Tunisia: Adaptation to climate change and decarbonisation of energy could boost GDP growth to 8.8% by 2030 (WB report)

Combined adaptation and mitigation measures to address climate change and decarbonise the energy sector could boost GDP growth to 8.8% by 2030, reduce poverty and cut energy-related emissions, according to the World's Bank's "Country Climate and Development Report for Tunisia" released Wednesday, ahead of COP28. On the other hand, "inaction could result in GDP losses of up to 3.4% by 2030, amounting to annual losses of about 5.6 billion dinars ($1.8 billion)". The World Bank report points to public policies and investment opportunities that could reduce the impact of climate change on people and businesses, and improve the competitiveness of the Tunisian economy. "Water scarcity, coastal erosion and flooding would reduce real GDP by 3.4% in 2030 if nothing is done. Annual losses would reach 6.4% of GDP in 2050, or 10.4 billion dinars (USD 3.4 billion) in net present value terms. Much of these losses are due to the impact of water scarcity. As a result, the agricultural sector would be particularly hard hi t, with its value added expected to fall by 15% by 2030 (and by 29% by 2050). A decline in agricultural production would reduce net exports, while imports would increase to fill the gap between supply and demand, especially in agriculture. As a result, the current account deficit would widen by more than 6% in 2030. This would worsen Tunisia's already fragile external balance. In addition, the poverty rate would rise to 21.3% by 2030," the document says. The report points out that "the Tunisian government has developed high-level strategies to combat climate change and promote a green transition, but despite these commitments, funding shortages, frequent changes in government, public sector obstacles and a growing budget deficit (due in part to the limited effectiveness of public spending on energy) have limited the state's implementation of climate policies." Implementing a new economic model The WB report calls for a new economic model to address Tunisia's difficult economic and social context and vulne rability to climate change. That new model would emphasise the role of the private sector in creating the majority of jobs, while the state focuses on its regulatory role, financing expenditures with the highest social and economic returns, and allocating resources to interventions that are both economically and environmentally sustainable. The proposed model would involve major changes, such as using pricing to rationalise resource consumption and creating favourable economic conditions for private investment in climate adaptation and decarbonisation. Given that Tunisia cannot increase its debt at present, the WB also believes that the country should create the right macro-financial conditions for public and private investment to finance its climate goals. Source: Agence Tunis Afrique Presse

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