Michael Koelle
OECD
OECD Economic Surveys: Peru 2025
Abstract
Peru is highly vulnerable to climate risks—ranging from glacial melt and extreme weather events to threats to its rich biodiversity. Meeting the commitment of decarbonising the economy by 2050 requires first and foremost tackling deforestation in the Amazon, the main source of emissions. Mitigating climate change also requires boosting investment in renewables and greening transportation – while ensuring that the mining sector provides essential minerals for renewable energy in a sustainable way. To increase resilience to already occurring climate risks, investing into adaptation and implementing adaptation strategies is essential not only for safeguarding the environment and ensuring the sustainability and resilience of key export industries but also for protecting the livelihoods of vulnerable populations, particularly those in rural and Indigenous communities. The success of many climate-related strategies, including stopping deforestation, environmental conservation, and sustainably sourcing essential minerals, relies on building consensus and improving livelihoods of vulnerable groups affected by climate change by improving skills and productivity.
Peru is on the frontline of global climate change. In line with its bold international commitments, Peru has taken steps to stop the growth of greenhouse gas (GHG) emissions in recent years, but further action is needed to meet its target of net-zero emissions by 2050 under the Paris Agreement. Recognising the urgency of climate action, Peru has integrated environmental priorities into its policies, including its Nationally Determined Contributions and the National Adaptation Plan, the National Strategy on Climate Change until 2050, the Framework Law for Climate Change and the declaration of a Climate Emergency, which will ease and speed up planning and budget allocation. Peru is also highly vulnerable to effects of global warming and an already changing climate. Rising temperatures, shifting rainfall patterns, and extreme weather events are already disrupting infrastructure, agricultural production, and livelihoods, with impacts set to intensify, calling for intensified implementation of adaptation measures.
Reducing emissions and adapting to climate change requires accelerating a profound transformation of the economy, which has the potential to also spur productivity and well-being. Tackling deforestation in the Amazon, the country’s main source of GHG emissions, is essential for protecting biodiversity, supporting sustainable livelihoods, and offsetting hard-to-abate emissions elsewhere. Transitioning to clean energy can reduce fossil fuel dependence, lower energy costs, and enhance energy security by tapping into Peru’s abundant potential for renewable sources. Peru faces a big opportunity with the global green transition if a more sustainable mining sector can supply critical raw materials. Investing in energy-efficient and climate-resilient infrastructure can improve living conditions and lower operating and maintenance expenses. Additionally, reducing reliance on private vehicles through better public transport can cut air pollution and congestion, and improve road safety. A shift towards cleaner transportation and better public transit systems will also lead to more sustainable and liveable cities.
The transition, however, comes with short-term costs. Key industries, including mining, agriculture, and transport, will need to invest in cleaner technologies and adjust their business models. Capital assets tied to fossil fuel industries will require replacement, and new and better infrastructure will be necessary. Workers will have to retrain and upskill, and some will have to find employment in other sectors. Carbon pricing policies will make high-emission goods more expensive. At the same time, financing constraints pose challenges, especially as Peru is facing a tight fiscal situation. Ensuring that the transition is both effective and equitable—minimising costs to households, businesses, and the public sector—is crucial. There is already an overwhelming consensus in Peru on the importance of climate change and the need for the government to address it, with 93% of Peruvians saying climate change impacts their daily life and 19 out of 20 supporting stricter government measures to encourage climate-friendly behaviour (EIB, 2023[1]). Building on this broad societal consensus, ensuring policy consistency, and channelling some resources to affected vulnerable populations will be essential for a successful shift to a sustainable economy.
This chapter outlines a policy mix to help Peru transition cost-effectively to a green economy by reducing emissions and adapting to climate change. The chapter first discusses adaptation measures to manage climate risks already underway. Drawing on research conducted by the OECD and other international organisations, it then explores policies to cut emissions and help meet GHG reduction targets, particularly by stopping deforestation and reducing the reliance on fossil fuels in energy and transport. Next, it discusses how to make agriculture and mining more climate resilient and sustainable. Finally, it outlines policies to support workers through the transition, helping to achieve social and political consensus and avoid skills shortages as the economy evolves.
Peru has established a robust environmental policy framework but faces significant challenges in effectively implementing and operationalising these policies. Peru adopted the National Strategy on Climate Change (ENCC) in 2015 to comply with commitments under the United Nations Framework Convention on Climate Change (UNFCCC). The ENCC includes strategic objectives and priority actions on both mitigation and adaptation and was updated in 2024. Peru ratified the Paris Agreement in 2016 and approved its Framework Law on Climate Change in 2018. In 2021, the country released the 2022-2030 National Adaptation Plan. Since 2022, the Ministry of Economy and Finance (MEF) has started integrating climate change considerations into its Multiannual Macroeconomic Framework, such as assessing the economic impact of extreme weather events, and integrated climate resilience considerations into the national infrastructure plan. However, Peru still has much work to do in implementing and operationalising these high-level policies and commitments and securing adequate funding for their implementation. According to the OECD climate action and policies measurement framework (CAPMF), Peru adopted fewer climate action policies than any other country (Box 4.1). This calls for strengthening the policy framework and adopting more general broad-based policies to support the green transition, as well as a greater number of sectoral measures that are in turn discussed below.
The OECD climate actions and policies measurement framework (CAPMF) tracks trends in climate action, covering 130 policies accounting for 75% of the instrument types recognised by the IPCC.
According to the CAPMF, while Peru has a similar range of GHG emissions targets and international commitments as other countries, in 2023 it had adopted less (8) climate policy instruments than any other of the 50 countries covered by the database. By comparison, the average OECD country adopted 24 sectoral instruments to steer key emitting sectors towards the green transition, in addition to cross-sectoral instruments.
Peru relies mostly on non-market-based sectoral instruments such as minimum energy performance standards and labels for appliances. However, instruments for the transport sector such as fuel economy standards (present in Argentina, Brazil, Colombia, Costa Rica and Mexico), labels on passenger cars (in Argentina, Brazil and Chile) or an announced ban on internal combustion engines (in Chile, Costa Rica and Mexico) are absent. Moreover, Peru has none of the main market-based instruments – carbon tax, emissions trading system (ETS), feed-in tariffs, renewable auctions or renewable portfolio standards – that many countries rely on for the energy transition, including countries in the region, which on average adopted around 20 instruments.
Source: Nachtigall et al. (2022[2]), ‘The climate actions and policies measurement framework: A structured and harmonised climate policy database to monitor countries' mitigation action”, OECD Environment Working Papers No 203, https://doi.org/10.1787/2caa60ce-en ; and OECD (2025), Climate Action in Latin America: https://www.oecd.org/en/data/insights/data-explainers/2025/02/climate-action-in-latin-america.html
Effectively mitigating and adapting to climate change requires a functional policy coordination framework. Although significant progress has been made in establishing an institutional and legal framework for environmental policy since the Ministry of Environment (MINAM) was first created in 2008, environmental policy could be more effective if it was less fragmented (OECD/ECLAC, 2017[3]; World Bank, 2022[4]). While MINAM has the formal mandate to lead climate policy, it lacks resources and key functions in several important areas. Territorial planning, infrastructure development, water policy, forestry management, transport and energy policy are all led by different entities. Moreover, competing sectoral visions exist in areas such as forestry, agriculture and mining. All entities are subject to detailed budgetary provisions by the MEF, which through this process has the power to effectively approve or veto specific policy tools. In some policy areas such as land use planning, a great number of legal provisions are in force, sometimes overlapping or contradictory, without a clear organisation (OECD/ECLAC, 2017[3]). Finally, administrative capacity of many entities to implement policies – including operationalising, monitoring, and supervising compliance and alignment of implemented actions with plans – is limited in many institutions. This requires complementary reforms to strengthen state capacity, including through anti-corruption, justice, and civil-service reforms (Chapter 1).
Although coordination mechanisms such as the High-Level Commission on Climate Change (CANCC) exist, sectoral planning and horizontal coordination to implement climate policy are not fully aligned. For example, even though they are required by the Framework Law on Climate Change to incorporate climate change and mitigation measures into their sectoral plans, only a few sectors have done so (World Bank, 2022[4]). OECD countries differ in their institutional setup for achieving strong coordination of climate policies. In some countries such as the Netherlands, responsibility for climate policy is bundled with functions such as economy or finance, which helps embed climate change considerations into policy design across sectors. Other countries such as Estonia and Italy in recent years created ministries for climate or for the ecological transition for better policy coordination.
Vertical coordination between the central and subnational governments is equally a challenge. Responsibility for implementation of policies with a relevance to climate change action has been devolved to subnational governments in several areas. Local governments are responsible for disaster risk management and urban zoning. Regional governments are responsible for land use designation and forestry management. However, capacity of subnational governments for policy implementation is limited, in part due to the lack of a functional civil service regime and insufficient subnational fiscal capacity, as discussed by the 2023 OECD Economic Survey of Peru (OECD, 2023[5]). As a result, the central government often steps in during crises and emergencies by declaring a state of emergency with associated budget allocations and forming ministerial committees outside the pre-established frameworks. There is a clear need to improve vertical coordination mechanisms and foster the coordinated implementation of agreed plans and policies, as well as effectively monitoring and enforcing compliance with legislated provisions.
Despite its plans, policies, and international commitments, Peru lacks an agreed and transparent path to achieve its medium and long-term climate goals. Many OECD countries, including the United Kingdom, Denmark, France, Germany, Mexico, New Zealand and Sweden have five-year emissions targets that are revised regularly. Such targets set clear expectations for stakeholders and serve as a benchmark for climate policy development and monitoring. Several countries, including the United Kingdom, Denmark and the Netherlands, have independent advisory bodies that propose the five-yearly emissions targets and monitor compliance as well as consistency of plans and policies with targets. Costa Rica’s National Decarbonisation Plan played a crucial role in aligning the country’s public finance with its climate strategy by setting sector-specific targets. In part, this was enabled by the adoption of the United Nation System of Environmental-Economic Accounting (SEEA).
Peru could do more to provide government entities and the public with access to climate information. While progress has been made in important areas, such as the National Inventory of Greenhouse Gases INFOCARBONO and the National Deforestation and Land Use Platform GEOBOSQUES – both established to comply with obligations under the Paris Agreement – more could be done to improve monitoring capacity, inform entities’ environmental policy implementation and law enforcement, and improve public accountability and understanding of climate policy. This includes strengthening the national monitoring, reporting and verification (MRV) system for climate data, especially in the key areas of deforestation, emissions reductions, and adaptation. Digital platforms and interoperable government systems would be a next step in this direction. Annual reporting in an accessible flagship publication, as is common in countries of the European Union, would improve transparency and public accountability. Other areas for improvement include hazard plans for disaster risk management, surveillance and traceability in the mining and agriculture sectors, and monitoring air and water quality (OECD/ECLAC, 2017[3]; World Bank, 2022[4]), as well as monitoring and steering financial resources allocated to climate action.
4.3.1. Reducing vulnerabilities and improving adaptive capacity
Peru is more exposed and vulnerable to natural hazards than many other countries, due to the high frequency of hazards and spatial concentration of population and economic activity in high-risk areas (World Bank, 2022[4]). Floods, landslides and droughts will become more frequent due to climate change. For example, a 1.5°C increase in temperature would result in a 400% increase in the population affected by floods (IPCC, 2022[6]), which is already higher than in many OECD countries (Figure 4.1). Flooding and landslides resulting from extreme rainfall frequently cause the country’s roads to be blocked, or bridges destroyed, with few alternatives to reroute traffic. At the same time, Peru is vulnerable to the slow-onset hazard of rising temperatures. It has already lost 56% of its glaciers during the last 6 decades (INAIGEM, 2023[7]). Even in a low emissions scenario, Peru will lose 50% of its remaining glacier surface; in a high-emissions scenario it will almost completely disappear (Schauwecker et al., 2017[8]).
Extreme weather events already disrupt Peru’s economy, and climate change is expected to increase their frequency and severity (Cai et al., 2021[9]). For example, a strong to extreme El Niño Costero, a weather phenomenon that generates cyclical changes in sea temperatures in the Southern Pacific Ocean, leads to a 70% drop in fish production and 11% in agricultural output and damage to infrastructure and the capital stock due to flooding from heavy rainfalls (IMF, 2024[10]). According to IMF estimations, Peru’s economy is already suffering a loss of potential output in the order of 4% due to the cumulative effect of climate events from which it does not fully recover. These accumulated losses are expected to increase to around 16% by 2050 even under the mildest scenario. Losses may increase to 23% under the most adverse scenario (IMF, 2024[10]). Translated into annual growth rates, this would further reduce Peru’s already low GDP growth by 0.5-0.7 percentage points each year, without accounting for the cost of reconstruction and other contingent fiscal liabilities such as emergency assistance.
Note: LAC is a simple average of Argentina, Brazil, Chile, Colombia, Costa Rica, and Mexico.
Source: OECD exposure to extreme precipitation and to river flooding indicators.
Such high levels of potential losses call for investments into climate change adaptation. This need is recognised by authorities, who set the objective of reducing by 30% the damages, losses and disruptions caused by hazards associated with climate change. However, current funding for adaptation remains inadequate. The National Adaptation Plan (NAP) estimates spending needs of around 0.7% of GDP per year (Box 4.2), while spending between 2014 and 2020 amounts to only 0.2% of GDP per year and has decreased over time. An investment package which would align adaptation spending with the NAP could mitigate around half to two-thirds of the losses of potential output to climate change (IMF, 2024[10]). Such investments should be made continuously and be channelled into adaptive capacity. This also requires adequate financing, as discussed further below in this Chapter. Investing into adaptation could improve public finances in the future due to higher growth and lower reconstruction costs after disasters. For example, almost 3% of GDP were allocated by the government to reconstruction efforts after the strong 2017 El Niño phenomenon, although spending efficiency and efficacy were very low, and allegations of corruption were rife, which led to the dissolution of the agency tasked with reconstruction in 2023.
Recognising the high vulnerability of Peru to climate change, in 2021 the government presented its National Adaptation Plan (NAP) with a timeline until 2030. The plan focusses on 5 thematic areas – forestry, agriculture, fisheries, water and health – and includes the 3 horizontal objectives of social equity through gender, intercultural and intergenerational perspectives; a participative approach to formulation and implementation of the NAP; and financial sustainability. Of the 92 adaptation measures in the plan, 51 have cost estimates totalling USD 17bn, with 75% befalling on adaptation in forestry, 17% in agriculture, and the rest on water, health, and fisheries. The plan is accompanied by a monitoring and evaluations framework, the National Plan for Monitoring and Evaluating Climate Change Adaptation.
Source: Ministerio del Ambiente (2021) Resolución Ministerial N. 096-2021-MINAM, Plan Nacional de Adaptación al Cambio Climático del Perú: un insumo para la actualización de la Estrategia Nacional ante el Cambio Climático
Current adaptive capacity in Peru is low (Figure 4.2, Panel A). This especially reflects vulnerabilities of water security, the human habitat, and the health sector (Figure 4.2, Panel B) due to long-standing deficiencies in the provision of housing, transport, water, and wastewater infrastructure and an overwhelmed health system, all of which were already identified as bottlenecks in the previous OECD Economic Survey of Peru (OECD, 2023[5]). Moreover, freshwater is highly unequally distributed across the country (OECD, 2021[11]) and low-income households are more widely exposed to natural disasters and climate change (World Bank, 2023[12]), raising distributional concerns. Together, these factors imply that investing into resilient infrastructure and improving water governance are no-regret, win-win actions which are both cost-effective in the short-term and have synergies with broader social and economic policy objectives (OECD, 2025[13]).
A cross-cutting issue is improving and speeding up the implementation of already decided adaptation measures. Even the National Plan for Monitoring and Evaluating Climate Change Adaptation, which tracks adaptation measures until 2030 that were decided in 2021, is neither operational nor has an established timeline for being put into operation. This impedes measuring progress and will hamper the timely detection of whether implementation is on track or not. Ensuring timely and effective implementation is especially crucial at the level of local governments, since many adaptation measures are location-specific. Although all Peruvian regions have adopted regional climate change strategies, limited human and fiscal capacity often limits local administrative capacity. The national government should strengthen technical and financial support to local governments to implement actions that contribute to the fulfilment of the National Adaptation Plan, especially identifying, designing, and managing adaptation projects. Co-financing schemes between national and subnational governments could encourage proactive planning and ensure local resilience measures are aligned with national priorities, while improving public spending efficiency and promoting fiscal discipline.
Note: The ND-GAIN Country Index uses data across 45 indicators to annually rank over 180 countries based on their level of vulnerability, and their readiness to successfully implement adaptation solutions to risks exacerbated by climate change, such as over-crowding, food insecurity, inadequate infrastructure, and civil conflicts. The adaptive capacity index inverts the ND-GAIN adaptive capacity indicator so that higher values indicate greater capacity. LAC is a simple average of Argentina, Brazil, Chile, Colombia, Costa Rica, and Mexico.
Source: Notre Dame Global Adaptation Initiative Country Index (ND-GAIN), 2025, University of Notre Dame.
4.3.2. Strengthening responses to natural disasters
Peru has a long-term national disaster risk management (DRM) policy until 2050 and a shorter-term national DRM plan until 2030, on timeframes which mimic the National Adaptation Plan. While efforts are made to align the two policies, there is a clear margin of progress to further develop synergies, avoid redundancies and benefit from opportunities. Specifically, as in other policy areas, it is essential to strengthen capacities of local governments and improve their incentive structure to align with national priorities (OECD, 2020[14]). This would help advance implementation of the national DRM policy, which has to date manifested itself mostly in policies and plans, less in practical instruments on which authorities could rely in the event of a disaster (World Bank, 2021[15]), although some hazard preparedness manuals were recently issued and funding mechanisms are being strengthened. To improve its DRM framework, Peru could further leverage its embeddedness in international initiatives such as the Global Shield against Climate Risks.
Experiences with past disasters, including the 2007 earthquake and the 2017 El Niño Costero, have laid bare deficiencies in disaster governance and management. In response to the last experience, a national early warning system for extreme meteorological conditions has been planned since 2020, when a government-to-government contract was signed with the United Kingdom. However, implementation is significantly behind schedule and should be accelerated and where feasible integrated with the national early warning system for earthquakes and with climate change adaptation policies. If already implemented, an early warning system could have prevented damages from the 2023 tropical cyclone, the 2023/24 El Niño, and the 2025 rainfalls
The high level of informality is an impediment to building resilience to climate change and responding to disasters. Housing informality complicates urban planning, enforcement of building codes, fiscal incentives to develop a climate-resilient housing stock, and the broadening of insurance coverage. Moreover, labour and business informality lowers productivity and makes it difficult to provide a social safety net to vulnerable populations. As the COVID-19 pandemic has shown, this especially restricts the government’s ability to respond in a nuanced way to disasters, hindering the provision of targeted support. While the ongoing development of a social registry is expected to bring some improvements, continuing to address the drivers of Peru’s structurally high informality (Chapters 1, 2 and 3) will improve the country’s adaptability and resilience to climate change.
Disaster insurance coverage is low. Non-life insurance penetration is 0.8%, well below the OECD average of 5.1% or that of countries in the region such as Chile (1.7%). Only 8% of private properties are insured against natural disasters, and many insurance policies explicitly exclude flood risks. For public properties, insurance is theoretically mandatory by law, but in practice insurance coverage is governed by the availability of funds. Moreover, public property management is fragmented, and each entity individually insures their own assets under management, which prevents achieving any economies of scale. Creating a national register of public assets would allow the public sector to achieve such economies of scale, either by leveraging its bargaining power to negotiate collective insurance (IMF, 2024[10]) or as a basis for the government to self-insure its assets, at least at the national government level, which could be most cost-effective.
Authorities could foster the development of a private disaster insurance market by raising awareness of climate-related physical risks, helping vulnerable segments access insurance, and increasing the availability of affordable insurance through regulation (OECD, 2022[16]). Low coverage of insurance against natural disasters, such as floods, likely reflects a belief that the government will step in to compensate in the case of a catastrophic event, leading to moral hazard and budgetary uncertainties (Maes et al., 2022[17]). Moreover, even though information about risk factors is in principle available, it is rarely considered especially for informal construction, which often tends to build in high-risk zones shunned by formal homebuilders. This requires better enforcement of building codes and planning restrictions that prohibit construction in high-risk areas. At the same time, the pricing of insurance contracts according to risk could increase the salience of risk information, making it more likely to be taken into account. Many OECD countries require comprehensive private flood insurance, either by making insurance mandatory for tenants and homeowners and/or by regulating that flood insurance must be provided through standard home insurance packages, such as in France. While making flood insurance universally mandatory may not currently be feasible in Peru due to high tenure informality and lack of enforcement capacity, it could be required for new mortgage contracts, as in Belgium. Targeted subsidies could be offered, to lower-income households, for example through existing mortgage subsidy programmes for the purchase of green homes. In some countries, such as South Africa, private companies offer home insurance for informal settlements, relying on simple contract features such as fixed payout amounts.
4.3.3. Climate-proofing infrastructure
Land use and infrastructure planning are often inadequate or ineffective, and existing building codes are often not enforced. Most of the housing stock was built informally, and many dwellings of low-income households are in high-risk areas such as hills and riverbeds. Poor building quality and building in inadequate locations are not limited to low-income housing. For example, during the 2017 El Niño Costero floods, 61 health facilities collapsed, affecting the capacity of health services to respond to the disaster (Chávez Cresta, Burbano and Villalobos, 2018[18]). Only 4% of all municipalities in 2017 had local development plans that integrate disaster risk management considerations (World Bank, 2021[15]). A basic impediment seems to be lack of risk information for urban and territorial planning (OECD, 2020[14]). A 2019 study found that only 7 of the 30 most important cities in Peru were up to date with all urban planning instruments as required by national law, whereas 5 cities had none, including Lima (World Bank, 2021[15]).
Better land use and planning policies could help reduce information asymmetries and help insurers price risk and offer suitable products (IMF, 2024[19]). Compliance with the building code, which is currently based on a municipal licensing system that suffers from high evasion, could be improved by moving to a system of risk-based building inspections (World Bank Group, 2015[20]). The 2021 Sustainable Urban Development Law mandates that disaster and climate risk should play an integral role in urban planning, but its implementation would require a clear institutional and regulatory framework for planning, the creation of laws or multisectoral policies on territorial organisation, and a clarification of the roles played by different ministries (World Bank, 2021[21]). Moreover, a modern and updated land registry (see below and Chapter 1) would help local governments in managing their planning instruments and advancing with land titling. Peru could further leverage its experience with making infrastructure resilient to earthquakes to foster climate change resilience.
Roads in Peru are frequently affected by extreme rainfall. This includes the main roads connecting major cities and agricultural production regions to the capital, such as the Pan-American Highway along the coast and the Carretera Central between Lima and the Andes. Due to the lack of redundancy – there are no parallel secondary roads – highways are blocked for a few weeks each year due to flash floods, landslides, or collapsed bridges. Flood-proofing roads, especially along vulnerable points such as bridges, and accelerating existing plans to create an alternative road in parallel to the Carretera Central, would be a cost-efficient strategy due to the high cost of transport interruptions (Hallegatte, Rentschler and Rozenberg, 2019[22]). It is important to incorporate resilience to disasters and disruptions already into today’s planning of infrastructure, including the maintenance and upgrading of existing infrastructure, and make adequate financial provisions.
Climate-proofing infrastructure requires participation of the private sector. Through public-private partnerships (PPP) and other mechanisms, the private sector already plays an important role in the development of transport infrastructure, as highlighted in the 2023 OECD Economic Survey of Peru (OECD, 2023[5]). In 2022, the National Infrastructure Plan and the PPP legislation were updated to include sustainability criteria – financial, social, environmental and institutional – in the prioritisation and operation of projects. More could be done to include environmental and climate risk into infrastructure planning and project evaluation, including the public investment appraisal system. This could be done by incorporating climate change risk into the life-cycle cost-benefit evaluation of infrastructure projects, such as in Japan, the United Kingdom, and the United States, or by monetising a project’s potential benefits for fostering adaptation and resilience to climate change, as in New Zealand (OECD, 2024[23]). Likewise, Peru needs to align its infrastructure planning with land use and territorial planning, as for example Brazil and Costa Rica do.
Liabilities for climate risks should also be appropriately apportioned in infrastructure concessions, which carry large contingent liabilities (Chapter 1). This helps achieve the right degree of risk-sharing and aligns with the OECD recommendation that under no circumstances, unless specified in the contract, should the government adopt responsibility for matters allocated to the private partner, which includes many climate risks. For example, Peru could follow Colombia in including resilience and sustainability clauses directly into PPP contracts for road concessions. In Spain, Colombia, and Costa Rica, adaptation measures must be integrated into infrastructure PPP project design, and in Sweden, Norway and Chile, concessionaries pay financial penalties for climate-related service disruptions in critical infrastructure, which helps firms internalise the benefits from investing into resilient infrastructure.
4.3.4. Improving water security
The Peruvian coast is highly vulnerable to structural water stress, which will be exacerbated by climate change. The Pacific coastal zone is home to 60% of the population and almost 80% of GDP; yet to less than 2% of all freshwater and 1% of all groundwater. The remaining 97-99% of water resources befall on the Amazon basin (OECD, 2021[11]). At the same time, most of the large-scale, export-oriented agriculture is located on the desertic coast, made possible by irrigation channels which have been built in recent years. The low water availability does not leave margin for water shortfalls during droughts, and the gradual melting of Peru’s glaciers due to climate change will lead to a reduction in water for the coastal region (OECD, 2021[11]; IFC, 2023[24]). Water scarcity is already felt today. For example, in late 2024, a drought in the Piura region forced authorities to ration water for human consumption, which impacted both the 2024 harvest of fresh horticultural products such as grapes, asparagus, avocados and blueberries and preparation for the 2025 growing season.
Strengthening the water pricing system would improve incentives for efficient water use (OECD/ECLAC, 2017[3]; OECD, 2021[11]). While Peru has in recent years commendably introduced freshwater, groundwater, and wastewater charges, the tariffs are often too low to set appropriate incentives and to collect sufficient resources for investments into water infrastructure. Pricing schemes should systematically include the price of groundwater extraction (which is currently mostly unpriced and even unmonitored, especially for agricultural use). This would set incentives for water conservation and reduce the current overexploitation, as previously recommended by the OECD (OECD, 2021[11]). Moreover, Peru should remove environmentally harmful subsidies that counteract incentives for water conservation, such as the current reduced electricity tariff for groundwater pumping. Since higher water tariffs could be regressive, affecting particularly low-income households that currently rely on off-grid water extraction, targeted lump-sum subsidies would avoid unintended social impacts.
Multi-purpose water storage facilities linked to pipe and irrigation networks could help smooth out greater fluctuations in inter-annual rainfall variability (World Bank, 2022[4]). Water storage includes nature-based solutions, such as protection of Andean lakes and watersheds, and man-made solutions such as reservoirs. For example, as discussed below, current and planned hydropower projects focus on small dams, which are more resilient to climate change due to their decentralised nature, consume less land, and could be repurposed as energy and water reservoirs. Developing resilience to climate change requires both optimising water flows and investing into reducing water consumption through water-efficient crop varieties and smart irrigation methods (see below).
Through its national and international commitments, Peru seeks to reduce its emissions to contribute to the global effort of reducing the overall severity of climate change. If done right, mitigating climate change can bring important co-benefits that in some areas could improve resilience – such as the environmental services and climate regulation from preserving its biodiverse forests, and better energy security from a diversified energy system based on different renewable energy sources. In a developing country like Peru, the green transition further opens up many opportunities for investment, strengthening innovation, adopting modern technologies, and improving efficiency – all factors that ultimately underpin economic growth and productivity. All of this, however, requires substantial policy efforts to steer the country on its transition path.
Peru has a low share of global GHG emissions (0.3%), lower than its share of the world population (0.43%) and similar to its share of world GDP (0.3%). Around half of total net emissions originate from land use, land use change and forestry (LUCLUF). Energy (18%), transport (14%) and agriculture (15%) are other major emitting sectors. The remainder (9%) befalls on waste and industrial processes and product use. Total emissions have largely been stable during the last decade and a half but emissions from sources excluding LUCLUF have increased by 30% since 2008, largely due to a doubling of emissions from transport and significant increases in energy and industrial processes (Figure 4.3, Panel A).
Note: Energy includes UNFCCC reporting categories “Energy Industries”, “Manufacturing and construction (energy)” and “Energy – Other”.
Source: OECD Environment Database; IDB (2021), Costos y Beneficios de la carbono-neutralidad en Perú: Un análisis robusto.
A 2021 study by the Inter-American Development Bank serves as a reference for the government and for various international organisations (World Bank, 2022[4]; Gobierno del Perú, 2024[25]). It contains a robust evaluation of potential paths to achieving climate neutrality in Peru that considers abatement cost uncertainty, such as uncertainty about the benefits and costs of future technologies including renewables and electric vehicles (BID, 2021[26]). The bulk (95%) of all envisaged GHG emissions reductions falls on three of the four sectors with the highest current emissions: LULUCF, transport, and energy (Figure 4.4). In the envisaged net-zero scenario in 2050 (Figure 4.3, Panel B), negative emissions from LULUCF will compensate for hard-to-abate emissions elsewhere, especially agriculture and energy production, where natural gas will continue to smooth fluctuations in energy demand and supply. By contrast, emissions from transport will have reduced to zero, which requires turning around a strong current emissions growth.
Source: IDB (2021), Costos y Beneficios de la carbono-neutralidad en Perú: Un análisis robusto.
In its Nationally Determined Contributions (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC), submitted in 2015 and updated in 2020, Peru commits to the target of reaching carbon neutrality by 2050. For 2030, Peru commits to GHG emissions not exceeding 209 MtCO2eq, or 30% below the business-as-usual (BAU) scenario. This is a level of emissions 10% higher than the last decade’s average (Figure 4.3) and should be reachable with existing policies (Climate Action Tracker, 2022[27]). Conditional on receiving international support, Peru’s ambition is to cut GHG emissions by 40% relative to BAU or to 179 MtCO2eq (not shown in the figure).
Achieving the Net Zero scenario by 2050, however, requires a substantial effort relative to business as usual (Figure 4.3, Panel B), both in the short and long term. Peru’s net emissions are set to double by 2050 under BAU, especially in transport (+150%), energy (+110%) and LUCLUF (+60%). Significant submissions reductions beyond the NDC targets are required by 2030 to meet the trajectory towards Net Zero. Designing a cost-effective, inclusive and publicly acceptable decarbonisation strategy requires a balanced policy mix including market-based instruments such as emissions pricing, standards and regulations, and complementary policies (D’Arcangelo et al., 2022[28]). At the same time, such a broad-based strategy can and should deal with abatement cost uncertainty.
4.4.1. Tackling deforestation
Land use, land use change and forestry (LULUCF) is not only the major source of GHG emissions today (about 50%) but also the sector which is envisaged to carry 70% of emissions reductions by 2050, and an even larger share in the short run (Figure 4.3 and Figure 4.4). A little more than half (53%) of the Peruvian territory is covered by Amazon rainforest, the second largest in South America only behind Brazil and one of the most vital and biodiverse ecosystems in the world. Reducing emissions requires ending deforestation in the Amazon, turning it instead into a carbon sink with negative emissions through reforestation and sustainable forest management. This would then help balance emissions from hard-to-abate sectors and allow reaching Net Zero. In other countries such as Chile, which has been at the forefront of sustainable forestry practice for some time, emissions from LULUCF have long been negative in most years (OECD, 2025[29]).
Deforestation of the Peruvian Amazon remains high (Figure 4.5, Panel A). It is driven by the expansion of the agricultural frontier, land appropriation, road construction, and informal and illegal logging and mining. In 2020, the first year of the COVID-19 pandemic, deforestation reached a new high. Between 2001 and 2023, total loss of forest cover amounted to 34,000 km2, a little more than the size of Belgium. Work conducted for this Survey shows that deforestation is mainly concentrated in three geographical areas (Figure 4.5, Panel B and Box 4.3): in the northern highland rainforest in regions such as San Martin and Huánuco, where forest is converted into smallholder agricultural plots; in the central Ucayali region, one of the main timber producing regions where deforestation is often associated to illegal logging (Office of the United States Trade Representative, 2016) as well as selective tree felling to enable illegal coca production (CEPLAN, 2022[30]); and in the southern Madre de Dios region, where it is generally associated to informal mining (Asner et al., 2013[31]; Caballero Espejo et al., 2018[32]). Around three quarters of all deforestation occurs on small plots of less than 5 hectares, suggesting an important role for small-scale, artisanal, and informal activities (see also Box 4.3).
Agricultural activity is a major source of deforestation, as the analysis in Box 4.3 reveals. On the small side, rural farming households clear forests in search of more productive land, often as a result of inefficient or unsustainable agricultural practices on soils with poor nutrient quality. The main legal cash crops including for larger farms in the areas where deforestation is mostly happening are palm oil, coffee and cocoa, which are typically exported, often with the intermediation of middlemen. Illegal coca production also tends to take place in the same areas, due to their high agricultural suitability for this crop and their remoteness.
Source: Ministerio de Ambiente, Observatorio Geobosques, https://geobosques.minam.gob.pe/; and OECD calculations
Analysis carried out for this Survey uses data assembled by the MapBiomas project (https://peru.mapbiomas.org), which classifies land use and land use change from Landsat satellite imagery using a machine learning algorithm based on the Google Earth Engine. The advantage of this data source (using the latest version from June 2025) is the longer time (1985-2024) and spatial coverage (1,800 of 1,891 Peruvian districts) compared to other sources such as GEOBOSQUES, which is limited to the 400 districts comprising the Peruvian Amazon 2001-2023.
Its main findings are:
Over the long term (40 years), around 90% of deforestation befalls on the eight regions making up most the Peruvian Amazon – Amazonas, Cusco, Madre de Dios, San Martín, Loreto, Ucayali, Junín and Huánuco (Figure 4.6, Panel A). Over time, there was a shift away from the central Amazon region of San Martín to the eastern and southern regions Madre de Dios Ucayali and Loreto.
Most (around 90%) of deforested land is converted into land for agricultural and livestock rearing (Figure 4.6, Panel B), largely (to 75%) into mixed-use agriculture combined with pastures for livestock (Figure 4.6, Panel C). This would be consistent with small-scale agricultural activities. Deforestation exclusively for crop growing or cattle grazing takes place in a few regions, notably in San Martin where crops such as rice and palm oil account for a significant share of deforested land
There is strong spatial concentration of destination uses for deforested land. While mining, accounts only for around 2% of total agricultural land conversion in the last decade (Figure 4.6, Panel B), in is a significant driver of deforestation in Madre de Dios (33%), and the most important in some provinces of these regions (Figure 4.6, Panel C).
Note: In Panel A and B, deforestation is defined as net forest loss over the five-year period, which might differ from estimates of annual forest loss. In Panel C, the main land use change associated with net forest loss by province over the ten-year period is shown. Only districts with at least 1,000 ha of forest loss over the decade are shown.
Source: MapBiomas, Version 3.0 of the annual series of land use in Peru, consulted on 13/06/2025 through the link: https://peru.mapbiomas.org/estadisticas; and OECD calculations.
Two additional drivers of forest loss and degradation that are not covered in the land-use data are illegal logging and coca production. Using complementary data sources on detected coca production and illegal logging alerts, a significant association of these illicit activities and deforestation is found.
Source: Garcia Soto and Koelle (forthcoming). Deforestation in Peru: A spatial analysis. Technical Background Paper.
Land use shifts can be achieved with very little investment but rather require effective institutional changes concerning the assignment and enforcement of property rights, the rule of law, and a shift towards nature-based modes of production (BID, 2021[26]). Many of these issues were already touched upon in the 2023 OECD Economic Survey of Peru (OECD, 2023[5]), but there has been little tangible progress since then. Reversing deforestation and extending forest coverage would generate a range of environmental co-benefits beyond carbon capture including reduced soil erosion, flood risks, and river degradation (IMF, 2023[33]).
Strengthening institutional arrangements to tackle deforestation
Coordination between the different government entities charged with tackling deforestation, both horizontally among the national entities, and vertically between national and regional authorities, remains a challenge. The Ministry of Agricultural Development and Irrigation (MIDAGRI) is the national forest authority through its National Forest and Wildlife Service (SERFOR), while the Ministry of Environment (MINAM) is tasked with environmental policy and oversees protected areas and those enrolled in various conservation programmes. Informal mining is regulated by the Ministry of Energy and Mines (MINEM), while law enforcement is coordinated by the Ministry of the Interior. Moreover, in regions with a high share of forest coverage, including all the regions containing the Amazon, forest administration and supervision are devolved to the regional governments. Better coordination, including through an integrated forest management plan that is developed together by all entities, and which makes use of all available policy instruments, would strengthen forestry planning, implementation, administration and enforcement of policies, information sharing, and coordination of timely interventions. Tackling deforestation efficiently further calls for concentrating on the regions where deforestation is high and developing differentiated strategies that address the main drivers of deforestation in each region (see Box 4.3). It is also necessary to involve the private sector in the fight against deforestation, including through the mainstreaming of industry sustainability standards and due diligence requirements (CEPLAN, 2022[30]).
Peru already leverages information technology to monitor its forest cover, map deforestation, and issue early alerts. Since 2017, the GEOBOSQUES platform has provided publicly available information derived from analysis of satellite imagery on forest cover and annual change of forest cover. Moreover, a non-public part of the platform issues real-time early alerts on potential ongoing deforestation for national park authorities and law enforcement agencies. However, there is much more potential to improve this centrally collected high-frequency information and to leverage it to inform local interventions. Evidence from Brazil points to the large positive effects that effective environmental enforcement informed by satellite-based deforestation alerts can have on reducing deforestation (Assunção, Gandour and Rocha, 2023[34]). Peru should scale up its monitoring and early warning system based on GEOBOSQUES, ensuring timely issuance of alerts and follow-up by law enforcement authorities. Simultaneously, better enforcement requires investing into local enforcement capacity, particularly in remote Amazon regions, ensuring adequate staffing, equipment and capabilities.
Strengthening governance and integrity would enhance the effectiveness of cross-cutting policy efforts. Local officials enforcing policies, regulations and the law often operate with limited oversight, increasing corruption risks. Better monitoring and control systems, including with the aid of digital technologies, are therefore a key step to improving governance. Some regional governments are taking laudable steps in the right direction. The San Martin regional government, for example, has developed an action plan to reduce corruption risks in the timber trade value chain, where falsification of certification for illegally harvested timber is a major problem (Associated Press, 2017[35]). The objectives are to improve internal control systems for timber certification, and to better monitor and control the issuance of land permits and the forest administration (Basel Institute of Governance, 2024[36]). At the same time, there is ample room to address impunity and corruption at all levels (Chapter 1), especially regarding illegal land use. Over 80% of Peruvians think that the government is not doing enough to address deforestation and illegal logging and mining, mainly due to corruption (Proética, 2022[37]). Authorities should therefore intensify efforts to effectively rein in illegal activities that contribute to deforestation as part of a national strategy to intensity the fight against corruption at all levels (Chapter 1).
Strengthening territorial planning and forest land use rights
Most deforestation occurs on lands that have not received any territorial categorisation (Ministerio del Ambiente, 2019[38]). Zoning, the process of assigning a territorial categorisation according to the Forest Law, is a prerequisite for granting land-use titles such as concessions on lands in the public domain. Evidence from Peru suggests that land titling is effective in preventing deforestation, reducing forest clearing by up to 75% (Blackman et al., 2017[39]). But zoning is a slow process, with many different steps and actors involved, leading to the risk of significant bottlenecks. Only a minority (30%) of farmers in Peru have a land or land-use title, and subsistence farming across the country takes place irrespective of protected areas, such as for forestry or watershed protection (OECD/ECLAC, 2017[3]). About 18% of the Peruvian territory is categorised as protected areas; and a smaller share is privately owned. To advance on categorisation of land, the forest zoning process and its ex-post monitoring should be simplified and expedited, including by exploiting digital technologies. Moreover, the local-level of granting of certificates of possession by mayors adds to complexity and potentially results in a growing number of landholders not formally recognised at the national level.
The status quo situation of deforestation driven – among other factors – by expansion of agricultural activity, the need to preserve livelihoods of rural farming households who often live in situations of poverty or extreme poverty, and the global policy goal of stopping deforestation to mitigate the effects of climate change, require a careful balancing act. The challenge lies in sustaining and improving the livelihoods of farmers on their current plot in a sustainable way, eliminating the need to clear another piece of forest to create a plot, either locally or via migration to a different location.
Agroforestry Concessions (Cesiones en uso para sistemas agroforestales, CUSAF) promoted by SERFOR could be used more widely to incentivise sustainable land use by small-scale farmers. Agroforestry Concessions are land-use rights on public forest land use for agriculture, awarded on the condition that it is state land without any assigned private usage right, and that the land has been deforested before 2011 (Reyes and Robiglio, 2018[40]). Concessionaries’ land tenure and land use are formalised in return for a commitment to avoid further deforestation and to use sustainable agroforestry practices. Other benefits include technical assistance, trade promotion, and access to credit via a mortgage on the concession plot. While the instrument could potentially cover 120,000 small-scale farming households occupying collectively one million ha of land (Robiglio, Vargas and Suber, 2018[41]), implementation has been slow, with about 1,200 concessions awarded that cover about 5,500 ha; mainly due to the slow zoning process. Plans by SERFOR to update guidelines to expedite the zoning process are welcome, as long as adequate technical standards that help to preserve forest are ensured, and result in improved processes being implemented.
Agroforestry Concessions could be more successful if they went along with more capacity-building initiatives and better monitoring of sustainable agroforestry practices, more secure land rights to incentivise long-term investments into land productivity, and access to finance (see Chapter 2) to undertake such investments. Knowledge gaps among farmers, especially relating to soil conservation practices and nutrient management, are widespread (Parodi et al., 2022[42]). Unless concessionaries have the capacity to farm the land sustainably, they will likely be forced to look for a new plot once the old one has degraded. It is estimated that 5 million ha of land – more than the total deforested land since 2001 – are abandoned. Capacitation and supervision visits are carried out by OSINFOR and local forestry agencies, but budget constraints and the fact that areas under concession are remote and spread out are an obstacle. Remote sensing and communications technologies could complement on-site visits and increase their effectiveness.
A recent change to the Forest Law has modified the procedures for granting land-use titles. The law was amended by Congress in December 2023 with limited consultation with affected stakeholders. A key modification concerned temporary provisions that eased the requirements for granting land-use licenses on public land used for agriculture and deforested before January 2024, suspending for two years zoning as a prerequisite for licensing. Some observers believed that the reform could reduce deforestation through several channels: by formalising informal land tenure with licenses that at least in principle have conditions and obligations attached to them, by increasing legal ties of current occupants to their land thus disincentivising further migration, and by helping smallholder producers to become compliant with the European Union Deforestation Regulation (EUDR) (Peña Alegría, 2024[43]). Others, however, were concerned about the negative signals the legal change might give by promoting impunity, which might encourage further deforestation via land appropriation and clearing in the expectation of a future land title. In March 2025, the Constitutional Tribunal declared the law’s temporary provisions as unconstitutional, citing the Constitution’s environmental protection principles and concerns about due process regarding prior consultation of Indigenous communities as arguments. Another part of the law that remains in force suspends the requirement for updating the registered land use category for private plots but explicitly confirms the requirement that 30% of the plot is covered by forest. Upholding this legal requirement, however, demands better monitoring and enforcement capacity. Investing into audits, beginning with large landholdings for their size of forest land and the visible signal audits send, might be a useful first step.
Notwithstanding these legal changes, managing forest land to tackle deforestation requires addressing the underlying problem that records of permitted land use, actual land use, and possession of forest land are mostly outdated and fragmented or inexistent, particularly for public land. Widespread informal occupation and cultivation of land is both a consequence of this situation, and at the same time contributes to it, hampering territorial planning and monitoring and enforcement of forest laws. A more permanent solution that strikes an adequate balance accelerating and streamlining land tenure formalisation while ensuring the enforcement of forest law and protecting communities remains pending. The project for a Sustainable Agriculture of the Amazon Law, which has passed its first hearing in Congress, could provide such an opportunity.
A promising solution, already pursued by other countries in the region, lies in developing a comprehensive and continuously updated land registry as a tool to ease the administration, assignment, and monitoring of land titles and land use rights. For example, Colombia is in the process of developing a multipurpose land registry to unify all information regarding a plot including use, ownership and suitability (see Chapter 1 and (OECD, 2024[44])). This single registry will serve as a reference for territorial planning and administration, private land markets, monitoring and enforcement of land use regulations, and other purposes such as tax administration. It is meant to be continuously updated to reflect the current situation of the plot, using interoperable databases and artificial intelligence to detect and regularise land use changes. In Peru, such a policy would also be useful in planning and implementing climate change adaptation and disaster risk management policies (see above).
A more agile land assignment and efficient administration of property and land-use rights needs to be accompanied by more effective enforcement, both to prevent opportunistic deforestation and to increase incentives for investing into sustainable production on existing agricultural land. Land appropriation is a main contributor to deforestation, especially when illegal actors are involved and the land belongs to Indigenous communities (Mongabay, 2024[45]). Enhancing criminal intelligence capabilities to identify and target illegal mining, logging, and cocaine production operations would be essential. Additionally, strengthening cooperation with neighbouring countries like Brazil, Bolivia and Colombia is crucial to rein in transnational criminal networks operating in border regions. However, better enforcement not only requires more law enforcement capabilities and control and monitoring systems to deter corruption (see above), but in general a greater state presence in remote forest areas.
Providing economic incentives
Payment for ecosystem services (PES) and other economic incentives are a key ingredient of successful strategies for reversing deforestation, as the case of Costa Rica shows (Box 4.4). In a context where deforestation is mainly driven by productive activities of poor households, PES has the potential to reduce both deforestation and poverty by providing poor households with a cash transfer conditional on conserving their forest. PES apply the “beneficiary pays” principle to externalities, where a payment is made for an action (such as conserving forest) that would not be privately beneficial to that person. However, there is the risk that PES subsidises forest conservation that would have happened anyway (so-called lack of additionality), or that beneficiaries shift instead to clearing another plot not covered by PES (so-called leakage). Early evidence from PES suggests that these concerns do not outweigh the benefits of PES, which can be cost-effective at reducing deforestation (Jayachandran et al., 2017[46]) even though the contractual conditionalities are rarely enforced in practice (Wunder et al., 2018[47]). More recent evidence from Mexico suggests that contracts that require participants to enrol all their land instead of selectively enrolling individual plots increase additionality and reduce leakage, therefore improving the effectiveness and efficiency of PES (Izquierdo-Tort, Jayachandran and Saavedra, 2024[48]).
There is ample room to expand the use of PES in Peru. The national PES registry maintained by the Environment Ministry lists 70 different national PES schemes. However, the majority relate to watershed protection, and only 12 PES schemes deal with forest conservation as the primary objective, covering about 9,000 ha in total. All these schemes are funded by private or utility companies. As recommended in the 2023 OECD Economic Survey, Peru could adopt a public PES scheme based on best practices, such as for example Costa Rica (OECD, 2023[5]). So far, only the national forest programme (Programa Bosques), run by the Ministry of Environment, provides economic incentives for forestry stewardship, but only to communities and other collective beneficiaries, not private landowners. Moreover, incentives are very low at PEN 10 (around USD 2.5) per hectare and year. For comparison, Costa Rica’s PES scheme pays between USD 42 and USD 107, and its beneficiaries can be individuals, groups of small landowners organised in an association, and Indigenous communities. The programme’s impact could be strengthened by improving its financial resources (the budget totals only USD 2.5 million) which are largely spent on administrative costs (Giudice and Börner, 2021[49]) and coordination with other forest conservation programmes, especially those under authority of the Ministry of Agriculture.
Costa Rica is the first tropical country to reverse deforestation with decisive policy action since the mid-1990s, raising its forest cover from 20% to 60% through reforestation, due to a mix of factors: strict forest clearing regulations, expanding protected areas with a strong multi-level governance system, and economic incentives:
The first national deforestation strategy established in 2008 included reference emission levels from forests and monitoring systems.
Protected areas cover a quarter of the land mass and have been turned into an important source of revenue worth 3% of GDP, largely due to ecotourism. This provides economic conservation incentives and finances the management and upkeep of protected areas through entrance fees.
PES cover 1.3 million ha, more than 40% of total forested area. Activities eligible for payment include forest protection, commercial reforestation, agroforestry, and regeneration of degraded areas. Its cost, totalling USD 600 million between 1997 and 2021, is financed by a ring-fenced portion of fuel taxes as well as international green finance mechanisms such as carbon credits and REDD+.
Complementary success factors of the deforestation strategy included strong institutions, elimination of cattle ranch subsidies, and effective land title enforcement.
Source: (OECD, 2023[50]) Environmental Performance Review of Costa Rica
Private sector participation in reforestation projects needs much stronger incentives. Reforestation has doubled from around 8,000 ha per year pre-2019 to about 14,000 ha in 2019-2022 (INEI, 2023[51]). However, this amounts to less than 10% of the total deforested area, barely changing the net loss of forest cover. It is far from Peru’s pledge, under the Bonn Challenge, to reforest 3.2 million ha by 2030. Forestry is an underdeveloped sector that falls far below its potential, exemplified by the fact that Peru is a net importer of wood products, despite its rich forest resources (OECD/ECLAC, 2017[3]). A PES scheme with differentiated payments could provide incentives for reforestation (OECD, forthcoming[52]). In Costa Rica, for example, landholders receive about twice the payment if the land enrolled in the programme is reforested than if it consists of existing forest to be preserved. Another policy to encourage reforestation, directed at larger plots, is fostering the development of biodiverse commercial timber plantations on deforested land (World Bank, 2022[53]).
REDD+, a programme of international collaboration to combat deforestation under the UNFCCC, and other voluntary carbon markets provide an opportunity for developing countries like Peru to receive international financial support for PES and other programmes that reduce deforestation and forest degradation. REDD+ implementation in Peru is supported by Norway, Germany, the United Kingdom and the United States. The Peruvian government is actively working on establishing a legal and institutional framework for REDD+, and has put in place several enabling initiatives, for example the forest monitoring platform discussed above and the national registry of mitigation actions (RENAMI). However, implementation of concrete REDD+ projects is still lagging, and largely limited to early pilot initiatives. Other countries in the region such as Argentina, Brazil, Chile, Colombia and Costa Rica have already received carbon credits based on REDD+ initiatives (IMF, 2024[19]). While the involvement of many actors such as NGOs is positive for innovation, transparency and safeguarding, the intergovernmental nature of the REDD+ mechanism requires a clear and strong leadership by the Ministry of Environment, complementing and enabling private initiatives while ensuring appropriate standards (Peña and Sarmiento Barletti, 2022[54]).
A domestic emissions trading system (ETS), as those established in many countries in Europe and Latin America, such as Brazil and Colombia, would provide another avenue to preserve and restore the Amazon forest. An ETS requires emitters of GHG emissions to purchase carbon credits on a market, while individuals and companies that generate negative emissions, such as through afforestation, reforestation, or carbon sequestration projects can generate credits and sell them profitably on the market. This can provide powerful incentives for investing into environmentally beneficial activities that currently have no or only low economic payoffs such as forest conservation or reforestation. The system could build on voluntary domestic carbon credit mechanisms, such as the “Peru Carbon Footprint” mechanism. A domestic ETS should be gradually introduced starting with the largest emitters and the integration between the domestic carbon market and international markets operating under REDD+, Article 6 of the Paris Agreement, and other mechanisms should be ensured to avoid duplication and align incentives. At the same time, a successful implementation of carbon markets requires complementary measures to improve land tenure security and building a strong measurement and monitoring framework of forest coverage, as recommended above.
Ecotourism provides yet another opportunity to improve the valuation of Peru’s natural assets and biodiversity, by creating an important source of income to owners of forest land, including the government as a manager of national parks. This has been a cornerstone of Costa Rica’s successful in reversing deforestation (see Box 4.4). Colombia also promotes ecotourism and cultural tourism as a way of bringing development and economic opportunities to long marginalised rural communities and thus contribute to peacebuilding in the country’s diverse territories (OECD, 2024[44]). While tourism is an important sector in Peru, contributing about 2.5% to GDP and creating about 700,000 jobs before the pandemic, touristic routes generally concentrate in the capital Lima and regions with cultural assets, such as Cusco (OECD, 2024[55]). Developing ecotourism in other regions of the Amazon first and foremost requires better domestic transport infrastructure; in addition to training and access to finance through targeted programmes, such as the bio-business programme launched in 2023. The ongoing update of the National Tourism Policy provides an opportunity to focus policy support on creating enabling conditions.
Fostering community involvement
Common ownership of land is the most widespread form on land tenure in Peru and covers 95% of private non-agricultural land (OECD/ECLAC, 2017[3]). About 10 million ha (15% of the Amazon) currently belong to formally defined communal reserves. Other parts are inhabited and tended by Indigenous communities informally, as has been the practice for many centuries. Involving communities in the policies described above – land titling, PES and REDD+ – while recognising their traditional ancestral knowledge and forestry practices is therefore essential for the success of efforts to stop deforestation. This is an important element of forest conservation and forest management not only in Peru but also in other OECD countries, since worldwide more than a third of intact forest landscapes are estimated to be within Indigenous People’s lands (Fa et al., 2020[56]). In Canada, for example, community forests are a common form of land tenure recognised by various legal frameworks according to local customs and traditions.
Land right and tenure insecurity negatively affects communities’ livelihoods and ability to effectively participate in REDD+ and other PES schemes. This manifests itself in two main ways. First, indigenous communities in Peru are often unable to enforce their property rights over forest – granted by a communal land title, or the establishment of a communal reserve, for example – against third parties that encroach on and deforest their land. This is especially the case for illegal activities including the cultivation of illicit crops, illegal logging, or gold mining. Many Peruvian Indigenous leaders who resist such activities on their communities’ land are threatened or killed.
Second, the enhanced valuation for forest land that PES causes can provide incentives for land appropriation by third parties (Larson et al., 2013[57]). Actors foreign to the community might seek to obtain land titles or concessions on untitled community land to benefit from REDD+ and other mechanisms, which might be less accessible to local communities. Recently, Peruvian courts found that Indigenous communities’ lands were expropriated for awarding concessions (Associated Press, 2024[58]). It is therefore important to put in place safeguards that prevent communities from being taken advantage of, which are an essential part of “readiness” for REDD+ (UNFCCC, 2024[59]). A key element for protecting communities is the formalisation of property rights that were previously based on local customs and traditions. Customary rights no longer offer adequate protection once outsiders develop an interest in the land. Authorities should speed up ongoing land titling processes and leverage digital technologies and records to support documentation of land tenure history.
Relatedly, simplifying bureaucratic processes and providing technical and financial support can help communities formalise their land tenure and scale up conservation efforts (Shanee, Shanee and Horwich, 2014[60]). Peru has more than 170 private conservation areas covering a total of 400,000 ha of land, in addition to ecotourism concessions. However, successfully applying for recognition of a conservation area or conferral of a concession is cumbersome and costly, often beyond the community’s financial and professional resources. A combination of technical assistance for communities and a simplification and streamlining of the requirements would enable more communities to have their conservation efforts formalised and recognised and be able to benefit from REDD+, all of which would increase conservation incentives. Evidence from successful community forest management programmes in Mexico and Brazil points to the role of land tenure formalisation and strong governance institutions that include both the local community as well as supportive outside parties (Cronkleton, Bray and Medina, 2011[61]).
4.4.2. Reducing the reliance on fossil fuels
Fossil fuels are still predominant in the energy matrix
Fossil fuels account for 71% of Peru’s primary energy supply, mostly for transport and electricity generation (Figure 4.7). GHG emissions from these two sectors have risen more strongly than other sectors in the last decade and are projected to increase by 250% until 2050 in the business-as-usual scenario (BID, 2021[26]). Currently they make up about 30% of total emissions. Natural gas has been playing an increasingly important role, with total domestic consumption since 2005 rising five-fold thanks to the Camisea gas fields. Oil is still the most important energy source due to its role in transport, which has been rising with economic and population growth as well as higher car ownership. Hydropower supplies close to 10% of total energy and 50% of electricity. Renewable energies including solar, wind and geothermal power still play a relatively marginal role in total energy supply. Around 15% of energy supply stems from biofuels and waste, largely from domestic heating and cooking stoves.
Source: IEA.
Reducing the reliance on fossil fuel requires two interconnected and major changes to energy production and consumption. First, the transport sector needs to switch from internal combustion engines powered by fossil fuels to electric vehicles. Second, electricity production needs to expand massively – to a large degree to sustain the electrified transport sector – and be driven by renewables. The legacy policy of natural gas massification – which stems back to the 2000s and seeks to increase access for households, industry and the transport sector to new domestic natural resources with subsidies and infrastructure investments – might require rethinking (World Bank, 2022[4]). A general, technology-neutral carbon price can set the correct price signals to accelerate these transitions.
Decarbonising the transport sector
Transport accounts for 12% of current GHG emissions. Due to strong growth under the business-as-usual scenario, almost 20% of total envisaged emissions reductions befall on this sector (see Figure 4.4, Panel A and (BID, 2021[26])). Achieving the long-term goal of zero transport emissions by 2050 requires electrifying the entire vehicle fleet. This is a very challenging endeavour, not least because transport emissions grew the fastest in the last decades, the vehicle fleet is old and contains many pollution-intensive vehicles, and public transport is highly decentralised and informal, pushing many Peruvians to rely on private vehicles if they can afford them (Figure 4.8). Even though in the medium and long term, a zero-emissions vehicle fleet would likely result in substantial operating cost savings, it requires sizeable public and private up-front investments.
Source: Office of Planning, Budget and Modernisation (OPPM); OECD Environment Database.
A low or zero-emissions vehicle fleet would help achieve complementary public policy goals, such as reducing air pollution. The share of the population exposed to unhealthy levels of air pollution in Lima is higher than in most major cities of OECD countries (Figure 4.9). Average annual particulate matter (PM2,5) concentration in Lima’s districts ranges between 20 and almost 40 mg/m3 (INEI, 2023[62]). While this represents considerable progress, thanks to policy efforts, since the 2000s when air pollution reached more than 80 mg/m3, current levels are still significantly above the threshold of 5 mg/m3 recommended by the World Health Organisation. Air pollution has been related to more than 10,000 annual premature deaths in Lima (United States EPA, 2020[63]) and transport has been identified as the main contributor to air pollution (Tapia et al., 2020[64]).
2024 average PM2.5 concentration, µg/m3
Source: IQ Air, World Air Quality Report 2024.
Heavy trucks and buses account for almost 30% of total GHG emissions from transport, even though they make up only 5% of the total vehicle fleet (Figure 4.10, Panel A). Diesel-powered transport vehicles benefit from implicit subsidies in the form of a 70% rebate on fuel excise taxes and the fuel price stabilisation fund, while vehicles running on natural gas benefit as well from tax exemptions and fuel conversion subsidies. Gas-derived fuels can play a role in the short term in mitigating emissions of the existing vehicle stock. However, a comprehensive strategy should ultimately incentivise timely purchases of new, zero-emissions trucks and buses, including discontinuing fossil fuel subsidies (see below). This would not only reduce emissions but also air pollution. Other policy options in the short term include incentivising an increase in biofuels through a rebate on the fuel excise tax rate, which is currently the same as for fossil fuels; a review of biodiesel blend rates, which are only at 5% and unchanged since 2012 compared to 10% in Colombia and 14% in Brazil; and more stringent fuel-efficiency standards for heavy-duty vehicles. In the longer term, development of a market for green hydrogen, for which Peru with its abundant renewable potential has a cost advantage (see below), will help decarbonise freight transport.
Note: Tricyles include mototaxis.
Source: RAGEI (MTC, 2019[65]); OECD calculations from the 2022 Encuesta Nacional de Hogares (ENAHO).
Urban public transport opens many leverage points for policy to influence the electrification of heady duty transport, thanks to the strong role governments already play in urban public transport. For example, Santiago de Chile managed to electrify 37% of its bus fleet in 2024, with plans for lifting this share to 55% by 2026 (OECD, 2025[29]). In Peru, however, the atomisation and informality of public transport provides a basic obstacle to any such initiatives. No Peruvian city, not even the capital, has an integrated public transport system (Box 4.5). Except for the Lima metro, no public transport system receives government financing. An ongoing public transport reform provides an opportunity to create an integrated and sustainable public transport system in Lima. A final, non-renewable five-year license is provided to traditional bus operators in the areas served by new concessionaries. Where there is no concessionary, licenses are renewable for 5 years conditional on replacing the vehicle with a modern bus, and up to 14 years if the new bus is electric. In addition, two new routes will be licensed exclusively to bus companies running an entirely electric fleet. These are steps in the right direction, and it should be a priority for the government to make this long overdue reform a success.
Once established, a consolidated, orderly, and integrated public transport system can and should be leveraged for further emissions reductions. This will require timely and strong complementary policies. First and foremost, the right incentives need to be set, and an enabling environment provided for the renewal and rationalisation of the vehicle fleet with large modern buses, which by itself is expected to bring important emissions reductions. Operators will require financial solutions to bear the large up-front capital investments, and incentives provided by scrapping or fuel conversion programmes that need to be closely coordinated with the reform and implemented in a timely manner. Other complementary measures include effective enforcement of license conditions and against unlicensed operators, impounding the oldest and most polluting vehicles, many of which have acquired significant unpaid traffic fines, and a reconsideration of the VAT exemption for public transport, which might give a cost advantage for formal transport operators that could otherwise deduct VAT paid on inputs.
Liberalisation of transport services and the import of used buses in 1992 led to excessive market entry. The number of buses increased fivefold to almost 50,000 units – mostly consisting of vans and small buses with around 20 seats – with knock-on effects on traffic congestion.
In 1997, the Metropolitan Municipality of Lima (MML) regulated bus routes, introducing ten-year licenses. However, the MML allowed for sub-contracting from licensees to vehicle owners, who in turn informally sub-contract drivers renting the licensed vehicle for a daily fee. Drivers on the same route fiercely compete for passengers, impacting service quality and road safety.
In 2003, ten-year licenses stopped to be issued and instead were renewable every six or twelve months on a “temporary” basis in anticipation of an integral transport reform, removing any incentives for investment into vehicle or service quality. The creation of the Authority of Urban Transport in Lima and Callao (ATU) in 2018 led the basis for the currently implemented reform.
In parallel to this traditional, informal and atomised public transport system, in 2011 a BRT system operated by the MML, and a metro operated by the national government were inaugurated. Both systems so far consist of a single line each, although a second metro line originally scheduled for 2019 is now partly operational. In the mid-2010s, an attempt at an integral transport reform awarded major bus routes to concessionaries, but the reform met political resistance and has failed to advance and even been partly reversed.
Source: Jauregi-Fung et al. (2019[66]): “Anatomy of an Informal Transit City: Mobility Analysis of the Metropolitan Area of Lima.” Urban Science, 3, 67.
Bus rapid-transit (BRT) lines offer a cost-effective way of building modern mass transit systems and achieving emissions reductions. A much smaller fleet of high-capacity, low-emissions BRT buses, such as Lima’s Metropolitano BRT (which runs on gas) could replace small and polluting old diesel minibuses. Moreover, modern, efficient and safe mass transit systems such as BRT encourage a shift from private car usage. Evidence from Mexico City and Bogotá’s BRT indicates that they can reduce GHG emissions by 10-20% (Scholl, 2015[67]). Due to the low cost and high speed of construction compared to light rails or metros, BRT are popular in many countries in the region and are prevalent even in secondary cities such as Pereira in Colombia, Curitiba in Brazil or Pachuca in Mexico.
By contrast, the Metropolitano is still Peru’s only BRT, despite urban transportation plans of six cities foreseeing a total of 130 km BRT operating by 2030 and a World Bank study showing the feasibility and emissions reduction potential of 400km of BRT corridors by 2050 (World Bank, 2022[68]). The government should support local authorities in implementing these plans according to schedule. Moreover, the Metropolitano performance is hampered by frequent breakdown of buses that are reaching the end of their technical life and a fleet that has not kept up with expansions of the initial corridors (World Bank, 2024[69]). Authorities should ensure that the bus fleet is replaced as needed, and that operators are provided sufficient incentives for this. It is also essential to integrate the Metropolitano with the expanding network of the Lima metro, the implementation of which should be accelerated.
Peru’s electric vehicle (EV) market is still very small. In 2023, only 2% of new car registrations were electric (plug-in and hybrid) compared to 17% in Colombia, 50% in France and Germany, and 97% in Norway. The main constraints for the development of electric vehicles are the very limited charging infrastructure, especially outside Lima, and the elevated up-front investment cost of electric vehicles. At the same time, the total cost of ownership of EV in countries such as Germany (with high fuel prices) and China (with low electricity prices) has in recent years fallen below that of vehicles with internal combustion engines, even before subsidies (IEA, 2024[70]). While Peru’s level of economic development and income poses some limits to EV adoption, the experience of Colombia shows that it is possible to achieve much higher EV adoption rates (17%) in a similar context, with the right policies. These include financial and regulatory incentives and the development of charging infrastructure.
Charging infrastructure for EV is underdeveloped. Currently, Peru has around 70 chargers mostly in Lima, all of which are privately owned, and none of which are fast chargers. The absence of a legal framework to foster electromobility – despite almost two dozen congressional initiatives, none of which were adopted – stymies the development of charging infrastructure, despite existing regulation for chargers. In many OECD countries this is boosted by public incentives or regulations. For example, some municipalities in Canada require EV charges to be installed in commercial parking lots or petrol stations. Several countries including Greece, the United Kingdom, and Denmark provide public funding. Other possibilities include updating the building code to create statutory rights for residents of apartment buildings to install EV chargers, such as in Germany, or requiring all new buildings to have at least one EV charging point, as in the United Kingdom.
Fiscal incentives can increase the uptake of EV, especially in the initial phase of adoption while externalities from a thicker EV network justify the use of subsidies. But tax incentives and subsidies must be carefully designed to avoid some of their pitfalls and only be used after careful cost-benefit analysis. Evidence from Canada and Norway shows that EV tax incentives are most efficient if they are targeted at the most polluting vehicles and tied to a scrappage scheme (Fournel, 2023[71]; Camara, Holtsmark and Misch, 2021[72]). In Peru, this could be achieved as part of a wider clean transport strategy by tying EV subsidies to already existing scrappage schemes for old diesel trucks and buses, although this would require better monitoring and ensuring that the programme reduces the overall vehicle stock. Several OECD countries have subsidy programmes for the acquisition of electric trucks, like the Netherlands, where the amount depends on the size of the company buying the vehicle, or France, where grants can reach up to 40% of the cost of a new electric truck (IEA, 2023[73]).
A largely untapped segment for EV is motorcycles (including three-wheelers), for which there is a large market in Peru, with a total vehicle stock more than double that of cars (Figure 4.10, Panel A). The total cost of ownership of electric motorcycles in countries such as India and China is already at or below fuel-powered alternatives (IEA, 2024[70]). However, in 2024 only about 500 of almost 250,000 newly registered motorcycles in Peru were electric. Compared to cars, which are disproportionately owned by high-income households, motorcycle and tricycle ownership is more evenly spread out along the income distribution (Figure 4.10, Panel B). High up-front cost of EV might be a deterrent especially for the lower-income buyers in this market segment who at the same time are more credit-constrained or subject to higher interest rates. For this reason, some countries have introduced targeted subsidies. For example, India bolstered uptake of electric motorcycles and rickshaws with its Go Electric campaign.
Finally, reducing GHG transport emissions requires developing alternatives to road transport. Non-motorised modes of transport, especially cycling, are feasible especially in coastal cities such as Metropolitan Lima, a mostly flat city on the sea level with year-round mild temperatures and without any meaningful precipitation. The development of cycle lanes in recent years constitutes some progress, but there is much room for increasing the participation of cycling in transport, which was below 1% in 2019, and which could substitute for motorised means of transports including motorcycles especially in cities. Moreover, many COVID-era cycling lanes have not been sustained, and some cycling infrastructure been reversed, highlighting the need for continued political commitment to comprehensive local clean mobility strategies. Rail and cabotage have the potential to offer efficient alternatives to road transport, especially for freight. Evaluation of freight cabotage pilots point to cost savings relative to road transport – in a context of high logistics costs even compared to other countries in the region – as well as emissions reductions (Semino Romero, Berrospi Villafuente and Akimoto Toyohama, 2020[74]). However, currently only 0.1% of all domestic cargo is transported via ports. Developing the cabotage sector would further increase climate resilience, since roads are sparse and vulnerable to disruption from climatic events (see above).
Letting renewables lead the energy sector
The energy sector (excluding transport) accounts for 18% of current GHG emissions and 11% of envisaged emissions reductions in the cost-effective scenario (BID, 2021[26]). Meeting emissions targets will require that essentially all newly installed electricity generation capacity from now on comes from renewables (solar, wind, geothermal and hydropower), with gas providing support in peak times and as a fallback option. Overall, installed electricity capacity is projected to almost quadruple by 2050, not only due to economic growth but also because of the electrification of transport. Peru’s CO2 emissions intensity from electricity generation is close to the average OECD country (Figure 4.11). This is thanks to the role of hydropower, which currently produces half the country’s electricity (Figure 4.12), compared to an OECD average of 14%.
Source: Ember (2025); Energy Institute - Statistical Review of World Energy (2024) – with major processing by Our World in Data.
Since its privatisation in the 1990s, Peru’s energy sector has been characterised by a solid regulatory and supervision framework. OSINERGMIN regulates the electricity and natural gas sector, sets tariffs, ensures compliance and quality standard. The electric grid is managed by COES. A key emphasis is on competition and quality standards. Overall, the system has worked well, as evidenced by a capacity expansion of 2.4 times since 2000, an increase of electrification from below 70% to 95% of households since 2000, strong growth of the natural gas sector, and generally an absence of power outages that have plagued some other countries in the region.
Natural gas has increased its share of electricity generation from close to 0% in 2000 to 44% in 2022 (Figure 4.12), thanks to the production from the Camisea gas field in Cusco, which became operational in 2004, and which now provides for 95% of domestic production. While this has diversified the energy mix, reduced costs for consumers, and provided for cleaner energy than if oil and coal were used, it has contributed to a noticeable increase of energy emissions intensity (Figure 4.11). Given the relatively recent rise in domestic gas production, most gas-fired power plants were built in the last 10 years and a nationwide gas massification programme for the residential sector is still in the middle of being rolled out. Virtually zero Peruvian homes have heating, due to the year-round mild weather in many parts of the country, therefore residential gas mainly serves for cooking.
Heavy reliance on natural gas from a single source, which fuels a large part of electricity generation and is vulnerable to supply disruption given the reliance on a single pipeline, constitutes a major energy security risk. The other major energy source, hydropower, is increasingly vulnerable to droughts that are already starting to become more frequent because of climate change. Together, these risks call for a rapid diversification of electricity generation capacity, both in terms of technology and geography.
Source: IEA.
At the same time, rapidly growing electrification, particularly in the transport sector, will demand a substantial expansion of zero emissions energy capacity. The projected path to Net Zero foresees installing an additional 8.7 GW of renewable electricity capacity by 2030 and a total of 45.8 GW by 2050. For reference, in 2023 total installed capacity across all sources of electricity amounts to 16GW. Peru has significant renewable energy potential across various sources, more than sufficient to meet this projected demand. Its wind energy potential, especially on the Central and Northern coast, is estimated at 22 GW. The southern regions of Arequipa, Moquegua and Tacna have some of the highest solar potential in the world, and large swaths of unused desert to install solar parks. In addition, total hydropower potential is estimated at 70 GW of which only around 5 GW are currently utilised. There is also a more moderate potential for geothermal and biomass electricity generation.
Despite the risks posed by droughts, the large potential of hydropower suggest it will continue to play a major role in the Peruvian energy mix. Hydropower was the almost exclusive source of electricity generation for decades, with many large dams going back to the 1970s. To reduce vulnerabilities and increase resilience to rainfall anomalies, new projects could focus on small-scale and decentralised systems, reducing dependence on large dams, which are more susceptible to rainfall anomalies. Although the technology is yet being developed, small hydropower dams could additionally be used as energy storage solution to smooth out fluctuations in the electricity generation from wind and solar, while also serving as freshwater reservoirs. These measures would improve water resource management, ensuring freshwater availability in drought-prone regions.
Peru has significant room for progress in developing renewable energy. The government has set the objective to increase the share of non-conventional renewables in electricity generation to 20% by 2030. However, only 5% of total electricity production currently befalls on wind and solar energy (Figure 4.13), and installed capacity is only about 1,100 MW spread over 33 sites. While this represents significant progress since the first large-scale renewables project started operating in 2012, the current pace is not sufficient to meet the projected required capacity to achieve either the 2030 renewables goal or the 2050 Net Zero objective. In 2024, only two wind parks with a total installed capacity of 244 MW were completed.
Source: IEA.
Until very recently, energy legislation disadvantaged renewable energy technologies. Wholesale electricity prices in Peru are determined by long-term power purchase agreements (PPA) between generators and distributors, supplemented by a spot market based on marginal costs. The previous energy law from 2006 required generators that subscribe to a PPA to ensure 24-hour power availability, effectively shutting down this market for wind and especially solar generators. Instead, they were forced to rely on the spot market selling to traditional energy providers, resulting in lower prices and reduced revenue predictability. In December 2024, Congress approved a reform which allows for PPA contracts to sell separately capacity and energy supplied, levelling the playing field for electricity generators in a technology-neutral way. There is a strong pent-up demand by renewables firms to invest in Peru, where the last renewable energy auction took place in 2016. For example, the Ministry of Energy and Mines lists 13 large-scale solar projects in the planning phase, with a total capacity of 2,300 MW, twice the currently installed capacity of wind and solar combined. Authorities should prioritise a fast implementation of the Energy Law, including the publication of its regulation, to avoid any further delays to the deployment of solar energy at scale. At the same time, new auctions should already be slotted and their schedule communicated in advance to incentivise timely participation by investors.
More generally, predictability for investors could be improved through clear and robust legal and regulatory signals. Investment needs for the energy transition are large, in the order of USD 67 bn until 2050, about USD 26 bn higher than under business-as-usual. Their realisation depends to a large degree on the willingness of private firms to invest. The lack of clear and long-term energy planning in Peru has created uncertainty and delayed key decisions for the sector. An energy transition law could provide a stable regulatory framework, set clear renewable energy targets, institutionalise strategies, monitor progress, and create mechanisms for financing and incentives that would signal long-term policy continuity, therefore increasing predictability for investors. It could align the country's energy strategy with Net Zero commitments and enhance energy security by promoting diversification and decentralised and resilient energy systems. In addition, the National Energy Plan from 2014 should be updated and include clear targets and their monitoring.
Electricity grids need to expand rapidly to meet the projected increase in electricity loads. The energy transition will shift the geography of energy production: solar power is concentrated is in the south near the border with Chile, and one of the main areas of wind power potential is the north. Yet most electricity demand befalls on Lima, where currently most thermal power stations are located. Grid constraints are already becoming a binding barrier for large-scale renewables development. Aging energy infrastructure and geographical constraints hinder reliable energy access in remote areas. Recent evidence from Chile shows how grid expansion can spur entry by new providers, increase renewable energy generation, and facilitate price convergence across regions (Gonzales, Ito and Reguant, 2022[75]).
The variable electricity production from renewables, and its low responsiveness to demand, puts increased requirements on grid flexibility tools such as demand management and energy storage solutions. Smart grids would enhance demand management and energy efficiency, enabling better integration of renewables. By establishing a communications channel between utilities and consumers, they allow to manage both demand and supply of electricity simultaneously. Energy storage is essential to balance electricity supply and demand at all times, improving grid reliability and reducing curtailment. Storage is also pivotal to off-grid and mini-grid systems in remote regions. To incentivise its development, energy storage needs a regulatory framework that allows entities other than electricity generators to provide and withdraw from the grid. With a regulatory framework in place, the government should encourage pilot projects, for example by inviting operators from other countries in the region such as Chile, which plans to install 2GW of storage capacity until 2027 (OECD, 2025[29]). Other regulatory changes that would encourage grid development and responsiveness include separating energy distribution and retail services to encourage market entry and innovation and creating a feed-in regulation for small-scale rooftop solar installations.
All this calls for significant investments into the grid. Until 2030, the new Transmission Plan which entered into force in 2025 contemplates 19 grid investment projects with a total volume of USD 1bn. Building on this plan, grid investments must consider the broader energy system, including natural gas, and the fact that non-conventional renewables require better national integration to manage local surpluses and deficits. Moreover, international grid integration with neighbouring countries would help balance out weather-dependent surpluses and deficits. The ongoing construction of a transmission line to Ecuador, where rainfall generally follows the opposite pattern as in Peru, is an important step in the right direction. Plans for grid integration with Chile should be accelerated and implemented. Advancing international grid integration moreover requires not only technical transmission coordination but also addressing regulatory and security concerns among countries.
Introducing a price on CO₂ emissions to incentivise cleaner energy and transport
Price signals in form of a carbon tax should set economic, technology-neutral incentives to reduce emissions in a cost-effective way while specific bottlenecks to the energy transition may be addressed with sectoral policy instruments (D’Arcangelo et al., 2022[28]). Carbon pricing allows consumers of energy – household and firms – to internalise the emissions externalities of their choices and provides clear price signals to the market, including to steer investment decisions. Carbon pricing is an instrument that is technically relatively easy to implement, with limited demands on administrative or monitoring capacity, which allows for a wider applicability in emerging economies like Peru compared to an emissions trading system (ETS). However, implementation carbon prices, especially those that are explicitly levied on consumers, is at times politically difficult, calling for a balanced and gradual approach.
Currently Peru does not levy an explicit carbon tax. The fuel excise tax constitutes an implicit carbon tax but covers only about 25% of all GHG emissions excluding LULUCF (Figure 4.14). Fuel excise tax rates are calculated as a function of the toxicity of each fuel rather than on the carbon content. One of the reasons for the low emissions coverage of the fuel excise tax is that it exempts gas-based fuels. Moreover, effective carbon tax rates and environmentally related tax revenues are very low in international comparison, and even compared to other countries in the region. Fuel excise taxes range USD 0.07-USD 0.12 per litre, much lower than in European countries where they are around USD 0.60 per litre, but also Brazil and Chile (around USD 0.25 per litre). Gas-derived fuels are entirely exempt from excise taxes, reflecting the legacy policy of gas massification. The government should broaden the base of fuel excise taxes by gradually extending them to gas-derived fuels and evaluate increasing all motor fuel excise taxes.
Note: LAC is a simple average of Chile, Colombia, Costa Rica, Mexico, Argentina, and Brazil. Panel A: Effective carbon tax rates are averaged across all GHG emissions, excl. LULUCF, including those emissions that are not covered by any carbon pricing instrument, for each of the 79 countries. Effective Average Carbon Rates account for free allocation of allowances in emissions trading systems. All rates are expressed in 2023 EUR using the latest available OECD exchange rate and inflation data. Other GHG emissions data are from CAIT (Climate Watch, 2024) while the data on CO2 emissions from energy use are based on the IEA World Energy Balances (IEA, 2023). ETS coverage and free allocation estimates are based on the OECD’s Effective Carbon Rates 2023, with adjustments to account for recent coverage changes, newly added countries and systems.
Source: OECD, Pricing Greenhouse Gas Emissions 2024; OECD Carbon Pricing and Energy Taxation Database; The Environmental Related Tax Revenue Database.
As recommended in the 2023 OECD Economic Survey, Peru would further benefit from levying an explicit carbon tax, following other Latin American countries such as Argentina, Chile, Colombia and Mexico (OECD, 2023[5]). To ameliorate public acceptability, a carbon tax should be introduced gradually and on a pre-defined trajectory to allow investors and consumers to make informed long-term decisions. Its proceeds could be explicitly linked to supporting vulnerable households in adapting to climate change or to financing green transition investments (OECD, 2023[5]). This is especially important as the carbon price that would be required to achieve Peru’s emissions target is quite high with respect to its current level, although in line with proposals of carbon prices for middle income countries (Parry, Black and Roaf, 2021[76]). For example, a carbon tax of USD 20 per ton of CO2 rising to USD 50 by 2030 would be consistent with Peru’s 2030 NDC if LULUCF emissions are reduced by 35% by 2030. Once fully implemented, it would generate additional government revenues in the order of 1% of GDP by 2035 (IMF, 2023[33]). The required level of the carbon tax depends critically on the speed of reversal of deforestation. For example, reducing LULUCF emissions by only 25% instead of 35% would bring up the required carbon tax to USD 155 per ton of CO2, whereas reducing LULUCF emissions by 40% or more would reduce the required carbon tax to close to zero. These scenarios underline the importance of rapidly reducing deforestation to allow for a balanced and socially acceptable path to meet emissions targets, which could be supported by a carbon tax that helps to align incentives in energy-consuming sectors.
Carbon tax revenues can support the green transition and support vulnerable businesses and households to prevent an increase in inequality and at the same time increase the acceptability of the green transition (Dechezleprêtre et al., 2022[77]). Poorer households spend more of their income on carbon-intensive goods and services such as transport services and energy, as data calculated for this Survey from Peru’s National Household Survey show (Figure 4.15). Prices of those goods might increase due to carbon taxes. Some of the revenue they generate could be returned to households. Many OECD countries, including Switzerland, Austria, and some Canadian provinces use lump-sum transfers – which constitute a larger share of total expenditure for lower-income households – while Luxembourg distributes half of its carbon tax revenue to the 40% lowest-income households, with the remainder going into green investments.
There is an exemption from the value added tax and the fuel excise tax for fuels sold in 350 municipalities in the Peruvian Amazon, which incurs tax expenditures of around PEN 250 million per year (Castillo Dextre, 2021[78]). The exemption creates a distortion in the fuel market, is thought to increase tax evasion and smuggling, and provides cheap energy inputs for illegal economic activities in the region (IPE, 2018[79]). Moreover, there is no evidence of tax benefits in the Amazon region having contributed to economic development. Peru should consider removing the Amazon tax exemptions in a gradual way, potentially compensating their removal with other, less distortionary transfers to the region. This could be part of a general review of tax expenditures (Chapter 1).
Expenditure on carbon-intensive goods and services by income quintile, % of income
Note: Energy incudes electricity, household consumption of natural gas, coal and biofuels. Transport includes automotive fuels and transport services but not travel.
Source: OECD calculations from the 2022 Encuesta Nacional de Hogares (ENAHO).
The contribution of agriculture to current emissions is modest (14%), but its emissions are hard to abate. The sector is expected to contribute only 3% to emissions reductions under a cost-effective pathway to Net Zero (BID, 2021[26]). Agriculture is highly vulnerable to climate change, both slow-onset events such as rising air and sea temperatures and glacial melt, as well as fast-onset weather anomalies. Moreover, small-scale and informal agriculture in the Amazon is a major contributor to deforestation without much added value creation (see above).
The El Niño climatic phenomenon, which will be exacerbated by climate change, already visibly affects Peruvian agriculture. During the 2017 and 2023 El Niño, agricultural production contracted each time around 2%; in 2023 this contributed to the recession of the Peruvian economy (OECD, 2024[80]; OECD, 2023[5]; World Bank, 2017[81]). Irrigated large-scale agriculture projects on the desertic coast have contributed much to exports and job creation and often employ world-leading irrigation techniques that rely on sensors to minimise water use (IFC, 2023[24]). Yet they are vulnerable to overall water scarcity.
Moreover, changing global consumer preferences are driving the stricter sustainability standards that are increasingly expected from exporting producers (Deconinck et al., 2025[82]). Lifestyle changes among young urban middle classes in many OECD countries, including an increased consciousness around health, animal welfare, and carbon footprints, are weighing down on global meat demand. Peru is already well positioned to serve the growing demand for meat replacements with products such as fresh avocado, other fresh vegetables, and more niche products such as quinoa and other protein-rich native grains. However, Peruvian agricultural firms have only recently started gaining consciousness and adapting to changing consumer requirements (IFC, 2023[24]). Moreover, the reliance of many fresh agricultural exports on air freight creates vulnerabilities to heightened climate concerns amongst consumers.
To capitalise on global consumer trends, the government could encourage agricultural producers to adopt sustainability standards. This would help reduce the environmental footprint of such firms in Peru, increase resilience to extreme weather events intensified by climate change, and help preserve and further increase the strong position the country has gained in global food markets. This will require applying and certifying global standards and measurement methodologies in Peru, strengthening the capacity to estimate carbon and water footprints, and supporting the sector with analysis on how to reduce these footprints as well as to increase global advocacy and promote Peru as a source of sustainably produced health foods (IFC, 2023[24]). There is a role for the government to raise awareness among producers of the changing global market requirements, especially smaller producers who might not be directly connected to consumer-facing international buyers such as foreign supermarkets.
Reducing the environmental footprint of the agriculture sector, and particularly GHG emissions, is possible through a connected set of measures: optimised irrigation practices, the use of less emissions-intensive fertilisers, and the introduction of silvopastoral systems for small-scale Amazon cattle ranchers (BID, 2021[26]). Currently, rice production utilises flood irrigation, which results in high water consumption and methane emissions; there are other methods available which reduce both. Drip irrigation is already used by some of the most productive, export-oriented farms; reforming water tariffs (see above) would incentivise more producers to adopt this technology and other water conservation practices. Fostering the use of organic fertilisers would incentivise the composting of organic agricultural residues, which are currently mostly burned. In addition, if food consumption in Peru underwent similar trends as in OECD countries, notably a reduction in the meat intensity of diets and a substitution of rice with other, healthier sources of carbohydrates such as cereals, tubers or grains, this would further contribute to a reduction in the emissions intensity of food production (World Bank, 2022[4]).
To reduce the extension of the agricultural frontier driving deforestation, as discussed above, changing the way producers exploit already deforested land is essential for fostering productivity, efficiency, and sustainable land use. Addressing this requires improving the technical capacities of small-scale agricultural, livestock and forestry producers, especially through agricultural extension and training services. This would help stop deforestation and at the same time improve the income and welfare of small landholders.
Since the 1990s and again further during the last decade, spending on agricultural extension services – programmes to provide training, technology transfer and inputs such as improved seeds and fertilisers – and other direct support for producers has declined. This has contributed to the duality between large-scale agro-exporters on the coast that saw their productivity explode and stagnation in other regions (IFC, 2023[24]; World Bank, 2017[81]). Large-scale irrigation and other infrastructure projects have also mostly benefited the coast. As a result, agricultural output has been growing most strongly in coastal regions such as Lambayeque, Tacna, La Libertad, Piura and Ica – in addition to the regions where it has been associated with deforestation such as Ucayali and Pasco (Figure 4.16). While in the past a reorientation of spending to boost agro-exports and foreign exchange earnings might have been justified, the existing duality calls for renewed direct support, especially through extension and other productivity-enhancing services, which would allow producers across Peru to partake in the opportunities offered by agro-exports. Modern technologies, including artificial intelligence, remote sensing, and mobile communications offer potentially important cost reductions and productivity improvements relative to traditional, labour-intensive ways of delivering agricultural extension services. This could help provide small-scale farmers with much-needed training in adopting efficient irrigation techniques and more resistant crop varieties, practicing crop diversification, and applying improved soil and water conservation practices.
In addition to knowledge, farmers also need the right incentives and access to financing to invest into better techniques. The duality of the sector, with large and small farms facing very different realities, will need to be reflected. Large farms may need more customised solutions, including R&D support and partnerships with agricultural research institutions. They could be exposed to price incentives such as more cost-reflective water tariffs, or feebate systems, which would require a better measurement of emissions at the farm level. Small farmers largely require technical and financial assistance and encouragement to adopt existing sustainable agricultural practices. Incentives could come from conditioning the provision of various schemes discussed above – payment for ecosystem services, agricultural disaster insurance, and the provision of preferential or subsidised green financial products – to good agricultural practices. The joint offering of access to finance and agricultural extension services through the Agroperu fund is a step in the right direction.
Another policy avenue to increase the productivity of small-scale farmers is to integrate them into the agricultural export value chains that have so far been dominated by large-scale agricultural operations on the coast. Productive alliances that link large agro-exporters to small-to-medium farmers, especially in the interior of the country, have proved to be successful mechanisms for this, facilitating knowledge transfer and access to international market participants (IFC, 2023[24]). The formation of productive alliances is aided by the fact that many small-scale farmers are already organised into cooperatives and other associative models. Better integrating small-scale farmers in the Andes and Amazon into export value chains requires not only creating linkages between firms in different regions, but also access to finance to scale up operations and better infrastructure such as irrigation and rural roads, as discussed in the 2023 OECD Economic Survey of Peru (OECD, 2023[5]). In addition, this would reduce pressure on ecosystems and water stress on the coast and improve resilience of agro-exports to local climate events.
2015-2022 average annual growth rate of agriculture, livestock, hunting and forestry, %
Source: INEI.
The Seguro Agrícola Catastrófico (SAC) provides insurance for farmers’ income against adverse climate events and is 100% subsidised by the state and covers 1 million farmers with 2 million ha of land. However, the programme faces budgetary constraints. Cross-country evidence from South America suggests that agricultural insurance has benefits for overall agricultural productivity by mitigating losses from droughts (Caucheteux, Nauerz and Vtyurina, 2025[83]). A new individual agricultural insurance policy, co-financed 70% by the State, was launched in 2024 and is marketed through rural microfinance institutions. Take-up of this new policy should be monitored, and evaluations conducted with a view to adjusting the policy’s parameters, if necessary.
Peru’s rich mineral reserves of essential raw materials such as copper (2nd largest in the world), zinc (4th largest in the world) and lithium (12th largest in the world) make its mining sector a key player in the global green transition. However, global markets demand increasingly environmentally sound and stringent methods of production: decarbonising mining operations through renewable energy and efficiency; improved water and environmental management, especially given regional climate stress; and a stronger social license obtained through early, sustained community engagement and benefit-sharing.
Mining makes an important contribution to the Peruvian economy and has propelled the country’s high growth during the 2000s and early 2010s. Conversely, growth slowed down with the end of the global commodity boom. While production of most other minerals including gold and silver stagnated or receded, copper production more than quintupled between 2000 and 2023 (Figure 4.17, Panel A). In 2023, mining contributed 12% to GDP and 60% to exports (Chapter 1). Peru accounted for about 11% of global copper and zinc production, respectively, in 2022 (Figure 4.17, Panel B).
Source: Ministry of Energy and Mines, General Directorate of Mining; US Geological Survey, January 2025.
Although mining represents only 2% of Peru’s total GHG emissions, those are under particular scrutiny for minerals that are critical inputs into “clean” technologies, where customers might be particularly sensitive to the environmental footprint of products that serve emissions reductions goals. Mining companies have started reacting to these demands, with many industry leaders – including the operators of some of Peru’s largest mines – committing to fully decarbonising their global operations by 2050. Around 45 mining companies are registered on the voluntary carbon marketplace “Peru Carbon Footprint”. The mining sector is a large energy user and has the potential to lead to decarbonisation of industrial processes in Peru. This requires procuring electricity from renewable sources and replacing diesel equipment with either electric motors or with other fuels such as green hydrogen in mining trucks, in addition to decarbonising some industrial processes. For example, Peru’s newest copper mine Quellaveco has been procuring 100% renewable electricity since the start of its operations through an exclusive power purchase agreement with a newly built wind park. The OECD supports international cooperation and standards on responsible and sustainable mining through several initiatives (Box 4.6).
Peru’s mining sector is well placed to lead decarbonisation thanks to its co-location with areas of high renewable energy potential. For example, the southern regions of Arequipa, Moquegua and Tacna are not only rich in critical minerals such as copper but also have some of the largest solar energy potential on the planet (see above). This geographical proximity will be a comparative advantage for Peru to cost-efficiently decarbonise mining. The government should ensure that appropriate regulatory frameworks and incentives to the different actors involved are in place. The Energy Law reform from December 2024 or the Green Hydrogen Promotion Act that was passed in March are important steps in this direction. The announcement of a USD 2.5bn investment into a green hydrogen plant in the Arequipa region was followed by an announcement of a USD 11bn green hydrogen project in early 2025. These are enormous figures, considering that total FDI inflows amounted to USD 6.7bn in 2023. The introduction of a carbon tax (see above) would also encourage the adoption of low-carbon production technologies, especially in energy-intensive sectors such as mining.
Peru’s mining sector is prone to social conflicts. More than half of the 148 active social conflicts in December 2024 are socioenvironmental, and about two-thirds of those pertain to mining projects (Figure 4.18). Many social conflicts involving mining originate in disputes over water, including concerns about contaminated wastewater that is returned to watersheds (OECD, 2021[11]). Although mining only accounts for about 1% of all water use, the highly uneven water availability in Peru – recalling that 97% of all freshwater flows toward the Amazon – means that mining concessions account for a significant share in some water-stressed watersheds (Natural Resource Governance Institute, 2016[84]). An additional problem consists in illegal gold mining in the Amazon, which in addition to contributing to deforestation causes significant environmental damage and water contamination though the untreated release of mercury residuals into the environment (OECD/ECLAC, 2017[3]). Around a quarter of gold in Peru is estimated to be mined illegally (OAS, 2021[85]). In addition to environmental degradation and forest loss, informal and illegal gold mining has been associated with poor working conditions including child labour and forced labour and links to organised crime.
The OECD has developed several legal instruments that provide government-backed guidance on responsible business conduct (RBC). The OECD Handbook on Environmental Due Diligence in Mineral Supply Chains contextualises and applies this guidance to the mining sector. The common focus is on risk-based due diligence to identify, prevent, mitigate and account for actual and potential adverse impacts of business conduct:
The OECD Minerals Guidance (OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas) provides a tailored framework for due diligence in mineral supply chains, with a focus on sector-specific risks, especially financial and human rights-oriented.
The OECD RBC Guidance (OECD Due Diligence Guidance for Responsible Business Conduct) provides a due diligence framework, applicable to all sectors and risks.
The OECD MNE Guidelines (OECD Guidelines for Multinational Enterprises on Responsible Business Conduct) provides recommendations to enhance the business contribution to global sustainable development, including in environmental matters.
Moreover, the OECD Guiding Principles for Durable Extractive Contracts provide guidance to government how to set appropriate framework conditions to balance risks and rewards from mining concessions, including environmental and community relations aspects.
Source: (OECD, 2023[86]) Handbook on Environmental Due Diligence in Mineral Supply Chains and (OECD, 2020[87]) Guiding Principles for Durable Extractive Contracts.
Peru risks losing out on opportunities created by increased resource demand from the green transition because its mines are stalled due to social conflict (OECD, 2021[11]; World Bank, 2022[88]; IMF, 2025[89]). Despite improvements in managing environmental risks with public policies (OECD/ECLAC, 2017[3]), legacy environmental liabilities of the past when polluters remained unaccountable and perceived conflicts of interest, for example when police officers are contracted by mines to provide private security services, fuel community fear and distrust (Natural Resource Governance Institute, 2016[84]; World Bank, 2021[90]). Examples of mining projects stalled in the face of social protest include many large-scale projects that had complied with and obtained all necessary regulatory approvals with the national government, with a total investment volume of USD 64 bn (IMF, 2025[89]).
Proactively engaging with communities and other stakeholders and going beyond formal consultations, which intervene often at late stages in the project approvals cycle, to a more participatory decision-making, might improve projects’ social acceptance and make them viable throughout their life cycle. Moreover, streamlining approvals processes while maintaining adequate standards would improve the dual perception of low social acceptability and at the same time cumbersome regulations.
Mines require a suite of environmental permits, including water, wastewater, archaeological, chemical, etc. An increased salience of the environmental impacts of mining has led to a proliferation of permits, with many different agencies involved. This increases requirements for coordination and chances of delays, including due to the low administrative capacity and high staff turnover in all branches of the government due to the lack of a civil service regime (OECD, 2023[5]). While the time to issue environmental permits should be reduced by cutting unnecessary delays and resolving bottlenecks, regulations for a competitive mining sector in the global green transition rely on striking an adequate balance between investment promotion and applying the necessary rigour to safeguard the environment and ensure community consultation and involvement (World Bank, 2021[90]; IMF, 2025[89]). Clear guidelines for environmental impact assessments would help ensure consistency and rigour and at the same time predictability and efficiency of the overall process (World Bank, 2025[91]).
An important bottleneck in the licensing process lies in the opinion by the National Forest Service SERFOR required as part of the process of obtaining a mining license. Since SERFOR does not have a full information system of land certification, and forest concessions are decentralised in many regions to regional governments it can take up to twelve months to issue this opinion (World Bank, 2021[90]). This provides another motivation for improving the land certification process and the land registry, as recommended above.
Active social conflicts by type and activity, December 2024
Source: Defensoría del Pueblo - APCSG.
Currently, there is little transparency about the allocation of water rights and the monitoring of compliance with wastewater quality standards. Monitoring of water quality in mines’ watersheds is very limited; yet the little monitoring that was conducted in the past often found contamination above acceptable thresholds (OECD/ECLAC, 2017[3]). Improving transparency, monitoring, and communicating of water quality would send the signal the state is willing and able to enforce its environmental laws and standards and hold those who violate them accountable, which could go a long way in building trust. Developing a comprehensive national environmental monitoring network, as recommended by the 2017 OECD Environmental Performance Review, could be a way to implement this (OECD/ECLAC, 2017[3]). Participatory environmental monitoring could improve community engagement and trust. Improving water reuse and recycling would reduce the amount of water that is returned from mining sites into watersheds.
The government could do more to signal alignment with mining firms’ own environmental commitments as well as ensuring that the mining industry stays competitive in a decarbonising world. For example, despite the alignment by many leading players in the industry with the Paris Agreement objective of reaching Net Zero in 2050, and Peru’s commitment to the same goal, none of Peru’s NDC concern the mining sector. This seems a missed opportunity to signal alignment between climate change and mining policies, and to market Peru’s mining sector as a key ally for advancing the global green transition. Chile’s national mining policy, for example, has the goal of achieving carbon neutrality in the mining sector by 2040, which sets strong signals to invest into the energy transition in the country’s mining sector through green hydrogen and renewable electricity.
Investment needs to face the green transition are large. Currently, Peru only spends around PEN 4 billion per year (0.4% of GDP) on climate change adaptation and mitigation. The costs of measures to mitigate climate change and achieve net zero are estimated at around USD 60bn in the short term (until 2035) and USD 100bn until 2050, with around half each falling on the public and private sector, respectively (BID, 2021[26]; World Bank, 2022[4]). Costs for climate change adaptation are expected to amount to PEN 66bn (USD 17bn) in the short term until 2030, with likely further costs as the effects of climate change materialise.
These investment needs require substantial financial resources. Given Peru’s limited domestic public resources and its tight fiscal situation (Chapter 1), tapping into alternative sources of funding including bilateral and multilateral development finance and international markets is essential, as recognised by the National Adaptation Plan. Some USD 23 billion are available globally from bilateral and multilateral development banks and climate funds for developing countries’ climate action (OECD, 2023[92]), although mostly in the form of debt, which limits their usefulness for countries like Peru. At the same time, development finance is often bundled with capacity-building initiatives, which would help strengthen administrative capacity in this area. The government should undertake a comprehensive assessment of investment needs and funding opportunities, and support individual entities with securing funding, especially by providing them with environmental information and assessments to make their case. Subnational governments need to be equipped with better capacity to attract international climate funding, especially in the area of adaptation. A Climate Finance Strategy is currently in the public consultation process; it will be important to complement it with a credible and well-costed decarbonisation plan.
However, even if Peru manages to attract a significant share of international funds, the size of the total investment requires diversified funding sources by expanding green, social, sustainable and sustainability-linked bonds. The government of Peru issued its first sovereign sustainability bond in 2021. In the corporate bonds market, Peru pioneered a green bond for a wind power project in 2014, and the state development bank COFIDE is a major issuer of green bonds (Climate Bonds Initiative, 2022[93]). However, the general limitations of Peru’s shallow capital market (Chapter 3) impact the development potential for its green finance market, which is much smaller than that of other countries in the region (Figure 4.19). Promoting firms’ climate-related financial disclosure by developing a green taxonomy would improve the ability of international investors to discriminate amongst firms (Climate Bonds Initiative, 2022[93]; OECD, 2025[13]). This will require that such taxonomies are consistent with high-quality, understandable, enforceable and internationally recognised standards that facilitate the comparability across companies and markets. The Green Finance Roadmaps by the Ministry of the Environment and the financial superintendence SBS and the National Competitiveness and Productivity Plan 2024-2030 provide anchor points for broader strategies to finance investments into the green transition and strengthen environmental considerations in the business sector. Ongoing developments of taxonomies for green investment projects and green finance should be prioritised and accelerated to support these efforts, involving private-sector actors to ensure the taxonomy is practical, credible, and tailored to national needs.
Latin America, outstanding GSSS bonds, April 2025, USD billions
Source: Palacios, L. and Herrera Isaza, N. (forthcoming), Financing of the energy transition in Latin America: the role of governments and sustainable finance. Technical Background Paper.
Access to finance for firms and households is a key enabler of green investments. Without finance, SMEs are unlikely to adopt solar panels, electric vehicles, efficient irrigation systems, or other low-carbon technologies – and similarly for households. Many low-emissions machines and appliances require higher upfront investment due to their superior technology or the cost of batteries but then incur savings in operating costs over the item’s lifecycle. Investment into low-emissions technologies can also support resilience, especially for more credit-constrained SMEs: it allows firms to better adapt to climate-related shocks (such as investing in flood defence or drought-resistant crops), reducing vulnerability in Peru’s extensive small-farm and small-business sector.
Peru needs to explore ways to create financing mechanisms for private green investment. Several OECD countries have put in place green transition funds, which are endowed from accumulated windfall revenues such as in Greece, or from a pensions surcharge such as in Denmark. Those funds deplete their capital paying out grants, but they could also be used a sovereign investment fund disbursing interest-bearing loans for green investments. Peru could consider endowing a green fund from windfall profits from high minerals prices, which are currently mainly accumulated in the Fiscal Stabilisation Fund (see Chapter 1), thus making even more explicit the positive contribution of mining to the green transition not only globally but also locally in Peru. Financing growth-enhancing investments would also help the country reap long-lasting benefits from providing minerals for global green transition needs (IMF, 2025[89]).
In a highly informal economy such as Peru’s, the green transition provides opportunities to improve job quality through well-qualified and formal green jobs in modern industries. At the same time, it raises concerns about the social cost of the green transition and the acceptance of climate policies, as in many OECD countries (Dechezleprêtre et al., 2022[77])
Peru’s green transition will impact employment in several sectors. The headcount and share of employment in the wind, solar and transmission sectors will strongly increase, from around 17,000 workers today in renewable electricity (mostly in hydropower). Jobs in solar and wind energy generation also have a larger job multiplier than more conventional renewable technologies (IMF, 2024[19]). All of this will require a comprehensive and agile policy response to avoid skills shortages, boost training programmes, and prepare the new generation of the workforce with vocational education and training (VET) programmes (see Chapter 3). At the same time, not all displaced workers might find re-employment elsewhere, or might need time to do so, calling for strengthening social protection systems including unemployment insurance (Chapter 1).
The transport sector might experience particularly strong jobs pressures from the green transition. Due to its atomisation and high informality, the sector is characterised by an oversupply of small units that create a significant share of employment. Even among the more formal transport services, such as authorised urban bus lines, atomisation and informality are very common (see above). An important political economy challenge for any transport reform will be to mitigate its impact on employment. Authorities are aware of this; for example, the current transport reform in Metropolitan Lima contemplates a gradual implementation, with space to absorb current transport workers into a consolidated public transport system, with regulated driving hours that should result in sufficient jobs to absorb today’s minibus drivers. This would not only preserve employment but at the same time improve the poor working conditions of drivers, thus improving reform acceptability, and contribute to the pressing policy objective of reducing informality (see Chapter 3 and (OECD, 2023[5])).
Strengthening vocational and educational training (VET) is key for creating the workforce for the future (see Chapter 3) and in particular for the green transition. Jobs driven by the green transition, especially those towards the lower end of the range of qualifications, require greater skill proficiency and cognitive skills than traditional jobs with similar qualification requirements (OECD, 2024[94]). This increases the role of formal VET for building workforce skills, rather than informal on-the-job learning. There is a need for reskilling and upskilling – for electric technicians on the use of renewables technologies, or for informal bus drivers on road and occupational safety – and for programmes to train qualified entry-level professionals such as technicians and engineers. Some VET institutions have already adapted to this changing labour demand, such as SENATI’s “school of renewable energy” that provides, among others, short-cycle certifications for photovoltaic energy installations. The government should proactively support VET for the green transition by monitoring demand and appropriately incentivising supply, before skills shortages become a bottleneck that are only slowly resolved if left to market signals and adjustments. Encouraging more girls and women to choose STEM fields will further widen the talent pools with the skills sought for the green transition.
Agriculture and ecotourism provide job opportunities in the context of the green transition for rural areas (Serrate, Iturriza and Urquidi, 2023[95]). Peru’s export agriculture located mostly on the coast already provides for hundreds of thousands of low-skilled jobs, especially for women. In the country’s interior, farmers have a strong position in organic agriculture and other sustainability certifications. These existing networks and clusters could be further leveraged to improve productivity through sustainable agricultural practices and improve job quality and labour rights. Tourism, which is currently focussed on sites of archaeological importance in certain regions and cities, could become a motor of employment in more regions in the form of ecotourism, as the example of Costa Rica (see above) shows. The government should support these trends through targeted programmes in VET and agricultural extension services.
References
[31] Asner, G. et al. (2013), “Elevated rates of gold mining in the Amazon revealed through high-resolution monitoring”, Proceedings of the National Academy of Sciences, Vol. 110/46, pp. 18454-18459, https://doi.org/10.1073/pnas.1318271110.
[58] Associated Press (2024), Amazon Indigenous community wins latest stage of court battle for lost territory, https://apnews.com/article/peru-rainforest-carbon-credit-indigenous-tribe-amazon-be9f580c2009f5f216ef0e122fd18e64.
[35] Associated Press (2017), AP investigation shows Peru backsliding on illegal logging, https://apnews.com/general-news-8f4d73bdc605446c9c64bc2aedf7aa31 (accessed on 11 December 2024).
[34] Assunção, J., C. Gandour and R. Rocha (2023), “DETER-ing Deforestation in the Amazon: Environmental Monitoring and Law Enforcement”, American Economic Journal: Applied Economics, Vol. 15/2, pp. 125-156, https://doi.org/10.1257/app.20200196.
[36] Basel Institute of Governance (2024), Peruvian region takes an important step towards protecting forests from corruption, https://baselgovernance.org/news/peruvian-region-takes-important-step-towards-protecting-forests-corruption.
[26] BID (2021), Costos y beneficios de la carbono-neutralidad en Perú: Una evaluación robusta, Inter-American Development Bank.
[39] Blackman, A. et al. (2017), “Titling indigenous communities protects forests in the Peruvian Amazon”, Proceedings of the National Academy of Sciences, Vol. 114/16, pp. 4123-4128, https://doi.org/10.1073/pnas.1603290114.
[32] Caballero Espejo, J. et al. (2018), “Deforestation and Forest Degradation Due to Gold Mining in the Peruvian Amazon: A 34-Year Perspective”, Remote Sensing, Vol. 10/12, p. 1903, https://doi.org/10.3390/rs10121903.
[9] Cai, W. et al. (2021), “Changing El Niño–Southern Oscillation in a warming climate”, Nature Reviews Earth & Environment, Vol. 2/9, pp. 628-644, https://doi.org/10.1038/s43017-021-00199-z.
[72] Camara, Y., B. Holtsmark and F. Misch (2021), Electric Vehicles, Tax incentives and Emissions: Evidence from Norway, IMF Working Paper WP/21/162, https://www.imf.org/-/media/Files/Publications/WP/2021/English/wpiea2021162-print-pdf.ashx.
[78] Castillo Dextre, C. (2021), “Gasto Tributario y la Politica Fiscal para un Desarrollo Social en la Región Selva”, Revista Lidera, https://revistas.pucp.edu.pe/index.php/revistalidera/article/download/23593/22563/.
[83] Caucheteux, J., J. Nauerz and S. Vtyurina (2025), “Extreme Weather Events, Agricultural Output, and Insurance: Evidence from South America”, IMF Working Paper No. 2025/052, https://doi.org/10.5089/9798229001991.001.
[30] CEPLAN (2022), Análisis de la deforestación y pérdida de vegetación a nivel nacional e impacto a nivel regional.
[18] Chávez Cresta, J., C. Burbano and M. Villalobos (2018), Fortaleciendo la Respuesta ante Desastres en el Perú.
[27] Climate Action Tracker (2022), Peru Country Summary, https://climateactiontracker.org/countries/peru/ (accessed on 5 March 2025).
[93] Climate Bonds Initiative (2022), Peru Sustainable Finance State of the Market 2022.
[61] Cronkleton, P., D. Bray and G. Medina (2011), “Community Forest Management and the Emergence of Multi-Scale Governance Institutions: Lessons for REDD+ Development from Mexico, Brazil and Bolivia”, Forests, Vol. 2/2, pp. 451-473, https://doi.org/10.3390/f2020451.
[28] D’Arcangelo, F. et al. (2022), “A framework to decarbonise the economy”, OECD Economic Policy Paper No. 31.
[77] Dechezleprêtre, A. et al. (2022), “Fighting climate change: International attitudes toward climate policies”, OECD Economics Department Working Papers, No. 1714, OECD Publishing, Paris, https://doi.org/10.1787/3406f29a-en.
[82] Deconinck, K. et al. (2025), “How do consumers interact with environmental sustainability claims on food?: Evidence from 40 countries”, OECD Food, Agriculture and Fisheries Papers, No. 218, OECD Publishing, Paris, https://doi.org/10.1787/0587c663-en.
[1] EIB (2023), Latin American EIB Climate Survey, https://www.eib.org/en/press/all/2023-315-9-peruvians-in-10-demand-stricter-climate-policies-eib-survey-reveals.
[56] Fa, J. et al. (2020), “Importance of Indigenous Peoples’ lands for the conservation of Intact Forest Landscapes”, Frontiers in Ecology and the Environment, Vol. 18/3, pp. 135-140, https://doi.org/10.1002/fee.2148.
[71] Fournel, J. (2023), Electric Vehicle Subsidies: Cost-Effectiveness and Emission Reductions, WP 1465, Toulouse School of Economics, https://www.tse-fr.eu/research/publications.
[49] Giudice, R. and J. Börner (2021), “Benefits and costs of incentive-based forest conservation in the Peruvian Amazon”, Forest Policy and Economics, Vol. 131, p. 102559, https://doi.org/10.1016/j.forpol.2021.102559.
[25] Gobierno del Perú (2024), Política Nacional: Estrategia Nacional ante el Cambio Climático al 2050, https://sinia.minam.gob.pe/sites/default/files/archivos/public/docs/ENCC%20al%202050.pdf.
[75] Gonzales, L., K. Ito and M. Reguant (2022), The Dynamic Impact of Market Integration: Evidence from Renewable Energy Expansion in Chile, National Bureau of Economic Research, Cambridge, MA, https://doi.org/10.3386/w30016.
[22] Hallegatte, S., J. Rentschler and J. Rozenberg (2019), Lifelines - The Resilient Infrastructure Opportunity, The World Bank Group, https://documents1.worldbank.org/curated/fr/111181560974989791/pdf/Lifelines-The-Resilient-Infrastructure-Opportunity.pdf.
[70] IEA (2024), Global EV Outlook 2024, https://iea.blob.core.windows.net/assets/a9e3544b-0b12-4e15-b407-65f5c8ce1b5f/GlobalEVOutlook2024.pdf.
[73] IEA (2023), Global EV Policy Explorer, https://www.iea.org/data-and-statistics.
[24] IFC (2023), “Creating Markets in Peru: Growth Opportunities to reduce regional gaps”, Country Private Sector Diagnostic.
[89] IMF (2025), Article IV Consultation Staff report.
[19] IMF (2024), Climate Change Challenges and Opportunities in Latin America and the Caribbean, International Monetary Fund, Washington, D.C., https://doi.org/10.5089/9798400240577.071.
[10] IMF (2024), Economic Benefits of Building Resilience to Natural Hazards and Climate Change, International Monetary Fund.
[33] IMF (2023), Peru 2023 Article IV Consultation.
[7] INAIGEM (2023), Inventario Nacional de Glaciares y Lagunes de Origen Glaciar, https://hdl.handle.net/20.500.12748/499.
[51] INEI (2023), Anuario de Estadísticas Ambientales, Instituto Nacional de Estadística e Informática.
[62] INEI (2023), Anuario Estadistico Ambiental.
[6] IPCC (2022), Climate Change 2022: Impacts, Adaptation and Vulnerability.
[79] IPE (2018), La ley de la Selva, https://www.ipe.org.pe/portal/la-ley-de-la-selva/.
[48] Izquierdo-Tort, S., S. Jayachandran and S. Saavedra (2024), Redesigning Payments for Ecosystem Services to Increase Cost-Effectiveness, National Bureau of Economic Research, Cambridge, MA, https://doi.org/10.3386/w32689.
[66] Jauregui-Fung, F. et al. (2019), “Anatomy of an Informal Transit City: Mobility Analysis of the Metropolitan Area of Lima”, Urban Science, Vol. 3/3, p. 67, https://doi.org/10.3390/urbansci3030067.
[46] Jayachandran, S. et al. (2017), “Cash for carbon: A randomized trial of payments for ecosystem services to reduce deforestation”, Science, Vol. 357/6348, pp. 267-273, https://doi.org/10.1126/science.aan0568.
[57] Larson, A. et al. (2013), “Land tenure and REDD+: The good, the bad and the ugly”, Global Environmental Change, Vol. 23/3, pp. 678-689, https://doi.org/10.1016/j.gloenvcha.2013.02.014.
[17] Maes, M. et al. (2022), “Monitoring exposure to climate-related hazards: Indicator methodology and key results”, OECD Environment Working Papers, No. 201, OECD Publishing, Paris, https://doi.org/10.1787/da074cb6-en.
[38] Ministerio del Ambiente (2019), “Cobertura y deforestación en los bosques húmedos amazónicos 2018”, Apuntes del Bosque No 1, https://sinia.minam.gob.pe/sites/default/files/sinia/archivos/public/docs/apuntes-del-bosque-n1.pdf.
[45] Mongabay (2024), Los vuelos de la muerte: líderes indígenas asesinados en un territorio invadido por 67 narcopistas, https://es.mongabay.com/custom-story/2024/11/los-vuelos-de-la-muerte-lideres-indigenas-asesinados-6-narcopistas/ (accessed on 16 December 2024).
[65] MTC (2019), Reporte Anual de Gases de Efecto Invernadero del Sector Energía 2019.
[2] Nachtigall, D. et al. (2022), “The climate actions and policies measurement framework: A structured and harmonised climate policy database to monitor countries’ mitigation action”, OECD Environment Working Papers, No. 203, OECD Publishing, Paris, https://doi.org/10.1787/2caa60ce-en.
[84] Natural Resource Governance Institute (2016), Water Management, Environmental Impacts and Peru’s Mining Conflicts, https://resourcegovernance.org/articles/water-management-environmental-impacts-and-perus-mining-conflicts.
[85] OAS (2021), On the trail of illicit gold proceeds: strengthening the fight against illegal mining finances in Peru, https://www.oas.org/en/sms/dtoc/docs/On-the-trail-of-illicit-gold-proceeds-Peru-case.pdf.
[13] OECD (2025), Framework for mainstreaming Climate Change Mitigation and Adaptation, and Energy Security Issues in Economic Surveys.
[29] OECD (2025), OECD Economic Surveys: Chile 2025, OECD Publishing, Paris, https://doi.org/10.1787/efad96ce-en.
[23] OECD (2024), Infrastructure for a Climate-Resilient Future, OECD Publishing, Paris, https://doi.org/10.1787/a74a45b0-en.
[80] OECD (2024), OECD Economic Outlook, Volume 2024 Issue 1: An unfolding recovery, OECD Publishing, Paris, https://doi.org/10.1787/69a0c310-en.
[44] OECD (2024), OECD Economic Surveys: Colombia 2024, OECD Publishing, Paris, https://doi.org/10.1787/a1a22cd6-en.
[94] OECD (2024), OECD Employment Outlook 2024: The Net-Zero Transition and the Labour Market, OECD Publishing, Paris, https://doi.org/10.1787/ac8b3538-en.
[55] OECD (2024), OECD Tourism Trends and Policies 2024, OECD Publishing, Paris, https://doi.org/10.1787/80885d8b-en.
[86] OECD (2023), Handbook on Environmental Due Diligence in Mineral Supply Chains, OECD Publishing, Paris, https://doi.org/10.1787/cef843bf-en.
[5] OECD (2023), OECD Economic Surveys: Peru 2023, OECD Publishing, Paris, https://doi.org/10.1787/081e0906-en.
[50] OECD (2023), OECD Environmental Performance Reviews: Costa Rica 2023, OECD Environmental Performance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/ec94fd4e-en.
[92] OECD (2023), Scaling Up Adaptation Finance in Developing Countries: Challenges and Opportunities for International Providers, Green Finance and Investment, OECD Publishing, Paris, https://doi.org/10.1787/b0878862-en.
[16] OECD (2022), Building Financial Resilience to Climate Impacts: A Framework for Governments to Manage the Risks of Losses and Damages, OECD Publishing, Paris, https://doi.org/10.1787/9e2e1412-en.
[11] OECD (2021), Water Governance in Peru, OECD Studies on Water, OECD Publishing, Paris, https://doi.org/10.1787/568847b5-en.
[14] OECD (2020), Common Ground Between the Paris Agreement and the Sendai Framework : Climate Change Adaptation and Disaster Risk Reduction, OECD Publishing, Paris, https://doi.org/10.1787/3edc8d09-en.
[87] OECD (2020), Guiding Principles for Durable Extractive Contracts, OECD Development Policy Tools, OECD Publishing, Paris, https://doi.org/10.1787/55c19888-en.
[52] OECD (forthcoming), Scaling up biodiversity-positive initiatives.
[3] OECD/ECLAC (2017), OECD Environmental Performance Reviews: Peru 2017, OECD Environmental Performance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264283138-en.
[42] Parodi, A. et al. (2022), “Embedding circularity into the transition towards sustainable agroforestry systems in Peru”, Science of The Total Environment, Vol. 838, p. 156376, https://doi.org/10.1016/j.scitotenv.2022.156376.
[76] Parry, I., S. Black and J. Roaf (2021), “Proposal for an International Carbon Price Floor among Large Emitters”, IMF Staff Climate Notes 2021/001, https://doi.org/10.5089/9781513583204.066.
[43] Peña Alegría, P. (2024), “(Mis)Adapting Domestic Law to Meet New International Environmental and Trade Rules: How Peru Changed Its Environmental and Land Use Rights Laws in Response to the European Union Deforestation Regulation”, Journal of Environmental Law, Vol. 36/3, pp. 437-444, https://doi.org/10.1093/jel/eqae019.
[54] Peña, P. and J. Sarmiento Barletti (2022), Peru’s regulatory framework for carbon markets: Current legal and policy developments in the context of REDD+, Center for International Forestry Research (CIFOR), https://doi.org/10.17528/cifor/008750.
[37] Proética (2022), Encuesta Nacional sobre percepciones de la corrupción en el Perú.
[40] Reyes, M. and V. Robiglio (2018), La Cesión en Uso para Sistemas Agroforestales: Identificación de zonas eligibles para su implementación, ICRAF. Oficina Regional para América Latina., https://www.worldagroforestry.org/sites/default/files/users/admin/Mo%CC%81dulo%203_Reyes_etal_2018_Zonas_elegibles.pdf.
[41] Robiglio, V., R. Vargas and M. Suber (2018), La Cesión en Uso para Sistemas Agroforestales. Los potenciales beneficiarios, distribución geográfica y estimación del potencial de contribución a las metas climáticas del Perú, ICRAF. Oficina Regional para América Latina.
[8] Schauwecker, S. et al. (2017), “The freezing level in the tropical Andes, Peru: An indicator for present and future glacier extents”, Journal of Geophysical Research: Atmospheres, Vol. 122/10, pp. 5172-5189, https://doi.org/10.1002/2016jd025943.
[67] Scholl, L. (2015), Comparative Case Studies of Three IDB-supported Urban Transport Projects, Inter-American Development Bank, https://doi.org/10.18235/0000020.
[74] Semino Romero, J., H. Berrospi Villafuente and E. Akimoto Toyohama (2020), “Análisis del cabotaje marítimo como alternativa de transporte de carga multimodal en la cadena de sumistro del Perú”, Universidad del Pacífico, Escuela de Posgrado.
[95] Serrate, L., A. Iturriza and M. Urquidi (2023), “Hacia el empleo verde en Perú”, IADB, Nota Técnica N IDF-TN-2856.
[60] Shanee, N., S. Shanee and R. Horwich (2014), “Effectiveness of locally run conservation initiatives in north-east Peru”, Oryx, Vol. 49/2, pp. 239-247, https://doi.org/10.1017/s0030605313001002.
[64] Tapia, V. et al. (2020), “PM2.5 exposure on daily cardio-respiratory mortality in Lima, Peru, from 2010 to 2016”, Environmental Health, Vol. 19/1, https://doi.org/10.1186/s12940-020-00618-6.
[59] UNFCCC (2024), Safeguards, https://redd.unfccc.int/fact-sheets/safeguards.html (accessed on 17 December 2024).
[63] United States EPA (2020), Assessing the Mortality Burden of Air Pollution in Lima-Callao Final Report December 14, 2020, https://nepis.epa.gov/Exe/ZyPURL.cgi?Dockey=P101825E.TXT.
[91] World Bank (2025), Peru: Seizing Opportunities for Growth and Prosperity.
[69] World Bank (2024), Peru - Lima Metropolitano BRT North Extension Project, http://documents.worldbank.org/curated/en/099102924050072411/BOSIB17049b9bd0d41a3cd1a6e3889c9197.
[12] World Bank (2023), Rising Strong: Peru Poverty and Equity Assessment, https://documents1.worldbank.org/curated/en/099042523145533834/pdf/P17673806236d70120a8920886c1651ceea.pdf.
[68] World Bank (2022), Aligning Peru’s transport sector development with climate action: A background note.
[88] World Bank (2022), Decarbonization of Mining in Peru.
[53] World Bank (2022), “Forestry and Agroforestry Sector Assessment”, Peru Country Climate and Development Report, Background Note.
[4] World Bank (2022), Peru Country Climate and Development Report, The World Bank Group.
[15] World Bank (2021), Institucionalidad, inclusicón y territorio: Propuestas para fortalecer la resiliencia del Perú frente a desastres, https://documents1.worldbank.org/curated/en/445981632307005898/pdf/Institucionalidad-Inclusion-y-Territorio-Propuestas-para-Fortalecer-la-Resiliencia-del-Per%C3%BA-Frente-a-Desastres.pdf.
[90] World Bank (2021), Peru Mining Sector Diagnostic.
[21] World Bank (2021), The State of Adaptation and Resilience in Peru, https://documents1.worldbank.org/curated/en/099242412052213917/pdf/P177137005d6390370b4fa0a6c67b4248ca.pdf.
[81] World Bank (2017), Gaining Momentum in Peruvian Agriculture: Opportunities to Increase Productivity and Enhance Competitiveness.
[20] World Bank Group (2015), Building regulation for resilience: Managing risks for safer cities, https://www.gfdrr.org/sites/default/files/publication/BRR%20report.pdf.
[47] Wunder, S. et al. (2018), “From principles to practice in paying for nature’s services”, Nature Sustainability, Vol. 1/3, pp. 145-150, https://doi.org/10.1038/s41893-018-0036-x.