Between 2025 and 2050, Ecuador requires an annual investment of 3.5 percent of GDP to mitigate and adapt to climate change.
Quito, September 19, 2024 - A robust climate policy program would enable Ecuador to boost economic growth and reduce poverty, according to the World Bank Group's Country Climate and Development Report (CCDR), released today.
The report stresses that climate action and economic progress can go hand in hand. Climate mitigation and adaptation actions, driven by a combination of private sector dynamism and well-targeted public investments, could contribute to Ecuador's economy, putting the country on a path to sustainable growth.
“Climate challenges can be successfully addressed by combining institutional, macroeconomic and sectoral policies that combine climate and development priorities,” said Issam Abousleiman, World Bank director for Bolivia, Chile, Ecuador and Peru. “Ecuador can achieve resilient, low-carbon development through these efforts, but urgent action is needed,” he said.
Between 2025 and 2050, the country must invest USD 3.7 billion (or 3.5 percent of GDP) annually in climate mitigation and adaptation activities, mainly in the transport, energy and agricultural sectors. These measures could significantly help protect Ecuador from the physical impacts of climate change and even offset the cost of the associated investments. Additionally, structural reforms in those three sectors are essential for attracting private sector investment and creating a stable macroeconomic environment. The recent strengthening of the regulatory framework for public-private partnerships (PPPs) is a step in the right direction as it can help attract capital to implement climate mitigation and adaptation activities for critical infrastructure. The report also highlights the importance of developing local capital markets and green financial instruments to finance climate action.
“Investment in institutional capacity, coordination and improvement of the public administration is essential for climate action, creating an enabling environment for private investment which can drive the economic diversification and resilience the country needs. The private sector can play a key role in energy transition,” said Manuel Reyes Retana, International Finance Corporation (IFC) regional director for South America.
If the country does not act promptly, increased frequency and magnitude of extreme weather events will have serious impacts on its economy and population well-being potentially reducing GDP per capita by nearly four percentage points.
Ecuador's rich natural wealth offers a unique advantage. Commodities from legal mining operations free from deforestation practices can boost Ecuador's economy increasing productivity while bolstering resilience against climate shocks.
The report underscores creating an enabling environment to attract increased private investment in renewable energy is crucial. Well-designed hydropower infrastructure complemented by investments in solar and wind power would help diversify electricity generation ensuring energy security with lower emissions.
Managing oil resources carefully by investing in diversification planning high-potential alternatives like tourism will also be necessary as part of this transition strategy.
The World Bank Group’s Country Climate Development Reports (CCDRs) serve as core diagnostics integrating climate change with development priorities helping countries prioritize impactful actions reducing greenhouse gas emissions boosting adaptation resilience while delivering broader developmental goals built on rigorous research data identifying main pathways costs challenges benefits opportunities suggesting concrete priority actions supporting low-carbon resilient transitions informing governments citizens private sectors development partners engaging them with developmental climatic agendas feeding into core bank group diagnostics engagements operations attracting funding directing financing high-impact climatic actions
Download complete report at: [link]
Learn more about World Bank’s work: www.worldbank.org/lac
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