14.1.3.1. Socioeconomic Issues

Latin America has one of the greatest disparities in income distribution in the world. From the social and environmental point of view, the region clearly is vulnerable to the effects of natural disasters. Inappropriate land use, for agriculture and human settlements, in watersheds causes serious damages during the occurrence of extraordinary climate extreme events, such as Hurricanes George and Mitch in Central America and intense rain events in Venezuela and Argentina. CEPAL (1999a,b,c,d,e) estimated losses from Hurricane Mitch (see Table 14-2). Losses in Honduras and Nicaragua were 70 and 45% of GNP, respectively, affecting the development and economic growth of both countries. There is strong evidence that the effects of natural disasters contribute to rising poverty and inequality in many regions of Latin America.

Table 14-2: Estimated losses from Hurricane Mitch.
Country	Losses (US$ million)	Percentage of GNP
Costa Rica	92	1.0
El Salvador	388	6.1
Guatemala	748	1.5
Honduras	4,000	70.0
Nicaragua	988	45.0

The year 1998 was one of the most problematic periods in recent times for Latin America and the Caribbean. The side effects of the international financial crisis that originated in Asia in the middle of 1997 limited the possibilities for the region to obtain external aid. In addition, many adverse climatic events worsened the socioeconomic conditions. The Latin American region hosts a myriad of socioeconomic conditions. Countries with a high level of development coexist with least-developed countries. Macro-economic figures indicate a moderately constant degree of growth in the region, even though more than 200 million people in Latin America are poor (CEPAL, 1998).

The Human Development Report for 1998 (UNDP, 1998), in its section on consumption patterns, notes that the overwhelming majority of people who die each year from pollution are poor people in developing countries. Large cities in Latin America such as Mexico City already have a serious problem with air pollution. The report also identifies several issues that affect most of Latin America which may be increased by global warming, including desertification, floods and storms, and harvest. Poor people are less resilient to these problems.

The World Bank (1997) analyzed the 1982-1983 El Niño event and, with a great degree of certainty, considered it to be the most intense in the 20th century. Losses from droughts, floods, and hurricanes were estimated at US$14 billion. Of these, US$2 billion were lost in the western coast of South America, half in Peru—mainly losses from fishing revenue and destruction of infrastructure. Social losses also were very high. Reconstruction and development of related activities in Peru depleted resources and resulted in losses of 6% in GNP. Damages in Peru in 1997-1998 were on the order of US$1 billion (of which 55% was transportation infrastructure, 15% agriculture, 14% energy, and 9% education), and more than 400 relief projects had to be implemented, requiring emergency attention in 14 of the 24 departments of Peru. Some positive effects resulted, such as increases in pastures (200,000 ha) and reforestation of 100,000 ha.

One sector that might be affected by climate change, based on previous experiences during the ENSO period, is fisheries. Fish capture was reduced by 53% during the 1998 ENSO event (IMARPE, 1998). However, adaptation measures such as changing the species captured and price increases reduced the losses to 40%. Some adaptation options, such as switching from anchovy to tuna, can significantly reduce losses from seawater warming (Arntz and Fahrbach, 1996; IMARPE,1998). Adaptation to flooding conditions may reduce damage from extreme floods. One way to address water-shortage areas is to store excess water; for example, a lake was created in north Peru in 1998 (IMARPE, 1998).

Insurance is an important financial aspect that may be impacted by climate change. A joint World Meteorological Organization/ Inter-American Development Bank (WMO/IDB) meeting—with participation by scientists, bankers, and insurers—recognized the importance of climate change in insurance policy and of the need for increased cooperation (WMO, 1994), but few concrete actions materialized, mainly because insurers feel that larger risks should be compensated with higher insurance premiums.

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