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In a rapidly evolving global landscape, where the balance between economic progress and sustainability forms the cornerstone of national development, Paraguay stands out as a compelling case study. Over the past two decades, this landlocked nation has embarked on a remarkable journey, experiencing robust economic growth driven by favorable trade conditions and stringent macroeconomic policies. Yet, as this growth narrative unfolds, it encounters the complex challenges of sustainability.
Paraguay's pursuit of sustainable development requires balancing recent economic growth, driven by favorable trade and sound policies, with social progress through poverty reduction and education initiatives, and environmental protection despite its reliance on renewable energy. This report analyzes Paraguay's efforts in these areas, including challenges like droughts and pandemics, government regulations on sustainable agriculture and deforestation, and its commitment to the UN's Sustainable Development Goals through its first sustainable bond and plans for a more diverse energy mix.
Environmental sustainability in Paraguay faces various challenges and opportunities as the country progresses. Key insights into the state of environmental sustainability in Paraguay include deforestation concerns, legislative actions, agricultural practices, and land use dynamics.
Deforestation and River Pollution: Paraguay has experienced significant environmental degradation, particularly in its Eastern Region due to widespread deforestation practices over the last 60 years. The Chaco region, specifically in Alto Paraguay, is also dealing with river and creek pollution, which has been a major concern for both citizens and the government.
Legislative Framework for Environmental Protection: Paraguay has ratified important international agreements like the UN Framework Convention on Climate Change and the Convention on Biodiversity. The country’s National Constitution emphasizes the preservation and improvement of the environment. The Law of Wild Life, established in 1992, is crucial for the conservation and sustainable use of biodiversity. Despite these legislative frameworks, challenges in enforcement and budget allocation have historically hindered effective environmental protection.
Sustainable Agriculture and Land Use: Approximately 45% of Paraguay's population relies on subsistence farming. The agricultural sector, a significant part of Paraguay's GDP, includes soy, cotton, and beef as major exports. The soy industry, in particular, has sparked debates over sustainable agriculture practices. Additionally, land ownership issues, with a small percentage of the population owning a large portion of the land, have led to social and environmental concerns. Sustainable agricultural practices and EU funding aim to improve the competitiveness and sustainability of the sector.
Addressing Environmental Challenges: Despite these challenges, there have been efforts towards improvement, including environmental advocacy campaigns, the inclusion of environmental crimes in criminal legislation, and the development of environmentally related government careers. Laws such as "Zero Deforestation" and "Valuation and Retribution of Environmental Services" have had significant impacts in protecting wild areas and promoting rational resource utilization.
The state of environmental sustainability in Paraguay illustrates the complex interplay between economic development, agricultural practices, and environmental conservation efforts. While legislative measures and international agreements provide a framework for action, the effectiveness of these efforts often hinges on enforcement, public and private sector cooperation, and community engagement.
Paraguay's energy sector is distinctive for its heavy reliance on renewable sources, primarily hydropower, with significant contributions from hydro and biomass resources. Over the past decade, these resources have contributed to 82% of the country's final energy supply, positioning Paraguay as a net energy exporter. However, as the country's economy grows and energy demand increases, especially in the transport sector, there has been a notable uptake of fossil fuels. This shift has prompted a comprehensive assessment of Paraguay's future energy landscape, emphasizing the need for diversification of the energy mix through the exploration of solar and wind resources. Paraguay's net energy imports accounted for 10.1% of 2021 total energy supply.
10.1%
of 2021 total energy supply
The electricity sector in Paraguay is marked by challenges in distribution and transmission losses. As of 2005, distribution losses were reported to be as high as 31%, significantly above the average for Latin America and the Caribbean. The National Electricity Administration (ANDE) is the primary entity responsible for the electricity sector, including generation, transmission, and distribution. ANDE operates the Acaray hydroelectric dam and six thermal power plants, with a total installed capacity of 220 MW. It also oversees Paraguay's share of the Itaipú and Yacyretá bi-national hydroelectric facilities.
To improve energy security, support economic growth, and enhance climate resilience, the International Renewable Energy Agency (IRENA) has recommended that Paraguay diversify its energy mix by tapping into its abundant solar and wind resources. This approach aligns with Paraguay's climate commitments under its Nationally Determined Contributions, which include a commitment to a 20% reduction in emissions by 2030. Solar energy, in particular, has been identified as having high potential throughout the country, which could help decarbonize end-use sectors, including transport, and provide energy to isolated areas, especially in the regions of Alto Paraguay, Boquerón, and Concepción. Wind potential has also been identified, particularly in the north-western region of Boquerón.
To realize a more balanced, low-carbon energy future, IRENA has outlined specific actions around key areas such as strengthening energy institutions and governance, enhancing energy policy, promoting the use of renewable energy beyond the power sector, and fostering investment in renewable energy technologies.
Social sustainability in Paraguay encompasses efforts to create inclusive and resilient societies where citizens are empowered, and governments are responsive. The World Bank's approach to social sustainability emphasizes building human capital, promoting accountable institutions, and improving the business climate. It supports initiatives aimed at providing universal access to primary healthcare, enhancing market access for small farmers, increasing protection against climate events, and improving public spending management in social development. This holistic approach aims to address the vulnerabilities of the Paraguayan society to economic fluctuations, environmental disasters, and social inequalities.
A critical look at 'responsible soy' production in Paraguay offers insights into the environmental, economic, and social sustainability challenges the country faces. The discourse around sustainable soy production, notably through certification initiatives like the Roundtable on Responsible Soy (RTRS), brings to light issues related to land-grabbing, deforestation, and the concentration of land holdings, which are significant concerns in countries with large, poor rural populations like Paraguay. This analysis underscores the need for a shift in sustainable development policies that prioritizes equitable land and resource distribution.
Moreover, the World Bank's Social Sustainability and Inclusion strategy seeks to "put people first" by promoting social inclusion of the poor and vulnerable through empowerment, building cohesive and resilient societies, and making institutions accessible and accountable. This strategy focuses on areas such as social cohesion and resilience, the social dimensions of climate change, citizen engagement, and the inclusion of indigenous peoples and those of diverse sexual orientations and gender identities. By addressing these critical areas, the initiative aims to foster a more inclusive and socially sustainable development path for Paraguay.
These efforts reflect a comprehensive understanding of social sustainability as not just a matter of economic growth or environmental conservation but as deeply intertwined with creating societies where everyone can thrive regardless of their background or circumstances.
Economic sustainability in Paraguay is supported by a multifaceted approach that encompasses environmental, social, and economic dimensions. The World Bank outlines Paraguay's recent economic history as one marked by robust growth due to favorable trade conditions and solid macroeconomic policies. However, challenges such as droughts, the COVID-19 pandemic, and high inflation have impacted this growth. Despite these challenges, economic recovery is underway, with a projected growth rate increase. The World Bank’s portfolio in Paraguay focuses on enhancing various sectors, including public health, transport, agriculture, and green growth, to support the country's sustainable economic model and investment in human capital.
The Sustainable Development Solutions Network's 2021 report on Paraguay emphasizes the country's commitment to sustainable development goals (SDGs) and its efforts towards economic stability, growth, and environmental protection. The report underscores the importance of international cooperation and policy reform in achieving these goals.
Innovative models for sustainable development, like those explored by Forestal Sylvis, highlight the potential for combining environmental conservation with economic and social benefits. Forestal Sylvis’ model provides an example of how sustainable business practices can contribute to forest recuperation, economic development, and social empowerment. This approach not only offers attractive investment returns but also supports local communities and conserves the environment.
Lastly, Paraguay’s ambition to diversify its economy and explore renewable energy sources as detailed by IRENA, further underscores the nation's efforts towards a more sustainable and resilient economic future. The focus on renewable resources, such as solar and wind, aligns with Paraguay's climate commitments and seeks to ensure energy security, economic growth, and climate resilience.
These initiatives collectively indicate a progressive stride towards economic sustainability in Paraguay, balancing growth with social and environmental responsibilities.
Alignment with SDGs: For future trends in sustainability for Paraguay, one key area is its alignment with the 2030 Agenda for Sustainable Development. Paraguay is working through interinstitutional coordination for implementing, following up, and monitoring international commitments under the United Nations' Sustainable Development Goals (SDGs). This involves a multi-faceted approach, including addressing poverty, health, education, and climate action, guided by the Paraguay Ministry of Foreign Affairs and the Technical Committee for Statistical Monitoring.
Sustainable bonds: In December 2023, Paraguay achieved a significant milestone in its sustainability efforts by issuing its first sustainable bond through the Agencia Financiera de Desarrollo (AFD). Valued at approximately US$13 million, this bond is designed to finance projects with social and environmental benefits. It focuses on sustainable resource management, energy efficiency, renewable energy, sustainable agriculture, education, small and medium-sized enterprise support, and affordable housing projects, marking a significant step towards aligning the country's financial sector with low carbon and sustainable development goals.
Energy: Paraguay has set renewable energy targets within its National Development Plan 2014–2030, aiming for 60% of total energy consumption to come from renewable sources by 2030. Additionally, the country intends to reduce its fossil fuel share within its total energy consumption by 20% by the same year.
In conclusion, Paraguay's path towards sustainable development is marked by both progress and challenges. The nation's economic growth necessitates navigating external shocks while ensuring social equity. Environmentally, Paraguay's renewable energy advantage must be balanced with tackling deforestation and pollution. The recent issuance of a sustainable bond and commitment to the UN's SDGs demonstrate Paraguay's intent to address these issues. By fostering collaboration between government, businesses, and civil society, Paraguay can navigate this complex landscape and achieve a future that is economically prosperous, socially inclusive, and environmentally responsible.
