How Different Is the Middle East and North Africa (MENA) Region? Climate, Growth, and Policy Impacts

MENA is distinct in the effects of climate change. Temperature dampens its growth rate more than the rest of the world; droughts affect agricultural growth strongly and, in fact, statistically drive the global effects; water resources are increasingly scarce; precipitation (or its lack) strongly positively (negatively) impacts agricultural growth; per capita CO2 emissions and fossil fuel subsidies are both among the world’s highest. The potential consequences of such effects range from further marginalization of the poor to climate-related migration and upheavals. This regional context influences the menu of effective policies that can be used to reduce CO2 emissions, including reduction fuel subsidies, imposing carbon tax, greening of public investments, and addressing large State-Owned Enterprises (SOE). Governments should be encouraged to explore a variety of instruments using lessons from best practice. Yet governments’ adoption of such policies has been slow. This suggests the need to better understand the political economy forces the constraint governments’ actions. This article addresses such constraints and also proposes incentive-compatible strategies to hasten green transition, including for example public information campaigns on the long-term benefits of green policies and countering public myopia that focuses on short-term costs, without sufficiently understanding their long-term benefits.