rationing of water to various sectors of the economy that could cause the loss of up to 6.5 percent of GDP by 2050 (only partially o ff set by new infrastructure and improved e ffi ciency) and prompt the migration of up to 1.9 million people, or 5.4 percent of the population (World Bank 2022i). For the region, crop yields could decline by up to 30 percent if temperatures were to rise by 1.5-2 degrees Celsius relative to pre-industrial times (World Bank 2014).

Estimates of the costs of adapting to climate change are larger when the indirect costs of action needed for climate resilience are taken into account. They are also dependent on assumptions about the climate outlook and therefore vary widely. One World Bank study estimated the cost to the region at around 7.3 percent of GDP on average per year from 2015 to 2030 (World Bank 2014). The IMF has estimated individual country costs to be as low as 0.1 percent of GDP in Bahrain, Jordan, and Saudi Arabia, but as high as 2 percent of GDP in Iraq over the next ten years.<sup>11</sup> Given the abundance of sunshine (radiant energy), much of the region can bene fi t from a shift to solar energy with rapidly decreasing costs (IMF 2022b). Current generation capacity from renewables is only about one-tenth of total installed energy generation capacity in MNA (Um 2020).

Broader infrastructure needs. Investment needs in the region go beyond addressing climate change and the repercussions of the pandemic. Infrastructure needs are also important, although they vary widely across MNA. Infrastructure spending can create the foundation for strong private-sector-led growth and provide access to opportunities for citizens. Infrastructure investment in the region averaged 3 percent of GDP over the last decade, fi nanced mainly by the public sector (Um 2020). This rate of investment will not be enough to meet infrastructure needs in the coming decade. If all MNA economies increased spending on roads by 1 percent of GDP per year, the share of the rural populations within reach of a primary or secondary road would still increase to only about one-half by 2030. Estimates suggest that infrastructure investment of about 7 percent of GDP will be needed to meet the sustainable development goals by 2030 ( fi g 19A). Increased investment in infrastructure could also help improve labor market conditions in MNA. One study estimated that each $1 billion of infrastructure investment has the potential to generate 110,000 infrastructure-related jobs, on average, in oil-importing MNA countries (Estache et al. 2013).

In oil-importing and non-GCC oil-exporting countries there is signi fi cant underinvestment in transport—in particular, roads—and electricity. According to the G20’s Global Infrastructure Outlook, Egypt will need to spend an average of 5.2 percent of GDP per year over the next decade to meet infrastructure needs mainly in energy and telecommunications (Oxford Economics and Global Infrastructure Hub 2017). Egypt’s energy sector could bene fi t from expanding and diversifying energy supply, a shift toward renewable sources, and the modernization of the oil and gas sector (World Bank 2018e).

> 11 These estimates only cover adaptation to floods, storms, and sea level rise and do not address rising temperatures or droughts, an important risk for the region.