We took part in a consultative opinion hearing on climate emergency held in Barbados before the Inter-American Court of Human Rights. In our presentation, we argued that to tackle a climate crisis, there must be resources and fiscal policies to generate and mobilize those funds. Together with the Asociación Civil por la Igualdad y la Justicia (ACIJ), Fundar Centro de Análisis e Investigación, the Center for Economic and Social Rights (CESR), and La Ruta del Clima, we emphasized that for measures to combat the climate crisis to be possible, the Court must develop standards on fiscal policy in its consultative opinion.
In our region, fiscal systems are regressive because the tax burden is not proportional to people’s ability to pay. This directly affects the most vulnerable sectors. Latin America is one of the regions with the highest levels of debt and exposure to the consequences of climate change. Despite this, for many states, debt obligations often take precedence over environmental obligations, leading countries to allocate more resources to debt repayment than to climate actions.
In our presentation, we pointed out that guaranteeing the fulfillment of human rights, including the right to a healthy environment, depends on the availability of resources. Mitigation and adaptation to climate change, as well as the reparation of the losses and damages it causes, require financing.
However, the financial structure in Latin America undermines the management of robust climate actions because its fiscal policies focus primarily on indirect taxes, which do not take into account people’s ability to pay and are generally regressive. Fiscal policy can contribute to guaranteeing rights through the allocation of resources or it can identify inefficient or regressive regimes.
In Latin America and the Caribbean, there is a problematic link between sovereign debt and the climate crisis. On the one hand, the emergencies caused by climatic events force countries to incur debt to address their consequences. Today, Latin America, which has contributed little to climate change, suffers its worst consequences, having to resort to loans granted by the countries that have contributed the most or to international financial institutions where these countries make the decisions, increasing the debt burden. On the other hand, the need to pay the debt limits the resources allocated to policies to combat climate change. In 2021, low-income countries spent more than five times the amount of money on sovereign debt services compared to what they invested in climate action projects.
Debt repayment often involves economic models that are incompatible with the fight against climate change. In economies oriented to the export of raw materials, like the majority of Latin America, the need to repay debt in foreign currency pressures countries to overexploit natural resources and invest in extractive sectors and agroindustry.
The case of Argentina illustrates this situation perfectly. Currently, public spending is being adjusted, affecting human and environmental rights obligations. In the first quarter of 2024, 96% less was executed compared to the same period in 2023 in the budget items labeled as “environmental and climate change budget.” However, the tax benefits received by the extractive industries, which result in a significant loss of revenue, were never questioned: for example, through the mining activity promotion regime, the revenue foregone in 2023 alone was equivalent to the entire budget of the former Ministry of Environment for that year. The International Monetary Fund, the country’s leading creditor, celebrates this economic model, overlooking these issues.
Therefore, we requested that the Inter-American Court of Human Rights recognize the importance of protecting environmental assets and rights and reducing dependence on revenue from extractive sectors. We urged the Court to develop standards on the obligation of states to ensure that decisions on sovereign debt comply with human rights and environmental protection standards, as well as on the obligation of states and international institutions to provide assistance and cooperation to address climate change, among other things.