• El sector turístico será sostenible o no será

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    Una de las consecuencias del estallido de la crisis sanitaria por la COVID-19 ha sido la mayor concienciación de la población y, por extensión, de la clase política, sobre la necesidad de introducir criterios de sostenibilidad en las políticas económicas, con el fin de impulsar una reactivación de la economía de forma más sostenible y resiliente. El sector turístico no es ajeno a estas tendencias porque, en primer lugar, su propia actividad se puede ver perjudicada por las consecuencias del cambio climático y, en segundo lugar, existe un amplio margen para que la actividad turística sea más sostenible. Este artículo trata de responder qué entendemos por sostenibilidad en el sector turístico, cómo se puede medir, en qué punto se encuentra el sector turístico español y hacia dónde se dirige.

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    ¿De qué hablamos cuando hablamos de sostenibilidad en el sector turístico?

    El sector turístico español ha experimentado en los últimos años un desarrollo excepcional, hasta convertirse en una de las principales fuentes de actividad, renta y empleo para la economía española. Este fuerte desarrollo desencadenó, de forma paralela, la aparición de algunas conductas críticas y de rechazo social al papel del turismo en ciertos destinos y momentos del tiempo, hasta que, en 2020, la crisis del coronavirus paralizó la actividad del sector y puso sobre la mesa su relevancia en el sistema económico y social en muchos territorios españoles. En la actualidad, las políticas puestas en marcha por las autoridades europeas y por el propio Gobierno español apuntan claramente hacia una salida de la crisis bajo criterios de sostenibilidad y de resiliencia que, en el caso del sector turístico, adquiere una doble vertiente. Por un lado, la actividad turística es especialmente sensible a los efectos del cambio climático, tales como el aumento en el nivel del mar, los fenómenos climáticos extremos, la degradación medioambiental o la pérdida de biodiversidad. Por el otro, existe un amplio margen de mejora para que el sector turístico sea más sostenible, al tratarse de una actividad que comporta elevados niveles de contaminación de la atmósfera y de fuerte presión sobre los recursos naturales.

    La Organización Mundial del  Turismo define

    los principios de sostenibilidad en función de los aspectos medioambiental, económico y sociocultural del desarrollo turístico

    A este respecto, la Organización Mundial del Turismo (OMT) define los principios de sostenibilidad en función de tres ámbitos: medioambiental, económico y sociocultural. El primero persigue dar un uso óptimo a los recursos naturales y medioambientales, así como a preservar la diversidad biológica. El aspecto económico corresponde al impacto de la actividad turística sobre la economía de la localidad receptora de turismo, de tal manera que se promuevan actividades viables a largo plazo, con oportunidades de empleo estable y la obtención de unos beneficios socioeconómicos bien repartidos. Por último, el ámbito sociocultural persigue conservar y fortalecer los activos culturales y arquitectónicos y los valores tradicionales del destino turístico.

    ¿Cómo podemos medir la evolución del sector hacia la sostenibilidad?

    Al tener en cuenta los tres aspectos que la OMT define sobre la sostenibilidad del sector turístico, tratamos de establecer un indicador relevante para cada uno de ellos con el fin de medir en qué punto se encuentra la sostenibilidad en el sector y cuáles deberían ser los pasos a seguir a partir de ahora. Cabe señalar que nuestro análisis se realiza con datos anteriores a 2020, ya que el efecto de la pandemia sobre estos indicadores distorsionaría el análisis que se pretende para este artículo.

    La mayor parte de la emisión de gases de efecto invernadero

    por parte del sector turístico se concentra en los sectores del transporte

    En el ámbito medioambiental, se emplea la evolución de las emisiones de gases de efecto invernadero (GEI) hacia la atmósfera por parte de los sectores que aglutina la industria turística española.6 Para analizar el sector solo tenemos en cuenta la evolución de los tres gases que más expulsa a la atmósfera: dióxido de carbono (CO2), óxidos de nitrógeno (NOx) y monóxido de carbono (CO). La primera conclusión que se puede extraer es que la mayor parte de la emisión de GEI procede de los sectores del transporte (suponen en torno al 12% del PIB turístico), concretamente a la emisión de óxidos de nitrógeno, derivada de la combustión de los motores. Estos sectores se encuentran entre los más contaminantes del conjunto de las ramas de actividad. Además, sus niveles de contaminación han aumentado desde 2013 para el caso del transporte aéreo, mientras que, para el transporte terrestre han disminuido, pero se mantienen en niveles tremendamente elevados. Respecto a los servicios de alojamiento y restauración, y las actividades de agencias de viajes y turoperadores, el monóxido de carbono es el gas contaminante que más se expulsa a la atmósfera.7 Aunque los niveles de contaminación no son alarmantes, lejos de moderarse, mostraron un crecimiento del 78% en el caso del alojamiento y del 38% en el caso de agencias y turoperación entre 2013 y 2019.

    • 6. Para este análisis se consideran los datos disponibles en el INE por ramas de actividad: servicios de alojamiento, servicios de comida y bebida (rama 55-56, según CNAE 2009); actividades de agencias de viajes, operadores turísticos, servicios de reservas y actividades relacionadas con los mismos (rama 79); transporte terrestre y por tubería (rama 49), y transporte aéreo (rama 51).
    • 7. Este tipo de GEI se produce cada vez que se enciende algún combustible como gas natural, gas propano, gasolina, petróleo, queroseno, madera o carbón. Es decir, el sector lo produce como consecuencia del uso de sistemas de calefacción y refrigeración y del empleo de cocinas de combustión.

    Emisiones de gases de efecto invernadero en los sectores turísticos

    Servicios de alojamiento, servicios de comida y bebida

    Last actualization: 11 January 2022 - 13:23

    Actividades de agencias de viajes, turoperadores y actividades relacionadas

    Last actualization: 11 January 2022 - 13:27

    Transporte terrestre

    Last actualization: 11 January 2022 - 14:29

    Transporte aéreo

    Last actualization: 11 January 2022 - 14:30

    Los indicadores de valor económico consideran la contribución del turismo a la sostenibilidad económica de cada destino. Para medir este ámbito consideramos como variables el número medio de pernoctaciones al mes (volumen de actividad) y el gasto por turista (valor de esa actividad). El volumen y el valor del turismo son esenciales para la sostenibilidad económica de un destino: cuanto más elevado sea el gasto por día, más eficiente será el destino en la generación de valor turístico.

    La relación entre el volumen (número de pernoctaciones) y el gasto por turista puede verse en el siguiente gráfico.8 Entre las provincias más turísticas (aquellas con más de 10 millones de pernoctaciones al año), el gasto medio se sitúa en torno a los 300 euros por turista. Entre ellas destaca negativamente el caso de Las Palmas: la segunda provincia con más pernoctaciones, pero con un gasto promedio modesto. Entre el resto de provincias, el gasto medio por turista se sitúa por debajo de los 175 euros. En este caso, destacan de forma muy positiva, entre otras, Girona, Alicante o Guipúzcoa, que se caracterizan por un volumen más modesto de estancias hoteleras pero que disfrutan de un gasto por turista muy elevado.

    • 8. El gasto turístico total por provincia se aproxima utilizando los pagos presenciales con tarjetas de turistas domésticos e internacionales en TPV de CaixaBank en el año 2019.

    Indicadores económicos: gasto turístico vs. pernoctaciones

    Eje Y: Gasto/turista; Eje X: Pernoctaciones (millones)

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    Fuente: CaixaBank Research, a partir de datos internos y del INE.

    Como indicador básico para medir el impacto social y cultural de los diferentes destinos turísticos, medimos la congestión en las distintas provincias, ya que influye en la satisfacción de los residentes y es un indicador básico del impacto social del turismo en una comunidad. Para ello, utilizamos la variable del número de pernoctaciones en proporción a la población residente, cuyos resultados se pueden observar de forma resumida en el siguiente mapa. En términos generales, no se observa una presión turística relevante en la mayor parte del territorio.9 Sin embargo, son llamativos los casos de (i) las regiones insulares, destino eminentemente de playa y naturaleza, que reciben mucho turismo internacional;10 (ii) ciertas zonas cercanas a la frontera con Francia, con un modelo turístico de playa y montaña (Huesca, Tarragona y Girona) que tienen una población local reducida y que reciben la visita de países vecinos, así como (iii) ciertas localidades de Andalucía, que reciben tanto turismo nacional como internacional (Málaga, Huelva y Almería). Evidentemente, la congestión de los destinos más turísticos no ha hecho más que empeorar en los últimos años, teniendo en cuenta que la población ha crecido, por término medio, mucho menos que la llegada de turistas.11

    • 9. En España, la proporción de volumen de pernoctaciones respecto a la población residente se sitúa ligeramente por encima de siete, lo que puede ser tomado como referencia de congestión media para el conjunto nacional. Una congestión por encima de estos niveles se puede considerar elevada. En el caso de la UE, se sitúa alrededor de cuatro, según los datos disponibles en Eurostat.
    • 10. De hecho, Illes Balears destaca como la región europea con mayor congestión por el número de visitantes anuales que acoge, según los datos regionales disponibles en Eurostat, por delante de la Provincia autónoma de Bolzano (Italia), Algarve (Portugal), Tirol y Salzburgo (Austria).
    • 11. En los últimos 10 años, la población ha crecido un 2% por término medio en España, mientras que la llegada de turistas internacionales ha repuntado cerca de un 60%.

    Pernoctaciones en proporción a la población residente

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    Fuente: CaixaBank Research, a partir de datos del INE.
    Hacia un nuevo modelo más sostenible y competitivo

    A la luz de los indicadores disponibles, parece claro que existe margen de mejora en los próximos años. En el ámbito medioambiental, los niveles de contaminación incluso han aumentado en los últimos años, y las líneas de mejora van desde la promoción de construcciones más eficientes y con mayor calidad energética, pasando por sistemas de acondicionamiento más modernos, hasta la promoción de medios de movilidad más sostenibles, entre otros aspectos. En términos económicos, no cabe duda de la importancia del sector para el conjunto de la economía española, si bien habrá que vigilar aquellos destinos especialmente demandados, con elevados niveles de congestión, donde la aportación económica del sector es modesta. Por último, en términos socioculturales, existen algunas regiones con una sobredemanda turística creciente que provoca malestar en determinadas poblaciones residentes, ya que causa problemas de congestión en localidades pequeñas, con servicios públicos limitados y que no siempre están preparadas para absorber esa ingente demanda estacional.

    A partir de aquí, la agenda hacia la sostenibilidad en el sector pasa por retomar iniciativas anteriores a la COVID-19 y que permitan, ahora, aprovechar los fondos procedentes de Europa.12 En concreto, el sector turístico español aparece en el Plan de Recuperación, Transformación y Resiliencia del Gobierno a través de la política de «Modernización y digitalización del tejido industrial y de la Pyme, recuperación del turismo e impulso a una España Nación Emprendedora», donde el componente 14 traza un Plan de Modernización y Competitividad del Sector Turístico. Dentro de este último, el eje que más inversión recibirá es la Estrategia de Sostenibilidad Turística en Destinos, que cuenta con un presupuesto estimado de unos 1.900 millones de euros para los próximos tres años.13

    • 12. A principios de 2019, el Gobierno y la Secretaría de Estado para el Turismo ya habían comenzado a trabajar en la Estrategia de Turismo Sostenible de España 2030, donde ya se tenía en cuenta la necesidad de introducir criterios de sostenibilidad en el sector y que comenzaba a introducir los objetivos y criterios que ahora, a través de los fondos NGEU, se han establecido en esta nueva Estrategia de Sostenibilidad Turística en Destinos.
    • 13. El Gobierno realizó en noviembre el reparto de la primera convocatoria extraordinaria de Planes de Sostenibilidad: se desembolsaron 615 millones a las CC. AA., teniendo en cuenta variables económicas (porcentaje de PIB turístico respecto de PIB autonómico y caída en la afiliación de trabajadores del sector turístico entre diciembre de 2019 y diciembre de 2020), territoriales (porcentaje de superficie de la comunidad autónoma respecto de la superficie nacional y densidad de población) y turísticas (número de turistas internacionales recibidos en 2019 y gasto de esos turistas).
    El objetivo final no es otro que tratar de mejorar

    la competitividad del sector turístico español a través de un nuevo modelo de mayor valor añadido

    Entre los objetivos de estas iniciativas no solo se encuentra que los destinos españoles sean capaces de integrar en su oferta criterios de sostenibilidad medioambiental, socioeconómica y territorial, sino también desarrollar estrategias de resiliencia frente a los retos actuales (cambio climático, sobredemanda turística, crisis sanitarias y de seguridad) y alcanzar una mayor cohesión territorial. Es decir, promover un mejor reparto de las cargas sobre el territorio y consolidar una gestión territorial integral que ayude a frenar los procesos de despoblación. El objetivo final no es otro que tratar de mejorar la competitividad del sector turístico español a través de un nuevo modelo que sea más sostenible, de más calidad y, por tanto, de mayor valor añadido.

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  • How the agrifood sector is becoming more sustainable

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    Climate change and the struggle to prevent it pose enormous challenges for agrifood production in Spain. In turn, improving the sustainability and resilience of the sector will be key to achieving the environmental targets set out in the European Green Deal. Agri-environmental indicators show that, despite some progress in recent years, the sector needs to tackle significant aspects, such as reducing the use of chemical pesticides, fertilisers and antimicrobials in agriculture, as well as improving animal health and welfare, increasing efficiency in the use of energy and water resources, promoting food consumption that is more sustainable and healthier and reducing food loss and waste, fostering a circular economy. The new CAP, with eco-schemes as its key measure, and the Next Generation EU funds will support the sector’s green and digital transition.

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    The threat of climate change and transition to a sustainable food system

    Spain’s agriculture has traditionally benefited from a privileged geographical location and climate but it is particularly vulnerable to climate change. Increased soil erosion, floods, droughts and wildfires, along with an increase in pests and diseases, are just some of the direct effects. In turn, primary sector activity also contributes to climate change: crop specialisation and intensification, the use of chemical inputs and the industrialisation of livestock production all have negative impacts on water, soil, air, biodiversity and habitat conservation.

    Agriculture contributes to climate change and, in turn, suffers directly from its consequences

    It must therefore move towards a new model that protects the natural resources on which it depends.

    EU countries are increasingly aware that they need not only to mitigate climate change but also adapt to it. Consequently, given growing concerns for the environment, the agrifood sector must move forward in its transition from a system that emits greenhouse gases (GHG), demands a large amount of natural resources and also pollutes them, to a new model, increasingly widespread, that provides healthy, nutritious food sustainably, protecting the natural resources on which agricultural activity itself depends.

    In addition to improving the sustainability of agrifood production and downstream distribution, another important lever for change is to promote healthier and more environmentally sustainable consumption patterns. For example, a diet with a larger proportion of vegetables, organic foods, seasonal and local produce. Similarly, the reduction of food loss and waste and promotion of the circular economy are also key factors in moving towards a sustainable food system, as stated in the European Commission’s «Farm to Fork» strategy.

    The Farm to Fork strategy

    The Farm to Fork strategy
    Source: European Commission.
    From the European Green Deal to the CAP Strategic Plans

    The EU is deploying a wide range of tools to provide stakeholders with mechanisms and incentives to support this transition to a sustainable food system and, in turn, to help achieve the targets set out in the European Green Deal. One important addition in the reformed Common Agricultural Policy (CAP), which will enter into force in January 2023, is the drafting of National Strategic Plans to establish priorities in terms of aid and incentives for the various production subsectors.6The star measure is eco-schemes, which are voluntary and reward sustainable practices. Spain’s Ministry of Agriculture has proposed two eco-schemes, with a budget of 1,107.49 million euros, which group sustainable practices into two areas: agroecology and low carbon agriculture. The first group includes activities such as pasture management using sustainable mowing, crop rotation and the maintenance of non-productive areas and other biodiversity aspects. The second group includes extensive grazing, conservation agriculture and the maintenance of living or dead vegetation cover.

    • 6. Spain’s Ministry of Agriculture, Fisheries and Food must submit its Strategic Plan to the European Commission by 30 December 2021.
    The new CAP, with eco-schemes as its key measure,

    together with Next Generation EU funds, will support the sector’s green and digital transition.

    In addition to the CAP, the European NGEU funds will also help to finance the green and digital transition of the primary sector. In particular, item 3 of Spain’s Recovery, Transformation and Resilience Plan, aimed at the environmental and digital transformation of the agrifood and fisheries system, provides for an investment of 1,502.8 million euros. The plan is based on four fundamental pillars: (i) improving efficiency in irrigation, (ii) promoting sustainability and competitiveness in agriculture and livestock farming, (iii) a digitalisation strategy for the agrifood sector and the rural environment, and (iv) modernising the fisheries sector, by promoting sustainability, research, innovation and digitalisation.

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    Environmental indicators in the primary sector

    The European Commission has analysed the situation of individual Member States in relation to their contribution to each of the Green Deal ambitions. The table below lists these targets and the reference values of these indicators for the main countries.7

    To make Europe the first climate-neutral continent by 2050, the first milestone has been set for 2030: reduce greenhouse gas (GHG) emissions by at least 55% compared with the 1990 level. While GHG emissions from EU agriculture have fallen by a significant 20% since 1990, no progress has been made since 2005. And in Spain the situation has been reversed: emissions have increased since 1990 (6.5%) with just a modest reduction since 2005 (–3.7%).

    • 7. «Commission recommendations to Member States as regards their strategic plans for the CAP», European Commission, December 2020.
    In relative terms, GHG emissions by Spain’s agricultural sector

    are lower than the EU average, which has set itself the target of at least 55% below 1990 levels by 2030.

    Despite this trend, it is important to note that, in relative terms, the sector is responsible for 12.0% of the economy’s total GHG emissions compared with an EU average of 12.7%. Furthermore, if we take into account the fact that the primary sector contributes 2.9% of GDP compared with 1.6% in the EU, the result is that GHG emissions by Spain’s agrifood sector per unit of GVA are significantly lower than the European average (1.2 kg/euro compared with 1.7 kg/euro in the EU).8 Similarly, emissions from agriculture per unit of agricultural land (tonnes of CO2 equivalent per hectare) are lower in Spain (1.6 compared with 2.5 in the EU).

    The second EU milestone is contained in the Farm to Fork strategy, which sets a target of 50% reduction in the use and risk of chemical pesticides by 2030. In recent years, Spain has significantly reduced the use of this type of chemical and the challenge is to continue moving in this direction. The target for antimicrobial resistance is a 50% reduction of the overall antimicrobial sales for farm and aquaculture animals by 2030, compared with the EU baseline in 2018. In this respect, Spain lags behind the EU average.

    On the other hand, Spain performs positively both in its share of agricultural land used for organic farming, an aspect we discuss in more detail in the next section, and the proportion of agricultural land occupied by highly diverse landscape features. In this case Spain, with 13.2% of its land, already exceeds the target of 10%.9

    • 8. Data from the European Commission’s Common Monitoring and Evaluation Framework (CMEF) for the CAP 2014-2020, https://agridata.ec.europa.eu/extensions/DataPortal/cmef_indicators.html
    • 9. EU Biodiversity Strategy 2030.

    European Green Deal targets and reference values

    European Green Deal targets and reference values
    Notes: GHG stands for greenhouse gases. UAA stands for utilised agricultural area. Source: CaixaBank Research, based on the European Commission’s COM (2020) 846.
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    Nitrate pollution from agriculture remains one of the greatest pressures on the aquatic environment. In this respect, the EU has set a target of reducing nutrient losses by at least 50% by 2030 while ensuring there is no deterioration in soil fertility, an aspect in which Spain needs to improve considerably. An increasing number of EU countries are also affected by water scarcity, often caused by excessive abstraction of water for agriculture and livestock. Climate change will further aggravate the problem of water availability in many regions, including Spain.

    Finally, the new CAP establishes digitalisation as a priority across the board, believing that the transition towards a sustainable food system must be supported by knowledge, innovation and digitalisation. In this respect, one key factor in developing rural areas and reversing their depopulation is the availability of a fast, reliable internet connection. While there has been a notable increase in the proportion of households in rural areas with next-generation broadband access, there is still a significant gap with respect to urban areas. The goal is to cover 100% of the population by 2025.10

    • 10. This target is included in the Agenda España Digital 2025.
    58.7% of Spanish households in rural areas

    had access to fast broadband internet in 2019. The goal is to cover 100% of the population by 2025.

    The green and digital transition of European agriculture is also creating new business opportunities which the sector must take advantage of, for example by better aligning its production with evolving consumer tastes. Sustainability will become a competitive advantage for those companies and farms that achieve a balance between economic growth, environmental care and social well-being, while those that fail to comply with environmental standards will be penalised by increasingly demanding and environmentally aware consumers who identify with the most sustainable brands and products.

    A firm commitment to boosting organic production

    The commitment to more sustainable production schemes, such as organic farming,11 is relentless. Spain, with more than 2.44 million hectares of these crops in 2020, is the first country in the EU and the third in the world after Australia and Argentina. However, in terms of its share of utilised agricultural area (UAA), it is above the EU average, as noted in the previous section, but well below leading countries such as Austria, Estonia and Sweden, which exceed 20%. Four million additional hectares would be needed to achieve the 25% target set in the Organic Action Plan.

    • 11. Organic farming is a system of agrifood production and management that combines the best environmental practices, a high level of biodiversity and preservation of natural resources and the application of high animal welfare standards, so that products are obtained from natural substances and processes (MAPA).

    Share of utilised agricultural area under organic farming

    Last actualization: 13 October 2021 - 16:38

    Regarding organic operators,12 almost 90% out of a total of 50,047 in 2020 were primary producers while the rest were industrial operators and traders. However, the number of operators is growing much faster (more than double) further down the food chain.

    • 12. An organic operator can be an individual or company and must meet certain requirements to be able to produce, process, prepare or package food of agricultural origin in order for it to be marketed using the terms ecological, biological or organic. In Spain there is a General Register of Organic Operators (REGOE) that collates the information provided by each autonomous region.
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    By region, Andalusia leads the field both in terms of land under organic farming, with more than 45% of the total, and in terms of organic livestock farms, with almost 60%. By type of crop, cereals for grain production come top (43% of the total) and, by type of livestock, cattle (48%). Compared with other countries, the Spanish agrifood sector is the world’s leading organic producer of olive oil and wine and the second for citrus fruits and vegetables.

    However, one of the challenges facing organic production in Spain is the low domestic consumption: per capita consumption of these products in 2019 stood at 50.2 euros, a far cry from countries such as Denmark or Switzerland, which exceed 300 euros. As a result, most of Spain’s organic produce, around 60%, is exported.13 The change in habits brought about by the pandemic has boosted healthier, more sustainable and local consumption, so the trend in domestic consumption of organic produce is clearly upward.

    • 13. Sociedad Española de Agricultura Ecológica (SEAE), MAPA (2021), «Análisis de la caracterización y proyección de la producción ecológica española en 2019» and Ecovalia (2021), «Informe anual de la producción ecológica en España».
    Organic farming in Spain, on the rise

    Area under organic farming

    Last actualization: 13 October 2021 - 16:38

    Organic operators in the primary sector (producers)

    Last actualization: 13 October 2021 - 16:39

    Organic operators in the secondary sector (manufacturers and processors)

    Last actualization: 13 October 2021 - 16:40
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Climate change and financial markets

In this article, we analyse the impact of the green transition on the financial markets by contrasting the effects of an orderly climate transition with those of a disorderly one.

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Skyline de Londres dibujado sobre una hoja de árbol

The COVID-19 pandemic has made it all too clear that events which we consider unlikely to occur, but which have a high impact, can end up materialising. In the coming decades, these phenomena, known as black swans, could become increasingly frequent and even change colour: the serious consequences of climate change could lead to green swans, especially if the transition to a sustainable economic model is not properly managed. In this article, we analyse the impact of this transition on the financial markets by contrasting the effects of an orderly climate transition with those of a disorderly one.

Orderly transition: the importance of separating the wheat from the chaff

In an orderly transition, the transformation towards a decarbonised economy takes place gradually and with adequate planning. As part of this process, there are regulatory changes (such as imposing strict limits on carbon emissions), fiscal changes (such as increased taxes on polluting emissions), and technological changes (such as the adoption of fully electric transportation systems or carbon capture techniques). These changes should, on the one hand, lead to an increase in funding needs (both public and private) throughout the transition period and, on the other, promote the development of new metrics and criteria to better identify environmental sustainability across sectors, companies, projects and products. As an orderly transition, the investment needs can be spread over time, so the increase in funding costs should, on average, be small. However, better identification of green investments would lead to an increase in the dispersion of these financing costs and also in the relative price of green assets compared to brown assets (the so-called «greenium»). This, in turn, would also generate persistent effects in the commodity markets, such as price increases among commodities used in less carbon-intensive sectors.1 At the same time, new sustainable financing instruments (such as the expansion of markets for green bonds or subsidised loans)2 should be given a major boost.

  • 1. The rise in the relative price of commodities required for renewable energy generation and storage, such as cobalt, will be significant compared to oil. See International Energy Agency (2021). «The Role of Critical Minerals in Clean Energy Transitions». World Energy Outlook Special Report.
  • 2. Like green bonds, a subsidised loan would involve a «green premium» (e.g. a lower interest rate) for projects that meet certain environmental targets.
INFORM physical climate risk index

As we are in the initial stage of a climate transition right now, it is worth asking whether some of these effects we have just described are already visible. Indeed, in an environment in which investors are beginning to take climate risks seriously (including both physical and transition risks),3 the internalisation of these risks is beginning to be partially reflected in financial asset prices. That said, it is still early days and their degree of incorporation largely depends on the quality of the information published,4 as well as on investors’ knowledge.5 Specifically, the available evidence shows that exposure and vulnerability to climate risks are being reflected to some extent in the sovereign debt market, penalising regions with greater exposure to physical risks and less capacity to respond. In particular, it has been estimated that the difference between the regions of the world that are most and least exposed to these risks is around 200 bps on average over the period 1995-2017.6

These results suggest that the economic players participating in the sovereign debt market take the scientific evidence on the effects of climate change into account, probably due to the existence of a sufficient quantity and quality of public information on the physical risks of climate change at the geographic level. Indeed, the scientific consensus tells us that the physical risks of climate change will be asymmetric – they will vary depending on each country’s geographical location, economic structure and institutional capacity – and non-linear. In addition, we already have a physical risk index for each country, calculated using the INFORM risk model, based on their exposure to these risks, their vulnerability and their ability to mitigate them.7 After analysing this index, we can highlight three elements. Firstly, mitigation and adaptation strategies have already had positive effects since 2012 in some regions of the world, as shown in the first chart. Secondly, the geographical distribution of the risk is uneven. Finally, the risk is asymmetric, since more than 70% of cumulative global emissions originate in countries with low physical risks, according to data from the Global Carbon Project. This implies that the physical costs of climate change are highly unlikely to directly affect the worst-emitting regions and that the design and implementation of adaptation and mitigation plans, supported by international cooperation mechanisms, will be essential.

In the case of equities, some asset prices do not seem to adequately incorporate relevant climate risks, which is consistent with the hypothesis that the mechanisms in place for reporting and disseminating more detailed information on climate risks still need to be improved. As an example, there have been no significant changes in the price of assets in the agri-food or real estate sectors, despite the risk of drought or flooding in coastal areas being widely documented.8

In contrast, in the corporate debt market the internalisation of transition risks is already beginning to be reflected in investors’ valuations, as we see an improvement in corporate ratings among European and North American companies which report their carbon emissions, as well as their future targets for reducing those emissions (see second chart). There is also evidence that investors take into account companies’ own carbon footprints and penalise the most polluting among them.9 Moreover, this «green premium» increases in periods when the public impact of climate change is more visible.

  • 3. Physical risks are those arising from the exposure of human activity to the natural system, while transition risks are those arising from the regulation that seeks to bring the economy towards a lower level of greenhouse gas emissions and from the transformation of economic activities to meet environmental targets.
  • 4. See L. Alessia, E. Ossola and R. Panzica (2021). «What greenium matters in the stock market? The role of greenhouse gas emissions and environmental disclosures». Journal of Financial Stability, 54.
  • 5. See P. Krueger, Z. Sautner and L. Starks (2020). «The Importance of Climate Risks for Institutional Investors». The Review of Financial Studies, 33-3, pages 1,067-1,111.
  • 6. See S. Cevik and J.T. Jalles (2020). «This Changes Everything: Climate Shocks and Sovereign Bonds». IMF Working Paper WP/20/79. And M. Painter (2020). «An inconvenient cost: The effects of climate change on municipal bonds». Journal of Financial Economics, 135-2, pages 468-482.
  • 7. See M. Marin-Ferrer, L. Vernaccini and K. Poljansek (2017). «Index for Risk Management – INFORM Concept and Methodology Report». Joint Research Centre - Publications Office of the European Union.
  • 8. See, for example, H. Hong, F.W. Li and J. Xu (2019). «Climate risks and market efficiency». Journal of Econometrics, 208-1, pages 265-281. And A. Bernstein, M. Gustafson and R. Lewis (2019). «Disaster on the horizon: the price effect of sea level rise». Journal of Financial Economics, 134-2, pages 253-272.
  • 9. ee E. Ilhan, Z. Sautner and G. Vilkov (2021). «Carbon Tail Risk». The Review of Financial Studies, 34-33, pages 1,540-1,571, in a study on how emissions affect put options of companies that make up the S&P 500.
Estimated impact on corporate ratings of reporting carbon emissions and future emission reduction targets
Disorderly transition: more abrupt changes

A disorderly transition would consist of an initial phase of inaction, followed by abrupt changes in the regulatory environment or in fiscal policy in order to contain the risks following the materialisation of extreme weather events and an unmanageable rise in temperatures. In this context, there could be a sudden and significant increase in funding requirements, which in turn would increase the average cost of financing, all accompanied by a dispersion of the costs. Substantial and sudden changes in asset prices would especially affect the assets which bear the brunt of the transition risks, the so-called «stranded assets».10 These trends could be exacerbated by the difficulties many firms would experience in rapidly adapting to a sudden and large-scale transition.11

  • 10. One example of such assets is the reserves of unextracted fossil fuels. See J.F. Mercure et al. (2018). «Macroeconomic impact of stranded fossil fuel assets». Nature Climate Change, 8, 588–593.
  • 11. See ESRB (2016). «Reports of the Advisory Scientific Committee: Too late, too sudden: Transition to a low-carbon economy and systemic risk». And ESRB (2020). «Positively green: Measuring climate change risks to financial stability».
Climate transition: how to address it and the value of information

As regulators and ultimate guardians of the global biosphere, nation states face two key challenges in the coming decades. The first is to develop well-designed regulations which facilitate the climate transition in an orderly manner and with market discipline. In other words, the impact on the financial markets will depend on whether this approach is taken or whether a more interventionist model is chosen involving direct corporate penalties. In this latter case, the increase in funding costs could be higher, even in an orderly transition scenario. The second challenge is to come up with mechanisms for reporting climate information that are transparent and accessible to all. The model that the climate transition finally takes may vary, but it is clear that protecting the planet as a global public asset for all largely depends on the production of another asset with the same characteristics, namely accurate and truthful information on climate risks.

 

    Long-term trends

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