Current scientific evidence increasingly shows that the benefits of strong early action far outweigh the costs of inaction. If we do not drastically and promptly reduce greenhouse gas (GHG) emissions now, we are risking a catastrophic disruption of the complex of interlinked environmental, economic, health, moral, political and social systems that sustain civilization as we know it.

Bringing the needed collective action to avoid the looming catastrophe, however, remains one of the greatest challenges humanity has ever faced. Its mere scale and the urgency of action will test the global governance system and stress the relationship between developing and developed countries during the next decade. To avoid the worst impact of climate change, we need to find equitable solutions and encourage the most drastic emissions reduction possible. The world has fallen too far behind in the fight against global warming. We cannot afford any further delay. Developed countries and the rapid growth economies of large developing countries have more responsibility for climate action, but there is no excuse for smaller countries not to act.

Costa Rica has decided to respond and align its national priorities with global climate action. The Government has prepared a far-reaching climate change strategy and is committed to becoming a carbon-neutral (C-neutral) country. We aspire to build a society whose pursuit of well-being does not reduce or risk the well-being of others. In the words of Costa Rican President Oscar Arias, "we do this with the hope that, eventually, we will be able to show the world that what ultimately needs to be done, can be done". As a small country, this is Costa Rica's important contribution to the climate change issue.

Climate change is at the top of the government agenda. The new Administration, which took office in 2006, included it as a priority in its national development plan. Both at the national and international levels, the Government has announced its commitment to transform Costa Rica into a leader in the battle against climate change. An economy-wide plan is being formulated in a participatory way that includes all economic sectors, relevant government bodies and academic institutions. Important segments of the private sector and the media have already shown enthusiastic support for this goal. The vision I have been advocating-that "a C-neutral economy is at the same time a competitive economy"-is starting to be shared by our society. We will not only take a shared climate change responsibility with the world, but will also seek to develop the necessary capabilities to turn the challenging mitigation goals into opportunities of change in order to transform our human sustainable development potential into reality.

The climate change strategy, which has a clear orientation for action, is defined around five strategic components: metrics, mitigation, vulnerability and adaptation, capacity-building, and education, culture and public awareness.

Metrics. This component will develop a metrics system that is accurate, reliable and verifiable, with built in mechanisms for monitoring.

Mitigation. This strategic component is focused on creating a C-neutral country with a vision that integrates the complex environmental, economic, human, social, moral, cultural, educational and political issues, as well as the national competitive strategy. The promotion of C-neutral companies and communities, among other stakeholders, will provide incentives for action and additional differentiation elements in the competitive strategy. Actions include the following main elements: emissions reduction by source, including energy, transportation, agriculture, land use (land- use change and the reduction of deforestation), industry, solid waste management and tourism (and associated international air travel), among other sectors; carbon sinks enhancement through reforestation and natural forest regeneration; and carbon markets development at the local and international levels of production.

Photo © Jane Goodall Institute

The avoided deforestation programme, including participation in the Coalition for Rainforest Nations, and a new tree-planting campaign that will be linked to Wangari Maathai's UN campaign are part of Costa Rica's planned actions, through which its learning experience in reforestation will be strengthened. Through a system of various mechanisms, including payment of environmental services for the protection of forests and the enhancement of forest- cover recovery, Costa Rica managed to increase its forest cover from 21 per cent in 1986 to 51 per cent in 2006. Its tree planting and forest protection efforts will continue to focus on high-quality environmental services, including biodiversity conservation, water-resource conservation and protection, local community development and scenic beautification, besides carbon fixing.

The relationship with competitive strategy is an important part of our design. Climate change, along with the degradation of the environment, energy and food security, will have a profound effect on sustainable economic growth. The value of companies and their profitability and growth will be associated with climate change risks and opportunities. The way companies manage those risks and opportunities are key to making this effort a success. We are creating the conditions to induce responsible and competitive behaviour, even in our economy. As has been recognized by the Carbon Disclosure Project companies, major economic, financial and competitive climate change risks are associated with exposure to the following factors:

• Competitive risks, due to consumers' shift in the demand for products and services, from high intensity carbon to low-carbon or carbon-neutral services and products. Carbon differentiation will be an important factor, while clean products, services and processes will provide a significant competitive advantage in the future.
• Reputation risks, due to consumers' perceived inaction on the part of the companies.
• Regulatory risks, due to exposure to local and international potential regulations.
• Economic and financial risks, due to impacts on assets and infrastructure caused by extreme climate events.

The main climate change opportunities are associated with education, culture, innovation and rapid technological change in existing sectors of the economy and the development of new sectors related to environmental issues. Climate change will have a deep impact on most sectors of the economy and society in general. The way a nation and companies respond will determine their future economic, financial and human development, as well as their environmental and social well-being. Future human sustainable development will depend on how we respond to climate change.

Adaptation. This strategy includes a set of studies to identify vulnerabilities and design mechanisms to apply measures to reduce the effects of climate change, research and monitoring, early warning systems and capacity-building to improve in an integrated way the country's economic, societal, environmental and biophysical adaptive capacity. Water resources, health, agriculture, infrastructure, coastal areas, and land and marine biodiversity will be among the key components of the adaptation strategy, as well as preparation for disasters and disaster-risk management. The main goal will be to reduce vulnerability of different sectors and ecosystems.

Capacity-building. For a nation to have the capabilities to implement a comprehensive climate change strategy, it is necessary to build society-wide capacities to conscientiously respond to climate change, as well as to measure and mitigate its causes, and to communicate how to adapt to its consequences at all levels of society.

Education, culture and public awareness. People must be involved and committed to combat climate change and thus build a societal system of decision-making for the implementation of the strategy. Individual habits and patterns of consumption must be made compatible with the climate change imperatives. If we are finally to make a difference, people must be informed and re-educated, and they need to have an active participation in climate change issues.

Costa Rica's C-neutral strategy is a combination of broad and specific voluntary commitments, which would reinforce each other and integrate climate concerns into development planning. These commitments also allow policies to be tailored according to national circumstances and at the same time increase competitiveness in attracting direct foreign investments. The strategy is consistent with our local and global responsibilities. However, a broader international climate regime will not only help us, but also other developing countries, which could include sector and policy approaches necessary for the deeper emissions reduction that the world requires.

For example, programmatic crediting within the scope of the Clean Development Mechanism or by way of other mechanisms is necessary to cover sector- and policy-based activities. This will allow meaningful national policy commitments, such as strengthening energy security by increasing the use of renewable sources and energy efficiency, promoting sustainable transportation, reducing urban air pollution by using cleaner fuels, reducing emissions from deforestation, supporting sustainable forestry and raising agriculture productivity, among others. To achieve emission cuts that are imperative worldwide, it is necessary that these climate actions in the developing countries benefit from carbon finance.