## cr18329-belizeclimatechange

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### Overview and key findings
- Belize is exceptionally vulnerable to natural disasters and climate change (hurricanes, flooding, sea level rise, coastal erosion, coral bleaching, droughts); impacts are likely to intensify with expected increases in weather volatility and sea temperature.
- The Climate Change Policy Assessment (CCPA) is a joint IMF–World Bank initiative that:
  - Assesses Belize’s plans to manage climate response from macroeconomic and fiscal perspectives.
  - Explores the possible impact of climate change and natural disasters on the macroeconomy and the cost of Belize’s planned response.
  - Suggests macroeconomically relevant reforms, identifies policy gaps, and estimates resource needs.
- Belize’s climate planning is advanced and consistent with the Growth and Sustainable Development Strategy (GSDS); the Nationally Determined Contribution (NDC) submitted in 2015 includes a clear strategy with relatively well-developed costing for mitigation and adaptation. Implementation capacity remains a challenge.

### General preparedness and fiscal context
- Strong physical emergency planning exists; Belize receives comparatively little disaster aid and falls short on longer-term financial provisioning.
- Public investment: an estimated one-third of budget investment already goes to resilience-building projects.
- Broad-brush estimate of cost of Belize’s planned climate response: in the order of 28 percent of FY2018–19 GDP, equivalent to about 2½ percent of GDP a year between now and 2030.
- Estimated total cost for mitigation and adaptation needs: US$548 million, or 28 percent of FY2018–19 GDP; spread over 12 years implies an annual bill of about 2.4 percent of GDP.
- If mitigation investments are fully mobilized privately, total climate response bill reduces to 19 percent of GDP, or 1.6 percent of GDP annually.
- Recommended fiscal target to build buffers and ensure sustainability: gradually raise the primary fiscal surplus to about 4 percent of GDP and reduce public debt to about 60 percent of GDP over the long term.

### Mitigation commitments, instruments, and modelling outcomes
- NDC mitigation targets (conditional):
  - Reduce carbon dioxide emissions by 62 percent from business as usual levels by 2030.
  - Increase share of renewable energy in electricity mix to 85 percent by 2030 (from 57 percent).
  - Reduce electricity use per capita by at least 30 percent by 2033.
  - Reduce fossil fuel use in transportation by 20 percent by 2030.
- Clean energy investment preliminary NPV (2015–2030):
  - Hydro projects: US $58 million
  - Bagasse projects: US $39 million
  - Solar PV: US $45 million
- Current electricity supply composition:
  - Hydro ~40 percent
  - Biomass (bagasse) ~17 percent
  - Mexico/imports ~35 percent
  - Diesel ~8 percent
- Fiscal and BAU model projections:
  - Electricity consumption per capita will decline only to 85 percent of 2015 levels by 2030 in BAU without additional policies.
  - Imported energy currently about 5.5 percent of GDP; meeting the renewables target would reduce the energy import bill to 5.0 percent of GDP in 2030 (a reduction of 12 percent in the import bill by 2030 relative to current composition).
  - Fuel tax revenues decline as a percent of GDP from 3.6 in 2017 to 2.9 percent in 2030 in BAU.
- Tax scenarios (Annex I / modelling):
  - Increasing excises on gasoline and (non-power) diesel by US $0.80 per gallon by 2030 would raise extra revenues of 0.7 percent of GDP in 2030; reduce transport fossil fuel use by around 5 percent below BAU in 2030; raise 2030 pump prices by around 15 percent.
  - Phasing in an excise of US 4 cents per kWh on electricity would raise user prices by approximately 20 percent in 2030; raise new revenues of 0.7 percent of GDP; reduce electricity consumption per capita by around 7 percent in 2030; reduce the energy import bill by 0.05 percent of GDP.
  - A feebate system combined with renewables expansion (stronger price incentive scenario) would:
    - cut 2030 electricity consumption per capita by 27 percent below 2015 levels;
    - cut transportation fuel use by 15 percent below 2015 levels;
    - reduce the energy import bill by 22 percent to 4.4 percent of GDP in 2030;
    - fuel tax revenues in 2030 decline to 2.6 percent of GDP under this scenario (offsetting revenue measures would be needed).
- Feebates recommended as a scalable policy instrument for vehicles, electricity-using products, and forest carbon storage; design notes and operational examples provided (Annex II).

### Adaptation priorities, costed sectors, and investments
- Priority sectors costed in NCCPSAP/NCRIP: agriculture/food, forestry, fisheries, coastal management, water.
- Additional sectors requiring costing: tourism, land resilience, transport, energy, health, waste.
- Most urgent priority: strengthen resilience of infrastructure connectivity (roads and bridges).
- Government public investment envelope by 2030: US$376 million (public investment envelope), with sectoral breakdowns:
  - Food security: US$16 million
  - REDD: US$3.5 million (other notes cite Public/Private REDD $5.2 million elsewhere)
  - Fisheries and reefs: US$1.2 million
  - Coastal management: US$10 million (elsewhere US$6 million listed)
  - Water management: US$1.5 million
- Current resilience-related spending: about one-third of the capital budget, around 1.7 percent of FY2018–19 GDP (BZ$66 million, or US$25 million); more than 4/5ths of current resilience-building efforts would be unfinanced without external support.
- Agriculture-specific: National Adaptation Strategy to Address Climate Change in the Agriculture Sector estimates enabling actions cost at approximately US$13.4m.

### Risk management, insurance, and contingency financing
- Belize retains most disaster risk with little ex-ante provision; ad hoc post-disaster financing is time-consuming and costly.
- Annual average loss from wind-related events and floods: just under US$123 million, or 7 percent of GDP.
  - Of that US$123 million, roughly US$88 million is estimated replacement value of direct physical damage.
  - Of that US$88 million, government direct damage to its own assets ≈ US$30 million (1.5 percent of GDP).
- Once every 100 years average costs expected to exceed US$1,857 million, or more than 105 percent of GDP.
- Recommended comprehensive risk buffer and indicative composition (risk-layering), envelope about 7 percent of GDP:
  - Risk envelope to cover (7% GDP): US$m 115–140; %GDP 7
  - Contingency Fund: US$m 15–20; %GDP 1
  - Contingency Financing: US$m 50–60; %GDP 3
  - CCRIF SPC: US$m 25–30; %GDP 1.5
  - Private insurance mechanisms: US$m 25–30; %GDP 1.5
- Suggested contingency fund: around 1 percent of GDP (US$15–20 million) for immediate post-disaster contingent liabilities.
- Existing contingent financing: US$ 1 million CERC in an IDA loan for the Climate-Resilient Infrastructure Project (BCRIP).
- World Bank suggestion: contingent financing arrangements equal to government losses from a hydrometeorological event of a 10 year-return period ≈ US$42 million.
- Insurance innovations and regional mechanisms highlighted: CCRIF SPC, Mesoamerican Reef – Reef Rescue Initiative, COAST; deepen collaboration and optimize CCRIF SPC coverage parameters.

### Climate projections and sectoral vulnerabilities
- Temperatures:
  - Belize expected to be warmer by up to 2⁰C by the 2030s, and up to 4⁰C by the end of the century.
  - Sea surface temperatures in the Caribbean projected to increase by as much as 2 degrees Celsius by the end of the century.
  - Average annual damages in the Caribbean could increase between 22 and 77 percent by 2100.
- Precipitation:
  - General Circulation Models predict a median decrease of up to 22 percent for annual rainfall between 2020 and 2039.
- Sea level rise:
  - Projected to exceed 10 cm by the 2030s in low, medium and high emission scenarios, with rises of 22, 23 and 38 cm respectively by 2050 and 34, 56 and 120 cm respectively by end-century.
- Extreme weather events: increased inter-annual variability and more intense severe events.
- Current exposure and historical impacts:
  - Belize ranks 3rd at risk for natural disasters among small states, and 5th at risk from climate change.
  - Of 182 countries in the Climate Risk Index, Belize was in the top 5 percent for losses to climate-related natural disasters during 1997–2016 and in the top 12 percent of climate-related disaster fatalities.
  - Since 1990 estimated disaster losses: US$ 557 million.
  - AidData disaster-related loans and grants since 1990: US$ 80 million (US$ 59 million from the IDB; US$ 16 million from the CDB and EU).
  - Historical event examples: Hurricane Richard (October 2010) and extensive forest fires in 2011; estimated 25,092 ha of cleared lands and another 33,129 ha estimated to have suffered fire/hurricane damage between 2010 and 2012.
- Sectoral livelihoods:
  - Tourism estimated to employ around 28% of Belize’s workforce and responsible for 21% of its GDP in 2014.
  - Fisheries employ around 15% of the population.

### Macroeconomic and fiscal scenarios (illustrative)
- Debt and sustainability context:
  - Government debt about 94 percent of GDP at end-2017.
  - Staff’s Article IV baseline projects primary surplus projected level of 2 percent of GDP; recommended path to reduce debt below 60 percent of GDP in 10 years requires raising the primary surplus to about 4 percent of GDP and reforms to enhance potential growth.
- Illustrative disaster scenario (staff analysis):
  - Hurricane causes 6 percent of GDP in economic damages.
  - Real GDP growth: decline by 3 percentage points in year of disaster, by 1 percentage point in next year, and grow faster than baseline by ½ percentage point in the following two years.
  - Government cost share assumed ⅔ of economic damage = 4 percent of GDP.
  - Government recovery/reconstruction expenditure spread over 3 years: 2 percent of GDP in first year, 1 percent of GDP in each of next two years.
  - Shock shifts government debt trajectory up by around 7 percent of GDP above baseline; government debt at 92.1 percent of GDP by end-2023 in scenario.
- Energy sector vulnerability:
  - Hydropower provides around half the country’s electricity.
  - Future reductions in inflows due to climate change could reduce hydropower production by up to 10% as early as the 2020s.
- Long-term growth risk:
  - Burke, Hsiang, and Miguel (2015) study predicts a loss of 75–100 percent of GDP for Belize by 2100, with high probability, relative to the no-climate-change scenario (under RCP 8.5); estimates subject to caveats including adaptation and sensitivity to estimation approach.

### Institutional, legal, and capacity priorities
- Major gaps:
  - Public investment management tools lacking (for example, climate screening).
  - Absence of PPP framework risks shutting off potential new sources of investment funding.
  - Data and budget planning shortcomings: no uniform, continually updated database capturing disaster events with uniform economic loss estimates; DANA systems lack standardization.
  - Financial sector small, constrained by Belize’s financial difficulties, and little involved in supporting the climate response.
- Priority legal/regulatory instruments to adopt:
  - Public Investment Law; Procurement Law; PPP Law; Fisheries Resources Bill; National Waste Management Plan; National Adaptation Strategy to Address Climate Change in the Agriculture Sector of Belize; mangrove protection legislation; final energy legislation for renewables including grid resilience; Coastal Zone Management Act; Integrated Coastal Zone Management Plan; marine dredging regulations; building code updates.
- Capacity-building needs:
  - Damage and loss data collection system and reporting, systematized across ministries.
  - Formalization of a national disaster risk financing strategy.
  - Development of feebate schemes within the excise tax framework (transport, electricity-using products, forestry).
  - Updated costing of priority sector projects and climate screening of PSIPs.
  - Development of public investment management tools and an inventory of public assets.
  - Reform of budget classification and reporting to identify disaster- and climate-related spending aligned with chart of accounts reform.

### Financing strategy and priority actions (selected, immediate)
- Mobilize substantial private investment and use official-sector financial involvement (seed financing, guarantees) to create bankable projects.
- Maintain foreign-financing pipeline, with emphasis on maximum concessionality and consistency with restructuring commitments.
- Protect current level of resilience-building investment (at least) within feasible fiscal envelope.
- Clarify remaining financing needs by updating NCRIP and completing costing.
- Expand contingent financing arrangements and insurance coverage; engage development partners on contingent lines of credit.
- Build fiscal buffers via revenue enhancement and current expenditure control to raise primary fiscal surplus to about 4 percent of GDP and reduce public debt to about 60 percent of GDP over the long term.
- Immediate recommended actions (selected):
  - Formalize a disaster risk financing strategy and implementation plan; translate NDC into implementable and “finance-ready” sectoral strategies.
  - Continue cost-effective expansion of hydro, biomass, and solar power to meet renewables commitment.
  - Develop national REDD+ strategy and strengthen capacity for future incentives.
  - Implement feebates and modify vehicle/electricity excise systems to promote efficiency while maintaining revenue.
  - Adopt key legislation (Public Investment Law, Fisheries Resources Bill, National Waste Management Plan, mangrove protection, energy legislation for renewables).
  - Establish a contingency fund around 1 percent of GDP (US$15–20 million) and seek contingency financing of US$50–60 million; expand insurance to cover US$50–60 million in potential losses.

### Key quantitative summary (selected figures preserved)
- Total estimated climate mitigation and adaptation cost: US$548 million (28 percent of FY2018–19 GDP).
- Public investment envelope to 2030: US$376 million.
- Private investment mobilization target by 2030: US$172 million (Hydro US$58 million; Bagasse US$39 million; Solar US$45 million; Transmission/distribution/other US$30 million).
- Resilience-related current budget allocation: 1.7 percent of FY2018–19 GDP (BZ$66 million, or US$25 million).
- Annual average loss from wind-related events and floods: just under US$123 million (7 percent of GDP).
- Government direct damage to assets (annual average): US$30 million (1.5 percent of GDP).
- Contingency fund recommended: US$15–20 million (≈1 percent of GDP).
- Contingency financing recommended: US$50–60 million (≈3 percent of GDP).
- Risk buffer envelope recommended: about 7 percent of GDP (US$m 115–140).

*Climate Change Policy Assessment for Belize — International Monetary Fund / World Bank.*

### EXECUTIVE SUMMARY ______________________________________________________________ 7

### EXECUTIVE SUMMARY

### Overview and key findings
- Belize is exceptionally vulnerable to natural disasters and climate change, facing hurricanes, flooding, sea level rise, coastal erosion, coral bleaching, and droughts; impacts are likely to intensify given expected increases in weather volatility and sea temperature.
- The Climate Change Policy Assessment (CCPA) is a joint IMF–World Bank initiative that:
  - Assesses Belize’s plans to manage climate response from macroeconomic and fiscal perspectives.
  - Explores the possible impact of climate change and natural disasters on the macroeconomy and the cost of Belize’s planned response.
  - Suggests macroeconomically relevant reforms, identifies policy gaps, and estimates resource needs.
- Belize’s climate planning is advanced and consistent with the Growth and Sustainable Development Strategy (GSDS), and the Nationally Determined Contribution (NDC) submitted in 2015 includes a clear strategy with relatively well-developed costing for mitigation and adaptation. Implementation capacity remains a challenge.

### General preparedness (macro and fiscal context)
- Strong physical emergency planning exists, but Belize receives comparatively little disaster aid and falls short on longer-term financial provisioning.
- Public investment: an estimated one-third of budget investment already goes to resilience-building projects.
- Despite fiscal constraints, Belize should be able to execute the outlined climate response without additional deficit-financing given current plans.
- A broad-brush estimate of the cost of Belize’s planned climate response is in the order of 28 percent of FY2018–19 GDP, equivalent to about 2½ percent of GDP a year between now and 2030.
- Success depends heavily on continued international support (including climate funds) and attracting adequate private investment.

### Mitigation
- Belize plans to meet its NDC mitigation goals by:
  - Expanding renewables further from 57 percent to 85 percent of electricity supply.
  - Reducing energy intensity and fossil fuel use in transport.
  - Protecting forest reserves and improving sustainable forest management.
- Given Belize’s already-reduced dependence on fossil fuels and the need to preserve competitiveness with Caribbean neighbors, unilateral large carbon tax increases have limited scope.
- Feebates (fees and rebates) could improve mitigation incentives in the tax system and promote more efficient/less emissions-intensive vehicles and electricity-consuming products, as well as forest carbon storage.

### Adaptation
- Priority sectors under the National Climate Change Policy, Strategy and Action Plan (NCCPSAP): agriculture/food, forestry, fisheries, coastal management, and water — actions in these sectors have been costed.
- Additional sectors requiring costing: tourism, land resilience, transport, energy, health, and waste — some investments already under way.
- Most urgent priority flagged: strengthening resilience of infrastructure connectivity (roads and bridges).
- Legal and regulatory enabling frameworks for climate action remain to be developed; this is an urgent, low-hanging-fruit priority.
- The financial sector is small, constrained by Belize’s financial difficulties, and has been little involved in supporting the climate response.

### Financing strategy and implications
- Financing needs for climate change are substantial and rely on a mix of private investment and concessional foreign financing.
- If mitigation investments are covered by the private sector, adaptation plans could be achieved by maintaining the current pace of budget investment.
- Belize must maintain the foreign-financing pipeline, with emphasis on ensuring maximum concessionality and consistency with restructuring commitments.
- If further fiscal tightening becomes unavoidable, protecting resilience-building investment is important because reducing long-term economic damages supports long-run macroeconomic sustainability.
- Recommended fiscal target to build buffers and ensure sustainability: gradually raise the primary fiscal surplus to about 4 percent of GDP and reduce public debt to about 60 percent of GDP over the long term.

### Risk management
- Financial risk management is almost non-existent; ad hoc post-disaster financing is time-consuming and costly.
- Belize should build fiscal and international reserve buffers and adopt advanced planning for contingent borrowing to secure concessional rates and immediate post-disaster financing.
- Apply a risk-layering approach with instruments to cover or transfer risk with an envelope of about 7 percent of GDP. Suggested components include:
  - A budgetary contingency fund,
  - Contingency financing arrangements with development partners,
  - Insurance (traditional and/or parametric), including optimizing CCRIF SPC coverage and developing traditional insurance for public and private assets.
- A contingency fund of around 1 percent of GDP would provide cost-effective coverage for emergency post-disaster contingent liabilities of the government.

### National processes and institutional readiness
- Planning for development and climate response is well linked through the public-sector investment program (PSIP) to the budget.
- The budget is relatively credible and comprehensive despite shortcomings identified in Belize’s 2014 PEFA.
- Public investment management tools are lacking (for example, climate screening).
- The absence of a PPP framework risks shutting off potential new sources of investment funding.
- Capacity-building to fill gaps in enabling legislation, regulatory frameworks, and public investment management is a top priority.

### Priority needs (summary)
- Mobilize substantial private investment and use official-sector financial involvement to create bankable projects.
- Continue budget foreign financing (preferably concessional) at current levels or higher to meet adaptation investment needs.
- Expand contingent financing arrangements and insurance coverage.
- Urgently develop enabling legislation and supporting frameworks and strengthen public investment management skills.

### Recommendations—Priority actions to start immediately (selected)
General Preparedness
- Formalize a disaster risk financing strategy and implementation plan, including clarifying budget processes and engaging with development partners on financing modalities. *
- Translate overarching plans and commitments (including NDC) into implementable and ‘finance-ready’ sectoral strategies.
- Review and update the NDC to reflect progress and new needs since the Paris Accord.
- Strengthen institutional capacity to implement commitments.

Mitigation
- Continue to expand, cost-effectively, hydro, biomass, and solar power to meet the NDC renewables commitment.
- Develop a national REDD+ strategy and strengthen capacity to benefit from future positive incentives for REDD+. *
- Implement a system of taxes and subsidies or feebates to promote more efficient vehicles, electricity-consuming products, and forest carbon storage.

Adaptation
- Continue implementing priority actions in the NDC and related plans (for example, NCCPSAP) under the GSDS umbrella.
- Adopt the Public Investment Law, the Fisheries Resources Bill, National Waste Management Plan, National Adaptation Strategy to Address Climate Change in the Agriculture Sector of Belize, and mangrove protection legislation; finalize energy legislation for renewables that includes grid infrastructure resilience. *
- Update the Tourism Master Plan and Land Use Plans to reflect sustainability considerations and sea-level rise impacts. *

Financing
- Clarify remaining financing needs by updating the NCRIP and completing costing.
- Maintain the foreign-financing pipeline, with emphasis on maximum concessionality and consistency with restructuring commitments.
- Protect the current level of resilience-building investment (at least) within the feasible fiscal envelope outlined in the 2018 Article IV staff report.
- Build fiscal buffers via revenue enhancement and current expenditure control measures to raise the primary fiscal surplus to about 4 percent of GDP and reduce public debt to about 60 percent of GDP over the long term.

Risk Management
- Identify risk financing instruments to deliver resources of up to 7 percent of GDP; these should include a budget contingency fund, contingency financing arrangements with development partners, and insurance (traditional and/or parametric). *

*Recommendations marked with an asterisk are currently being supported by technical assistance from the World Bank and other institutions.*

*Prepared by a joint IMF and World Bank team in collaboration with the authorities of Belize.*

### 16. Deepen collaboration with CCRIF SPC and/or other Caribbean efforts to strengthen the

### 16. Deepen collaboration with CCRIF SPC and/or other Caribbean efforts to strengthen the insurance industry and tailor it better to member needs.

### Priority investment, financing, and insurance needs
- Government public investment envelope of US$376 million, by 2030, including:
  - Food security (US$16 million)
  - REDD (US$3.5 million)
  - Fisheries and reefs (US$1.2 million)
  - Coastal management (US$10 million)
  - Water management (US$1.5 million)
  - Other priority sectors: Transport; Land resilience; Tourism; Energy/Power; Health; Waste management
- Possible government financial involvement to resolve problems impeding private investors, such as seed financing or guarantees
- A budget contingency fund of US$15–20 million
- Contingency financing arrangements of US$50–60 million
- Expansion of insurance to cover US$50–60 million in potential losses
- Private investment of US$172 million by 2030, in:
  - Hydro-power (US$58 million)
  - Bagasse (US$39 million)
  - Solar (US$45 million)
  - Transmission/distribution/other (US$30 million)

### Capacity-building and institutional needs
- Development of a damage and loss data collection system and reporting, systematized across all ministries
- Formalization of a national disaster risk financing strategy
- Development of a feebate scheme within the excise tax framework
- Updated costing of priority sector projects and climate screening of PSIPs
- Development and refinement of enabling legal documents such as the building code, legislation for renewable energy, procurement law, PPP law
- Development of public investment management tools, and an inventory of public assets
- Reform of budget classification and reporting, to identify disaster- and climate-related spending, in alignment with the chart of accounts

### National processes and legal/financial reforms (selected recommendations)
- Deepen collaboration with CCRIF SPC and/or other Caribbean efforts to strengthen the insurance industry and tailor it better to member needs.
- Explore options for improving accessibility of affordability of catastrophe insurance for residential, and commercial needs, including agriculture and fisheries sectors.
- Build capacity for effective appraisal of public investment and PPPs, climate screening of PSIPs and monitoring, in the Ministry of Finance and other relevant ministries.
- Pass a Procurement Law which reflects international green, resilience or sustainability standards.
- Introduce a framework for PPPs; and identify the safeguards needed for Belize to be comfortable with considering this diversified source of investment funding and know-how.

### Key climatic projections and sectoral vulnerabilities
- Temperatures:
  - Belize is expected to be warmer by up to 2⁰C by the 2030s, and up to 4⁰C by the end of the century.
  - Sea surface temperatures in the Caribbean are projected to go up by as much as 2 degrees Celsius by the end of the century.
  - Average annual damages in the Caribbean could increase between 22 and 77 percent by 2100.
- Precipitation:
  - General Circulation Models predict a median decrease of up to 22 percent for annual rainfall between 2020 and 2039.
- Sea level rise:
  - Sea level rise is projected to exceed 10 cm by the 2030s in low, medium and high emission scenarios, with rises of 22, 23 and 38 cm respectively by 2050 and 34, 56 and 120 cm respectively by end-century.
- Extreme weather events:
  - Projections show increased inter-annual variability, with more intense effects of each severe weather event.

### Current exposure and recent historical impacts (statistics)
- Belize ranks 3rd at risk for natural disasters among small states, and 5th at risk from climate change.
- Of the 182 countries in the Climate Risk Index, Belize was in the top 5 percent for losses to climate-related natural disasters during 1997–2016 and in the top 12 percent of climate-related disaster fatalities.
- Belize’s annual average loss from wind-related events and floods averages just under US$123 million, or 7 percent of GDP.
  - Of that US$123 million, roughly US$88 million is the estimated replacement values associated with direct, physical damage.
  - Of that US$88 million, the government will experience direct damage to its own assets amounting to about US$30 million (1.5 percent of GDP).
- Once every 100 years, on average, these costs are expected to exceed US$1,857 million, or more than 105 percent of GDP.
- Historical events:
  - In October 2010, Hurricane Richard (Category 1) led to extensive forest destruction; Belize experienced extensive forest fires during the 2011 dry season. Estimated 25,092 ha of cleared lands, and another 33,129 ha estimated to have suffered from fire/hurricane damage between 2010 and 2012.
- Sectors and livelihoods:
  - Tourism estimated to employ around 28% of Belize’s workforce, and responsible for 21% of its GDP in 2014.
  - Fisheries employ around 15% of the population.

### Macroeconomic and fiscal implications
- Belize’s debt is elevated (about 94 percent of GDP at end-2017) and its sustainability is vulnerable to the impact of natural hazards and climate change.
- Illustrative disaster scenario in staff analysis:
  - Assumes a hurricane causes 6 percent of GDP in economic damages.
  - Real GDP growth assumed to decline by 3 percentage points in the year of the disaster, by 1 percentage point in the next year, and to grow faster than baseline by ½ percentage point in the following two years.
  - Assumes the cost borne by the government is ⅔ of the economic damage, corresponding here to 4 percent of GDP.
  - Associated government recovery and reconstruction expenditure spread over 3 years: 2 percent of GDP in the first year, and 1 percent of GDP in each of the next two years.
  - The shock shifts the government debt trajectory up by around 7 percent of GDP above the baseline, with government debt at 92.1 percent of GDP by end-2023 in the scenario.
- Energy sector vulnerability:
  - Hydropower provides around half the country’s electricity.
  - Future reductions in inflows due to climate change could see hydropower production decrease by up to 10%, as early as the 2020s.
- Long-term growth risk:
  - An influential study (Burke, Hsiang, and Miguel, 2015) predicts a loss of 75–100 percent of GDP for Belize by 2100, with high probability, relative to the no-climate-change scenario (under RCP 8.5). Estimates are subject to caveats including adaptation and sensitivity to estimation approach.

### Strategic implications for policy
- Strengthen insurance and catastrophe risk financing (including regional collaboration such as CCRIF SPC) to expand coverage and accessibility for residential, commercial, agriculture, and fisheries needs.
- Mobilize public investment and contingent financing to meet a public investment envelope of US$376 million by 2030 and provide contingency funding (budget contingency fund US$15–20 million; contingency financing arrangements US$50–60 million).
- Leverage private investment of US$172 million by 2030 across renewable and transmission sectors to reduce vulnerability in energy.
- Build institutional capacity: public investment appraisal, PPP frameworks and safeguards, procurement law aligned with green/resilience standards, standardized damage/loss reporting, and climate screening of PSIPs.
- Implement national disaster risk financing strategy, and expand insurance to cover US$50–60 million in potential losses.

*Climate Change Policy Assessment for Belize — International Monetary Fund / World Bank.*

### 11.      Yes. A strong point of Belize’s NDC is its close links to other climate change strategy

### cr18329-belizeclimatechange - 11.      Yes. A strong point of Belize’s NDC is its close links to other climate change strategy

### Links between NDC and national development documents
- Belize’s NDC is closely built on the NCCPSAP, which refers to the 2013 National Climate Resilience Investment Plan (NCRIP).
- The 2016–19 Growth and Sustainable Development Strategy (GSDS) prescribes implementation of these plans.
- The GSDS and Horizon 2030: National Development Framework for Belize 2010–30 specify environmental stewardship as one of four critical success factors for development.

### Disaster planning and institutional capacity
- Established legal basis:
  - Disaster Preparedness and Response Act (2000 and 2003) established the National Emergency Management Organization (NEMO).
  - NEMO is a whole-of-government committee backed by a small permanent office.
  - Ministries’ responsibilities in emergencies are articulated (e.g., Ministries of Natural Resources and Agriculture responsible for Damage Assessments and Needs Analysis (DANA)).
- Institutional gaps:
  - No corresponding legislative clarity on funding human resources or disaster response activities.
  - Organizational and legislative frameworks mainly support emergency management rather than comprehensive risk management.
  - The National Hazard Mitigation Policy (not yet officially adopted) lacks a focus on risk mitigation.
- Data and budget planning shortcomings:
  - DANA systems exist but lack procedural standardization across ministries.
  - No uniform, publicly available, continually updated database capturing disaster events of all magnitudes with uniform economic loss estimates.
  - Tracking post-disaster expenditures lacks specificity and traceability to spending unit and funding source.
  - CARTAC assisting Belize with revision of the chart of accounts; a reform of budget classification would be important.

### Historical disaster losses and financing
- Since 1990 estimated disaster losses: US$ 557 million.
- AidData records disaster-related loans and grants since 1990: US$ 80 million (of which US$ 59 million from the IDB and US$ 16 million from the CDB and EU).
- Government reliance on debt financing:
  - Debt peaked at 85 percent of GDP after Hurricane Dean (US$ 89 million in damages) in 2007.
  - Debt re-peaked at 100 percent of GDP after Hurricane Earl in 2016.
  - Damages associated with Hurricane Earl estimated at 11 percent of GDP.

### Institutional recommendations from World Bank February 2018 report (Advancing Disaster Risk Financing in Belize)
- Streamline and institutionalize a damage and loss data collection and reporting system across ministries for all severities of events.
- Reinforce the role of budgetary planning for disaster-related contingencies at the ministry level and institutionalize the strategy to encompass line ministries as well as MED.
- In budget reporting, identify expenditure for disaster response, categorized by sector and event.
- Formalize and implement a disaster risk financing (DRF) strategy, including a budgetary process for financing disaster response, and engagement with development partners on contingent financing.
- Prepare a manual for post-disaster financing that captures actors, systems, sources of financing, and processes to disburse and utilize funds across ministries.

### Recommendations for general preparedness
- Review and update the NDC to reflect developments since the Paris Accord, including changes in cost estimates and records of progress.
- Maintain Belize’s emergency response procedures with NEMO as a leading actor, while extending disaster management to comprehensive risk management with more ex ante preparedness.
- Improve information collection on the costs of disasters, disaster response expenditure, and sources of financing.
- Formalize a national disaster risk financing strategy, including improving availability of data on losses from disaster, inventorying public assets, clarifying budget processes and engaging development partners on financing modalities.

### Contribution to mitigation — targets and conditionality
- Belize’s NDC aims for:
  - A reduction in carbon dioxide emissions by 62 percent from business as usual levels by 2030.
  - An increase in the share of renewable energy (RE) in electricity mix to 85 percent by 2030.
- These targets are conditional.

### Mitigation commitments and gaps
- Main commitments in the NDC:
  - Scale up renewables from 57 to 85 percent of electricity supply by 2030 (to be implemented through PUC contracts with private investors).
  - Reduce electricity use per capita by at least 30 percent by 2033.
  - Reduce fossil fuel use in transportation by 20 percent by 2030.
  - Reduce CO2 emissions from forest and land use changes (currently estimated at 3.3 million tons a year due to forest clearance).
  - Other commitments: reduce fuel wood consumption among rural households, protect and restore mangrove forests, improve waste management to reduce methane emissions.
- Gaps:
  - Baseline years against which most targets will be measured are to be determined.
  - Policy instruments for many commitments are largely to be determined, except renewables expansion via PUC contracts.

### Benefits of meeting mitigation targets (quantified)
- Imported energy currently about 5.5 percent of GDP.
- Meeting the renewables target would:
  - Reduce the energy import bill to 5.0 percent of GDP in 2030 (a reduction of 12 percent in the import bill by 2030 relative to current composition).
  - Cut nationwide 2030 CO2 emissions by 5 percent below BAU levels.
- Sustainable intensification of agriculture would slow deforestation, preserve biodiversity, and create eco-tourism opportunities.

### Clean energy plans and costs
- Current electricity supply composition:
  - Hydro ~40 percent of domestic electricity supply.
  - Biomass (bagasse) ~17 percent.
  - Mexico provides about 35 percent of domestic supply, typically priced at around US 6 to 12 cents per kWh.
  - Diesel plants account for 8 percent of electricity supply.
- CO2 emissions by fuel type (energy-related):
  - gasoline 38%
  - diesel--non power 33%
  - diesel--power 7%
  - heavy fuel oil 8%
  - kerosene 9%
  - LPG 5%
- Preliminary cumulative investment costs for 2015–2030 (net present value):
  - Hydro projects: US $58 million
  - Bagasse projects: US $39 million
  - Solar PV: US $45 million
- Mobilization strategy:
  - Goal is to mobilize mainly from private investors via PUC contracts, though government likely to incur ancillary costs.
  - Climate resilience considerations for hydropower water supply need to be taken into account.
- Potential obstacle: high upfront costs for private bidders for assessments; partial public funding of these costs may be needed.

### Fuel and carbon taxation, subsidy policy context
- No adjustments to carbon pricing are included in mitigation strategy given:
  - Fuel taxes are already significant.
  - Energy prices are higher than in most Caribbean/Central American countries.
  - Emissions are less sensitive to carbon pricing given the power sector’s modest share of emissions.
- Current excises (per gallon; US gallons):
  - Premium gasoline: US$1.81 per gallon
  - Regular gasoline: US$1.64 per gallon
  - Diesel: US$1.49 per gallon
  - Kerosene and heavy fuel oil: US$0.53 per gallon
  - Liquified petroleum gas (LPG) exempted from excises.
  - Diesel fuel for power generation exempted from excises.
  - Fuels subject to GST and a modest environmental tax of US $0.08 per gallon.
- Electricity pricing:
  - Generally set to cover supply costs.
  - Covered by GST with a distortionary provision: No GST on electricity bills up to BE $50, full GST applied to bills exceeding BE $50.
- Regional comparisons (2015 or nearest year):
  - As of 2015, 10 of 18 countries in the region had lower gasoline and diesel prices than Belize.
  - As of 2015, only 2 countries in the region had higher electricity supply costs than Belize.

### Modelling and BAU projections for mitigation outcomes
- IMF staff spreadsheet modelling indicates:
  - Electricity consumption per capita will decline only to 85 percent of 2015 levels by 2030 without changes in energy taxes or additional mitigation policies.
  - Projected use of transport fuels remains approximately stable in BAU as GDP-driven travel growth offsets autonomous fuel efficiency improvements and assumed international oil prices rising 25 percent between 2018 and 2030.
- Fiscal and trade implications in BAU:
  - Fuel tax revenues decline as a percent of GDP from 3.6 in 2017 to 2.9 percent in 2030.
  - Imported energy bill remains at 5.6 percent of GDP in BAU.
  - Meeting the renewables target would reduce the import bill to 5 percent of GDP but would not address lost fuel tax revenue.

*Source: cr18329-belizeclimatechange — INTERNATIONAL MONETARY FUND.*

### Annex I contains a description of the model and its parameterization for Belize.

### cr18329-belizeclimatechange - Annex I contains a description of the model and its parameterization for Belize.

### Mitigation policy options: fuel and electricity taxes
- Progressively increasing excises on gasoline and (non-power) diesel by US $0.80 per gallon by 2030 (about another 50 percent) would:
  - raise extra revenues of 0.7 percent of GDP in 2030;
  - reduce fossil fuel use in the transport sector by only around 5 percent below BAU levels in 2030;
  - raise 2030 pump prices by around 15 percent.
- Phasing in an excise rising to US 4 cents per kWh on electricity consumption would:
  - raise user prices by approximately 20 percent in 2030;
  - raise new revenues of 0.7 percent of GDP;
  - reduce electricity consumption per capita by around 7 percent in 2030 (based on a standard assumption about the price responsiveness of electricity demand);
  - reduce the energy import bill by only 0.05 percent of GDP.
- A carbon tax (tax on all fossil fuels in proportion to carbon content) would produce behavioral responses similar to combined higher road fuel and electricity taxes and would raise the relative cost of diesel generation, increasing the competitiveness of renewables in tenders.

### Feebates: design, impact, and trade-offs
- Definition and rationale:
  - Feebates are sliding scales of fees/rebates that increase prices for low-efficiency products and decrease them for high-efficiency products.
  - They forgo new revenues from higher energy taxes and do not increase average product prices, so they are less effective than carbon pricing at raising average prices but can provide stronger incentives for energy efficiency.
- Advantages over standards and project-based approaches:
  - More flexible and less administratively burdensome than regulatory standards.
  - Align with IMF and World Bank international advice favoring price-based instruments over regulatory approaches.
- Scenario impacts (feebates combined with renewables expansion):
  - A feebate system providing four times the price incentive for improving energy efficiency as under the above fuel/electricity tax scenarios, combined with renewables expansion, would:
    - cut 2030 electricity consumption per capita by 27 percent below 2015 levels;
    - cut transportation fuel use by 15 percent below 2015 levels;
    - reduce the energy import bill by 22 percent to 4.4 percent of GDP in 2030.
  - Fuel tax revenues in 2030 decline to 2.6 percent of GDP under this scenario due to shrinkage of the tax base for fossil fuel excises — offsetting revenue increases (for example, a higher average vehicle excise within a feebate structure) would be needed.
- Limitations and risks:
  - Feebates do not encourage less intensive use of energy-consuming products and may induce a modest rebound effect (potentially increasing usage because of lower per-unit energy costs).
  - Some sectors may need transitional assistance; additional policies (e.g., ethanol blending) may still be needed to meet mitigation pledges, especially if targets are defined relative to BAU in 2030 rather than 2015.
- Operational notes:
  - Feebates can be designed revenue-neutral or revenue-raising by adjusting baseline formulas (e.g., scaling baseline carbon by 10 percent).
  - Annex II of the source provides more detail on designing feebates for transport and electricity.

### Forestry and agriculture: REDD+, feebates for land use, and sequestration potential
- Forest trends and emissions:
  - Forest cover decreased from 73 percent in 1989 to 60 percent in 2014; the trend is expected to continue without mitigation.
  - 95% of the country’s emission of GHGs come from Land Use, Land Use Change and Forestry (LULUCF).
- REDD+ readiness:
  - Belize is undertaking a REDD+ Readiness process to be completed by 2020 to assess drivers of deforestation and establish a baseline inventory of forest carbon storage.
- Feebates for forestry:
  - A feebate targeted at marginal changes in sequestered forest carbon could provide nationwide incentives on private lands, subsidizing increases in sequestered carbon relative to baseline and taxing carbon releases relative to baseline storage.
  - Advantages over project-based approaches: broader coverage (including small landowners), lower transactions costs, limits payments to additional carbon, automatic penalties for within-country leakage, and stronger incentives for landowner cooperation on monitoring and verification.
  - Feebates should involve annual tax/subsidy or “rental” payments rather than large one-off payments to avoid impermanent land-use change and reduce ex-post re-payment complexity.
  - The rental payment ideally equals the implicit CO2 price imposed in the energy sector times the (real) interest rate. Example: if the implicit CO2 price in the energy sector is $50 per ton, the rental payment should be $2.5 per ton of sequestered CO2 per year, assuming a 5 percent discount rate.
- Quantitative sequestration potential:
  - Increasing nationwide forest coverage in Belize by 1 percent might sequester an extra 0.23 million tons of CO2 per year.
  - 1 percent of land area in Belize is about 40 square miles, or about 22,500 hectares.
  - In moist tropical regions new forests can sequester up to about 11 tons of CO2 per hectare per year in above-ground biomass and about another 3-4 tons below ground.
- Agriculture feebates:
  - Feebates could incentivize reduced expansion of the agricultural frontier and adoption of practices that reduce emissions (e.g., no burning of crop residues, reduced mechanical cultivation, improved livestock feeding) and promote carbon sequestration (e.g., incorporation of crop residues).

### Regional carbon pricing
- Rationale:
  - Unilateral increases in energy taxes in Belize could raise competitiveness concerns (for tourism and agricultural exports) and burdens on vulnerable households; a regional carbon price floor could mitigate competitiveness risks.
- Proposal:
  - Belize would benefit from a regional carbon price floor arrangement modeled on the Canadian provinces and territories experience.
  - Carbon pricing schemes are proliferating globally (51 carbon pricing schemes at regional, national, and sub-national levels noted), but are not yet meaningfully introduced in Caribbean and Central American countries; regional policymakers should consider coordinated carbon pricing to support NDCs without tax disadvantages.

### Policy recommendations (energy intensity and emissions)
- Progressively, and cost-effectively, expand hydro, biomass, and solar power to meet the renewables commitment.
- Consider government financial involvement to cover costs that inhibit private investment in mitigation projects (e.g., assessment costs for new generation sites).
- Modify the excise tax system for passenger, bus, and goods vehicles to include a feebate with the implicit CO2 price rising over time, and an ad valorem component set to maintain revenue.
- Modify the excise tax system for electricity-using products to include a feebate with the reward for energy efficiency rising over time and an ad valorem component set to maintain revenue.
- Consider a feebate system to promote carbon storage in the forestry sector, following completion of the forest carbon inventory.
- Discuss with other countries the possibility of introducing a carbon price floor arrangement for the Caribbean region to support the NDC process.

### Adaptation planning: framework, priorities, and sectoral actions
- Policy framework:
  - Belize has a well-articulated policy framework and sectoral strategies for resilience-building (NCCPSAP, NCRIP, Third National Communication), though some gaps in costing remain and costing is indicative and needs updating.
  - Costs are estimated for agriculture/food, forestry, fisheries, coastal management and water management. Tourism, land resilience, transport, energy, health and waste management are flagged with qualitative strategies but costing is missing.
- Key priority actions by sector (telegraphic summary):
  - Agriculture: diversify to resilient livestock breeds; increase access to drought-resistant crops and livestock feeds; adopt soil and water management; improve pest-management; provide early warning/meteorological forecasts; prioritize climate-smart agriculture.
  - Forestry: maintain and restore healthy forest ecosystems through sustainable forest management, afforestation and reforestation to increase resilience and livelihoods.
  - Coastal management: early warning systems for storm surges; restore mangroves; strengthen sea and river defenses; implement Integrated Coastal Zone Management Plan.
  - Water management: protect water catchment areas; improve management and maintenance of water supply systems; restore ecosystems and water infrastructure; adopt forest management plans; introduce water harvesting; prevent and control water pollution; undertake water policy reform including pricing and irrigation; develop flood controls and drought monitoring.
  - Land use: develop infrastructure risk assessment and strategic land-use and settlements policy; build defenses; improve drainage and sanitation; create marshlands/wetlands as buffers; evaluate feasibility of relocating vulnerable communities; review and modify housing designs and building codes.
  - Tourism: sea level rise vulnerability mapping; review setback, mangrove and coral reef conservation, beach nourishment, property decommissioning; enhance coral resilience by reducing pollution and overfishing; implement carrying capacity limits; improve infrastructure access as coast changes.
  - Transport: update standards to include protective margins for natural disasters and climate change; implement infrastructure reinforcements and relocations; promote energy efficiency in transport including bus fleet maintenance and bio-fuels.
  - Energy: assess exposure of power system to climate risks; identify solutions to climate-proof infrastructure; evaluate long-term energy planning with climate consideration; remove institutional barriers to disaster preparedness, response and recovery.
  - Health: assess climate impacts on human health; improve disease/vector monitoring, forecasting, early-warning systems; develop education programs; enhance health sector capacity for epidemics/outbreaks.
  - Waste management: develop an Integrated Solid Waste Management Program addressing segregation, collection, minimization, reuse and recovery; include capping/closing open dumps, capturing landfill gas, and proper organics handling.

*Source: cr18329-belizeclimatechange - Annex I contains a description of the model and its parameterization for Belize.*

### Box 2. Climate Change Adaptation and Mitigation in the Agriculture Sector

### Box 2. Climate Change Adaptation and Mitigation in the Agriculture Sector

### Agriculture vulnerability and climate-smart agriculture (CSA)
- Agriculture in Belize is susceptible to weather variability and vulnerable to climate hazards, such as hurricanes, floods, and droughts.
- Weather variability caused by climate change is likely to increase over time, along with changes in precipitation and temperatures that will be detrimental to agriculture.
- Climate-smart agriculture (CSA) is defined as technologies and practices that enhance food security while addressing at least one of three objectives:
  - (1) sustainably increasing agricultural productivity and farmers’ incomes,
  - (2) adapting and building resilience to climate change,
  - (3) reducing and/or removing greenhouse gas (GHG) emissions.
- Most CSA practices have potential to deliver “triple wins” by sustainably increasing productivity, enhancing resilience, and reducing or removing GHGs.
- Many CSA practices and technologies already exist worldwide and are currently being used to cope with climate-related production risks.
- Adoption in Belize:
  - Many farmers in Belize are practicing CSA to some degree.
  - Wider adoption is hindered by lack of information, lack of technical knowledge, and lack of resources to pay for initial investment costs.

### CSA prioritization, promising practices, and barriers
- A national CSA Country Profile and a CSA Prioritization Framework are being finalized; they identify promising CSA practices demonstrated in Belize, including:
  - cover structures,
  - drip irrigation systems,
  - water-harvesting,
  - adjustment of planting dates,
  - crop rotation,
  - intercropping,
  - conservation tillage,
  - use of improved planting material,
  - agroforestry systems,
  - use of improved livestock breeds,
  - pasture improvement,
  - production of hay and silage.
- Underlying barriers to CSA adoption identified:
  - lack of information about promising CSA practices,
  - lack of technical knowledge,
  - lack of access to finance to cover initial investment costs,
  - among others.
- Mainstreaming CSA requires:
  - mapping technically effective, financially profitable, and environmentally sustainable practices,
  - diagnosing barriers to adoption and strategies to overcome them,
  - identifying institutional and financial enablers,
  - careful planning to capture synergies and address trade-offs among productivity, adaptation, and mitigation,
  - grounding efforts in holistic food system analysis, integrating landscape, ecosystem, and value chain approaches.

### Investment needs and financing for CSA and agriculture
- Current levels of investment in the agricultural sector are insufficient to achieve Belize’s national development goals and are slowing the uptake of CSA practices.
- The National Adaptation Strategy to Address Climate Change in the Agriculture Sector estimates the cost of the enabling actions needed for the implementation of CSA at approximately US$ 13.4m.
- In addition to enabling actions, investments will be needed at farm-level and throughout the value chain to adopt CSA practices.
- Because agriculture is predominantly private, individual producers and agribusiness firms must play a central role; government should leverage private investment to pursue CSA opportunities.
- A recent analysis found many promising CSA investments will require initial investments beyond the reach of most farmers and agribusiness firms, indicating a need for innovative financing mechanisms.

### Public investment and budgetary context (resilience-building)
- Resilience-related spending is about one-third of the capital budget, with allocations of around 1.7 percent of FY2018–19 GDP (BZ$66 million, or US$25 million).
- Resilience-building to date is concentrated in physical infrastructure and relies heavily on international support; more than 4/5ths of current resilience-building efforts would be unfinanced without external support.
- Ecosystem resilience-building and natural resource conservation are essential for Belize’s economic resilience.
- Implementation gaps in the regulatory framework and laws identified as needed to support adaptation include:
  - Pass the Public Investment Law,
  - Adopt a national procurement law and PPP law,
  - Finalize the Fisheries Resources Bill,
  - Adopt the Coastal Zone Management Act,
  - Implement the Integrated Coastal Zone Management Plan,
  - Finalize mangrove protection regulations and marine dredging regulations,
  - Review and finalize legislation for solar energy (grid tie-ins and net metering),
  - Harmonize permit requirements and incorporate ‘building back better’ standards,
  - Update Tourism Master Plan and Land Use Plans to reflect sea-level rise vulnerability mapping,
  - Ensure implementation of the National Adaptation Strategy to Address Climate Change in the Agriculture Sector of Belize.

### Financial sector preparedness and macro-financial buffers
- Local banks do little, if any, climate-related lending; risk capital needs and small market size are barriers.
- Domestic private insurance companies see limited scope for expanding coverage to vulnerable homeowners or farmers due to limited ability to lay off risk or reinvest profitably, and perception that premia will be too high.
- Gaps in information about firms and exposure data impede banks and insurers from extending engagement.
- Belize City’s government-guaranteed bond issue (for post-flooding street construction and possibly drainage) was seen as an important vehicle for mobilizing domestic finance.
- International development partners have started collaborating with domestic companies to increase affordability and accessibility of insurance for vulnerable populations.
- It was seen as over-optimistic to plan for early bank re-openings to deliver cash after a disaster; social security is examining advancing pension payments when a disaster is forecast.
- Gross international reserves are projected at 2.7 months of imports of goods and services over the medium term, below the Fund staff’s risk-weighted adequacy metrics.

### Financing strategy for mitigation and adaptation programs — needs and scenarios
- Total estimated cost for mitigation and adaptation needs: US$548 million, or 28 percent of FY2018–19 GDP. Spread over 12 years, the envelope implies an annual bill of about 2.4 percent of GDP.
- Belize intends its mitigation projects (around 9 percent of GDP over the period) to be covered by private investment; greater private share reduces budgetary impact.
- If private financing is fully mobilized, total climate response bill would reduce to 19 percent of GDP, or 1.6 percent of GDP annually.
- For adaptation:
  - Significant investment is already ongoing—an estimated 1.7 percent of GDP each year, with more than 80 percent of this foreign-financed.
  - Maintaining this level of investment going forward would allow Belize to cover all needs identified in the NDC and NCRIP by 2030 at latest (subject to caveats about conservatism in assumptions).
- Caveats and risks:
  - Estimates are conservative and assume all NCRIP projects (full US$376 million envelope) remain to be implemented between now and 2030, which may be unduly conservative.
  - Heavy reliance on continued international concessional financing puts burden on Belize to mobilize external support.
  - Shortfall in private investment in renewables would require authorities to bear some costs (e.g., to make risk-capital tolerable), increasing fiscal burden.

### Consistency with fiscal and external debt sustainability
- Belize’s current government debt is about 94 percent of GDP.
- The 2018 Article IV Staff Report estimates reducing government debt to below 60 percent of GDP in 10 years would require measures that gradually raise the primary surplus to about 4 percent of GDP from the current projected level of 2 percent of GDP, alongside reforms that enhance potential growth.
- In the staff’s “active” policy scenario:
  - Medium-term fiscal consolidation measures are conservatively estimated to yield savings of 3 percent of GDP.
  - These are partially offset by additional priority spending of 1 percent of GDP, including additional resilience-building public investment, resulting in a 2 percent of GDP net rise in the primary fiscal surplus compared to the “baseline” policy scenario.
- The 2018 Article IV baseline and active scenarios envisage protecting and gradually expanding capital expenditure to near 5 percent of GDP over the medium term.
- Conclusion: A feasible path exists to meet climate goals and achieve macroeconomic sustainability if Belize protects priority resilience-building investments, mobilizes foreign support, and attracts private investment.

### Recommendations for adaptation (enumerated)
- 1. Update and complete the costing exercise for key sectors begun in the NCRIP.
- 2. Continue to make balanced progress with implementing priority actions identified in the NDC and related plans, under the umbrella of the GSDS.
- 3. Adopt the Public Investment Law, the Fisheries Resources Bill, National Waste Management Plan, and the mangrove protection legislation.
- 4. Review and finalize energy legislation that accommodates Belize’s plans to develop renewable energy.
- 5. Identify any additional climate vulnerabilities in the existing power system and in proposed future power infrastructures so that entire Belize’s power system becomes climate resilient.
- 6. Update the Tourism Master Plan and Land Use Plans to reflect sustainability considerations and the impact of sea-level rise.
- 7. Develop a national procurement law and PPP law.
- 8. Engage with financial agents and development partners to seek solutions for risk-capital financing and FX constraints.

*Source: cr18329-belizeclimatechange — Box 2. Climate Change Adaptation and Mitigation in the Agriculture Sector (PDF chapter).*

### Box 3. Scope for Policies to Offset the Impact of Weather Shocks

### Box 3. Scope for Policies to Offset the Impact of Weather Shocks

### Model-based analysis (DIG model): effects and policy levers
- Framework: IMF (2017) applies the DIG general equilibrium model to a representative small economy broadly comparable to Belize; climate damage calibrated to the non-linear empirical relation between temperature and productivity estimated by the authors.
- Scenario analyzed: a 1°C increase in temperature damages productivity and private capital.
- Findings from simulations:
  - Role of fiscal buffers: additional buffers of 1 percent of GDP used to support public spending reduce the depth of the recession by about 0.5 percent (real GDP; % deviation from baseline).
  - Role of investment efficiency: higher public investment efficiency increases the benefit of additional buffers used to finance rebuilding; efficiency is linked to quality of public sector governance.
  - Role of adaptation: investment in adaptation and resilience-enhancing infrastructure lowers sensitivity of output, productivity, and private investment to temperature increases, significantly reducing weather-driven downturns and accelerating recoveries.

### Macroeconomic spillovers of climate actions
- Balance of payments:
  - Belize’s energy import bill remains sizeable, at 5.6 percent of GDP.
  - A comprehensive mitigation strategy (scaling up renewables, reducing fossil fuels for transport) could save a further 1 percent of GDP in energy imports.
- Revenue:
  - A coordinated increase in carbon-relevant feebates could help offset the projected revenue decline and generate substantial additional revenues to ease fiscal pressures.

### Institutional issues and financing constraints
- Climate fund access: Belize has longstanding success accessing climate funds (early Global Environment Facility client; first to access Special Climate Change Fund) but faces heavy technical demands of newer climate funds that hinder private sector involvement.
- Innovative financing: A large debt-for-climate swap to finance coral reef protection was being explored but negotiations were interrupted by debt restructuring; authorities should remove restructuring-related encumbrances that prevent future deals while ensuring value-for-money.
- Legal frameworks: Lack of legal frameworks for private involvement is a serious impediment to mobilizing private financing; filling key gaps in laws and regulations is a vital prerequisite for attracting private financing for climate response.

### Recommendations for Financing
- Clarify remaining financing needs, by updating the NCRIP and completing costing.
- Prioritize the maintenance of the foreign-financing pipeline, emphasizing maximum concessionality and consistency of new borrowing with restructuring commitments.
- Protect the current level of resilience-building investment (at least), within the feasible fiscal envelope outlined in the 2018 Article IV Staff Report.
- Ensure all relevant policy and legal frameworks are in place for attracting private investment in the energy sector and other relevant sectors (e.g., sustainable tourism).

### Risk management strategy: assessment, retention, transfer
- Risk assessment:
  - Belize has technical assessments of vulnerability (e.g., Third National Communication, 2016) but lacks a framework defining government contingent liabilities and does not quantify climate-related fiscal risks or prepare a fiscal risk statement.
  - World Bank actuarial analysis (1996–2016 hydrometeorological events): direct damages to the public sector ≈ US$ 30 million, or 1.7 percent of the GDP; direct and indirect annualized average damage and losses to the government, including implicit contingent liabilities ≈ US$ 123 million, or about 7 percent of GDP.
- Self-insurance and retention:
  - Belize retains almost all its disaster risk with little risk transfer and does not make advance financial provision.
  - No planning for contingency fund or contingent lines of credit for small, frequent disasters; almost no insurance for public assets for more severe disasters.
  - Belize renewed excess rainfall policy with CCRIF SPC for 2018–19 season but needs to optimize coverage parameters.
  - Current contingent financing: US$ 1 million CERC in an IDA loan for the Climate-Resilient Infrastructure Project (BCRIP).
  - World Bank suggests contingent financing arrangements equal to government losses from a hydrometeorological event of a 10 year-return period, or about US$ 42 million.
- Risk transfer and insurance market:
  - Public sector makes little use of traditional non-life insurance; central government lacks an inventory of assets.
  - Belize decreased hurricane and earthquake coverage from CCRIF SPC after disappointing payouts and now invests minimally in CCRIF SPC’s excess rainfall product.
  - Private non-life insurance: nine companies, real premium growth stagnated, non-life insurance penetration 2.5 percent (below Caribbean average of 3.3 percent); mandatory mortgage insurance is the only growing area.
  - World Bank recommends exploring public-private partnerships to provide affordable insurance for housing and agriculture.

### Applying a risk-layering approach and indicative buffer needs
- IMF staff estimates: total buffer needed in the order of 7 percent of GDP, maintained on a rolling basis—congruent with World Bank actuarial analysis.
- Recommended structure (risk-layering):
  - First element: contingency fund to cover immediate recovery and response costs from high-frequency, low-severity events.
  - Complement with ex-ante contingent financing and insurance for reconstruction and larger disasters to be cost-effective given limited fiscal space.
- Illustrative comprehensive risk buffer (Table 6):
  - Risk envelope to cover (7% GDP): US$m 115–140; %GDP 7
  - Contingency Fund: US$m 15–20; %GDP 1
  - Contingency Financing: US$m 50–60; %GDP 3
  - CCRIF SPC: US$m 25–30; %GDP 1.5
  - Private insurance mechanisms: US$m 25–30; %GDP 1.5

### Insurance innovations relevant to Belize
- Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC):
  - First regional catastrophe risk pooling mechanism using parametric insurance for immediate liquidity based on parameters such as wind-speed; supported by World Bank and donors.
  - Sixteen current members including Belize; expanding geographically and in product offerings.
  - Basis risk has led to some disappointing payouts for Belize, prompting decreased coverage.
- Mesoamerican Reef – Reef Rescue Initiative:
  - Objective: contribute to conservation of the Mesoamerican Reef through resilience and recovery; pilot a parametric reef insurance mechanism to cover coral reef restoration after hurricane and ship grounding damage and train rapid response teams.
  - Supported by the German government; governed by a Technical Supervisory Committee and executed by the MAR Fund and CCAD with participation of Belize, Guatemala, Honduras, and Mexico.
- Caribbean Oceans and Aquaculture Sustainability Facility (COAST):
  - Aim: design insurance coverage for coastal fishing communities, linking improved fisheries and marine habitat management to lower insurance premiums; COAST Design Phase explores actuarial models and economic incentives to improve coastal resilience.

*Source: Box 3. Scope for Policies to Offset the Impact of Weather Shocks, IMF staff report content.*

### Box 4. Insurance Innovations Relevant to Belize (concluded)

### Box 4. Insurance Innovations Relevant to Belize (concluded)

### COAST and regional insurance innovations
- COAST is a partnership between the US State Department, the PROFISH Multidonor Trust Fund at the World Bank, the Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC), and the Caribbean Regional Fisheries Mechanism (CRFM).
- The mechanism is envisioned as a sovereign parametric insurance product at a scale relevant to vulnerable fishing communities.
- Triggers: high winds, storm surge and/or excessive rainfall.
- Objective: put money and human resources rapidly into the recovery effort to provide immediate economic relief.
- The Belize Government has expressed interest in purchasing this instrument to reduce vulnerability and enhance resilience of its fisheries sector.
- Belize can also invest in other regional sector-specific risk transfer products to complement CCRIF SPC, such as the Reef Rescue Initiative.

### Role of insurance within a comprehensive risk buffer
- The envelope for the risk buffer may need to be built up gradually, though the sooner it can be put in place the better—especially for the urgently needed contingency fund.
- A conversation with external development partners on willingness to engage on contingent lines of credit or comparable instruments should not be postponed.
- Table 6 (in source) illustrates the sizeable role insurance needs to play; therefore resolving shortcomings in Belize’s engagement with CCRIF SPC is valuable rather than attempting to construct a comprehensive risk buffer without reliance on parametric insurance.
- Table 9 (in source) signals that successful resilience-building investment can reduce expected damages and potentially create a growth dividend, lowering the long-term cost of maintaining an adequate risk buffer.

### Recommendations for Risk Management
- 1. Develop a fiscal risk statement as an input to better budgeting, with attention to costing government’s likely contingent liabilities from disasters and climate change.
- 2. Develop a comprehensive risk buffer for natural disasters. A risk buffer of 7 percent of GDP, replenished on a rolling basis, would give Belize a 95 percent probability of being able to cover the fiscal costs of disasters without incurring additional debt.
- 3. As part of the risk buffer, establish a budget contingency fund of around 1 percent of GDP as soon as possible, to be accessible for immediate post-disaster relief.
- 4. Engage with development partners to establish contingent financing arrangements of at least US$ 50 million.
- 5. Over the medium term, expand public sector insurance to include key buildings and infrastructure, based on an inventory of public assets.
- 6. Regional initiatives for insurance are likely to be relatively cost-effective, given Belize’s small economic size. Collaboration with CCRIF SPC and other Caribbean efforts to deepen the insurance industry should be re-explored, with a dialogue on how to make CCRIF SPC best-tailored to its members’ needs.
- 7. Explore with private insurers options for expanding the traditional market, both for housing and socially-desirable services such as flood and agriculture insurance, which may require public sector involvement.

### National processes — planning and mainstreaming climate change
- Planning is a strong point in Belize; the budget is credible and comprehensive.
- Public investment management tools are lacking, the legal and regulatory framework needs strengthening, and the absence of a PPP framework limits potential new sources of investment funding.
- 61. Mainstreaming: Belize has effectively mainstreamed climate-related projects with international support. The 2013 NCRIP identified priority climate-resilient projects and costed them—transport, forestry, mangrove, and flood management flagged as top-priority. These priorities were re-emphasized in the NCCPSAP and the GSDS. The PSIP and the capital budget since 2015 show a ramping up of transport and land-use projects, largely supported by external funding.
- 62. Allocation of climate-related responsibilities across agencies is well-understood and coordinated; functions are grouped in a relatively small number of ministries represented on the National Climate Change Committee, with technical inter-ministerial steering committees managing projects.
- 63. The PSIP framework functions well, but basic tools for project selection need development. Lack of in-house capacity for project specification and appraisal increases dependence on donor priorities.

### Adequacy of the Public Investment Management (PIM) system
- 64. Belize has large gaps in its PIM system and remains heavily reliant on donor project procedures.
- 65. Lack of capacity to actively manage public investment partly explains reluctance to seek public-private partnerships (PPPs). There is no legislation or policy framework for PPPs; only two PPPs are on record.
- 66. Summary of a recent assessment using the IMF’s PIMA tool (not a full PIMA evaluation):
  - Planning
    - Belize has no formal fiscal framework or rule; fiscal policy guided by commitments to creditors in the 2017 debt restructuring.
    - Investment planning and prioritization are well-coordinated, but allocation decisions are driven largely by ODA financing.
    - No in-house capacity for selecting and appraising projects.
    - Lack of PPP framework disadvantages Belize for attracting new investment.
    - Legislation and regulations leave open possibilities for competition and private sector involvement (notably renewable energy), but gaps and outdatedness of legal framework deter investment.
  - Allocation
    - Capital spending is almost all undertaken transparently through the budget, including foreign-financed projects; domestic and foreign-financed capital expenditures are presented in separate budget chapters.
    - Belize does multiyear planning with a three-year budget horizon; recurrent costs are in principle budgeted for but under-funding is often serious; appropriations are annual.
    - The current and capital budgets are prepared and presented together, though not in line with international standards; the Chart of Accounts is not in line with international standards and is undergoing reform.
    - Cost-benefit analyses are conducted mainly for foreign-financed projects and are not systematically published.
    - No standard criteria for project selection, although projects must align with the ‘critical success factors’ in the GSDS.
    - There is a realistic pipeline of projects pending approval; on rare occasions the pipeline may be bypassed.
  - Implementation
    - Project outlays are appropriated annually; unspent appropriations cannot be rolled over; ongoing projects are given priority in annual allocations.
    - Transfers of appropriations from capital to current spending are prohibited.
    - Cash for project outlays is normally released in a timely manner; agencies can plan and commit expenditure in advance based on reliable cash flow outputs, particularly for donor-financed projects.
    - With the exception of EU financing, all ODA is integrated into national treasury management processes.
    - Externally-financed projects are tendered competitively following donor procedures. In the absence of a procurement law, there are no systematic procedures for tendering domestic projects. Externally-financed projects and major domestic projects are monitored during implementation. Ex-post audits are undertaken when required by donors.

### Adequacy of Public Financial Management (PFM) systems for climate financing
- 67. Belize’s budget system has been strengthened but still suffers from gaps typical of small states. A 2014 PEFA found improvements since 2009 but scores remain low.
  - PEFA identified budget credibility, comprehensiveness, and transparency as strong points, and noted absence of procurement law.
  - PEFA flagged need for clearer financial relations with municipal governments if they begin borrowing or expanding donor relations.
  - PEFA commended protection of donor funds (high and growing share deposited at the central bank) but noted some donor financing persists in commercial bank accounts and emphasized need for improvements in accounting and external scrutiny (audit and legislative oversight).
- 68. The budget system would benefit from further development to facilitate resilience-building:
  - Program budgeting introduction is valuable, but enforcing reporting requirements is important.
  - The budget and PSIP lack systematic tagging of climate-change related projects beyond project title—budget classification would benefit from rethinking aligned with chart of accounts reform.
  - More attention needed to strengthen treatment of NDC actions within medium term expenditure framework planning processes.
  - Lack of project appraisal capacity and systematic monitoring means climate-change mitigation and adaptation impact of proposed investments cannot be evaluated.

### Recommendations for National Processes
- 1. Build capacity for effective public investment appraisal and monitoring, in the Ministry of Finance and other relevant ministries.
- 2. Pass a Procurement Law which reflects international standards.
- 3. Introduce a framework for PPPs; and identify safeguards needed for Belize to be comfortable with considering this diversified source of investment funding and know-how.
- 4. Upgrade the regulatory framework for economic infrastructure, to clarify the scope for competition.
- 5. Continue the development of program budgeting, in particular, by enforcing reporting requirements and systematizing the identification of climate-related programs.

### Taking stock: priority needs to be met
- Success requires significant private investment in renewables, maintenance of external budget project financing at current levels (as concessional as possible), contingent financing arrangements, and capacity-building to fill gaps in legal, regulatory, and administrative frameworks.
- 69. Indicative tally of priorities (not exhaustive and will evolve):
  - General preparedness
    - Development of a damage and loss data collection system and reporting, systematized across all ministries (capacity-building).
    - Formalization of a national disaster risk financing strategy (capacity-building).
  - Mitigation
    - Private investment of US$172 million by 2030, in:
      - Hydro-power ($58 million)
      - Bagasse ($39 million)
      - Solar ($45 million)
      - Transmission/distribution/other ($30 million)
    - Public or private investment in REDD ($5.2 million).
    - Possible government financial involvement to resolve problems impeding private investors, such as seed financing or guarantees (financial support).
    - Development of a feebate scheme within the excise tax framework, adequate to achieve planned reductions in energy consumption, while calibrated to delivering required revenue (capacity-building) and a similar scheme for forestry.
  - Adaptation
    - A public investment envelope of US$376 million, by 2030 (requiring concessional foreign financial support), in:
      - Food security ($16 million)
      - Fisheries and reefs ($1.2 million)
      - Coastal management ($6 million)
      - Water management ($1.5 million)
      - Other priority sectors: Transport, Land resilience, Tourism, Health, Waste management
    - Updated costing of priority sector projects (capacity-building).
    - Development and refinement of enabling legal documents such as the building code, legislation for renewable energy, procurement law, PPP law (capacity-building).
  - Risk management
    - A budget contingency fund of US$15–20 million (financial support).
    - Contingency financing arrangements of US$50–60 million (contingent financial support).
    - Expansion of insurance to cover US$50–60 million in potential loss (financial support, either contingent or to underwrite premia costs).
  - National processes
    - Development of public investment management tools (capacity building).
    - Reform of budget classification and reporting, to identify disaster- and climate-related spending, in alignment with the ongoing reform of the chart of accounts (capacity-building).

### Annex I — Spreadsheet model to assess mitigation policies (summary)
- The spreadsheet model of fossil fuel consumption used to assess mitigation possibilities for Belize is similar to models applied recently to China and India.
- Basic data on fuel use, prices, and fuel excises were obtained in meetings with the authorities.
- The model specifies demand functions for:
  - Electricity consumption by households;
  - Electricity consumption by the industrial/commercial sector;
  - Premium gasoline;
  - Regular gasoline;
  - Road diesel;
  - Heavy fuel oil (HFO);
  - Kerosene;
  - Liquified petroleum gas (LPG).
- The model does not incorporate capital of different vintages and does not distinguish between shorter- and longer-term responses to fuel price changes.
- Business-as-usual (BAU) assumptions:
  - Demand rises over time relative to 2017 levels with increases in GDP, which expands by 25 percent between 2017 and 2030 based on IMF forecasts and extrapolation.
  - Income elasticities for these products are taken to be between 0.6 and 0.75.
  - Electricity and fuel use are assumed to decline autonomously by 0.75 percent a year due to gradual retirement of older, less efficient capital.
  - Electricity prices are constant in real terms in the BAU (19 and 17 cents per kWh for households and industry/commerce, respectively).
  - Retail prices of fuels increase by between 18 and 31 percent between 2017 and 2030 due to gradually rising international energy prices.
  - 2017 electricity consumption: households 231 million kWh; industry/commerce 154 million kWh.
  - 2017 fuel use in million gallons: premium gasoline 8; regular gasoline 17; road diesel 19; diesel in power generation 4; HFO 5; kerosene 5; LPG 3.
  - 2017 prices in $ per gallon: premium gasoline 4.57; regular gasoline 4.24; road diesel 3.97; power sector diesel 2.49; HFO 2.98; kerosene 2.99; LPG 2.45.
- Price responsiveness assumptions:
  - Each 1 percent increase in electricity or fuel prices is assumed to reduce electricity/fuel demand by 0.45 percent, with two-thirds of the response from efficiency improvements and one-third from reduced product use.

*International Monetary Fund — Box 4. Insurance Innovations Relevant to Belize (concluded), from cr18329-belizeclimatechange*

### 5. In the BAU scenario, the share of domestic diesel, hydro, and biomass generation in

### 5. In the BAU scenario, the share of domestic diesel, hydro, and biomass generation in electricity supply remain constant at 0.08, 0.40, and 0.17 respectively, while the remaining supply share (0.35) comes from imported sources

### BAU electricity-generation and demand response
- Supply shares in the BAU scenario:
  - domestic diesel: 0.08
  - hydro: 0.40
  - biomass: 0.17
  - imported sources: 0.35
- Changes in electricity demand lead to changes in generation from diesel, hydro, and biomass equal to the change in demand times the respective supply shares for these fuels.
- An expansion of the renewables supply share leads to a corresponding reduction in the diesel fuel generation share.

### CO2 emission rates and revenue computation
- CO2 emission rates per gallon:
  - gasoline: 0.0088 metric tons per gallon
  - diesel and other fuels: 0.0103 (metric) tons per gallon
- Total emissions in a year = fuel use × emission rate, aggregated over fuels.
- Revenues = fuel use × relevant excise tax, aggregated over fuels.
- Excises in $ per gallon (fixed to 2030 in the BAU):
  - premium gasoline: 1.81
  - regular gasoline: 1.65
  - road diesel: 1.49
  - HFO and kerosene: 0.53
  - power sector diesel and LPG: 0

### Oil price and behavioral notes (contextual source notes)
- Oil price forecasts average over IMF forecasts (essentially flat as based on futures markets) and International Energy Agency forecasts (where prices rise over time as predicted by a global oil demand and supply model).
- Behavioral responses (e.g., vehicle driving response) are limited due to limited possibilities for using other travel modes like public transport, cycling, and walking.

### Annex II — Applying Feebates to Key Sectors in Belize: Overview and rationale
- Context: For Belize, where tax hikes are politically difficult and potentially damaging to competitiveness, the CCPA (Chapter IV) recommends introducing feebates to achieve price-incentive effects of carbon taxation without pre-determining the overall tax rate.
- Potential advantages of feebates:
  - Effective at reducing energy use if comprehensively applied across imported products and set to provide continuous rewards for higher efficiency.
  - Cost-effective if there is a uniform reward for saving energy across different product types.
  - Can limit administrative burdens by incorporation into existing excise collection procedures for imported products.
  - Consistent with fiscal objectives because an ad valorem component of excises (unrelated to energy efficiency) can be retained to meet revenue needs.
  - Can limit burdens on vulnerable households and firms, as they do not involve a first-order pass through of new tax revenues into higher fuel, electricity, or product prices.

### Transportation — feebate design and implementation
- Current vehicle excise structure:
  - Imported passenger vehicles with cylinder capacity exceeding 3,000: excises of 5 percent, and import duties of 5 or 45 percent (lower rate for vehicles knocked down for assembly in approved plants).
  - Buses: excises of 5 percent and import duties of 5 to 10 percent.
- Shortcomings: Current tax system provides limited incentives for fuel-efficient vehicles and does not reward vehicle characteristics that lower emission rates (e.g., smaller cabin size, lighter body materials, better aerodynamics).
- Recommended structure: Shift to a vehicle excise tax system with an ad valorem component and a feebate component.
  - Ad valorem component: set to meet a revenue target without distorting choice among different vehicles.
  - Feebate component: levies a tax on relatively fuel-inefficient vehicles proportional to the difference between their fuel consumption rate and a pivot-point consumption rate; conversely provides a subsidy to relatively efficient vehicles proportional to the difference.
  - Formula (conceptual): t · (fuel per mile/model − fuel per mile pivot), where the bar denotes the pivot point and t is a charge per gallon per mile (accounts for expected use).
  - Revenue neutrality: pivot point can be set equal to the average fuel consumption rate of vehicles sold in the previous year and updated over time.
  - Data needs: fuel per mile (inverse of fuel economy) for different models; these data are readily available (see www.fueleconomy.gov).
  - Alternative: levy on differences in CO2 emission per mile relative to pivot point.
- International precedents and pivot-point examples:
  - Pivot points in existing schemes typically between about 200 to 250 grams of CO2 per mile.
  - Feebate prices differ: about US$10 per gram of CO2 in France and up to US$155 in Norway.
  - Example from Mauritius: average fuel consumption of imported vehicles fell from 7 liters/100km in 2011 to 5.8 liters/100km in 2014; hybrid registrations rose from 337 to over 1,400.
  - Illustration: a feebate with pivot point 250 grams CO2 per mile and price US $100 per gram CO2 would:
    - provide a subsidy of US $5,000 to a vehicle with fuel economy of 45 miles per gallon
    - impose a tax of $10,000 on a vehicle with fuel economy of 25 miles per gallon
- Conversion factor note: Fuel economy can be converted to CO2 per mile by inverting and multiplying by CO2 per gallon — 8,850 grams per gallon for gasoline and 10,250 grams per gallon for diesel.

### Public transport considerations
- Economic rationale for subsidizing public transport fares as a complementary policy:
  - Deters automobile use, reducing road congestion, carbon emissions, and accidents.
  - Subsidies may be warranted by scale economies: reduced wait times, greater load factors, and greater density of service.
- Current pricing: fares are set to recover operating costs; public transport is (moderately) taxed because GST paid on diesel inputs is not rebated.
- Design caution: Any subsidies should be carefully designed to expand the system rather than encourage inefficiency.
  - Possible approach: fixed subsidies per passenger mile (longer-term option requiring electronic metering capacity for tracking passenger mileage).

### Electricity sector feebates
- Feebate structure for imported appliances and electricity-using capital:
  - Combine ad valorem excise (to maintain revenue) with feebate component taxing inefficient products and subsidizing efficient ones in proportion to differences from a pivot-point consumption rate.
  - Example formula for refrigerators: t · (kWh/(cubic foot cooled) / pivot − pivot / pivot) — conceptually, fee/rebate = t · (kWh/(cubic foot cooled) model − pivot kWh/(cubic foot cooled)).
  - Illustration: if pivot = 5 kWh/month and feebate price = $30 per kWh/month:
    - refrigerator with consumption 8 kWh/month → tax of $90
    - refrigerator with consumption 2 kWh/month → subsidy of $90
  - Revenue neutrality: set pivot equal to the average electricity consumption rate of models within a product class sold in the previous year and update over time.
  - Cost-effectiveness across product classes: the incremental reward on kWh (tax rate t) should be uniform across products.

### Agriculture — feebates for Climate Smart Agriculture (CSA)
- Feebate elements could promote widespread adoption of CSA practices and technologies by reducing the cost of financial instruments.
- Integration: feebate scheme could be integrated into matching grants, guarantee mechanisms, or index-based rainfall insurance and area/yield-based index insurance.
- Mechanism: based on farmer adoption of a CSA technology, the feebate scheme could subsidize costs of these instruments to generate positive climate outcomes on resilience and emissions.
- Note: A forthcoming WB study "Climate Smart Agriculture in Belize" is exploring financing strategies for CSA investment in Belize and will provide recommendations and identify needed supporting investments.

*International Monetary Fund — Annex II and related sections as provided in the source content*

### Appendix I. CCPA Template

### Appendix I. CCPA Template

### 1. Climate change risks and expected impacts
- Impact of climate change risks on the macroeconomic framework/long-term outlook  
  - How vulnerable is the economy to climate change?  
  - What impact could climate change have on macroeconomic sustainability?  
- Table of recent and expected climatic developments

### 2. General preparedness for climate change
- The NDC and other national resilience-building strategies  
  - Does the NDC present a comprehensive and costed strategy for climate change response?  
  - Is the climate change strategy consistent with broader development goals?  
- Disaster planning and other contingency plans  
  - How well-prepared is the country to cope with possible intensified disasters?

### 3. Contribution to mitigation
- Statement of NDC pledge  
  - How does the country plan to meet its emissions reduction target?  
- Clean energy plans  
- Carbon taxation and fuel subsidy policies  
  - Does the current tax/subsidy system deliver appropriate carbon pricing?  
  - What would the tax system look like with recommended carbon pricing?  
- Other carbon pricing strategies  
  - What other carbon-pricing strategies could usefully contribute to mitigation?  
- Other macroeconomically relevant policies for mitigation  
  - Are any further large-scale mitigation policies relevant to the country?

### 4. Adaptation plans
- Has the country developed an adequate strategy to adapt to climate change?  
- Public investment plans  
- Table of Costed Climate Change Projects (if costing has been done) US$  
  - %GDP  
  - Total  
  - Mitigation  
  - Adaptation  
- What, if anything, is missing from the adaptation investment strategy?  
- Other public programs (regulation reform, zoning...)  
  - Adaptation is not just a matter of investment spending; what regulations support it?  
- Financial sector preparedness  
  - How is the financial sector contributing to the climate change effort?

### 5. Financing strategy for mitigation and adaptation programs
- Current state of financing  
  - Does the country have adequate financing to meet the needs of its climate change strategy?  
- Consistency of climate change spending and financing plans with fiscal and external debt sustainability  
  - Are the country’s climate changes plans consistent with fiscal and external debt sustainability?  
- Other macroeconomic considerations  
  - Would implementation of the climate change plans have any (good or bad) spillover effects to the macroeconomy?  
- Institutional issues

### 6. Risk management strategy
- Risk assessment procedures (e.g., fiscal risk statement)  
  - How well does the government assess risk?  
- Self-insurance (including government financial buffers including contingency provisions, rainy-day funds, NIR)  
  - To what extent does the government self-insure against risks?  
- Risk reduction and transfer (including other insurance and pooling arrangements)  
  - To what extent does the economy transfer risk?

### 7. National processes
- Integration of climate change into national planning processes  
  - Have climate-related projects been mainstreamed into national planning?  
- Adequacy of public investment management system (effectiveness of procedures for identifying, evaluating, selecting, and implementing projects)  
  - Are adequate public investment management systems in place, to ensure climate-related investments will be well-spent?  
- Adequacy of PFM systems for managing CC financing and outlays (including transparent on-budget treatment of CC activities, multi-year budgeting)  
  - Are adequate public financial management systems in place, to protect climate-related funding?

### 8. Taking stock: priority needs to be met
- What resources does the country need to mobilize, to achieve its climate-change strategy?  
- Annexes contain information important to one or other institution, but which have not necessarily been fully reviewed by both.

*Appendix I. CCPA Template*

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_Source: https://www.imf.org/-/media/files/publications/cr/2018/cr18329-belizeclimatechange.pdf_