Developing countries can stop extracting their natural resources and at the same time improve their economies. Costa Rica has done just this, so successfully that it received a prize from the hands of Prince William of England a couple of years ago.
Between 1940 and 1987, Costa Rica experienced an unsustainable period. Economies based on the extraction of its abundant natural resources had a positive impact on the economy (in the case of my country, its tropical forests rich in wood). For example, Costa Rica’s economy grew from 164 million dollars per year (about 148 million euros) in 1950 to 4.533 billion dollars in 1987, while its national forest cover plummeted from 75% to 21% of its territory. That was more than 30 years of terrible deforestation.
Costa Rica changed course and increased its forest cover to almost 60% of its territory by 2020: mangroves were added to 57% of the territory covered by forests. This process was consolidated through the use of the Payment for environmental services (PES) In 1996, a new forestry law was passed that imposed harsh penalties for illegal logging.
Over the same period, the country’s annual GDP grew from its 1987 level of $4.533 billion to $61.52 billion in 2020. While tripling its forest cover, it saw its GDP increase more than 13-fold.
Although it seemed contradictory that reducing the extraction of natural resources would allow economic growth, the enormous transformation of the Costa Rican economy demonstrates what is possible. According to data published by UNED professor Velia Vicarioli in 2016, Costa Rica now exports a range of more than 4,335 products and services to more than 150 countries.
The forestry law passed in 1996 and the adoption of the PSA model marked a turning point in the country’s national development strategy. It moved from an economy based on resource extraction to one based on sustainability. It also incorporated indigenous and Afro-descendant peoples, and other communities with communal or tribal properties, as well as projects involving women heads of households with small properties (generally 2 to 10 hectares).
Costa Rica concluded its first stage of forest recovery on October 18, 2021, upon receiving The Earthshot Prize 2021 and with the signing of agreements with the World Bank and the United Nations Green Climate Fund, which recognize a reduction of almost 27 million tons of CO2 emissions, both from forest regeneration, forest plantations, mangroves and the control of forest fires.
The challenges
The next phase presents the country with another formidable challenge that is both more complex and intersectoral. Costa Rica has committed to becoming carbon neutral by 2050. Meeting this commitment will require a paradigm shift for all productive activities, whether by reducing emissions or through national or international offsets.
Costa Rica has committed to becoming carbon neutral by 2050
The country will need to incorporate new agroforestry, silvopastoral and multiple-use systems if it wants to expand its forest cover to the remaining 8% of its territory, which is made up of degraded lands under some form of agriculture and livestock, and which are still available for such use. This will mean transforming existing PES structures into one that offers payments for ecosystem services (a kind of PAS 2.0).
The country will need to replace some 1.2 million fossil fuel vehicles with electric vehicles, and its freight fleet will likely need to run on green hydrogen. Biomass systems using agricultural waste will need to be added to the national grid if the country is to sustainably produce enough green hydrogen and electricity to power the new vehicle fleet. And of course, it will need to find an alternative source of funding to cover the drop in revenue from its specific tax on fossil fuels included in the 1996 forestry law.
As fossil fuels are replaced by electricity based on renewable sources, the revenue from the tax on the use of petroleum derivatives will be phased out. One possible source of revenue could be the sale of domestic and international CO2. These certificates of CO2 emissions reduced in the country would generate a fresh income that the country could use to finance the PAS 2.0. This would require a complex commercial negotiation due to environmental integrity requirements, and to define standards and systems for monitoring, reporting and verification acceptable to the seller and buyer countries.
You can follow Future Planet in X, Facebook, Instagram and TikTok and subscribe here to our newsletter.
#economy #forests #grow #time #Costa #Rica