Serbia faces a range of climate-related hazards, including floods, landslides, droughts, heat waves, wildfires, and earthquakes. These challenges impact the country's water and energy security, agriculture, rural and low-income communities, as well as transportation and road infrastructure. To adapt to these changes effectively, Serbia requires an investment of approximately $9.5 billion over the next decade. Without action, the nation's GDP could decrease by at least 15% by 2050. The severe floods in 2014 alone resulted in damages worth EUR 864 million and losses amounting to EUR 648 million.
Investing in climate adaptation can bring significant benefits. Such investments are estimated to cost between 0.4-0.6% of GDP annually but could lead to reduced fatalities and injuries, minimized damage to infrastructure and assets, increased business and capital investments, job creation, enhanced labor productivity, improved human health outcomes, and biodiversity preservation.
An additional investment of $10.4 billion over the next 25 years is necessary for Serbia to achieve its net zero emissions target by 2050. This would primarily focus on transforming the power sector as Serbia is the largest greenhouse gas emitter in the Western Balkans. With fossil fuels accounting for 83% of its total energy supply, efforts should concentrate on expanding wind, hydroelectricity, and solar PV capacities while phasing out coal.
The private sector plays a vital role in this transition since it can provide up to 85% of investments needed for decarbonizing the economy if supported by a conducive regulatory environment. Developing a green debt market and leveraging public-private partnerships are crucial steps for Serbia to boost climate investment.
The report recommends that climate change adaptation and mitigation measures could foster climate-resilient growth in Serbia with improved labor productivity and health outcomes. This requires financial sector reforms, better education and training systems, streamlined regulations with greater transparency, reduced state intervention across industries, enhanced disaster risk management strategies, and comprehensive climate risk assessments.