Latin America and the Caribbean: Inclusive Green Growth Can Help Sustain Recent Economic and Social Gains (World Bank)


Press Release No:2012/492/LAC
  • Ahead of Rio+20, World Bank report underlines region’s innovative successes and urges to transform them into widespread practices.
  • Latin America’s vast natural resources at risk if inclusive green growth policies are not sustained.
  • Challenges include: 80% of region’s population live in cities; LAC has fastest motorization rate.

WASHINGTON, May 31, 2012 – Latin America and the Caribbean’s natural resources, vastly credited with current growth, could be significantly depleted in less than a generation (15 to 20 years) if the region does not fully embrace inclusive green policies that can guarantee sustainable growth, says a new World Bank report released at the Woodrow Wilson Center today, ahead of the Rio+20 United Nations Conference on Sustainable Development.

In many respects, Latin America and the Caribbean (LAC) could turn out to be a victim of its own economic success. The region’s bonanza of recent years (an average of 4 percent growth and more than 70 million people lifted from poverty) has led to explosive urbanization, which makes a green future more difficult. For instance, the region has the most people living in urban areas in the developing world–over 80 percent of its population–and holds the world’s fastest growing motorization rates at 4.5 percent per year, the study argues.

Examples of how LAC is embracing the inclusive green growth agenda

A Compact and Efficient Urban Footprint:  Densification subsidies to attract people to the city center and revitalize stagnant urban economies are now being utilized in many cities  such as Mexico City, Lima, and Rio de Janeiro.

Expansion of Basic Urban Services:  Between 2001 and 2008, an additional 63 million people in LAC were covered by solid waste services, increasing the coverage rate for collection from 81 to 93 percent.

Bus Rapid Transit Systems:  As the region undergoes rapid growth in automobile ownership it has also led the developing world in the implementation of alternative mass transit systems, in key cities such as  Bogota, Lima, and Mexico City.

Expansion of Low Carbon Electricity Generation:  Electricity generation more than doubled between 1990 and 2009, growing at over 4 percent per year.  The share of natural gas in the region increased from 10 percent in 1990 to 21 percent in 2009.  With oil and diesel declining in importance, power generation growth in LAC has thus had a lower carbon footprint than in other regions.

Extending successes with sustainable agriculture:  The most important pillar of a strategy to reduce the environmental footprint of the region’s agriculture has been the preservation of existing forest cover and the encouragement of reforestation with native species where feasible. Latin America has led the way in using direct payments for forest conservation, with national programs in place in several countries and Brazilian states.


But the region has also served as a global laboratory for some of the most innovative green practices, the report underlines.   It boasts, for example, the lowest carbon energy matrix of the developing world (6 percent of global GHG emissions in the power sector), and multiple cutting edge instruments such as the first catastrophic risk insurance facility to enhance resilience against natural disasters. It has also adopted payment schemes for preserving the environment, which have, for instance, helped turn Costa Rica into a global environmental icon and a paradise for eco-tourism, after being the worst deforester in the region back in the mid 1990s.

“LAC countries are confronted today with decisions that will define their future for years to come,” said Ede Ijjász-Vásquez, World Bank’s Sustainable Development Director for Latin America and the Caribbean“The region has the opportunity to choose a path that can lead to robust growth without locking it into unsustainable patterns that in the long run can prove to be more expensive, less efficient, and less resilient.”

Some of these choices will define the future of the region for decades to come in key areas such as infrastructure, energy and urban services, which are drivers of economic growth and define the quality of life for most of the people in the region who live in cities. For example, demand for electricity in LAC will almost double in the next two decades. While the region currently has the cleanest energy mix in the world, the electricity sector’s carbon intensity has been rising due to the increasing share of fossil fuels (including natural gas), a trend that is expected to continue. To address this, the region will have to rely more on other cleaner sources of energy—such as hydro and wind.

The sustainability of the region’s growth will also depend on its commitment to use    its unique natural assets in a sustainable way. The very advantages that the region’s natural endowment provides – rich water resources, fertile land, and unparalleled biodiversity—are under threat from the spread of inefficient land use and deforestation.  

The report also points out that the region has a real chance to become a leader in adopting a more efficient and climate-smart agricultural practices that do not come at a cost to the environment and are better prepared for new climate patterns. It will also mean moving towards more efficient and greener forms of transportation of goods, such as railways and waterways, which are currently greatly underused, as well as increasing the number of rural communities that are connected.

Ijjász-Vásquez also pointed out that green growth is not inherently inclusive. “For green policies and investments to endure over time, it will be essential that they benefit all of the region’s people, with a focus on the poor,” he added.

There is no single blue print for inclusive green growth in LAC.  However, many of the answers to the challenge of how to grow in sustainable and inclusive ways lie within the region’s own experiences.  Policies and targeted investments can boost economic growth as well as help realize the aspirations of the growing middle class for a better quality of life, create opportunities for the poorest and most vulnerable segments of society, and protect LAC’s environmental assets.