MOSCOW, October 28, 2009 — The latest World Development Report (WDR) finds that vulnerability to climate change in Eastern Europe and Central Asia (ECA) is compounded by weak environmental management over many decades and the poor state of much of the region’s infrastructure. Many ECA countries are also among the world’s least energy efficient, which further impairs the Region’s capacity to withstand climate change risks.

World Development Report 2010: Development and Climate Change, released in advance of the December meetings on climate change in Copenhagen, stresses that resilient, low-carbon growth is possible for developing and emerging economies, although poorer countries will require financial and technical assistance from high-income countries to support climate fixes.

"To solve the climate problem, we urgently need to transform energy systems towards higher energy efficiency and more low-carbon technologies," says Marianne Fay, Director of the WDR and Chief Economist of the World Bank’s Sustainable Development Network. This is particularly true in ECA economies, where increasing energy efficiency and bringing currently very high carbon intensity closer to international norms is desirable for many other reasons—competitiveness, energy security, and public health."

Ms Fay, who is in the region to present the WDR’s main findings for ECA, stressed that policymakers should act now, act together, and act differently to tackle climate change.

Countries need to act now because today’s decisions about energy, infrastructure, and environment will shape policy options and therefore will determine the climate of tomorrow. Countries need to act together because no one country stays immune to challenges posed by climate change, and global cooperation is vital for improving energy efficiency, designing and introducing low carbon technologies, and developing alternative energy sources. Countries need to act differently, because business as usual would put the world onto a potentially catastrophic path with unacceptable costs to development.

The world’s developing countries and emerging economies—including those in ECA—will bear most of the costs of the damage from climate change. For example, rising temperatures and reduced precipitation in Central Asia will exacerbate the environmental catastrophe of the disappearing Southern Aral Sea (caused by the diversion of water to grow cotton in a desert climate), while sand and salt from the dried-up seabed are blowing onto Central Asia’s glaciers, accelerating the melting caused by higher temperatures. Poorly designed and constructed, badly maintained, and aging infrastructure and housing are ill suited to withstand today’s storms, heat waves, and floods, let alone protect populations from the impacts of increasingly frequent and intense extreme events.

Average temperatures across ECA have already increased by 0.5°C in the south to 1.6°C in the north, and overall temperature increases of 1.6 to 2.6°C are expected by the middle of the century. This is affecting hydrology, with a rapid melting of the region's glaciers and a significant decrease in winter snows. Many countries are already suffering from winter floods and summer droughts—with both Southeastern Europe and Central Asia at risk for severe water shortages. Summer heat waves might claim more lives than would be saved by warmer winters.

“Much has been made of the fact that warmer climate and abundant precipitation in parts of Europe and Central Asia—particularly Kazakhstan, Russia, and Ukraine—will open up a new agricultural frontier. However, any local potential benefit pales in comparison to the existing costs of the region’s relative inefficiency and low productivity,” says Ms Fay. “While world grain yields have been growing on average by about 1.5 percent per year, they have been falling or stagnant in these three countries.”

Regardless of climate change, ECA will gain a lot by improving its water resource management, addressing its serious environmental legacies, upgrading neglected infrastructure and housing, and strengthening disaster management. But the region should also develop strategies to reduce vulnerability to future changes—focusing on infrastructure but also on capacity building and stronger institutions to support adaptation and help people take advantage of changing opportunities, for example, in agriculture and energy. Much of the adaptation needed to make ECA more resilient to climate change will have substantial co-benefits for other development priorities.

Reducing greenhouse gas emissions is equally important for ECA countries, particularly the EU members bound by EU community-wide policy goals. Even those without obligations can benefit, through reduced costs and greater energy security, from reducing fossil-fuel dependence and increasing efficiency—and from seizing opportunities to produce renewable energy.

Experiences from the World Bank, International Finance Corporation, and Global Environmental Facility show promising results for energy efficiency programs in the region, including Bulgaria, Hungary, and Serbia. Lessons indicate the importance of a guarantee mechanism to increase investor confidence in projects, and of technical assistance to raise awareness of energy efficiency and to provide training and advisory services to local banks and project developers.

The World Bank stands ready to provide assistance and finance to support ECA countries’ efforts to adapt to climate change and reduce their own emissions, both through innovative financing mechanisms as well as through direct lending. For example, in May 2009, Turkey became the first country to access low-interest financing from a Clean Technology Fund that will be used in part to expand the country’s wind power capacity over the next fifteen years.  In Russia, a World Bank report “Energy Efficiency: Untapped Resources” has made energy efficiency part of the public debate and helped move the agenda forward. The Bank is assisting the Government of Russia in introducing the legal and regulatory framework for energy efficiency investments.