IDB supports Mexico’s climate change agenda
11/17/2010 Since 10 years

Loan will support the third stage of program to strengthen institutional capacity and the regulatory framework for climate change, improve mitigation and adaptation projects

Mexico will consolidate advances achieved in its institutional and operational capacity to deal with climate change while improving climate mitigation and adaptation measures, as part of a reform program supported by the Inter-American Development Bank (IDB).

The climate activities are among several measures Mexico has pledged to carry out under a programmatic policy-based loan (PBL) for $400 million approved by the IDB Board of Executive Directors.

This is the IDB’s third PBL in support of Mexico’s climate-related reforms. Under the first PBL, approved in Nov. 2008 for $200 million, Mexico initiated a landmark study of the economic impact of climate change on its territory. That study provided the first compelling evidence that assuming the costs of mitigation and adaptation to climate change in Mexico could be considerably lower than the cost of doing nothing.

As part of the second PBL, approved in Sept. 2009 for $400 million, Mexico implemented a National Climate Change Program (known as PECC, for its initials in Spanish) that established short and medium-term mitigation and adaptation objectives and includes commitments with measurable results for priority sectors such as agriculture, tourism and water resource management.

The current PBL will support the mainstreaming of climate change into every aspect of Mexican public policy, implement tools for climate change mitigation and advance adaptation efforts. Mexican authorities will also develop an information system to monitor the degree to which various sectors are meeting the objectives of the country’s Special Climate Change Program.

In order to reach this objective, the program will evaluate the previous implementation of climate change action plans in ten states and extend its implementation to five others. It will also help create a Climate Change Research Bureau within the National Ecology Institute (INE, for its acronym in Spanish), as well as a Sustainable Projects Division within Nacional Financiera S.N.C. (NAFIN, for its acronym in Spanish).

The new program will also expand adaptation efforts. It will promote instruments to evaluate and reduce vulnerability and risks associated with climate change. And it will strengthen capacities to monitor and forecast climate and further evaluate vulnerabilities through regional scenarios.

Policy-based loans are flexible, fast-disbursing instruments that provide IDB member countries the resources to finance priority programs with results that must be verified as a condition for disbursement of the funds.

The PBL comes from the IDB’s ordinary capital. Its amortization period is 20 years with a 5 year grace period. The interest rate is based on the LIBOR. The borrower is the United Mexican States. The executing agency will be SEMARNAT, with NAFIN as the borrower’s financial agent.

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