maintain the conventional status quo liquidsbased transportation system with petroleumbased transport fuels giving way over time to biofuels and to some degree gastoliquids synfuels In contrast the mixI advanced transport path way pursues a systemic transformation of the transportation sector through electrification of the transportation mix Furthermore all of the GEA pathways share certain other common defining features as well the most significant of which is significant mitigation of GHG emissions into the future In each of the 41 GEA pathways that IIASA has assessed IIASA finds that this reduction of emissions is significant enough to make a regionally appropriate contribution to a credible global defense of the 450 parts per million ppm atmospheric concentration limit and the 2C guardrail by 2050 Riahi et al 2011 In fact it is set as a minimum assumption of the model Nevertheless even before we stripped the pathways of AFOLU interventions and emissions reductions the GEA model pathways were only capable of bringing LAC to around 32 tons per capital tpc a year thus necessitating deeper more effective and more expensive AFOLU interventions If the GEA pathways are presented as only energy intervention scenarios they would bring LAC to anywhere between 34 tpc and 43 tpc by 2050 and would therefore need to be supple mented with significantly more intensive AFOLU policy measures in order to follow the aggres sive mixI plus combined intervention pathway to the LAC goal of 2 tpc annually by 2050 In other words the energy interventions bring LACs per capita emissions from 93 under the BAU trajectory down to below 4 tpc another 2 tpc must be reduced through AFOLU interventions in order to achieve the 2 tpc goal by 2050 Significant decarbonization of the energy sector also unfolds in all of IIASAs GEA pathways with lowcarbon energy reaching 60 percent to 80 percent of the primary mix in all of the path ways and 75 percent to 100 percent of the electricity mix in all cases by 2050 For example the central reference pathways in this studythe aggressive mixI combined pathwayachieves 97 percent decarbonization of the electricity generation mix by 2050 87 The Climate and Development Challenge for Latin America and the Caribbean For the purposes of this report the socalled moderate intervention pathway will generally be considered to be the mixI energy pathway and the aggressive intervention pathway will be taken to refer to the aggressive mixI combined pathway unless one of the other group pathways is explicitly identified Distinguishing characteristics features assumptions common benefits and cobenefits of the GEA pathways All of the 41 global pathways when including all energy and AFOLU emissions for the entire world would contribute to successfully limiting global temperatures to no more than 2C over preindustrial levels by rapidly reducing the emissions from the energy sector and achieving certain AFOLU emissions gains against BAU At the global level emissions will peak in ap proximately 2020 and then reach 3070 percent of their 2000 levels by 2050 They will ultimately reach nearly zero or even negative values in the second half of the century All GEA energy pathways involve a rapid shift over the next 20 years away from traditional biomass to modern fuels while providing near universal access to modern energy both elec tricity and modern fuels for heating and cooking The global investment required for such a reduction in energy poverty and assumed for all pathways ranges from 22 billion to 38 billion a year half in Africa according to IIASA Such an investment would save 24 million DALYs disabilityadjusted life years in 2030 as a result of the health improvements associated with ac cess to modern energy while displacing reliance on traditional biomass All GEA energy pathways secure significantly tightened pollution controls through global investments of 200 billion to 350 billion annually by 2030 10 percent20 percent of energy costs Such investments would save 21 million DALYs in 2030 All GEA pathways imply enhanced energy security through reduced import dependence source diversification and increased resilience of energy systems and in particular the electricity sectors A focus on efficiency and renewable energy can increase the share of domestic supply in primary energy by a factor of 2 resulting in significantly reduced import dependence They also promise to achieve the following as adapted from Riahi et al 2011 Improvement in the historical rate of energy intensity decline 12 percent per year since the 1970s a 15 percent decline per year achieved by the supply pathway versus 22 percent achieved by the efficiency pathway Nevertheless different levels of final energy use are im plied across the different pathways for LAC the efficiency pathways would produce energy enduse demand levels some 50 percent below the BAU levels in 2050 the mix pathways would imply energy end use 40 percent below the BAU levels in 2050 and the supply path ways would reduce energy end use to only 23 percent below the BAU levels in 2050 A broad portfolio of supply options focusing on lowcarbon noncombustible renewables bioenergy nuclear and carbon capture and storage CCS This portfolio reaches lowcarbon shares in the primary energy mix of 60 percent to 80 percent by 2050 For the specific path ways articulated in this study nuclear power is assumed to be excluded Significant expansion of renewable energy beginning immediately and ultimately reaching 165650 EJ exajoules in primary energy by 2050 Increased storage technology that supports variableintermittent solar and wind power Growth in bioenergy particularly in the middle term to 80140 MJ by 2050 This would in volve extensive use of agricultural residues and secondgeneration bioenergy technology to mitigate the adverse impact on land use and food production Increased use of fossil CCS as a bridge technology in the middle run and increased reliance on CCS used with bioenergy in the long run if demand is high 250 GtCO2e of storage capac ity will be needed by 2050 88 The Climate and Development Challenge for Latin America and the Caribbean Aggressive decarbonization of the electricity sector with the lowcarbon share of the elec tricity mix reaching 75 percent to 100 percent by 2050 Conventional coal without CCS is phased out and natural gasfired power could be used as a lowercarbon bridge or transition technology in the short to middle run Enhancements in the transportation sector including the possibility of electrification the introduction of hydrogen vehicles or the further development of the current liquid transpor tation infrastructure with biofuelssynfuels substituting progressively for petroleum A reduction in fossilfuel use A peak in oil use in the transportation sector by 2030 would be followed by a phase out over the medium term and strong growth of liquid biofuels in the short and medium term In the long term the liquidgaseous fuel mix would be deter mined by future decisions concerning the transportation system and by technological break throughs All of the pathways would require investmentsat the global scaleof 17 trillion to 22 tril lion annually compared with 13 trillion currently Of this total 300 billion550 billion would need to go to energyefficiency measurestechnologies on the demand side every year Globally total required investments would be equivalent to 2 percent of global GDP There is a limited role for nuclear in some versions of the pathways But it can be avoided in all of them without significantly affecting net financial additionality In our versions of the pathways nuclear energy has been excluded 89 The Climate and Development Challenge for Latin America and the Caribbean Annex 3 Basis for Projections for Net Financial Additionality and Activity Costs of Mitigation Efforts Chapter 2 presented financial cost projections for a number of possible mitigation pathways that would help Latin America and Caribbean achieve stabilization goals by 2050 see table 25 But these projections were globalpresented with no sector or activity breakoutsand regionwide with respect to the relevant geographical unit of analysis LAC Meanwhile the International Institute for Applied Systems Analysis IIASA Global Energy Assessment GEA model database offers projections that are detailed enough to contemplate attempting sectoral or intervention activity component projections for net financial additionality Table 29 presented this other more detailed type of net financial additionality projections for a number of the principal activi ty or investment sector components of the aggressive mixI plus pathway one of the potential pathways that could deliver LACs 2050 emissions mitigation goal This annex presents details on the process used for formulating the activitycost projections presented in this report The IIASAs GEA database includes projections from 2005 through to 2100 for the world and its principal component regions including LAC in the categories of greenhouse gas GHG emissions required expenditure and investment figures levels of primary secondary and final energy use broken down by energy type and levels of final energy demand along with a num ber of other energy emissions or economic indicators for more on the IIASA GEA model and database see annex 2 IIASA has elaborated most such projections for a counterfactual trajectory for the region until 2100 These IIASA projections released in tenyear annual splits and all presented in 2005 equivalent form the basis of this studys BAU trajectory for LAC In addition to the BAU trajec tory IIASA has further elaborated projections for 41 different intervention pathway scenarios grouped in categories around three illustrative pathway cases efficiency mix and supply see annex 2 These illustrative pathways are differentiated primarily by the level of relative gains assumed to be achieved in energy efficiency by 2050 They are also further differentiated by an assumption with respect to the future transportation system conventional liquidsbased infra structure or electrification see annex 2 This report has directly adopted IIASAs three illustrative pathways as the efficiencyI mixI and supplyI pathways the only caveats being that IIASAs illustrative mix pathway was based on the assumption of a transportation sector rely 90 The Climate and Development Challenge for Latin America and the Caribbean ing upon the traditional conventional liquidsbased fuel mix and infrastructure while this reports version of mixI is based upon an advanced electrified transportation system IIASAs version of the illustrative pathways assumes a very limited role for nuclear power in the future LAC energy mix whereas nuclear power has been excluded from this studys illustrative pathways Landuse and AFOLU interventions and emissions gains have been eliminated from the GEA model pathways used in the current report But AFOLU interventions articulated separately as landuse pathways have been reintegrated into the aggressive or combined pathways Together these three IIASA pathways form this studys moderate or energy pathways group all of which achieve a LAC per capita emissions level of 3443 tons exclusively through reductions in energybased emissions The total LAC projections of net financial additionality for the three moderate intervention pathways presented in table 27 therefore have been taken directly from the GEA database The GEAs gross data were further elaborated by subtracting from them GEAs own BAU projection levels to produce a net level of financial additionality that is how much extra finance must LAC mobilizeabove and beyond that which would be already required under the BAU trajectory As mentioned more summarily in the text the AFOLU pathway projections have been elabo rated independently but they are based on certain core elements of the GEA projections The aggressive or combined pathway projections combine this reports own AFOLU pathway projec tions based themselves on certain IIASA projections with those of the IIASA GEA database for the moderate or energy pathways Each aggressive pathway has been formulated independently producing certain changes in the net financial additional costs of the AFOLU sectors and therefore deviates to a minor degree from a strict summation of the AFOLU pathway projections with the energy pathway projections This annex provides a a stepbystep summary of how the AFOLU cost projections were produced This exercise will be followed by a similar explanation of how the aggressive pathway projections were formulated Activity costs for landuse or AFOLU pathways The ZNDD 2020ZNLU 2030 pathway would through deforestation and other landuse efforts achieve i net zero deforestation in LAC by 2020 and ii net zero emissions from deforestation and land use in the broadest sense that is LULUCF but not agriculture by 2030 maintaining this level of net zero ZNLU emissions indefinitely This pathway carries a projection of 37 billion annually by 2050 in terms of net financial additionality required across the entire LAC region This projection was reached following the next steps Each of the IIASA GEA illustrative pathways includes some emissions abatement in the AFOLU sector However the mix pathways only involve modest gains in landuse emissions less than 50 percent of the decline against 2010 levels when compared to the landuse emissions reductions that IIASA assumes would be achieved under the BAU The mixI pathway would re duce such annual emissions to 023 GtCO2e in 2050 while the mixII pathway would bring these landuse emissions to 018 GtCO2e In addition for each of these pathways IIASA has projected required nonenergy expendi tures in tenyear annual splits to 2100 314 billion annually in 2050 for the mixI advance trans no nuclear pathway 39 billion for mixII conventional trans no nuclear 384 billion annually in 2050 for the mixII pathway with conventional transport and a full portfoliothat is IIASAs illustrative mix pathway According to IIASA this nonenergy category includes expenditures on sink recovery and ex 91 The Climate and Development Challenge for Latin America and the Caribbean pansion including REDDREDD and related activities along with expenditures dedicated to mitigation efforts to reduce emissions of nonCO2 gases including N2O and CH4 in both agricul ture and industry and also some in waste61 But IIASA does not present a split of the required expenditures between these various non energyemissions reduction efforts This report therefore uses a different method to determine how much sink expenditures are required according to the IIASA projections in order to achieve the extra amount of landuse emissions reduction secured under these moderateenergy path ways To do this the report develops a proxy for projected landuse and sinks expenditures by tak ing the IIASA GEA projection for annual nonenergy expenditures to 2050 for a particular version of the mix pathway one which includes conventional transport allows for nuclear power to com pete within the technology portfolio but which excludes activities on landuse and sinks from the pathway62 This yields a projected annual financial expenditure figures for each decade to 2050 047 billion annually in 2020 25 billion annually in 2030 46 billion annually in 2040 59 billion annually in 2050 for nonenergy expenditures which have been stripped of expenditures on the defense and net expansion of sinks at least in the forestry and landuse change fields The projected nonenergy expenditures for the mixII no sinks pathway are then subtracted from the total figure for the nonenergy expenditures 27 billion annually in 2020 9 billion annually in 2030 203 billion annually in 2040 and 384 billion annually in 2050 of the IIASA illustrative mixII pathway with conventional transport and no restrictions on its technology portfolio to yield the total annual nonenergy expenditures required for the maintenance and net expansion of sinks under the mixII pathway 22 billion annually in 2020 64 billion annually in 2030 157 billion annually in 2040 and 325 billion annually in 2050 This derived projection for the net additional financing required to reduce deforestation and landuse emissions to the degree indicated by the projections for the illustrative mixII path way are then divided by IIASAs projection for the reduction of annual landuse emissions against the BAU by 2050 048 GtCO2e along the mixII pathway In 2020 this projection comes to 58 tCO2e for the average cost or financial additionality of each ton of landuse emissions abated by 2020 along the mixII pathway and in 2050 67tCO2e These projection figures for the average cost or financial additionality of each ton of land use emissions abated by 2050 are multiplied by the amount of landuse emissions abatement re quired annually in each decade up until 2050 under the ZNDD 2020ZNLU 2030 pathway against the BAU to yield total gross financial additionality required under the ZNDD 2020ZNLU 2030 pathway 43 billion annually in 2020 45 billion annually in 2050 61 Although the GEA database defines this nonenergy expenditure category to include expenditures for nonenergy mitiga tion such as mitigation of emissions of FgasesCH4 and N2O in industry agriculture and waste IIASA researchers have verified that this category includes sinks that is deforestation and landuse or AFOLUREDD expenditures But IIASA has not produced more detailed splits of this category to break down investment from noninvestment expenditures or to break out the sublevels between sinks CO2 industry mainly N2O agriculture N2O and CH4 and waste CH4 We therefore have had to make certain assumptions or rely on certain GEA projection data to transform into our own projections as explained in this annex 62 We could not create this proxy using a pathway that excludes nuclear power Of IIASAs 41 potential pathways there are none that exclude both nuclear power and sinks Nevertheless there is only minor variation among IIASA pathways in terms of total nonenergy expenditures and relative landuse emissions gains against the BAU This is true across the IIASA pathways used as foundations in this study Therefore our use of this proxy seems reasonable But when this proxy for landuse and sinks expenditures is used to produce each of our pathways independently it is divided by each independent pathways landuse emissions reductions not simply that achieved under the illustrative mix pathway Therefore while the AFOLU pathways all use the proxy for sinks expenditures and the landuse emissions reductions achieved under under IIASAs illustrative mix pathway the aggressive pathways use the proxy but compare it to their own reductions in landuse emissions which are always slightly different than those achieved under the illustrative mix pathway In this way the aggressive pathways vary slightly from a simple summation of the AFOLU pathways and the energy pathways 92 The Climate and Development Challenge for Latin America and the Caribbean This yields a projection figure for the gross financial additionality required by the ZNDD2020ZNLU 2030 pathway of 78 billion annually by 2050 43 billion annually by 202063 But when attempting to subtract IIASAbased BAU projected expenditures for the same nonener gy sink expenditures to distinguish gross from net financial additionality and to determine gross and net average financial additionality per tCO2e an issue is encountered in the sense that IIASA projects no zero nonenergy expenditures along the BAU trajectory despite the fact that the BAU trajectory projects a net decline in landuse emissions of nearly 10 GtCO2e compared to current levels This entire landuse emissions decline along the BAU trajectory is assumed by IIASA to occur as an organic result of projected increases in income wealth urbanization and modernization across LAC Given the projections available in IIASAs GEA model public database at this point a meth odological challenge appears Because equivalent BAU expenditure projections are zero there is no difference between gross and net financial additionality for the ZNDD 2020ZNLU 2030 pathway 45 billion annually by 2050 in both cases But given that the sink expenditures pro jected under the full mixII pathway come to 325 billion annually by 2050 and achieve only a further 03 GtCO2e reduction against the BAU which itself reduces such emissions by more than three times that amount against the present level it seems unreasonable to assume that such BAU landuse emissions reductions could be achieved with no additional expenditures dedicated directly to landuse emissions abatement Furthermore both total financial additionality and average additional financial cost of a ton of CO2e reduction if calculated assuming that the net figure is no different than the gross tend to be two to three times higher at least for 2020 than the range of current projections for deforesta tion and landuse emissions abatement see chapter 2 But if one calculates differently assuming that the BAU does not achieve any LULUCF emis sions reductions without at least some financial support and accepting that the IIASA illustra tive mix our mixII projections for required financial additionality would achieve the full 100 percent of landuse emissions reductions over the present level instead of just against BAU the total and average net financial additionality under the illustrative mix our mixII pathway would fallfrom 43 billion annually and 58tCO2e in 2020directly into the range of similar financial cost projections from the existing literature see chapter 2 down to 17 billion annually and 21 tCO2e in 2020 The projections for 2050 would likewise fall from 78 billion annually and 67tCO2e to 37 billion annually and 23tCO2e Such an assumption is supported by the consensus of opinion which holds that the finan cial costs of ending deforestation and landuse emissions are relatively low when compared to the financial requirements of abatement in the energy realm It is also consistent with a related assumption that the cost of reducing landuse emissions rises with timeas the economic op portunities costs of reducing such emissions rises over time as land and timber values rise over time for example 63 Even though there are no projected declines in landuse emissions from 2030 when they reach zero until 2050 we assume the same level of total additional expenditures will be required annually to 2050 as in 2030 given that opportunity costs for maintenance of sinks with net zero emissions will still have to be paid 93 The Climate and Development Challenge for Latin America and the Caribbean ZNDD 2020ZNLU 2030 plus pathway The same assumption is made when calculating projections for the ZNDD 2020ZNLU 2030 plus pathway which continues beyond 2030 through deeper and continued financial commit ment in innovative forestry and landuse practices to reduce net emissions from sinks to well below zero achieving 035 GtCO2e of further abatement annually until 2040 and 07 GtCO2e annually to 2050 Again multiplying the average financial cost per ton 23 by the amount of landuse emissions reductions achieved by this pathway by 2050 23 GtCO2e annually this re ports projection for the net financial additionality of this pathway comes to 53 billion annually in 2050 This pathways much greater level of emissions abatement beyond 2030 an additional 07 GtCO2e accounts for its higher net financial additionality figure 53 billion annually in 2050 compared to only 37 billion for the ZNDD 2020ZNLU 2030 pathway option Relying on such an assumption implies either that i IIASAs BAU trajectory for LAC should be adjusted upwards by as much as 07 GtCO2e annually in 2050 or ii much if not all of the landuse emissions reductions projected by IIASA to occur under the BAU should be reassigned to the IIASA illustrative our moderate pathways While there might be an argument in favor of shifting IIASAs BAU up to over 75 GtCO2e in 2050 compared to around 67 GtCO2e or even maintaining an assigned portioned of landuse emissions reduction for the BAU we decided that we would rather alter IIASAs projections for nonenergy expenditures in particular the dedicated sinks portion by changing their assump tions concerning landuse emissions under the BAU reassigning 100 percent to the pathways and keeping the BAU landuse emissions level constant at the present level into the future rather than changing IIASAs projections for the total BAU levels themselves The abovedescribed assumption reassigning BAU landuse emissions reductions to each of the pathways while maintaining the BAU trajectory total emissions stable however problematic seems even further justified by the very sensitive political nature of any BAU emissions trajectory projection both in private industry and international climate negotiations implying as it does potentially differing levels of national emissions abatement from commitments previously made to targets measured in percentage terms against the old versus new projected BAU levels Agricultural emissions and the AFOLU pathway The AFOLU pathway assumes the expenditures and landuse reductions of the ZNDD 2020 ZNLU 2030 plus pathway plus a further 50 percent in agricultural emissions by 2050 when measured against those projected in the BAU trajectory The first step then is to calculate the projected average financial additionality per tCO2e to achieve a certain reduction in agricultural emissions Using the IIASA projections for nonenergy expenditures with no sinks along the illustrative mix pathway 047 billion annually in 2020 25 billion annually in 2030 46 billion annually in 2040 59 billion annually in 2050 we can calculate projected average financial additionality per tCO2e by dividing the above nonenergy expenditures with no sinks by the net reduction in agricultural emissions 018 GtCO2e annually in 2020 037 GtCO2e in 2030 048 GtCO2e in 2040 and 063 GtCO2e in 2050 of the AFOLU pathway compared with the BAU trajectory This would yield average financial additionality per tCO2e abated in the LAC agricultural sector of 26tCO2e in 2020 69 in 2030 96 in 2040 and 93 in 2050 The second step is to calculate the projections of total net financial additionality BAU agri cultural emissions are projected to increase from 14 GtCO2e in 2010 to 18 GtCO2e annually in 2020 to 20 GtCO2e annually in 2030 and to 217 GtCO2e annually in both 2040 and 2050 Under the AFOLU pathway however agriculture emissions would fall to 13 GtCO2e annually in 2020 94 The Climate and Development Challenge for Latin America and the Caribbean to 125 GtCO2e annually in 2030 to 167 GtCO2e annually in 2040 and to 108 GtCO2e annually in 2050 This yields a net reduction in agricultural emissions under the AFOLU pathway against the BAU levels of 046 GtCO2e annually in 2020 075 GtCO2e annually in 2030 10 GtCO2e an nually in 2040 and 108 GtCO2e annually in 2050 If one multiplies these net reductions in agri cultural emissions against the BAU by the average financial additionality per tCO2e in each year 26tCO2e in 2020 69tCO2e in 2030 96tCO2e in 2040 and 934tCO2e in 2050 the result is the total net financial additionality required to achieve the reductions in agricultural emissions projected under the AFOLU pathway 12 billion annually in 2020 516 billion in 2030 96 billion in 2040 and 101 billion in 2050 Finally a third step would involve summing the total net financial additionality of the ZNDD 2020ZNLU 2030 plus pathway 53 billion annually in 2050 with that of the net financial additionality of the AFOLU pathways agricultural emissions reductions 101 billion annually in 2050 to produce a total net financial additionality required annually by 2050 for the entire AFOLU Pathway which includes the ZNDD 2020ZNLU 2030 plus pathway of 63 billion see table A31 If one then divides this figure by the total amount of all emissions reductions achieved under the AFOLU pathway compared to BAU 245 GtCO2e the result is an average financial additionality per tCO2e of 184tCO2e The illustrative GEA pathways and our moderate interventionenergy pathways The moderate or energy intervention pathways in this study are based directly on six IIASA GEA pathways i efficiency with advanced transportation and no nuclear our efficiencyI ii mix with advanced transportation and no nuclear our mixI iii supply with advanced trans portation and no nuclear our supplyI iv efficiency with conventional or traditional transpor tation and no nuclear our efficiency II v mix with conventional or traditional transportation and no nuclear our mixII and vi supply with conventional or traditional transportation and no nuclear our supplyII All of these pathways bring LAC to somewhere between 20 tpc and 30 tpc annually in 2050before we strip them of their limited AFOLU interventions and emissions gains and to between 34 tpc and 43 tpc once they have been reduced to pure energy intervention pathways The gross and net financial additionality for each of these pathways has been taken from the total energy expenditures projections found in the GEA model database Total energy expendi tures projected under IIASAs message counterfactual pathway our BAU trajectory have been subtracted from the gross total energy expenditures to yield net total additional energy expendi turesor net financial additionality These gross and net financial additionality projections for each of these six moderate intervention pathways can be seen in table 27 The aggressive or combined pathways We have constructed three different groups of six aggressive pathways that combine the pure energy intervention trunk of the three IIASA GEA illustrative pathways and their versions assuming conventional transportation together with our three different AFOLU pathways ZNDD 2020ZNLU 2030 ZNDD 2020ZNLU 2030 and AFOLU These 18 different combined pathways include Aggressive mixI aggressive efficiencyI aggressive supplyI aggressive mixII aggressive efficiencyII aggressive supplyII aggressive mixI aggressive efficiencyI aggressive supply I aggressive mixII aggressive efficiencyII aggressive supplyII AFOLU mixI AFOLU efficiencyI AFOLU supplyI AFOLU mixII AFOLU efficiencyII and AFOLU supplyII All of these pathways are included in table 29 But for explanatory purposes this section 95 The Climate and Development Challenge for Latin America and the Caribbean describes how the pathway financial projections were arrived at for the aggressive mixI plus pathway along with the various sector intervention components We start by taking the net financial additionality required under the mixI moderate or energy intervention pathway found in table 27 negative 8 billion annually by 2020 and some 43 billion annually by 2050 05 billion annually by 2030 and 12 billion annually by 2040 To these sums we add the net financial additionality required under the ZNDD 2020ZNLU 2030 plus pathway 18 billion annually by 2020 24 billion annually by 2030 37 billion an nually by 2040 53 billion annually by 2050 to yield the total net financial additionality for the aggressive mixI plus pathway 11 billion annually by 2020 25 billion annually by 2030 49 billion annually by 2040 and 97 billion annually by 2050 If we add back into these figures the total amounts expected under the BAU trajectory 140 billion annually in 2020 241 billion annually in 2030 371 billion annually in 2040 and 464 billion annually in 2050 we get total gross financial additionality under the aggressive mixI plus pathway 151 billion annually by 2020 266 billion annually by 2030 420 billion annu ally by 2040 and 561 billion annually by 2050 To arrive at the average financial additionality gross for this pathway we must divide the above gross projections by the total number of tons of GHG emissions to be abated 13 GtCO2e annually by 2020 28 GtCO2e annually by 2030 41 GtCO2e annually by 2040 and 53 GtCO2e an nually by 2050 along this pathway this yields 113tCO2e in 2020 95tCO2e in 2030 102tCO2e in 2040 and 105tCO2e in 2050 To arrive at net average financial additionality for this pathway we must divide the above projections for net financial additionality by the total number of tons of GHG emissions to be abated 13GtCO2e annually by 2020 28GtCO2e annually by 2030 41GtCO2e annually by 2040 and 53GtCO2e annually by 2050 along this pathway This yields net average financial additional ity of 7tCO2e in 2020 9tCO2e in 2030 12tCO2e in 2040 and 18tCO2e in 2050 Investmentsector intervention components of the aggressive mixI plus pathway In tables 28 and 29 we have presented projected expenditures required to achieve each major sectoral component of the aggressive mixI plus pathway64 Below we review the steps whereby we arrived at such projections The first intervention component included within the aggressive mixI plus pathway is ZNDD 2020ZNLU 2030 pathway itself Gross and net financial additionality are the same 37 billion annually for 2050 and come directly from table 26 see the relevant subsection in this annex for a detailed explanation of how this projection was arrived at Likewise to achieve the additional gains implied in the ZNDD 2020ZNLU 2030 plus path way an additional 16 billion annually would be required by 2050 Finally for the last additional gains to come from moving beyond the ZNDD 2020ZNLU 2030 plus pathway to achieve the AFOLU pathway 50 percent cut in agricultural emissions against the expected BAU levels we likewise include an additional 10 billion annually by 2050 see table 26 The next step involves projecting the financial requirements for four different major inter vention components included in the moderate mixI energy intervention pathway energy effi 64 Table 29 presents financial projections for the sectoral components of the aggressive mixI AFOLU plus pathway whereas in the preceding explanatory text here presents only the aggressive mixI plus pathway the difference between the two being the exclusion in the latter case or inclusion of the emissions mitigation assumed in the agriculture sector 50 percent against the BAU in 2050 or only 10 billion annually in 2050 in both gross and net terms 96 The Climate and Development Challenge for Latin America and the Caribbean ciency gains decarbonization of the electricity generation sector electrification of transportation and the rollout of sufficient carbon capture and sequestration technology Energy efficiency measures capable of reducing LAC final energy demand by 40 percent compared to the expected BAU levels of energy consumption would cost approximately 104 billion annually by 2050 in terms of gross financial additionality and 88 billion in terms of net financial additionality The gross projection is arrived at by adding i 83 bil lion annually by 2050 projected by IIASA to be required demandside investment and ii 21 billion annually by 2050 half of what is projected by IIASA to be required investment in electricity transmission and distribution the other 21 billion annually is distributed to electricity decarbonization see the following subsection In terms of the net financial additionality required for energy efficiency measures under the aggressive mixI plus pathway the projection of 88 billion annually by 2050 is arrived at by subtracting 16 billion annually half of the 32 billion expected annually in 2050 for electricity transmission and distribution investment under the BAU from the gross financial additionality 104 billion annually Electricity sector decarbonization would entail 133 billion annually by 2050 in gross finan cial additionality and 66 billion annually by 2050 in net financial additionality The former is arrived at by summing i 62 billion annually by 2050 projected by IIASA to be required investment in nonfossil electricity generation ii 21 billion annually by 2050 half of what is projected by IIASA to be required investment in electricity transmission and distribution the other 21 billion annually has been distributed to energy efficiency see above para graph and iii an additional 50 billion in expendituresout of the total 216 billion in annual noninvestment expenditures by 2050 under the mixI pathway which remain unallocated under the IIASA projections we have allocated another 50 billion annually to transportation electrification 10 billion annually to CCS and 100 billion annually to other energy expenditures On the other hand net financial additionality for electricity sector decarbonization66 billion annually by 2050is arrived at by subtracting from each element of the gross financial addi tionality the following i 31 billion annual investment required under the BAU for nonfossil electricity generation ii the 16 billion annually expected for electricity transmission and distri bution investment under the BAU and finally iii the 20 billion in noninvestment expenditures that we have allocated to electricity sector decarbonization under BAU from IIASAs unalloted noninvestment expenditures under the BAU The total gross financial additionality of CSS comes to 17 billion annually by 2050 7 billion annually is projected by IIASA to be required investment while 10 billion annually is assigned out of IIASAs projected noninvestment expenditures to CCS expenditures Net fi nancial additionality is the same as gross given that no CCS expenditures are projected to occur under the BAU trajectory Other gross financial expenditures under the aggressive mixI plus pathway are pro jected to reach 204 billion annually in 2050 and include i investment in fossil extraction 54 billion annually in 2050 versus 170 billion annually under the BAU ii investment in fossil electricity generation 2 billion annually in 2050 versus 4 billion annually under the BAU iii other supplyside investment 42 billion annually in 2050 including investments in oil re fineries district heat and bioenergy extraction as well as production of hydrogen and synfuels versus 38 billion annually under the BAU and iv other noninvestment expenditures that are not allocated to specific line items by IIASA 106 billion annually by 2050 versus 150 billion annually under the BAU In terms of net financial additionality this other category turns out to be negative 158 billion annually by 2050 This implies that compared to the BAU trajectory the aggressive mix I plus pathway involves significantly fewer new additional expenditures annually in certain 97 The Climate and Development Challenge for Latin America and the Caribbean subsectors in which large savings are registered from less investment taking place in the future on expensive fossil fuel extraction and generation 118 billion annually in savings in 2050 and from fewer noninvestment expenditures spent on increasingly expensive fossil fuels in the future for transportation and electricity consumption 44 billion annually in savings by 2050 Of the four principal intervention components for which we make isolated projections of financial requirements that is energy efficiency electricity decarbonization CCS and electrifi cation of the transportation sector along the aggressive mixI plusaggressive mixI AFOLU plus pathways all of them except transportation can be derived directly or at least partially directly from the IIASA GEA model database figures But projections for the electrification of the transportation sector can be derived indirectly from data in the model even if additional assump tions are required to extend and more fully complete the model Our estimated projection for this sector comes to 50 billion annually in 2050 compared with 20 billion annually projected under the BAU yielding a projection for net additional fi nancial expenditures of 30 billion annually in 2050 This projection is based only indirectly on the IIASA GEA model database figures because the database offers no specific breakdown for any required expenditures investment or noninvestment projected for the electrification of transportation Nevertheless half of the IIASA models illustrative pathways which serve as the foundation for our intervention pathways assume the electrification of transportation and even small amounts of hydrogen in the generation or fuel mix Because the IIASA projections for in vestment and noninvestment expenditures are energy systemwideincluding everything pub lic and private from the exploratory upstream to the final consumption of energythe required expenditure for electrification of transportation would be included somewhere within the global projection for total required expenditures even if it cannot be found on any explicit breakdown line in the database Furthermore it can be assumed that at least some of the financial requirements for an elec trification of the transportation sector will need to take the form of investment particularly for infrastructure adaptation and construction whereas our projection of 50 billion annually in 2050 is assumed to be entirely in the form of noninvestment expenditures for example for the private purchase of hybrid andor electric vehicles and any government incentives provided to support such purchases given that it is based on our reallocation of the projected amount that the IIASA GEA model database infers will be necessary noninvestment energy expenditures But at least some if not all of the investment expenditures required for the electrification of transportation would come in the form of modified or upgraded electricity transmission and distribution systemsan essential supporting investment of electrification This would require a modal shift from gasoline filling stations to a distinct infrastructural mode designed for charging car batteries in a way that takes advantage of the synergies available in smart grids by integrat ing the objectives and dynamics of transportation electrification with those of decarbonizing the power sector and improving the efficiency resilience and flexibility of the grid In this sense much of the investment expenditures required to modify the transportation infrastructure would already be included in the IIASA projections for the investment required in electricity transmission and distribution We have split this discrete financial projection from IIASA evenly between the energy efficiency and electricity decarbonization components Again one could argue that at least some of this should be allocated to the transportation component but it would not alter our estimated projection for the electrification of LAC transportation by more than 10 percent This is because a threeway split of the projected required additional in vestment expenditure for transmission and distribution would add only 8 billion annually in 2050 in gross terms and only 2 billion annually in 2050 in net terms if the projected equivalent investment expenditures under the BAU were also evenly split three ways among efficiency de carbonization and electrification Nor would it alter our projections for any of the intervention pathways although it would likewise marginally reduce our projections for the other interven tion components In any event at least some of this investment however split is essential for underpinning systemwide electrification 98 The Climate and Development Challenge for Latin America and the Caribbean On the other hand while directly offering total energy systemwide expenditure projections for its pathways the IIASA GEA model database leaves a large quantity of projected noninvest ment expenditures unspecified216 billion annually in 2050 in the case of IIASAs mix ad vanced transport pathway and our aggressive mixI pathway and 189 billion annually in 2050 in the case of the IIASA counterfactual BAU trajectory According to IIASA the category of noninvestment expenditures refers to those expenditures necessary to support continued in vestment and in particular those required for operations and maintenance Assuming that these include all spending in the energy system that is not dedicated to investment but necessary for the systems sustained functioning then noninvestment expenditures both public and private to purchase or support the purchase of fuel electric vehicles or batteries would be included in IIASAs nonspecified noninvestment expenditure projections as would noninvestment expen ditures on petroleum and coal and their related investment in their unique infrastructure under the fossilfuel economy in the case of the BAU trajectory Given this assumption we have allocated these projected expenditures to various of our in tervention components within the aggressive mixI pathway i 50 billion has been allocated to the electrification of the transportation sector to support the conversion to an electric vehicle fleet including the deployment of battery technology we assume the intervention component will need to at least double the equivalent efforts of the BAU trajectory in electrification and therefore allocate only 20 billion in electrification expenditures under the BAU which will likely take the form of supporting a higher percentage of hybrid vehiclesas opposed to pure elec tricthan equivalent expenditures in the intervention pathway ii another 50 billion annually in 2050 has been allocated to the decarbonization of electricity to support the purchase of initially higher priced renewable energies likewise only 20 billion annually has been allocated under the BAU iii 10 billion has been allocated as expenditure to support investment in CCS none has been allocated under BAU and iv 106 billion has been allocated to support final enduse purchase of energy mainly lowcarbon electricity compared to the 150 billion allocated to this purpose in the BAU representing increasingly expensive fossil fuels which would be displaced under the intervention pathways Based on the global and integrated nature of the IIASA GEA model such a reallocation of IIASAs unspecified noninvestment expenditures seems reasonable One could argue that the allocation to electrification of transportation should be highermore in line with its 38 percent of final energy consumption both currently and in 2050 But this is not necessarily the case once we have considered the tight linkages and overlap of many investments targeted on efficiency the transmission grid and decarbonization of electricity 99 The Climate and Development Challenge for Latin America and the Caribbean Annex 4 Greenhouse Gas Emissions by Sector in 2005 CO2 CH4 N2O PFCs HFCs SF6 excludes landuse change Manufacturing Construction Other Fuel Combustion Waste Transportation Agriculture Industrial Processes Electricity Heat Fugitive Emissions 1 World MtCO2e 123731 52108 53413 37429 17508 18839 60752 14187 Sector Manufacturing Construction Other Fuel Combustion Waste Transportation Agriculture Industrial Processes Electricity Heat Fugitive Emissions 1 LAC MtCO2e 10904 943 1631 1851 4451 3052 4325 1433 Sector 100 The Climate and Development Challenge for Latin America and the Caribbean Manufacturing Construction Other Fuel Combustion Waste Transportation Agriculture Industrial Processes Electricity Heat Fugitive Emissions 1 Mexico MtCO2e 1710 576 1296 380 830 274 766 477 Sector Manufacturing Construction Manufacturing Construction Other Fuel Combustion Other Fuel Combustion Waste Waste Transportation Transportation Agriculture Agriculture Industrial Processes Industrial Processes 2 Electricity Heat Electricity Heat Fugitive Emissions 1 Fugitive Emissions 1 Brazil Argentina MtCO2e MtCO2e 438 94 324 5905 1389 57 166 379 343 346 480 124 585 976 428 1356 Sector Sector 101 The Climate and Development Challenge for Latin America and the Caribbean Manufacturing Construction Other Fuel Combustion Waste Transportation Agriculture Industrial Processes Electricity Heat Fugitive Emissions 1 Venezuela MtCO2e 356 409 528 79 602 63 516 101 Sector Manufacturing Construction Other Fuel Combustion Waste Transportation Agriculture Industrial Processes 2 Electricity Heat Fugitive Emissions 1 Colombia MtCO2e 76 62 57 889 124 190 145 197 Sector Manufacturing Construction Other Fuel Combustion Waste Transportation Agriculture Industrial Processes 2 Electricity Heat Fugitive Emissions 1 Ecuador MtCO2e 122 38 24 20 103 48 54 29 Sector 102 The Climate and Development Challenge for Latin America and the Caribbean Manufacturing Construction Other Fuel Combustion Waste Transportation Agriculture Industrial Processes 2 Electricity Heat Fugitive Emissions 1 Peru MtCO2e 96 48 85 31 05 363 62 70 Sector Manufacturing Construction Manufacturing Construction Other Fuel Combustion Other Fuel Combustion 3 Waste Transportation Transportation Agriculture Industrial Processes 2 Industrial Processes 34 Electricity Heat Electricity Heat Fugitive Emissions 1 Fugitive Emissions 3 Chile Trinidad Tobago MtCO2e MtCO2e 151 227 27 152 17 63 20 165 118 03 23 04 206 37 Sector Sector 103 The Climate and Development Challenge for Latin America and the Caribbean Manufacturing Construction Other Fuel Combustion 3 Transportation Industrial Processes 34 Electricity Heat Honduras MtCO2e 10 23 22 14 07 Sector Manufacturing Construction Manufacturing Construction Other Fuel Combustion 3 Other Fuel Combustion 3 Transportation Transportation Industrial Processes 34 Industrial Processes 34 Electricity Heat Electricity Heat Nicaragua Guatemala MtCO2e MtCO2e 07 14 03 11 48 29 21 12 16 03 Sector Sector Source WRI 2010 Note 1 N2O data not available 2 CH4 data not available 3 CH4 N2O data not available 4 PFC HFC SF6 data not available A compelling argument for prompt action on climate change in Latin America based on the analysis of the high costs of nonaction the lower costs of action via both adaptation and mitigation and the local cobenefits to be garnered Christiana Figueres Executive Secretary United Nations Framework Convention on Climate Change UNFCCC This book illustrates the many challenges faced by the Latin American region resulting from climate impacts It also includes a comprehensive effort to quantify the financial consequences from these impacts thus providing essential information for policy making Carlos Nobre National Secretary for RD Policy Ministry of Science Technology and Innovation of Brazil