ABSTRACT
The importance of LAC's natural capital is evidenced by the fact that this region holds approximately 70% of the world's vertebrates biodiversity (IUCN, 201 3), 40% of the global aboveground carbon stocks (FAO, 20100), 30% of total blue freshwater resources (FAO, 2013) and 13% of world heritage sites (UNESCO, 2013). Yet, the fast pace of development taking place in the region is generating a large pressure on LAC's natural capital, causing important environmental impacts and the loss of multiple ES, particularly regulating services (see Chapter 3). Two important factors explain current pressure on LAC's natural capital: 1) the prevailing economic model, which is natural resource use-intense and highly coupled yet; and 2) the large and often poorly urbanization process, which has large impacts on freshwater ecosystems and constitutes the most important driver of point water pollution. High commodity prices have stimulated the rapid growth of the primary sector in LAC (mostly of agriculture and mining), generating large negative environmental externalities (e.g. deforestation, diffuse pollution, soils degradation, etc.) and low interest in internalizing these costs to remain competitive, i.e. maintain its comparative advantage and support the prevailing cheap food policies. Similarly, urban growth encompasses a growing water demand to meet citizens needs, i.e. infrastructure development and water transfers, and yet investments in wastewater treatment plants are scarce, exacerbating the water pollution problem.
