The economics of climate change in Latin America and the Caribbean: Stylized facts

Abstract

Not surprisingly, this involves an intense ethical and international political debate over the distribution of costs between countries, and between sectors and economic groups, with emphasis on adaptation and vulnerability, or on mitigation and compliance mechanisms and the respective sanctions (see, for example, Oxford Economic Review of Economic Policy, 2008). The key aim of this article is to present a longrange overview of the main regular patterns observed between economic activities and climate change in the region. It thus attempts to contribute to discussions aimed at defining the best adaptation and mitigation alternatives to tackle the problem of climate change from the Latin American and Caribbean standpoint, and to improve understanding of the consequences that the various types of international agreements could have for the region. The economic analysis of climate change is surrounded by major uncertainty, since it includes a wide variety of factors in which the transmission channels and scale of the effects are not sufficiently understood. It is a very long-term phenomenon with feedback processes, and it includes complex riskmanagement procedures. Hence, the projections set forth in this article only represent potential scenarios which are highly uncertain and should not be taken as point forecasts.

How the Black Swan damages the harvest: Extreme weather events and the fragility of agriculture in development countries

“…Whereas South America experiences rising temperature and changing precipitation patterns leading to mixed effects on agriculture, an increase in temperature severely damages agricultural output in Central America. Moreover, even though Central America is marked by a decline in precipitation, floods remain among the most frequent extreme weather events [ 46 ]. The estimated conditional probabilities suggest that in Central America & Caribbean maize production reacts mainly to extremes in high precipitation and temperature and rice production reacts to extreme low precipitation.…”

Economic growth and the environment

“…In the particular case of Latin America, some empirical evidence exists of environmental degradation in the long period of economic growth since the 1940s (Sunkel and Gligo, 1980;Gligo 1993). The negative impact of climate change upon average output and output variability has also been reported as a set of stylized facts (Galindo and Samaniego, 2010).…”