Ministries of Finance of Latin America and the Caribbean Advance a New Generation of Policies for the Ecological Transition and Fiscal Resilience

Representatives from more than 15 countries, international organizations, and academic experts gathered in Mexico City to strengthen dialogue on integrating climate and nature-related risks into the region’s macroeconomic and fiscal planning.

Mexico’s Ministry of Finance and Public Credit (SHCP) and the Economic Commission for Latin America and the Caribbean (ECLAC), with the support of the European Union’s Euroclima Programme, concluded today the Second Conference on Analytical Tools and Climate Change for Ministries of Finance of Latin America and the Caribbean. The meeting examined how finance ministries can lead the design of “policy mixes” to achieve low-carbon, resilient, and inclusive development.

During the opening session, Regina Rosales, Acting Director General for International Forums and Sustainable Finance at Mexico’s SHCP, stressed that climate and nature issues have shifted from being distant risks to becoming “macro-critical factors for fiscal stability, growth, and debt sustainability.” She emphasized that comprehensive policies must combine mitigation and adaptation, alongside technology transfer and strategic labor market planning for emerging sectors.

Santiago Lorenzo, Head of the Climate Change Unit at ECLAC, noted that addressing climate change requires a “radical transformation of the economy,” demanding forward-looking and integrated analyses beyond traditional tools. He underscored that, given the region’s vulnerability, adaptation has moved from being a priority to becoming an imperative, and that action is needed to ensure the transition is just and does not deepen income concentration.

Representing the European Union, Stefan Agne, Head of Cooperation at the EU Delegation in Mexico, highlighted the importance of the Global Gateway investment agenda to mobilize resources toward a transition that must be “green and inclusive.” He stressed the critical role of institutional frameworks in attracting the private investment needed to address challenges of monumental scale.

During the first day, discussions focused on whether the transition to net-zero emissions can be transformed into a growth and prosperity strategy for the region. Experts emphasized that this transformation requires a “policy sequencing” approach, prioritizing the development of new technologies and infrastructure before phasing out traditional sources, using strategic subsidies and public procurement to stimulate initial demand. The update of climate targets (NDC 3.0) was also discussed, highlighting that closing mitigation gaps requires coordination between industrial and financial policy to avoid stranded assets and ensure future competitiveness.

A central theme of the debate was the insufficiency of isolated instruments to achieve climate goals. Participants discussed the need to align carbon pricing with economic incentives, regulation, and the development of new infrastructure. The conference also addressed the region’s economic dependence on ecosystem services, noting that the degradation of these assets represents a direct financial risk, with potential impacts equivalent to significant GDP losses if adaptation is not accelerated.

On the second day, the conference delved into the immediate materiality of risks arising from nature degradation, with particular emphasis on the economics of water. Evidence was presented on how water stress and biodiversity loss directly affect agricultural productivity and energy generation, representing contingent liabilities for public finances that must be incorporated into macroeconomic modeling. A key point was the analysis of distributional impacts, showing that climate shocks generate inflationary pressures that disproportionately affect vulnerable households through rising food prices. In response, participants stressed the importance of using short-term scenarios to assess public debt sustainability in the face of extreme events.

The final day focused on the practical application of management tools through the workshop co-organized by the French Development Agency (AFD), SHCP, and ECLAC, entitled “Scenarios on Climate and Nature Economic Policy.” In this space, technical teams deepened their understanding of the role of macroeconomic scenarios in coordinating national strategies, taking into account post-COP30 global dynamics. Participants proposed strengthening peer collaboration—supported by the agencies present—on Climate and Nature Economic Policy Scenarios for Latin America and the Caribbean.

The meeting concluded with a series of strategic bilateral meetings between representatives of Ministries of Finance and cooperation agencies. These sessions helped identify specific technical assistance needs and strengthen regional ties for experience-sharing, laying the groundwork for the third edition of the conference in 2027 and reaffirming the region’s commitment to a sustainable, resilient, and socially inclusive development model.