Costa Rica is on track to be the first country in the world to achieve carbon neutrality, the country's environment minister has said.
The Central American nation of 4.9 million people has a hugely ambitious climate policy agenda, leading the way in innovative thinking.
On Saturday, Carlos Manuel Rodriguez, its Minister for Environment and Energy, arrived in Dubai for the World Economic Forum's Global Future Councils meeting.
The annual gathering brings together more than 600 academics, business leaders and government officials to address global, regional and geopolitical issues.
"Costa Rica has understood that… the neoclassic economic model is unable to reflect what we do with nature," Mr Rodriguez told The National.
“Unless we are able to change it, we will collapse as a society. If our economic model does not reflect the good and the bad we do to nature, mother nature will pass on an invoice that we will never be able to pay.”
Last year, Costa Rica’s young president Carlos Alvarado, 39, pledged to make the country completely carbon neutral by 2021.
Renewable energy currently meets 98 per cent of the nation’s energy requirements, in part due to forward-thinking strategies put in place more than 30 years ago.
In the 1980s, the country began an aggressive reforestation programme after its forestry had dwindled by three quarters in just a few decades.
Today, its forests cover more than half the country and are a strong draw for ecotourism, which now accounts for 8.2 per cent of GDP.
“Costa Rica has doubled the size of our forest in a period the economy tripled, meaning that we can protect or restore nature and it is not a burden for development,” said Mr Rodriguez.
Costa Rica also introduced a carbon tax on gasoline half a century ago to fund environmental conservation. It added a 3.5 per cent levy to hydrocarbons in 1997.
Mr Rodriguez says time is running out for countries to act. Pawan Singh / The National
The carbon tax funds carbon sequestration through reforestation and reduced carbon emissions by changing consumer behaviour.
Additionally, the government pays subsidies to landowners helping to nurture and protect natural resources.
“In the case of Costa Rica, even though our emissions are small on a global level, we see the decarbonisation of our economy as a way to transition to a new development paradigm,” said Mr Rodriguez.
“It’s not just moving to a carbon free society, it’s moving towards what we call the fourth industrial revolution: automatisation, digitalisation and a de-carbonised society.
“We see it as a great opportunity to prosper, to generate more quality jobs and to have happier people.”
Today, Costa Rica is tackling transportation, which accounts for two-thirds of national emissions.
It has lifted all taxes on the sale of electric vehicles, installed an extensive infrastructure for public charge points and begun to replace buses with electric substitutes. The target is 40 per cent of all the country’s vehicles to be electric by 2030.
In the same period, officials would like to see the number of cars in the country drop by a third by offering better alternatives.
To that end, the government has plans to construct an electric train in San Jose, the capital, which is due for completion in 2025.
These policies have made Costa Rica a poster child for a decarbonised economy.
If our economic model does not reflect the good and the bad we do to nature, mother nature will pass on an invoice that we will never be able to pay
Mr Rodriguez believes that states like the Emirates can apply many of these policies. First, the country must commit to a long-term decarbonisation plan.
The UAE has broadly pledged energy diversification but national emissions are set to increase by 50 per cent between 2010 and 2030, according to Climate Change Tracker, an independent body that measures government action against the internationally agreed Paris Agreement.
The region’s solar power potential is a “magnificent opportunity” and advances in wireless energy transfer could add to that economic boon, Mr Rodriguez said.
“I think that the Emirates may have a strong role in the global transition to a new energy paradigm,” he said.
“If we solve the energy issue and we don’t solve the deforestation issue, we will never achieve anything.
“The Arab nations are in the best location for energy solutions but need to engage more with tropical countries on deforestation and forest restoration.”
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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2016: Cleveland bt Golden State 4-3
2015: Golden State bt Cleveland 4-2
2014: San Antonio bt Miami 4-1
2013: Miami bt San Antonio 4-3
2012: Miami bt Oklahoma City 4-1
2011: Dallas bt Miami 4-2
2010: Los Angeles Lakers bt Boston 4-3
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2008: Boston bt Los Angeles Lakers 4-2
Bitcoin is the most popular virtual currency in the world. It was created in 2009 as a new way of paying for things that would not be subject to central banks that are capable of devaluing currency. A Bitcoin itself is essentially a line of computer code. It's signed digitally when it goes from one owner to another. There are sustainability concerns around the cryptocurrency, which stem from the process of "mining" that is central to its existence.
The "miners" use computers to make complex calculations that verify transactions in Bitcoin. This uses a tremendous amount of energy via computers and server farms all over the world, which has given rise to concerns about the amount of fossil fuel-dependent electricity used to power the computers.
Red flags
Promises of high, fixed or 'guaranteed' returns.
Unregulated structured products or complex investments often used to bypass traditional safeguards.
Lack of clear information, vague language, no access to audited financials.
Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
