The Unassuming Economist

From the IMF’s latest report on Belize:

“Belize is exceptionally vulnerable to natural disasters and climate change. It already faces hurricanes, flooding, sea level rise, coastal erosion, coral bleaching, and droughts, with impacts likely to intensify given expected increases in weather volatility and sea temperature. Hence, planning for resilience-building, and engagement with development partners on environmental reforms, have been central to Belizean policy-making for many years, since well before Belize submitted its Nationally Determined Contribution (NDC) to the Paris Accord in 2015.

This Climate Change Policy Assessment (CCPA) takes stock of Belize’s plans to manage its climate response, from the perspective of their macroeconomic and fiscal implications. The CCPA is a joint initiative by the IMF and World Bank to assist small states to understand and manage the expected economic impact of climate change, while safeguarding long-run fiscal and external sustainability. It explores the possible impact of climate change and natural disasters on the macroeconomy and the cost of Belize’s planned response. It suggests macroeconomically relevant reforms that could strengthen the likelihood of success of the national strategy and identifies policy gaps and resource needs.

• General preparedness for climate change. Belize’s planned climate response is well articulated. Its NDC includes a clear strategy with relatively well-developed costing for its mitigation and adaptation activities. But while climate planning is advanced and consistent with the broader development strategy (GSDS), implementation capacity remains a challenge. Belize has strong physical emergency planning but receives comparatively little disaster aid and falls short on longer-term financial provisioning.

 

• Mitigation. Belize plans to meet its NDC mitigation goals by expanding its already relatively high share of renewable energy further (from 57 percent to 85 percent of electricity supply), reducing energy intensity and fossil fuel use in transport, and protecting forest reserves and improving sustainable forest management. Given its already-reduced dependence on fossil fuels, and its need to preserve competitiveness with Caribbean neighbors, it has limited scope to raise carbon taxes unilaterally; however, feebates could improve the mitigation incentives in the tax system.

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