Montenegro has the chance to enhance its resilience to climate change and foster sustainable economic growth through carefully planned investments and policies, according to a Climate and Development Report for Montenegro, released today by the World Bank Group.
The report highlights that targeted activities can protect communities, reduce economic losses, and support long-term development.
According to the findings, climate-driven disasters could reduce Montenegro’s GDP by 7.9% by 2050.
Floods, the country’s most devastating natural disaster, affect 10,000 people annually, causing an average of $90 million in damage each year. Earthquakes also pose a significant risk, affecting 9,000 people each year with average losses of $70 million. Without timely climate adaptation measures, these challenges are expected to intensify due to the accelerating effects of climate change.
“Climate change presents a serious risk to Montenegro’s economic stability and the well-being of its citizens. Investing in adaptation and mitigation not only protects lives and livelihoods but also opens opportunities for sustainable growth, bringing economic, ecological, and social benefits to Montenegro,” said Christopher Sheldon, World Bank Country Director for Bosnia and Herzegovina and Montenegro.
The report estimates that Montenegro needs to invest $5.7 billion over the next decade to strengthen its resilience to climate impacts.
“These investments are not only aimed at reducing damage; nature-based solutions, such as floodplain restoration, can significantly enhance protection while providing ecological and social benefits. Similarly, urban adaptation measures like green infrastructure, new water systems, and building designs in Podgorica have already shown improvements in energy efficiency, public health, and overall urban quality,” the World Bank said in the report.
The report also outlines a pathway to achieving net-zero emissions by 2050.
“Since the private sector is expected to contribute more than 70% of the additional capital needed to achieve this goal, Montenegro should focus on creating a favorable regulatory environment and utilizing financial instruments such as green bonds and public-private partnerships to stimulate private sector investment,” the statement added.
Nikolas Markijer, Regional Manager of the IFC for the Western Balkans, emphasized that private sector investments are crucial to complement public sector efforts in achieving Montenegro’s climate goals.
“Public-private partnerships for infrastructure development and green financing by financial institutions will be key to mobilizing the necessary investments for decarbonizing the economy and enhancing resilience to climate challenges,” Markijer said.
In line with EU goals, decarbonizing the energy sector will require significant expansion of renewable energy sources such as wind and solar, alongside existing hydroelectric capacities.
“Investments in energy efficiency and transitioning the heating and transport sectors to electricity-based technologies are also critical. For a just transition, the government should implement policies to support coal-dependent communities and protect low-income households from the potential economic impacts of the green transition,” the statement concludes.
