Montenegro is presented with an opportunity to enhance its resilience to climate change while promoting sustainable economic growth, according to the World Bank Group's Country Climate and Development Report for Montenegro. The report, released today, underscores the importance of strategic investments and policies in safeguarding communities, minimizing economic losses, and supporting long-term development.
The report highlights that climate-related disasters could potentially reduce Montenegro's GDP by 7.9% by 2050. Floods are identified as the most damaging natural hazard in the country, affecting 10,000 people annually and causing approximately $90 million in damages each year. Earthquakes also pose a significant threat, impacting 9,000 people yearly with average losses of $70 million. Without prompt climate adaptation measures, these issues are expected to worsen as climate change effects accelerate.
"Climate change poses a severe risk to Montenegro’s economic stability and the well-being of its citizens," stated Christopher Sheldon, World Bank Country Manager for Bosnia and Herzegovina and Montenegro. "Investing in adaptation and mitigation will not only protect lives and livelihoods but also unlock opportunities for sustainable growth."
To bolster its resilience against climate impacts, Montenegro needs an estimated investment of $5.7 billion over the next decade. These investments aim not only at reducing damages but also at enhancing protection through nature-based solutions like floodplain restoration which provide environmental and social benefits. Urban adaptation measures such as green infrastructure improvements in Podgorica have shown advancements in energy efficiency, public health, and urban space quality.
The report outlines steps toward achieving net-zero emissions by 2050 with private sector contributions expected to cover more than 70% of additional capital requirements. To facilitate this, Montenegro should focus on creating a supportive regulatory environment while leveraging financing instruments like green bonds and public-private partnerships.
"Private sector investments are essential to complement public sector efforts in achieving Montenegro’s climate goals," said Nicolas Marquier, IFC Regional Manager for the Western Balkans. "Public-private partnerships to develop infrastructure and green financing from financial institutions will be key."
Decarbonizing the energy sector aligns with European Union objectives necessitating expansion of renewable energy sources such as wind and solar alongside existing hydroelectric capacity. Investments in energy efficiency along with transitioning heating and transport sectors towards electricity-based technologies are deemed crucial.
To ensure a fair transition, government policies should support coal-dependent communities while protecting low-income households from potential economic impacts during this green transition.
Download the Montenegro Country Climate and Development Report here.