© Reuters. FILE PHOTO: People use escalators after disembarking from a train at the Luz station in Sao Paulo, Brazil January 12, 2022. REUTERS/Amanda Perobelli/File Photo
MEXICO CITY (Reuters) – Climate change could cost Latin America nearly a fifth of its gross domestic product (GDP) by the end of the century without new policies to curb its impact, according to a Moody’s (NYSE:) Analytics report published Monday.
The analysis examined three possible scenarios for the region, accounting for costs of climate change’s physical toll – infrastructure damage, poorer health – as well the costs of policy interventions aimed at reducing climate change’s impact.
If no new policy action is taken, Moody’s foresees a steady deterioration in GDP, losing 10% by 2075 and ending the century down 16% as the region loses production capacity starting this year and losses mount at increasing rates.
The report called this a “nightmare scenario.”
“Latin American countries that would be more affected by climate change are the main fossil fuel producers and consumers: Venezuela, Colombia, Brazil and Mexico,” the report said.
Latin America’s economic output sustained losses under all three scenarios analyzed: immediate policy actions targeting zero emissions by 2050, policies delayed until 2030 but then picking up pace, and no new policies to curb climate change.
“Early policy is the best-performing scenario as it reports the lowest losses,” said Moody’s, predicting higher inflation for the first 50 years with output losses falling below 4.5% and leveling down just 3.5% by 2100.
Under a late policy scenario, Moody’s sees output sinking more than 6% lower before recovering to a loss of 5% by 2080.
Output losses would accelerate and worsen between 2030 and 2060 as decarbonization advances, it said, with much higher inflation from more intensive prices and tariffs.