Decarbonization will bring significant economic benefits to Costa Rica, study says

Costa Rica’s decarbonization plan, which seeks to transform the economy through low-emission transport and production systems, will provide the country with net economic benefits of $41 billion over 30 years, according to a study released Tuesday.

The study by the Inter-American Development Bank (IDB) — which has an active portfolio of $1.9 billion in loans to Costa Rica, including in environmental projects — indicates the decarbonization plan will cost $37 billion during its implementation from 2020 to 2050. But it will generate benefits of $78 billion, for a net profit of $41 billion.

“It is an extraordinary figure,” said the President of Costa Rica, Carlos Alvarado, in a virtual presentation of the report.

Alvarado highlighted the positive effects of the decarbonization process, saying “it is our responsibility to do the right thing. Costa Rica is doing it for this generation and for those that follow.”

The decarbonization plan seeks to transform the Costa Rican economy to reach net-zero greenhouse gas emissions by 2050.

Costa Rica’s transport sector is currently responsible for 66% of hydrocarbon consumption and 54% of carbon-dioxide emissions. By modernizing it, the lower level of emissions would be offset by the country’s forest cover — currently 54% of the national territory.

The report was prepared by the IDB together with the U.S.-based Rand Corporation and the University of Costa Rica, with financing from the French Climate Fund.

It details that in rural areas, improvements in agricultural yields and the economic benefits provided by forests — including as tourist attractions — will generate a net income of $22 billion.

Likewise, in urban areas, significant savings are expected due to the electrification of transport, which the study said could limit congestion, improve efficiency and contribute to population health gains by reducing air pollution,

The IDB representative in Costa Rica, José Ramón Gómez, explained that the study “manages to quantify the concepts of environmental sustainability and sustainable reactivation.”

The study’s authors said they considered 3,000 “plausible futures” of Costa Rica’s decarbonization plan, and under all but 22, “implementation of the decarbonization plan would lead to economic benefits that exceed the costs.”

Read the report in its entirety here.