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EXECUTIVE SUMMARY 2 Climate and Development An Agenda for Action © 2022 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone 202-473-1000; Internet www.worldbank.org This work is a product of the staff of The World Bank Group with external contributions. “The World Bank Group” refers to the legally separate organizations of the International Bank for Reconstruction and Development IBRD, the International Development Association IDA, the International Finance Corporation IFC, and the Multilateral Investment Guarantee Agency MIGA. The World Bank Group does not guarantee the accuracy, reliability or completeness of the content included in this work, or the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors including, without limitation, typographical errors and technical errors in the content whatsoever or for reliance thereon. 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Cover design Brad Amburn 3 Climate and Development An Agenda for Action Achieving Climate and Development Goals Together Foreword by David Malpass Developing countries face a unique challenge of having to achieve their economic development goals in the context of a changing climate. Policymakers face tough questions. How to translate short- and long- term climate impacts into decisions today What policy reforms and investments should be prioritized What are the trade-offs between immediate benefits and costlier delays The answers to these questions will impact every sector of their economies and societies. Moreover, there is no single solution the energy transition in China looks very different from in Chad, and the development priorities of Pakistan vary significantly from those of Türkiye. All countries can benefit from a systematic approach that combines the best available data, models, and tools to provide immediate and actionable recommendations that integrate climate and development goals. That is what our transformative new diagnostic the Country Climate and Development Reports sets out to do. The reports build on the World Bank Group’s long and ongoing country engagement as the world’s leading development institution and the leading provider of climate finance to the developing world. Each report is rooted in its unique country context from the country’s climate commitments and development priorities to its income level and its sectoral transitions. The reports take a people- centric approach, from people living in flood-prone areas to workers in the coal industry, to protect the poorest and most vulnerable and contribute to a just transition. They capture the essential role of the private sector in increasing resilience and reducing emissions. They also examine the “All countries can benefit from a systematic approach that combines the best available data, models, and tools to provide immediate and actionable recommendations that integrate climate and development goals. That is what our transformative new diagnostic the Country Climate and Development Reportssets out to do.” 4 Climate and Development An Agenda for Action technologies and innovations needed for lower carbon intensity production of electricity, steel, cement, and manufacturing, and how the world will build green and efficient supply chains for sustainable development. The result is that each report contains a wealth of information on the pathways and investments that can help each country to shape a low-carbon, resilient development future. These reports do not provide all the answers, but they offer new analysis and lay out the challenges and opportunities of climate and development in an integrated way that enables policymakers to better find the answers they need. The first batch of reports spans 24 countries Argentina, Bangladesh, Burkina Faso, Cameroon, Chad, China, Arab Republic of Egypt, Ghana, Iraq, Jordan, Kazakhstan, Malawi, Mali, Mauritania, Morocco, Nepal, Niger, Pakistan, Peru, Philippines, Rwanda, South Africa, Türkiye, and Vietnam. Each report is conducted jointly by the World Bank and its private sector arms, the International Finance Corporation and the Multilateral Investment Guarantee Agency, and in close coordination with the International Monetary Fund. I want to thank all those who have taken part in this groundbreaking exercise for their insights, rigor, collaborative spirit, and hard work. This analysis, Climate and Development An Agenda for Action, draws from the richness of the individual country reports and shares some early insights we have gleaned from the first batch. These early insights are striking. In CCDR countries, investing an average of 1.4 of GDP in adaptation and mitigation could increase their resilience and reduce their emissions by as much as 70 by 2050. The transition could see positive impacts on GDP and employment, but these must be balanced against losses in fossil fuel-intensive sectors which will impact some populations and communities. The gains are there to be reaped but they are not automatic they depend on carefully designed policies as well as increased financial support from richer economies. Especially in lower-income countries, where investment needs for climate action often exceed 5 percent of GDP, increased volumes of concessional financeincluding through grantsare critical to a successful and just transition. The first batch of CCDRs show us that tackling climate and development is achievable. Together, we can forge a path toward a low-carbon resilient future. 5 Climate and Development An Agenda for Action Executive Summary Climate changecaused by greenhouse gas GHG emissions from human activitiesposes a major threat to countries’ ability to protect past development gains and achieve future improvements in living standards for all. Tackling climate change and development challenges together is therefore at the heart of the World Bank Group’s Climate Change Action Plan 2021–25 1 and the World Bank’s Green, Resilient, and Inclusive Development GRID approach. 2 To support the alignment of development and climate objectives at the country level, the World Bank Group has launched a new core diagnostic tool the Country Climate and Development Report CCDR. These country reports combine the best available data, models, and tools to provide immediate and actionable recommendations for decision makers today. Integrating climate change and development considerations, the CCDRs aim to help governments, the private sector, citizens, and development partners prioritize the most impactful actions that can boost resilience and adaptation and contribute to global public goods by reducing GHG emissions, while delivering on broader development objectives. The first set of 20 CCDRs covers 24 countries figure S.1. 3 FIGURE S.1 CCDR countries covered in this synthesis paper and those where CCDRs have been recently initiated Argentina Bangladesh Burkina Faso Cameroon Chad China Egypt Ghana Iraq Jordan Kazakhstan Malawi Mali Mauritania Morocco Nepal Niger Pakistan Peru The Philippines Rwanda South Africa Türkiye Vietnam Published or in press Angola Brazil Honduras Indonesia Mozambique Forthcoming Ukraine Sudan On hold Azerbaijan Bhutan Cambodia Central African Republic Colombia Democratic Republic of Congo Côte d Ivoire Initiated Dominican Republic Eastern Caribbean Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines Ecuador Guinea-Bissau India Kenya Lebanon Liberia Madagascar Paraguay Romania Tunisia Uzbekistan West Bank and Gaza Zimbabwe Population billions, 2021 GDP , trillions, 2020 GHG emissions MtCO2e, 2018 2.7 34.0 0.6 7.2 1.8 23.2 2.7 34.5 19.4 22.4 2.6 3.0 60.5 69.9 3.9 4.5 15,980 33.8 3,387 7.2 5,460 11.5 22,063 46.7 393 0.8 Note MtCO2e million tons of carbon dioxide equivalent. 1 https//openknowledge.worldbank.org/handle/10986/35799. 2 https//openknowledge.worldbank.org/handle/10986/36322. 3 https//www.worldbank.org/en/publication/country-climate-development-reports. 6 Climate and Development An Agenda for Action This synthesis paper summarizes the main emerging findings from the first set of CCDRs. It identifies commonalities as well as differences and specificities across country contexts, income groups, and geographies. It also aims to combine these insights to inform how international development partners and especially high-income countries HICs should support the global transition toward a more resilient low-carbon development path, including through their own climate action and through support to climate action in low- and middle-income countries LICs and MICs. The first set of CCDRs shows that resilient, low-carbon development is possible, but only if all countries embrace major change. For LICs and MICs, this means changes to policies, regulations, and investments; for HICs, it means accelerating their own climate action and providing increased support to LICs and MICs. The first set of CCDRs demonstrates the significant impact of climate change, even when estimated only for a subset of impact categories and without including the larger impacts expected post-2050. The CCDRs explore some of the most critical transmission channels of climate change impacts, such as labor productivity, agricultural yields, and water availability. Sectoral impact assessments demonstrate high vulnerability to climate change with significant implications for food security and human health table S.1. CCDRs also look at the bi-directional relationship between climate change and risks related to fragility, conflict, and violence. Different analyses were performed for different countries, depending on their needs and vulnerabilities, but not all challenges could be explored in every country. 4 Even these partial analyses, however, show significant macroeconomic effects, particularly for poorer countries and especially under the assumption of higher levels of global warming. The CCDR analyses show a large and disproportionate impact of climate change on poverty and economic opportunities, especially for the most vulnerable members of society. Higher vulnerability of people in or close to poverty is linked to higher exposure to risk for example, working outdoors or living in low-quality housing. But it is also linked to a lower ability to prepare and respond for example, lacking access to borrowing or having no or low savings and lower access to support systems, such as remittances, social protection, health care, or a voice in decision making. 4 In particular, the first set of CCDRs does not include small islands that may face more dauntingor even existentialchallenges. CCDRs covering small islands are in progress. Key Messages Climate change poses a major threat to long-term development objectives. null Climate changecaused by GHG emissions from human activitiesposes a major threat to long-run development objectives, especially poverty reduction. null With appropriate adaptation policies, countries can reduce impacts in the short term. null Even with appropriate adaptation, successful development and poverty reduction require rapid reductions in global GHG emissions, which requires first and foremost accelerated mitigation action in HICs and other large emitters. 7 Climate and Development An Agenda for Action TABLE S.1 Examples of climate change impacts from the first set of CCDRs By 2030, Vietnam could experience agricultural losses up to 6.2 compared to 2010 levels as opposed to a scenario without climate change where agricultural output is estimated to increase by 25 Water availability in Iraq could decline by 13–28 by 2050 due to climate change By 2040, hydropower generation in Ghana could be reduced by 8–30 compared to 2020 levels Due to increased frequency, duration, and intensity of heat waves, outdoor worker productivity in some provinces of China could decline by 2–15 by 2060 By 2050, in a moderate-warming scenario, increased temperatures in Argentina could slightly reduce mortality thanks to a decrease in extreme cold days, but climate change would increase mortality under a pessimistic- warming scenario While drought conditions in Malawi increase the probability of an individual falling below the poverty line by 14, the impact on individuals with only a primary education rises to 26, versus 9 for those with a higher education In Rwanda, higher average temperatures could cause international tourism demand to drop by 11–20 by 2040 The poverty rate in the Sahel countries could increase from a 27 baseline to 34 by 2050 in a dry and high- emission scenario, with an additional 13.5 million people falling into poverty To reduce short-term climate change impacts, the CCDRs make recommendations for countries to boost their resilience by combining 1. Rapid and inclusive developmentparticularly through poverty reduction and levers such as universal access to infrastructure, financial services, education and health services, and effective soci