Climate Finance for the Middle East and North Africa: Confronting the Challenges of Climate Change

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Policy Paper

Climate Finance for the Middle East and North Africa: Confronting the Challenges of Climate Change


November 21, 2012
Smita Nakhooda, Alice Caravani and Prachi Seth, Overseas Development Institute and Liane Schalatek, Heinrich Böll Stiftung North America

Responding to climate change presents challenges for the oil dependent and water stressed countries of the Middle East and North Africa (MENA), but also opportunities to forge new paths to more inclusive and effective development.  57% of proven oil reserves and 41% of proven natural gas resources are found in MENA countries, and development of these abundant fossil fuel reserves have been an effective route to substantial wealth accumulation in many countries: these reserves generated an estimated USD 785 billion in revenues in 2011. Nevertheless, there are large disparities in per capita income within countries and across the region, and not all countries are so well endowed. All the countries in the region are severely water stressed, and climate change is likely to further exacerbate this condition. Resultant land degradation and desertification will have severe implications for agricultural yields in a region that is already heavily dependent on imports for food needs, and whose poorest people and countries are still agrarian.

This brief considers the scope and objectives of dedicated public finance directed to the region, drawing on Climate Funds Update data. It finds that most finance has been directed to a small number of large projects in Egypt and Morocco using concessional loans. No finance has been directed to the four largest oil exporters in the region: Kuwait, Libya, Qatar, and Saudi Arabia. Although good examples of adaptation projects are emerging (largely focused on water management, agriculture and rural development), adaptation remains gravely underfunded. Furthermore, although access to education and healthcare is increasing, gender disparities persist and remain a difficult social and political issue.

Nevertheless, we observe an increasing level of activity on climate change –notably investment in renewable energy—largely supported with domestic and private sector finance.  Many countries are investing in wind and solar energy at a large scale, for both domestic use and export. As the host of the 18th Conference of the Parties to the UNFCCC, Qatar has a unique opportunity to play a leadership role in global efforts to respond to climate change. It is uniquely paced to both set a good example by advancing its own efforts to adapt to climate change and embrace low carbon solutions to meeting future energy needs, as well as by supporting the efforts of poorer countries (particularly within its own region) to respond to climate change.


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