If not controlled, climate change could lead to economic losses of around US$ 17 trillion in South America between 2021 and 2070, in addition to causing the loss of 18 million jobs and 12% of the Gross Domestic Product (GDP) of the region, the equivalent of US$ 2 trillion. This is what the global study “The Turning Point – A new economic climate in South America” shows, carried out by the consultancy Deloitte, through its division Deloitte Economics Institute.
“These losses come from a predictive analysis of a scenario where nothing is done to contain the effects of climate change,” says Felipe Donatti, manager of Deloitte’s sustainability and ESG practice. “These are costs that companies will have to bear, effects that governments and populations will have to face, due to the impact of climate change as a whole, if there is no immediate action to contain the risk of these impacts.”
This negative situation, however, can be avoided: if global warming is limited to 1.5°C above pre-industrial levels, South America escapes economic losses, having, by 2070, 2 million more jobs. in relation to a scenario of intense emissions and impacted by the climate, in addition to US$ 150 billion more in GDP. For this, it is necessary that the countries of the region, through their governments, companies and civil society institutions, start acting immediately, even in this decade (2021-2030), for decarbonization and ambitious measures to mitigate the effects of warming. global.
The report highlights that these actions are urgent so that it is possible for South America to reach, from the mid-2060s, its “turning point”, when the economic gains from decarbonization begin to overcome costs. Otherwise, climate change will bring destruction and imbalance of natural ecosystems, strongly affecting entire sectors of the economy and the lives of the population.
Climate change is already affecting sectors that are more dependent on environmental services, such as agriculture, which can suffer from droughts and floods and possible barriers to importing carbon-intensive products in some countries. The sector will continue to be impacted, but the Deloitte report also points out that services, manufacturing and retail and tourism, which account for just over 80% of jobs in the region, could suffer the greatest losses due to climate change. By 2070, there would be a reduction in the gross value added of services in the region by US$ 7.1 trillion, a reduction in industrial production by US$ 3.5 trillion and losses of US$ 2.3 trillion in the retail and tourism sector.
“It is important to point out that the risks that arise from climate change affect all sectors. Each sector and each region where the sector operates will be affected in a certain way, but everyone will be affected in some way, because the production chain will be affected. If that sector does not directly feel the climate impact, its supplier or another business partner will feel it directly, and this will end up affecting the company’s operation in an indirect way”, explains Donatti.
The poorest will be most affected
The consequences of climate change must be felt more intensely by people living in poverty in South America. According to the Deloitte report, by 2030 climate change will reduce agricultural productivity, threatening the food security of the poorest populations, especially in Northeast Brazil and parts of the Andean region.
Felipe Donatti explains that more vulnerable and less developed regions have less climate resilience, a concept of how much a given region or population is able to adapt to the new scenario imposed by global warming. “These regions suffer more from the impacts and have less capacity to recover. This has to be considered, it is necessary to reflect on how to focus on these regions so that they increase their climate resilience, at the same time that we direct efforts to reduce the worsening climate issues”, he says.
The social aspect, therefore, should not be left out during the transition to a low carbon economy, with investments and risk mitigation measures always considering the entire population, in line with the Sustainable Development Goals (SDGs) of the United Nations (UN).
“In the transition to a low carbon economy, we have the concept of a just transition, which aims to incorporate how to ensure that this most vulnerable portion is not left out of this transition. By changing processes and technologies, we will eventually have a change in professional profiles, so, How do we guarantee that jobs are not lost, how do we train this population for the new jobs that are emerging? It is necessary to guarantee the inclusion of these people, so that no one is left behind in this transition”, says Donatti.
Brazil can lead energy transition
According to the Deloitte executive, Brazil has a greenhouse gas emissions profile more related to agriculture, land use and land use change, while most other major global economies follow an emissions profile linked to production of energy.
“Brazil has a privileged position on the energy issue and can lead the energy transition towards a cleaner matrix, more composed of more renewable energies. As for our emissions, we can implement mechanisms to reduce deforestation, we can reforest areas and, with that, , there is a big gain in carbon capture. So Brazil has a big advantage in these two points”, he says.
Donatti points out, however, that “more ambition” is needed in Brazil’s journey in relation to the climate issue. “It is important to recognize the advances we have made so far, both on the business side and on the government side, but we cannot be satisfied just yet. Because the longer this transition takes, the longer it will take to reach the turning point”, he says.
