A. Country Vulnerability to Climate Change Including Human, Social and Economic Costs

1. Jamaica has made notable development progress in recent years, but challenges posed by climate change remain significant. After decades of weak macroeconomic performance, an austerity program launched in 2013 helped to reduce the public debt-to-GDP ratio by over 50 percentage points, improving investor sentiment. Despite historically low real GDP growth of around 1 percent, Jamaica also lowered the poverty rate by 17.4 percentage points between 1990 and 2019 and increased life expectancy. But Jamaica's geographic location and economic structure make it highly vulnerable to exogenous shocks, including climate change, which can quickly reverse economic and social gains, especially in the context of limited fiscal space.

2. Climate change represents a major risk to Jamaica's growth and the wellbeing of its population. Situated along the Atlantic hurricane belt, the country is highly susceptible to recurrent extreme weather and climatic events that threaten the viability of its key infrastructure assets and industries. Nearly two-thirds of Jamaicans live within two kilometers of the coast. In addition, the coastal zone is home to three-quarters of the country's industry and its dominant tourism sector, which combines to generate about 90 percent of GDP. The poor and vulnerable are more exposed because many rely on agriculture and live in dwellings not built to the required standards. Recent estimates suggest that 14.5 percent of the population lives in high-risk flood zones, with about 118,000 of them likely to be poor (living on less than $5.50 per day). In recent decades the frequency of natural disasters – mainly floods, tropical depressions, tropical storms, hurricanes, droughts, and landslides – in Jamaica increased, creating significant physical and economic damages.¹ As climate change impacts intensify, costs andrisks for Jamaica willgrow, largely due to the increasing severity of storms.²

3. Changing climatic conditions will also have significant impacts on a number of sectors. They will lead to deterioration of agricultural yields as growing conditions for key crops shift away from optimal season length, temperature, and precipitation profiles. Periods of extreme heat and weather events will have widespread effects across the economy, including infrastructure degradation and associated business interruption, and negative impacts on health and human development. For example, tourism is at risk from damage to assets and losses from disruption of activities. Under a 4.3°C scenario, a 1-in-100-year hurricane event could cause damages and losses of more than $98 million to the tourism sector alone.³ Acute hazards such as storms, floods, and heatwaves directly cause deaths and injuries. Indirectly, they contribute to public health risks by tainting drinking water with chemical runoff and with disease-bearing human or animal waste, increase vulnerability to illness and exploitation by making homes uninhabitable, and reduce the future prospects of young people who are exposed to sanitation conditions that increase risk of chronic illness or stunting and to educational conditions that inhibit learning. Low-income households residing in informal communities within the largest urban centers are disproportionately exposed and vulnerable to these climate-driven risks.

4. Jamaica's share of global greenhouse gas emissions (GHG) is low, yet the country is taking important steps and demonstrating regional leadership in decarbonizing its economy. In 2018, Jamaica's emissions were 10.2 MtCO2e, with the industrial and electricity generation sectors contributing 62 percent of total emissions. Industrial emissions, which include those from industrial processes and manufacturing/construction sectors, contribute 32 percent of overall emissions. The second largest contributor to Jamaica's emissions is the electricity/heat sector, which contributes 30 percent of total emissions. Transport emissions make up 20 percent of total emissions, with the remaining emissions attributed to agriculture, waste, land use change and forestry, buildings and other sectors. GHG emissions peaked at 14 MtCO2e in 2006. Falling GHG emissions reflected the declines in the manufacturing/construction and electricity/heat subsectors which coincided with the downturn in mining activities. However, the available analysis suggests that GHG emissions could grow by 50 percent by 2050 under a baseline of no climate action, including no action on the commitments presented in the updated Nationally Determined Contributions (NDC) of 2020. These projections reflect the expected impact of economic growth and population growth. The emissions growth will be led by industrial production, electricity, and transport sectors.

B. Government Policies and Commitments in Terms of Climate Change Adaptation and Priority Areas to Strengthen Resilience

5. The Government of Jamaica has gradually integrated climate change adaptation efforts into its policy framework and sector policies. Jamaica's overarching development strategy through 2030 is articulated in Vision 2030 Jamaica: National Development Plan (NDP) and is based on the comprehensive vision of “Jamaica, the place of choice to live, work, raise families, and do business". The NDP includes climate change adaptation as a national development priority. The implementation of the strategy is guided by medium-term national strategies, sector level programs, plans and activities for each of the social, governance, economic and environmental pillars of the NDP. In this regard, the Climate Change Policy Framework for Jamaica elaborates on the overarching vision of the NDP and is intended primarily to support the goals of Vision 2030 and to facilitate the development and implementation of risk reduction measures in all sectors including through strengthened climate change governance arrangements, improved water resource management, and enhanced disaster risk financing. It outlines the objectives, principles and strategies that the country will employ in order to effectively respond to the impacts and challenges of climate change, through measures which are appropriate for varying scales and magnitudes of climate change impacts. Recognizing the challenges posed by natural hazards and climate change, and vulnerability of Jamaica's population and key economic sectors, the Government of Jamaica has also strengthened the country's disaster risk management (DRM) framework and developed national strategies and policies accordingly. These include the Natural Hazard-Risk Reduction Policy (2005), the Building Code Bill (2013), and the DRM (Amendment) Act (2021), which is the primary policy tool for DRM in the country. The country leads the region in developing a comprehensive disaster risk financing strategy which includes a tailored menu of financial instruments to address low to high intensity events. Jamaica has also taken additional steps to strengthen its fiscal resilience to natural hazard shocks, including by becoming a member of the multi-country risk-pooling Caribbean Catastrophe Risk Insurance Facility. It has also established a National Disaster Fund to finance emergency response and rehabilitation activities and has adjusted its public financial management procedures to improve efficiency in responding to disasters. The social protection system has also been strengthened and now includes a portfolio of programs across social insurance, labor market programs, and social assistance, and has contributed to improving equity and social resilience.

C. Government Policies and Commitments in Terms of Climate Change Mitigation and Priority Areas to Reduce GHG Emissions

6. The Government of Jamaica is taking important steps towards a sustainable low carbon transformation of its economy. Demonstrating leadership, in June 2020 Jamaica became the eleventh country worldwide to submit an updated NDC, which has an unconditional target of 25.4 percent and a conditional target of 28.5 percent reduction in emissions relative to business-as-usual by 2030.⁴ The revised NDC identifies additional opportunities within the energy sector and – for the first time - within the forestry sector. Building on its NDC, the Government of Jamaica is in the process of developing a long-term strategy for low carbon and climate resilient development. It also has a number of complementary sectoral policies that are addressing and directly contributing to the country's climate change mitigation efforts. Recognizing the importance of decarbonization of the energy sector, the government adopted a national Energy Policy in 2010, which establishes a goal of 20 percent renewable energy in the energy mix by 2030. The Government of Jamaica is also preparing a new Integrated Resource Plan which sets out Jamaica's 20-year plan for the sector, including for increasing the share of renewable energy the current from 12 percent to currently to 30 percent.

D. Other Challenges

7. Institutional capacity and gaps in financing are major challenges to decarbonizing and building climate resilience in Jamaica. Notwithstanding notable progress in developing and deploying initiatives to expand ex-ante financial protection to mitigate the impact of climate shocks, there is significant scope to strengthen the institutional framework across the government for the formulation, implementation and enforcement of climate change policies, including through strengthen infrastructure and urban planning, integrated coastal zone management, and development of insurance and risk transfer instruments, among others.⁵ This includes efforts to further strengthen infrastructure and urban planning, integrated coastal zone management, and provision and use of climate data. Fiscal space is expected to remain limited over the medium-term. For instance, the total upfront investment need for the sixteen commitments that underpin Jamaica's revised NDC alone is estimated at US$921.1 million, with around 76 percent of this funding coming from private sources.⁶ As such, additional initiatives to boost fiscal space and explore the use of innovative climate finance instruments would help to bridge the financing gap and mobilize additional funding (e.g., in from of Public Private Partnerships (PPPs), green bonds and other sustainability linked financing) for scaled-up climate action. For the low-carbon transition in coming years, policies and investments geared toward harnessing the value of a nature-based economy will be important for Jamaica.

E. World Bank Engagement in the Area of Climate Change

8. The World Bank has been actively engaged in supporting Jamaica's efforts to improve its resilience to observed and anticipated climate change risks and contribute to the global efforts to curb emissions. With the support of the Bank, the Government of Jamaica has embarked upon a comprehensive strategy toward resilience to climate shocks. The reforms cover financial, physical, and social resilience and are being supported through various instruments, including Development Policy Financing (DPF), Investment Policy Financing (IPF), and technical assistance (TA). For example, the ongoing Jamaica Disaster Vulnerability Reduction Project aims to enhance Jamaica's resilience to disaster and climate risk in the wider context of sustainable development. The project is supporting key investments to: (i) improve the capacity of Government institutions to generate and use hazard and risk information to shape local and national development; and (ii) reduce disaster and climate vulnerability by making infrastructure more resilient. Similarly, both DPFs approved by the Bank since 2020 (the Economic Resilience DPF and the COVID-19 Response and Recovery DPF) supported reforms to advance the country's climate agenda, including adaptation reforms, and green transition in energy. The World Bank has also been supporting initiatives to create an enabling environment for private sector resource mobilization, including through a Catastrophe Bond, and PPPs in energy and infrastructure, as well as the framework for the development of insurance and risk transfer instruments. The Bank is currently supporting the Jamaica Generation Procurement Entity in strengthening the capacity to conduct renewable energy tender auctions. Further, in addition to cross-sectoral investment operations with significant climate co-benefits, the World Bank also provided TA to support the NDC update and translating these commitments into a low-emission, climate-resilient development plan. The Bank also supported the preparation of low emission development pathways and a related strategy up to 2050, which will play an important role in guiding the country's overall climate change policy and ambitions, informing subsequent NDC updates.