For Central America, climate bill could top hundreds of billions annually

For Central America, climate bill could top hundreds of billions annually

  • Climate change impacts on Central America’s forests could cost the region between $51 billion and $314 billion per year by 2100, according to a new study.
  • For some of the countries in region, the loss of ecosystem services provided by forests could lead to losses equivalent to more than three times their GDP.
  • This is the first time ecological and economic measurements have been assessed together for climate change impacts in Central America and could help to inform conservation activities like defining protected areas, establishing biological corridors and restoring degraded landscapes.
  • While the impacts of climate change are being felt by communities in the region, breakthroughs in computing power as well as collaborations between European universities and Central American research institutions and companies is promoting increased innovation in ecosystem restoration.

Climate change impacts could cost countries in Central America up to $314 billion per year by 2100 if ecosystem services provided by the region’s forests are affected, a recent study has found. It warns this could severely affect the region’s low- and middle-income countries, which could suffer losses more than three times their GDP.

“The forests are not able to deliver the same ecosystem services as without climate change,” said study co-author Marc Hanewinkel, chair of forestry economics and planning at the University of Freiburg in Germany. “And this is related to a high economic cost, which is what we tried to estimate.”

The researchers looked at how forests might be affected by changing temperatures and precipitation patterns, which would impact photosynthesis and carbon storage. Then they calculated the costs of those changes, pricing for the first time both the ecological and economic impacts of climate change in Central America.

According to Hanewinkel, these costs are a very rough underestimate since the investigation focused only on the region’s protected areas and on two ecosystem services — climate regulation and habitat — and concentrated on potential impacts from the loss of biomass and biome stability, i.e. all the ecosystem services provided by forests.

Finer detail satellite data could help conservation efforts across Central America in the face of climate change. Image courtesy of Osa Conservation.

Central America’s complex topography, spread over a relatively small area, previously made it difficult for researchers to model climate impacts. But improvements in computing power allowed Hanewinkel and his colleagues to analyze geospatial information at a much higher resolution, he told Mongabay.

The region hosts at least 17,000 plant, 1,120 bird and 580 amphibian species, many of them found nowhere else. A finer level of spatial information can inform activities relating to conservation and local communities, such as demarcating protected areas, establishing biological corridors and restoring degraded landscapes, which were previously done using regional or local spatial information.

The study also highlights that the region’s mountainous and dry tropical forests could be especially at risk as they already receive low precipitation and cannot easily shift in altitude.

“It’s a very first estimate of what we could lose economically if we if we lose these habitats, if we lose the biodiversity,” said Hanewinkel, who has published previously on this topic. “We put money on [the value of habitats] because I am convinced that money is a language that people understand.

On-the-ground changes already happening

“It’s no longer talking about climate change as something far away, it’s something that is here and it’s very visible,” said Carlos Cruz Estrada, vice president of the Association of Water Boards of the Southern Sector of Pico Bonito National Park (AJASSPIB) in Honduras.

AJASSPIB mobilized 28 communities in 14 watersheds below Pico Bonito to create a more resilient local water supply. By charging a minimum fee, it aimed to improve water infrastructure and reforest slopes to recharge aquifers that had been depleted because of the deforestation.

Rainforest on Costa Rica's Osa Peninsula. Photo by Rhett Butler.
Central America, home to at least 17,000 plant, 1,120 bird and 580 amphibian species, many of them endemic, is highly vulnerable to climate change and its costs. Image by Rhett Butler.

In 2012, AJASSPIB won the United Nations Development Programme’s Equator Prize, which recognizes innovative initiatives by Indigenous peoples and local communities using nature-based solutions for local sustainable development. In addition to successfully recharging aquifers through reforestation, the initiative also promoted the use of fuel-efficient wood-burning cookstoves. However, despite offering a steady supply of water to communities, Cruz Estrada said climate change has made the situation increasingly difficult for small-scale farmers like him.

“What we produce here is meat and milk and I believe that we are at about 30% of production capacity,” he said. “Because of a lack of rainfall for feeding cattle and less water, we are reaching an extreme where we are living in permanent heat and the temperature is treacherously high and remains high every day.”

Cruz Estrada said he hasn’t seen conditions like this since 1998, when Hurricane Mitch killed more than 14,000 people and caused damage worth three-quarters of Honduras’s national GDP; in the years following the hurricane, droughts reduced corn and bean production by 50-70%.

Continuous adaptation

“Adaptation or adaptive management of nature is going to be constant,” said Guillermo Navarro Monge, a professor affiliated with the Tropical Agricultural Research and Higher Education Center (CATIE) in Costa Rica. Navarro has worked with Hanewinkel at the University of Freiburg to help finance research on climate change issues, including forestry adaptation and biodiversity management.

“Nature is dynamic and obviously the structure and composition of forests is changing over time,” Navarro Monge said. “Some people treat nature as something very fragile in general, that is not going to be able to survive climate change. But there are many species that are very resilient.”

Species that are widely distributed across a landscape show a great capacity to adapt, he added, but varieties within the species could be better suited to differing climatic conditions. CATIE and the University of Freiberg are working together not just to understand species’ adaptability, but also to see how advanced climate modeling can support large-scale reforestation projects.

Climate entrepreneurs

“For me, this is a dream coming true,” said Andreas Eke, director of Futuro Forestal. “The lack of detailed knowledge is still one of the biggest risks for our investors.”

Panama-based  Futuro Forestal uses research from Hanewinkel’s team to help inform the creation of “generation forests” — forests planted with a higher percentage of native timber plants, which Eke said increases the density of timber per hectare and combines the productivity of a plantation with the resilience of a natural forest.

Not all species across Central America’s ecosystems might be able to adapt to a warming climate. Above, a spawning Nassau grouper in Belize. Image by Alexander Tewfik/WCS.

“Natural forest is disappearing because the way we manage natural forests today is not economically the highest and best use,” Eke said. “What we need to do now is reforestation trying to get the highest environmental and social impact and to optimize impact.”

A key issue, he said, is that while plantations are very productive, they aren’t very resilient to diseases, like fungal and bacterial infections that could become more common as the climate changes. He noted increased biodiversity in their forests as well as wildlife performing the role of pest management, leaving forests more resilient.

Eke told Mongabay that investors normally aim to get the best return on risk, but in doing so they will fail to act on social and environmental issues, as most developing countries have a higher risk profile for international investors.

With improved scientific information, including about tree varieties, Eke said, they can better model the growth curve of trees, taking into account issues like water availability. With more information, they can more accurately project the trees’ biological growth curve, boosting future income, and the net present value of the forests, making investments even more attractive.

“We are very market driven, so we are not against market economies. We are not against making profits,” Eke said.

He added that all the scientific and financial information they produce related to generation forests is open source for others to use.

“We understood that the underlying issue was an issue of risk,” Eke said. “But we believe that we need a different relation to nature, organizing the way the economy works in a different way if we want to have a future here on the planet.”


Baumbach, L., Hickler, T., Yousefpour, R., & Hanewinkel, M. (2023). High economic costs of reduced carbon sinks and declining biome stability in central American forests. Nature Communications14(1). doi:10.1038/s41467-023-37796-z

Hanewinkel, M., Hummel, S., & Cullmann, D. A. (2010). Modelling and economic evaluation of forest biome shifts under climate change in Southwest Germany. Forest Ecology and Management259(4), 710-719. doi:10.1016/j.foreco.2009.08.021

Banner image: Image by Murray Foubister via Wikimedia Commons (CC BY-SA 2.0).

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