Water at heart of climate solutions: World Bank report outlines policy priorities & steps to address finance gaps

Many countries have expressed interest in becoming producers, users and exporters of green energy, for which they need adequate, reliable access to water

Climate change impacts the availability of water and leads to extreme events such as droughts and floods.

The World Bank Group’s report People in a Changing Climate consolidates insights from 72 Climate Country and Development Reports (CCDR) and highlights individuals’ central role in addressing climate risks. Released at COP29 in November 2024, it underscores how people are both impacted by and integral to solutions for climate adaptation and low-carbon development.

CCDRs, launched in 2022, guide countries in aligning developmental processes with climate action by enhancing resilience, reducing greenhouse gas emissions and achieving United Nations-mandated Sustainable Development Goals.

Covering low-, middle- and high-income countries, CCDRs unite stakeholders, including governments, private sectors and citizens, to advance climate and development goals.

The report emphasised the disproportionate effects of climate change on lower-income countries, noting significant labour productivity losses due to rising temperatures. It highlighted how policies focused on people, resilient infrastructure and macroeconomic strategies can reduce vulnerabilities, foster green value chains, and support sustainable transitions with global collaboration.

Labour productivity loss due to heat stress by 2050 

Source: World Bank Group 2024. People in a Changing Climate: From vulnerability to action — Insights from world bank group country climate and development reports covering 72 economies.

Water at the heart of solutions

The second part of the 2024 report opens the dialogue for transition in different sectors, water being the most crucial one.

Access to water for agriculture, food security, human development, economic growth and the environment has been at the centre of CCDRs. Climate change impacts the availability of water and leads to extreme events such as droughts and floods.

During droughts, agriculture, energy production, food security are impacted. These lead to migration and malnutrition, especially in low-income countries.

On the other hand, flood situations lead to loss of lives, water-borne diseases, displacement of people and infrastructural damage. Both of these situations deal a blow to the economy of affected countries, with a disproportionate impact on vulnerable groups.

Climate change impacts the availability of water and leads to extreme events such as droughts and floods.

In Malawi, the report highlighted, drought will lead the people to fall below poverty line by 14 per cent. Ghana would lose its hydropower generation capacity by 8-30 per cent by 2040. Armenia would face a decline in rainfed crop yields by 2050 and Argentina would incur losses of $2.1 billion (0.6 per cent of GDP) due to decline in agricultural production.

Other countries including South Africa and Lebanon would also record a drop in agricultural production and farming jobs.

In Uzbekistan and Zimbabwe, water borne diseases will become more common by 2040 and 2050 respectively. 

The CCDRs have identified a matrix of country-specific solutions for boosting water resources management and building climate resilience. They suggested that there is a need for investment in this sector and bringing in reforms in institutional regulatory sectors.

Climate change has distinct impact on water availability, causing severe impact on people. CCDRs have made a compelling case for investing in social intervention to protect the vulnerable.

Rapid urbanisation leading to population influx in cities, expanding commercial and industrial infrastructure and poor wastewater management lead to severe risks. The CCDRs emphasise on solutions related to demand-side management of water for sustainability and risk mitigation.

Water-related recommendations in CCDRs

Source: World Bank Group 2024. People in a Changing Climate: From vulnerability to action — Insights from world bank group country climate and development reports covering 72 economies

It is also necessary to improve water security through wastewater management and promoting circularity, the authors of the report highlighted. Inefficient management of wastewater is leading to environmental pollution.

CCDRs have made recommendations that the cities should invest and focus on performance monitoring systems in wastewater treatment plants. This will ensure the quality of water, improve efficiency of the plants and reduce GHG emissions. Many countries have expressed interest in becoming the producers, users and exporters of green energy, for which they need adequate and reliable access to water.

Finance gap

The report highlighted that there is a high need for investment in the water sector, but current investments are much lower that what is required. An investment of $1.8 trillion in the water sector would result in estimated benefits worth $7.1 trillion between 2020 and 2030.

Investment in the water sector would also return greater direct benefits in terms of social, economic and climate returns. But in most of the CCDR countries, the investment in water sector was found to be only 0.5 per cent of their GDPs.

To meet the objectives of SDGs, public and private finances are required. This shall also compensate for the underinvestment till now.

Climate change impacts the availability of water and leads to extreme events such as droughts and floods.

Apart from water, the report also emphasised on transition in energy, transportation and urban development sectors. There is a need to shift towards green energy in transportation and invest more in building new infrastructures to reduce emissions for sustainability.

The report highlighted varying climate impacts across income groups. Low-income countries, including Small Island Developing States, face heightened vulnerabilities, while high-income nations endure infrastructure risks.

With rising temperatures projected by UNFCC, wealthier countries must lead decarbonisation and technology sharing. Bridging the $960 billion annual investment gap requires public-private partnerships, especially in low-income nations, the experts stressed in the report.

Courtesy: Down To Earth

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