Remittances now account for an important portion of GDP in Latin America and the Caribbean and support millions of families, so the drop in this source of income is shaking the economies of many countries and deepening poverty in the region. CREDIT: World Bank

By Humberto Márquez
CARACAS, May 18 2020 (IPS)

Remittances that support millions of households in Latin America and the Caribbean have plunged as family members lose jobs and income in their host countries, with entire families sliding back into poverty, as a result of the COVID-19 health crisis and global economic recession.

The region will receive a projected 77.5 billion dollars in remittances this year, 19.3 percent less than the 96 billion dollars it received in 2019, according to provisional forecasts by the World Bank.

The damage “can be understood from the angle of consumption. Six million households, of the 30 million that receive remittances, will not have them this year, and another eight million will lose at least one month of that income,” expert Manuel Orozco told IPS from Washington, D.C.

Remittances in the region average 212 dollars per month, according to studies by the Inter-American Development Bank (IDB).

Remittances “represent 50 percent of the total income of the households that receive money from family members abroad, and increase their savings capacity to more than double that of the average population,” said Orozco, who heads the migration, remittances and development programme at the Inter-American Dialogue organisation.

“The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country,” the World Bank stated in a report.

The cause of this was the shutdown of entire segments of economic activity in an attempt to curb the spread of the COVID-19 virus, which deprived migrants of their sources of employment and income, thus undermining their ability to send money back home to their families.

This is a global phenomenon, with remittances falling by at least 19.7 percent to 445 billion dollars in low- and middle-income countries as a whole: dropping by 23 percent in sub-Saharan Africa, 22 percent in South Asia, 19.6 percent in the Middle East and North Africa, and 13 percent in East Asia and the Pacific.

Remittances “are a vital source of income for developing countries,” World Bank Group President David Malpass said Apr. 22, noting their role in alleviating poverty, improving nutrition, increasing spending on education and reducing child labour in disadvantaged households.

Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), listed the drop in remittances among the factors that will depress the region’s economy to an unprecedented level, -5.3 percent, with the risk of poverty climbing from 186 million to 214 million inhabitants: 33 percent of the total population.

An empty money transfer office in Las Vegas, Nevada, which is usually packed with migrants sending remittances home from the U.S. to their families in Central America. The city, dedicated to leisure and tourism, has been paralysed by the COVID-19 pandemic, leaving thousands of migrant workers without employment or income. CREDIT: Western Union

Anxiety from the north

The countries that will be hardest hit are those of Central America and Haiti, according to Bárcena. Remittances make up between 30 and 39 percent of Haiti’s gross domestic product (GDP), and last year accounted for 21.8 percent of Honduras’ GDP, 21.2 percent of El Salvador’s and 13.8 percent of Guatemala’s.

“We’re talking about fragile states, with collapsed health systems, weak or corrupt governments, and budgets that were already insufficient to meet people’s needs and are worse off now,” Victoria Gass of the U.S. division of Oxfam’s anti-poverty coalition told IPS from New York.

Orozco stressed that it will affect the consumption capacity of 20 percent of Central Americans, who will be forced to use their savings, on average a quarter of all remittances, for immediate expenses such as buying food and medicine.

In El Salvador, for example, Gabriela Pleitez, 35, who lives in the capital, no longer receives the 200 dollars a month sent to her by her mother, a dental assistant, and her brother, a taxi driver, who live in Los Angeles, California and found themselves suddenly unemployed.

Gabriela completed the 400 dollars she needed to get by with unsteady work as a real estate agent or by selling clothes and beauty products. Now she takes in some money as an assistant at a stand that sells traditional foods.

“I don’t buy bread anymore, and I’m eating less. If you manage to get 10 dollars you have to think carefully what to spend it on. If I don’t pay the water bill, they will cut it off. My landlord won’t charge me rent for three months, in accordance with a government decree, but then he will want me to leave,” she told IPS.

Another Salvadoran, Rosa Ramírez, a 56-year-old mother and grandmother still in charge of an adult daughter and four children, said the pandemic dealt her small flower arrangement business a death blow. “The situation was difficult before, and now, with homes and businesses closed, I’m out of work,” the resident of Zacatecoluca, in the central department of La Paz, told IPS.

Young Latin Americans migrate in search of opportunities and older family members are dependent on their support through remittances to cover essential expenses such as food and medicine. CREDIT: IFAD

Her lifeline is her son Luis, 27, who found a job in 2018 as a carpenter in Stafford, Virginia, in the U.S. southeast, after fleeing from gangs who demanded he make payments to keep them from attacking his then three-year-old daughter.

Luis used to send her between 350 and 400 dollars a month “to pay bills, the rent, and medicine, because I’ve had high blood pressure for years and I can’t go without my medicine,” Rosa said. But now her son has only sent her half that because “he is working fewer hours, one day he gets a job and the next he doesn’t.”

Rosa’s daughter received a temporary 300 dollar aid package provided by the government for the most vulnerable, and was able to cover basic expenses. But Rosa is now anxious about how she will make ends meet. Her daughter, Gabriela, would like to emigrate to the United States, but she has been told that the legal process could take eight years.

Another hard-hit country is Mexico, where 42 percent of the population of 130 million lives in poverty. In 2019, 36 billion dollars in remittances came in, mostly from the 37 million people of Mexican origin living in the United States.

Seven million households received remittances in 2019, but this year 1.7 million of those households will not receive them, Orozco calculated, due to the wave of unemployment that is hitting the U.S.

Intra-regional migration in the South

South America has a more even spread of migration that provides it with remittances, between North America, Spain and other European countries, and the sub-region itself, greatly increased by the millions of Venezuelans who fled to neighbouring countries in the last six years due to the economic, political and humanitarian calamity in their country.

This is the case, for example, of 26-year-old Laura (who preferred not to give her last name), who works in a veterinary clinic in Lima, “which has practically been left without clients due to the lockdown ordered by the Peruvian government. My husband, who used to do various jobs, is not bringing in an income either,” she told IPS from the Peruvian capital.

Poverty in Latin America and the Caribbean will rise with the fall in economic activity, the largest seen in the region in almost a century, and this time there will be little relief from remittances because the COVID-19 pandemic has also sunk the economies of host countries. CREDIT: UNDP

Laura regularly sent 100 dollars a month to her mother, a widow raising two teenage children on the meager salary (equivalent to five dollars a month) of a school teacher in Barquisimeto, a city in central-western Venezuela.

With each remittance, her mother “could buy some medicine, some meat, milk and eggs to complete the CLAP (the acronym for the bag of basic foodstuffs that the government delivers monthly at subsidised prices to poor families), but now I can’t send her almost anything, we’re just trying to scrape by in Lima,” said Laura.

Of the Venezuelans working in Peru, 46 percent were street vendors, 15 percent were employed in shops and six percent worked in restaurants – activities that have all faced restrictions in the COVID-19 pandemic, according to research by Cécile Blouin of the Pontifical Catholic University in Lima.

In the last five years, 1.6 million Venezuelans have migrated to Colombia, 880,000 to Peru, 385,000 to Ecuador, 370,000 to Chile, 250,000 to Brazil and 145,000 to Argentina, according to a platform of United Nations agencies and NGOs monitoring the phenomenon.

The Venezuelan diaspora was added to more traditional migration flows, such as that of Paraguayans in Argentina: 550,000 migrants who sent home some 70 million dollars in 2019, a figure that was already declining due to exchange controls in Buenos Aires.

One third of the 1.3 billion dollars that Bolivia received in remittances in 2019 came from Bolivian migrants in Argentina, Brazil and Chile, but the figure has dropped since March with the measures put in place in the attempt to contain the spread of COVID-19.

In Peru, which has three million citizens living abroad, a quarter of the 3.3 billion dollars the country received in remittances in 2019 came from the 350,000 Peruvians living in Argentina and the 250,000 in Chile.

Until this global upheaval, remittances were counter-cyclical: workers sent more money to their families when their home countries were experiencing crisis and hardship, which this time they have not been able to do because the pandemic and recession have affected all countries.

But there is some hope for the future. According to the International Monetary Fund, after falling -3.0 percent in 2020, the world economy will grow 5.8 percent in 2021 (Latin America 3.4 percent) and remittances will also increase at a similar rate. In low- and middle-income countries they will total 470 billion dollars.

But for millions of Latin American families, like those of Gabriela and Rosa in El Salvador or Laura in Venezuela, that’s too long a wait.

With reporting from Edgardo Ayala in San Salvador.

A house with a solar panel in the municipality of Tula, in Hidalgo, a state adjacent to Mexico City. Non-conventional renewable sources are considered an instrument to combat energy poverty. Credit: Emilio Godoy/IPS

By Emilio Godoy
MEXICO CITY, May 29 2017 (IPS)

Energy poverty afflicts millions of homes in Mexico, with many social, economic and environmental impacts for the country.

These homes, located in both urban and rural areas in this Latin American country of 122 million people, have difficulty satisfying their needs for energy for cooking, lighting, heating and entertainment.

“Not only is it a problem of access, since the population needs other consumables, to cook, take a bath, for family entertainment. Access to energy is a key indicator of well-being and in this respect it is important to know how many families lack this service,” expert Boris Graizbord told IPS.“We have to regionalise the response, which requires a different combination of inputs and expenses. If we invest in solar water heaters or in other renewable energy sources, we’ll reduce spending on gas, we’ll decrease the power distribution. Those scenarios are possible if there is a decentralisation of power generation.“ -- Boris Graizbord

The academic from the Centre of Demographic, Urban and Environmental Studies at the public College of Mexico pointed out that some groups in small localities, even those who have their own incomes or remittances sent home by relatives in the United States, are unable to access natural gas or other energy sources.

The concept of energy poverty is new in Latin America, although it emerged in the 1990s in Britain, to describe the situation when a poor family spends more than10 percent of their income on energy.

But in countries such as Mexico the concept has been adapted to take into account cultural and social differences. Here the concept includes lack of access to energy, poor quality services, or energy inefficiency.

In a pioneering study, Graizbord and his colleague Roberto García, from the public College of the Northern Frontier, found that nearly 37 per cent of households –about 11 million homes– suffer from a shortage of energy in terms of “economic goods” such as thermal comfort, an efficient refrigerator or a gas or electric stove.

The study “Spatial characterisation of energy poverty in Mexico. An analysis at a subnational level,” published in 2016 in the magazine Economy, Society and Territory, found that the main factors behind the phenomenon are income level, the size of the town and of the house, and the educational level and gender of the head of the household.

This “represents a major social problem, due to the effect that the use of clean, affordable energy has on improving the quality of life and reducing poverty among the local population,” points out this study by Graizbord and García, who has worked on this issue in the Economic Commission for Latin America and the Caribbean (ECLAC).

The southern states of Chiapas, Guerrero and Oaxaca present the highest average levels of energy poverty, as well as the highest overall poverty rates.

In Mexico, 46 per cent of the population lived in poverty in 2014, when the latest National Survey of Household Incomes and Expenditures was carried out – a rate that has likely increased since then, according to experts.

The Energy Ministry identifies the most important end uses in the residential sector as water heating, cooking, refrigerator, lighting, air conditioning/heat and entertainment.

In 2015, firewood produced 252,840 petajoules. The joule is the measuring unit for energy which equals one watt per second and estimates how much heat is necessary to carry out an activity. A petajoule represents one quadrillion (10^15) joules.

Gabriela Niño, climate change coordinator for the non-governmental organisation Polea, said there is a close link between energy poverty and its social and environmental impacts, such as the emission of polluting gases, soil degradation and deforestation.

“With biomass there is a big health risk, since people are exposed to local pollutants by burning biomass indoors,” she told IPS.

Since August 2014, Mexico has embarked on a major energy reform that opened up oil exploration, extraction, refining, transportation, distribution and sale of oil and its by-products to local and foreign private investment.

But the question remains whether these changes will result in a reduction of energy poverty, insofar as the government leaves important activities of the electricity sector in private hands, who are profit driven, and not focused on social objectives.

Also, the country has committed to the goals set by Sustainable Energy for All (SEforAll), the programme to be implemented during the United Nations 2014-2024 Decade of Sustainable Energy for All.

This global initiative intends to guarantee universal access to modern energy services, double the rate of improvement of global energy efficiency and increase the share of renewable energy in the global energy mix.

Also, like the rest of the international community, it has adopted one of the 17 Sustainable Development Goals: SDG 7, which aims “to ensure access to affordable, reliable, sustainable and modern energy for all,” as part of the 2030 Agenda.

Graizbord proposes a response in Mexico differentiated by region, given the variations, including climatic, in different parts of the country.

“We have to regionalise the response, which requires a different combination of inputs and expenses. If we invest in solar water heaters or in other renewable energy sources, we’ll reduce spending on gas, we’ll decrease the power distribution. Those scenarios are possible if there is a decentralisation of power generation,” he said.

For Niño, addressing energy poverty poses several challenges.

“We have to research, generate indicators, identify causes and possible solutions, on how energy is generated, how it is used,” she said.

In her opinion, “the democratisation of energy should also be promoted, the government should generate actions that respond to a public policy objective, focused on access to new technologies, such as solar panels, for people who are isolated from the grid or who are not able to produce their own power or meet their needs.”

In Latin America and the Caribbean, 97 per cent of the population has access to energy. This means that 23 million people still lack electricity, according to data from late 2016 of the Inter-American Development Bank (IDB). Nevertheless, the IDB predicts that this will be the first developing region to achieve universal energy access.

In Mexico, more than two million people have no electricity. According to the IDB, the countries in the region with the largest proportion of the population lacking energy access are Haiti – where only 40 percent have electricity – Honduras, Peru, and Mexico.

Meanwhile, leading the region in terms of greatest access are Uruguay, Costa Rica and Chile, in that order.

A wind farm in Curacao. Credit: Desmond Brown/IPS

By Desmond Brown
BRIDGETOWN, Barbados, Apr 14 2017 (IPS)

Barbados and its Caribbean neighbours are continuing to press ahead with their climate change agenda and push the concept of renewable energy despite the new position taken by the United States.

This was made clear by the Minister of the Environment and Drainage in Barbados, Dr. Denis Lowe, against the background of the position taken by U.S. President Donald Trump that climate change is a “hoax”, and his subsequent push for the revitalisation of the coal industry, and the issuance of an Executive Order to restart the Dakota Access Pipeline.“We stand ready to do what needs to be done." --Dr. Denis Lowe

“The moment has come. The President of the United States of America has determined that climate change is really a hoax, and that any notion about climate change science is based on false belief, and that there is no clear justification that this phenomenon called climate change exists,” Lowe said.

However, the Environment Minister pointed out that while Trump was “decrying” the legitimacy of climate change, 2016 was already being labelled as the warmest ocean temperature year.

“The impact of that accelerated warmth of the earth, according to American environmentalists, is the Michigan coastline, Lake Michigan. Evidence has been produced to show that the impact of climate change has affected that whole seaboard area, including the erosion of beaches along the Illinois Coast. This is a fact as reported,” he said.

Dr. Lowe cautioned that the new US position spelled “bad news” for the Caribbean.

He warned that the new position could see a significant reduction in funding from the United States to the United Nations system, which was the primary driver of the climate change fight.

“Institutions like the United Nations Framework Convention on Climate Change and the Green Climate Fund will be impacted. The Adaptation Fund will be affected, and all of the other activities driven by US-donated funding will be impacted,” he pointed out.

But Lowe stressed that the region could not allow itself to be “hemmed in” by what might or might not occur relating to international funding.

He gave the assurance that his Ministry and Government would continue “to plough” ahead and look for unique ways to fund the island’s coastal rehabilitation and green energy programmes.

“We stand ready to do what needs to be done. Our Ministry continues to work with our stakeholders to look for ways to continue to press ahead with our climate change agenda,” Lowe said.

“We ask Barbadians from all walks of life to assist us in adopting and practising habits that would reduce the impacts of climate change on us as it relates to our water supply, our conservation effort, and our preservation efforts in terms of our spaces around the island that would be of importance,” he added.

Meanwhile, New York-based syndicated columnist Rebecca Theodore, who has written extensively on climate change and renewable energy in the Caribbean, said while President Trump seeks for a revitalisation of the coal industry in the United States, this will need more than government policy in Washington to be implemented.

“First, renewable energy sources like wind and solar are much more price-viable than coal. The demand for jobs in renewable energy is going up while for coal it’s rapidly going down,” Theodore told IPS.

“Secondly, the moral arguments and market forces in which the production of coal as an energy source are interlaced cannot be ignored. Carbon emissions from coal-fired power plants are the leading cause of death in many places and continue to be a hazard to public health.

“Thirdly, if the Clean Power Plan is to achieve its aims of cutting carbon dioxide emissions from power plants, then there must be a reduction in coal consumption,” Theodore added.

She also noted that carbon pollution from power plants is one of the major causes of climate change.

“It follows that if the United States must continue the fight in the global efforts to address climate change then the goal must be centered on cheap natural gas and the installation of renewable energy plants, Theodore told IPS.

“There must be options for investment in renewable energy, natural gas and shifting away from   coal-fired power.”

Earlier this year, the Inter-American Development Bank (IDB) said a significant portion of the 13 billion dollars it will be lending this year has been earmarked for agriculture, climate change and renewable energy projects.

IDB Executive Director Jerry Butler noted that the issue of renewable energy has been a constant focus for the institution.

“We are going to lend 13 billion dollars and of that amount we’ve carved out 30 percent of it for climate change, agriculture and renewable energy. In fact, 20 percent of that 13 billion in the Americas will be devoted to climate change and renewable energy,” Butler said.

“I think we are putting our money where our mouth is when it comes to us as a partner with the Caribbean Community (CARICOM) and us as a partner with the other entities that work with us.”

Highlighting the IDB’s commitment to the region, Butler noted that even though the Eastern Caribbean States are not members of the bank, through its lending to the Caribbean Development Bank (CDB), countries in the sub-region have not been left out.

“For example, the more than 80 million dollars that’s devoted to geothermal exploration, Grenada will be the first beneficiary in the Eastern Caribbean,” he said.

“And our focus on the Caribbean is not stopping – whether it be smart financing programmes in Barbados, whether it be programmes associated with renewable energy and energy efficiency in Jamaica, or whether it be programmes in Guyana off-grid or on-grid – we try to do everything that we can to bring resources, technology, intelligence and at the same time best practices to everything that we do when it comes to the topic of renewable energy.”

Butler said the IDB believes that the sustainability, the competitiveness and the job-creation potential of the Caribbean can be unlocked “if there is a considered focus on weaning ourselves off the dependence on foreign fuels for generation” and focusing on “producing its own indigenous type of energy”.

One of the concerns about compliance with Habitat III is how to finance the new public works, taking into consideration the considerable investment required. In the image, a photocomposition of European cities in a Habitat III exposition in Quito. Credit: Emilio Godoy/IPS

By Emilio Godoy
QUITO, Oct 27 2016 (IPS)

“We as mayors have to govern midsize cities as if they were capital cities,” said Héctor Mantilla, city councilor of Floridablanca, the third-largest city in the northern Colombian department of Santander.

He told IPS that “citizens not only demand public services, but also infrastructure; and environmentally and financially sustainable construction works are needed.”

Mantilla, who took office in January, participated in the United Nations Conference on Sustainable Housing and Urban Development (Habitat III), held Oct. 17-20 in the capital of Ecuador, which produced the “Quito Declaration on Sustainable Cities and Human Settlements for All,” known as the New Urban Agenda (NUA).

At the summit, organised by U.N. Habitat every 20 years, Mantilla talked about infrastructure needs and management.In 2015, 54 percent of the world population lived in urban areas, a rate that will climb to 66 percent by 2050. The Americas will be the most urbanised region in the world, with 87 percent urban population.

Floridablanca, population 300,000, is part of the Bucaramanga metropolitan area, together with two other municipalities. To address people’s demands, the local administration built two highway interchanges and a paragliding park.

The mayor’s experiences and expectations reflect the concerns of governments, particularly local administrations. In fact, one of the NUA’s major challenges is the environmental and financial sustainability of the infrastructure required to meet the commitments made in Quito with regard to housing, transport, public services and digitalisation.

For Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), the priorities are mobility, water and sewage, adequate housing, resilience, renewable energy, promotion of digitalisation and the fight against segregation and inequality.

“There is a lack of infrastructure. It is not sufficiently integrated. We have two scenarios: the United States with high car use rates, or the European, with smaller cities, where the use of private cars is discouraged,” she told IPS.

Bárcena said that “a certain kind of infrastructure and planning is required” in order for cities to be “resilient”, a concept touted in recent years by international organisations such as the World Bank and the Inter-American Development Bank (IDB), defined as the capacity of an ecosystem to absorb environmental stress without undergoing fundamental changes.

In 2015, 54 percent of the world population lived in urban areas, a rate that will climb to 66 percent by 2050. The Americas will be the most urbanised region in the world, with 87 percent urban population. The projected proportions are 86 percent in Latin America and the Caribbean; 74 percent in Oceania; 82 percent in Europe; 64 percent in Asia; and 56 percent in Africa.

Mayor Héctor Mantilla (right) spoke at Habitat III about the infrastructure needs in midsize cities, in his case, Floridablanca, in Colombia’s northern department of Santander. Credit: Emilio Godoy/IPS

The report “Latin America and the Caribbean. Challenges, dilemmas and commitments of a common urban agenda”, released at the Quito summit, observes that, despite the significant expansion in infrastructure in recent decades, the deficit in cities remains one of the main challenges for developing countries in general.

The document, drafted by the Forum of Ministers and High-level Authorities of the Housing and Urban Development Sector in Latin America and the Caribbean (MINURVI), ECLAC and U.N.-Habitat’s Regional Office for Latin America and the Caribbean, points out that Latin America and the Caribbean have an investment rate of two percent of GDP, compared to eight percent of regional GDP in Southeast Asia.

The overall rate of investment in infrastructure “has declined in the last three decades, blaming a reduction in public investment, a marginal increase in private investment and the retraction of multilateral financing.”

In the developing South, large cities face challenges like pollution, exposure to climate change, chaotic growth, traffic congestion, informal employment and inequality.

There have been different attempts to calculate the scale of infrastructure needs. The IDB’s Emerging and Sustainable Cities Initiative estimates a need for 142 billion dollars in priority investments in urban infrastructure.

Meanwhile, the Cities Climate Finance Leadership Alliance (CCFLA) estimates a global need of 93 trillion dollars in investment in low-carbon climate resilient infrastructure over the next 15 years.

The NUA mentions the word “infrastructure” 33 times, although it outlines no means or goals to develop it.

Money is short

A recurring question is where the funding for infrastructure will come from, given that regions such as Latin America are experiencing an economic downturn, after a decade of growth that made it possible to fight poverty and expand public works.

Andrés Blanco, a Colombian expert on urban development and housing with the IDB, proposes several mechanisms, including “land value capture”: capturing the increases in property values for the state. This refers to a municipality’s ability to benefit from the rise in real estate value generated by infrastructure improvements (access to highways, the paving of roads, public lighting, sewers, etc.) or the implementation of new land-use rules (e.g., from rural to urban).

“The main idea is to use this resource to finance infrastructure. But this has not been done, because there is a cash flow problem. The cost is paid by the government and the communities, but only private property owners benefit,” he told IPS.

In three Brazilian cities, the IDB found that investing one dollar per square metre in drinking water pipes increased the land value by 11 dollars, while three dollars per m2 invested in sewage brought up the value to 8.5 dollars, and 2.58 dollars per m2 invested in paving raised the value by 9.1 dollars. In Quito, the transformation of rural to urban land enhanced the value by 400 percent.

In the Ecuadorean capital, the IDB released the report “Expanding the use of Land Value Capture in Latin America”.

In Floridablanca, the local government recovered 30,000 dollars of a total of 175,000, that the owners of 100 plots of land must pay for having benefited from investment in urban improvements.

“The main challenge facing the New Urban Agenda is how to find funding. We as mayors have to prioritise small-scale projects, but we need major infrastructure in outlying areas,” Mantilla said.

For Bárcena, Habitat III leaves an immense financing task. “Land use could be more profitable. States cannot do it alone. For this reason, there has to be a grand coalition between governments, companies, and organisations to make urban and public space more habitable, and to make cities more connected,” she said.

ECLAC, which is carrying out a study on time use in cities, proposes mechanisms such as: public policies on land value capture, to increase revenue collection and guide the way urban infrastructure is developed; the issue of municipal bonds to raise capital for long-term infrastructure projects; and platforms to draw private investment.

The United Nations Environment Programme’s “Global Outlook on Walking and Cycling”, released in Quito, calls for countries to invest at least 20 percent of their transport budget on infrastructure for pedestrians and cyclists, in order to save lives, curb pollution and reduce carbon emissions.

Vineyards belonging to the Dominio del Plata winery in Luján de Cuyo in the Argentine province of Mendoza. It is one of the companies taking part in the Federal Programme for Cleaner Production, which involves a sustainable reconversion inthe wine-growing industry. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
LUJÁN DE CUYO, Argentina , Oct 20 2015 (IPS)

The region of Cuyo in west-central Argentina is famous for its vineyards. But it is one of the areas in the country hit hardest by the effects of climate change, such as desertification and the melting of mountain top snow. And local winegrowers have come up with their own way to fight global warming.

In the cup, malbec, Argentina’s flagship red wine, still has the same intense flavour and colour.

But behind the production process is a new environmental reconversion, which began four years ago in the arid province of Mendoza, where vineyards bloom in the midst of oases created by human hands.

Only 4.8 percent of the desert province of Mendoza is green; 3.5 percent is dedicated to agricultural production, which uses 90 percent of the water consumed, and the rest is urban areas.“Many people think investing in ecological practices has an additional cost and won’t necessarily bring the company any benefits. This shows that is not the case.” -- René Mauricio Valdés

“We are trying to maintain the same production levels, using less water and less energy, reducing waste, reusing waste products, and creating less pollution,” the provincial coordinator of the Federal Programme for Cleaner Production, Germán Micic, told Tierramérica.

The initiative, launched by the national Secretariat of the Environment and Sustainable Development, benefits some 1,250 small and medium-sized companies in Argentina.

It is carried out with technical and administrative support from the United Nations Development Programme (UNDP) and funds from the Interamerican Development Bank. In Mendoza, 210 companies – 60 percent of them wineries – are participating. They receive advice and up to 28,000 dollars in funds.

“We’re producing the same wine, but in a sustainable manner,” said Luis Romito, the head of the Sustainability Commission of the Bodegas de Argentina wineries association, while participating in the Climate Change Forum organised this month in Mendoza by the National University of Cuyo and the UNDP.

Some of these practices have begun to be implemented by Dominio del Plata, a family winery at the foot of the Andes mountains, in Agrelo, a town in the department of Luján de Cuyo.

By changing equipment and modifying processes, the family business has managed to use less water in the production of its wine.

In the wine production process, water is mainly used for washing, rinsing, heating and cooling.

One example of the changes introduced was the replacement of manual washing of the grape picking lugs, which took some 20 minutes per unit, by automated industrial washers.

“The lug is washed in five minutes with this machine,” Marcelo del Popolo, the winery’s adviser on quality and environmental responsability, told Tierramérica. “We have reduced water consuption by some 60,000 litres a month. In three months of harvest, that’s 180,000 litres of water saved.

“And the water used in the washing process goes down a drain and is carried to a treatment plant, and is then used to irrígate the vineyards,” he said.

And irrigation systems are being improved in Mendoza, where 90 percent of water is used in agricultural activities, and where water shortages are increasingly severe as a result of global warming.

“Water is vital to our province, and we are being seriously affected by this problem,” Ricardo Villalba, an expert in geosciences and former director of the Mendoza-based Argentine Institute of Snow Research, Glaciology and Environmental Sciences, told Tierramérica. “Water is the element that controls regional development.”

Wine storage tanks with special jackets maintain temperatures more efficiently in wineries in the wine-growing region of Luján de Cuyo in the Argentine province of Mendoza, which are taking part in a special programme to create more green-friendly processes to help combat the effects of climate change. Credit: Fabiana Frayssinet/IPS

“Our province basically depends on the water that comes from the snow up in the mountains, and all of the global forecasts and models indicate that there will gradually be less and less snow,” said Villalba, who is a member of the Intergovernmental Panel on Climate Change (IPCC).

The wine-growing industry, which represents six percent of GDP in Mendoza and 1.3 percent of GDP nationwide, also aims to reduce energy consumption, which in Argentina is responsible for 43 percent of greenhouse gas emissions.

In the wineries, energy is used for heating, cooling, pumping of liquids and lighting.

“In each one of these stages we can incorporate modifications of equipment or processes, which make significant energy savings possible,” Micic said. “From jackets on the tanks to maintain temperatures more efficiently to the installation of advanced new pumps for a stronger water flow and lower energy consumption, through the change of compressors and lighting.”

Del Popolo said: “We keep track here of the water that comes in and the temperature we manage to achieve. By doing this we have reduced the energy used for heating by 15 percent.”

The company also uses green-friendly materials like lightweight wine bottles and lighter boxes that use less cardboard. Plastic and other waste products like broken bottles are classified, recycled and reused.

“We’re using boxes that we have already recycled many times over,” he said.

The benefits to the environment also bring considerable cost savings.

“We have addressed two fundamental questions: savings in energy and in water. And in both of them, we’re also seeing significant economic savings,” said the head of the winery, which plans in the future to invest in a solar thermal system for heating and fermentation.

This, according to UNDP representative in Argentina René Mauricio Valdés, is what makes the project self-sustainable.

“Many people think investing in ecological practices has an additional cost and won’t necessarily bring the company any benefits. This shows that is not the case,” said Valdés during a visit to the winery.

Fincas Patagónicas Tapiz, an olive oil producer in the neighbouring department of Maipú, is another company taking part in the programme in Mendoza.

Among other measures, it implemented a system to circulate water heated by solar energy around the tanks of oil to eliminate that energy expense.

It also insulated the room holding the tanks of oil, to keep the temperature steady. This made it possible to avoid the need to use air conditioning in the entire plant, which consumed an enormous amount of energy.

“If the temperature of the oil drops below 14 or 15 degrees Celsius, it solidifies and I can’t filter it,” plant manager Sebastián Correas explained to Tierramérica. “Which means that in the (southern hemisphere) winter I have to keep heating the entire plant until the warmer temperatures of September and October make it possible to bottle the oil.”

Argentina is not one of the world’s top emitters of greenhouse gases. Producing 0.66 percent of all greenhouse gases released globally, it is 22nd in a ranking that counts the 28 European Union countries as a single bloc.

But Villalba, the scientific researcher, believes that Argentina, like Mendoza, has a role to play.

“We are going to have to prepare ourselves for this, for example to continue to be leaders in the production of malbec at a global level,” he said.

This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

The Mexican government has increasingly turned to public–private partnerships (PPPs) to build energy industry infrastructure. The photo shows a gas pipeline belonging to Mexico’s state oil company, Pemex. Credit: Courtesy of Pemex

By Emilio Godoy
MEXICO CITY, Sep 28 2015 (IPS)

The Mexican government has increasingly turned to public–private partnerships (PPPs) to build infrastructure in the energy industry and other areas. But critics say this system operates under a cloak of opacity and is plagued by the discretional use of funds.

As the 2013 energy reform, which opened the industry to national and international private capital, is implemented, PPPs have become more and more frequent.

In the case of the state oil company Pemex, “it doesn’t form alliances with just anyone, only with corporate giants. It doesn’t talk much about those deals. They’re very hard to track,” said Omar Escamilla, a researcher on fossil fuels with the non-governmental Project on Organising, Development, Education, and Research (PODER).

The analyst told IPS that “The PPPs are formed with companies registered in tax havens, which makes it difficult for the Mexican justice system to hold them accountable or request reports on how the funds are used.”

“What is worrisome is who the partnerships are formed with, where the capital comes from, and what is the history of those companies,” he said.“The PPPs are formed with companies registered in tax havens, which makes it difficult for the Mexican justice system to hold them accountable or request reports on how the funds are used.”-- Omar Escamilla

The Law on Public–Private Partnerships, in effect since 2012 and amended in 2014, regulates long-term contractual arrangements by the public sector for the provision of services that use infrastructure partially or totally provided by the private sector.

The law requires that the contracts be put out to tender, and gives the state the power to declare the works of public utility and to expropriate land, while setting a minimum timeframe of 40 years for the contracts.

Mexico is in seventh place among developing countries in terms of the number of PPPs. In Latin America, only Brazil uses this scheme more frequently. The largest number of PPPs has involved the construction of roads, although they are also used in the construction of hospitals, prisons, airports, railroads and the energy industry.

According to the World Bank, “PPPs are typically medium to long term arrangements between the public and private sectors whereby some of the service obligations of the public sector are provided by the private sector, with clear agreement on shared objectives for delivery of public infrastructure and/ or public services.”

PPPs are seen as improving the equation between quality and prices for services, transferring risks to the private sector, improving incentives for efficient production, reducing public spending, and transferring debt to the private sector.

But critics say they bind governments to payments under lengthy contracts. They also argue that they can bring down spending on public services, mask the true extent of the public debt, disguise the privatisation of public services, and drive up costs.

At the federal level, Mexico has 29 PPPs, while different states have a combined total of 20.

The energy reform approved in December 2013, the biggest transformation of the industry in the last eight decades, opened up oil exploration, extraction, refining, transportation, distribution and sale of oil and its by-products to local and foreign private investment.

In the last 20 years, Pemex has turned to PPPs to build oil industry infrastructure, as a way to get around the legal and economic limitations of a state monopoly, says the study “Analysis of the business structure in Mexico’s oil industry,” published by PODER in June.

For example, in 1996 Pemex and the U.S.-based Sempra Energy formed a partnership to create Gasoductos de Chihuahua, which became the biggest player in Mexico’s natural gas industry, because it controls nine companies by means of two joint ventures and seven partner companies, all of which form part of Pemex’s organisational chart.

With the aim of developing three mature fields in the southern state of Tabasco, PMI Campos Maduros Sanma, a subsidiary of Pemex, formed a partnership in 2011 with the subsidiaries in Mexico of the private trasnational corporations Petrofac Limited (UK) and Schlumberger Limited (U.S.).

In 2013, Pemex transferred the Planta Clorados III petrochemical complex, one of the national petrochemical industry’s most important assets, to the local firm Mexichem, creating the company Petroquímica Mexicana de Vinilo. In the joint venture, Mexichem controls 55.1 percent of the shares and Pemex holds the rest.

Another case is Gasoductos de Chihuahua, the company that will be responsible for the operation and maintenance of the Los Ramones pipeline, the biggest investment in infrastructure for transporting gas in half a century, with a capacity to transport 3.5 billion cubic feet of natural gas a day over a distance of 900 km.

The pipeline will link central Mexico with the U.S. border in the north.

The gas pipelines that the Mexican government is building to provide gas industry infrastructure are actually the biggest business scheme for the private sector to form ties with Pemex in the natural gas industry, says the Poder report.

The Comisión Federal de Electricidad, a state power company, has followed a similar strategy with the construction and operation of wind power farms in the southern states of Oaxaca and Chiapas.

“Oversight, accountability and transparency are pending tasks, to carry out a comprehensive review of these mechanisms,” Arturo Oropeza, a professor at the National Autonomous University of Mexico’s Economic Research Institute, told IPS.

“There has been a lack of instruments for this, as well as a lack of an integral vision for understanding what happened. What is needed is a sectoral evaluation,” he said.

“Evaluating the environment for public-private partnerships in Latin America and the Caribbean”, published in April, lists Mexico among the countries with the best conditions for PPPs.

The list, which assessed 19 countries in the region based on 19 indicators involving electricity, transportation and water infrastructure, classified Mexico as the best-placed in terms of investment climate and worst in terms of the domestic context.

The report was produced by the Inter-American Development Bank; its private financing arm, the Multilateral Investment Fund; and the Intelligence Unit of the British magazine The Economist.

It states that issues like transparency represent a challenge to the development of more PPPs.

The report mentions the lack of significant independent oversight of compliance with contracts, and says the largest projects have been granted through direct negotiations in cases where there was only one interested party, even though the law requires that they be put out to tender.

Chile headed the list, with nearly 77 points out of a possible 100, followed by Brazil (75); Peru (70.5) and Mexico (nearly 68). Nicaragua, Argentina and Venezuela tailed the list.

Mexico has earmarked some 300 billion dollars for PPPs over the next three years.

In Escamilla’s view, the outlook in Mexico is not promising, given the increased use of PPPs.

“It’s important to generate frameworks for oversight and operability. PPPs should be held accountable with regard to how the partner was chosen, their profile, their history of bribes and fraudulent payments….And if these criteria are not met, the option is to look for other partners,” he said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

The OPEC Fund for International Development (OFID) has agreed to give the United Nations Industrial Development Organization (UNIDO) a grant in support of a project aimed at improving the productivity and competitiveness of the shrimp value chain in the Latin America and Caribbean (LAC) region.

OFID is the development finance institution established by the member states of the Organisation of Petroleum Exporting Countries (OPEC) in 1976 as a collective channel of aid to the developing countries.

The grant, which amounts to 300,000 dollars, aims at co-financing a project worth close to 900,000 dollars. OFID Director-General, Suleiman J. Al-Herbish and UNIDO Director General Li Yong, signed the agreement in Austria’s capital, where the two organisations are based.

UNIDO Director General Li Yong (left) and OFID Director-General Suleiman J. Al-Herbish (right). Credit: Courtesy of OFID

Al-Herbish said that the project “will support the sustainable development of the fisheries sector in the LAC region through the promotion of more resource efficient, environment friendly and socially equitable fish farming and processing practices.”

It will also contribute to poverty reduction efforts through the creation of direct and indirect employment and income generation opportunities, as well as improved food and nutrition security, he added.

UNIDO Director General Li pointed out that the shrimp farming sector represented an important source of income in countries such as Colombia, Cuba, Dominican Republic, Ecuador, Mexico and Nicaragua.

“However, in most of these countries there is a need to enhance the productivity and competitiveness of the sector and its compliance with international quality and environmental standards.”

Aquaculture, especially shrimp farming, has been a vital source of economic growth in developing countries. Shrimp farming represents 15 percent of the total value of the fishery products internationally traded in 2011. Ecuador and Mexico are currently among the largest producers in the sector at regional level.

The agreement was signed on Aug. 25, within four weeks of OFID and the Inter-American Development Bank (IDB) signing a co-financing agreement to jointly promote development and economic growth in the LAC region through the expansion of trade financing to banks in the region.

According to the agreement, OFID and IDB will build on the existing Trade Finance Facilitation Programme (TFFP) to provide lines of credit to commercial banks in the LAC region to broaden the sources of trade finance available for LAC importing and exporting companies and support their internationalisation.

In support of global and intraregional integration through trade, this agreement will further strengthen OFID’s long-standing partnership with the IDB and widen OFID’s presence in the trade finance market in the LAC region, OFID said in a press release.

OFID works in cooperation with developing country partners and the international donor community to stimulate economic growth and alleviate poverty in all disadvantaged regions of the world.

It does this by providing financing to build essential infrastructure, strengthen social services delivery and promote productivity, competitiveness and trade.

According to OFID, its work is “people-centred, focusing on projects that meet basic needs – such as food, energy, clean water and sanitation, healthcare and education – with the aim of encouraging self-reliance and inspiring hope for the future.”

Edited by Phil Harris