## CLIMATE CHANGE IN THE WAEMU: TRENDS, MACRO-CRITICALITY AND OPTIONS GOING FORWARD

## Source details

**Canonical URL:** [CLIMATE CHANGE IN THE WAEMU: TRENDS, MACRO-CRITICALITY AND OPTIONS GOING FORWARD](https://www.imf.org/-/media/files/publications/selected-issues-papers/2024/english/sipea2024015.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/selected-issues-papers/2024/english/sipea2024015.pdf.md)
- [Structured JSON version](/-/media/files/publications/selected-issues-papers/2024/english/sipea2024015.pdf.json)

---

### 1. Temperatures in the WAEMU — Rising temperatures and climate-related events
- Average temperatures during 2017-2021 were higher by 0.4-0.9 Celsius in all WAEMU countries compared to long-run averages (since the 1900s).
- There were 232 climate-related disasters in the WAEMU over 1966-2022.
- About 65 percent of those disasters (151 out of 232) took place during 2000-2022; 35 percent occurred during 1966-1999.
- Frequency change: about 7 disasters per year since the 2000s versus around 2 per year in the pre-2000 period.
- Event types: droughts and floods are the most common forms (218 events out of 232).
- Scale: about two-thirds of the disasters (150 out of 232) are estimated to have affected more than 10,000 people.

### 2. Macro-criticality of climate change in the WAEMU — Exposure, production impacts, and fiscal/external implications
- Exposure and sectoral dependence:
  - Around 53 percent of the WAEMU population is estimated to depend on agricultural employment (particularly high in Burkina Faso, Mali and Niger).
  - Agriculture contributes 26 percent of the region’s GDP.
- Projected impacts on production and GDP:
  - Evidence from developing countries: a 1 Celsius increase in temperatures is associated with a 3-percentage points reduction in agricultural production.
  - Sub-Saharan Africa analysis: monthly economic activity would decline by 1 percentage point if temperatures exceed the long-run average by 0.5 Celsius.
  - Projected GDP losses without adaptation by 2050: 7 percent in Burkina Faso, 11 percent in Mali, and 12 percent in Niger.
  - These three countries’ projected losses correspond to a 3 percent GDP loss in the WAEMU (they represent about 30 percent of regional GDP).
  - Climate change is estimated to lead to around 30-40 percent loss in agricultural productivity in the WAEMU countries.
- Fiscal and external balance implications:
  - Climate-related shocks lead to a persistent decline in economic growth by around 1 percentage points in sub-Saharan Africa.
  - Post-disaster effects include lower government revenues and increased spending for infrastructure, social and health needs, posing risks to fiscal sustainability.
  - External balances suffer because foreign assistance and remittances rarely fully offset declines in exports and increased reconstruction imports; evidence shows increases in both current account and fiscal deficits following disasters.
- Longer-term development and social impacts:
  - Climate shocks can damage infrastructure, undermine financial-sector contributions to growth, increase poverty and income inequality, and worsen gender-based disparities.
  - Climate-driven disruptions reduce human capital accumulation via deaths, malnutrition, or lower school enrollment.

### 3. Agricultural production and food insecurity
- Current food insecurity and sensitivity to shocks:
  - Around 47 percent of the WAEMU population faced insufficient food consumption in 2022-23.
  - Around 9 percent of the WAEMU population (about 11 million people) was estimated to be either facing extreme food crisis or at risk of it as of mid-2023.
  - Analysis for sub-Saharan Africa shows food insecurity intensifies by 5–20 percentage points following floods or droughts.
  - Disruptions in agricultural production due to rising temperatures and frequent climate-related disasters can add inflationary pressures on food products, a major contributor to overall inflation.
- Trade exposure:
  - WAEMU member states tend to rely heavily on food imports for consumption needs, increasing vulnerability to global supply shocks and price changes.

### 4. Climate risks, adaptation, and policy options
- Mitigation versus adaptation:
  - Mitigation measures suggested: introducing carbon taxes, phasing out energy subsidies, transitioning energy sources to green ones, reforestation, and restricting investment in polluting capital.
  - WAEMU responsibility: about 0.4 percent of global greenhouse gas emissions; limited global-impact mitigation potential implies adaptation is more urgent for immediate needs.
  - Adaptation components: building resilience (address exposure and vulnerability) and enhancing coping mechanisms (disaster relief and social protection).
- Adaptation needs and constraints:
  - WAEMU countries assessed to be at substantial risk of humanitarian crises led by climate change, with low adaptation performance and high vulnerability and limited readiness to adapt quickly.
  - Adaptation costs in sub-Saharan Africa are estimated at around 2-3 percent of regional GDP on average each year over the next decade.
  - Adapting is generally more cost-effective than frequent disaster relief; development-partner financed resilient infrastructure can meet the same welfare level as frequent disaster relief with associated costs at least 30 percent lower.
  - Challenges: tight public finances, pressures on public and external balances, ongoing security and political issues, and the need to avoid crowding out spending on education and health.

### 5. Climate finance: gaps and instruments
- Financing needs and current flows:
  - Implementing Nationally Determined Contributions (NDCs) in the WAEMU is estimated to cost about $79 billion in total over the medium-term (encompassing both adaptation and mitigation).
  - $79 billion corresponds to about 39 percent of the 2023 regional GDP, ranging from 21 to 70 percent of the 2023 GDP across member states.
  - Climate finance flows to the WAEMU remain limited: about $3.6 billion in 2020, with almost 90 percent of it from public sources (multilateral development finance institutions, bilateral funding, and other donors).
- Financing instruments and mobilization priorities:
  - Financing options include: (i) concessional financing, (ii) private finance via climate-linked debt instruments, and (iii) climate-related insurance products.
  - Dominance of public sources highlights the need to mobilize private climate finance via green finance, bolstering local and regional debt markets, de-risking approaches (blending public and private sector finance), and debt-for-nature swaps.
  - Multilateral development banks and development finance institutions can design innovative instruments to provide risk absorption capacity and leverage private investment.
  - IMF-supported reform measures (Resilience and Sustainability Facility) aim to attract private climate finance to the region.

### 6. Key policy recommendations and priorities
- Prioritize adaptation measures given immediate exposure and limited contribution to global emissions; focus on building resilience and coping mechanisms.
- Mobilize climate finance at scale: expand concessional finance, unlock private finance through de-risking and regional instruments, and develop climate insurance products.
- Ensure international climate finance is additional to current aid flows and targets resilience-building rather than solely disaster relief.
- Preserve fiscal sustainability by rebuilding buffers and aligning adaptation spending so it does not crowd out essential development spending (education, health).
- Align mitigation choices with Nationally Determined Contributions (NDCs) and development objectives; consider phasing out subsidies for polluting energies and increasing renewable energy shares where feasible.

### 12. Building awareness of the links across adaptation and economic outcomes — Linkages, cooperation, and regional actions
- Linkages between adaptation measures and economic outcomes:
  - Improved seeds, insecticide, fertilizer, irrigation, and reliable access to electricity and water are important for adaptation.
  - Better access to finance (to provide financial buffers to the most vulnerable) and telecommunication services (to improve access to early warning systems), and robust housing and sanitation boost the resilience of households to climate-related shocks.
  - Such efforts are found to reduce the likelihood of post-shock food insecurity in sub-Saharan Africa up to 30 percentage points (IMF 2020).
  - Strong institutions should support the enforcement and effectiveness of regulations aimed at addressing weather sensitivity of infrastructure and production activities.
  - Improving social safety nets (e.g., for poorer households and small and medium enterprises) helps the most vulnerable build resilience to climate shocks.
  - The WAEMU can benefit from climate-related stress tests to assess the risks from climate change in the financial system.
  - Macroeconomic policies and structural reforms to create fiscal space, build external buffers and promote economic diversification (e.g., addressing high reliance on agriculture) can help the WAEMU not to forgo other development needs while limiting and mitigating the effects of climate shocks.
- Cooperation and coordination for adaptation:
  - Effective adaptation encompasses a continuous process of identifying climate risks, planning of adaptation, implementing necessary measures, and monitoring and evaluating those measures (UNFCCC 2020).
  - Operationalizing these stages requires coordination within government (including across the Ministries of Finance, Agriculture, Education, Environment, and Health, and other agencies responsible for specific infrastructures) and with development partners (IMF 2020).
  - Regional coordination and cooperation at the WAEMU level remain crucial.
- Regional actions and initiatives (WAEMU level):
  - Regional guidelines on appropriate institutional and legal frameworks, and roles and responsibilities of bodies in charge of adaptation and mitigation measures, to help synchronize efforts and realize potential synergies across member states.
  - Capacity building efforts at the WAEMU level to accelerate implementation of climate strategies at national levels.
  - Consideration of regional regulations to build resilience, including launching new directives for setting standards for climate-resilient public investment management.
  - Regional initiatives to overcome data limitations that impede identifying and forecasting climate-related risks and vulnerabilities.
  - Establishment of a standardized methodology at the WAEMU-level to assess the magnitude and sectoral distribution of climate finance needs, building on regional data.
  - Sharing of technologies, expertise, knowledge and institutional practices across member countries to increase efficiency and effectiveness of adaptation measures.
  - Regional initiatives to facilitate digitalization across the region to help farmers use early warning systems and improve access to financial resources for adaptation.
  - Reforms for greater economic diversification and deeper regional and global trade integration, particularly for agricultural inputs and products, combined with resilient storage and transport infrastructures, to provide new opportunities for the private sector and incentivize climate-resilient investment in agriculture (Baptista et al. 2022).
  - Developing regional markets for agricultural products to lower food prices and help improve food security in the WAEMU.
- Key statistic:
  - Reduction in the likelihood of post-shock food insecurity in sub-Saharan Africa of up to 30 percentage points (IMF 2020).

*Source: IMF staff paper "CLIMATE CHANGE IN THE WAEMU: TRENDS, MACRO-CRITICALITY AND OPTIONS GOING FORWARD" (March 1, 2024).*

### 1. Temperatures in the WAEMU _______________________________________________________ 3

### 1. Temperatures in the WAEMU

### Rising temperatures and climate-related events
- Average temperatures during 2017-2021 were higher by 0.4-0.9 Celsius in all WAEMU countries compared to long-run averages (since the 1900s).
- There were 232 climate-related disasters in the WAEMU over 1966-2022.
- About 65 percent of those disasters (151 out of 232) took place during 2000-2022; 35 percent occurred during 1966-1999.
- Frequency change: about 7 disasters per year since the 2000s versus around 2 per year in the pre-2000 period.
- Event types: droughts and floods are the most common forms (218 events out of 232).
- Scale: about two-thirds of the disasters (150 out of 232) are estimated to have affected more than 10,000 people.

### 2. Macro-Criticality of Climate Change in the WAEMU

### Exposure and sectoral dependence
- Around 53 percent of the WAEMU population is estimated to depend on agricultural employment (particularly high in Burkina Faso, Mali and Niger).
- Agriculture contributes 26 percent of the region’s GDP.

### Projected impacts on production and GDP
- Evidence from developing countries: a 1 Celsius increase in temperatures is associated with a 3-percentage points reduction in agricultural production.
- Sub-Saharan Africa analysis: monthly economic activity would decline by 1 percentage point if temperatures exceed the long-run average by 0.5 Celsius.
- Projected GDP losses without adaptation by 2050: 7 percent in Burkina Faso, 11 percent in Mali, and 12 percent in Niger.
- These three countries’ projected losses correspond to a 3 percent GDP loss in the WAEMU (they represent about 30 percent of regional GDP).
- Climate change is estimated to lead to around 30-40 percent loss in agricultural productivity in the WAEMU countries.

### Fiscal and external balance implications
- Climate-related shocks lead to a persistent decline in economic growth by around 1 percentage points in sub-Saharan Africa.
- Post-disaster effects include lower government revenues and increased spending for infrastructure, social and health needs, posing risks to fiscal sustainability.
- External balances suffer because foreign assistance and remittances rarely fully offset declines in exports and increased reconstruction imports; evidence shows increases in both current account and fiscal deficits following disasters.

### Longer-term development and social impacts
- Climate shocks can damage infrastructure, undermine financial-sector contributions to growth, increase poverty and income inequality, and worsen gender-based disparities.
- Climate-driven disruptions reduce human capital accumulation via deaths, malnutrition, or lower school enrollment.

### 3. Agricultural Production and Food Insecurity

### Current food insecurity and sensitivity to shocks
- Around 47 percent of the WAEMU population faced insufficient food consumption in 2022-23.
- Around 9 percent of the WAEMU population (about 11 million people) was estimated to be either facing extreme food crisis or at risk of it as of mid-2023.
- Analysis for sub-Saharan Africa shows food insecurity intensifies by 5–20 percentage points following floods or droughts.
- Disruptions in agricultural production due to rising temperatures and frequent climate-related disasters can add inflationary pressures on food products, a major contributor to overall inflation.

### Trade exposure
- WAEMU member states tend to rely heavily on food imports for consumption needs, increasing vulnerability to global supply shocks and price changes.

### 4. Climate Risks, Adaptation, and Policy Options

### Mitigation versus adaptation
- Mitigation measures suggested: introducing carbon taxes, phasing out energy subsidies, transitioning energy sources to green ones, reforestation, and restricting investment in polluting capital.
- WAEMU responsibility: about 0.4 percent of global greenhouse gas emissions; limited global-impact mitigation potential implies adaptation is more urgent for immediate needs.
- Adaptation components: building resilience (address exposure and vulnerability) and enhancing coping mechanisms (disaster relief and social protection).

### Adaptation needs and constraints
- WAEMU countries assessed to be at substantial risk of humanitarian crises led by climate change, with low adaptation performance and high vulnerability and limited readiness to adapt quickly.
- Adaptation costs in sub-Saharan Africa are estimated at around 2-3 percent of regional GDP on average each year over the next decade.
- Adapting is generally more cost-effective than frequent disaster relief; development-partner financed resilient infrastructure can meet the same welfare level as frequent disaster relief with associated costs at least 30 percent lower.
- Challenges: tight public finances, pressures on public and external balances, ongoing security and political issues, and the need to avoid crowding out spending on education and health.

### 5. Climate Finance: Gaps and Instruments

### Financing needs and current flows
- Implementing Nationally Determined Contributions (NDCs) in the WAEMU is estimated to cost about $79 billion in total over the medium-term (encompassing both adaptation and mitigation).
- $79 billion corresponds to about 39 percent of the 2023 regional GDP, ranging from 21 to 70 percent of the 2023 GDP across member states.
- Climate finance flows to the WAEMU remain limited: about $3.6 billion in 2020, with almost 90 percent of it from public sources (multilateral development finance institutions, bilateral funding, and other donors).

### Financing instruments and mobilization priorities
- Financing options include: (i) concessional financing, (ii) private finance via climate-linked debt instruments, and (iii) climate-related insurance products.
- Dominance of public sources highlights the need to mobilize private climate finance via green finance, bolstering local and regional debt markets, de-risking approaches (blending public and private sector finance), and debt-for-nature swaps.
- Multilateral development banks and development finance institutions can design innovative instruments to provide risk absorption capacity and leverage private investment.
- IMF-supported reform measures (Resilience and Sustainability Facility) aim to attract private climate finance to the region.

### 6. Key Policy Recommendations and Priorities
- Prioritize adaptation measures given immediate exposure and limited contribution to global emissions; focus on building resilience and coping mechanisms.
- Mobilize climate finance at scale: expand concessional finance, unlock private finance through de-risking and regional instruments, and develop climate insurance products.
- Ensure international climate finance is additional to current aid flows and targets resilience-building rather than solely disaster relief.
- Preserve fiscal sustainability by rebuilding buffers and aligning adaptation spending so it does not crowd out essential development spending (education, health).
- Align mitigation choices with Nationally Determined Contributions (NDCs) and development objectives; consider phasing out subsidies for polluting energies and increasing renewable energy shares where feasible.

*Source: IMF staff paper "CLIMATE CHANGE IN THE WAEMU: TRENDS, MACRO-CRITICALITY AND OPTIONS GOING FORWARD" (March 1, 2024).*

### 12.      Building awareness of the links across adaptation and economic outcomes can be a

### 12.      Building awareness of the links across adaptation and economic outcomes can be a first step for the WAEMU governments to develop comprehensive strategies

### Linkages between adaptation measures and economic outcomes
- Improved seeds, insecticide, fertilizer, irrigation, and reliable access to electricity and water are important for adaptation.
- Better access to finance (to provide financial buffers to the most vulnerable) and telecommunication services (to improve access to early warning systems), and robust housing and sanitation boost the resilience of households to climate-related shocks.
- Such efforts are found to reduce the likelihood of post-shock food insecurity in sub-Saharan Africa up to 30 percentage points (IMF 2020).
- Strong institutions should support the enforcement and effectiveness of regulations aimed at addressing weather sensitivity of infrastructure and production activities.
- Improving social safety nets (e.g., for poorer households and small and medium enterprises) helps the most vulnerable build resilience to climate shocks.
- The WAEMU can benefit from climate-related stress tests to assess the risks from climate change in the financial system.
- Macroeconomic policies and structural reforms to create fiscal space, build external buffers and promote economic diversification (e.g., addressing high reliance on agriculture) can help the WAEMU not to forgo other development needs while limiting and mitigating the effects of climate shocks.

### Cooperation and coordination for adaptation
- Effective adaptation encompasses a continuous process of identifying climate risks, planning of adaptation, implementing necessary measures, and monitoring and evaluating those measures (UNFCCC 2020).
- Operationalizing these stages requires coordination within government (including across the Ministries of Finance, Agriculture, Education, Environment, and Health, and other agencies responsible for specific infrastructures) and with development partners (IMF 2020).
- Regional coordination and cooperation at the WAEMU level remain crucial.

### Regional actions and initiatives (WAEMU level)
- Regional guidelines on appropriate institutional and legal frameworks, and roles and responsibilities of bodies in charge of adaptation and mitigation measures, to help synchronize efforts and realize potential synergies across member states.
- Capacity building efforts at the WAEMU level to accelerate implementation of climate strategies at national levels.
- Consideration of regional regulations to build resilience, including launching new directives for setting standards for climate-resilient public investment management.
- Regional initiatives to overcome data limitations that impede identifying and forecasting climate-related risks and vulnerabilities.
- Establishment of a standardized methodology at the WAEMU-level to assess the magnitude and sectoral distribution of climate finance needs, building on regional data.
- Sharing of technologies, expertise, knowledge and institutional practices across member countries to increase efficiency and effectiveness of adaptation measures.
- Regional initiatives to facilitate digitalization across the region to help farmers use early warning systems and improve access to financial resources for adaptation.
- Reforms for greater economic diversification and deeper regional and global trade integration, particularly for agricultural inputs and products, combined with resilient storage and transport infrastructures, to provide new opportunities for the private sector and incentivize climate-resilient investment in agriculture (Baptista et al. 2022).
- Developing regional markets for agricultural products to lower food prices and help improve food security in the WAEMU.

### Key statistic
- Reduction in the likelihood of post-shock food insecurity in sub-Saharan Africa of up to 30 percentage points (IMF 2020).

*Source: sipea2024015 - 12.      Building awareness of the links across adaptation and economic outcomes can be a (Selected Issues Paper chapter).*

---


_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2024/english/sipea2024015.pdf_