Djibouti is confronting significant climate challenges that threaten its economy and infrastructure. These challenges include extreme heat, increased floods and droughts, and rising sea levels. The country's coastal economy is particularly vulnerable, with potential annual climate-related economic damages reaching 6% of GDP by 2050 without adaptive measures.
As a crucial transport hub in the Horn of Africa, Djibouti's resilience has regional importance. It handles 95% of Ethiopia’s imports through its port and serves as a landing point for submarine cables linking Africa to global data flows. Climate change exacerbates existing pressures on Djibouti's coastal, road, and rail infrastructure.
"Climate change will expose Djibouti’s coastal economy to storm surges, worsen extreme heat, and make drought and floods more common," highlights the report. Despite being one of the world's smallest emitters (188th globally), Djibouti faces substantial risks from climate change.
Significant investments in infrastructure provide a foundation for boosting resilience. However, ensuring these assets reach their full potential is crucial. Heavy rains and heat stress are projected to increase annual transport infrastructure damages by $40 million by mid-century, while labor productivity losses could reach 2%. Modeling suggests priority investments can reduce vulnerability in the transport sector by about 60%.
Water access remains strained due to low renewable water resources estimated at 185 m3 per person annually. Rural livestock livelihoods could see a revenue decline of 24% from heat stress. Heat is also expected to reduce human productivity by up to 3.5% by mid-century.
"Djibouti has made important investments in new water sources," including desalinization capacity and a pipeline connection delivering water from Ethiopia. Urban water security can be achieved with additional efforts to optimize these resources.
The report stresses the need for investment in urban flood management and energy sector reform to support growth sectors in Djibouti City—the country's economic engine facing frequent flooding events causing damages up to US$43 million per event.
Djibouti's adaptation needs could exceed US$2.8 billion, with priority actions requiring US$1.1 billion more funds through 2035. "Such investment can be consistent with Djibouti’s goal of achieving both growth and debt sustainability," but must be supported by economic reforms and international aid due to the region's reliance on Djibouti's resilience.