PODGORICA, December 4, 2024 - Montenegro has an opportunity to strengthen its resilience to climate change and foster sustainable economic growth through well-planned investments and policies, according to the World Bank Group's Country Climate and Development Report for Montenegro, released today. The report emphasizes that targeted actions can protect communities, reduce economic losses, and support long-term development.
The report states that climate-related disasters could reduce Montenegro's gross domestic product (GDP) by 7.9% in 2050. Floods stand out as the country's most destructive natural hazard, affecting 10,000 people annually and causing an average of $90 million in damages each year. Earthquakes also pose a significant risk, impacting 9,000 people annually and resulting in average losses of $70 million. Without timely climate adaptation measures, these challenges are expected to intensify as the effects of climate change accelerate.
"Climate change poses a severe risk to Montenegro's economic stability and the well-being of its citizens," said 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, delivering economic, environmental, and social benefits for Montenegro.
The report estimates that Montenegro needs to invest $5.7 billion over the next decade to enhance its resilience against climate impacts. These investments do more than reduce damages; nature-based solutions, such as floodplain restoration, can significantly enhance protection while providing environmental and social benefits. Similarly, urban adaptation measures, like new green infrastructure, water system, and building designs in Podgorica, have demonstrated improvements in energy efficiency, public health, and the overall quality of urban spaces.
The report also outlines the path to achieving net-zero emissions by 2050. With the private sector expected to contribute more than 70% of the additional capital required, Montenegro should focus on creating an enabling regulatory environment and leveraging financing instruments like green bonds and public-private partnerships to encourage private sector investments.
"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 to unlocking the investments needed to decarbonize the economy and build resilience against climate challenges."
In line with European Union objectives, decarbonizing the energy sector will require a significant expansion of renewable energy sources like wind and solar, alongside the existing hydroelectric capacity. Investments in energy efficiency and transitioning heating and transport sectors toward electricity-based technologies are also critical.
To ensure a just transition, the government should implement policies to support coal-dependent communities and protect low-income households from the potential economic impacts of the green transition.
Download the Montenegro Country Climate and Development Report here.
