COP27, a rainforest cartel and climate migrants
Comments on this week’s UN climate summit and the implications for Latin America
Lula will attend COP27 in Egypt and propose the creation of an OPEC-inspired “rainforest cartel” in which Brazil, Indonesia and the Democratic Republic of Congo (DRC) would be the founding members. The three countries all face challenges in stopping illegal deforestation and making tradeoffs related to economic development in order to protect the environment.
Many international donors stopped providing financing to Brazil due to Jair Bolsonaro’s atrocious environmental policies and record. Lula is banking that donors will return with even greater amounts of funding given the increased concerns about climate change and the hopes that they can demonstrate the success and sustainability of these policies to prevent another Bolsonaro-like disaster in the future. Norway and Germany have already announced their return to the fold once Lula is inaugurated.
Lula’s proposal runs in parallel to a push from the Biden administration to raise tens of billions of dollars in commitments for a new program that would allow companies and governments to buy and sell carbon offset credits. Other countries, including Barbados and Belize, are tying the climate agenda to debt issues, hoping to address the two crises simultaneously, and it’s likely other Latin American and Caribbean countries will engage in similar efforts in the coming year.
While these types of economic incentives are critical to the success of programs to combat climate change, from the risk perspective, there are also serious compliance challenges and the potential for corruption. Companies that want to falsely demonstrate environmental responsibility will find greenwashing opportunities. Corrupt officials will create mechanisms for those companies to obtain credits at off marketing pricing. While the ESG backlash is trendy in the media, the actual ESG push will continue into the coming decade. That means legitimate ESG auditing will become more important following this summit.
No matter how good the auditing, corruption scandals are almost inevitable. While pushing for these climate investments, Latin America and the Caribbean should also make sure that investigations and prosecutions happen in a timely way so these initiatives are not completely undermined. Investigative journalists digging into these issues will need to be protected and supported.
The other regional issue that intersects with COP27 is migration. The WSJ covered the communities in Panama's San Blas archipelago who will be forced from their islands due to rising ocean levels. The link above should give you access to the article so you can at least see the amazing photos.
Most climate migration has been less direct than what occurs on those islands. Farmers have seen crop yields decline, forcing them off their land and towards opportunities typically in cities within their current country. Internal displacement then increases the chances of emigration. As climate change worsens, hurricanes and heat will continue to force more people from their homes in greater numbers.
Protecting migrants doesn’t receive the same level of financial interest as carbon offset credits, but it does have a larger direct impact on the region’s stability and politics. Even under the best case scenarios of mitigation and adaptation, hundreds of thousands of people will be forced from their homes in the coming decades due to climate change, adding to already strained systems of migrants and refugees. Preparing for that wave should be a regional priority at this week’s meetings and beyond.
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