Front Matter Page
IMF Country Report No. 18/181
ST. LUCIA
CLIMATE CHANGE POLICY ASSESSMENT
June 2018
This paper on St. Lucia was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on June 1, 2018.
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© 2018 International Monetary Fund
Front Matter Page
ST. LUCIA
CLIMATE CHANGE POLICY ASSESSMENT
June 1, 2018
Approved By
Western Hemisphere and Fiscal Affairs Departments
Prepared by Leo Bonato, Adrienne Cheasty, Miria Pigato, Kassia Antoine, Annette De Kleine Feige, Alejandro Guerson, Shruti Lakhtakia, Ian Parry, Gonzalo Salinas, and David Stephan
Contents
Glossary
EXECUTIVE SUMMARY
A. Recommendations—Summary
INTRODUCTION
ST. LUCIA’S CLIMATE CHANGE RISKS AND EXPECTED IMPACTS
A. Impact of Climate Change Risks on the Macro-Framework/Long-Term Outlook
GENERAL PREPAREDNESS FOR CLIMATE CHANGE
A. The NDC and Other National Resilience-Building Strategies
B. Disaster Planning and Other Contingency Plans
CONTRIBUTION TO MITIGATION
A. Clean Energy Plans
B. Carbon Pricing
C. Other Macro-Relevant Green Tax Possibilities
D. Other Carbon-Pricing Strategies
ADAPTATION PLANS
A. Policy Framework and Sectoral Strategies
B. Public Investment
C. Sectoral Priorities
D. Other Public Programs
E. Financial Sector Preparedness
FINANCING STRATEGY FOR MITIGATION AND ADAPTATION PROGRAMS
A. Current State of Financing
B. Consistency of Climate Change Spending and Financing Plans with Fiscal and External Debt Sustainability
C. Other Macro-Considerations
D. Institutional Issues
RISK MANAGEMENT STRATEGY
A. Risk Assessment Procedures
B. Self-Insurance and Risk Retention
C. Risk Reduction and Transfer
NATIONAL PROCESSES
A. Integration of Climate Change into National Planning Processes
B. Adequacy of the Public Investment Management System
C. Adequacy of PFM Systems for Managing Climate Financing and Outlays
TAKING STOCK: PRIORITY NEEDS TO BE MET
BOXES
1. Priority Needs to Be Met
2. The Foundation for Carbon Taxation in St. Lucia
3. Macro-Modeling the Impact of Mitigation Policies
4. The Caribbean Catastrophe Risk Insurance Facility
5. The Cat DDO
FIGURES
1. Climate Change and Macroeconomic Performance
2. Articulation of St. Lucia’s Climate Change Strategy
3. Fuel Prices Augmented by Carbon Taxes
4a. CO2 Reductions from Alternative Mitigation Policies
4b. Revenue Gains from Alternative Mitigation Policies
5a. Losses of Total Annual Household Consumption in 2030
5b. Average Burden on Total Annual Household Consumption in 2030
6. Growth and Debt with Climate Change Policies
7. A Saving Fund for Natural Disasters
TABLES
1. Expected Climatic Developments and Consequences
2. Major Natural Disasters
3. Envisioned Mitigation Measures in St. Lucia’s NDC
4. Adaptation Projects in the Capital Program of the 2016–17 Budget
5. Key Planned Capital Expenditures (2017–18) to Mitigate the Impact of Natural Disasters
6. Financing Needs and Sources for Climate Change
ANNEXES
I. Renewable Energy in St. Lucia
II. Assessing the Impact of Alternative Mitigation Policies—IMF Spreadsheet Model
III. NDC-Based Scenarios to Achieve GHG Emission Reduction Targets— World Bank Model
IV. PIMA Institutional Questionnaire—Interview Responses from St. Lucia
APPENDIX
I. CCPA Template
Front Matter Page
This report was prepared by joint IMF and World Bank teams in collaboration with the authorities of St. Lucia.
The IMF team was led by Adrienne Cheasty (Deputy Director of the IMF’s Fiscal Affairs Department (FAD)) and Leo Bonato, (mission chief for St. Lucia, Western Hemisphere Department), together with Ian Parry (the IMF’s Principal Environmental Fiscal Policy Expert, FAD), Alejandro Guerson (mission chief for Dominica, WHD) and Gonzalo Salinas (desk economist for St. Lucia, WHD).
The World Bank team was led by Miria Pigato (Practice Manager), with Annette de Kleine (Senior Economist for the OECS and Barbados); Kassia Belo da Silva Antoine (Research Analyst); Andrew Burns (Lead Economist); David Stephan (Economist); Charl Jooste (Economist); May Olalia (Senior Public Sector Specialist); Onur Erdem (Public Sector Specialist); Karina Ramirez Arras (Research analyst); Raul Alfaro Pelico (Lead Climate Change Specialist), Wei Jen Leow (Senior Economist); Rashmin Gunasekera (Disaster Risk Management Specialist); Tiguist Fisseha (Senior Disaster Risk Management Specialist); Mary Boyer (Disaster Risk Management Specialist); and Shruti Lakhtakia (Consultant).
The authorities consulted in the preparation of this report included Ministers Raymond (Ministry of Finance) and Rigobert (Ministry of Sustainable Development) and their staff; staff in the Ministries of Economic Development, Energy and Infrastructure, and Fisheries; LUCELEC; Executive Director Leon (Financial Services Regulatory Authority), and Mr. D’Auvergne (Disaster Risk Management Coordinator, OECS). The teams much appreciated the authorities’ support in developing this pilot report, and the thoughtful collaboration of public and private sector representatives. The team is especially grateful to Embert St. Juste, Head of Research at the Ministry of Finance, whose guidance and organization contributed immensely to the success of the discussions.
Glossary
| BAU |
Business As Usual |
| CARICOM |
Caribbean Community |
| Cat DDO |
Catastrophe Deferred Drawdown Option |
| CCCCC |
Caribbean Community Climate Change Centre |
| CCPA |
Climate Change Policy Assessment |
| CDB |
Caribbean Development Bank |
| CDEMA |
Caribbean Disaster Emergency Management Agency |
| CCRIF |
Caribbean Catastrophe Risk Insurance Facility |
| CERC |
Contingency Emergency Response Component |
| DANA |
Damage Assessment and Needs Analysis |
| DRM |
Disaster Risk Management |
| DVRP |
Disaster Vulnerability Reduction Project |
| ECERA |
Eastern Caribbean Energy Regulatory Agency initiative |
| EDF |
Emergency Disaster Fund |
| FSRA |
Financial Services Regulatory Authority |
| GCCA |
Global Climate Change Alliance |
| GCF |
Green Climate Fund |
| GEF |
Global Environment Facility |
| GHG |
Greenhouse Gas |
| INDC |
Intended Nationally Determined Contribution |
| IPCC |
Intergovernmental Panel on Climate Change |
| IPP |
Independent Power Producer |
| IPSAS |
International Public Sector Accounting Standards |
| JICA |
Japan International Cooperation Agency |
| LUCELEC |
St. Lucia Electricity Company |
| MoE |
Ministry of Infrastructure, Ports, Energy and Labour |
| MoF |
Ministry of Finance, Economic Growth, Job Creation, External Affairs and Public Service |
| MTDS |
Medium-Term Development Strategy |
| MCII |
Munich Climate Insurance Initiative |
| NAP |
National Adaptation Plan |
| NDC |
Nationally Determined Contribution |
| NEMAC |
National Emergency Management Advisory Committee |
| NEMO |
National Emergency Management Organization |
| NEMS |
National Environmental Management Strategy |
| OECS |
Organization of Eastern Caribbean States |
| PEFA |
Public Expenditure and Financial Accountability (Assessment) |
| PFM |
Public Financial Management |
| PIMA |
Public Investment Management Assessment |
| PPP |
Public-Private Partnership |
| PSIP |
Public-Sector Investment Program |
| RCP |
Representative Concentration Pathways |
| SNC |
Second National Communication |
| SPCR |
Strategic Programme for Climate Resilience |
| TSA |
Treasury Single Account |
| UNFCCC |
United Nations Framework Convention on Climate Change |
| USAID |
United States Agency for International Development |