Moody’s Analytics analysis released on Monday says if new policies are not put in place to lessen the effects of climate change, Latin America’s GDP might lose roughly 5% of its value by the end of the century.
The analysis looked at three potential outcomes for the area, taking into account both the direct costs of climate changeโsuch as infrastructure damage and worsening healthโas well as the indirect costs of policy changes meant to lessen its effects.
If no new policy action is taken, Moody’s foresees a steady deterioration in GDP, losing 10% by 2075 and ending the century down 16% as the region loses production capacity starting this year and losses mount at increasing rates.
The report called this a “nightmare scenario.”
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“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% and leveling down just 3.5% by 2100.
Under a late policy scenario, Moody’s sees output sinking more than 6% lower before recovering to a loss of 5% by 2080.
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.
Story adapted from Reuters
