Albatrosses fly over the sea on the way to the Kerguelen Islands, also known as the Desolation Islands on Dec 23, 2022. (PHOTO / AFP)
MEXICO CITY — Climate change could cost Latin America nearly a fifth of its gross domestic product (GDP) by the end of the century without new policies to curb its impact, according to a Moody's Analytics report published Monday.
The analysis examined three possible scenarios for the region, accounting for costs of climate change's physical toll – infrastructure damage, poorer health – as well the costs of policy interventions aimed at reducing climate change's impact.
Latin American countries that would be more affected by climate change are the main fossil fuel producers and consumers: Venezuela, Colombia, Brazil and Mexico
If no new policy action is taken, Moody's foresees a steady deterioration in GDP, losing 10 percent by 2075 and ending the century down 16 percent as the region loses production capacity starting this year and losses mount at increasing rates.
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The report called this a "nightmare scenario."
"Latin American countries that would be more affected by climate change are the main fossil fuel producers and consumers: Venezuela, Colombia, Brazil and Mexico," the report said.
Latin America's economic output sustained losses under all three scenarios analyzed: immediate policy actions targeting zero emissions by 2050, policies delayed until 2030 but then picking up pace, and no new policies to curb climate change.
"Early policy is the best-performing scenario as it reports the lowest losses," said Moody's, predicting higher inflation for the first 50 years with output losses falling below 4.5 percent and leveling down just 3.5 percent by 2100.
Under a late policy scenario, Moody's sees output sinking more than 6 percent lower before recovering to a loss of 5 percent by 2080.
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Output losses would accelerate and worsen between 2030 and 2060 as decarbonization advances, it said, with much higher inflation from more intensive prices and tariffs.