Climate Change Dashboard
A Deep Dive into the Economic and Fiscal Implications of Environmental Challenges in LAC
Natural disasters and climate change critically impact fiscal sustainability and debt management in Latin American and Caribbean countries. The increasing frequency of hurricanes, floods, and droughts poses a higher risk of straining government budgets, leading to unsustainable debt levels. The economic impacts of climate change, such as reduced productivity and infrastructure damage, further exacerbate these challenges.
By offering real-time data and insights into the economic impacts of natural disasters and climate change on fiscal sustainability in LAC, this dashboard helps policymakers make informed decisions that promote long-term financial stability.
was the increase in the number of natural disasters events in LAC between 1980-2000 and 2001-2020
represents the highest average of economic damages from natural disasters as a share of GDP suffered by LAC in 1985
Events in LAC
Events in LAC
In , the top three countries with the highest number of natural disasters were:
Magnitudes are scaled by region
Immediate effect of extreme natural disasters
The occurrence of a natural disaster resulting in damages equivalent to 2% of Gross Domestic Product (GDP) leads to a rise of up to 0.3 percentage points (pp) in public debt in the affected region for a minimum of three years, and simultaneously, causes a decrease in revenues by 0.04 pp in the first year.
While the effect on public spending is positive and temporary for current and capital expenditures, the initial perception of sovereign risk increases but diminishes after the second year. Notably, the Caribbean economies face the most significant fiscal pressures, and the change in their Emerging Markets Bond Index (EMBI) spread is more than double that of the Latin America and the Caribbean (LAC) region in 2020.
Effect of extreme natural disaster (in pp)
Shocks from natural disasters that result in higher debt levels have a more significant effect on the primary balance.
Fiscal reaction given an increase in debt due to an average natural disaster impact.
Actions & Progress
How vulnerable is LAC to climate change and how ready is it to adapt to its impacts?
The ND-GAIN Country Index evaluates a nation's ability to adapt to the negative impacts of climate change through two key dimensions: vulnerability and readiness.
Vulnerability is measured by assessing a country's exposure, sensitivity, and capacity to adapt to climate change. The index considers six vital sectors - food, water, health, ecosystem service, human habitat, and infrastructure - to determine a nation's overall vulnerability. Exposure indicators are projected impacts that are invariant over time, while sensitivity and adaptive capacity may vary. Sensitivity measures a nation's dependency on a sector negatively affected by climate change, and adaptive capacity measures the availability of social resources for sector-specific adaptation.
Readiness measures a nation's capacity to leverage investments and convert them to adaptation actions. Economic readiness captures a nation's ability to accept investment and apply it to adaptation, while governance readiness evaluates the institutional factors that enhance the application of investment for adaptation. Social readiness measures the factors such as social inequality, ICT infrastructure, education, and innovation that enhance the mobility of investment and promote adaptation actions.