S Photo: Ankit Dembia on unsplash Photo: Environment and Energy Landscape in Latin America and the Caribbean: An Analysis of Trends from 2020-2030 Report Summary December 2020 Introduction and objectives About the Report Phot; Jan Kronies on unsplash Jan Kronies Phot; The United States Agency for International Development (USAID) partnered with Environmental Incentives and Dalberg Advisors to conduct an analysis of key environmental and energy trends that are likely to affect Latin America and the Caribbean (LAC) from 2020 to 2030 Objectives • This full report aims to help USAID and its partners gain a more thorough understanding of environmental and energy trends affecting the region to help inform their actions, investments, and partnerships • This summary report provides a high-level overview of the five trends and sub-trends, as well as opportunities for USAID. For more detailed information please refer to the full narrative report or the specific trend report of interest Methodology • The team initially explored a diverse set of trends affecting the region along multiple dimensions. These trends included challenges and solutions as well as ones that were pan-regional and local, existing and emerging • Five key trends were prioritized based on their potential impact and relevance for USAID and the U.S. Government (USG) • The team conducted desk research and consultations with USAID experts, Missions, and outside experts to analyze these five trends indepth 2 Environment and Energy Landscape in Latin America and the Caribbean: An Analysis of Trends from 2020-2030 Illegal, unreported Increased exploitation Wildlife Deforestation Mining and unregulated trafficking of natural resources (IUU) fishing Increased planetary Diseases from Health issues from changes in outdoor and indoor health issues vector ecology air pollution Increased adoption Technology and Financing Policies of climate adaptation innovation Increased access and use Distributed Use of modern Energy efficiency of modern energy sources generation energy sources Expanded use of market-based Payment for Tradable Environmental Green ecosystem permits and mechanisms for environmental taxes bonds management and conservation services (PES) quotas (P&Q) 3 Phot; Jan Kronies on unsplash Jan Kronies Phot; INCREASED EXPLOITATION OF NATURAL RESOURCES 8/14/2020 4 INTRODUCTION | LAC’s resources are critical for U.S. and global value chains, and play a crucial role in local economies % of LAC LAC % of % of LAC on unsplash Jan Kronies Phot; Type Exports to US Global Exports GDP Agriculture 36% 16% Agriculture represents LAC accounts more than 10% of Seafood 18% for 26% of US 9% GDP in Belize, Bolivia, food imports Dominica, Ecuador, 5% Forestry Guatemala, Guyana, 14% 8% Haiti, Nicaragua, and Renewable Paraguay Livestock/Poultry 1% 2% Lithium 75% 67% LAC accounts for In Peru and Guyana, Silver 26% 29% of US 5% mineral rents are mineral imports 3% ( equivalent to 8% and Oil 21% and 21% of ore 9% 15% of GDP, and metal imports Gold 10% 5% respectively Non-renewable Sources: 1. FAOSTATS, Forestry Trade Flows, 2017; 2. Statista, share of economic sectors in GDP in Latin America and Caribbean, 2019; 3. WITS, Carbonates: lithium carbonate exports by country in 2018; 4. World Bank Data, Mining rents (% of GDP), 2017; 5. WITS, Gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or in powder form; 2019; 6. WITS, Silver (including silver plated with gold or platinum): unwrought or in semi-manufactured forms, or in powder form 2019; 7. WITS, Fish and crustaceans, mollusks and other aquatic invertebrates, 2019; 8. World Bank Data, Oil rents (% of GDP), 2017; 9. WITS, Animals live, 2019; 10, FAOSTATS, All elements included in detailed trade matrix excluding live animals, beverages and cigars, 2018; 11. US Energy Information Administration, Crude oil imports by country 2019; 12. WITS, Oils: petroleum oils and oils obtained from bituminous minerals, crude exports 2019; 13. World Integrated Trade Solution World Bank, “United States Food Products Imports By Region 2018.” 2020; 14. OECD-FAO, “Latin American Agriculture: Prospects and Challenges.” 2019; 15. World Integrated Trade Solution World Bank, “United States Minerals Imports By Country and Region 2018.” 2020; 16. World Integrated Trade Solution World Bank, “United States Ores and Metals Imports By Region 2018.” 2020; 17. World Bank, “Mineral rents (% of GDP).” 2018. 5 DEFORESTATION | The 2.7 million hectares of forest that LAC lost per year from 2010-2020 has enormous implications (1 of 2) Overview Share (%) of forest loss/gain over five-year period (2000-2020) LAC lost 2.7 million ha/year between 2010-2020 - slower rate (50% less per year) than the previous decade, but still an unsustainable level Sources: 1. FAOSTAT, “Forest Land.” n.d; 2. Reuters, “Amazon deforestation could speed up in 2020.” 2020; 3. WWF, Amazon deforestation, n.d.; 4. Nature, “When will the Amazon hit a tipping point?” 2020; 5. Global Wildlife Conservation, “Critical New Initiative to Protect Mesoamerica’s Five Great Forests Launches During UN Climate Summit.” 2017. 6 DEFORESTATION | The 2.7 million hectares of forest that LAC lost per year from 2010-2020 has enormous implications (2 of 2) Implications Decreased biodiversity and Lost livelihoods for indigenous increased soil erosion due to and rural communities habitat destruction Increased displacement of Decreased carbon stock resulting in populations due to environmental Social Environmental greater carbon in the atmosphere degradation Economic losses of $ 3.5 trillion Decreased food security and during the next 30 years in the nutrition for local and broader Amazons alone populations Economic Health-Related Sample solutions Agroforestry practices Tracking technologies Innovative governance models Land-use systems that integrate Monitor supply chains in Business partnerships agriculture and forestry to increase real-time from tree to with rural communities to commercial activity while protecting the final user improve resiliency and forest forests management 7 MINING | Most of the small-scale mining in the region is illegal, but there are emerging solutions to tackle illegality and to improve mineral extraction (1 of 2) Overview on unsplash Jan Kronies Phot; Illegal Small-scale Mining includes: Illegal gold mining by country (% of total mining) 91% 80% 1 Informal Mining 77% • Artisanal miners or small-scale miners who operate without licenses or who have not formalized their operations 31% 28% 22% 2 13% Criminal Mining 10% 9% • Linked to organized crime • Operates in prohibited areas and/or fail to meet laws Venezuela Colombia Ecuador Bolivia Peru Guyana Nicaragua Brazil Mexico Sources: 1. The Global Initiative Against Transnational Organized Crime, “Organized Crime and Illegally Mined Gold in Latin America.” 2016; 2. Reuters, “‘Ethical gold’ aims to curb mining’s toll in South America.” 2014; 3. Ecologist, “Fair Trade gold mining in the highlands of Peru.” 2015; 4. The Global Initiative Against Transnational Organized Crime, “Organized Crime and Illegally Mined Gold in Latin America.” 2016; 5. Impact, “Best Practices Formalization and Due Diligence in Artisanal and Small-Scale Mining.” 2018; 6. Better Gold Initiative, “About Better Gold Initiative.” n.d.; 7. SECO, “Iniciativa Oro Responsable para la Pequeña Minería.” n.d. 8 MINING | Most of the small-scale mining in the region is illegal, but there are emerging solutions to tackle illegality and to improve mineral extraction (2 of 2) Implications on unsplash Jan Kronies Phot; Increased water and air pollution, Lost livelihoods for indigenous and particularly mercury contamination rural communities Increased deforestation, including the Increased displacement of populations due destruction of habitats and protected areas to environmental degradation Environmental Social Loss of significant tax revenue Decreased food security and nutrition for given informality local and broader populations Increased corruption, which Economic undermines financial system Health-Related Sample solutions Gold Tracing & Certification Transparency Regulations Gradual Formalization Certification for complying with ethical Require companies to disclose their Formalization policies that enable working conditions and environmental sourcing information, including sourcing artisanal and small-scale miners to standards. Certifications trace gold at all from conflict areas progressively comply with requirements stages in the value chain 9 WILDLIFE TRAFFICKING | Wildlife trafficking is on the rise, threatening the region’s biodiversity (1 of 2) Overview on unsplash Jan Kronies Phot; From 2011-2016, wildlife shipment confiscations from LAC in USA decreased 46% Confiscations of jaguar From 2013-2016, in parts in LAC increased Mexico confiscations 200-fold from 2012-2018, of illegal animals with 34% of cases destined increased 43% for China Exporters Importers Sources: 1. WCS, “Averting a Crisis: Wildlife Trafficking in Latin America.” 2018; 2. Mongabay, “Latin American ilegal wildlife trade exploding in scope and scale.” 2015; 3. Geographical, “Fangs and skin: Illegal wildlife trade endangers Latin America’s jaguars.” 2020; 4. European Commission, “Questions and answers on the EU Action Plan against Wildlife Trafficking.” 2016; 5. Biological Conservation, “Trade in live reptiles, its impact on wild populations, and the role of the European market.” 2016; 6. Defenders of Wildlife, “Combating Wildlife Trafficking from Latin America to the United States.” n.d.;