Paris — The Inter-American Development Bank Group (IDB Group) announced its support for the newly formed Caribbean Climate-Smart Coalition, a public-private initiative aimed at funding an $8 billion investment plan to transform the region into the world’s first “climate-smart” zone and benefit an estimated 3.2 million households in the region. The Coalition’s work will focus on coordinated action on four initial critical priorities: scaling renewable energy and energy efficiency; building low-carbon, resilient infrastructure; creating innovative financing models in exchange for progress on policy reforms to promote climate-smart growth; and strengthening the capacity of Caribbean countries to plan for long-term resilience strategies. The announcement of the creation of the Coalition came at the One Planet Summit, convened by the Government of France to review progress on the Paris climate agreement, adopted two years ago today. envisions that the Caribbean region will become the world’s first “climate smart zone.”
In the wake of the devastating impacts of the category five Hurricanes Irma and Maria, the Caribbean’s vulnerability to the effects of climate change is coming into sharper focus. One IDB estimate indicates that the economic impact of the “new normal” climate effects under “business as usual” scenarios could exceed $22 billion per year by 2050, roughly 10 percent of the Caribbean’s current GDP. In response the IDB Group aims to develop a public and private investment framework for investing in resilient infrastructure, providing contingency resources for responding to disasters and approving additional loan financing to buttress the region’s policy framework for confronting climate and natural disaster risk. The IDB Group will work with the Caribbean Development Bank to support OECS borrowing member countries.
The IDB Group’s support will include new public and private-sector financing commitments of $1 billion over the next five years. In tandem with its announced loan targets, the IDB Group also launched its Sustainable Islands Platform, designed to help island territories pursue sustainability and climate-resilient investments. The Platform will benefit 11 Caribbean Basin island states and continental countries whose territory includes islands: The Bahamas, Barbados, Belize, Costa Rica, Dominican Republic, Haiti, Honduras, Jamaica, Nicaragua, Panama, Trinidad and Tobago. The Platform will promote economic growth and climate-resilient investments through an innovative approach that applies the principles of the Blue and Circular Economy. The Blue Economy focuses on the sustainability of oceans and coastal areas, as opposed to land-based models, while the Circular Economy emphasizes reuse, recycling and the regeneration of natural capital such as mangrove swamps and barrier reefs.
Support for the private-sector activities associated with the Coalition will be coordinated by IDB Invest, the IDB Group’s private-sector arm, and will include partnering with impact investors, bilateral sources and other multilateral institutions on blended finance solutions, as well as the development of new instruments.