Sri Lanka is facing increasing challenges from climate change, with recent heatwaves making daily life more difficult for residents. In April 2024, the country experienced temperatures in the mid-30s Celsius and recorded nearly 80 dangerously hot days—almost double the global average. These conditions have impacted people like Malani, a Colombo resident who works multiple jobs and must adjust her routine to avoid extreme heat.
Following a severe economic crisis that drove many families into poverty, Sri Lanka has implemented significant fiscal reforms amounting to nearly 8 percent of its GDP over three years. This adjustment has been one of the largest and fastest globally, helping stabilize the economy.
As Sri Lanka recovers economically, it faces ongoing risks from climate change. The country’s average temperatures range between 27°C and 28°C and are expected to rise further. Extreme weather events such as floods, droughts, and heatwaves threaten communities, jobs, and food production. Over the past three decades, annual flood damages have averaged about US$240 million. Without additional measures, climate-related losses could reach 3.5 percent of GDP by 2050 and increase poverty rates by almost two percentage points.
To address these challenges, Sri Lanka’s government has introduced a National Climate Finance Strategy (2025-2030) aimed at attracting investment in green infrastructure, sustainable agriculture, and improved water management. The World Bank Group’s Sri Lanka Country Climate and Development Report (CCDR) supports this approach by highlighting that investments in climate resilience can also drive job creation and reduce poverty.
The CCDR identifies three main priorities for climate-smart growth: supporting farmers through modern practices and market access; investing in urban improvements such as green spaces and public transport; and expanding renewable energy sources like solar and wind to lower costs and emissions.
An integrated landscape management approach is recommended by the CCDR to coordinate efforts across sectors including water resources, agriculture, forests, infrastructure, and tourism. This strategy aims to enhance resilience while supporting economic growth throughout both urban and rural areas.
With limited public funds due to ongoing recovery efforts, Sri Lanka plans to mobilize private capital through instruments such as green bonds and public-private partnerships outlined in its Climate Finance Strategy. Between 2025 and 2053, the country will require approximately US$220 billion—about 4.3 percent of GDP annually—for key investments that build resilience against climate risks.
By accelerating clean energy adoption and investing in resilient infrastructure for cities and agriculture alike, Sri Lanka aims not only to mitigate future shocks but also promote inclusive long-term prosperity.