Armenia is facing significant challenges related to climate change, according to the World Bank Group's Armenia Country Climate and Development Report (CCDR). Released today, the report emphasizes the urgent need for effective climate action to secure energy independence, reduce pollution, and ensure sustainable economic growth.
The nation is particularly susceptible to floods, droughts, heat stress, hail, and landslides. These environmental issues have been exacerbated by its dependence on fossil fuels. The annual health-related costs of pollution in Armenia are estimated at 10.6% of GDP.
The CCDR warns that inaction could lead to a 3% reduction in Armenia’s economy by 2060 due to climate impacts on water and agriculture sectors. Conversely, proactive investments could boost the economy by 0.5-1% annually.
Natural gas imports account for 63% of Armenia's energy supply and contribute significantly to greenhouse gas emissions. The report argues that decarbonizing this sector would be more cost-effective than continuing with imported gas due to associated hidden costs like healthcare expenses.
“Investing in effective climate action offers Armenia an opportunity to create new growth drivers and quality jobs," said Carolin Geginat, World Bank Country Manager for Armenia.
Water scarcity is another pressing issue with over-extraction threatening agricultural output and drinking supplies. Transboundary water flows are also decreasing due to upstream activities in neighboring countries.
The CCDR outlines two priority areas: decarbonization for emissions reduction and energy security; and boosting agriculture productivity along with food and water security. Achieving these goals will require an estimated $8 billion investment by 2060, mostly from private sources under favorable policy reforms.
Ivana Fernandes Duarte from the International Finance Corporation highlighted the potential for private investment in solar energy, storage solutions, critical infrastructure, and agricultural resilience through public-private partnerships.
Fiscal reforms such as a carbon tax could generate revenue for incentivizing private investment while protecting vulnerable households from price hikes. Institutional reforms are necessary for better anticipation of future climate impacts on growth.
Overall, the CCDR suggests concrete actions aimed at reducing greenhouse gas emissions while bolstering resilience against climate vulnerabilities. The findings aim to inform stakeholders involved in development and climate agendas about strategic pathways forward.