Madagascar is already feeling the harsh impacts of climate change
Despite contributing only 0.09% of global greenhouse gas emissions, Madagascar is suffering the impacts of climate change. The country is highly vulnerable to extreme weather, such as intense cyclones and severe droughts. Over the past 20 years, Madagascar has experienced 35 cyclones, eight floods, and five severe droughts These changes threaten Madagascar's unique ecosystems, like coral reefs and rich biodiversity, and worsen poverty and food insecurity.
Without taking action, an additional 1.68 million people in Madagascar could fall into poverty by 2050. Climate change hits the poorest the hardest, making it essential to invest in climate resilience to make headway on improving the livelihoods and well-being of the most vulnerable. Under the "business as usual" scenario, Madagascar's GDP could fall by 5.8% by 2050, severely impacting tourism, agriculture, and labor productivity. With targeted adaptation investments and reforms, the GDP decline could be minimized to 1.7%.
GDP Losses from Climate Change under Different Economic Policy and Climate Scenarios, 2030–2050
Urgent investments for climate-resilient growth in Madagascar
The has identified urgent steps to be taken in the next 3-5 years, costing about $3.37 billion by 2030, to help the country grow in a climate-resilient way.
These urgent investments are grouped into three priority areas: ensuring climate resilience in key sectors, achieving institutional and policy readiness, and securing climate finance while mobilizing the private sector. Institutional capacity building and reforms are also essential for success, along with a solid regulatory, policy, and institutional foundation for climate adaptation.
Ensuring climate resilience in key sectors
The report highlights five key sectors for climate-resilient growth in Madagascar: water, food, and energy security; the blue economy; climate-resilient cities; resilient transport systems; and human development, health, and well-being.
Climate change threatens food systems and water availability, making investments in water management, climate-smart agriculture, and expanding hydropower and solar energy essential. Madagascar's marine and coastal resources support significant development but are vulnerable to climate change, necessitating actions to promote sustainable fisheries, blue tourism, and protect coastal ecosystems. Rapid urbanization and climate change increase flood and landslide risks, requiring upgrades to urban infrastructure, improved waste management, and investments in nature-based solutions. The transport network is limited and vulnerable to extreme weather, so improving road maintenance, developing multimodal transport, and climate-smart investments in railways, ports, and airports are crucial.
Madagascar’s CCDR’s Five key Intervention Sectors and Cross-cutting Focus Areas
As well, investing in social protection, education, and health services is vital for reducing climate vulnerability, with actions including scaling up social safety nets, building climate-resilient infrastructure, and training for green jobs. Enhancing climate and disaster risk management across all sectors is essential, involving improvements in climate data exchange, early warning systems, and disaster preparedness, with goals to establish fully operational early warning services and create a risk-aware society by 2030.
Achieving institutional and policy climate readiness
Madagascar needs a comprehensive Climate Change Framework Law to address policy, regulatory, and institutional gaps. Despite having the Nationally Determined Contribution and National Adaptation Plan, and preparing a long-term strategy, the country lacks a unified climate action framework law. Climate change is not fully integrated into development planning and public finance management. The government also lacks real-time information for policy making and private sector mobilization.
Securing climate finance and mobilizing the private sector
Madagascar faces a significant climate finance gap to implement urgent actions needed to protect its economy, people, and ecosystems from climate change. The estimated cost for climate-resilience investments and reforms across the five key sectors is nearly $7.5 billion by 2050. The most urgent actions, prioritized for the next 3 to 5 years, will cost around $3.37 billion by 2030. This highlights an urgent funding gap, as only $416 million was mobilized in 2020.
To bridge this gap, Madagascar can mobilize funds by phasing out fossil fuel subsidies, developing carbon markets, increasing support from multilateral development banks and global green finance funds, and encouraging private sector investment in green and blue projects. Collaboration between the World Bank Group and the IMF under the Resilience and Sustainability Facility (RSF) is a step towards operationalizing these recommendations. A clear national strategy for climate finance mobilization is needed, addressing roadblocks to climate financial markets. This strategy should prioritize and coordinate policies, set clear milestones, and track progress.
Creating an enabling environment for low-risk climate investments is crucial to attract private capital. Key sectors for private investment include tourism, fisheries, agri-business, mining, and hydro-resources. Scaling up insurance and risk management products is also important. The government should unlock financing for larger-scale private sector projects and leverage the forest carbon market to finance REDD+ initiatives.
Note: CCDRs are the World Bank Group’s new flagship report, aiming to align climate action and development priorities. This CCDR is informed by robust climate modeling, combined with an in-depth analysis of the macroeconomic and sectoral implications of climate change, including the impacts of climate change on Madagascar’s future growth and poverty. The Madagascar report has leveraged technical sector teams from across the World Bank, the International Finance Corporation, and the Multilateral Investment Guarantee Agency, working in close partnership with the Government of Madagascar through a cross-sectoral committee established specifically for this report.
