Latin America: Emerging Trends in Environmental, Economic Growth

Cover story, Centerpoint

Oct 05, 2010

Latin America, a region historically plagued by social inequality and underdevelopment, is continually setting its sights on growing economically and reducing poverty. Panelists at a July 22 event asserted that Latin American nations should incorporate environmental sustainability efforts in their economic development plans.

The event, co-hosted by the Brazil Institute and Environmental Change and Security Program in partnership with the U.S. Agency for International Development (USAID), marked the launch of the Wilson Center / USAID report, Emerging Trends in Environment and Economic Growth in Latin America and the Caribbean, which identifies key trends likely to shape the economy and natural environment in Latin America and the Caribbean for the next 10 years.

The culmination of six workshops and a regional meeting in Panama since January 2010, the seminar highlighted the key points of the report, notably five interrelated factors with enormous economic and environmental implications: climate change, clean energy, indigenous and minority issues, challenges of small economies, and urban issues.

As Latin America focuses on economic growth and job creation to meet the needs of a booming working-age population, said panelist Christine Pendzich, any development plans must take into account environmental concerns, which can ultimately worsen social and economic ills. Pendzich, principal author of the report and technical adviser on climate change and clean energy to USAID, said global warming and other climate change trends have become a "game changer," which can fundamentally alter development paths in the hemisphere.

According to data in the report, in the coming decade in most Latin American countries, the working population is expected to exceed the number of the aging and underage dependents. Pendzich argued that capitalizing on the Latin American population's age structural transition toward a majority of working-age adults will require increasing skilled job creation, educating workers to fill those positions, and maintaining fiscal stability.

But Latin America also has the world's largest decrease in fertility rates which points to the need for more resources devoted to maternal health, education, and other basic services. "A healthier, better educated population can then turn into a more highly skilled workforce," the report stated, "attracting higher investment in the region."

While decreasing overall across Latin America, fertility rates in rural areas are outpacing those in urban areas, the report noted. These rural areas are home to many of the region's indigenous and minority groups who historically have been marginalized and whose socio-economic conditions remain dire. Pendzich said the inadequate inclusion of the region's indigenous and minority groups in education and the economy "drags everyone down."

Discussing regional economic trends, Eric Olson, co-author of the report and senior associate of the Wilson Center's Mexico Institute outlined several challenges and opportunities for Latin America and the Caribbean.

Olson said the recovery of the global economy will hurt net importers of fossil fuels, specifically in Central America and the Caribbean and have a negative impact on the environment. The recovery also may increase natural resource exploitation that may exacerbate inequality and social conflict, he said. And while the economic recovery will increase demand for primary products, he said, that will decrease the incentive to diversify Latin American economies.

But there are opportunities too. Olson said the economic recovery will provide incentives for environmentally friendly growth and allow for increased utilization of existing trade benefits and intra- and sub-regional trade opportunities.

The report also discusses Latin America's growing economic ties with China, which have contributed to Latin America's above-average recovery from the global economic downturn. But Pendzich argued that this economic relationship could add to the social and environmental problems faced by the region. She warned that insufficient innovation could lead to a continued regional dependence on commodity exports.

During another panel discussion that day, three of the 77 participants involved in creating the report revealed in greater depth the integration and interconnectivity of the five trends discussed in the report. Blair Ruble, director of the Wilson Center's Comparative Urban Studies Project said with 78 percent of the Latin American population living in urban areas, "cities and urban life create a context in which there are opportunities for solutions to problems," opportunities that can be used to further innovation, encourage social equality, and promote good governance. To succeed in all of these areas, he said, good governance is key.

Alternatively, cooperation with the rural indigenous and minority groups can also provide valuable opportunities for change, specifically in the area of climate change, said Judith Morrison, senior adviser at the Inter-American Development Bank's Gender and Diversity Unit. She argued that indigenous populations are not only the most affected by climate change, but also the most able to help as a result of their unique knowledge of the local geography.

Maria Carmen Lemos, associate professor at the University of Michigan, said vulnerability to climate change depends on two sets of factors: geographical location and socioeconomic factors. Therefore, she said, policies to adapt to climate change must focus on poverty reduction as well as the vulnerability of specific geographic locations.

Julie L. Kunen, senior adviser to the Bureau of Policy, Planning, and Learning at USAID, applauded the report for its cross-trend analysis and called on the development community to work together to address these trends in the Latin American and Caribbean region. The next step, Kunen claimed, must be to develop an ambitious strategy and "convene everyone who cares about the issues and rally them around the agenda."

The panelists agreed that economic development and combating climate change are deeply intertwined and reliant upon each other. Latin America is "not our back yard, it's our front yard," said Janet Ballantyne, acting deputy assistant administrator of USAID's Latin America and the Caribbean Bureau. It's time we "open the front door," she said, and address the issues faced by Latin America that have long-term consequences for the region, the United States, and the world.

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