URUGUAY ADVANCES ON CLIMATE CHANGE

UNCLAS MONTEVIDEO 000181

SIPDIS

STATE FOR WHA/BSC MDASCHBACH

E.O. 12958: N/A
TAGS: SENV KGHG UY
SUBJECT: URUGUAY ADVANCES ON CLIMATE CHANGE

Summary
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1. An environmental current is gathering momentum in Uruguay, with
a notable increase in the number of public and press events related
to climate change. On March 17, President Vazquez announced the
launching of a National Agenda on Climate Change that creates a $6
million emergency fund to help mitigate damage by natural disasters
resulting from climate change. Uruguay's economy is largely
dependent on natural resources; its economic health, in large part,
will depend on its ability to manage its resources as they are
affected by climate change. The GOU is a faithful adherent to
international climate change agreements, and the new national agenda
reinforces its commitment to a sustainable response to the growing
challenges in that area. End summary.

GOU Announces a National Agenda on Climate Change
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2. Climate change grabbed headlines in Uruguay with President
Vazquez's March 17 announcement of its inclusion in the national
agenda, but the issue is old news in Uruguay. For years, the GOU
and Uruguayan civil society have carried out regular outreach
programs and promotion campaigns aimed at increasing the awareness
and understanding of climate change issues by different sectors of
society (the general public, GOU agencies, and stakeholders in
general) as well as building support for the implementation of
response measures.


3. President Vazquez's National Agenda on Climate Change is another
step toward promoting a national debate on the issue. "Fighting
climate change must be a matter of the nation's politics," Vazquez
said. He announced the establishment of an emergency fund to
alleviate the impacts of climate change-induced disasters. An
initial $6 million will be committed to the fund with increasing
amounts planned for the future. The fund will be used to address
the damage wrought by droughts, tornadoes, and floods. A joint
working group, including representatives from the GOU and local
governments, will help manage risk with a focus on the impact that
natural disasters could have on the economy. The 220-page document
also includes a summary of climate change research results obtained
in Uruguay, and a description of the projects that are already being
implemented.


4. Both public and private sectors are involved. A measure to
require new hotels, sports clubs and hospitals to have solar-powered
hot water heaters was passed in the Senate in December and is
awaiting approval in parliament. Although it is a progressive
environmental measure, it stands to face significant resistance from
developers, especially during an election year, due to the
additional construction costs. In an ongoing project to increase
the percentage of electricity from renewable sources, last week the
national electricity agency named several private companies winners
of contracts to produce 26.2 MW of renewable energy (including a 5MW
contract awarded to U.S. company Weyerhauser). Uruguay has eight
projects underway that are reducing the emission of the equivalent
of 300,000 tons of CO2, and nine biomass and wind energy projects
saving 200,000 tons of CO2. Note: Since they are all Clean
Development Mechanism projects, the GHG emission reduction that they
will bring, will not be allocated to Uruguay, but to the foreign
company that bought them. Therefore, they will not be reflected in
the GOU inventories. End note.

Climate Change Impacts on Uruguay
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5. Although a minor contributor to global warming, Uruguay faces
the possibility of being severely affected by climate change. That
could result in serious problems in achieving sustained,
environmentally-sound economic and social development, given the
link between the country's natural resources and its economic
performance. Uruguay presents a significant inter-annual and
inter-seasonal climate variability, which results in large climate
anomalies that manifest themselves as droughts, floods, tornadoes,
and modifications in wind, precipitation and storm patterns.
Experts believe these extreme weather events are likely to become
increasingly frequent and intense.


6. Climate change is affecting many sectors in Uruguay, but for the
moment the GOU has decided to concentrate its efforts solely on the
economy and the environment. The announcement of the plan comes on
the heels of a severe drought which is estimated to have caused a
loss of $450 million (roughly 1.5 percent of GDP) for the
agricultural sector alone. Losses could end up being even higher,
though, once the costs of using more expensive energy sources (in
the absence of hydropower) are incorporated into the analysis.
Other agricultural implications of climate change could include
impacts on Uruguay's traditional crop/livestock production system.
Minister of Agriculture Agazzi said there may be a "tropicalization"
of Uruguay's agriculture, a need for land-use changes (crops vs.
livestock vs. forestry),switching of animal species, and changes in
biodiversity. Fisheries may also be affected as a result of an
increase in the mortality rate of juveniles, and an increase in
toxic algal blooms. In terms of tourism (4 percent of GDP),beach
erosion is a problem, and the Ministry of Tourism has initiatives to
develop environmentally friendly tourism.


7. Uruguay's economy is largely dependent -- directly or indirectly
-- on natural resources. The management of those resources is a
critical link in Uruguay's efforts to both adapt to and help
mitigate climate change. Although the agricultural sector's
contribution to the country's GDP is only 10 percent, agricultural
products constitute about 65 percent of the value of the country's
exports. If manufactured goods from agriculture are included, this
contribution increases to 85 percent. Eighty-five percent of
Uruguay's land is suitable for agricultural production, one of the
largest proportions in the world. Livestock production is the most
important agricultural activity.


8. Uruguay's coast also plays a critical role in the national
economy. An estimated 80 percent of the country's GDP is generated
from activities taking place in coastal areas (e.g. tourism,
fishing, construction industry). Urban growth increases pressures
on coastal areas since 70 percent of the population resides in the
coastal zone.


9. Along with President Vazquez's announcement, Minister of
Environment Colacce announced the 2010 launching of a special World
Bank-funded Clean Development Mechanism (CDM) for small and medium
sized enterprises. Colacce stressed the need to focus on the impact
of climate change on the availability, use, and management of the
country's water resources and explained how Uruguayan coastal
resources are particularly vulnerable to climate change impacts
through sea-level rise (he cited an estimated 0.40 meter sea level
rise by the end of this century). He pointed out that climate
change-caused storm surges could produce a cascade of impacts from
beach deterioration and morphological changes to negative effects on
wetlands, human settlements, coastal infrastructure, and
coast-dependent industries like tourism.

Uruguay's Commitment to Combat Climate Change
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10. Uruguay ratified the United Nations Framework Convention on
Climate Change (UNFCCC) and the Kyoto Protocol in 1994 and 2000,
respectively. The GOU has excelled in fulfilling its commitments
under the agreements over the past 15 years. A Climate Change Unit
(UCC) was created in 1994 within the framework of the National
Environment Office (DINAMA) of the Ministry of Environment (MVOTMA).
In addition, in 2000, the General Environmental Protection Act was
passed which provides a framework for environmental management and
incorporates specific provisions for climate change.


11. The submission of National Communications is one of the
country's main commitments under the UNFCCC. Uruguay was one of the
first countries to submit its Initial National Communication in
1997, and was the first developing country that submitted its Second
National Communication in 2004. Uruguay is currently working on the
Third National Communication, tentatively scheduled for release in
November 2009.


12. As a result of the work coordinated by the UCC within the
context of the formulation of those National Communications, Uruguay
has been able to produce five GHG Emissions Inventories (1990, 1994,
1998, 2000, and 2002),a comprehensive Program of General Measures
for Mitigation and Adaptation to Climate Change in Uruguay
(PMEGEMA),and several related documents. Both Communications
reflect the efforts of the country in exploring strategies that
would allow it to deal with the effects of climate change. Leading
universities and research institutions carried out the research, in
coordination with all relevant stakeholders, through the
establishment of inter-institutional, multidisciplinary working
groups. The implementation of the measures listed in the PMEGEMA
was declared of national interest in 2003. The first comprehensive
assessment of the country's vulnerability and adaptation to climate
change was funded by the USG through the U.S. Country Studies
Program. Subsequent to that, the Global Environment Facility (GEF)
has been the largest donor.


13. Uruguay has also carried out mitigation and adaptation analysis
for a wide range of sectors including the agricultural sector,
forestry, coastal resources, biodiversity, waste, energy, water
resources, fisheries, human health, and transportation. Response
measures were identified for each sector, as well as cross-sectoral
measures. They were all included in the PMEGEMA Program. An
example of successful implementation of a mitigation measure is the
World Bank-funded project by which a methane recovery system was
built on top of an existing urban landfill in the interior if the
country. The methane obtained is used to generate electricity that
is later sold to the national grid.


14. Since ratification of the Kyoto Protocol on 2000, the GOU has
been actively engaged in the identification of potential projects
and partners under the Protocol's CDM. Uruguay represents an
attractive market for countries interested in engaging in carbon
emission trade opportunities and transfer of GHG-reducing
technologies and services. Bilateral agreements have been signed
with Canada, The Netherlands, and Spain. Business people appear
eager to understand the issues at play and how to set up projects to
generate carbon credits. Uruguay has nine CDM projects under way,
as well as several others in the pipeline.

A Congruence of Views
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15. The GOU and the USG have similar views on many international
environmental issues. This has facilitated dialogue on how
countries can promote economic growth and protect the environment.
There is a strong commitment, from both the government and the
general public, to reduce emissions. Clean energy cooperation is
therefore an easy target for bilateral cooperation in Uruguay.

MATTHEWMAN