Child | What are the effects of climate change on the Peruvian economy? | Infrastructure | Climate Change | economy

In 2023, the economy is affected by climate factors According to the Central Reserve Bank of Peru (BCRP), had an impact of about 1.5% on GDP (PPI)

Six years ago, in 2017, the country had already experienced an El Niño event in which, according to Macroconsult, Damages that year totaled US$4,000 million (1.9% of GDP).. Also, Thorne & Associates estimated – as a flow of GDP – the impact was between S/ 25 thousand and S/ 35 billion (about 3% of GDP).

Various experts have already highlighted that it should not be surprising that new climate anomalies will become more frequent in the future, given the factor that creates this situation: Climate change.

management Conducted the conversation “The impact of Climate change Its Effects on the Peruvian Economy” To answer three questions: How vulnerable are we? Can we rely on government announcements to mitigate this situation? What can we expect in the first months of 2024?

Paola Lazarte, former Minister of Transport and Communications; Alonso Segura, former Minister of Economy and Finance; Abraham Levy, director and partner at Environmental Antina; Rosario Bazán, co-founder and CEO of Danper; and Claudia Sícoli, Director of Economic Studies at UPC, give their perspective on this important topic.

Paola Lazarte, former Minister of Transport and Communications

Unlike other countries, The urban planning component is irregularly populated where it should not be. In terms of budget, mitigation and restoration of public and private infrastructure is much more expensive than if there had been adequate planning. We are vulnerable from a physical infrastructure point of view, but this situation leads us to budgetary vulnerability as these are resources that are not necessarily in the budget.

Creating new institutions is not the most appropriate way to deal with events like El Niño. Instead, we can create financial mechanisms Create incentives so that projects can be implemented quickly, for example, use contracts already in place to deliver infrastructure quickly.. A problem in the reconstruction or post-reconstruction phase El Nino phenomenonTendering and implementation of technical files and it should not be, the main problem is getting resources.

We need to make substantial reforms. We already have a promotional portals event, all we need to do is develop contingency plans. Reforming public finances to create incentives for local governments to comply with their canal cleaning and riparian protection measures is not too expensive. At the same time, we need a reform of infrastructure management, without creating new institutions, we need to create administrative structures and related organizations that can quickly execute projects.

Alonso Segura, former Minister of Economy and Finance

It is fundamentally dysfunctional in the public sector, unable to have short-term responses or medium- and long-term strategies.. The Peruvian state is highly bureaucratic and institutions do not talk among themselves, adding to those administrative inefficiencies. For example, in prevention, preparation for climate change or El Nino, you have to play the role of government at different levels, but there is both political and financial centralization.

Most of the problems in the country are due to improper decentralization. The ideal of decentralization is that you have a government closer to the citizens, the question is whether this government works and meets the needs of Peruvians.. The answer is no, and the problem is how to get rid of this bad decentralization.

In fact, we're going in the opposite direction, and we're increasingly looking at political news: “Look at how we're giving more money to regional and local governments.” They see it as a great achievement, but in many cases it means wasted budget. Powers have been transferred to them and they are not implementing them, hence resources are being wasted and public goods and services are not reaching the citizen.

Rosario Bazán, co-founder and CEO of Danper

And not just because of rainfall and infrastructure issues, we are talking about high temperatures, heat stress at levels we have never seen before; All these make up the compact Agricultural production. This means that a hectare of blueberries normally produces 20 tonnes, but this year we have got 10 tonnes or less. That means costs will increase. Additionally, these costs are further compounded by pests and diseases.

All these have a direct negative impact on job creation, especially considering that Agricultural industry It is the main source of employment in Peru, providing employment for 25% of the economically active population.

How is the situation of family farming in relation to infrastructure? Appallingly, no work has been done on rebuilding infrastructure against it El Nino phenomenon, the situation is confusing. Agricultural exports have increased more than 40 times, from 400 million US dollars in 2000 to almost 10 billion US dollars, but we are still a “one road country”. A bridge broke and we were completely separated. It's not a matter of changing the name of the companies that are going to look after us, it's a political decision. The government has not done its homework now and never did.

Abraham Levy, Director and Partner, Environmental Antina

There is a known predictability of impacts that we all need to internalize and make part of our implementation or general management plans.

We don't know how to identify “bacteria” in Peru. Will an El Nino event come in the summer? No, the El Nino event arrived in February this year and we have it. FEN is not the rain in Piura, it is the warming of the ocean. That's what created the Yakuza storm. We need to understand the problem better. 25% of our lives here will be spent under El Niño conditions, more or less; 25% of La Niña; and 50% in neutral positions.

To remember, in the 2015-2016 El Nino, a similar situation occurred: at the end of summer it (the sea) warms up, we have a very warm autumn, and it decreases in winter. But remains strong till December. Already in the last week of the last month of the year it (quantity) becomes moderate.

Every president has had his own El Niño event. Between December and March 2017, El Nino “Kuczynki” had a magnitude between weak and moderate, and it hit us. In contrast to 2016's El Nino, between December 2015 and March 2016, it was between moderate and strong, but no rain. Why isn't it raining? Because the warmer water was pushed out further and the coast was protected by lower temperatures, similar to what is happening now. If you ask me: Does it rain in summer? I will say a little.

Claudia Sícoli, Director of Economic Studies at UPC

He El Nino phenomenon It is something that happens sequentially. Why aren't we talking about relocating vulnerable people? About building the infrastructure that allows it to stay on track? For me, rather than confronting an event that has already happened or is about to happen, we should start thinking about how we are going to face this as a country in the future. We cannot continue to 'stick' situations. No medium and long term vision. For me, this is one of the most pressing problems that create inflation, employment problems, agricultural export problems, quality of life problems, diseases etc.

There are technical committees working within ministries that formulate state policies. Even if ministers change, I believe that ultimately we need to strengthen the teams in the portfolios; Through these committees these medium to long term government policies can be implemented. The biggest problem is the issue of corruption, difficulty in implementing resources, because the authorities are more concerned that there should be no gaps in the budget, because everything is “under the shadow of corruption”.

In addition to prevention, the issue unites a significant number of Peruvians with very limited living conditions. I think we should also think about social distancing. The government should consider how it can support these groups of people who are going to be affected by the various situations that may arise.