Climate change increases country risk

Climate change has a negative impact on economies around the world, on the public finances of the most affected countries and on international trade. Its economic consequences increase the country risk associated with exports and international recruitment. According to the latest study released by Crédito y Caución, the emerging economies of Africa, Latin America and Asia-Pacific are the most affected by the economic consequences of climate change, which "affects in various ways the country risk related to foreign trade" by implying "great financial and economic damage".

According to the study, the change in precipitation patterns towards more frequent extreme weather events will have a negative impact on public health, agriculture and energy supply. The economies of African countries, in many of which intensive agriculture accounts for more than 20 per cent of GDP, are the most exposed to crop failure.

The change in rainfall may also have a negative impact on energy supply. Hydroelectric power is a major part of the mix in many countries in Latin America and, to a lesser extent, in Asia. In Africa, hydropower capacity is expected to increase in the east, where rainfall will increase, and decrease in the south due to droughts.

The economic threat caused by rising sea levels is particularly relevant for Asia-Pacific and Caribbean economies, especially in island states, as is the increase in natural disasters in littoral zones, where the most exposed economies are located in Asia-Pacific, Central America, and the Caribbean in particular.

"Many emerging economies are vulnerable to one or more elements of climate change. Hot weather, drought and changes in rainfall patterns are a major threat to Africa, where agriculture is intensive. Rising sea levels and increased natural disasters in littoral zones create problems in Asia, the Pacific and the Caribbean," concludes the report.

The report predicts an increase in economic activity in the fight against climate change. Companies involved in the development of new technologies, the construction of irrigation and desalination plants or renewable energies will increase their activity in Africa. On a much larger scale are the opportunities created for companies active in the construction of offshore wind farms.