Background
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Key Findings
Investing in climate adaptation comes with significant benefits. The investments needed for climate adaptation are equivalent to 0.4-0.6% of GDP per year. But the effects range from reduced fatalities and injuries to people and damages to infrastructure and other assets, to accelerated business and capital investments, greater job creation and enhanced labor productivity to positive effects on human health or biodiversity. Going green will also require people-focused interventions in education, health, social protection and possibly employment so that everyone gains the right skills required in the labor market.
Additional investment of $10.4 billion in the next 25 years can help Serbia achieve net zero emissions target by 2050. These investments would primarily focus on the power sector. Serbia is the largest greenhouse gas emitter in the Western Balkans and its GHG emissions profile suggests that mitigation measures will need to first target the energy supply and use as the country relies on fossil fuels for 83 percent of its total energy supply. Those additional investments would primarily focus on wind, hydro and solar PV capacities, along with phasing out coal to eliminate the key source of GHG emissions and pollution. At the same time, investing in tree plantings, infrastructure protection, early warning systems, and shifting work hours can reduce the adverse impact of climate change on GDP.
The private sector has a crucial role to play in climate action as 85 percent of investments in decarbonizing the economy can come from the private sector with the right regulatory environment. Serbia needs to develop its green debt market, leverage guarantees and public-private partnerships to boost climate investment. The country needs to implement a sustainable finance framework in alignment with the EU that can support the issuance of thematic debt instruments such as green, social or sustainability-linked bonds. Guarantees can be used for public and public-private partnership projects to mobilize significant cross border investments, deepen the credit markets and foster green finance in Serbia.
Recommendations
- Climate change adaptation and mitigation measures can lead to climate resilient growth, greater labor productivity and improved health and environmental outcomes for Serbia.
- This will require further reform of the financial sector, improvements in education and training, as well as streamlined regulations, greater transparency and less state intervention in various industries.
- There is also a need for enhanced disaster risk management and better climate risk assessment so that both public and private sectors better prepare for future climate change impacts.