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Executive Summary
The 2030 National Development Strategy (NDS) of the Dominican Republic (DR) offers an ambitious vision for the country, putting development and climate at the center. The Strategy lays out a path to the creation of a society based on sustainable production and consumption. It aims to manage risks and protect the environment and natural resources, while ensuring equity and efficiency. In addition, the Strategy emphasizes the need to provide essential services such as good‑quality education, healthcare, housing, and basic services, in the context of climate adaptation and the decarbonization of the economy. The DR has also included in its updated Nationally Determined Contribution (NDC) the intention to achieve carbon neutrality by 2050 and has begun to develop a long‑term strategy to complement its NDC.
To achieve these objectives, the country will need to navigate two economic transitions. Because of its geographical position and island status, the country is highly vulnerable to natural shocks such as floods, storms, and hurricanes, which exact high human and economic losses. The country is also increasingly vulnerable to slow‑onset changes, mainly from rising temperatures and sea levels. The first transition the DR will need to manage therefore is to become a more climate‑resilient economy to reduce its exposure to the expected macroeconomic, poverty and distributional impacts of climate change. Secondly, to achieve its development and climate goals, the DR economy will need to make a structural transition from carbon-positive emissions to carbon neutrality.
Despite significant progress in boosting economic growth and reducing poverty, the DR will face challenges in navigating these economic transitions and achieving its development objectives. First, while high and stable economic growth has led to social progress, significant work remains to achieve inclusive and equitable development. Second, enhanced productivity is needed to reinvigorate growth and make sustained gains in living standards and poverty reduction. Lagging productivity has contributed to depressed real wages in a country that already has high regional disparities, and that will require greater market competition, improved human capital, and more innovation to speed growth. Third, the DR faces limited fiscal space in which to step up public investment. This is crucial not just for bridging the gaps in infrastructure, but also to meet social demands, including equitable access to basic services such as healthcare and education. Fourth, important sectors such as water, agriculture, and tourism are highly dependent on increasingly scarce natural resources such as water, timber, and land, and unsustainable practices have led to environmental degradation. These sectors, together with energy (including transport), are critical sources of pollution and carbon emissions, and increasingly uncompetitive. Furthermore, the high cost of energy along with power outages impact businesses and hamper competitiveness, as well as disproportionally affecting poor and vulnerable households.
Despite the government's efforts and commitment, climate change is likely to compound some of the country's development challenges and, in the absence of adaptation efforts, the projected climate impacts will affect economic activity, poverty reduction, and growth. Disasters caused by natural hazards will likely increase, with tropical storms the most frequent. Climate projections indicate higher‑intensity windspeed, storm surge and floods associated with tropical storms, as well as a likely increase in the number of hot days (35 °C+), along with sea‑level rise. By 2050, climate change impacts are expected to decrease labor productivity and affect health, crop yields, tourism, infrastructure, and natural ecosystems such as forests and coastal areas. The modeling conducted for this report suggests that climate‑induced GDP deviations from the baseline scenario could reach up to 16.7 percent of GDP by 2050. Of this, more than 80 percent of the loss comes from three channels: reduced labor productivity caused by heat stress, more tropical storms, and reduced tourism demand. Climate change will also affect the country's poverty reduction efforts. Estimates show that by 2050 the poverty rate will be between 0.7–1.2 percentage points higher compared to business as usual because of climate change impacts. That is, 16–25 percent more people will live in poverty by 2050 compared to a scenario in which climate change didn't occur. Climate change impacts, compounded by natural resource degradation and limited access to basic services, are also expected to affect migration patterns and vulnerable populations.
Although the DR has a small carbon footprint, the persistently steady rise in emissions threatens the country's climate neutrality goal (figure ES-1 in the PDF). In 2019, emissions were 3.70 t CO2eq/capita, significantly lower than both the world (6.48 CO2eq/capita) and the Latin America and the Caribbean (LAC) (6.28 tCO2eq/capita) averages. However, in the 2010–2015 period, emissions had increased by 18.85 percent, driven mainly by the energy, waste, and agriculture sectors. In the energy sector, electricity generation emitted the most GHGs, followed by transport. The land use sector consistently absorbed more CO2 than it emitted, but removals decreased by 14 percent over the same period.
In both the short and long terms, the DR would gain from accelerating the implementation of decarbonization measures. Without enhanced decarbonization measures, emissions are expected to rise at a slower pace than economic growth as the structure of the economy shifts toward services, which are less intensive in GHG emissions, and as the country's energy matrix becomes greener. To address the country's emissions, the main measures are to i) accelerate the shift to a greener power mix; ii) electrify buildings, transport, and industrial processes; iii) maintain and enhance the country's carbon sink through improved practices in the agriculture, forests, and land use sectors; and iv) reduce emissions in the waste sector. Decarbonization can improve the economy's resilience because heavy dependence on fuel imports is a major source of balance of payments risk and potentially of price instability, as occurred between 2021 and 2022. Mitigation actions will lower pollution, improve biodiversity protection, enhance public health, and help create green jobs in the agriculture, energy (including transport), tourism and waste sectors.
To achieve climate neutrality by 2050, the country will need to adopt even more ambitious reforms. Even after undertaking ambitious sectoral reforms, total emissions in 2050 are modelled to be 27.36 MtCO2e (figure ES-2). To reach net zero, enhanced decarbonization efforts for the energy sector (power and transport) will need to be complemented by reforms in other sectors, including waste, and additional measures in forestry and agriculture. Sectoral reforms will also need to be combined with economy‑wide measures (for example, carbon pricing). Expected future decreases in the costs of green technologies could speed up the trajectory of decarbonization, complementing policy reform actions. The DR will also need to ensure a just transition amidst decarbonization efforts, prioritizing the protection of its most vulnerable and at‑risk communities, especially workers whose jobs, and regions whose local economies will be at risk.
Investments for resilient, low-carbon development will have substantial costs but will also generate significant economic, environmental, and social benefits. This CCDR estimated additional investment needs for resilient, low‑carbon development based on the ambitious decarbonization scenario (table ES‑1). Investment needs were calculated as the 2022 present value of the investment flows up to either 2030 or 2050, discounted with an interest rate of 6 percent, and then expressed as a share of the discounted present value of GDP to either 2030 or 2050. The analysis shows that new power infrastructure requires in investments worth 1.1 percent of GDP by 2050 in the ambitious scenario. Similarly, transport decarbonization investment costs are estimated at 1.1 percent of cumulative GDP, including hybrid electric vehicles (HEVs), battery electric vehicles (BEV), and modal shift. While both investments are costly, the economic benefits of the two together outweigh their long‑term costs because of their outsized contributions (of 80 percent) to total avoided emissions, reduced fuel costs and road damage, and reductions in deaths from improved air quality. Because of constraints related to the country's island status, the energy sector (power and transport) cannot itself reach net zero without interconnecting with a bigger, reliable, and cleaner grid that would serve as a backup to its electricity system and safeguard the power needed for growth. The analysis also found that mitigation investments in land and forests will cost 0.02 percent of cumulative GDP by 2050 and provide relatively large emissions reductions both by 2030 and 2050, in addition to serving as a carbon sink that will help bring the entire economy closer to net zero by 2050. These interventions also bring small net‑positive economic benefits i valued relative to other potential land uses, such as grazing (0.1 percent of cumulative GDP by 2050). Therefore the positive cost benefit relationship of mitigation focuses on measures for land use that can be competitive against other alternatives that might put at risk the long term sustainability of the country's forest and land productivity.
Resilience-enhancing investments by 2050 require resources of at least 1.6 percent of cumulative GDP. However, they would bring significant economic benefits associated both with the direct reduction of damage (net economic benefits of 3.4 percent of cumulative GDP by 2050 from averted capital damages) and with economic multiplier effects and wider social benefits, not all of which are quantifiable in the context of the DR. Investments in adaptation measures, including changed times for outdoor labor, minimizing urban heat islands and expanded cooling to reduce labor stress result in a 50 percent reduction in labor productivity loss in the service sector and a 58 percent reduction in productivity loss in industry by 2050. Crop resilience investments result in absolute gains to agricultural productivity in the short term (to 2030), and near‑complete amelioration of climate impacts out to 2050 with a 97 percent reduction in yield losses. Unmet demand for municipal and industrial water declines by 12.3 percent annually by 2030, before increasing slightly to a 7.7 percent reduction in annual losses by 2050 as climate impacts accelerate. However, these estimations represent only a subset of the investment needed for adaptation and resilience. The cost and benefit NPV calculations provided herein are based on current assumptions, estimates, and projections and involve significant elements of judgment and analysis. Users should be aware that NPV calculations are inherently predictive and are subject to uncertainties and contingencies, and future developments might affect the calculations, including related to project implementation, technological innovation and state capacity. They should also be considered as both complementary to other estimations and subject to high uncertainty.