We invite you to read the publication of Diario Financiero in which our partner, Antonio Rubilar, commented on how climate change can impact the local economy.
Estimates indicate that the country could see its gross product decrease by around 10% due to climate change. And, although decarbonization is advancing, experts believe that the adaptation of industries and infrastructure to the effects of global warming has not been able to take a good pace.
There is consensus that Chile is generating important changes and signals to mitigate the effects of climate change, seeking to reduce greenhouse gas emissions. However, analysts believe that more progress needs to be made to counteract the economic impact on different sectors.
In Chile we have had important advances in mitigation, with a deployment of renewable energies that has been an example at international level and with very relevant advances in the last time in energy efficiency. However, we have not addressed climate change adaptation with equal force. We must prepare our economic activities, infrastructure and even lifestyle, to adapt to this new reality’, says the sustainability manager of Fundación Chile, Ignacio Santelices.
The academic director of the Diploma in Finance of FEN-UChile Unegocios, Jorge Berríos, warns that it is estimated that the country’s losses due to the effects of climate change would be close to 10% of GDP and, in fact, he details that in 2023 local agriculture lost about US$2 billion, only due to climate effects.
He notes that, along with this, the requirements for the execution of projects have been exacerbated. Due to environmental issues, more than 64 projects for amounts of more than US$ 10,600 million are in court’, he explains, and adds that the restrictions that are being placed in Chile have generated that some investments have gone to other countries, ‘as was the case of CMPC’.
The study ‘High temperatures and scarce rainfall: the impact of climate change on Chile’s economic activity’, published by the Central Bank at the beginning of this year, determined that the increase in temperature has a negative impact on GDP growth, with a significant effect on industries such as agriculture, forestry, commerce, restaurants and hotels, among others, sectors in which ‘an increase of 0.2°C in the average temperature with respect to its historical norm has an effect of -0.81 percentage points on quarterly inter-annual growth’. Meanwhile, the GDP of mining and items such as electricity, water, gas or transport would also fall by 0.02 percentage points due to the rise in temperature.
Along these lines, Nicolás Román, an academic at the School of Economics and Business Administration of the Universidad de los Andes, points out that sectors dependent on phenomena such as droughts and floods, changes in temperatures and climatic conditions along the coastline will be more directly impacted, such as, for example, ‘fruit exporters, wine companies and ports, to mention a few’.
Public infrastructure
At the infrastructure level, experts state that it is not prepared to withstand the inclemencies of climate change.
We have been slow to adapt to climate change. We have not advanced strongly enough in developing water solutions, such as nature-based solutions to refill aquifers when rain events occur; additional storage, desalination capacity, water reuse or water efficiency, among other solutions. And we must improve the resilience of our infrastructure for scenarios of extreme weather events, which will occur more frequently’, warns Santelices.
An example of this is the situation that the capital experienced a few weeks ago with winds of more than 100 kilometers per hour that devastated the electrical infrastructure ‘This impacted hundreds of companies in the region that had to interrupt their production and services for several days, not to mention the impact it had on millions of homes’, he points out.
For this reason, he considers that it is necessary to increase the resilience of the infrastructure, which up to now continues with standards of around 8 hours of cut-off per year. “To advance in this, it is urgent to reform the distribution and develop an investment plan in infrastructure, which unfortunately has been stopped despite the enormous benefits it will have in the medium and long term”, says the executive of Fundación Chile.
At the sanitary infrastructure level, the situation is similar, says the leading partner of Public Law and Regulated Markets of Albagli Zaliasnik (az), Antonio Rubilar, who indicates that the current facilities of the sanitary companies ‘will probably become obsolete if they start, for example, to desalinate water. For this reason, work is currently being done on projects to ease the permitting, which will give the private sector certainty to invest‘.
