Mexico's Climate Budget Faces Shortfalls in 2023

The Ministry of Finance and Public Credit (SHCP) announced that the budget allocated by the Government of Mexico for the adaptation and mitigation of climate change, experienced a delay in 2023. This delay, as noted by Greenpeace, is anticipated to impede the country's immediate and long-term efforts to effectively address the challenges posed by climate change.

Between January and September 2023, SHCP established a MX$153.8 billion (US$8.8 billion) budget to address and mitigate the effects of climate change in Mexico. However, the funds officially allocated in Annex 16, the assessment document of the Federal Expenditure Budget related to Climate Change, only amounted to MX$120.01 billion during that period. The resulting MX$33.79 billion discrepancy constitutes a shortfall of 22% compared to the authorities' planned allocation.

Pablo Ramírez, Coordinator of the Energy and Climate Change Program, Greenpeace Mexico, has emphasized that the lack of transparency in expenditure of Annex 16 exacerbates the consequences of climatic catastrophes. "Annex 16 falls short in adapting the country to the impacts it is already facing from climate change. The evidence is clear in Mexico's case. For instance, Otis escalated from a tropical storm to a Category 5 hurricane in just 12 hours off the coast of Guerrero," Ramírez told El Economista. 

Looking ahead, droughts resulting from climate change have been a persistent issue in the past year. According to the Mexican Drought Monitor, based on data from the National Water Commission (CONAGUA), 63% of the country's municipalities have experienced some level of drought. In September, CONAGUA reported that the states most heavily impacted by drought were Chihuahua, Zacatecas, San Luis Potosi, Michoacan, Nuevo Leon, and Tamaulipas. During that period, 502,550ha of crops were affected by the lack of water. 

Formerly, the Natural Disaster Fund (FONDEN) was responsible for allocating resources to states affected by natural disasters exacerbated by climate change, such as hurricanes and droughts. However, following the dissolution of FONDEN as a trust in 2021, the program is now subject to the approval of annual budgetary funds. In this regard, the responsibility for addressing the consequences of climate disasters largely falls on individual states and municipalities, requiring them to allocate annual funds for emergencies and disasters from their respective budgets.

As the impacts of climate change continue to intensify, resulting in a series of natural disasters not confined to national borders but extending globally. In this scenario, the ability of governments and international organizations to respond to such situations should prioritize the protection and safety of the most vulnerable communities. To address this challenge effectively, the imperative is to invest in disaster prevention, ensuring that assistance reaches those in greatest need.

In this context, during the inaugural week of the COP 28, UN delegates approved the formation of a Loss and Damage Fund, designed to assist the most vulnerable countries in the face of climate-related disasters. Nations, including those from the European Union, the United Arab Emirates, United Kingdom, United States, and Japan, collectively pledged over $400 million as an initial contribution to the fund, as reported by MBN. The fund will officially begin operating in 2024 and will be administered by the World Bank for the following four years. This move will instill confidence and certainty globally, signaling that COP 28 is undertaking serious actions to mitigate the effects of climate change, said Ramirez.

Moreover, he contends that the countries contributing the most to greenhouse gas emissions and, consequently, to climate change should be responsible for allocating resources to the fund. This responsibility also extends to the fossil fuel industry, Ramirez added. "These are the major historical culprits of the problem we find ourselves in, and therefore, they are the ones who should take responsibility for the Loss and Damage Fund," Ramirez asserted.