Climate-Informed Economic Development Key to Malawi’s Future Growth and Resilience

Climate change will make it harder for Malawi to achieve its ambitious development goals— unless it accelerates policies and programs, as intended in its national Vision 2063, and supplements this effort with additional investment in adaptation, says the new World Bank Country Climate and Development Report (CCDR) for Malawi.

Most quickly, Malawi can take steps to speed up investments in infrastructure that can withstand the effects of climate change and stop land degradation and forest loss. This will improve agricultural productivity and help the country capture more carbon. 

Prioritising these actions, combined with expanded safety nets and economic diversification, could reduce the number of vulnerable households that would otherwise fall into poverty by as much as three-quarters.

Hugh Riddell, World Bank Country Manager for Malawi, said: 

"Malawi’s pathway to economic growth is persistently halted by climate shocks, leaving many millions trapped in poverty for many decades. 

“Vision 2063 for Malawi provides a clear pathway to build a resilient economy. The World Bank is providing climate financing to support that vision and help the government reduce the impacts of climate change under fiscal constraints.”

Climate change could reduce GDP by 3 to 9 per cent by 2030, 6 to 20 per cent by 2040, and 8 to 16 per cent by 2050 if these investments are not made. Climate change is also reducing the resilience of households and could increase poverty rates in the country, potentially pushing another two million people into poverty over the next 10 years, the report says.

Eisenhower Mkaka, Minister of Natural Resources and Climate Change said: 

"Climate change will make it harder for Malawi to reach the ambitious goals of Vision 2063. The country must start addressing climate resilience now, starting with lower cost, high impact priorities, as outlined in our development plan and the CCDR."

Malawi also doesn't have a lot of room in its budget in the near future, so it needs more money from grants, highly subsidised public financing, and the private sector. Malawi can also get the most out of public sector resources, international public finance, and private investment by keeping transaction costs low and finding new ways to grow that don't add to public debt.

This CCDR, the first of its kind in Malawi, is meant to help the country reach its development goals even though the climate is changing. It does this by calculating the effects of climate change on the economy and outlining a path to strong, climate-resilient growth. 

It also examines Malawi’s current policy landscape and identifies needed reforms to finance the development and climate agendas, including Malawi’s efforts to protect the most vulnerable households. The assessment also looks at how to adapt and how much it will cost for agriculture, land management, energy, transportation, and digital, as well as the effects on the economy as a whole, on poverty, and the budget.

The Country Climate and Development Reports (CCDRs) from the World Bank Group are new core diagnostic reports that look at both climate change and development. They will help countries figure out which actions will have the most impact on lowering greenhouse gas (GHG) emissions and making it easier to adapt, while also meeting broader development goals. 

CCDRs are based on data and thorough research, and they show the main ways to reduce GHG emissions and climate vulnerabilities, as well as the costs, difficulties, opportunities, and benefits of doing so. The reports suggest concrete, priority actions to support the low-carbon, resilient transition. As public documents, CCDRs aim to give governments, citizens, the private sector, and development partners information about the development and climate agenda and make it possible for them to get involved. CCDRs will feed into other core Bank Group diagnostics, country engagements, and operations. They will also help attract funding and direct financing for high-impact climate action.

Source: World Bank

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