Argentina faces a profound challenge in committing to long-term climate adaptation due to its chronically volatile macroeconomic and political environment, despite the country high vulnerability to extreme climate events. The dominance of short-term crises such as high inflation, recurrent debt, and policy instability overshadows the necessity of sustained, forward-looking investments required for climate resilience.
Structural Barriers to Adaptation
Effective climate adaptation demands long-term institutional commitment and investments with uncertain, delayed returns, which are undermined by Argentina’s structural issues:
• Short-Term Policy Cycles: Frequent changes in administration, macroeconomic shocks, and fiscal constraints repeatedly disrupt policy continuity, making long-term climate planning difficult to formulate and implement.
• Competing Priorities: Immediate public concerns like inflation, poverty, and exchange rate volatility consistently overshadow visible climate risks like rising temperatures, droughts, and floods, making it difficult to place climate change high on the national agenda.
• Limited Financial Capacity: Shallow financial markets and severely limited credit availability restrict broader adaptive capacity. In 2023, credit to the private sector was only 12% of GDP, the lowest in the region, which constrains investment in general.
Climate Vulnerability and Economic Impacts
Argentina is highly vulnerable to climate change, with material risks already affecting its economy and human capital:
• Economic Damage: Estimates suggest that a 1°C rise in temperature reduces Argentina’s real per capita GDP by 0.32-0.50%. Localized climate disasters are also associated with a 0.53% reduction in night-time luminosity, a proxy for economic activity.
• Extreme Events: Between 1980 and 2020, floods were the most frequent natural hazard, affecting over 14 million people. The severe 2023 flooding in Bahía Blanca killed at least 16 people and caused extensive damage.
• Agricultural Risk: The advanced agricultural sector, which accounts for over half of exports, is highly sensitive to climate shifts. Droughts have repeatedly depressed output, severely affecting crops like maize and soybean.
• Human Capital Impact: Extreme temperatures increase mortality rates, particularly among the elderly (65+), where one additional hot day increases total mortality by 0.73%. Furthermore, the 2023 floods in Bahía Blanca damaged 131 of 232 public schools, forcing some to close for nearly two weeks, highlighting negative effects on education and health.
Adaptation Strategies and Policy Needs
While the profit-driven agricultural sector has incentives to adapt, private action alone is insufficient for broader resilience.
• Technological Leadership: Argentina is a global leader in conservation agriculture, with nearly 90% of farmland under no-tillage management. It is also a top adopter of genetically modified seeds, including the first country to approve HB4 drought-tolerant wheat for enhanced resilience.
• Financial Gaps: While crop insurance is developed, financial markets are too shallow and weather insurance remains underdeveloped, limiting the country’s ability to absorb shocks through financial instruments.
• Critical Need for Governance and Infrastructure: Given weak institutions, investments in governance and resilient infrastructure are vital. Improving deficient transport infrastructure, for example, would raise market integration and limit the impact of localized weather shocks, drawing parallels with how rail expansion reduced famine risk in India.
The ultimate challenge for Argentina is the tension between immediate political pressures and the necessity for durable, forward-looking investment to ensure long-term climate resilience.