As Sri Lanka charts its growth path, prioritising investments in resilient, inclusive development is an urgent necessity and a strategic opportunity to boost economic activity, create jobs, and improve overall welfare, while safeguarding against the growing impacts of Climate Change, the World Bank stated in Sri Lanka Country Climate and Development Report issued on Friday. “Climate Change poses significant challenges for Sri Lanka: potential economic losses could range from 3.3-3.5 percent of Gross Domestic Product (GDP) by mid-century due to reduced labour productivity from heat stress, decreased agricultural yields, and intensified flooding in urban and rural areas,” the Report stated.
The Bank said that these adverse effects would disproportionately affect the poorest and most vulnerable populations, particularly those in agriculture and coastal areas, potentially increasing poverty rates by 1.7-1.8 percentage points. Strategic investments in resilience can substantially mitigate these risks while unlocking economic opportunities and creating jobs, it stated.
“Several ‘no regrets’ measures are already outlined in Sri Lanka’s Nationally Determined Contributions, National Adaptation Plan, and Climate Prosperity Plan. These include expanding clean energy sources, modernising transportation systems, improving energy efficiency, enhancing irrigation, and upgrading water and sanitation services. These investments offer a host of other benefits, including lower energy costs, improved air quality, enhanced urban livability, and increased agricultural productivity.
Transforming Sri Lanka’s energy sector presents substantial opportunities for economic growth, investment, and improved welfare,” the Report stated.
It stated imported coal and petroleum products comprise more than half the total energy supply, exposing Sri Lanka to energy security risks and commodity price fluctuations. Its reliance on fossil fuels and biomass also contributes to air pollution and public health deterioration.
Scaling up domestic renewable energy, improving energy efficiency, and adopting clean transport solutions can lower energy costs, enhance energy security, and improve air quality, the Report stated. Achieving near-term investments will set Sri Lanka on the path to achieving its longer-term goals of a Net Zero transition. Advancing ‘no-regrets’ investments alongside continued reforms can enhance long-term growth, create jobs, and encourage greater private investment, while supporting the country’s ambitious energy transition goals, the Report added.
