Background
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Key Messages
- As the Horn of Africa’s key transport hub, Djibouti’s resilience is critical to the region. Handling 95% of Ethiopia’s imports, Djibouti’s port links the Horn of Africa to the global market. The country is also the landing point for key submarine cables linking Africa to global data flows. Flooding and other weather events already strain key coastal, road and rail infrastructure. Climate change will add further pressure, and Djibouti’s resilience to such impacts is important for the prosperity of the region’s economy.
- Climate change will expose Djibouti’s coastal economy to storm surges, worsen extreme heat, and make drought and floods more common. While Djibouti is among the world’s smallest emitters (188th globally), it faces substantial climate risks. Rising sea levels will threaten some of Djibouti’s most important coastal economic areas. By 2050, in the CCDR’s ‘hot’ scenario, Djibouti could lose 6% of GDP permanently. Climate change will also further impact the lives of vulnerable populations, by undermining water security and livestock livelihoods. However, priority resilience investments can reduce these damages by half, the equivalent of two years of today’s GDP.
- Djibouti can build on significant infrastructure investments to boost resilience and green growth but must ensure that these assets reach their full potential. Recent infrastructure investments have provided a strong foundation for climate-resilient economic growth. These assets include port, road, and rail networks, desalinization capacity, piped water imports, and electricity generation, all critical for water security and affordable energy.
- Heavy rains and heat stress are expected to increase annual transport infrastructure damages by $40 million by mid-century, with labor productivity losses projected at 2% due to disruption and delays. However, modeling shows that priority investments can effectively reduce vulnerability in the transport sector, avoiding about 60% of expected losses.
- With renewable water resources as low as an estimated 185 m3 per person per year, water access is strained, especially affecting rural livestock livelihoods, which may see a 24% revenue decline from heat stress. Heat is expected to reduce human productivity by up to 3.5% by mid-century, with vulnerable populations particularly at risk. Malaria incidence has already risen 37-fold over the past two decades with the arrival of a new mosquito species and is projected to remain high.
- Djibouti has made important investments in new water sources, including desalinization capacity and a pipeline connection to deliver water from Ethiopia. Even with a growing population, urban water security is within reach with additional efforts to reduce network losses, use the pipeline connection at full capacity, and complete a planned expansion of desalinization. Food security can be enhanced by investing in rural water management alongside better shock-responsiveness of the social protection system, improved management and financing of food stocks, and growth in select competitive food value chains, assisted by water-efficient technology.
- To ensure a thriving urban economy, Djibouti needs to invest in urban flood management, protect its future growth sectors, and reform its energy sector. As the country’s engine of growth, Djibouti City’s economy is pivotal to diversification, but frequently faces urban flooding, with damages from single events of up to US$43 million. Climate-induced floods are expected to raise annual damages by US$10 million, while a rising sea level is expected to cause US$38 million in annual losses and damages by mid-century.
- Djibouti’s climate adaptation and green growth needs could exceed US$2.8 billion. The CCDR estimates that even a limited set of priority adaptation actions may require US$1.1 billion in additional funds, including an additional US$77 million per year through 2035. Such investment can be consistent with Djibouti’s goal of achieving both growth and debt sustainability, but it needs to be accompanied by economic reform and additional concessional resources. International support is particularly warranted given the regional importance of the resilience of Djibouti’s economy.