TOGO i Country Climate and Development Report: Côte d’Ivoire Official Use Only © 2025 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA), collectively known as The World Bank Group, with external contributors. The World Bank Group does not guarantee the accuracy, reliability or completeness of the content included in this work, or the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. 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All queries on rights and licenses should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; e-mail: pubrights@worldbank.org. Official Use Only Contents ABBREVIATIONS AND ACRONYMS ......................................................................................................................... 8 EXECUTIVE SUMMARY ........................................................................................................................................ 10 CHAPTER 1. DEVELOPMENT AND CLIMATE CHALLENGES ............................................................................ 21 1.1. Socioeconomic context and development challenges ........................................................................... 21 1.2. Climate change, structural transformation, and the cost of inaction ................................................... 23 1.3. Defining a resilient and low carbon development pathway ................................................................... 28 CHAPTER 2. CLIMATE COMMITMENTS, POLICIES AND PREPAREDNESS ...................................................... 30 2.1. Togo’s climate change commitments ..................................................................................................... 30 2.2. Policies and institutions for climate adaptation and resilience ............................................................ 31 i. Adaptation & Resilience Diagnostic ............................................................................................... 33 ii. Climate and Disaster Risk Management ....................................................................................... 33 iii. Agriculture, Water & Natural Resources Management ................................................................. 34 iv. Network Infrastructure .................................................................................................................... 34 v. Urban Development, Coastal Development, and Blue Economy .................................................. 35 vi. Health, Education, and Social Protection....................................................................................... 35 vii. Private sector readiness ................................................................................................................. 36 viii. Financial sector readiness .............................................................................................................. 37 2.3. Key policy options for climate governance ............................................................................................. 37 CHAPTER 3. CLIMATE CHANGE AND STRUCTURAL TRANSFORMATION ........................................................ 39 3.1. Scaling up climate-smart solutions in agriculture and forest management ......................................... 39 i. Agriculture sector context and challenges ..................................................................................... 39 ii. Promoting green agriculture and nature-based solutions ............................................................ 41 iii. Transitioning to a more productive, resilient, and low carbon agriculture sector ....................... 47 3.2. Making urban and coastal areas more resilient .................................................................................... 49 i. Sector context and challenges ....................................................................................................... 49 ii. Boosting Resilience ......................................................................................................................... 51 3.3. Accelerating the transition to clean and reliable energy ....................................................................... 54 i. Sector context and challenges ....................................................................................................... 54 ii. Sector vulnerabilities and low-carbon solutions ............................................................................ 57 3.4. Supporting climate-smart transportation ............................................................................................... 59 I. Sector context and challenges ....................................................................................................... 59 ii. Reducing climate-related damages to roads and bridges ............................................................ 60 iii. Ensuring a sustainable development of the port of Lomé ............................................................ 61 iv. Promoting green mobility ................................................................................................................ 62 Official Use Only 3.5. Leveraging and greening digital infrastructures ..................................................................................... 64 I. Sector context and challengeS ....................................................................................................... 64 ii. Digital solutions for a better resilience .......................................................................................... 64 iii. Developing climate resilient and low-carbon digital infrastructures ............................................ 64 3.6. Accelerating the green transition in key industries ................................................................................ 65 I. Sector challenges and climate change .......................................................................................... 65 ii. Priority reforms and efforts in decarbonizing key industries ........................................................ 67 CHAPTER 4. POVERTY, HUMAN CAPITAL, AND RESILIENCE TO SHOCKS ...................................................... 68 4.1. Climate change impacts on poverty and human capital ....................................................................... 68 i. Climate change, poverty, and gender inequality ........................................................................... 68 ii. Climate change and human capital ............................................................................................... 70 iii. Building a more resilient, productive, and inclusive society ......................................................... 72 CHAPTER 5. ASSESSING INVESTMENT NEEDS AND FINANCING OPTIONS ................................................... 80 5.1. Investment needs and impacts ............................................................................................................... 80 5.2. Climate financing options ........................................................................................................................ 82 i. Current context and challenges ...................................................................................................... 82 ii. Creating fiscal space for climate investments ............................................................................... 82 iii. Mobilizing the private sector ........................................................................................................... 85 iv. Operationalizing carbon credit markets ......................................................................................... 87 v. Greening bank lending to stimulate climate smart investment ................................................... 88 vi. Strengthening disaster risk financing and insurance schemes ................................................... 88 ANNEXES ................................................................................................................................................................ 90 Annex 1: Modelling approach and assumptions ............................................................................................. 90 Annex 2: Togo’s adaptation and resilience diagnostic ..................................................................................103 Annex 3: Togo's Commitments under the NDC and Sectoral Strategies .....................................................109 Annex 4: B-Ready scores for Togo ..................................................................................................................110 List of Figures Figure 1-1 - Real GDP growth has been resilient, leading to improvements in living standards .......................... 22 Figure 1-2 - …but poverty remains elevated, with a particularly large rural -urban divide ..................................... 22 Figure 1-3 - Structural transformation, with rising labor participation and decelerating fertility rates could yield significant growth dividends. .................................................................................................................................... 23 Figure 1-4 - …bringing substantial welfare gains in the structural transformation scenario. ............................... 23 Figure 1-5 - Temperatures have significantly increased in Togo over the last few decades... ............................. 24 Figure 1-6 - High temperatures concentrate in the North, precipitation in the mountainous areas. ................... 24 Figure 1-7 - Climate change will impact welfare mainly through labor heat stress, human capital, crop yields, and infrastructure damages ..................................................................................................................................... 26 Official Use Only Figure 1-8 - Structural transformation would strengthen the capacity of vulnerable households to adapt to climate change .......................................................................................................................................................... 26 Figure 1-9 - Lowering fertility rates is crucial for prosperity and natural resource preservation .......................... 28 Figure 1-10 - Main sources of CO2 emissions are agriculture, industry, transport, waste, and land use ............ 28 Figure 2-1 - Summary chart of adaptation and resilience performance of Togo across all pillars ....................... 33 Figure 3-1 - Agriculture growth has been driven by expanding land usage while productivity was stagnant in Togo, contrasting with aspirational peers ................................................................................................................ 40 Figure 3-2 - Conversion to cropland account for a significant share of deforestation events, particularly in the Savanes and Maritime regions ................................................................................................................................. 40 Figure 3-3 - The effect of climate shocks could be significantly reduced by mechanization and irrigation efforts .................................................................................................................................................................................... 41 Figure 3-4 - Vegetables, cassava, yams, and maize yields could be most affected by climate change, while cotton, groundnut, palm fruit, and Sorghum much less.......................................................................................... 41 Figure 3-5 - Increasing irrigation by 5 percent of cropland per year could temper climate impacts on yields .... 43 Figure 3-6 - Despite low irrigation rates, agriculture is a dominant source of water consumption in Togo ......... 43 Figure 3-7 - Scaling up agroforestry on suitable cropland and grassland could boost food security… ................ 45 Figure 3-8 - … while significantly reducing GHG emissions, opening opportunities for carbon credit financing . 45 Figure 3-9 - The Savanes region is in greatest need for riparian buffers. .............................................................. 45 Figure 3-10 - Benefits from riparian buffers could reach 2.8 percent of GDP by 2036. ....................................... 45 Figure 3-11 - Centrale and Plateaux have the greatest potential for CBFM .......................................................... 47 Figure 3-12 - CBFMs could sequester up to 595 Ktonnes of CO2 by 2050 ........................................................... 47 Figure 3-13 - Adaptation on top of structural transformation measures could significantly reduce the impact of climate change on agriculture .................................................................................................................................. 48 Figure 3-14 - Built-up areas exposed to flooding in Togo's cities ........................................................................... 50 Figure 3-15 - Daily average air temperature for Lomé ............................................................................................ 51 Figure 3-16 - Energy consumption is dominated by biomass and is largely absorbed by the residential sector.55 Figure 3-17 - Access to electricity has increased with strong disparities between urban and rural areas. ......... 55 Figure 3-18 - Towards a Resilient Energy Infrastructure: Togo’s low-cost development plan .............................. 55 Figure 3-19 - Increase in renewable energy to more than 50% of installed capacity. ......................................... 56 Figure 3-20 - Reduction of imports to 30% of the energy mix. ............................................................................... 56 Figure 3-21 – Shifting the energy mix towards renewables is key to lower emission intensity ............................ 57 Figure 3-22 – Cost and benefit analysis of various adaptation scenarios. ............................................................ 60 Figure 4-1 - Climate change will increase the incidence of poverty, although much less in the structural transformation scenario… ......................................................................................................................................... 69 Figure 4-2 - ... the depth of poverty will substantially increase, meaning welfare losses of already poor households ................................................................................................................................................................. 69 Figure 4-3 - .Climate shocks could slow structural transformation, as more workers stay in agriculture to produce food .............................................................................................................................................................. 69 Figure 4-4 – The poor in Togo are more exposed to extreme climate events than many peers .......................... 69 Figure 4-5 - Social safety net coverage in Togo is lower than among regional peers............................................ 73 Figure 4-6 - …so is the coverage of social protection programs ............................................................................. 73 Figure 4-7 - Cash transfer programs tend to better target the poor ....................................................................... 73 Figure 5-1 – Adaption measures could largely offset climate impacts, with residual effects from heat stress and reduced crop yields in the more severe scenario. ................................................................................................... 80 Figure 5-2 – Identified investments are expected to prevent adverse effects on poverty, including in more exposed rural areas. .................................................................................................................................................. 80 Figure 5-3 – Structural transformation combined with adaptation and mitigation investments could result in a 55 percent reduction in the carbon intensity........................................................................................................... 81 Official Use Only Figure 5-4 - Togo’s green budget is mostly geared towards adaptation, which is appropriate given its exposure to shocks .................................................................................................................................................................... 83 Figure 5-5 - Carbon taxation could yield significant revenues … ............................................................................ 84 Figure 5-6 - …and reduce emission intensity ........................................................................................................... 84 List of Tables Table 1 - Temperatures could rise nearly twice faster in the dry/hot scenario, compared with the wet/warm scenario ...................................................................................................................................................................... 24 Table 2 - Precipitation would increase in the wet/warm scenario while declining towards 2040-50 in the dry/hot scenario ........................................................................................................................................................ 24 Table 3 - Key policy recommendations .................................................................................................................... 37 Table 4 – Key investments recommendations ........................................................................................................ 48 Table 5 - Key policy recommendations .................................................................................................................... 49 Table 6 - Key investment and policy recommendations for urban and coastal resilience ................................... 52 Table 7 - Key investment recommendations ........................................................................................................... 58 Table 8 - Key policy reforms for the energy sector .................................................................................................. 59 Table 9 - Summary of flood damage assessments ................................................................................................. 60 Table 10 - Estimated costs and benefits after CBA of sediment bypass options .................................................. 62 Table 11 -Key investment recommendations for the transport sector .................................................................. 63 Table 12 - Key policy reforms for the transport sector ............................................................................................ 63 Table 13 - Key investment recommendations ......................................................................................................... 65 Table 14 - Key policy recommendations .................................................................................................................. 65 Table 15 - Key investment recommendations ......................................................................................................... 67 Table 16 - Key policy recommendations .................................................................................................................. 67 Table 17 - Policy and investment recommendations .............................................................................................. 78 Table 18 - Adaptation and mitigation investments across key sectors over the period 2025-50 Error! Bookmark not defined. Table 19 - Policy recommendations on investment and financing ......................................................................... 89 List of Boxes Box 1 - Illustrating the range of possible flood damages through stochastic simulations .................................... 25 Official Use Only This report was authored by a World Bank Group Task Team led by Marc Stocker with core members including Komlan Kpotor and Justin Marie Bienvenu Beleoken Sanguen, Nour Masri, Ahmed Al Qabany, Raphaela Beatrice Karlen, Meritxell Martinez, Christopher Balliet Bleziri, Daniel Valderrama Gonzalez, and Martin Aaroee Christensen. The report has benefitted from invaluable inputs from the task team including: Aissatou Ouedraogo; Akizou Bataba; Akouvi Ometima Agbekoh; Ana Karla Perea Blazquez; Andre Teyssier; Antonia Grafl, Bernardo Atuesta, Bogachan Benli, Dinara Akhmetova; Djiby Thiam; Esther G. Naikal; Eva Brocard; Fatima Barry; Fred Kizito; Ibrahim El ghandour; Jia Jun Lee; Koffi Hounkpe; Laurent Damblat; Laurent Xavier Frapaise; Louis Akakpo; Maimouna Gueye; Manuela Ravina da Silva; Marek Stec; Miriam Muller; Mohamed Moustapha Sarr; Morten Larsen; Nahida Sinno; Nimonka Bayale; Nouhoum Traore; Oceane Keou; Ruslan Yemtsov; Sara Datturi; Shreya Rangarajan; Stephane Dahan; Steven David Potter; Voahirana Rajoela; Xavier Stephane Decoster; and Youssouf Traore. The team would like to extend sincere thanks to the Industrial Economics (IEc) team: Kenneth Strzepek, Brent Boehlert, Diego Castillo, Kim Smet who led the impact channel and adaptation modelling. The analysis of Nature-Based Solutions (NBS) in agriculture and forestry benefited from the technical and financial support of NBS Invest, which aims to mainstream Natural Based Solutions into climate mitigation and adaptation initiatives in low-income countries. NBS Invest is funded by the Global Environment Facility through its Least Developed Countries Fund and implemented by the World Bank, in partnership with the Global Program on Nature Based Solutions. Thanks are extended to Management and their teams on their guidance. In particular, Chakib Jenane, Jessica Wade, Olivier Buyoya and Sebnem Erol Madan, Ellysar Baroudy, Kanta Kumari Rigaud, Hans Anand Beck, Markus Kitzmuller, and Sujatha Venkat Ganeshan. The team benefited immensely from the guidance of, and is grateful to, the key peer reviewers: Craig Meisner, Hardwick Tchale, Fatima Arroyo, Lara Born, and Stephanie Brunelin. The report benefited from editorial support from John Carey. The team would like to thank the authorities for their collaboration and inputs in the preparation of this report. Official Use Only ABBREVIATIONS AND ACRONYMS A&R Adaptation and Resilience AF Adaptation Fund ANPC National Agency for Civil Protection or Agence nationale de protection civile ARC African Risk Capacity Insurance Company Limited BAU Business-as-Usual BCEAO Central Bank Of The West African States or Banque Centrale Des États De l'Afrique De l'Ouest CCDR Country Climate and Development Report CBFM Community-based Forest management CEET Compagnie Énergie Électrique du Togo CGE Computable General Equilibrium CMIP6 Coupled Model Intercomparison Project 6 CO2 Carbon Dioxide CO2e Carbon Dioxide Equivalent COVID-19 Coronavirus Disease Of 2019 CSO Civil Society Organization DRF Disaster Risk Financing DRM Disaster Risk Management EU European Union FNE National Environmental Fund or Fond National pour l'Environnement GCF Green Climate Fund GCMs General Circulation Models GDP Gross Domestic Product GEF Global Environment Facility GHG Greenhouse Gas GWh Gigawatt hours IDA International Development Association IFC International Finance Corporation ITS Intelligent Transport Systems KPIs Key Performance Indicators Ktonnes Kilotonnes LIPW Labor Intensive Public Works LNG Liquefied natural gas LTS Long-term Low Emission Development Strategy MANAGE Mitigation, Adaptation and New Technologies Applied General Equilibrium MAPAH Ministry of Agriculture, Animal Production and Fisheries or Ministère de l’agriculture, de la production animale et halieutique MEF Ministry of Economy and Finance or Ministère de l'Économie et des Finances MERF Ministry of Environment and Forest Resources or Ministère de l'Environnement et des Ressources Forestières MPDC Ministry of Development Planning and Cooperation or Ministère de la Planification du Développement et de la Coopération MSMEs Micro, small, and medium-sized enterprises MUHRF Ministry of Urban Development, Housing and Land or Ministère de l’Urbanisme, de l’habitat et de la réforme foncière Official Use Only NBS Nature-Based Solutions NDC Nationally Determined Contribution NDP National Development Plan PIA Plateforme Industrielle d’Adetikopé PNPSNC National Non-Contributory Social Protection Program or Programme National de la Protection Sociale Non-Contributive PPP Public Private Partnerships RCP Representative Concentration Pathway REDD+ Programme on Reducing emissions from deforestation and forest degradation RRS Resilience Rating System RSPM Registry of individuals and households or Registre Social des Personnes et des Ménages SDAI Irrigated Agriculture Master Plan or Schéma directeur de l’agriculture irriguée SEZ Special Economic Zone SLB Sustainability-Linked Bonds SNPT Société Nouvelle des Phosphates du Togo SOE State-Owned Enterprises SSA Sub-Saharan Africa SSP Shared Socioeconomic Pathway TFP Total Factor Productivity UNFCCC United Nations Framework Convention on Climate Change WAEMU West African Economic and Monetary Union ZAAP Planned Agricultural Development Zones or Zones d’aménagements agricoles planifiées Official Use Only EXECUTIVE SUMMARY Climate change, structural transformation and the cost of inaction Togo has achieved significant development gains over the last decade, but progress is still held back by slow structural transformation and a large urban-rural divide. Togo was able to achieve relatively rapid and stable growth over the last 10 years, averaging about 5.2 percent (2.8 percent in per capita terms), which was supported by economic reforms as well as rising public and private investment rates. However, limited headway was achieved in terms of structural transformation (i.e., the process of shifting jobs towards higher productivity activities and sectors), thus holding back opportunities for faster, more inclusive, and more sustainable growth. While the expansion of port activities in Lomé and the development of agro-business value chains, manufacturing and logistics services have helped the country’s economic development in recent years, limited gains in agriculture productivity, slow progress with human capital accumulation, and remaining barriers to private investment have prevented faster development. As a result, the national poverty rate has been on downward trends over the last decade, reaching 43.8 percent in 2021, but with significant and widening gaps between the capital Lomé and rural communities, particularly in the North where factors of fragility and insecurity have escalated in recent years. These factors have contributed to inward migration pressures in other areas of the country. Togo would need to deliver higher and more inclusive growth than observed historically to achieve ambitious development outcomes by 2050. In fact, to reach upper middle-income status and reduce extreme poverty to below 10 percent over the next 25 years, annual GDP growth in Togo would need to accelerate to 6 percent on average, or 4 percent in per capita terms, which would put the country among the top 10 to 15 percent of growth performers and nearly double the pace of income per capita gains from recent trends. This development trajectory would only be possible if Togo is able to simultaneously boost productivity and create more and better jobs through structural transformation. This would require diversifying the economy by leveraging comparative advantages in agriculture, light manufacturing, logistics, other trade-related and high-value services, improving connectivity infrastructures, creating a more enabling environment for private investment, upskilling the labor force, and creating more opportunities for female participation in the formal economy. More specifically, sustaining average GDP growth of 6 percent until 2050 would require ensuring that private investment reaches about 20 percent of GDP on average (+3 ppt from current levels), increasing total factor productivity growth by 0.8 ppt per year supported sectoral reforms and a shift in labor supply from agriculture to industry and high-value services, accelerating human capital gains by about an additional 0.2 ppt per year, and boosting female labor force participation by 6 ppt. This ambitious structural transformation scenario could more than double cumulative income per capita gains and more than halve the poverty rate by 2050 compared to a business-as-usual scenario where growth would gradually slow to 4 percent (Figure ES 1). Climate change will significantly impact Togo’s development trajectory, affecting disproportionately vulnerable populations. Heat waves have already become more widespread and severe, rainfall seasons more uncertain, and occurrences of extreme precipitation more frequent. These climate pressures are projected to intensify over time. In a business-as-usual scenario where the structure of the economy would remain broadly unchanged and the labor force would remain predominantly employed in low productivity and informal jobs in agriculture and services, simulations suggest that damages from climate change could result over the next 25 years in a loss of average income per capita ranging between 6.1 percent and 12.2 percent depending on climate scenarios. In these scenarios, the poverty headcount could rise by between 1.8 and 3.1 percentage points as a direct result of climate shocks, pushing between one-quarter to half a million people into poverty every year as a result of climate shocks. Considering the specific impact channels modeled in this report,1 rising temperatures would be a dominant driver of expected losses in welfare, followed by reduced yields for rainfed crops, slower human capital accumulation, and damages from more intense urban, coastal and inland flooding. Internal migration from more exposed rural areas, 1 The impact of climate shocks was assessed by using a large-scale computable general equilibrium model capturing direct climate impacts on productivity, labor, and capital, as well as indirect effects through production linkages, factor substitution, and trade. Climate shocks are evaluated through to separate biophysical models that convert changes in grid-level climate data into biophysical shocks for each of the ten impact channels considered in this CCDR, including through crop-specific yields; livestock revenues; damages to infrastructure from inland, urban and coastal flooding; heat stress on labor productivity and learning outcomes; and impact on labort supply of incidence of vector-borne, water-borne, and temperature-related diseases on labor supply. 10 Official Use Only including the Savanes and Northern Kara where significant cropland surfaces could be lost to climate change, and from low-lying coastal areas due to increased coastal erosion and flooding, could put additional strains on resources in host communities, leading to heightened competition for water, infrastructure, and social services, which could feed social strife and conflict. Faster structural transformation will be needed to boost economic opportunities for all, but also to strengthen resilience to climate shocks. By reducing the share of the workforce exposed to heat stress and boosting agriculture productivity through improved land management, irrigation, and mechanization, and by ensuring a transition to more productive services and manufacturing jobs in urban areas, structural transformation can be a powerful tool to reduce climate change impacts on livelihoods and poverty. A faster reduction in fertility rates and slower population growth could also ease pressures on land, water, and other natural resources that provide ecosystem services and help regulate the climate. Simulations suggest that the impact of climate shocks could be reduced by about 20 percent in this structural transformation scenario, ranging between -4.8 and -10.3 percent of GDP. As a result, the impact on income per capita and poverty could be less than one third of that in the business-as-usual scenario (Figure ES 2). This highlights how priority reforms to stimulate structural transformation are expected to play crucial role not only in raising Togo’s growth potential but also improving its resilience to climate change. This combined with adaptation and mitigation measures identified in this CCDR could largely offset climate impacts even in the most severe scenario and significantly reduce emissions intensity. While structural transformation is essential to strengthening growth and resilience, it also needs to be more inclusive to maximize impact on poverty reduction. In Togo, where poverty and food insecurity remain entrenched, boosting economic opportunities for smallholder farmers, improving education and healthcare outcomes in rural areas, prioritizing inclusive urban planning and equitable access to resources and services and creating more and better jobs in urban-based industries and services are crucial to ensure broad-based gains and alleviate fragility risks. Figure ES 1 – Structural transformation, higher labor Figure ES 2 – … and would also mean greater resilience participation and lower fertility rates could yield large to climate shocks growth dividends GDP growth and drivers Average per capita growth over 2024-50 Source: World Bank Source: World Bank Notes: Results from simulations with the World Bank’s Mitigation, Adaptation and New Technologies Applied General Equilibrium (MANAGE-WB) model. 2 For the purpose of the analysis in this CCDR, and in line with guidance to ensure comparability across countries, climate scenarios were aggregated into wet/warm and dry/hot scenarios to assess vulnerabilities and adaptation options. 2 The World Bank’s Mitigation, Adaptation and New Technologies Applied General Equilibrium (MANAGE -WB) model accounts for both direct effects of climate change through damage vectors on productivity, labor supply and the capital stock and indirect effects accrue from various channels such as production linkages, factor substitution and intersectoral mobility, the fiscal framework, and trade. 11 Official Use Only Defining a more resilient and low-carbon development pathway With the right policy responses, challenges associated with climate change could be turned into development opportunities for Togo. While climate change poses a significant threat to Togo's development, particularly for its agriculture sector and most vulnerable populations, a multi-pronged strategy that leverages innovation, green infrastructure development, climate-proofed social services, and the promotion of climate-conscious businesses could help turn threats into opportunities. In agriculture, improving access to drought-resistant crop varieties, developing smart irrigation, promoting nature-based solutions like agroforestry and better land management and conservation could boost yields while strengthening resilience and helping to decarbonize the sector. Accelerating the shift to renewable energy sources like solar, hydro and wind power will not only reduce reliance on fossil fuels but also provide reliable and clean energy for rural communities, fostering economic activity and promoting sustainable development. Upgrading existing transport, digital, urban, and coastal infrastructures will also be key to ensure long- term resilience and to minimize future damages. Climate-proofing social services would require expanding social protection programs in the form of social safety nets for vulnerable communities, investing in robust early warning and disaster response systems, and strengthening education and healthcare infrastructures and training systems to address climate-related challenges. A climate-conscious development strategy requires building on synergies and complementarities between sectoral policies in order to simultaneously boost productivity, job creation and the resilience of vulnerable populations. For instance, scaling up climate-smart and nature-based solutions in agriculture supports productivity, food security, and carbon sequestration, providing a strong foundation for sustainable rural livelihoods that limits rural-to-urban migration pressures. This complements efforts to ensure sustainable urban and coastal development while mitigating risks from coastal erosion and flooding. Ensuring universal access to clean and reliable energy is also critical to power agriculture, to attract new manufacturing and higher value-added services in urban centers, and to support digital solutions for a low-carbon economy. Similarly, a more resilient and greener transport sector can help lower emissions while strengthening local, regional and global value chains, and help develop secondary cities that reduce the urban pressures under the Grand Lome area. Efforts to enhance human capital, especially among the youth, are also critical to support more and better paying jobs by matching skills with the demand of emerging sectors and technologies, including those needed for Togo’s green transition. A higher level of human capital is in turn conducive to social progress, stronger social cohesion and resilience, and reduced fertility rate, all enablers of structural transformation. Finally, robust climate governance and improved access to climate-related financing can help mobilize critical investments across these sectors while fostering transparency and accountability for impactful delivery. If implemented correctly, priority reforms and investments could help turn threats from climate change into opportunities for faster development. Here are the key elements of that strategy: 1. Scale up climate-smart and nature-based solutions in agriculture The agricultural sector could make a more substantial contribution to Togo’s structural transformation with necessary productivity-enhancing investments and efforts to reduce exposure to natural hazards. Despite its relatively low and declining share in GDP, agriculture still occupies 40 percent of the workforce in Togo and remains the main source of income for 60 percent of rural workers and up to 70 percent of those living under the poverty line. Yet stagnant productivity traps most farmers in subsistence agriculture with low incomes and limited capacity to invest in more resilient practices or to adjust to shocks. In the absence of decisive measures, agricultural development in Togo could be severely hampered by heat-related stress, changes in rainfall patterns, climate-related crop diseases, and soil erosion. These impacts could reduce the sector’s production capacity by up to 12.3 percent over the next 25 years. Greening the agriculture sector and improving water management are critical to boost resilience and decarbonize production in the face of climate change. Supporting the adoption of climate-smart practices could significantly transform Togo's agriculture sector by increasing productivity, creating jobs, enhancing resilience to climate shocks, and ensuring food security. Key strategies include green mechanization and irrigation, organic fertilizers, and heat- 12 Official Use Only resilient crops, which could mitigate the negative impacts of climate change on yields. To attract private investments needed to transform the agriculture sector, it will be crucial to develop customized financial instruments, improve access to technology, streamline regulatory processes, and better leverage public-private partnerships. Land tenure security will also need to be strengthened to encourage smallholder farmers to invest in their land, improve their living conditions and preserve natural resources. Scaling up nature-based solutions, and notably agroforestry, appears particularly promising to confront climate change challenges for smallholder farmers in Togo. It offers prospects of significant gains in agricultural productivity and in ecosystem services that reduce the need for costly and sometimes environmentally damaging inputs. In addition, its carbon sequestration potential could open the door to financing options that could help scale up necessary investments. Table ES 1 - Development pathways, priority areas, and recommended actions for greener, more resilient, and inclusive development in Togo HIGH LEVEL OBJECTIVE PRIORITY AREAS KEY RECOMMENDATIONS ACCELERATE STRUCTURAL Scale up climate-smart Support the adoption of Promote agroforestry, Increase access to TRANSFORMATION IN A and nature-based climate-smart practices riparian buffers, and sustainable irrigation CHANGING CLIMATE solutions in agriculture and inputs other nature-based and develop inland valley solutions swamps Support sustainable Develop an urban Improve solid waste Implement a dynamic urban and coastal planning code that management through adaptive policy to tackle developments incorporates climate the use of sanitary coastal degradation risks and ensures the landfills and recycling resilience of cities to disaster and climate- related risks Ensure universal access Incorporate gas into the Implement reforms and Improve access to clean to more reliable and energy mix as a make strategic cooking solutions and clean energy transitional measure investments to boost management of biomass away from more polluting solar and hydroelectric energy sources power Develop greener and Increase the share of Phase out fuel subsidies, Create a sediment more resilient paved roads by 50 introduce Intelligent bypass around the Port transportation percent, build to higher Transport Systems (ITS), of Lomé standards and improve and promote electric maintenance capacity mobility Promote clean industrial Implement a Use the planned Develop low clinker development comprehensive strategy exploitation of hard-rock content or blast furnace to address marine phosphate deposits to cement and promote pollution from the convert to electrified or demand for low-carbon release of tailings from hydrogen-fueled cement products phosphate mining equipment Develop an enabling Reform investment Create a more supportive Expand green credit and environment for private promotion, FDI, policy framework for equity financing options, sector innovation and entrepreneurship and research and through inter alia the the promotion of green PPP policies to development (R&D) in introduction of a new investments mainstream climate green technologies taxonomy to identify climate-smart activities adaptation and mitigation BOOST THE HUMAN CAPITAL Improve learning Construct climate-smart Reinforce teacher Accelerate digitalization AND RESILIENCE OF outcomes in sustainable school infrastructure and training and curricula on in the education sector VULNERABLE POPULATIONS schools use vegetation to reduce climate-related issues heat stress Prevent climate-related Ensure rapid progress Improve the quality of Ensure climate-adaptive health threats towards universal health health and nutrition measures for health coverage services, particularly for infrastructure in climate- the most exposed sensitive areas segments of society Develop a robust and Operationalize a dynamic Expand access to Institutionalize a shock shock-responsive social social registry with up-to- productive safety net response program to protection system date socio-economic programs to strengthen support households in household data the resilience of poor the event of a climate households hazard 13 Official Use Only IMPROVE CLIMATE Develop a clear strategy Strengthen institutional Fully integrate climate Make the tax structure GOVERNANCE AND ACCESS and institutional capacity through better objectives into public greener and consider the TO FINANCE framework governance and investment management introduction of carbon coordination taxation Boost access to climate- Maximize the full range Operationalize the Create the capacity to related financing of concessional and regulatory and issue sustainability- semi-concessional institutional framework linked sovereign debt financing instruments for carbon credits instruments. Taken together, investments identified in this CCDR to boost climate adaptation and mitigation in the agriculture sector could reduce climate impacts by at least 50 percent. These investments are estimated to amount to US$1.9 billion in present value term over the next 25 years, which would require average annual investments of about 0.9 percent of GDP until 2035 and 0.451 percent of GDP from 2036 to 2050. These investments will have synergies with other sectors, notably – in education and social protection, where re-skilling and preparation of the workforce for green jobs will complement investments in new technologies. However, they would be more than offset by gains in production capacity, incomes, and food security, which should largely compensate the impact of climate shocks in a wet/warm scenario and reduce their effect by more than 50 percent under a dry/hot scenario. The carbon intensity of the sector would also decrease by an estimated 75 percent between now and 2050. Greening agriculture production and value chains will help support international competitiveness. Climate regulation among countries representing major market opportunities for Togo are likely to increasingly limit access for agricultural products not meeting certain forest and land preservation standards. Similarly, the potential for climate financing in agriculture largely relies on measurable reductions in emissions, including through better land and forest management. Nature-based solutions like agroforestry, riparian buffers or community-based forest management are particularly promising in this regard but should be accompanied by improved capacity to undertake reliable and transparent environmental and emission impact assessments. Similarly, developing sustainable supply chains that prioritize renewable energy, use local sourcing and minimize transportation distances could contribute to a lower carbon footprint, while the adoption of waste-to-energy technologies, converting agricultural waste into biogas or bio- fertilizers would also help reduce emissions. This could have the added benefit of helping boost access to international markets amid increasingly demanding low-carbon commitments. 2. Support sustainable urban and coastal developments Climate pressures are heightening challenges associated with rapid urbanization and coastal developments, which play an important role in structural transformation. By 2050, it is projected that about 9.3 million people will live in urban areas in Togo, corresponding to more than 60 percent of the population, up from 45.6 percent currently. Climate pressures are set to amplify spatial imbalances and geographical disparities between rural and urban areas and between northern and southern parts of the country, further intensifying fragilities and causing population displacements. As demographic pressures intensify, major urban and coastal areas in Togo will be increasingly exposed to flood risks, with an average of 3 to 6 percent of built-up areas currently exposed to 100-year floods. By 2050, flood damages in urban areas could increase by 5 to 11 percent, creating significant disruptions to livelihoods and economic activity. Moreover, southern coastal agglomerations, where most of the urban population resides, are highly vulnerable to growing coastal erosion and sea level rise, which could lead to permanent damage, in addition to the repairable damage from periodic floods and storm surges. Weaknesses in water supply and sanitation systems and urban heat island effects will also amplify climate vulnerabilities, while inadequate solid waste management is a major source of urban Greenhouse Gas (GHG) emissions and flood risks. The next decade will be critical for determining the development pathway of cities and coastal areas. Once urban sprawl has occurred and coastal erosion becomes pervasive, reversing the trend is extremely challenging as natural risks would be locked in. A new urban planning code that incorporates climate risks and ensures greater resilience of cities to disaster- and climate-related risks should be implemented, including regulations for the use of land, buildings, or other structures. Improving solid waste management through the use of sanitary landfills and recycling would help reduce urban emissions, while also helping to reduce water pollution and flood risks. A dynamic adaptive policy to tackle coastal degradation is also needed to reduce coastal erosion, with a strong role to be played by the private sector. More sustainable funding mechanisms for local governments, such as increasing transfers or using 14 Official Use Only performance-based grants, could incentivize much-needed local action. Diversifying water resources and increasing the efficiency of distribution networks will also help reduce the energy intensity of water supply services while improving water availability. Investments identified in the CCDR to support sustainable urban and coastal development are estimated to reach about US$2.07 billion by 2050 in present value, which would require average annual investments of about 0.78 percent of GDP until 2035 and 0.8 percent of GDP from 2036 to 2050. These are however expected towould bring large economic and environmental co-benefits. 3. Ensure universal access to more reliable and clean energy The energy sector will play a key role in Togo’s transition to a more prosperous, resilient and lower carbon economy. Significant progress has been achieved in raising access to electricity in recent years. But this has occurred mostly in urban areas, as in rural areas, only a quarter of the population has access to electricity. As the government seeks to reach universal access by 2028, the demand on the interconnected grid is expected to increase by 250 percent by 2035 and by 500 percent over the next 25 years. This will require major expansions of production and distribution capabilities, along with efforts to boost decentralized solutions in remote areas. Supporting studies to mitigate losses on the network of the national electricity company (Compagnie Énergie Électrique du Togo, CEET) and in public buildings will help reduce demand pressure and optimize resource use. Reinforcing and upgrading regional integration is also crucial to create a more resilient and interconnected energy network, augmenting the production capacity of importing countries like Togo, and ensuring a stable supply of natural gas through the West African Gas Pipeline (WAGP). The exposure of power infrastructures to climate hazards, combined with weak sector governance and performance, are exacerbating challenges in meeting growing demand while transitioning to cleaner and cheaper energy. Beyond the need to scale up renewable energy sources, climate mitigation efforts in the energy sector will require improvements in the biomass sector, which currently accounts for 75 percent of energy consumption in Togo. Current practices in this area are causing the overexploitation of forests, adversely affecting natural ecosystems and plant and animal biodiversity. Inefficient cookstoves consume large amounts of wood fuel and are also major sources of atmospheric pollution. Universal access to modern energy cooking services (MECS) 3 by 2050 could reduce biomass use by shifting away from wood and charcoal and cut greenhouse gas emissions by about 90.5 percent compared to a 2020 baseline. Efforts to reduce reliance on fossil fuels should be combined with improved access to clean and stable energy, and with a more sustainable management of natural resources. Gas could serve as a bridge to a cleaner energy system by facilitating the integration of renewable energy sources through balancing intermittent supply and stabilizing the grid. However, Togo's integration of LNG into its energy mix risks creating a dependency due to the sunk costs of LNG infrastructure, potentially locking the country into natural gas use beyond its transitional role. As hydrocarbon reserves are depleted in neighboring countries, Togo should aim to diversify its energy sector. To achieve a significant expansion of solar energy, Togo will need to pursue a series of sectoral reforms and strategic planning of large-scale projects, which will likely become a source of cost-effective and climate-friendly renewable energy. Hydroelectric power is also a crucial element in Togo's clean energy strategy, with the dual objectives of providing a reliable and sustainable electricity supply and of improving water management to counter the negative impacts of climate change. Furthermore, a revised national energy strategy should prioritize grid extension and densification, especially in rapidly growing peri-urban areas. Reaching universal access to clean and efficient cooking would also require significant investments, but those would be lower than the expected gains in welfare and the reductions in emissions over time. Establishing performance targets for cookstoves’ efficiency and emissions, creating cookstove testing facilities and labeling schemes, and tracking progress to identify and overcome barriers are some of the low hanging fruits to move towards cleaner cooking technologies. Overall, identified investment needs for climate adaptation and mitigation in the energy sector are estimated to reach a cumulative US$3.881 billion by 2050 in net present value, requiring average annual investments of about 2.22 percent of GDP until 2035 and 1.25 percent of GDP from 2036 to 2050. These investments, however, should be partly compensated by the economic empowerment for other sectors as well as the reduced emission intensity of the energy mix by around 60 percent from now till 2050. 3 This refers to a household context that has met the standards of Tier 4 or higher across all six measurement attributes of the Multi-Tier Framework: convenience, (fuel) availability (a proxy for reliability), safety, affordability, efficiency, and exposure (a proxy for health related to exposure to pollutants from cooking activities). 15 Official Use Only The private sector will need to play a determinant role in enhancing the overall efficiency and financial performance of the energy sector. As the CEET grapples with challenges related to operational efficiency and financial viability, strategic partnerships with private entities are indispensable. These collaborations facilitate the injection of capital, the introduction of innovative technologies, and the improvement of management practices. The synergy between the private sector's dynamism and CEET can lead to more sustainable energy solutions and help stabilize the financial foundation of the energy sector. This partnership not only drives progress towards universal electricity access but also supports the government's efforts to ensure that state-owned enterprises become more accountable and financially viable. By leveraging private sector expertise and investment, Togo can better navigate the complexities of modernizing its energy sector and enhancing its economic impact. 4. Develop greener and more resilient transport sector Togo’s main transport assets, namely roads, bridges, and port facilities, are significantly exposed to natural hazards. At present, almost 20 percent of the total length of roads could be damaged during frequent flooding (with a flood return frequency of ten years) and up to 40 percent under extreme circumstances (with a flood return frequency of 100 years). The wider economic cost of flood-induced damages to roads and bridges is estimated at US$12.1 million every year, 95 percent of which is due to traffic disruptions associated with reduced accessibility. Depending on climate scenarios, these costs could increase by between 40 and 250 percent over the next 25 years. Moreover, the Port of Lomé, which is one of Togo’s most valuable assets, is increasingly impacted by coastal erosion, while also being a cause of that erosion. In fact, a strong natural eastward drift of sediment along the coastline has been interrupted by the construction of the Port of Lomé, leading to significant erosion on the east side of the port and sediment accumulation on the west side and along the port’s access channel. Sea level rise will amplify coastal erosion, with effects becoming increasingly visible after 2040. Targeted adaptation and mitigation interventions could help prevent climate-related disruptions to transport infrastructure and also cap emissions. Increasing the share of paved roads by 50 percent and building to higher standards could potentially reduce climate-related road network disruptions by half by 2050. Building capabilities for effective road maintenance is also crucial to maximize the benefits of investments over time. Upgrading drainage systems and elevating road surfaces across the most exposed road links could be cost-effective measures as well, helping to prevent large-scale disruptions with minimal investments. Considered as a quick win in addressing urgent short-term priority, the adaptation of critical links across the country to protect key road links from events as severe and rare as 1,000-year flood could be regarded as cost effective investments to be pursued by the government. These investments could partially be financed through a phasing out of fuel subsidies, which could also encourage lower emissions transportation. Other mitigation measures include improving the quality of gasoline and diesel fuels, introducing Intelligent Transport Systems (ITS), promoting electric mobility, and rehabilitating railways and freight movement. Meanwhile, a sediment bypass around the Port of Lomé, involving the dredging of the port access channel and the transfer of sediments to the erosion zone to the east, could be the most effective option for minimizing coastal erosion, and is also preferred in terms of socio-economic acceptance. The past decade has seen substantial public spending to support the government’s road infrastructure program, with public investment in the sector averaging 2.5 percent of GDP per year. Priority investments needed to support a more resilient road sector with lower emissions and address coastal erosion around the Port of Lomé are conservatively estimated to reach about US$1.6 billion by 2050 in net present value, requiring average annual investments of about 0.78 percent of GDP until 2035 and 0.5 percent of GDP from 2036 to 2050. 5. Scale-up clean industrial development and innovation Togo aspires to accelerate industrial development, which will require leveraging more private sector investments to improve efficiency and reduce the environmental footprint. Togo’s industrial sector is still concentrated in extractive industries, most notably phosphate production and cement works. It also has manufacturing industries in areas such as food, textiles and clothing, wood, chemicals, and metals, with a large untapped potential for more and better jobs. Developing a more attractive environment for foreign direct investments, which have been relatively muted over the last decade, could play a critical role in leveraging the potential of these sectors and in fostering technological transfers, driving innovation, and spreading cutting-edge practices needed to boost productivity and job creation in a 16 Official Use Only climate conscious way. Togo is already providing significant safeguards for foreign investments, but to attract new projects and broaden their benefits it should continue to improve access to markets, energy, and infrastructure, ensure strategic planning around ambitious sectoral objectives, and stimulate domestic investments in associated value chains. At the same time, Togo could facilitate local innovation and reduce its reliance on imported technologies by strengthening public-private partnerships, creating a more supportive policy framework for research and development (R&D) in green technologies, and carrying out targeted investments in technical education and vocational training. Climate-proofing phosphate and cement sectors are critical to the nexus between industrial competitiveness and environmental sustainability. Actions to decarbonize their activities are a key component of their future competitiveness and access to international markets amid increasingly stringent national and global emissions reduction commitments. For instance, EU’s Carbon Border Adjustment mechanism seeks to ensure that impo rts of key industrial products like steel, fertilizer, cement, or aluminum meet certain emissions standards in order to prevent carbon leakage thus putting domestic industries at a competitive disadvantage. Energy audits of existing production facilities, together with the selection of more energy efficient technologies, could help guide the decarbonization strategy of these sectors. The potential exploitation of hard-rock phosphate deposits offers an opportunity to convert to electrified or hydrogen-fueled equipment with low emissions. In parallel, urgent action must be taken to rein in the significant maritime pollution caused by the release of tailings from the phosphate industry. In the cement sector, lowering its carbon footprint through reduced clinker content or blast furnace cement should go hand in hand with efforts to expand demand for low-carbon cement products, which currently remains low. 6. Boost human capital and the resilience of vulnerable populations In the absence of robust adaptation measures, climate change could slow poverty reduction efforts and adversely impact human capital development with lasting consequences on future generations. Under the more benign wet/warm scenario, climate shocks could increase the poverty rate by 1.8 percentage points by 2050, while in the more acute dry/hot scenario, the increase could reach 3.1 percentage points, with up to half a million people falling into poverty as a result of climate shocks every year. Challenges to human capital development will also intensify, as learning opportunities and health of exposed populations could be significantly impacted, with negative consequences on productivity and earning levels of future generations. Togo is already grappling with high learning poverty (82 percent), which diminishes adaptation potential and readiness for structural transformation, and could deepen even further because of climate pressures. If left unmitigated, rising temperatures could potentially reduce knowledge acquisition by between 10 to 20 percent over the next 25 years, and school and education infrastructures remain highly exposed to climate shocks such as flooding and high winds. The social protection system currently suffers from pervasive fragmentation and weak coverage of the poor and vulnerable, directing the bulk of resources towards better off formal sector workers. Climate change could also exacerbate fragility risks and security challenges in the North, increasing competition over diminishing resources and intensifying migration. The hard-won gains of social and public health programs could also be threatened by an increased incidence of climate-related diseases, putting additional pressure on already underfunded social protection programs. To prevent adverse impacts on human capital and build a more resilient, productive, and inclusive society, climate- smart reforms and investments will need to be prioritized in the coming years. While the Government should continue pursuing investments that help to build resilience through education, health, and social protection programs, it should also target specific reforms and investments to address climate change impacts on its vulnerable population. In this regard, productive safety net programs play an important role in strengthening the resilience of poor households and better preparing them for climate and other shocks, while contributing to higher productivity of future generations and greater social cohesion. The vision of the new flagship safety net program adopted by the Government needs to be translated into concrete actions in instituting, financing and launching it at scale. To improve learning opportunities for students across the territory, priorities should include the construction of climate- smart school infrastructure and the use of vegetation to reduce heat stress. These measures should be complemented by adjusted curricula, reinforced teacher training, and accelerated digitalization in the education sector. Finally, ensuring rapid progress towards universal health coverage, the provision of quality services, particularly for the most exposed segments of society as well as ensuring climate-adaptive measures for health facilities, could limit the impact of climate change on public health. The costs of priority measures to support the 17 Official Use Only adaptation of vulnerable populations are estimated to reach a cumulative US$3.6 billion by 2050 in net present value, which would require average annual investments of about 1.17 percent of GDP until 2035 and 0.85 percent of GDP from 2036 to 2050, which should prevent the loss of human capital to climate change. Identifying priority investment needs and their impact Addressing climate change while meeting broader development needs requires selectivity in climate actions as well as innovative financing solutions. The critical climate-specific investments addressing climate adaptation and mitigation across the key sectors described above are estimated to cost about US$13,925 million in net present value over the next 25 years, corresponding to average annual investments of about 6.23 percent of GDP until 2035 and 4.1 percent of GDP thereafter (Table ES 2). If financing for such investments could be found, the adverse impact of climate change could be largely avoided under wet/warm conditions and be reduced by about 60 percent under dry/hot conditions (Figure ES 3), while reducing GHG emissions intensity by 55 percent by 2050 (Figure ES 4). This illustrates that combining structural transformation with key adaptation and mitigation measures can help ensure faster development, while boosting climate resilience and emission reductions. Table ES 2 – Priority investment needs for adaptation and mitigation in key sectors over the period 2024-50 Investment needs by 2035 Investment needs by 2050 Cumulative, Average, Cumulative, Average, Present Value %GDP Present Value %GDP US$ US$ Agriculture, including the following priority investments: US$1,160M 0.9 US$1,926M 0.4 Develop a national agroforestry initiative, using ecosystem services to help boost agricultural productivity and prevent land degradation. Promote the use of climate-smart agriculture practices and technologies to strengthen resilience and reduce the carbon footprint. Boost access to sustainable irrigation systems that integrate effective surface water management and optimize water use for agriculture. Urban and coastal development, including the following priority investments US$1,093M 0.8 US$2,068M 0.8 Implement a resilient and compact urban development compact that ensures better land management and reduces the risk of urban sprawl. Carry-out a resilient drainage and flood protection program for coastal and secondary cities and reduce heat-related climate risks. Strengthen coastal development and management, including through the implementation of nature-based solutions to reduce coastal erosion. Energy, including the following priority investments: US$2,984M 2.2 US$3,885M 1.2 Boost access to electricity by supporting resilient grid extension in peri-urban areas and hybrid mini grids and solar kits in rural areas Develop cost-effective and climate-friendly renewable energy sources through the strategic planning of large-scale photovoltaic projects. Strengthen reforestation efforts and biogas supply capacity for bioenergy production. Transport, including the following priority investments: US$1,008M 0.8 US$1,666M 0.5 Establish an Intelligent Transport Systems (ITS) with digital services and automatic traffic management to cap emissions and congestions. Boost the road network resilience by upgrading key links for protection against 1,000-year floods. Support the sustainable development of the Port of Lomé by developing a sediment bypass combined with regular dredging of the port access. Digital, including the following priority investments: US$115M 0.1 US$136M 0.01 Expand climate-proof and resilient ICT infrastructures in high-risk (remote) areas; and perform periodic climate risk assessment. Roll out critical digital public services to ensure the administration continuity in a disaster and set up disaster recovery centers in low-risk areas. Phosphate and other industries, including the following priority investments: US$379M 0.3 US$625M 0.2 Reduce marine pollution from phosphate production by implementing water quality testing and constructing settling basins for slurry treatment. Develop a robust monitoring and reporting system to track progress of private sector initiatives in climate mitigation and adaptation. Human capital, including the following priority investments: US$1,756M 1.2 US$3,619M 0.9 Implement mandatory green building standards for new education and health sector constructions to boost resilience. Ensure that pupils have access to digital content to develop new learning opportunities and limit disruptions during climate shocks. Adopt and implement a Preparedness Plan for food and nutrition security (FNS). Strengthen the resilience of poor and vulnerable households by operationalizing a dynamic social registry with georeferenced and hazard data, expanding access to flagship safety net program to all poor, and institutionalizing shock response program to those affected by climate shocks. Total investment needs US$8,495M 6.2 US$13,925M 4.1 Source: World Bank Note: Priority investments are identified based on their viability and expected impact. An investment “viability� is computed by averaging scores on urgency, implementation period, and operability. Expected impact is computed by averaging scores on development co-benefits and Impact on the most vulnerable. 18 Official Use Only Despite strong development co-benefits from many of the identified climate actions, Togo’s ability to invest is constrained by limited fiscal space and access to climate financing instruments. Fiscal consolidation efforts in the short term and relatively low domestic revenue mobilization are among the most pressing constraints for publicly financed climate actions in Togo, many of which have high upfront costs. This is especially true when the country also needs to invest massively in basic infrastructure and services, as well as in education, healthcare, and social protection to address poverty and fragility risks. Togo will therefore need to focus in the short term on relatively low- cost and high-return investments and boost allocative efficiency through governance reforms, while developing new sources of revenue mobilization and improving access to climate financing instruments. Figure ES 3 - Structural transformation combined with Figure ES 4 - …reduce GHG emission intensity by 55 adaptation and mitigation measures could reduce percent over the next 25 years. climate impacts by between 60 to 90 percent … GHG emissions in a dry/hot scenario with sectoral mitigation and a carbon Impact of climate shocks by 2050 on real GDP per capita levels under tax of US$7.5 per ton of CO2 different scenarios Source: World Bank Source: World Bank Notes: Derived from simulations with the World Bank’s Mitigation, Adaptation Notes: Derived from simulations with the World Bank’s Mitigation, Adaptation and and New Technologies Applied General Equilibrium (MANAGE-WB) model. New Technologies Applied General Equilibrium (MANAGE-WB) model. A detailed analysis of energy supply and demand has been incorporated, taking into consideration various sources of electricity generation and the corresponding energy mix. The model is also set up to include and track the evolution of GHG emissions by type and source. Boosting climate governance and access to finance Togo would need to develop a clear and well coordinate climate change strategy. While the Government’s national development program includes climate change considerations, Togo does not yet have an integrated and holistic national climate strategy, nor has it set a net zero target in accordance with Article 4.19 of the Paris Agreement. The government did, however, launch a low emissions development strategy (LTS) covering all sectors, State-Owned Enterprises (SOEs), and municipalities, which marks an important step forward towards more strategy-driven climate change planning. On the other hand, Togo’s institutional landscape for climate change and its coordination of climate action and policy are not yet conducive to improved climate governance. Despite the establishment of several coordination mechanisms over the years, including several institutions that appear set to play a role in mobilizing climate finance, these are yet to be operational. This further underscores the urgent need for a more integrated and collaborative approach to climate change policy and financing in Togo for delivering on adaptation and resilience objectives. A more comprehensive Climate and Disaster Risk Financing strategy is also needed to clarify most suitable sources of financing and instruments. Climate objectives and risks should be integrated in the public investment management framework to reinforce adaptation and mitigation efforts. Integrating climate considerations into macro-fiscal policies, budget allocations, and public investments is critical. Climate goals and climate risk assessment should systematically be integrated in the selection and execution of public investment projects. A Resilience Rating System (RRS) could help assist in 19 Official Use Only project financing and implementation decisions, and raise awareness among government officials, policy makers, and the general public about the risks of climate change and the benefits of more resilient infrastructures. Public- Private Partnerships are also critical to meet large investment needs and to benefit from private sector expertise in climate adaptation and mitigation. This should be accompanied by updated legislation clarifying standards and methodologies to account for climate risks. It is also critical to develop a cohesive climate and disaster financing strategy, and to engage the private sector to enhance Togo’s adaptation and resilience capacities. Greening the tax structure and introducing carbon taxation could provide an important source of additional financing for climate actions and significantly reduce emissions. In particular, the gradual introduction of a carbon tax at US$7.5 per ton of CO2 in sectors that are significant sources of emissions and for which low-carbon alternatives exist like energy, transport, industry, and agriculture could raise an average of 1 percent of GDP per year by 2035 and reduce emissions by 9.9 million tons of CO2eq by 2050. This would lower the emissions intensity of economic activity by 6 percent. A fee and rebate system could provide necessary incentives for low-carbon alternatives by subsidizing them with rebates, while discouraging activities and production methods with high carbon intensities with fees. Reforming wasteful and regressive subsidies and tax expenditures could also help to increase resources for climate action, while leading to more efficient use of energy, lower pollution, and improved human health. Togo will need to maximize the full range of concessional and semi-concessional financing instruments. These could blend funding and guarantees from multilateral development banks, development institutions, and public sector funds to support nature and biodiversity conservation, or climate-resilient infrastructure, transportation, and agriculture in Togo. Green bonds could also help attract investors for sustainable forestry, agriculture, or renewable energy projects. To take advantage of these financing sources, Togo needs to establish a strong framework with transparent impact assessments, and a robust pipeline of well-defined thematic projects. Moreover, Togo could explore sustainability-linked bonds (SLBs), which tie their financial performance to progress made towards agreed- upon Key Performance Indicators (KPIs), but which are not linked to specific projects. Deepening the financial sector is also essential to mobilize domestic and international savings for climate investments. Banks dominate the financial sector in Togo, but their ability to finance climate-related projects is limited. Authorities have not yet introduced formal labels for green lending products or for banks’ financing flows for climate and environmental projects. The lack of a green taxonomy framework impedes investors from identifying environmentally sustainable activities. Togo should define its own taxonomy based on its needs, prioritizing sectors with the highest needs, such as energy, agriculture, and forestry and other land uses. Togo is currently developing the regulatory framework for carbon markets, which should help implement mitigation efforts and nature-based adaptation strategies. Carbon market initiatives offer opportunities to accelerate the transition to a sustainable, inclusive, and low-carbon economy in Togo. To unlock their benefits, Togo should establish a clear and stable regulatory framework for carbon markets, set up a market infrastructure, and develop a pipeline of high-integrity projects that utilize credible methodologies. Key policy reforms and investments identified in the CCDR will be operationalized through World Bank operations in the context of the FY25-29 Country Partnership Framework (CPF) and stakeholder engagement. Climate interventions highlighted in this report will be systematically included in World Bank operations during the new FY25-29 CPF period to boost resilience in sectors such as agriculture, forestry, and water management; electricity, transport, and digital infrastructures; coastal and urban developments; and health and human capital. This should help achieve the CPF’s main objective of transforming the agriculture sector with productivity-enhancement investments, boosting connectivity and logistics to connect farmers to markets, and ensure universal access to electricity to support Togo’s economic transformation and stimulate private investment. The CCDR will serve as a key instrument to help align climate actions of various technical and financial partners, help mobilize new sources of financing, engage with civil society, academia, think tanks on the contour of a development strategy that better integrates climate challenges and help develop a strategy to mobilize the private sector for priority investments in the above-mentioned sectors. 20 Official Use Only CHAPTER 1. DEVELOPMENT AND CLIMATE CHALLENGES Togo has achieved significant development gains over the last decade, but progress is still held back by limited progress with structural transformation and the narrowing of a large urban-rural divide. Poverty remains high in rural areas, particularly in the Northern Savanes region where fragility and insecurity risks exacerbate challenges. Climate change poses an additional threat, with rising temperatures and unpredictable rainfall projected to heighten vulnerabilities and negatively impact economic activity. However, a faster structural transformation and climate- conscious investments could transform climate risks into opportunities for accelerated development. 1.1. Socioeconomic context and development challenges Togo, a West African country of roughly eight million people, is endowed with a strategic location, a natural deep- water port, fertile land, and mineral resources. It is positioning itself as a regional leader in several agricultural value chains, as well as port and logistical services. Togo has an advantageous geographical location in the heart of Western Africa between Ghana to the west and Benin to the east. Its numerous natural assets include land resources favorable to agriculture, significant phosphates, and other mineral resources. Togo also has the deepest port in the region,4 which serves many landlocked countries, including Burkina Faso, Mali, and Niger. It has also recently become a regional air transport hub. As a member of the West African Economic and Monetary Union (WAEMU), Togo can tap into regional markets and enjoy the benefits of a stable currency and generally favorable financing conditions. While Togo’s economy has been resilient in recent years, fragility risks have increased, and fiscal buffers have been depleted. Since the onset of the COVID-19 pandemic in 2020, Togo has faced unprecedented headwinds, including global trade disruptions, international energy and food price shocks, slowing external demand, and tighter financing conditions. Togo has also faced cross-border spillovers from insecurity in the Sahel region, with patterns of violence and instability taking roots in the Northern part of the country. While external factors have been the main cause of recent challenges in the Northern region, spatial disparities in economic opportunities and access to basic services, as well as high exposure to climate shocks contribute to amplifying fragility risks, which could further entrench regional disparities. The government helped limit immediate effects of these shocks in recent years with a strong fiscal policy response, which depleted fiscal buffers but allowed a continued upward trend in GDP per capita gains during difficult times (Figure 1-1). Poverty has remained consistently high, with large regional and gender-based disparities. According to the latest household survey data from 2021, the poverty headcount ratio using the national poverty line stood at 43.8 percent, down from 45.5 percent in 2018/19. Poverty incidence is significantly higher in rural areas (58.2 percent, versus 20.1 percent in Lomé and 32.3 percent in other urban areas) and northern regions are the poorest both in terms of monetary poverty and access to basic services (Figure 1-2). Inequality is among the highest in the WAEMU region, with a Gini coefficient estimated at 38.1. Gender disparities in poverty incidence are also high and have widened since the COVID-19 pandemic, which disproportionately affected women given their overrepresentation in informal services activities. The Savanes region exhibits a singular pattern in which households are highly exposed to idiosyncratic and climate shocks, with heightened fragility and security risks in recent years preventing poverty reduction. Structural transformation will need to accelerate to sustain growth and alleviate poverty and fragility risks in coming years. Togo was able to achieve relatively rapid and stable growth over the last decade, averaging about 5.2 percent over the period 2013-2023, supported by economic reforms and by rising public and private investments. However, the structural transformation made limited headways, holding back opportunities for a more rapid development trajectory and faster poverty alleviation. While the expansion of port activities in Lomé and the development of industrial and agro-business zones translated into some strides towards an economic transformation, low and stagnant productivity in agriculture, a high degree of concentration of the private sector and urbanization around capital Lomé, and slow progress with human capital development have prevented faster progress. Moreover, the 4The Port Autonome de Lomé (PAL) enjoys one of the deepest quay infrastructures in West Africa (with 16.6 meters depth, capable of accommodating third-generation ships carrying 2,000-3,000 containers) and is now the premier transshipment port in West Africa. 21 Official Use Only quality of public infrastructures, including secondary and rural road networks is still holding back strategic sectors like agriculture and logistics, and is limiting the development of secondary cities. Togo’s electrification rate has also improved, but access in rural areas is low and lagging most regional peers, while access to the internet is patchy and unaffordable for a majority of the population. Poor connectivity infrastructures in rural areas contribute to large spatial and socioeconomic disparities in Togo. The experience of aspirational peers illustrates the importance of scaling up private investment to accelerate structural transformation and of leveraging comparative advantages to drive faster growth and job creation. In Togo, scaling private investment faces multiple constraints despite efforts to improve the business environment, with access to finance, energy, and markets as well as weak public sector governance and effectiveness being key challenges for firms. Figure 1-1 - Real GDP growth has been resilient, Figure 1-2 - …but poverty remains elevated, with a leading to improvements in living standards particularly large rural-urban divide Real GDP growth and GDP per capita levels Poverty rate by areas, 2021 Source: World Bank Source: World Bank calculations based on EHCVM 2018 and EHCVM 2021 The agriculture sector in Togo is at a crossroads, facing both significant challenges and promising opportunities. Agriculture is the primary source of income for 40 percent of the workforce in Togo and 70 percent of the working poor in rural areas. Yet the agriculture sector faces multiple constraints that limit productive investment and commercialization, leading to insufficient opportunities to raise living standards in rural areas. The sector's growth over the last two decades has mostly been driven by the expansion of cropped areas, rather than by improved practices and efficiency gains.5 Consequently, value-added per hectare remains low and has increased at a significantly slower pace than peers in the region, hindering the sector’s development and contributing to environmental degradation. The government’s industrialization policy has helped trigger private investments and growing activity in sectors, but the potential for industrial development remains largely untapped. The industrial sector was traditionally driven by the mining sector, especially phosphate processing, but improvements in electricity production, light manufacturing in food and beverage products, and clinker and cement production have helped diversify the industrial base. However, the sector's contribution to growth and job creation remains very limited. Unlocking its potential would require substantial investments in machinery, infrastructure, and processing, which would offer an opportunity to decarbonize these industries, which now are significant sources of GHG emissions, as well as air and water pollution. Togo would need to deliver significantly higher and more inclusive growth than observed historically to meet its development ambitions. If historical trends continue, and without consideration to climate change impacts, annual growth rates in Togo could be expected to gradually trend downward to reach about 4 percent by 2050, as growth in the labor supply slows amid changing demographic patterns (Figure 1-3). This “business-as-usual� scenario considers that the pace of structural transformation, physical and human capital accumulation, and innovation remains aligned 5 Measured as Total Factor Productivity, i.e., the efficiency of agricultural production obtained from all land, labor, capital, and material resources used. 22 Official Use Only with historical norms, which would imply relatively stable labor productivity growth, at 2.4 percent per annum on average and GDP per capita gains averaging about 2.6 percent annually over that period. In a more ambitious structural transformation scenario in which Togo would emulate the successful experience of aspirational peers such as Bangladesh or Vietnam, growth would be projected to accelerate to 6 percent on average over the next 25 years, or 4 percent in per capita terms from 2.8 percent over the last decade and 1.1 percent over the last two decades, putting the country in the top 10 to 15 percent of growth performers globally. These growth dividends are expected to deliver faster poverty reduction. Estimates suggest that the poverty headcount, measured by the national poverty line, could fall to as low as 8 percent in the structural transformation scenario by 2050, compared with 18 percent in the business-as-usual one (Figure 1-4). This development trajectory would only be possible if Togo is able to significantly shift productivity trends and job creation through structural transformation. This would require diversifying the economy by leveraging comparative advantages in agriculture, light manufacturing, logistics and other trade-related services, improving connectivity infrastructures, creating a more enabling environment for private investment and strategic FDIs, investing in education and skills, and increasing female labor force participation. More specifically, maintaining average GDP growth of 6 percent until 2050 would require a sustained increase in private investment rates to about 20 percent of GDP on average (+3 ppt from current levels), an increase in total factor productivity growth by 0.8 ppt per year supported sectoral reforms and a shift in labor supply from agriculture to industry and services, an acceleration of human capital gains of about 0.2 ppt per year, and an increase in female labor force participation by 6 ppt. To maximize impact on poverty reduction, it is also crucial that structural transformation is more inclusive by focusing on economic opportunities for small-holder farmers, improving education and healthcare outcomes in rural areas, prioritizing inclusive urban planning and equitable access to resources and services, creating more and better jobs in urban-based industries and services, improving the resilience of vulnerable populations and reducing sources of fragility risks. Figure 1-3 - Structural transformation, with rising labor Figure 1-4 - …bringing substantial welfare gains in the participation and decelerating fertility rates could yield structural transformation scenario. significant growth dividends. Poverty projections by growth scenarios with no climate shocks (percent of Growth projections with structural transformation and no climate shocks population) (percentage point) Source: World Bank Source: World Bank 1.2. Climate change, structural transformation, and the cost of inaction Climate change is already a reality for Togo. Togo ranks 135 among 181 countries in measures of extreme climate vulnerability (181 being the most vulnerable), with the country already experiencing increased temperatures, more frequent droughts and floods, and an increase in coastal erosion. These impacts are already adversely affecting economic activity, poverty, food security, natural landscapes, and public health. Mean annual temperatures have increased by 1.1°C since 1960, with the rate of increase being higher in the more arid and poorer northern regions 23 Official Use Only (Figure 1-5). The number of hot days has increased by about 15 percent since 1960, and heat waves have become more common across all regions of the country. Annual rainfalls have generally declined but have also become more variable, with more frequent occurrences of extreme precipitation. Differences in average rainfall and rainy seasons also vary considerably across regions and over time, with significantly wetter conditions around mountainous areas and significantly drier conditions around coastal areas and especially in the northern Savanes region (Figure 1-6). Floods have become more frequent, adversely affecting the livelihoods of more exposed rural and urban populations, while also leading to the loss of ecosystems. Coastal erosion is also a key concern. Given the concentration of the population and economic activity along the coastline, Togo is particularly vulnerable to sea level rise and coastal erosion. Figure 1-5 - Temperatures have significantly Figure 1-6 - High temperatures concentrate in the North, increased in Togo over the last few decades... precipitation in the mountainous areas. Average mean surface temperatures Average temperatures (L) and precipitation (R), 1995-20186 Source: World Bank Source: World Bank Table 1 - Temperatures could rise nearly twice faster in Table 2 - Precipitation would increase in the wet/warm the dry/hot scenario, compared with the wet/warm scenario while declining towards 2040-50 in the dry/hot scenario scenario Change in average temperature by decade relative to 1990-2020 Percent change in average precipitation by decade relative to 1990-2020 Scenario 2020s 2030s 2040s Scenario 2020s 2030s 2040s Dry/hot mean +0.58 ˚C +1.05 ˚C +1.44 ˚C Dry/hot mean +2.2% +1.5% -3.2% Wet/warm mean +0.36 ˚C +0.56 ˚C +0.82 ˚C Wet/warm mean +3.7% +8.5% +11.1% Source: World Bank Source: World Bank Heat stress is expected to intensify, precipitation will become more uncertain, and floods will escalate, particularly in coastal areas. For the purpose of the analysis in this CCDR, and in line with guidance to ensure comparability across countries, climate scenarios were aggregated into wet/warm 7 and dry/hot8 scenarios to assess vulnerabilities and adaptation options under well-defined clusters of possible outcomes (see Annex 1 for details). Expectedly, temperature increases are greatest under the dry/hot scenario, peaking at around 1.5˚C in 2050, with slightly higher gains in central regions, while temperatures would increase by a more moderate 0.8˚C on average in the wet/warm scenario (Table 1 - Temperatures could rise nearly twice faster in the dry/hot scenario, compared with the wet/warm scenario ). Regarding precipitation, the wet/warm scenario predicts an increase in precipitation in each decade and throughout the country, peaking at +11 percent by 2040-50 with greater flooding and erosion risks in some regions. Under the dry/hot mean scenario, a decrease relative to baseline conditions is expected towards the end of the 6 Climatologies at high resolution for the Earth land surface areas. Scientific Data. 4 170122. https://doi.org/10.1038/sdata.2017.122 7 Three scenarios around the 90th percentile of mean precipitation changes (i.e., wet) and the 10th percentile in mean temperature changes (i.e., warm), across SSP2- 4.5 and SSP3-7.0 GCMs. 8 Three scenarios around the 10th percentile of mean precipitation changes (i.e., dry) and the 90th percentile in mean temperature changes (i.e., hot), across SSP2-4.5 and SSP3-7.0 GCMs. 24 Official Use Only projection period, intensifying droughts, and dry spells, particularly in northern regions (Table 2). The sea level rise of up to 0.34m by 2050 and 0.74m by the end of the century is expected to intensify coastal erosion, with the loss of coastline doubling from 5m per year currently to 10m per year by 2100. The combined pressures from sea level rise, coastal erosion, and coastal flooding will be particularly alarming for the City of Lomé, the country’s capital , and center of economic activity, where 40–50 percent of the population lives. Box 1 - Illustrating the range of possible flood damages through stochastic simulations Stochastic simulations offer additional insights on the effects of low probability but high impact events such as extreme flooding. While the main model results presented in this CCDR are based on expected mean damages, which are calculated by multiplying the probability of an event by its potential damages, stochastic simulations can offer a more granular understanding of climate change effects, particularly for low probability but high impact events such as extreme floodings. By generating a range of possible outcomes, these simulations capture the inherent uncertainty and variability associated with such events, considering their frequency, magnitude, and spatial distribution. This allows decision-makers to assess the potential for catastrophic losses, evaluate the effectiveness of different adaptation strategies, and make informed choices that align with their risk tolerance (IPCC, 2021; Hallegatte, 2010). This box investigates more specifically damage channels from inland, urban, and coastal flooding in Togo, using estimated return period of historical floods and their impacts to run 5000 realizations of flooding damages over the period up to 2050 under various climate change scenarios. Figure B1: Flood damages by 2050 across areas and climate Figure B2: Flood damages by 2050 across areas and climate scenarios: total impact scenarios: deviation from historical impact Source: World Bank Source: World Bank Results indicate that urban floodings could have the largest overall impacts on activity while damages from coastal floodings would increase the most in coming decades. In a wet-warm climate scenario, damages from urban flooding are estimated to reach on average 6.5 percent of GDP by 2050 but could range from a minimum of 5.1 percent of GDP in the best-case scenario to a maximum of 8.0 percent in the worst one (Figure B1). Compared with historical norms, this would imply an increase amounting to 0.6 percent of GDP on average (Figure B2). Interestingly, while urban floodings will likely have the largest overall impact on activity, irrespective of climate scenarios, it is the impact of coastal flooding that is expected to increase the most, reflecting rising sea levels and the associated coastal erosion. Indeed, while climate change (under wet-warm conditions) is predicted to increase the average impact of urban and inland flooding by about 0.5-0.6 percent of GDP by 2050, coastal flooding impacts would increase by 1.6 percent of GDP over the same period, nearly doubling from a no-climate change baseline. Simulations illustrate the importance of prioritizing urban and coastal resilience to limit economic damages from more frequent flooding events. It is projected by 2050 that all the coastal area will be urbanized. Coastal areas will be most hit by flood damages associated with the effects of climate change. So will other urban areas across the territory. Lomé and the five district capitals are indeed equipped with drainage masterplans (since 2016 for the 25 Official Use Only district capitals) but their implementation is lagging. Small-scale civil works have been undertaken in Lomé, Dapaong and Kara. However, the lack of significant investments in this area resulted in important damages in the past decades. Sound urban planning, land management and reforms, critical drainage investments combined with nature-based solutions could help the country face urban and coastal floods and other effects of climate change. In the absence of faster structural transformation and adaptation efforts, Togo’s development could be severely impacted by climate shocks. If the labor force in Togo continues to be predominantly employed in low productivity and informal jobs in agriculture and services over the next 2½ decades, damages from climate change could cause a loss of GDP per capita ranging between 6.1 percent in a wet/warm scenario and 12.2 percent in a dry/hot scenario by 2050, according to simulations using the World Bank’s Mitigation, Adaptation, and New Technologies Applied General Equilibrium (MANAGE) model (see Annex 2 for details).9 Heat stress is expected to be a dominant driver of expected losses in welfare, negatively affecting productivity and income prospects. This is particularly the case in the dry/hot scenario where the number of days with temperatures exceeding the 32°C threshold would increase the most. Above that threshold, work capacity is reduced by an estimated 40 percent for intense outdoor work, with particularly severe repercussions for labor productivity in agriculture. Heat stress would also impact learning outcomes in schools, which could deteriorate by -10 to -20 percent by 2050, depending on climate scenarios. This could have significant effects on labor productivity, reducing it by 1.8 to 3.4 percent by 2050. Another major source of climate damages in Togo would come from reduced yields of the main rainfed crops, reducing GDP per capita by between -1.2 percent in the wet/warm scenario and by -3.2 percent in the dry/hot scenario (with higher frequency of droughts, water scarcity, and crop diseases). Impacts from more frequent flooding in urban, coastal, and inland areas are also significant in terms of mean expected damages, implying large and lasting disruptions during extreme events (Box 1). Figure 1-7 - Climate change will impact welfare mainly Figure 1-8 - Structural transformation would strengthen through labor heat stress, human capital, crop yields, the capacity of vulnerable households to adapt to and infrastructure damages climate change Impact of climate shocks by 2050 on real GDP per capita levels under Impact of climate change on the poverty headcount (percentage points) different scenarios Source: World Bank Source: World Bank The livelihoods of poor and vulnerable households could be severely affected by climate change. By 2050, the poverty headcount could rise by 1.8 percentage points in the wet/warm scenario and by 3 percentage points in the 9 The MANAGE-WB model is the core analytical tool used in the CCDR to assess the impact of climate shocks, as well as the effect of adaptation and mitigation policies. It is a large-scale computable general equilibrium model capturing direct climate impacts on productivity, labor, and capital, as well as indirect effects through production linkages, factor substitution, and trade. The World Bank Long-Term Growth Model (LTGM) was also used to calibrate both baseline and structural transformation growth scenarios. The LTGM builds on the Solow-Swan growth model where Total factor productivity (TFP), investment/savings, and human capital are key growth drivers. The model also includes other growth fundamentals, such as demographics and labor market participation (disaggregated by gender). The CCDR utilizes eight scenarios, combining baseline and structural transformation assumptions with climate shocks (dry/hot, wet/warm) and adaptation and mitigation measures. These scenarios help assess the cost of climate change under various circumstances and the benefits of structural transformation and adaptation measures to limit those costs. Climate shocks are evaluated through to separate biophysical models that convert changes in grid-level climate data into biophysical shocks for each of the ten impact channels considered in this CCDR. Biophysical shocks are aggregated at the national and/or sectoral level using high-resolution geospatial data. 26 Official Use Only dry/hot scenario (Figure 1-8, Annex 3 for details). This increase in the incidence of poverty, combined with expected population growth, would mean that between one-quarter to half a million people will be pushed into poverty every year due to climate change. Households more directly impacted would be those whose income depends heavily on agriculture. Second-order effects will amplify the negative impacts of climate change through the reduction of wages in industry and services, and through increases in the cost of living.  Accelerating structural transformation is in itself a climate action strategy as it can significantly reduce exposure. By reducing the share of the workforce exposed to heat stress and boosting agriculture productivity through improved land management, irrigation, and mechanization, and by ensuring a transition to more productive services and manufacturing jobs, the structural transformation can be a powerful tool to reduce heat stresses and damages to agriculture yields. A faster reduction in fertility rates and slower population growth could also ease pressures on land, water, and other natural resources that provide ecosystem services and help regulate the climate. Overall, the structural transformation scenario considered in this analysis could help reduce the cost of climate change to about 10.3 percent of GDP under a dry/hot scenario, and to 4.8 percent under a wet/warm scenario (Figure 1-7). As a result, GDP per capita growth could still average about 4 percent per year under a wet/warm scenario from now until 2050, and 3.7 percent under a dry/hot scenario, compared with 2.3 and 2.1 percent respectively in the absence of faster structural transformation. By 2050, this would translate into a 40 percent gap in GDP per capita levels between the business-as-usual and structural transformation scenarios. In addition, the impact on poverty would less than one third of that in the business-as-usual scenario (See Chapter 4). Lowering fertility rates is crucial for development and for natural resources preservation. Togo's current population growth rate of 2.3 percent per year translates into a doubling of the population every 30 years, which could place significant pressure on land, water, and other natural resources. Should fertility rates stabilize at current levels, Togo could see its population reach 17.2 million in 2050, compared to 8.2 million in 2023 (Figure 1-9). Arable land, estimated to account for about 35 percent of Togo’s territory, will become increasingly scarce as competition for land intensifies with demographic pressures, amplifying deforestation and land degradation. This will also accelerate forest degradation, which is a leading cause of depletion of natural resources and emissions. In fact, the main contributor to GHG emissions in Togo is agriculture, accounting for about 40 percent of total emissions (Figure 1-10). A growing urban population is also a cause of deforestation, including the loss of coastal mangrove forests which can store more carbon than other ecosystems. A changing climate coupled with a still rapidly growing population could also severely deplete Togo's already stressed water resources. Under the structural transformation scenario that combines lower fertility rates and higher productivity in agriculture, the share of land used for agriculture would stabilize, thereby eliminating a key source of deforestation in Togo. Togo's transition to lower fertility rates can be accelerated through well-targeted investments in women's health, education and agency, The climate-related displacement of people could also heighten fragility risks. Climate-related displacement in Togo is projected to reach 15 percent of the total internal movements of people by 2050. Migration is expected from rural areas where degraded soil quality, erosion, more volatile rainfall, and increased heat stress would compromise agricultural activity. These regions include the Savanes and Northern Kara, where significant cropland areas could be lost to climate change in the absence of ambitious adaptation and mitigation efforts. Low-lying coastal areas, including Lomé, could also see climate outmigration due to sea level rise, coastal erosion, and more frequent flooding. Sea level rise could dramatically reshape coastal communities over time, forcing former landowners to become economic migrants. Overall, south-central regions could see migrant flows from both north and south, while northern regions could also be primarily impacted by cross-border migration from the Sahel region, which is facing prospects of desertification, degraded agricultural land and disrupted water security. The influx of climate migrants would put a strain on resources in host communities, potentially leading to competition for water, sanitation, infrastructure, and social services, which could lead to social strife and conflict. New patterns of violence and instability have already emerged in recent years in the Sahel region, with pockets of insecurity taking roots in the North of Togo as well. Climate change is already among 5 key risk factors for fragility, conflict, and violence in Togo, 27 Official Use Only and will likely be amplified by unequal access to social services. 10 Current projections show an increase of climate- induced internal migrants in Togo by as many as 75,000 per year by 2050 with important hotspots in the North.11 Figure 1-9 - Lowering fertility rates is crucial for prosperity Figure 1-10 - Main sources of CO2 emissions are and natural resources preservation agriculture, industry, transport, waste, and land use Population projections for Togo under constant, baseline and structural- transformation (low) fertility rates Annual emissions in carbon dioxide equivalents Source: World Bank Source: World Bank 1.3. Defining a resilient and low-carbon development pathway Developing an effective strategy to reduce climate vulnerabilities and support the decarbonization of the economy is critical for Togo’s development trajectory. With the right policy response, climate pressures could be turned into development opportunities for Togo. While climate change poses a significant threat to Togo's development, particularly for its agriculture sector and most vulnerable populations, a multi-pronged strategy that leverages innovation, green infrastructure development, climate-proofed social services, and the promotion of climate- conscious businesses could help turn threats into opportunities. In agriculture, improving access to drought-resistant crop varieties, developing smart irrigation, promoting nature-based solutions like agroforestry and better land management and conservation could boost yields while strengthening resilience and helping to decarbonize the sector. Accelerating the shift to renewable energy sources like solar, hydro and wind power will not only reduce reliance on fossil fuels but also provides reliable and clean energy for rural communities, fostering economic activity and promoting sustainable development. Upgrading existing transport, digital, urban, and coastal infrastructures will also be key to ensure long-term resilience and to minimize future damages. Climate-proofing social services would require expanding social protection programs like cash transfers or food assistance for vulnerable communities during climate shocks, investing in robust early warning and disaster response systems, and strengthening education and healthcare infrastructures and training systems to address climate-related challenges. Mobilizing the private sector to finance climate-smart projects could foster sustainability and resource efficiency. Togo has made strides in developing the enabling environment for private sector participation in projects such as water-efficient irrigation systems, solar power generation, energy-saving equipment, and innovative waste management solutions, but climate-related challenges, including a better understanding of climate considerations by practitioners, remain to be addressed and could foster sustainability and resource efficiency for businesses Public- private partnerships will be particularly critical tools for increasing private sector involvement in climate-resilient infrastructure and decarbonization efforts. Exploring opportunities for participation in international carbon markets and other innovative climate financing solutions could also allow businesses to generate revenue by reducing their carbon footprints, incentivizing sustainable practices, and contributing to Togo's climate goals. Realizing these goals 10 Tarif 2022 “Climate change and violent conflict in West Africa: Assessing the evidence. SIPRI Insights on Peace and Security� 11 Rigaud, Kanta Kumari; de Sherbinin, Alex; Jones, Bryan; Adamo, Susana; Maleki, David; Abu-Ata, Nathalie E.; Casals Fernandez, Anna Taeko; Arora, Anmol; Chai-Onn, Tricia, and Mills, Briar. 2021. “Groundswell Africa: Internal Climate Migration in West African Countries.� The World Bank. W ashington, DC 28 Official Use Only will require collaborative efforts from the government, international organizations, the private sector, and local communities. But the socioeconomic dividends could be very significant. This CCDR aims to identify practical solutions for a resilient, equitable, and sustainable development trajectory in Togo. In Chapter 2 of this report, the readiness of government and the private sector to address climate change challenges is analyzed, showing that significant progress with institutions and governance will be needed to support an ambitious climate strategy. Chapter 3 is devoted to evaluating the resilience of key sectors of the economy for structural transformation, which are also those that are more exposed to climate shocks and/or are dominant sources of emissions. These include agriculture and forest management, urban and coastal development, energy, connectivity infrastructures, and key industries like phosphate and cement. Chapter 4 discusses efforts needed to increase the resilience of the poorest and most vulnerable in society, highlighting the need to improve social protection and disaster response systems, strengthening and adapting education systems to climate change, and reinforcing access to quality health and nutrition services, clean water, and sanitation. Given the government’s limited fiscal space and the global public good dimension of climate change, Chapter 5 discusses available options to mobilize domestic and external financing for priority investments and evaluate their macroeconomic effects. 29 Official Use Only CHAPTER 2. CLIMATE COMMITMENTS, POLICIES AND PREPAREDNESS Despite efforts to mainstream climate considerations in Togo’s policy and regulatory frameworks, more work remains to be done both on strengthening relevant texts and on coordinating climate action and policy operationalization for increased resilience. This is even more critical as the level of preparedness to face climate risks and impacts on both productive and human capitals is low, with highly vulnerable assets such as coastal, urban and network infrastructures, water resources and natural ecosystems. Furthermore, low investments in mitigation and adaptation by the private sector and the lack of relevant financial instruments are hindering adaptive capacity to climate shocks. 2.1. Togo’s climate change commitments Togo has made ambitious commitments to climate action in its latest Nationally Determined Contribution (NDC), revised in 2021. While contributing only 0.02 percent of global emissions, Togo has committed to unconditionally reduce its GHG emissions by 2030 by 20.5 percent compared to a business-as-usual (BAU) scenario. With additional financial resources, Togo commits to a 30.06 percent reduction. The Nationally Determined Contribution (NDC) also includes adaptation efforts in priority sectors as shown below. Area Adaptation Priorities Energy Reinforce actions in favor of energy efficiency and low-carbon technologies Promote the use of renewable energies Agriculture and food Strengthen the resilience of agricultural production systems and resources Promote sustainable management of forest ecosystems and restoration of ecosystem services Water resources Support the harnessing of surface water resources through multi-purpose hillside reservoirs Adaptive capacity of human Set up an early warning system for risks settlements Support vector-borne disease prevention and control Strengthen social protection and build climate-resilient socio-economic infrastructure Coastal zone Initiate income generating activities for market gardening and fishing communities in the coastal zone Reinforce coastal protection against coastal erosion (both natural and artificial) Implementing Togo’s NDC commitments would cost an estimated US$5.5 billion – US$2.8 billion for adaptation and US$2.7 billion for 40 mitigation actions. The NDC emphasizes that external bilateral or multilateral support will be crucial for implementation. Overall, most of the costs (78 percent) are in the conditional portion of the NDC, and the share is even higher (82 percent) for adaptation. Togo expects that these costs would be financed through a variety of financial instruments, including lines of credit, grants, and technical assistance from development finance institutions, as well as from public funds and private sector investments. In addition to these costs, Togo will require US$234.6 million in investments for capacity building and US$66.5 million for technology transfer between 2020 and 2030. The revision of the NDC includes emissions reductions targets for the Waste and Industrial Products and Product Use (IPPU) sectors in line with Togo’s National Plan for the Reduction of Air Pollutants and Short -Lived Climate Pollutants of 2019. Togo aims to reduce emissions of hydrofluorocarbons by 9 percent, black carbon by 80 percent, methane by 32 percent, particulate matter by 58 percent, and nitrogen oxide by 51 percent by 2030 compared to the reference scenario. Those targets would be achieved by improving cookstoves, setting stricter vehicle emissions standards, promoting electric vehicles, improving solid waste management, and increasing the efficiency of livestock production, among other measures. The air quality improvements would bring significant co-benefits for public health – a crucial priority for Togo, where air pollution contributes to 6,700 premature deaths every year. 12 Togo also submitted its First Communication on Climate Change Adaptation to the United Nations Framework Convention on Climate Change (UNFCCC) in 2023, outlining key climate change vulnerabilities in each sector and 12 https://theconversation.com/togos-new-climate-policies-reduce-greenhouse-gas-emissions-and-improve-air-quality-heres-how-193866 30 Official Use Only describing completed and ongoing actions undertaken to implement its National Climate Change Adaptation Plan (2017). The National Climate Change Adaptation Plan is centered around three strategic areas: integrating adaptation into planning documents, implementing a set of priority adaptation measures in six key sectors13, and mobilizing financing for adaptation. The First Communication provides an updated inventory of capacity building and technology transfer needs for adaptation. It identifies access to financing as a key obstacle and stresses the importance of strengthening capacities and putting in place a communication strategy to better involve all stakeholders – government, Civil Society Organizations (CSOs), and the private sector – in adaptation financing. 2.2. Policies and institutions for climate adaptation and resilience In the framework of this CCDR, an Adaptation and Resilience (A&R) Diagnostic and Climate Change Institutional Assessment (CCIA) were undertaken to better understand the existing institutional framework and the capacity and readiness for adaptation and resilience in Togo. Climate change initiatives and policies are covered in various legal and regulatory texts. In terms of primary national legislation, the environment framework law adopted in 2008 addresses climate change as a sub-topic of the environment.14 Recent regulations were adopted in 2023 to introduce a carbon mechanism and implement a national system for measuring, reporting, and verifying climate data. Other significant regulations include the establishment of the National Environmental Fund (NEF) in 2009. While not yet operational, the government indicated plans to transform the NEF into a central institution to manage national and international climate finance. Furthermore, framework legislation on climate change is being prepared which could strengthen credibility and commitment to climate change objectives. The framework legislation should aim to close gaps and address missing elements in the current climate-related legal framework. Specifically, it can do so by providing a legal basis for climate objectives, clarifying the institutional framework for climate policy, specifying responsibilities for planning and finance functions, especially in relation to the use and oversight of fiscal policy measures and mechanisms; ensuring third-party oversight of climate policy and its implementation, and establishing a national climate council at the highest levels of government to offer strategic direction and improve cross-ministerial mobilization and coordination.15 While Togo has not developed an integrated national climate change strategy, the country has incorporated climate considerations into its national planning documents, particularly the Government Roadmap 2020-2025, which emphasizes sustainable development and crisis preparedness. Climate-related measures from both the national climate change adaptation plan and NDC 2021 are traceable in the roadmap, though the degree of integration into sectoral policies and strategies varies significantly. Key interventions in the roadmap include (i) addressing major climate risks through targeted interventions such as urban flood planning and reforestation (Project 35), (ii) promoting electric mobility and improving system-wide efficiencies through such measures as land-use planning, low- carbon fuels, and expansion of public transport (Project 36), and reforming environmental legislation to enhance resource protection and pollution control including through establishing tax incentives (Reform 6). Togo has also adopted a strategy for reducing emissions from deforestation and forest degradation (REDD+) as part of its various national development plans. Recently, the government has taken an important step by launching a low emission development strategy extending to 2050 in accordance with Article 4.19 of the Paris Agreement, covering all sectors, SOEs and municipalities. Moving forward, high-level leadership will be essential for setting the vision and driving implementation, with the ownership of the Ministries of Finance and Planning being paramount to facilitate access to international climate financing and ensure efficient and effective allocation of financial resources towards the government’s long-term strategic climate objectives. The coverage and implementation of climate change planning documents and programs can be improved through better sectoral ownership and engagement in climate action. Sector ministries do not systematically contribute technical or sector-specific advice to climate policy development, resulting in initiatives that are poorly aligned with 13 In descending order of priority: Agriculture; Water Resources; Coastal Erosion; Human Settlements and Health; Land Use, Land Use Change, and Forestry; Energy. 14 Loi n° 2008-005 portant loi-cadre sur l'environnement. Climate change is addressed in articles 134 and 135 15 The government is able to refer to the twelve principles defined by the World Bank Reference Guide to Climate Change Framework Legislation to further strengthen the legislative initiative. 31 Official Use Only the country's NDCs and national climate adaptation plan. Additionally, implementation gaps in mainstreaming climate resilience into various areas such as infrastructure planning highlight the need for more robust coordination mechanisms and enforcement provisions. While the Ministry of Environment (MERF) holds the official mandate for climate change strategy and policy, its capacity to mobilize and coordinate across ministries should be strengthened. As highlighted in the 2021 NDC Adaptation Study, this institutional fragmentation has led adaptation efforts to focus predominantly on environmental actions, with limited ownership and initiative-taking by sector ministries, underscoring the need to strengthen cross-sectoral climate planning and implementation. The coordination of climate action and policy remains a core weakness in Togo’s climate institutional landscape. The effectiveness of the mandate of the MERF as national implementing and monitoring agency for the UNFCCC and NDCs is constrained by lack of effective coordination mechanisms to drive ownership of sectoral ministries. Several coordination mechanisms have been established over the years but are not operational.16This is the case of the National Commission for Sustainable Development (CNDD) established in 2011 and the National Committee on Climate Change (CNCC) established in 2005. Furthermore, several institutions that appear set to play a role in mobilizing climate finance are awaiting operationalization, namely, the governance bodies of the carbon mechanism and the NFE planned to become central institution to manage national and international climate finance. This situation underscores the urgent need for a more integrated and collaborative approach to climate change policy in Togo. Strengthening political leadership and coordination mechanisms is essential for an integrated and effective climate change policy in Togo. Clarifying the functional responsibilities between various ministries and agencies is critical to improve efficiency in climate coordination and policy implementation. The draft climate framework legislation can help resolve the existing organizational and institutional inconsistencies and gaps. By clearly defining roles and involving key ministries like ministries of finance and planning in climate-related planning and budgeting, the government can promote accountability and drive reform. The proposed establishment of a high-level steering and technical coordination bodies in the climate framework legislation, represents a promising institutional solution to enhance cross-ministerial coordination and ensure climate considerations are effectively integrated into public investment and procurement processes. International experience and country lessons suggest that Togo’s climate leadership and coordination mechanisms could be more effective if the high-level steering committee was chaired by the head of government and major climate-related decisions mandate committee approval. Furthermore, the technical coordination secretariat could be housed at the ministry of finance or planning, building on the green budget committee experience17, which could enable stronger support to MERF’s technical authority on NDC planning and UNFCCC reporting, better access to major climate funds, and greater convening power with private sector and development partners. Climate change policy planning and design could benefit from more meaningful engagement and consultation with non-government stakeholders. The government has taken concrete steps to meet Paris Agreement transparency requirements by establishing a Monitoring, Reporting, and Verification (MRV) system and releasing two Biennial Update Reports (BUR) and two National Inventory Reports (NIR) as of late 2021. To further strengthen the climate action framework, enhanced collaboration with government agencies, the private sector, civil society, academics from the University of Lomé, CSOs, social entrepreneurs in waste management, local governments, and faith-based organizations is essential. These stakeholders can provide valuable research, grassroots perspectives, advocacy, and community engagement, thereby enhancing the robustness, inclusivity, and impact of climate policies. Establishing effective platforms to integrate these diverse contributions will ensure more comprehensive and sustainable climate reforms. 16 Previous analysis, such as the recent PEFA Climate assessment and the revised NDC 2021 pointed out that many entities exist on paper only and that the functioning of the institutional arrangement is not transparent. 17 https://togoreforme.gouv.tg/download/budget-vert-2024/ 32 Official Use Only i. Adaptation & Resilience Diagnostic The A&R assessment18;19 shows that while Togo has made progress on climate resilience, substantial gaps remain in creating an enabling environment. Around 10 percent of A&R indicators were classified as Established, while 51 percent were Emerging, and 29 percent were Nascent (Figure 2-1, 0Annex 2: Togo’s adaptation and resilience diagnostic). Togo registers the highest level of “established� status in the “Foundations� pillar, reflecting progress in advancing economic growth with a relatively low unemployment rate and a high human capital index, relative to peer countries. Togo has put in place some mechanisms to enhance its adaptive capacity but more needs to be done to create the enabling conditions to help private actors take adaptation action and create more resilient business models and investments. More sustainable and resilient growth will, however, require the strengthening of institutional capacity to manage and protect public assets in the face of climate change, be it for the protection and management of critical assets (including natural assets) or for the management of residual risks and climate change impacts. The following sections present an account of Togo’s adaptation efforts and highlight sectoral recommendations to be implemented at central and/or local levels and by the private and finance sectors. Figure 2-1 - Efforts to boost resilience in Togo are still nascent Adaptation and Resilience Diagnostic and Scoring Source: World Bank Note: a total of 101 indicators were used in this assessment, of which 29 percent are quantitative indicators where data are sourced from publicly available databases. The remaining 71 percent contain qualitative information collected through consultations with sectoral and country experts, and a review of relevant and publicly available legislative and executive documents, including strategies, regulations, plans and other policy documents. Climate and Disaster Risk Management Togo’s readiness in disaster risk management is “nascent�, suggesting that substantial strategies and actions are needed to ensure that people and firms can better manage residual risks and recover from their impacts. Currently, Togo’s institutional framework for climate and disaster risk management is guided by the Disaster Relief Organization Plan (ORSEC-Togo) and the National Multi-Risk Contingency Plan. These plans are coordinated by the National Agency for Civil Protection (ANPC or Agence nationale de protection civile), created in 2017 to supervise and coordinate all disaster risk prevention and emergency response activities in Togo. Other national policies and strategies which address climate and disaster risks include the National Strategy for Disaster Risk Reduction 2022- 2026 and the National Strategy for Post-Disaster Recovery 2022-2026. However, Togo needs better access to data and financial instruments, and lacks a national disaster risk management (DRM) strategy, under the purview of the Ministry in charge of the environment. The country also needs to strengthen recovery mechanisms, including reconstruction plans and emergency procurement planning and procedures. 18 Atotal of 101 indicators were used in this assessment, of which 29 percent are quantitative indicators where data are sourced from publicly available global databases. The ratings for these indicators are assigned according to Togo’s performance as benchmarked against a group of peer countries. For Togo’s A&R assessment, the selected benchmarking group was “Sub Saharan Africa� (SSA), although the benchmarking exercise was also conducted against “Low Income Countries� (LICs). The remaining 71 percent of indicators evaluated for the assessment contain qualitative information collected through consultations with sectoral and country experts as well as expert judgement based on review of relevant and publicly available legislative and executive documents, including strategies, regulations, plans and other policy documents. 19 The Adaptation and Resilience diagnostic tool and detailed results are described in Annex 2. 33 Official Use Only Social protection systems need to be strengthened to improve the resilience of poor and vulnerable households and to protect the population from climate shocks. The A&R found that 86 percent of the indicators for the capacity to manage financial and macro fiscal issues (including macroeconomic stability, public finances, and debt sustainability) were “nascent.� The assessment shows that Togo needs to improve data sharing, the allocation of financing commitments, and contingency funding of shock-responsive programs, and to strengthen institutional partnerships. Other key actions include encouraging private-public partnerships to offer affordable and reliable insurance to households, firms, and public actors. That could help develop the insurance sector and ensure that financing is available to the poorest and most vulnerable populations. In addition, Togo should work to increase access to basic services and to provide job opportunities for those in refugee settlements. ii. Agriculture, Water & Natural Resources Management The A&R assessment found that there are further opportunities to enhance food and water security while protecting natural ecosystems. The Government of Togo has set out its vision for addressing climate and disaster risks to agriculture in two main strategies: the National Climate Change Adaptation Plan and the Agricultural Policy and Strategic Plan for the Transformation of Agriculture in Togo by 2030 (PA-PSTAT 2030), released in 2015. The PA- PSTAT 2030 recognizes the hazards posed by climate change and integrates various adaptation measures, such as the development of drought and flood index insurance, incentives to promote climate-adaptive farming practices, and regional collaboration for research and dissemination of climate-resilient varieties. While the National Action Plan for Adaptation includes adaptation efforts focused on agriculture, there are substantial barriers to implementing those efforts. The barriers include Togo’s low capacity to mobilize financial resources for adaptation, uncertainties in climate risk assessments, and limited local information. Increasing agriculture’s resilience to climate change requires improving Hydromet and early warning services, as well as increasing coverage of agricultural insurance. The A&R Assessment also showed that climate considerations are yet to be incorporated into water sector policies and strategies, such as the National Strategic Plan for Universal Access to Water and Sanitation (2020). Current planning and designs for infrastructure are done without information on climate change's impacts on water resource availability, or on potential flooding risks or measures to protect assets. Despite recent efforts of the Ministry of Water (MEHV or Ministère de l’eau, de l’équipement rural et de l’hydraulique villageoise ) on mobilizing funding towards climate mitigation or adaptation, more remains to be done for enhancing water security, including the establishing of a more rational management of water resources based on integrated water resources management principles. While Togo has an array of policy and planning documents, natural resources management faces capacity and technical constraints in adapting to climate change and boosting resilience. To better protect forests and natural ecosystems, Togo should make greater use of nature-based solutions for climate resilience. The National Development Plan (NDP 2018-2022), for example, encourages implementing the Programme on Reducing emissions from deforestation and forest degradation (REDD+) Strategy with specific forest projects. iii. Network Infrastructure Togo has made remarkable political and institutional commitments to improve the resilience of its infrastructure, such as in the “Togo 2025� strategy, but lags on implementing those commitments. Little has been done to enhance the resilience of critical public assets like energy systems and digital infrastructures, such as by developing emergency response plans in the event of outages or assessing vulnerability risks for assets like generation facilities, substations, and transmission and distribution lines. Similarly, despite calls for expanding the road network, especially in rural agricultural areas, in the Government Roadmap 2020-2025, little has been done to improve the climate resilience of road infrastructure. Togo has made some progress in developing a national physical infrastructure masterplan and construction standards for buildings, but it is unclear whether these plans and standards consider resilience to climate impacts or whether they include enforcement mechanisms. 34 Official Use Only Togo could better leverage the opportunities that digital technologies offer for adaptation. In addition to implementing policies to limit climate impacts on digital infrastructures, Togo should also promote the use of innovative technologies to improve resilience. iv. Urban Development, Coastal Development, and Blue Economy Togo should develop or strengthen risk-informed urban planning and coastal zone management tools. The National Strategy for Disaster Risk Reduction 2022-2026 calls for the integration of disaster risk considerations in building codes, land use planning, and construction standards. Meanwhile, the Ministry of Maritime Economy, fisheries, and coastal protection has developed a Littoral Masterplan that is structured around six strategic areas: (i) governance, institutional, and legal strengthening; (ii) research, knowledge, reinforcement, and sensitization; (iii) sustainable urban planning and development; (iv) strengthening protection, monitoring, and adaptation measures; (v) dynamism and economic diversification; and (vi) preservation, management, and valorization of the environment. In addition, the High Council of the Sea is preparing a Marine Spatial Planning strategy that includes an action plan to better organize the marine and coastal sector. However, there has been little progress so far in implementing these plans, in part because several ministries are involved and their individual roles and responsibilities are unclear. Weaknesses in urban planning are contributing to urban sprawl. Urban planning is a challenge in Togo, especially following the communalization of the entire territory in 2019. Following the adoption of Law No. 2019 �006 of June 26, 2019, on Decentralization and Local Liberties, the Togolese territory was administratively organized in 117 municipalities with legal personality and financial autonomy, but urban planning remains under the purview of the central government. Moreover, the existing key tools and procedures for urban planning, such as the Detailed Urban Plan, are complex and require an update. They do not reflect the newly defined administrative borders and are seldom enforced, in part because of challenges related to land tenure. The Government has initiated reforms to revise its legal framework for urban development and to consolidate all the existing texts into a single new Code of Urbanism and Construction. But it has yet to be adopted. Despite urban flooding being identified as a key challenge, with major flooding already occurring in Togo’s capital, Lomé, the NDC focuses on flooding in the maritime regions in the south (where risk is highest). The emphasis on early warning systems and on building resilient infrastructure in various national plans (including the NDC) do address urban risks to some extent. However, given the expected impacts (and the results of the World Bank A&R diagnostics), Togo needs policies that directly address urban resilience and land use planning. Despite efforts on urban and coastal zone development, the A&R diagnostic identified land use planning and urban development as being among the sectors with the most room for improvement. To improve urban and coastal resilience, Togo should work to identify climate risks to urban areas, assets, and sectors, and to provide basic services and support in informal settlements. Togo can also strengthen integrated coastal zone management by regularly updating coastal erosion monitoring, communicating that information to the public, and integrating community and environmental issues into coastal plans. v. Health, Education, and Social Protection The A&R assessment identified Togo’s healthcare system as having relatively high preparedness levels. Over the last decade, Togo has stepped up its efforts to address climate change impacts on the health system, especially in governance. The country has ratified several climate-informed regulatory plans and strategies and has implemented climate-focused health programs. The country adopted a National Adaptation Plan for the Health Sector in 2020 20, with the objective of increasing the resilience of the health system by 2050. Furthermore, the revision of Togo’s NDC in 202121 included the priorities that emerged from the COVID-19 pandemic and the efforts accomplished since 2015. 20 MSHPAUS (2020), Plan National d’Adapt ation du Secteur de la Santé aux Effets des Changements Climatiques (PNAS). 21 Contributions déterminées au niveau national révisées. Togo. Octobre 2021. https://unfccc.int/sites/default/files/NDC/2022-06/CDN percent20Revis percentC3 percentA9es_Togo_Document percent20int percentC3 percentA9rimaire_rv_11 percent2010 percent2021.pdf 35 Official Use Only To operationalize these strategies, a special Task Force on Climate Change and Health, as well as a “One Health� multisectoral platform, were put in place. The country has strengthened the resilience of its population to malaria and other climate-induced diseases (vector-borne and water-borne diseases), supported community health activities, especially in nutrition, in disadvantaged areas, and increased the delivery of other essential health services. This progress was challenged by the COVID-19 pandemic, which led to a reallocation of climate change budgets, delays in the implementation of adaptation measures, and disruptions in implementing planning tools that integrate adaptation aspects. Without efforts to improve school infrastructure resilience, progress achieved in education may be affected negatively by heat stress. Many public primary schools lack basic facilities or services such as electricity, water points, hand-washing facilities, and adequate latrines. There have been improvements, as around 79 percent of primary schools were built with sustainable materials in 2023, but it is important to establish norms and standards for school construction that are regularly updated and consider local risks with a monitoring mechanism in place. Social protection systems need to be strengthened to improve the resilience of poor and vulnerable households and to protect the population from climate shocks. A shock-responsive productive cash transfer program is currently being institutionalized, building on the country’s previous experience with safety net programs, economic inclusion, and the Novissi platform during the COVID-19 pandemic. However, it is not yet fully operational. Meanwhile, most poor households still engage in negative coping strategies, such as reducing food consumption, selling productive assets, discontinuing education of children, and postponing health care when shocks occur. This undermines investment in human capital, leading to inter-generational poverty traps. In addition, they often need to draw down their savings or rely on support from family and communities, reducing their resilience to future shocks. Linking the social protection system to DRM through data sharing, more effective and efficient identification tools to reach those most vulnerable to climate change, allocating financing commitments, and stronger institutional partnerships can help establish key safety nets in the face of increasingly frequent and intense climate shocks. vi. Private sector readiness More needs to be done to enhance the adaptive capacity of private actors and create a more resilient business model and investment climate for further climate action. The A&R diagnostic assessed Togo as primaril y “emerging� (45 percent) and “nascent� (50 percent) under this priority area, indicating that adaptive capacities need to be either established or implemented and updated periodically. There are some mechanisms in place to build adaptive capacity: for example, Togo has a Hydromet data system and flood map for certain regions. It also has completed vulnerability assessments for various economic sectors under its Fourth National Communication, created a social registry to collect socioeconomic household data, developed certain measures to address A&R finance risks in the private sector, and identified some sunset sectors in its macroeconomy. However, these tools lack targets and responsibilities for A&R. These need setting residual risk targets, which could use publicly available national maps of residual flood risk and outline clear responsibilities for firms and individuals. Micro, small, and medium-sized enterprises (MSMEs) are investing in risk mitigation and adaptation, but not in proportion to the level of risk. Only one-third of surveyed firms have implemented at least one environmental risk mitigation strategy; moreover, these strategies are not fully aligned with perceived risks. For example, while MSMEs identify floods as a risk, only 9 percent of them have invested in flood prevention measures. The extent of adaptation investments varies by firm sector and size: 54 percent of medium and 56 percent of large firms have implemented at least one adaptation measure, in contrast to 45 percent of small and 22 percent of micro enterprises. Agricultural firms are also more likely to have implemented adaptation measures than those in other sectors, but more support is needed. While more than half of agricultural MSMEs reported being affected by flooding, only 23 percent have invested in flood prevention systems. Financial instruments to help firms cope with climate shocks are generally lacking. While a legal framework for risk insurance is in place, there are few risk insurance schemes, and their uptake is low. Most firms have not developed business continuity plans to prepare for climate shocks. It is therefore imperative to strengthen private sector engagement by developing climate change action plans for private sector actors and industries, establishing green jobs growth strategies, and considering resilience in business continuity plans. 36 Official Use Only vii. Financial sector readiness Overall, the system of climate finance is nascent and fragmented, with unclear roles and responsibilities. Regional financial authorities, such as the Autorité des marchés financiers de l'Union monétaire ouest africaine (AMF-UMOA) and the Banque centrale des États de l'Afrique de l'Ouest (BCEAO), are taking the lead in promoting green finance initiatives. The AMF-UMOA has published a guide to issuing green, social, and sustainable bonds and the BCEAO is also a member of the Network for Greening Financial Systems (NGFS), while several banks have applied for membership of the Green Climate Fund (GCF)22. However, little progress has been made in terms of private sector financing on the capital markets in general, and green financing in particular. According to the Sustainable Debt Monitor published by the Institute for International Finance, no green corporate bonds had yet been issued in Togo by early 2023, while overall adoption in the WAEMU also remains negligible. There are potential avenues for developing green financing mechanisms. They include improving incentives for thematic bonds and disaster risk assessments, promoting guarantees to reduce risk premiums, grouping smaller initiatives together to make them more attractive to investors, creating awareness-raising programs for local investors, and disseminating research on local adaptation and mitigation measures. Integrating adaptation considerations into macro-fiscal policies, budget allocations, and public investments requires an understanding of the economic costs of climate change and disasters. Togo’s fiscal risk statement mentions climate-related risks though these risks are not quantified. Furthermore, Togo has initiated climate-sensitive budgeting, which offers promising levers to draw useful insights on the climate impact of public sector activities and make necessary adjustments to ensure policy coherence. The green budget initiative seeks to integrate climate and environmental aspects into every stage of the budget cycle, including preparation, arbitration, adoption, monitoring, and reporting; but this is still in a nascent stage. One effective measure could be developing a long-term plan to diversify tax revenues away from climate-vulnerable sectors. 2.3. Key policy options for climate governance The current organization and institutional set-up related to climate change is not effective in driving climate change policy implementation. Current steering and coordination mechanisms do not always have the ability, capacity, nor are they sufficiently empowered to mobilize government-wide stakeholders and monitor integration and implementation of climate actions. Key recommended actions (serving both adaptation and mitigation efforts) at the institutional and organizational levels are shown in the following table. Additional sector-specific recommendations are made in Chapters 3 and 5. Table 2-3 1 - Key policy recommendations for improved climate governance Policy Recommendations Lead Viability2 Impact3 Overall4 type1 Streamline the organizational architecture and strengthen coordination mechanisms. A high-level steering mechanism at the PM or President office, would strengthen national ownership, provide strategic advice, and facilitate inter-ministerial mobilization. A Prime Minister, technical steering and coordination committee housed at the ministry of finance would MERF, MEF, A&M 1.33 2.50 1.92 provide a whole-of-government platform that converts MERF's technical climate MPDC expertise into implementable programs across all ministries; and establish the fiduciary systems and standards needed to access increased international climate finance. Prime Minister, Expand strategic coordination mechanism to academics, CSOs, and faith-based groups President, to act as observers of implementation of climate change reforms to promote resilient A&M 1.33 2.50 1.92 MERF, MEF, food, water, environment, and land use systems. MPDC Build partnerships with academics and CSO who can evaluate performance of climate MERF A&M 1.67 2.00 1.83 change reforms and monitor their efficiency Strengthen the draft climate framework law by establishing a clear legal basis for MERF A&M 1.33 1.50 1.42 climate objectives, defining the institutional and organizational framework, assigning 22 Togo Invest and Ecobank, two private sector entities are already in the accreditation process. The MERF is also considering accrediting the Office de Développement et d’Exploitation des Forêts (ODEF) and the FNE. 37 Official Use Only specific responsibilities for each policy instrument (public expenditure, and tax measures), and setting explicit timelines for implementation of these responsibilities Develop a comprehensive climate finance and disaster financing strategy that clarifies MEF, MERF, the mandate of the National Environmental Fund (FNE) in line with good practices of the A&M 1.67 1.00 1.33 MPDC Programme de Microfinancements du Fonds. Operationalize and clarify the governance and mandate of FNE related to planning and MEF, MERF, A&M 1.67 2.00 1.83 finance functions of climate change to ensure transparency in resource management. MPDC Strengthen international coordination and peer learning, such as through “Coalition of Finance Ministers for Climate Action�, whose membership would provide options for MEF A&M 1.33 3.00 2.17 training, technical support, funding opportunities, and knowledge sharing. Integrate climate impacts and disaster risks in planning, recovery, and budgeting MEF, MERF, processes. Set targets and M&E frameworks as well as communication of information MPDC, ANPC, A 1.67 1.00 1.33 planning to manage risks. private sector. High level Develop a Long-Term Strategy for a decarbonization transition that includes adaptation steering A&M 2.00 1.50 1.75 and resilience objectives and considerations. committee, MERF Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 38 Official Use Only CHAPTER 3. CLIMATE CHANGE AND STRUCTURAL TRANSFORMATION Interlinkages between structural transformation and climate change are particularly important for Togo’s development trajectory, affecting large sways of the population in both rural and urban areas. In rural areas, building a more climate-resilient, productive and low-carbon agricultural sector will be critical to boost income for farmers, food security and support the development of competitive agro-industrial value chains, while in urban and coastal areas, more strategic planning and resilient infrastructures could help leverage the benefit of agglomeration while reducing exposure to natural hazard. Ensuring universal access to cleaner, more reliable energy by developing renewable energy sources and modernizing the biomass sector are also vital to stimulate growth and decarbonize the economy, while reducing the exposure of transport and other network infrastructures to climate shocks and reduce their impact on the environment will be key to increase resilience and support mitigation efforts. A gradual shift towards cleaner technologies in key industrial sectors such as phosphate mining and cement production would also be needed to curb their environmental impact and sustain their competitiveness on global markets. 3.1. Scaling up climate-smart solutions in agriculture and forest management i. Agriculture sector context and challenges Agriculture is the backbone of Togo’s economy but also the sector most exposed to climate change. Agriculture employs around 40 percent of the workforce at the national level and 60 percent in rural areas, yet it faces multiple constraints that hinder its development and capacity to support food security for a growing population. Adoption of yield-enhancing technologies has been limited, with only 37 percent of agricultural households using fertilizer and only 8 percent using improved seeds. Barely 1 percent has access to irrigation. Togo has increased its agricultural production over the last two decades, but this has been accomplished largely by expanding cropland areas rather than by improvements in efficiency (Error! Reference source not found.). As a result, deforestation and soil d egradation have increased (Error! Reference source not found.) and both value-added per hectare and cereal crop yields lag behind peers in the region. Continuing "business as usual" would result in additional agricultural expansion, mostly in the central corridor of Togo, putting more pressure on existing savannah areas, and livestock farming, as well as forests. 39 Official Use Only Figure 3-1 –Growing agriculture production in Togo has Figure 3-2 – Cropland conversion accounts for a historically been driven by cropland expansion while significant share of deforestation events, productivity has generally been stagnant particularly in the Savanes and Maritime regions Agriculture productivity and cropland expansion Deforestation events and cropland conversion23 Source: World Bank Source: World Bank Climate change is increasing threats to agricultural productivity and farmers’ livelihoods. The adverse effects of climate change are already visible, as erratic rainfall patterns and droughts increase the uncertainty of crop production. This unpredictability makes it more challenging for investors to support agriculture transformation, while disproportionately affecting Togo’s small-scale farmers, who are often ill-equipped to manage climate shocks. In the absence of decisive measures, climate change is expected to significantly reduce yields, increase heat stress on labor, and accelerate soil erosion, resulting in a cumulative impact on agriculture output by 2050 ranging between - 5.4 percent under wet/warm conditions and -12.3 percent in a dry/hot scenario (Figure 3-3). Significant differences across individual crops are expected, with the most affected ones being vegetables, cassava, yams, and maize (Figure 3-4). The latter could be particularly impactful for rural livelihoods given its larger share of arable lands, but all these crop categories play a critical role in the daily diet of the population and could therefore impact food security. 23 FAO 2018. WaPOR Database Methodology: Level 1. Remote Sensing for Water Productivity Technical Report: Methodology Series. Rome, FAO. 72 pages. Licence: CC BY-NC-SA 3.0 IGO 40 Official Use Only Figure 3-3 - The effect of climate shocks could be Figure 3-4 - Vegetables, cassava, yams, and maize yields significantly reduced through mechanization and irrigation could be most affected by climate change, while cotton, efforts groundnut, palm fruit, and Sorghum much less Impact of climate shocks on agricultural production by 2050 and contributing Impact of climate shocks on individual crops by 2050 factors Source: World Bank Source: World Bank ii. Promoting green agriculture and nature-based solutions Recent investments and reforms are expected to improve agricultural productivity and bolster agrobusiness value chains, but more will be needed to confront climate challenges in coming years. Recent initiatives include the Planned Agricultural Development Zones (ZAAP) program, the establishment of agricultural training centers, the expansion of the Kara Agropole, and the operationalization of the Agricultural Transformation Agency. Implementation of the 2024-28 master plan on irrigation would reduce the reliance on rain-fed systems, thus reducing exposure to climate variability. Those initiatives are a promising start, but as this section describes, much more is needed to combine foster adaptation and mitigation in the sector. Solutions that can boost food security in a changing climate while also preserving natural resources and reducing GHG emissions include nature-based approaches such as agroforestry, riparian buffers, and community-based forest management; while sustainable water management, alongside green mechanization, value chains development and support for research on climate- smart inputs can also help trigger the rapid transformation of agriculture and rural development. Land tenure security will also need to be strengthened to encourage smallholder farmers to invest in their land, improve their living conditions and preserve natural resources. 1. Climate-smart practices and irrigation to modernize conventional agriculture Adopting climate-smart practices and access to green finance would create jobs and unlock the full potential of Togo's agriculture sector. Green mechanization and irrigation, organic fertilizers and heat-resilient crops are among the most promising avenues to boost productivity and resilience to climate shocks in a sustainable way. For instance, simulations suggest that using heat-tolerant varieties of key crops on just 25 percent of agricultural areas could reduce the adverse impacts of climate change on yields by 40 percent for yams, 30 percent for cassava, and 20 percent for vegetables in the more severe dry-hot scenario. Successful implementation would require improving seed availability, farmer education, and market access, and research into even more heat-tolerant varieties. Similarly, assuming that 3,900 hectares of irrigated land are added every year until 2050 (5 percent of the cultivated area of each crop per year), the impact of climate change on rainfed crops could be lowered by another 30 percent in the more severe dry/hot scenario, while production could increase above the baseline in the more benign wet/warm scenario. The impact varies across individual crops and climate scenarios, but irrigation efforts tend to improve outcomes across the board (Figure 3-5). Precision agriculture, which allows farmers to tailor the use of fertilizers and other inputs to optimize crop yields, also requires knowledge of soil quality such as organic matter, nutrient and acidity levels. Initiatives like the "Carte de Fertilité" launched in 2016 provide for such information and could be 41 Official Use Only scaled up by expanding coverage, integrating it with agricultural extension services, and improving access to inputs through digital platforms and public-private partnerships. Fully implementing the government’s irrigation master plan for agriculture could significantly improve resilien ce to future climate shocks but come at an elevated cost. Out of 180,000 hectares of irrigable land in Togo, only 2.6 percent currently have adequate irrigation, and only 1,000 hectares are currently equipped for full control irrigation. The government has developed an Irrigated Agriculture Master Plan (SDAI) from the period spanning 2023 to 2040 to enhance agricultural water practices, with the objective of creating synergies between water, soil, and energy resources to develop various forms of irrigation suitable for each region. The overall cost of the SDAI, however, is high at an estimated US$1,000 million. By prioritizing the expansion of Planned ZAAPs with efficient and modern practices, including improved water management systems with water intakes or reservoirs for irrigation purposes, agriculture yields are expected to increase significantly. Smart Irrigation technologies like artificial intelligence (AI) integrating climate based, early warning systems, and soil moisture sensors and controllers with nutrient management strategies should be considered to optimize water used toward high agricultural water productivity. Promoting intensive Inland Valley Swamps management could make sustainable rice production. Togo relies heavily on rice imports to meet domestic demand, as rice is a staple food in the population's diet. Inland valley rice cultivation accounts for over 60 percent of total rice cultivated area in the country, offering significant potential for expanding rice production and enhancing resilience to climate change. Inland valleys are cost efficient and are believed to be the future food baskets in West Africa due to relatively higher water availability and soil fertility than the surrounding uplands and they are targeted by many interventions to improve national rice production. The inland Valley potential is estimated at 360,000 ha with an investment cost need of US$2,340 million.24 Moreover, the adoption of water-saving technologies like the alternate wetting and drying (AWD) technique will further enable rice farmers to reduce water use, energy and related emissions while improving yields. Through AWD, ponded water is allowed to disappear and the soil to dry at a certain level after which irrigation water is applied to lowland fields. Sustainable livestock management practices within agricultural landscapes would also contribute towards adaptation and mitigation efforts. Some of the often subtle but critical climate-smart practices are related to livestock management. Conventionally, livestock are known to be key emitters of methane, however, GHG emissions due to livestock is limited in Togo because of the low carrying capacity in the Northern part of Togo (Savanna region and Kara) and the presence of local breeds of small ruminants in the Maritime, Plateaus and Central region.25 For other areas in Togo where livestock is grazed, integrating crops and livestock offers numerous soil health adaptation advantages and the use of feed additives reduces enteric fermentation thus GHG emissions. The sustainable management of grazing rangelands, particularly at the communal level, and sustainable management of livestock waste, through the use of biodigesters that have the potential to produce biogas, as a renewable energy source could result in improved community livelihoods, offering a win-win scenario. Togo’s water resources face competing demands, which should be managed in a more coordinated manner. These water sources face competing demand from various sectors including agriculture, forestry, fishing (34 percent), industry (3 percent), other services such as environmental water requirements, municipal, and hydroelectric power generation (63 percent, Figure 3-6). The share of agricultural water withdrawals is an indication of the relative weight of agricultural water uses compared to the industrial and municipal ones. Some masked or hidden uses exist, for example, water for the dairy and meat industries and industrial processing of harvested agricultural products is often included under industrial water withdrawal. Competing demands for water combined with the possibility of significantly drier conditions under some climate scenarios call for better management of the scarce resources and would need transboundary collaboration regarding water sector policies. Effective surface water management is particularly crucial for supporting agricultural irrigation in Togo. Despite abundant surface water resources, such as rivers and reservoirs, irrigation infrastructure remains underdeveloped, limiting the country’s capacity to reduce its dependence on erratic rainfall and limited ground water reserves. Integrating surface water management with 24 The estimation of investments using groundwater and surface water were calculated using SIIP project costs. World Bank. 25 Branca, G. T. (2012). Identifying opportunities for climate-smart agriculture investment in Africa. Food and Agriculture Organization of the United Nations, Rome. 42 Official Use Only sustainable agricultural practices would require targeted investments in infrastructure, watershed management, and in capacity-building to optimize water use for agriculture and other sectors. To advance the greening of the agriculture sector in Togo, it is imperative to enhance access to green finance and attract private investments. The financing shortfall for MSMEs operating in the agriculture sector represents a significant barrier to development and modernization of agriculture practices. However, this can be overcome by strengthening land tenure security and developing customized financial instruments and establishing risk mitigation frameworks that support agri-entrepreneurs and farmers throughout the entirety of the targeted value chains. In fact, customary land tenure systems in Togo lack clear and secure land rights, making it difficult for farmers to invest or access credit, and can lead to land disputes and conflicts. Women are particularly disadvantaged, as they account for only 24.5 percent of all landowners in Togo, while their access to land rights are found to help strengthen and diversify households’ income. Encouraging private sector involvement will be key to promoting innovative financial instruments and services. Initially, public funding may be necessary to improve access to climate-resilient crops, irrigation, and mechanization, but over time, a shift towards private sector-driven solutions, like equipment leasing and pay-as-you-go models, is anticipated. Developing a comprehensive master plan for the agriculture sector could help scale up green private sector investments, including streamlining processes and reducing the costs associated with environmental and export licenses. Strengthening public-private dialogue mechanisms is also important to facilitate consistent interactions between the government and private agribusiness investors. Additionally, capacity building activities will be vital to reassess the institutional framework, financing models, and promotional strategies of the agro-poles program, ensuring its sustainability and effectiveness, as well as alignment with investor requirements to optimize economic returns. Figure 3-5 - Increasing irrigation by 5 percent of cropland Figure 3-6 - Despite low irrigation rates, agriculture is per year could temper climate impacts on yields already a dominant source of water consumption in Togo Impact of climate shocks on yields with and without increased irrigation, Water withdrawals by sector in Togo in 2022. across crops and climate scenarios Source: UN Water, 2023 Source: UN Water, 2023 2. Developing Nature-based solutions in agriculture and forest management Nature-based solutions (NBS) offer a promising, ecosystem-based approach to increasing resilience to climate shocks, boosting productivity and farmers’ income. They are ecologically grounded practices aiming at mimicking and enhancing natural processes, while providing simultaneous benefits for agricultural productivity and climate resilience. Yield augmentation stems from improved soil health through practices like cover cropping and compost utilization, while the integration of trees into cropping systems (agroforestry) reduces heat stress, provides microclimate regulation, erosion control, and nitrogen fixation. Similarly, enhanced biodiversity can help promote natural pest control and pollination, which boosts yields further. Water management strategies like rainwater 43 Official Use Only harvesting, wetland restoration, and erosion control measures like terracing and buffer strips around rivers safeguard valuable farmland from heavy rains, bolster water availability during droughts and mitigate flood risks. Finally, improved forest management can help drive reforestation which in turn reverses land degradation and promotes income diversification among rural communities. The analysis presented here focuses on the opportunity of developing agroforestry at scale. Agroforestry There is a considerable potential for agroforestry to transform the rural economy in Togo. Agroforestry adopts a unique concept among agricultural production systems by integrating non-productive (agroforestry) trees among crops as a tool to replace chemical fertilizers. By implementing trees that naturally fixate nitrogen, farmers can therefore reduce their operating costs, while improving the quality of their soil biota, and even improve the quality of certain crops which can allow farmers to earn price premiums. A cost-benefit analysis undertaken for this CCDR shows that agroforestry would have higher long-term profitability than conventional agricultural practices under any climate scenario and could significantly boost production capacity. 26 In fact, in a scenario where 20 percent of suitable cropland and 50 percent of suitable grassland and shrubland are converted to agroforestry (3,822 km2), crop production from these areas could be nearly double that of conventional agriculture under the harsher dry/hot scenario (Figure 3-7),27 benefiting 764,000 smallholder farmers across the country,28 and potentially avoiding up to 3,755 Ktonnes of CO2 emissionsFigure 3-8-8). While the long-term benefits of agroforestry are clear, significant upfront investments for cash-strapped farmers and the absence of an enabling environment are important deterrents. The self-sustaining nature of agroforestry systems means that maintenance costs are significantly lower over the long run, but initial seeds and tree planting imply higher initial investments than conventional agricultural practices, while benefits take longer to materialize. Investments needed to convert 20 percent of suitable cropland and 50 percent of suitable grassland and shrubland are estimated at about 0.05 percent of GDP, with the bulk of it occurring in the very first years of development. To bridge the gap, specific financing models (including improved access to finance) and incentives for smallholder farmers need to be put in place. For example, pilots that educate smallholder farmers on the integrated benefits and costs of agroforestry and NBS would translate into reduced investment costs, improved access to finance and greater awareness of income generation potential of related activities such as beekeeping, inclusion of fruit-trees and use of fast-growing fodder trees for livestock. Other constraints to scaling up agroforestry systems include the lack of a national agroforestry zoning strategy, insufficient research and development on fast-growing tree species adapted to local conditions, a lack of technical assistance available for farmers transitioning to agroforestry systems, the absence of clear regulation for agroforestry practices, gaps in land management regulation, as well as in the certification of sustainable agroforestry products. Assisted Natural Regeneration (ANR) is a flexible approach to agroforestry grounded in local farmers practices which offers promising perspectives. It consists in identifying young shoots of diversified local species already naturally present in the farm, and protecting them so that they can grow, by eliminating obstacles that threaten their growth. 26 Assuming a discount rate of 6 percent per year, every dollar invested in agroforestry would return over a 25-year timespan US$15.46 in wet/warm scenario and US$15 in the dry/hot scenario. Over 95 percent of the gains would be allocated to private investors through higher economic returns, while 5 percent would derive from carbon sequestration. Even increasing the discount rate to 10 percent would still lead to a benefit-to-cost ratio of 13 under wet/warm conditions and 12.4 under dry/hot conditions. In comparison, every dollar invested in conventional agricultural farming is expected to return only US$7.9 by 2050 at a 6 percent discount rate and US$7.6 at a 10 percent discount rate under wet/warm conditions (assuming a high carbon value). Other economic assessments have found comparable and even higher benefit-to-cost ratios (Cheboiwo et al. 2019). 27 Suitable areas for agroforestry were defined using climatic, topographic, and socio-economic factors that tend to favor such systems, including ample precipitation, optimal temperatures (25-27.5C), and high soil quality, low slopes, and elevation, and in proximity to roads and settlements. 28 These results likely underestimate benefits as it considered only the effect on crop yields, land preservation, and carbon sequestration, while there are many other ancillary benefits to agroforestry that could not be quantified in this exercise, including non-wood forest products and related income for women, soil life and health restoration, improved water quality and quantity, flood risk reduction, and improved microclimate regulation, among others. 44 Official Use Only Figure 3-7 - Scaling up agroforestry on suitable cropland Figure 3-8 - …while reducing GHG emissions and and grassland could boost food security… opening opportunities for carbon credit financing Carbon emissions from different agricultural systems on 20 percent of Crop production by 2050 on 20 percent of suitable cropland and 50 percent cropland and 50 percent of grassland and shrubland, cumulative of suitable grassland and shrubland converted to agroforestry Source: World Bank Source: World Bank Riparian buffers Riparian buffers are planted or naturally occurring vegetated strips along rivers that provide multiple ecosystem services and significantly reduce flood damages. Currently, over 3.9 million people are estimated to reside in a high or very high-risk zone, representing approximately 47 percent of Togo’s popu lation. The Savanes region, and specifically the Oti and Kpendjal prefectures (through which the Oti River crosses) has experienced several devastating floods in recent decades, which impacted farmlands, crop yields and led to the loss of livestock. For those regions, early warning systems and riparian buffers can be powerful tools to plan better and mitigate flood risks while helping stabilize riverbanks, reduce nutrient pollution, improve water quality in rivers, and help recharge groundwater resources. Riverbank vegetation also keeps streams cooler, enhancing habitats for aquatic life and helping to prevent harmful algal development, and has a significant potential for carbon sequestration. Additionally, use of riparian buffers in coastal communities could yield economic benefits from agriculture and ecotourism, while also contributing to building coastal resilience and fostering the blue carbon economy. Figure 3-9 - The Savanes region is in greatest need for Figure 3-10 - Benefits from riparian buffers could reach riparian buffers to reduce flood risks. 2.8 percent of GDP by 2036. Priority areas for riparian buffers by region in km2 Estimated benefits and investment needs of priority riparian buffers Source: World Bank Source: World Bank Scaling up riparian buffers could help protect communities and infrastructure close to high flood risk zones and deliver significant potential for carbon sequestration. Focusing on areas that are at high or very high risks of flooding, approximately 1,420 km2 were identified as potential ground for riparian buffers in Togo, particularly in the Savanes region (Figure 3-9). Combining the use of Napier grass/vetiver grass and bamboo, which have dense root systems 45 Official Use Only that mitigate erosion during flood events and have commercial value in Togo could be particularly effective. The short growth cycle of the bamboo and Napier/vetiver grass imply that initial investments are quickly surpassed by the benefits from the sale of grass and bamboo and carbon sequestration accruing as soon as in the first year. Overall, developing riparian buffers in all high-risk zone could yield private benefits reaching 1.2 percent of GDP by 2036, and up to 2.8 percent of GDP when considering carbon sequestration benefits (Figure 3-10).29 Investment needs are estimated to reach 0.1 percent of GDP by 2035, which could primarily be financed by the private sector 30 and by leveraging climate financing from multilateral institutions and carbon markets. Community-based Forest management Community-based Forest management (CBFM) is an effective approach for protecting forests and diversifying farmers’ incomes. In CBFM, local communities are given custodial rights over forest land and are trained to manage and protect the forest in a way that allows them to sustainably produce economic goods, such as cash crops and timber. The strategy has been shown to slow or prevent deforestation – a major problem in Togo, which lost nearly 6 percent of its tree cover between 2000 and 2020, mainly from cropland expansion, wood harvesting, and forest fires. A study in the Bonga forest of Ethiopia, for example, found that CBFM nearly doubled average incomes, as local communities shifted away from logging and charcoal production and towards the production of coffee, honey, and crops. Support for CBFM was complemented by social protection programs that helped restore severely degraded areas. Similarly, a CBFM project in Uganda brought benefits that were five times greater than the costs. There is a large potential for developing CBFMs in Togo. By identifying recently deforested areas that also have settlements nearby as most suitable for CBFM, 800 km2 of land could potentially be converted, mainly in the Centrale and Plateaux regions. (Figure 3-11). Assuming that it will take an average of 10 years for trees to reach maturity from seedling to adulthood, and that implementation of CBFMs on the 800 km 2 would take about 5 years, carbon sequestration could reach to 849 Ktonnes of CO2 by 2050 (Figure 3-12). Suitable areas identified in this study only make up about 1.4 percent of the country’s territory so further scaling up could be envisaged, where CBFM contributes to reducing GHG emissions leading to larger carbon sequestration benefits and thereby promoting mitigation outcomes. Togo is already implementing NBS solutions that mix agroforestry and community-based forest management that could be further scaled up. In particular, the Taungya system combines food crop cultivation with forest plantation establishment. In Togo, this is used to address deforestation and land degradation, particularly in regions such as Plateaux and Kara. The method involves planting short-term food crops like maize or cassava alongside tree seedlings, including teak and eucalyptus. Farmers benefit from immediate food production while supporting reforestation efforts. This system is central to community-based reforestation initiatives, aiding in soil restoration and erosion control, especially in hilly areas. It also reduces government reforestation costs by involving farmers in plantation establishment. The collaboration between the state, non-governmental organizations, and local communities ensures that reforestation aligns with livelihood needs. Scaling up such initiatives could significantly contribute to Togo’s National Reforestation Program, which encourages planting fast-growing species like teak and eucalyptus while engaging communities and international partners. However, Togo faces persistent challenges, including inadequate funding, technical capacity constraints, and land tenure disputes, which hinder the effectiveness of these initiatives. To achieve its ambitious targets, the government must enhance policy implementation, foster local community participation, and integrate long-term planning for sustainable forestry management. Despite these challenges, the Taungya system remains a key tool for balancing ecological restoration and food security in Togo. 29 For the sake of this economic analysis, buffers of 100m on both sides of the riverbank was selected, as it has the potential of eliminating all runoff water and sub- surface flow nitrate entering streams and appear most appropriate in areas facing high and very high risks of flooding. 30 For instance, in Rwanda, EcoPlanet Bamboo has effectively planted over 600 km of riparian systems between 2000 and 2023 and is committed to planting up to 1,000 km of riparian systems in the future. The company’s commitment to establishing a deforestation -free supply chain allows for their products to earn price premiums through TEE-free and deforestation-free certifications. 46 Official Use Only Figure 3-11 - Centrale and Plateaux have the greatest Figure 3-12 - CBFMs could sequester up to 595 potential for CBFM Ktonnes of CO2 by 2050 CBFM potential in deforested areas converted to cropland between 2001 and Carbon sequestration of CBFMs in Ktonnes of CO2 (5 percent yearly 2022 increase in sequestration rate) Source: World Bank Source: World Bank Beyond forest management, Togo is also undertaking efforts to enhance the management of protected areas and restore biodiversity. Approximately 7 percent of Togo's territory is designated as protected areas, including prominent sites such as the Fazao-Malfakassa National Park and the Oti-Kéran-Mandouri National Park, which serve as critical habitats for endangered species, like elephants and antelopes. These areas benefit from conservation initiatives supported by international organizations such as the IUCN and UNEP, focusing on capacity-building for park management, anti-poaching efforts, and the promotion of ecotourism to balance conservation with economic development. Togo’s biodiversity restoration efforts include reforestation, native species reintroduction, and agroforestry programs designed to rehabilitate degraded ecosystems and improve habitat quality. The National Biodiversity Strategy and Action Plan (NBSAP) provides a framework for integrating biodiversity conservation into national policies and development planning. Despite progress, challenges such as insufficient funding, weak enforcement of conservation laws, and land-use pressures from agriculture and urbanization persist. Addressing these issues requires stronger governance, increased community engagement, and sustained international collaboration. iii. Transitioning to a more productive, resilient, and low-carbon agriculture sector Greening the agriculture sector, leveraging nature-based solutions, and improving water management are critical to boost food security, accelerate rural development and decarbonize the economy. Combining effective measures to stimulate structural transformation and climate adaption in the agriculture sector could significantly reduce adverse impact of climate shocks and even lead to a boost to production under the more benign wet/warm scenario (Figure 3-13). Measures modelled include increased mechanization and irrigation, combined with the use of heat-tolerant varieties for selected crops (i.e., cassava, yams, rice, sorghum, and vegetables) and the introduction of conservation agriculture practices, including the use of agroforestry on 10 percent of all cropland by 2050. This demonstrates that better availability, and affordability of crop-specific inputs (including use of inorganic fertilizers) in combination with efforts to increase the adoption of irrigated, mechanized, as well as climate-smart and nature-based agriculture practices could turn challenges into opportunities for development. Modelled results for intensified agriculture included solar driven-irrigation (using trickle drip systems) and the use of inorganic fertilizers assumed a scenario where 20 percent of suitable cropland and 50 percent of suitable grassland and shrubland are converted to agroforestry (2,276 km2) by 2050.31 This scenario resulted in 1,732 tons of CO2 emissions but the presence of the agroforestry component would result in a mitigation benefit of -181 Ktonnes of CO2 emissions by 2050. 31 This scenario assumes there is no increase in land suitability until 2050. The figure assumes that only areas suitable today are planted for agroforestry, as opposed to the figure in the previous section, which assumes that suitable land will increase to 3,821 km2 by 2050. 47 Official Use Only Incentivizing private sector participation into the agriculture sector through the public investments in infrastructure such as irrigation canals for water delivery, roads, and electrification could be a game-changer for Togo. Infrastructure will create an enabling environment for the private sector to promote state-of-the-art sustainable farming practices such as precision agriculture with Internet of Things (IoT) and drones to save on labor and increase efficiency. In addition, the use of climate-resilient crops coupled with agroforestry as well as early warning systems offers promising adaptation options in a changing climate. The ability to improve access to finance through microloans to smallholder farmers, and use of sustainable supply chain solutions like cold-chain infrastructure will present an opportunity for the combination of adaptation and mitigation benefits. Figure 3-13 - Adaptation on top of structural transformation measures could significantly reduce the impact of climate change on agriculture Impact of climate shocks on agricultural production by 2050 with selected adaptation measures Source: World Bank Table 4 – Key investments for the agricultural sector Investment Needs Investment Needs Policy Recommendations Lead Viability2 Impact3 Overall4 by 2035 by 2050 type1 Cumulative, Cumulative, Average, Average, Present Value Present Value %GDP %GDP US$ US$ Develop a national agroforestry MERF initiative that involves planting trees US$97M 0.07 US$151M 0.05 A&M 1.67 1.5 1.58 MAPAH and restoring degraded land. Implementation of Riparian Buffers MERF US$128M 0.1 US$234M 0.07 A&M 2.00 1.5 1.75 across Flood-Prone Areas. MEHV Develop a national Community-based Forest Management (CBFM) strategy MERF US$3M 0.002 US$5M 0.001 A&M 2.67 1.5 2.08 and action plan, including Taungya MUHRF systems Develop resilient and highly productive agriculture based on MAPAH US$152M 0.12 US$250M32 0.05 A 1.33 1.5 1.42 climate-smart practices and MEHV technologies. Increase agriculture areas with access to sustainable irrigation MEF US$275M 0.21 US$453M33 0.1 A 1.67 1.5 1.58 systems, including small-medium scale irrigation. 32 Based on related combined project investment costs in various policy, strategic and planning documents (Togo Roadmap 2025, Nationally Determined Contribution NDC, National Climate Change Adaptation Plan NCCP, National Agricultural Investment and Food and Nutritional Security Program (NAIFNSP) and its investment plan (2017-2026), agricultural policy accompanied by the strategic plan for the transformation of agriculture in Togo by 2030 PA-PSTAT). 33 The estimation of investments using groundwater and surface water were calculated using SIIP project costs. World Bank. 48 Official Use Only Increase private investment in MAPAH US$16M 0.01 US$27M 0.01 A 1.67 1.5 1.58 irrigation. MEF Promote intensive Inland Valley MAPAH Swamps management for sustainable US$489M 0.38 US$806M34 0.17 A 1.67 2 1.83 MEHV food production Total Agriculture US$1,160M 0.892 US$1,926M 0.451 Source: World Bank Note: Total cumulative investment needs by 2035 and by 2050 are computed in present value using an annual discount rate of 6 percent. Investment as a share of GDP are annual averages for the periods 2025-35 and 2036-50 Table 5 - Key policy recommendations for the agricultural sector Policy Recommendations Lead Viability2 Impact3 Overall4 type1 Develop certification programs ensuring compliance with safety and phyto-sanitarian MERF, M 2.00 2.00 2.00 standards for key agriculture value chains MAPAH Develop a national strategy on climate-smart agriculture and mainstream CSA into the MAPAH A 1.67 1.00 1.33 national agricultural development policy35 Promote the adoption of renewable energy technologies for irrigation through tax and subsidy MAPAH, A 1.33 1.00 1.17 reforms MEHV Improve land tenure security, streamlining land tenure regulations, educating farmers about MERF, their land rights, and exploring alternative tenure arrangements, giving forest managers legal A&M 2.00 1.00 1.50 MAPAH custody of the land they manage, or transferring forest tenure rights to local communities Develop support services and incentives for agroforestry, including developing a national MERF, agroforestry zoning strategy, supporting research and development for fast-growing A&M 2.33 1.00 1.67 MAPAH agroforestry trees, and providing technical and financial assistance for farmers Enhance the capacity to measure and verify carbon credits (through MRV systems) for NBS MERF, A&M 1.67 1.50 1.58 solutions in agriculture and forestry MAPAH Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 3.2. Making urban and coastal areas more resilient i. Sector context and challenges As Togo is rapidly urbanizing, inequalities are increasing. About 45.6 percent of Togo’s population now lives in urban areas, with the size of the urban population more than doubling between 2000 and 2020. By 2050, about 9.3 million people (about 60 percent of the population) are expected to live in urban areas. In fact, the incidence of poverty in rural areas (58.2 percent) is twice as high as in urban areas (24.6 percent) but higher urban population growth implies that the number of urban poor is growing faster than average. The highly urbanized southern part of the country is exposed to flooding, coastal erosion, and increasing temperatures. More than half the population of Togo lives in the South, in an area 10 percent of the size of the whole country. Most of those people – 2 million people, or 25 percent of Togo’s population – are concentrated in the urban agglomeration of Grand Lomé, which lies within the Greater Ibadan-Lagos-Accra urban corridor. This southern coastal region already faces challenges providing adequate services, and is highly vulnerable to erosion, sea level rise, increasing temperatures, and flooding. In most major urban areas, about 3 to 6 percent of the built-up areas are exposed to extreme 100-year floods. Unless climate resilience efforts are enhanced, the population in the region will experience more severe economic impacts from more extreme and frequent weather events. 34The estimation of investments using groundwater and surface water were calculated using SIIP project costs. World Bank. 35It is estimated that US$2-5M are needed by 2035 representing 1-3 percent of total investment needs of recommendation “develop resilient and highly productive agriculture based on climate-smart practices and technologies�. 49 Official Use Only Figure 3-14 - Built-up areas exposed to flooding in Togo's cities Climate change will increase the threats from floods in urban areas, increasingly damaging critical infrastructure. The current average annual losses from flooding are estimated at around US$16 million, or 0.33 percent of GDP. Those are expected to increase as storms become more frequent and more severe. In most major urban areas, about 3 to 6 percent of the built-up areas are exposed to 100-year floods. However, the exposure is much greater in Grand Lomé mainly due to a high density, the extension of the city and a low level of the drainage system, particularly on the outskirts. The five district capitals (Atakpamé, Dapaong, Kara, Sokodé and Tsévié)— home to a large share of the remaining urban population outside Lomé— are also grappling with exposure to floods (Figure 3-14). An assessment of potential damages of floods in urban areas showed that damage could increase by 5 to 11 percent by 2050, depending on the climate scenarios. These increases, however, could be limited by developing adequate drainage infrastructure and enforcing risk-informed territorial plans. Coastal erosion is damaging infrastructure. An assessment of the cost of historical degradation of the coastline indicates that environmental degradation of the coastal zone resulted in a loss of US$202 million so far. In 2022 alone, erosion caused estimated losses of US$72 million, or 36 percent of the total losses from environmental degradation. The construction of the Akosombo dam in Ghana followed by a series of coastal protection works on the littoral of Ghana combined to the presence of the port of Lomé and the sea level rise are multifactor elements that have accelerated coastal erosion to the east of the Togolese coast. As a result, the unprotected sectors from East of the port of Lomé to Agbodrafo are the most threatened, with rates of coastal erosion that can reach 15 to 20 meters per year in some areas (with an annual average of 2 to 5 meters). By 2050, erosion will be increasingly caused by sea level rise, forcing urban areas along the coast to grapple with additional coastal flooding beyond what now is caused by periodic storm surges. As the sea level rise intensifies erosion, the country will face a multifaceted migration and cultural challenge. The accelerating environmental changes are expected to reshape coastal communities, forcing former landowners to become economic migrants and tenants. Solid waste exacerbates urban floods and contributes to overall emissions in Togo. Poor waste management can contribute to the impact of urban flooding by blocking drainage, increasing debris, and harboring disease vectors. In Togo, municipalities manage this service; however, they typically lack the necessary financial, human, and technical capacities. In addition, CO2 emissions from solid waste rose 4.5-fold between 1995 and 2018,36 mainly from incineration, open air waste burning, and the treatment and discharge of domestic and industrial wastewater. Most of the treated waste in Togo is produced in Lomé. Of that, 65 percent is dumped in landfills, 5 percent is treated (such as by recovery or recycling), and the remaining 30 percent is burnt. A new landfill site at Aképé, which covers Greater Lomé, started operations in January 2019 and included biogas recovery. More recycling, and better collection and prevention of waste, would be effective measures for reducing emissions and improving resilience to floods. 36 République Togolaise. (2021). Rapport National d'Inventaire des Gas à Effet de Serre du Togo. 50 Official Use Only Urban planning and programming do not yet take climate risks into account. Only 28 of Togo’s 117 municipalities have a City Master Plan and many plans have not been updated or fully applied. As a result, Togo has a low average urban density of 4,000 inhabitants per km237 and urban sprawl is widespread, with the share of the urban population living in slums estimated to be above 50 percent. Most cities in Togo have faster built-up area growth rates than population growth rates. Moreover, rapid urbanization in coastal cities is occurring in hazardous flood-prone areas, putting more people at risk. Built area exposed to recurrent 10-year flood hazards increased from one square kilometer to more than four square kilometers between 1975 and 2020. This indicates that unless rapid urbanization is paired with effective urban planning, exposure to floods will continue to rise in the future. Togo’s urban water supply and sanitation systems are inadequate, adding to climate vulnerabilities. Only half of the population has adequate water supply services, and only 16 percent has basic sanitation services, one of the lowest rates in Africa. In the northern regions and in Greater Lomé, where most of the unserved population lives, people rely on shallow groundwater, which entails public health hazards and cross-contamination risks of private boreholes during flood events. Improving sanitation and protecting Togolaise des Eaux (TdE) borehole intakes should therefore be prioritized in urban areas like Greater Lomé that rely on groundwater and are subject to high flood risks. Figure 3-15 - Daily average air temperature for Lomé Source: World Bank Heat stress in Lomé and in the five district capitals are amplified by urban heat island effects. In the northern city of Kara, the energy needed for cooling could increase by 43 percent by 2050 and the number of “tropical nights� (where temperatures remain above 25°C) could jump from 100 today to 260 by 2070 as global temperature increases are amplified by urban heat island effects. The annual mean amount of heatwave days will also increase in urban areas. In Dapaong, for instance, it will rise from 26 to between 64 and to 74 days by 2070, depending on climate scenarios (an increase of 146 percent and 184 percent, respectively), i.e., more than 1/5 time of the year. Similarly, other cities will experience risky heat stress periods. ii. Boosting Resilience To increase urban resilience, the CCDR makes the following key recommendations: - Implement planning and development policies to reduce urban sprawl. Togo should move forward with its new Urban Planning Code to regulate the use of land, buildings, or other structures for residences and commerce. It can also strengthen formal institutions for titling and property transfer. Existing urban masterplans need to be adopted, and their orientations implemented. In addition, nature-based solutions, like green spaces and wetlands, can build resilience to floods and extreme heat, while heat-health action plans can help protect workers and the public. These steps will reduce the costs of delivering services, help mitigate climate change and reduce the risks from more extreme climate events. The next five to ten years are critical since it is very difficult to reverse sprawl once it has occurred and to resettle people from high-risk zones. 37 See: https://africapolis.org/EN/country-report/Togo. The density calculate by the national statistics institute is even lower. 51 Official Use Only - Develop nature-based solutions like green spaces in urban settings. While often faced with several land management challenges. As residential and commercial developments extend into previously vegetated areas, the allocation of land for green spaces becomes limited, resulting in environmental and health implications, such as loss of biodiversity and inadequate air quality. Moreover, unregulated land use in peripheral areas, coupled with flooding due to poor infrastructure planning, complicates sustainable urban development. These challenges are exacerbated by financial constraints, as green spaces are often undervalued in comparison to land designated for housing or transport infrastructure, which are seen as immediate economic priorities. Overcoming these issues requires effective land use policies, enhanced urban planning regulations, and a shift in how urban green spaces are valued—recognizing their long-term environmental and societal benefits. - Tackle urban floods and coastal degradation. Investing in grey, blue and green infrastructure aimed at protecting, sustainably managing and restoring natural or modified ecosystems to mitigate the risks of flooding/extreme heat, while simultaneously providing human well-being and biodiversity benefits—will be crucial to protect people and assets in urban areas. The six Nature-Based Solutions Opportunity Scans38 performed for Lomé and the district capitals assess in more detail the scope for nature-based solutions to pluvial flooding and heat stress and overall to improve human health. The transfer of sediment from the port of Lomé (as described in the transport section) for example could be complemented by nature-based solutions, including regular sand replenishment, and by the programmed retreat of exposed communities. These measures will especially benefit the tourism industry and populations livelihoods.39 - Diversify water resources. Most urban water supply systems rely on surface water (outside of Lomé), making them vulnerable to climate shocks. Including groundwater in the supply mix thus is critical for climate adaptation, but only if the groundwater can be protected. Nature-based solutions can enhance aquifer recharge, and pilot programs could be implemented in the arid North, which relies on groundwater resources. Preventive measures to avoid pollution of retention basins should also be implemented to reduce the high costs associated with their treatment. - Improve the efficiency of water distribution networks. Currently, about 10 million m3 of treated water is lost in urban water supply systems because of leaks, exacerbating water shortages and causing higher costs. With improved human and financial capacity, and financial incentives, these losses can be reduced. - Improve knowledge about water resources. The vulnerabilities of Togo’s water resources to the impacts of climate change are not clearly understood and are not incorporated in water infrastructure designs. Developing data collection systems; strengthening the capacity to analyze, publish, and disclose water resources information; and operationalizing decentralized water basin committees would thus improve water resources management. - Reinforce the disaster risk management framework and invest in risk mapping, early warning systems, and the further use of digital information. By providing complete and accurate information about all potential risks, such investments would enable households and businesses to make better decisions about their safety, their property, and their livelihoods. 40 Even modest investments in such systems can have significant returns. Table 6 - Key investments for urban and coastal resilience Recommendations Lead Investment Needs Investment Needs Policy Viability2 Impact3 Overall4 by 2035 by 2050 type1 Cumulative, Average, Cumulative, Average, Present Value %GDP Present Value %GDP US$ US$ MUHRF US$80M 0.01 US$133M 0.04 A&M 1.67 1 1.33 38 The World Bank developed these six scans as part of a parallel analytical work undertaken in Togo entitled “Spatial development and decentralization� (P501273). 39 République Togolaise, 2022. Evaluation du coût de la dégradation historique de la côte y compris la vulnérabilité des communautés côtières. Projet WACA ResIP. 40 Mukim, M., & Roberts, M. e. (2023). Thriving : Making Cities Green, Resilient, and Inclusive in a Changing Climate. Washington D.C.: World Bank. Retrieved from http://hdl.handle.net/10986/38295 52 Official Use Only Implement a resilient urban development compact and fight urban sprawl. - Reinforce the mechanism for the securitization of land titling. Reduce flood, coastal, and heat- related climate risks, starting with Lomé and the five district capitals. MUHRF US$380M 0.3 US$633M41 0.2 A&M 1.67 1 1.33 - Carry out a resilient drainage and flood protection program for coastal and secondary cities, starting with Lomé and the five regional capitals including NBS. Strengthen coastal development MUHRF, and management. US$163M 0.12 US$265M42 0.09 A&M MEMPPC - Carry out works/NBS to reduce 1.67 1 1.33 coastal erosion. - Address coastal pollution (phosphate discharge in marine 2.33 1 1.67 waters) Improve solid waste management MERF, to meet NDC commitments. ANASAP, local gov’nts US$133M 0.1 US$178M43 0.06 A&M 1.67 1 1.33 - Complement and capitalize on investments undertaken in Lomé and the five district capitals. Empower cities to build resilience MEF. to climate change. MATDDT, MUHRF, local gov’nts US$204M 0.16 US$404M 0.13 A&M 1.67 1.5 1.58 - Develop a more sustainable funding mechanism for local governments, increasing transfers and potentially scaling-up the use of performance-based capital block grants — earmarked for climate resilience investments. Improve the efficiency of water distribution networks. SP-Eau, TdE US$30M 0.01 US$80M 0.01 A&M 1.67 1.5 1.58 - Strengthen TdE’s capacity and incentives to find and fix leakages - Invest regularly in networks replacement and assets management Expand sanitation services, including fecal sludge MEA US$80M 0.06 US$300M 0.25 A&M 2.33 1 1.67 management, with a priority focus on flood-prone areas Improve the resilience of water MEA, supply systems to flooding: SP-Eau US$15M 0.01 US$55M 0.01 A&M 1.67 1 1.33 - Improve TdE borehole headworks to prevent aquifers contamination - Setup TdE boreholes protection perimeters to regulate polluting activities and reduce groundwater contamination risks - Assess the vulnerability of water supply infrastructure and identify priority investments to protect strategic assets 41 Was estimated for a 10 to 30-year flood event based on: (i) costs provided in the drainage masterplans of Lomé (2025-2050) and the five district capitals (2016- 2035) adjusted for inflation; and (ii) Nature-Based Solutions Opportunity Scans that were performed for Lomé and the five district capitals to assess possible nature- based solutions to mitigate primarily pluvial flooding and heat stress. The scans relied on openly available global geospatial data sets with local data where available, there were complemented with costing estimates based on works carried out in African countries. Maintenance of the system is not taken into consideration in the estimate. 42 Extrapolated from the littoral masterplan. 43 Calculated based on a capex ratio of ~ US$30 per capita. Population is projected to be at around 10 million inhabitants in 2030. This estimate is in line with the costing provided in the NDC report of 2021. This estimate does not include OPEX. 53 Official Use Only Improve knowledge of water resources. MEA US$8M 0.01 US$20M 0.01 A&M 2.00 2.5 2.25 - Develop water resources data collection and valorization capacity - Conduct water resources diagnostic studies in water stress hotspots Total Urban and coastal US$1,093M 0.78 US$2,068M 0.8 Development Source: World Bank Note: Total cumulative investment needs by 2035 and by 2050 are computed in present value using an annual discount rate of 6 percent. Investment as a share of GDP are annual averages for the periods 2025-35 and 2036-50 Table 7 - Key policy recommendations for urban and coastal resilience Recommendations Lead Policy Viability2 Impact3 Overall4 type1 Implement a resilient urban development compact and fight urban sprawl. MUHRF - Promulgate the new building code. A&M 1.00 1.00 1.00 - Adopt the secondary legislation and increase enforcement capacity of building A&M 1.00 1.00 1.00 codes/land use under consideration of gender equality principles. Reduce flood, coastal, and heat-related climate risks, starting with Lomé and the five MERF A&M district capitals. - Enact national cooling coverage and efficiency policy 1.33 2.50 1.92 Strengthen coastal development and management. MEPC, MUHRF - Develop the Marine Spatial Planning strategy and set up the national coastal A 1.33 3.00 2.17 observatory. - Strengthen national legal framework for climate migrants’ and cultural heritage A 1.67 1.00 1.33 protection MERF, MUHRF, Improve solid waste management to meet NDC commitments. MEA, Municipalities - Prepare a national sanitation strategy. M 1.67 1.00 1.33 Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 3.3. Accelerating the transition to clean and reliable energy i. Sector context and challenges Energy consumption in Togo is dominated by biomass and is mostly absorbed by the residential sector. Over 75 percent of energy consumption is accounted for by biomass, with more than 90 percent of the population using it as the main source of energy, primarily for cooking (Figure 3-16). Overall, households absorb 73 percent of energy supplies, followed by transportation (12 percent), commercial activities (10 percent), and industry (3 percent). This dependency on biomass poses significant challenges, with unsustainable harvesting and charcoal production practices leading to overexploitation of forestry sources, negatively impacting natural ecosystems and plant and animal biodiversity. Not only are charcoal production practices unsustainable; household s’ use of inefficient traditional cookstoves also impacts the amount of wood fuel that is consumed and are major sources of key atmospheric pollutants that impact human health. 54 Official Use Only Figure 3-16 - Energy consumption is dominated by Figure 3-17 - Access to electricity has increased with large biomass and is driven by the residential sector. disparities remaining between urban and rural areas. Energy consumption, 2021 Access to electricity in rural and urban areas Source: AFREC, ESMAP Although access to electricity has improved in Togo, there are remarkable disparities between urban and rural areas. While the national electrification rate progressively improved from 39 percent in 2012 to 65 percent in 2023, this has largely been driven by electrification in urban areas, where access reached 96 percent in 2021. On the other hand, rural areas remain largely undeserved, with only 24.7 percent of the population being connected, thereby leaving 3.7 million people without electricity. This gap bears crucial socio-economic consequences for rural areas and Togo’s development and resilience to climate hazards more generally. Figure 3-18 - Towards a Resilient Energy Infrastructure: Togo’s low-cost development plan Significant investments will be required for the power sector to be able to meet the country's growing electricity demand. The National Electrification Strategy (NES) aims to achieve a universal access by 2028. In this context, demand at the interconnected grid level is expected to increase from 1,527 GWh in 2021, to 5,322 GWh by 2035 and further to 8,292 GWh in 2050, which will require major expansion of production and distribution capabilities. The Low-Cost Master Plan also highlights that 40 percent of non-electrified households could be connected more efficiently through decentralized solutions, such as mini-grids and solar home systems to serve remote areas. It estimates that achieving this goal will require investment of US$1,095 million in net present value by 2035 (0.8 percent of GDP), including US$741 million for transmission and distribution, and US$298 million for mini-grids and solar kits. 55 Official Use Only Increased access must go hand-in-hand with a faster transition towards renewable energy sources. In 2021, 52 percent of electricity was sources from imports from the Electricity Community of Benin (CEB), Ghana, and Nigeria, while 47 percent came from domestic production, with a dominant role for thermal generation (80 percent), followed by hydro (11 percent) and solar (9 percent). Togo’s Low-Cost Development Plan aims to increase and sustain renewable energy capacity above 50 percent of installed capacity from 2030 (Figure 3-19) and seeks to reduce imports to 30 percent of the energy mix (Figure 3-20). Error! Reference source not found.To achieve these goals, the plan calls for the construction of new infrastructure, with additional solar power plants with a capacity of 825 MWc by 2030, 220 MWc by 2040 and 450 MWc by 2050 followed by hydropower development adding 57 MW of capacity by 2030 and 206 MW by 2040. This initiative requires investment of US$1.1 billion by 2035 in net present value (0.8 percent of GDP) for the development of solar power plants and battery energy storage systems (BESS), and an additional US$0.5 billion for hydropower projects (0.4 percent of GDP). Regional energy integration holds strategic importance for the security and energy transition of Togo. The country's energy security is closely linked to this regional integration, notably through its active participation in the West African Power Pool (WAPP), the Communauté Électrique du Bénin (CEB), and the West African Gas Pipeline (WAGP). Heavily reliant on imports to meet its energy needs, Togo depends on Ghana and Nigeria for its electricity supply, as well as on Nigeria for importing gas for local electricity production. Figure 3-19 – Plan for increasing the share of Figure 3-20 – Plan for reducing the share of imported renewable energy to more than 50% of installed energy to 30% of the energy mix. capacity. Installed capacity Energy mix Source: World Bank and LCDP Source: World Bank and LCDP Togo is strategically incorporating gas into its energy mix as a transitional measure, replacing oil and HFO. Gas can serve as a bridge fuel that facilitates the integration of renewable energy sources by balancing intermittent supply and stabilizing the grid. In a growing demand context, natural gas use aligns with the country’s Low-Cost Development Pathway and may provide an environmental, credible and viable economic alternative to HFO. Togo also anticipates diversifying its energy mix diversification by integrating LNG and, over the long term, by considering new sources – biogas and renewably-produced “green� hydrogen, which would also promote energy independence. However, Togo's integration of LNG into its energy mix risks creating a dependency due to the sunk costs of LNG infrastructure, potentially locking the country into natural gas use beyond its transitional role. Furthermore, Nigeria (holding the 11th largest natural gas reserves globally) is Togo’s main supplier of natural gas, which further reinforces the dependency to this natural resources. This focus could divert resources from renewable projects, slowing the shift to a greener energy mix and increasing opportunity costs, and raising the risk of lock-in or stranded assets. Additionally, given the vulnerabilities of the West African Gas Pipeline (WAGP) and the limited availability of upstream gas production, Togo and fellow WAGP member countries (Nigeria, Benin, and Ghana) unanimously recognize the need for a comprehensive approach that is technical, commercial, and regulatory to ensure continuous and sufficient gas supply. This highlights the importance of regional collaborations like ECOWAS, which could offer more sustainable and economical alternatives to a LNG-heavy strategy. Finally, and as the country has established its national nuclear 56 Official Use Only commission, nuclear energy could appear as a long-term alternative to LNG, providing stable low-carbon power in Togo. The power sector faces persistent profitability and solvency challenges due to high cost of service and inadequate electricity tariffs. Current electricity tariffs are still below the cost of service (CoS), which is kept up by expensive take- or-pay gas contracts, and operational performance issues at CEET. In 2021, the utility benefited from the renegotiation of the gas supply contract, commissioning of the lower-cost solar PV IPP in Blitta and the Kekeli Gas IPP, and reduction of expensive imports from Volta River Authority of Ghana (VRA). However, the financial situation of the utility worsened again in recent years, with a negative net result reaching unsustainable levels in 2023. ii. Sector vulnerabilities and low-carbon solutions The biomass sector is highly exposed to climate shocks, especially in northern regions. Demand for wood already exceeds the sustainable supply, and if current trends continue, only 28 percent of demand could be met by 2025 and 12 percent by 2050. Climate change will make this shortfall even worse, as increased heat and changes in rainfall reduce wood production, highlighting the need for more sustainable energy production and use. Figure 3-21 – Shifting the energy mix towards renewables is critical to lower emission intensity Emissions from power generation as share of real GDP, index = 100 in 2024 Source: World Bank The increased frequency and intensity of extreme weather events could exacerbate challenges in achieving universal and reliable access to electricity. The structural deficits in Togo's electricity infrastructure already makes it difficult to restore supply following climate-related or other disruptions, with challenges likely to be exacerbated in the future by rising demand and more frequent shocks. Climate change also poses specific challenges to the shift to renewable power generation. For instance, increased droughts or changes in precipitation could adversely affect hydropower production (both imported and domestic), while high temperatures can reduce solar panel efficiency and accelerate degradation. Moreover, elevated ambient temperatures amplify resistive losses in power transmission and distribution networks. This emphasizes the importance of climate-proofing future hydropower infrastructures and ensuring that solar installations use more durable materials and are optimized for better heat dissipation. To spur sustainable growth and structural transformation, accelerate the transition towards renewable energy, and increase resilience to climate shocks, the following policy priorities are identified: - Adopt clean cookstove technologies and strengthen biomass management. Universal access to modern energy cooking services (MECS)44 by 2050 could reduce biomass use by shifting away from wood and charcoal and cut greenhouse gas emissions by about 90.5 percent compared to a 2020 baseline. Although households will be required to make the largest contributions towards the cost of stove and fuels, public investment should help bridge the affordability gap. Excluding fuel cost subsidies, the transition to clean cooking shouldered by the 44 This refers to a household context that has met the standards of Tier 4 or higher across all six measurement attributes of the Multi-Tier Framework: convenience, (fuel) availability (a proxy for reliability), safety, affordability, efficiency, and exposure (a proxy for health related to exposure to pollutants from cooking activities) 57 Official Use Only public sector is estimated at 472 million in net present value by 2050.To develop a market for clean cooking, the government should establish performance targets for cookstoves’ efficiency and emissions , create cookstove testing facilities and labeling schemes, and track progress to identify and overcome barriers. This could also serve to mobilize international carbon credit financing. Reforestation efforts should also be strengthened, in conjunction with the promotion of agroforestry, community-based forest management and riparian buffers advocated in this CCDR, which could be significant sources of biomass energy. - Achieve universal access to electricity and build climate-resilient infrastructure. Togo has already made notable strides towards universal access and is committed to expanding the national electricity grid, investing in renewable energy sources, and electrifying remote rural communities. Continuing these efforts will catalyze economic advancement, reduce poverty, and raise living standards while building resilience against future climate events. - Accelerate investment in climate-ready hydroelectric and solar power generation. Hydroelectric projects will provide a reliable and sustainable electricity supply, reduce dependence on fossil fuels, and improve water management to counter the negative impacts of climate change. The development of small and medium-sized hydropower capacities optimizes resource utilization and improves the management of decreasing rainfall. These multipurpose reservoirs also benefit agriculture and help mitigate the risks of droughts and floods, as well as their impacts on transport infrastructure. Large solar projects, like the 50 MW Blitta facility, will supply renewable energy to the grid, while mini grids will stimulate rural development. Implementing the necessary investments to reach 50 percent of renewables in domestic production could help reduce the emission intensity of power generation by 60 percent (Figure 3-22). Nevertheless, due to the increase in peak demand, which is expected to quadruple over the next 25 years, and with the high penetration of photovoltaic energy that fades during the evening peak, there will be an increased need for peak-time power production. This explains the additional need for investment in thermal and battery storage capacity.454647 - Leveraging digital and innovative solutions is essential for reducing GHG emissions and enhancing grid efficiency. Digital technologies that enable smart grids will reduce power losses, help integrate and efficiently use large amounts of renewable electricity and allow users to become producers by reselling excess electricity. In addition, predictive analytics, grid data, and machine learning can help the CEET better predict and balance the grid, while also monitoring failure modes and reducing outages. Furthermore, adopting innovative solutions, such as floating solar PV systems, could help mitigate the impacts of climate change on both hydropower and conventional solar systems, leveraging water bodies to improve energy output while reducing land use and thermal stress on the panels. Table 8 - Key investment for the energy sector Investment Needs Investment Needs Policy Recommendations Lead Viability2 Impact3 Overall4 by 2035 by 2050 type1 Cumulative, Cumulative, Present Value Average, Present Value Average, US$ %GDP US$ %GDP Strengthening reforestation efforts for energy wood purposes MERF, MMRE US$28M 0 US$28M 0 M 1.33 1.5 1.42 (17,400 hectares). Develop bioenergy production capacity, including briquette and MERF, pellet production plants and MMRE, US$25M 0 US$25M 0 M 1.67 1.5 1.58 biogas through biodigesters, and private sector gasification equipment. Promote efficient stoves, MERF, carbonization grindstones, and MMRE, US$286M 0.22 US$472M 0.15 M 1.67 2 1.83 electrical equipment private sector 47 The investment in thermal capacity is not included in the investment needs outlined for 2035 and 2050 in the "Key Investment Recommendations" table. 58 Official Use Only Develop hybrid mini grids for MMRE, rural electrification and solar kits AT2ER; CEET, US$298M 0.2 US$369M 0.1 A&M 1.67 1 1.33 private sector Expand and strengthen MMRE, resilience of transportation and AT2ER; CEET, US$741M 0.6 US$879M 0.3 A 1.67 1 1.33 distribution networks private sector Expand photovoltaic energy MMRE, production both on land and AT2ER; CEET, US$1,095M 0.8 US$1,468M 0.5 A 1.67 1 1.33 water. private sector Expand hydropower and biogas MMRE, energy production AT2ER; CEET, US$511M 0.4 US$644M 0.2 A 2.67 1 1.83 private sector Total Energy US$2,984M 2.22 US$3,885M 1.25 Source: World Bank Note: Total cumulative investment needs by 2035 and by 2050 are computed in present value using an annual discount rate of 6 percent. Investment as a share of GDP are annual averages for the periods 2025-35 and 2036-50. Table 9 - Key policy reforms for the energy sector Policy Recommendations Lead Viability2 Impact3 Overall4 type1 Undertake a comprehensive restructuring of CEET to ensure its financial health and MEF, MMRE, A&M 1.67 2.00 1.83 operational efficiency. CEET Revise grid extension plans and accelerate efforts to expand energy access, prioritizing MEF, MMRE, A&M 1.00 1.00 1.00 areas identified in the updated electrification strategy. CEET, AT2ER Support the financing of studies on energy efficiency, focusing on reducing technical MEF, MMRE, and commercial losses in the CEET network and improving energy use in public A&M 1.67 2.00 1.83 CEET administration buildings. Enhance the management of energy supply and associated financial risks to stabilize MMRE, CEET A&M 1.67 2.00 1.83 the sector. MEF, MMRE, Initiate key sectoral reforms to improve regulatory, operational and tariff structures. A&M 1.67 2.00 1.83 CEET Develop capacity and tools to integrate climate risks in infrastructure development and MEF, MMRE, A&M 2.67 2.00 2.33 maintenance. CEET, ARSE MEF, MMRE, Develop capacity to leverage new financing options from climate financing 2.67 2.00 2.33 CEET, ARSE Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 3.4. Supporting climate-smart transportation i. Sector context and challenges Developing an efficient and climate-smart transport sector is vital to stimulate structural transformation and preserve the environment. A robust and resilient transport network can unleash economic opportunities, stimulate agricultural diversification, encourage the adoption of more modern and capital-intensive farming practices, improve access to education and healthcare, and attract investments into local industries, creating new employment opportunities. Essential transport assets in Togo include its road network, particularly along the Lomé-Ouagadougou-Niamey Economic Corridor, and the Autonomous Port of Lomé (PAL), which is one of the major deep-water ports on the West African coast. Linked to Togo’s National Road RN1 and other road networks, the port enables the import and export of goods and cargo not just to and from Togo, but also for landlocked countries such as Burkina Faso, Mali, and Niger. Togo also has two international-class airports that are currently under-utilized, and a railway network largely underdeveloped and mainly used to transport mining products. The transport sector already faces threats from extreme weather events like heavy rains, flooding, and high temperatures. These events damage infrastructure like roads and bridges, driving up maintenance costs and disrupting economic activity. The relatively poor condition of the roads, where most of the secondary network is 59 Official Use Only unpaved, tends to increase damage and disruptions associated with these events. Investing in transport infrastructure to make it more resilient remains challenging, however, because of higher upfront costs and limited expertise in building to climate-proof standards. ii. Reducing climate-related damages to roads and bridges Without adaptation measures, climate change will likely increase disruptions to transport networks in coming decades. Almost 20 percent of roads could be damaged during 1-in-10 years flooding events, rising to 40 percent under extreme events with a return period of 100 years (Table 10). Bridges, however, are less vulnerable, in part because few roads cross steep terrain with potential high-water velocities. Geographically mapping these damages highlights a concentration of severe damage in the secondary links of the network, particularly within the Plateaux and Central regions. The total costs of damage from floods could be significant and growing over time. The wider economic cost of floods, including direct damage costs and indirect effects on economic activity, are currently estimated at US$12.1 million per year, 95 percent of which are caused by traffic disruptions and reduced accessibility. Some communities could be isolated for months at a time, highlighting the urgent need for climate adaptation interventions. Without adaptation measures, the cumulative costs to roads and bridges between 2021 and 2050 could total between US$249 million under dry/hot conditions and 536 million under wet/warm conditions, reaching annual losses of US$17 and 43 million over the period 2041-2050 alone. Table 10 - Summary of flood damage assessments Asset Type Total Damaged assets per return period assets RP10 RP50 RP100 RP250 RP500 RP1000 Bridges 735 4 22 32 64 78 100 (Number) Roadways (km) 8,976 1,717 2,697 2,931 3,234 3,623 3,765 Source: World Bank Figure 3-23 – Cost and benefit of investments to protect key road links PLAN A PLAN B PLAN C $ 11 Million $ 11.2 Million $ 4.4 Million Adaptation of assets that Country-wide adaptation of Adaptation for frequent produce significant total assets that produce flood events loss in all possible flood significant total loss in all (RP ≤ 100 y) for assets that events in the most ‘critical’ possible flood events produce significant total district (Maritime) (link-based adaptation) loss in the Maritime district Interventions on 3 bridges & Interventions on 2 bridges & Interventions on 3 bridges 76 km of roadways 79 km of roadways & 76 km of roadways 20 17.5 100 40% 33% $76 $72 15 $71 30% 10 7.9 50 20% 7.3 14% 13% 5 10% 0 0 0% BCR NPV (US$ Million) Annual ROI Source: World Bank Three potential plans are being investigated to protect critical road links in the short to medium term. Plans A and B would protect key road links from events as severe and rare as 1,000-year flood by raising road surfaces, adding drainage, and other measures; the difference is that Plan A would focus just on the Maritime region, while Plan B would cover strategically selected critical links across the whole country to avoid their closure and total stalling of the 60 Official Use Only network. Plan C would just add drainage – and only focus on the Maritime region. Not surprisingly, Plan B is the costliest (at US$11.2 million) followed by Plan A (US$11 million) and Plan C (US$4.4 million). All three as highly cost- effective, with benefit-cost ratios of 7.3 for Plan B, 7.9 for Plan A and 17.5 for Plan C, thus indicating that a scenario for adaptation to frequent events of the Maritime region could be the most advantageous from a cost-benefit perspective, while focusing on adaptation of high-cost links across the country is more comprehensive and equitable to secondary cities (Figure 3-23). This latter option (Plan B) could be privileged in the Government action plan. Reinforcing axle load control in Togo is critical for preserving the road infrastructure and ensuring sustainable transport. Excessive overloading of heavy goods vehicles significantly accelerates road deterioration, increasing maintenance costs and reducing the lifespan of road networks. UEMOA Regulation 14 and the updated ECOWAS Supplementary Act harmonize axle load standards and procedures across West Africa, aiming to curb overloading by imposing stricter measures such as mandatory weighbridge installations at high-capacity freight hubs, shared liability among stakeholders, and the requirement to offload excess weight before resuming transit. For Togo, effective enforcement of these measures would require investment in monitoring infrastructure, public awareness campaigns targeting transport operators, and strict adherence to fines and penalties dedicated to road maintenance. Regional collaboration is essential for uniform application and long-term road asset protection, particularly as key trade routes such as the Abidjan-Lagos corridor face increasing pressure from freight volumes. Paving the path to climate resilience. Paving roads and ensuring that the new pavement can resist more extreme floods and higher temperatures, could cut road network disruptions (and economic damages from those disruptions) in half by 2050. The relative cost of paving 1,460 kms of unpaved roads (about ½ of existing gravel and dirt roads) is estimated at US$563 million by 2035 and US$929 million by 2050 (in net present value term), while gradually replacing 1,608 kms of existing pavement with climate-resilient technologies is estimated at US$310 million by 2035 and at US$511 million by 2050. Meanwhile, costs of maintenance alone would largely surpass total resources of Togo’s national road maintenance company (La Société autonome de financement de l’entretien routier - SAFER), which only represented 1 percent of GDP in 2022. In addition to important governance challenges hindering the effectiveness of SAFER, challenges in developing a climate-resilient road sector include high upfront costs, the need for advanced engineering and innovative materials. Phasing out fuel subsidies could generate significant revenues that could be used to extend and maintain the country's rural road network. In 2022, fuel subsidies cost the government around 1 percent of GDP, more than the domestic budget for social protection programs. These subsidies also are highly regressive. By keeping fuel prices artificially low, they mainly benefit those who can afford to buy larger amounts of fuel, with 40 percent of the direct benefits going to the richest 10 percent. If Togo phased out the subsidies, it could limit the impacts on low-income households with targeted social protection programs or voucher systems. The Road Maintenance Fund (SAFER) should therefore raise additional funding necessary to implement long-term output- and performance-based maintenance contracts, taking climate-resilient standards into consideration. iii. Ensuring a sustainable development of the port of Lomé The Port of Lomé is amplifying challenges associated with sedimental drift and coastal erosion. The construction of the Port of Lomé's main jetty in the 1960s interrupted the eastward drift of sediment along the coast, causing the coastline west of the port to grow seaward and exacerbating erosion to its east. Analyses show that the most cost- effective option to reduce this erosion would be a sediment bypass around the Port of Lomé, involving the dredging of the port access channel and the transfer of sediments to the erosion zone to the east, which would have minimal negative impact on people's daily lives. However, future infrastructure planned could reduce the benefits of such a sediments bypass system over time, so other options, such as sourcing sand from nearby borrow pits, could also be considered to minimize erosion. Maintenance and dredging at sea combined with floating pipeline deposition appears to have the most favorable Benefit/Cost Ratio, and should be privileged by authorities (See Table 11). The Government also aims to establish an Emission Control Area around the port of Lomé. Togo is working to reduce shipping emissions around the port of Lomé. An Emission Control Area (ECA) in the framework of the International Convention for the Prevention of Pollution from Ships is seeking the adoption of low pollutants and low greenhouse gas fuel standards and compliance of shifts with strict controls for sulfur oxide emissions. The Government of Togo 61 Official Use Only has decided to take the lead in setting up an ECA around the Port of Lomé, which requires the submission of a dossier, including an impact study demonstrating the positive effects in terms of pollution reduction and public health, and requires a decision by the member countries of the International Maritime Organization (IMO), the world's regulatory body for maritime transport. The feasibility study is a decisive step towards mobilizing the member countries concerned around the initiative that Togo intends to lead. A roadmap was made for the project's preparation and parties to the Abidjan convention are being mobilized. Table 11 - Estimated costs and benefits of sediment bypass options Option 1 Option 2 Option 3 Maintenance and/or dredging at Maintenance and/or dredging at Mechanical extraction in the accretion sea, floating pipeline deposition sea, bow coupling unit on land, zone to the west of the PAL and storage, and transport by truck transfer of sediments by truck to 2 strategic zones located in the erosion zone to the east of the fishing port. Current Future Current Future Current Future situation developments situation developments situation developments Capacity [m3 /year] 1 million 500,000 1 million 500,000 1 million 500,000 Frequency Every 5 years Every 5 years Yearly Yearly Continuously Continuously [Millions of euros] Discounted Costs 118.71 71.04 136.34 90.07 130.02 76.80 Total discounted benefits 205.56 27.79 140.60 21.37 202.32 20.11 NPV 86.85 -43.24 4.26 -68.70 72.31 -56.69 Benefit/cost ratio 1.7 0.4 1.0 0.2 1.5 0.3 Source: World Bank iv. Promoting green mobility Electric mobility can improve the environmental performance of the transport sector, but scaling up such a solution is still a distant prospect. Togo’s Green Mobility Program aims to accelerate the adoption of electric vehicles, with a target of 3 percent market share of new registrations of EVs by 2025. It also aims to promote public transport, railways, and cycling and walking. The program, however, faces legislative, technical, financial, and capacity obstacles, including the lack of a shared and integrated vision for sustainable mobility, and does not account for the current dominance of road transport and limited EV charging availability. The development of technical standards for electric vehicles in Togo will be essential to ensure their safe production, reliable operation, and effective market integration. These standards should encompass performance, safety, and environmental specifications, particularly focusing on battery reliability and sustainability. Additionally, enhancing local technical capacities for battery diagnostics and recycling systems is crucial for sustainable growth in the EV sector. By developing a clear regulatory framework, Togo can support EV adoption, reduce emissions, and contribute to the global shift towards greener mobility solutions. Managing the quality and quantity of vehicles on the country’s roads will also be imperative. Road traffic is likely to grow substantially, even with investments in alternative modes of transportation. To improve air quality, reduce GHG emissions, and limit congestion, Togo will need a package of measures including tighter fuel efficiency and emissions standards, and maintenance requirements to identify and fix high-emitting vehicles. In the short term, Togo could also improve the quality of gasoline and diesel fuels, such as by requiring lower sulfur content or eliminating lead and manganese in gasoline. Public transportation can be made safer, smarter, greener, and more efficient with Intelligent Transport Systems (ITS). The Lomé-Ouagadougou-Niamey Economic Corridor is expected to be equipped with such digital services as automatic incident detection and automatic traffic management. The development of a national ITS policy and strategy engaging the private sector would contribute to expanding ITS nationwide and greening the transport sector. Reviving railway or waterway transport could help Togo realize its ambitions to become a regional logistics hub for West Africa. Continuing to move most freight by road would increase GHG emissions, road traffic crashes, air pollution, and traffic congestion around ports and other hubs. In this context, the country could prioritize investments towards rail and inland waterway systems. While Togo’s current railway system is underdeveloped and in a state of 62 Official Use Only disrepair new initiatives to link Benin and Togo with landlocked Niger and Burkina Faso could help revive railway freight transport over time. Table 12 -Key investments for the transport sector Investment Needs Investment Needs Policy Recommendations Lead Viability2 Impact3 Overall4 by 2035 by 2050 type1 Cumulative, Cumulative, Average, Average, Present Value Present Value %GDP %GDP US$ US$ Establish an Intelligent Transport Systems (ITS) with digital services MTRAF US$5M 0 US$10M 0 M 1.67 1 1.33 and automatic traffic management. Set up an Emission Control Area MEMPPC, US$6M 0.005 US$11M 0.003 M 2.00 1 1.50 (ECA) at the Port of Lomé. MEF, MERF MTPI, Upgrade existing paved roads to MTRAF, US$310M 0.24 US$511M 0.16 A 2.33 1 1.67 higher standards SAFER, MEF MTPI, Pave half of existing unpaved and MTRAF, US$563M 0.44 US$929M 0.3 A 2.33 1 1.67 gravel roads to higher standards. MEF, MDPR Upgrade key transport links for MTPI, protection against 1,000-year MTRAF, US$4M 0.003 US$6M 0.002 A 1.00 1 1.00 floods. MEF, MDPR Develop a sediment bypass system for the port of Lomé, MEMPPC, US$40M 0.031 US$66M 0.021 A 2.00 1 1.50 together with regular dredging of MEF the port access channel. Implement the green transportation plan, including MTRAF, US$80M 0.062 US$133M 0.043 A 3.00 1 2.00 efficiency and environmental MEF, MERF performance improvements. Total Transport US$1,008M 0.781 US$1,666M 0.529 Source: World Bank Note: Total cumulative investment needs by 2035 and by 2050 are computed in present value using an annual discount rate of 6 percent. Investment as a share of GDP are annual averages for the periods 2025-35 and 2036-50 Table 13 - Key policy recommendations for the transport sector Policy Recommendations Lead Viability2 Impact3 Overall4 type1 Enhance road assets management systems, including strict enforcement of axle load control, MTRAF A&M 1.00 1.00 1.00 and ensure routine data collection to prioritize investments. Conduct systematic climate risk analysis and vulnerability and prioritize resilient MTRAF A&M 1.33 1.00 1.17 infrastructures. Develop a Transport master plan to coordinate Sub-Sectors investments and implementation MTRAF A&M 2.00 1.00 1.50 MTRAF, Increase the technical and operational capacity of SAFER and ensure greater transparency. A 1.33 1.00 1.17 SAFER Implement tighter fuel efficiency and emissions standards for vehicles. MTRAF M 2.00 1.00 1.50 MTRAF, Develop a regulatory framework for technical standards of electric vehicles M 2.33 1.00 1.67 SAFER Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 63 Official Use Only 3.5. Leveraging and greening digital infrastructures i. Sector context and challengeS Digital technologies could significantly enhance Togo’s mitigation and adaptation efforts. Technologies that can improve resilience include early warning systems, digital public services, remote sensing technologies, real-time dashboards that enable timely data-driven decisions, integrated flood management systems, and smart irrigation systems. Additionally, as other sections in this chapter have described, digital technologies could accelerate the deployment of smart grids, improve traffic management and public transportation, and increase agricultural productivity. While digital technologies can help meet climate challenges, digital infrastructures may be susceptible to damage from extreme climate events. Storms, floods, mudslides, extreme heat, sea level rise, and other adverse conditions can damage landing stations, data centers, antennas, and other exposed and vulnerable equipment. For example, Togo has more than 1,735 mobile antennas (BTS) providing connectivity to thousands of mobile subscribers. The foundations of some of these, or other telecom towers, could be threatened by saline corrosion and soil instability, potentially cutting off telecommunications in affected areas and hampering emergency and recovery operations. Digital infrastructures are also critical to power and water supply, and related failures could cause widespread disruptions. ii. Digital solutions for a better resilience Digital technologies offer opportunities to adapt better to natural hazards. Mobile phones and internet connectivity could provide vulnerable populations with access to critical services and information before, during, and after weather events. Studies have shown, for example, that early warning systems reduce damage and fatalities during natural disasters. Similarly, up-to-date databases enable the delivery of critical services in social sectors such as education, health, social protection, and financial services, in part by helping to swiftly identify those in need in times of crisis. In its roadmap, Togo set a goal of digitizing 20 public services and 75 percent of administrative procedures by 2025. However, progress has been slow; as of March 2024, only 8 services had been digitized and made available on the "Service Public de l‘administration togolaise" platform. The Government is encouraged to accelerate the reengineering and dematerialization of critical public services to ensure their accessibility by vulnerable communities in the event of a climate shock. Togo’s multi-hazard early warning system (EWS) could be further reinforced. The flood EWS, which covers the entire country, relies on a network of volunteer observers who report hydrological, meteorological, and community information. To improve its potential, it is especially crucial to extend mobile coverage to remote and most vulnerable areas, particularly in climate “hot spots� where network coverage should be prioritized to improve the capacity to anticipate and respond to hazards. iii. Developing climate-resilient and low-carbon digital infrastructures To protect against climate-related risks, the government should develop climate-proofing strategies for digital infrastructures. Mobile networks in high-risk areas, especially coastal regions, face significant threats from rising sea levels, flooding, and soil instability. These factors can damage the foundations of critical infrastructure such as antennas and data centers, leading to service disruptions. Togo’s government has set ambitious goals to establish itself as a leading digital hub in West Africa by 2025. This includes the integration of fiber optic infrastructure into major civil engineering projects. Fiber optic cables are more resilient to climate events than traditional copper cables and are being rapidly deployed, with over 4,130 km installed. However, these networks are still vulnerable to damage from floods, debris, and exposure if not properly buried. To address this, the government is encouraged to adopt climate-proofing strategies, including deeper cable burial and the use of concrete ducts in vulnerable areas, and adopt new policies for the roll-out of green and resilient digital infrastructure that can withstand the impacts of climate change. The growth of the ICT sector presents opportunities for Togo to reduce the sector’s carbon footprint . With only 20.8 percent of mobile sites currently powered by solar energy, Togo could quickly and effectively reduce emissions by 64 Official Use Only replacing fuel-powered generators with solar energy systems at cable landing stations, core node sites, and mobile sites. That said, Togo was the first West African country to deploy a 5G network technology, which is up to ten times more energy efficient than previous technologies such as 3G. The Government can further decrease GHG emissions by establishing energy efficiency objectives and standards for networks and associated equipment. Togo also should consider developing policies to manage the 8 kilotons of electronic waste the country generates each year, as e- waste becomes an increasingly critical issue globally. Such policies could enable Togo to create new jobs and economic opportunities. Table 14 - Key investments for the digital sector Investment Needs by Investment Needs by Policy Recommendations Lead Viability2 Impact3 Overall4 2035 2050 type1 Cumulative, Cumulative, Average, Average, Present Value Present Value %GDP %GDP US$ US$ MENTD Expand climate-proof and resilient Mobile ICT infrastructures in high-risk Network US$76M 0.059 US$86.85M 0.0058 A 1.67 1.5 1.58 (remote) areas; and perform Operators periodic climate risk assessment. Service Providers Roll out critical digital public services to ensure the MENTD US$38M 0.0295 US$47.04M 0.0049 A 2.33 2 2.17 administration continuity in a ATD disaster. Set up one or multiple Disaster Recovery Centers in low-risk locations, which could enable the MENTD US$0.76M 0.0006 US$2.21M 0.0008 A 2.33 2 2.17 delivery of key e-services in the event of a climate shock. Total Digital US$115M 0.089 US$136M 0.012 Source: World Bank Note: Total cumulative investment needs by 2035 and by 2050 are computed in present value using an annual discount rate of 6 percent. Investment as a share of GDP are annual averages for the periods 2025-35 and 2036-50 Table 15 - Key policy recommendations for the digital sector Policy Recommendations Lead Viability2 Impact3 Overall4 type1 Implement mandatory green standards for increased resilience in new digital infrastructures MENTD A 1.67 2.00 1.83 Adopt new guidelines to promote the use of renewable energy for digital infrastructures MENTD M 1.33 2.00 1.67 Develop and adopt a national e-waste management strategy and implement regulatory MENTD M 1.67 2.00 1.83 decisions. Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 3.6. Accelerating the green transition in key industries i. Sector challenges and climate change Togo aspires to accelerate its industrial development, which will require improving industry’s r esilience to climate shocks and reducing its environmental footprint. Togo’s main industries are phosphate production and cement, though it also has commercial enterprises in food, textiles and clothing, wood, chemicals, and metals. To maintain competitiveness and access to international markets and to meet increasingly stringent national and global emissions reduction commitments, Togo therefore needs to intensify its decarbonization efforts in these industries. Furthermore, Togo’s exports to Europe could be impacted by the recently imposed Carbon Border Adjustment 65 Official Use Only Mechanism (CBAM). In this context, local industries may view this as an opportunity to set up their registry and MRV systems to better estimate their own emission and track GHG reduction targets as well as to establish internal Marginal Abatement Cost Curves (MACC) for future climate action. It will also further help carbon accounting at the national level (NDC and other international reporting exercises). Finally, it will strengthen the credibility of manufacturers seeking access to international carbon markets through the creation of high-quality and high-integrity credits. • Phosphate The mining sector has historically been dominated by phosphate mining. Since 2013, phosphate production has hovered around one million tons per year. While currently exploited clay deposits are expected to be depleted within the next ten years, newly identified rock deposits are estimated to have the potential for producing five to ten million tons per year for another 50-100 years. Extracting and processing these, however, will require substantial investments in production facilities and infrastructure. Most phosphate related GHG emissions come from the use of diesel fuel. This is mostly accounted for by excavation and transportation of the ore to the treatment plant at Kpémé and from heavy fuel oil consumption of the power plant providing energy to the phosphate beneficiation. Total annual consumption is about one million liters of diesel and approximately 20,000 tons of heavy fuel oil.48 Given the short remaining lifespan of the deposits, investing in low-emission energy is difficult, though some short-term efficiency gains might be possible. However, efforts should be made to climate-proof the extraction and processing of the yet to be developed rock phosphate deposits. The phosphate production is causing two serious environmental issues. First, abandoned mine sites in the Zio and Vogan prefectures have caused significant soil erosion and waterway siltation, and revegetation efforts have been inadequate. 49 Second, the concentration process for the phosphate ore releases large quantities of slurry which are pumped directly into the ocean from the production facility in Kpémé. The slurry contains large amounts of chemical and inorganic materials that harm marine life and constitute a threat to the population. 50 The discharge of phosphate sludge into Togo’s coastal waters is also impacting neighboring Benin’s marine area, causing a serious regional pollution challenge that needs to be addressed. Togo therefore should require the construction of settling ponds to remove the most contaminated tailings before water is released in the ocean. While the pond construction would incur a relatively modest investment amount (around US$10 million) which should be absorbed by SNPT or any future investor in phosphate expansions, the costs of clean-up from legacy mine sites and the marine pollution would require public funding since it is beyond the control of any future investor. Small-scale and artisanal mining for construction materials and gold is accelerating deforestation and polluting streams and rivers. While emissions are not considered a significant impact, flooding, erosion, and siltation originating from abandoned mine sites is a particularly important problem in the absence of a regulatory framework to enforce closure and rehabilitation requirements.51 Cement Togo boasts abundant limestone reserves and cement production face challenges. The country’s current cement production capacity is estimated at about 3 million tons per year and has the potential to grow by supplying both domestic needs and markets in neighboring countries like Benin, Ghana, and Burkina Faso. While there are expansions and potential market growth, challenges persist. These include the need for substantial investments in capital-intensive clinker production, potentially competing with low-priced imported clinker. Togo's GHG emissions from cement production are significant, but difficult to assess and reduce. Cement production emits CO2 directly in the calcination process (where limestone is heated to produce lime, with CO 2 as a byproduct) and 48 SNPT statistics 2020 to 2022 49 SNPT (2016), « Audit Environnemental et Social de la SNPT » 50 SOFRECO (2018), “Examen Approfondi du Rapport d’Audit Environnemental et Social » 51 Keita, S. (2021), “Guide de Réhabilitation et de Fermeture Applicables aux Sites Miniers et Carrières au Togo » 66 Official Use Only from the coal or natural gas used to in the heating process. Cement is a “hard-to-abate� sector, but some strategies exist and research is now underway to develop new technologies for low-emissions cement. ii. Priority reforms and efforts in decarbonizing key industries Table 16 - Key investments for the industrial sector Investment Needs Investment Needs Policy Recommendations Lead Viability2 Impact3 Overall4 by 2035 by 2050 type1 Cumulative, Cumulative, Average, Average, Present Value Present Value US$ %GDP %GDP US$ Implement marine water quality testing of the coastline near the MERF, SNPT Phosphate production US$2.57M 0.002 US$4.24M 0.0014 M 1.33 1.5 1.42 MME facilities and construct settling basins for treatment of slurry. Implement regulations requiring regular reporting and monitoring of GHG emissions from cement MERF, US$0.16M 0.0001 US$0.27M 0.0001 M 2.00 2 2.00 plants and set a net zero MME decarbonization roadmap for the sector. Develop and enforce robust monitoring and reporting systems MERF, to track the progress of private US$376.20M 0.2921 US$620.25M 0.1994 A&M 1.67 2 1.83 MIPI sector initiatives in climate mitigation and adaptation. Total Industry US$379M 0.294 US$625M 0.201 Source: World Bank Note: Total cumulative investment needs by 2035 and by 2050 are computed in present value using an annual discount rate of 6 percent. Investment as a share of GDP are annual averages for the periods 2025-35 and 2036-50 Table 17 - Key policy recommendations for the industrial sector Recommendations Lead Policy type1 Viability2 Impact3 Overall4 Implement a comprehensive strategy and address marine pollution from MERF, MIPI M 1.33 1.00 1.17 the release of tailings Develop and implement mine pit rehabilitation plans of abandoned SNPT sites, accelerate revegetation plans, and develop tighter mine closure MERF, MME M 1.00 2.00 1.50 regulation Climate-proof the mining industry including promoting energy efficiency, adopting cleaner production technologies, and transitioning to alternative MERF, MME M 2.67 2.00 2.33 fuels. MERF, MEM, Togo Cement Expand demand for low-carbon cement among end-users. M 1.00 2.00 1.50 Producers Association Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 67 Official Use Only CHAPTER 4. POVERTY, HUMAN CAPITAL, AND RESILIENCE TO SHOCKS Togo’s exposure to climate change can slow down poverty reduction, increase fragility risks, and delay structural transformation. Poor and women are less able to self-insure against shocks and are particularly affected by climate change’s negative impact on health and education outcomes. Given the importance of human capital for climate adaptation as well as future productivity levels, inaction today will have lasting consequences for future generations. To offset the effects of climate change on human capital accumulation, it is necessary to strengthen household resilience and build climate-smart delivery systems in health, education, and adaptive social protection. Over the period of 2025-2050 such investments would amount to US$3.6 billion in net present value requiring an investment rate of 1.18 percent of GDP from 2025-2035 and 0.85 percent from 2036-2050. 4.1. Climate change impacts on poverty and human capital i. Climate change, poverty, and gender inequality Climate change could slow poverty reduction efforts, particularly in the absence of reforms accelerating the structural transformation. Without climate change, the national poverty rate could be expected to fall to 22 percent of the population in the business-as-usual scenario and down to 8 percent under the structural transformation scenario. Improved living standards in the latter scenario are attributed to increased female labor force participation, reduced fertility rates, rising agriculture yields, and a more fluid sectoral reallocation from low to higher productivity jobs. 52 Under the more benign wet/warm scenario (see Chapter 1 for a description), climate change could cause a rise in the poverty rate of 1.5 percentage points by 2050. In the more acute dry/hot scenario, the increase could reach 3 percentage points (Figure 4-1). The combination of a higher poverty rate and the expected population growth will mean that the size of the population being affected by climate change on a yearly basis will increase, reaching between one quarter to half a million people in 2050. The welfare losses will be particularly large in rural areas, particularly the Savanes and Plateaux regions which are highly exposed to climate shocks, and the Maritime region impacted to intensifying coastal and urban floodings as well as heat stress. The structural transformation would significantly reduce the impacts of climate change on livelihoods, with an increase in poverty of only about one-third of that in the business-as-usual scenario. Moreover, the gains from structural change compound over time, with the increase in poverty due to climate change decreasing over time (Figure 4-2). The increase in poverty is just the tip of the iceberg, as climate change will significantly reduce the consumption of already poor households. Climate change could cause the poverty gap, a metric that can help illustrate the welfare losses of the already poor population, to increase by 7.4 percent under the wet/warm scenario and by 14.3 percent under a dry/hot scenario. This cost increases continuously over time, reflecting how already poor households are disproportionally affected by climate change because their income portfolios  are strongly intertwined with the more exposed agricultural sector. These households suffer the brunt of climate change, given the direct impacts of weather on agricultural output, through the declines in labor and land productivity. The increased intensity and frequency of climate hazards will be particularly impactful after 2040, highlighting the importance of undertaking adaptation measures today to prevent or reduce future adverse impacts. Vulnerable households will be impacted by low returns on labor and higher prices. The decline in labor returns results from the combined effects of lower labor productivity and slower structural transformation resulting from climate change impacts. Lower labor productivity is caused by factors such as heat stress and the decline in crop and livestock yields, and is expected to reduce average wages by 1.5 percent in a dry/hot scenario, with stronger wage reductions for low-skill male workers. Moreover, the particularly acute reduction in agricultural productivity, coupled with rising food demand, will keep a larger share of the workforce in agriculture, hindering the process of structural transformation and leading to higher poverty levels (Figure 4-3). By 2050, the proportion of workers in agriculture is expected to be 4.3 percentage points higher in a dry/hot scenario than in the baseline scenario. Finally, the decline in agricultural productivity will also affect households through increased prices. In particular, climate-induced inflation 52Poverty projections for the next three decades involve a high degree of uncertainty and, therefore, should not be taken at face value; instead, they should be used as anchors to simulate the changes in welfare resulting from climate change, which will be the main statistic reported in the rest of this section. 68 Official Use Only is expected to erode the purchasing power of already weakened labor earnings. By 2050, climate change will create upward pressure on prices between 1.8 and 4.5 percent, depending on the scenario. Compared with peers, the poor in Togo are particularly exposed to extreme weather climate events. About four out of 10 people living in extreme poverty are exposed to extreme climate events in Togo, which makes them one of the most exposed in the region (Figure 4-4). the country more exposed to these events than other countries in the region. The most common events vary greatly by subregion. Heat and Droughts are common extreme events that affect the population in Maritime and Savanes. The incidence of Droughts is particularly spread all across the country, with all the regions, except for Lomé, having almost 20 percent of their population affected by this extreme event. This suggests that adaptation measures that prevent households from running out of water for their consumption and for growing crops are essential in these regions. Although floods affect fewer people on a national scale than droughts, their effects are highly localized in Lomé. Figure 4-1 - Climate change will increase the incidence Figure 4-2 - ... the depth of poverty could substantially of poverty, although much less in the structural increase through welfare losses of already poor transformation scenario… households Difference in poverty headcount compared to baseline Increase in BAU poverty gap compared to baseline (%) Sources: World Bank staff calculations, based on EHCVM 2018-2019 microdata, macroeconomic projections obtained from CC-MFMOD and biophysical damage functions from Industrial Economics (IEc). Figure 4-3 - Climate shocks could slow structural Figure 4-4 – The poor in Togo are more exposed to transformation, as more workers stay in agriculture extreme climate events than many peers Increase in poverty against increase in agricultural workers Total population and extreme poor (USD 2.15 PPP 2017) exposed to climate shocks Sources: World Bank staff calculations, based on EHCVM 2018-2019 microdata, macroeconomic projections obtained from CC-MFMOD and biophysical damage functions from Industrial Economics. 69 Official Use Only Poor households are more vulnerable to natural disaster shocks and are less able to self-insure against shocks. The poorest households are less resilient to climate change and face more barriers to migrate to areas or occupations that are less affected by climate change.53 Among poor households, 18.7 percent reported having been affected by a natural disaster shock, compared with 5.1 percent for households with at least one member active in the formal sector. Resorting to negative coping mechanisms is also more common among poor households while recurring shocks deplete their limited savings, leading to lower levels of productive and human capital investments.54 Women are overrepresented in climate-vulnerable sectors and are at higher risk of suffering the consequences of climate change. While 21 percent of women and 40 percent of men are active in agriculture in Togo,55 climate change and shocks have led to outmigration of men in West Africa, increasing women’s share of agricultural labor. 56 Evidence shows that poor and female-headed households in rural Africa face greater livelihood risks from climate hazards.57 Also, women are more likely to lose their livelihoods in the aftermath of a natural disaster.58 Beyond agricultural activities, women are more likely to engage in at-risk employment activities and informal jobs – hence, they are less protected in the event of a shock. In Togo, 80 percent of women are in vulnerable employment, compared to 62 percent of men.59 In rural areas, 28 percent of Togolese women over 15 work without remuneration for family members, compared to 9 percent of men. 60 Women are more likely to adopt negative coping strategies during disasters and external shocks. Having to confront financial or food insecurity caused by climate change can increase the risk of women skipping meals 61 and amplify the risks of child marriage.62 Evidence also shows that income shocks caused by climate impacts, such as droughts, can affect the age of marriage because marriage payments are a source of consumption smoothing, particularly for a woman's family.63 Moreover, the limited agency of women might keep them in unsafe settings and compromise their safety. Evidence suggests that women experience an increased burden of domestic work and heightened risks of gender-based violence after natural disasters.64 Women displaced due to disasters are often at greater risk of gender-based and sexual violence, exploitation, and trafficking while also having reduced access to formalized safety nets.65 Furthermore, women’s voices are often not represented in disaster-related decision-making. ii. Climate change and human capital While access to quality education and full health is key to human capital accumulation, prosperity and well-being, their progress is slowed with lasting consequences for future generations in the wake of climate change. In 2020, a child born in Togo was expected to be 43 percent as productive as she could be if she had access to complete education and full health. While this is slightly higher than the average for Sub-Saharan Africa (40 percent) and Low- Income Countries (37 percent), Togo is still grappling with a high learning poverty rate of 86 percent, with particularly 53 Rigaud, K. K., de Sherbinin, A., Jones, B., Bergmann, J., Clement, V., Ober, K., . . . Midgley, A. (2018). Groundswell: Preparing for Internal Climate Migration. World Bank, Washington, DC. Retrieved from https://hdl.handle.net/10986/29461 54 Karlen, R. a. (2023). Togo Jobs Diagnostic—Confronting Challenges and Creating Opportunities for More Good Quality Jobs for All. World Bank, Washington, DC. 55 Institut National de la Statistique et des Etudes Economiques et Démographiques (INSEED). (2022). Enquête Harmonisée sur le Conditions de Vie des Ménages, 2021-2022. 56 FAO, 2011. 57 IPCC, 2022. 58 Acevedo, M. C. (2014). The Effect of Extreme Hydro-Meteorological Events on Labor Market Outcomes: Evidence from the Colombian Caribbean. Harvard Environmental Economics Research Seminar; & Erman, A. T. (2019). Wading Out the Storm the Role of Poverty in Exposure, Vulnerability and Resilience to Floods in Dar Es Salaam. Washington, DC: World Bank. Retrieved from http://hdl.handle.net/10986/32269 59 ILO estimates. 60 Institut National de la Statistique et des Etudes Economiques et Démographiques (INSEED). (2022). Enquête Harmonisée sur le Conditions de Vie des Ménages, 2021-2022.. 61 Erman, A., De Vries Robbe, S. A., Thies, S. F., Kabir, K., & Maruo, M. (2021). Gender Dimensions of Disaster Risk and Resilience : Existing Evidence. Washington, DC: World Bank. Retrieved from https://hdl.handle.net/20.500.14041/3385; & Shoji, M. (2010). Does Contingent Repayment in Microfinance Help the Poor During Natural Disasters? Journal of Development Studies, 46(2), pp. 191–210. doi: https://doi.org/10.1080/00220380902952381 62 Corno, L. H. (2020). Age of Marriage, Weather Shocks, and the Direction of Marriage Payments. Econometrica, pp. 879-915. doi: https://doi.org/10.3982/ECTA15505 ; UN Women 2022a. 63 Corno, L. H. (2020). Age of Marriage, Weather Shocks, and the Direction of Marriage Payments. Econometrica, pp. 879-915. doi: https://doi.org/10.3982/ECTA15505 64 Desai, B. &. (2021). Role of Climate Change in Exacerbating Sexual and Gender-Based Violence against Women: A New Challenge for International Law. Environmental Policy and Law, 51(3), pp. 137-157. doi:https://doi.org/10.3233/EPL-210055; & Erman, A. T. (2019). Wading Out the Storm the Role of Poverty in Exposure, Vulnerability and Resilience to Floods in Dar Es Salaam. Washington, DC: World Bank. Retrieved from http://hdl.handle.net/10986/32269; Khanna, M. a. (2020). Do Marriage Markets Respond to a Natural Disaster? The Impact of Flooding of River Kosi in India. doi: http://dx.doi.org/10.2139/ssrn.3644052; & Rodrigues 2022; UN Women 2022. 65 CARE, 2020; UNHCR, 2022. 70 Official Use Only weak outcomes for reading capabilities. Unless appropriate reforms and investments are initiated, climate change is expected to impact negatively human capital outcomes in coming years, exacerbating learning and health-related challenges. This in turn, will negatively affect productivity levels of future generations, further increasing labor earning variations between households in the higher and those in the lower quintiles, and reinforcing inter-generational poverty traps. Cross country evidence suggests that children affected by floods today will have between 21 and 27 less weeks of schooling by the time they reach adulthood, thus amplifying poverty traps.66 Learning outcomes could be severely impacted by heat stress and a lack of resilient school infrastructures. Togo is still grappling with a high learning poverty rate of 82 percent, with particularly weak outcomes for reading capabilities, while the transition rate to high school for girls is half that of boys (26.7 percent vs 52.1 percent), with only 4 percent of girls completing secondary school. A significant percentage of public primary schools lack essential facilities or services such as electricity, water points, hand-washing facilities, and adequate latrines. While conditions improve marginally at the lower secondary level, significant gaps persist. Moreover, 15 percent of classrooms at lower secondary level were constructed using non-sustainable materials and are vulnerable to climate-related damage, exacerbating existing infrastructure deficiencies. The precarious conditions of school infrastructure as well as a lack of adequately trained teachers exacerbate the situation, hindering effective teaching and learning and widening educational disparities. Data from the 2023 national assessment of basic reading skills (EGRA) and ERA5 data underscore the connection between academic performance and temperatures, school vegetation, classroom construction, class size, and school status (private or public). While a 1°C increase in temperature explains 17 percent and 15 percent of the variation in reading and mathematics scores, respectively, the presence of school vegetation is positively correlated with reading scores. In the absence of effective adaptation strategies to reduce heat stress in classrooms, climate change could reduce learning outcomes by 10 to 20 percent over the next 25 years, depending on the climate scenario. As cohorts of students reach the active age, up to 70 percent of the labor force could be impacted, reducing aggregate productivity by between 1.8 and 3.2 percentage points by 2050. The hard-won gains of social and public health programs are threatened by the increased frequency of climate shocks. Climate change will further increase risk factors and disease incidence and mortality, with deaths from malaria, water-related and heat-related diseases estimated to reach 73.9, 86.3 and 3.6 per 100,000 people by 2050, respectively. While impacts on the labor supply would remain moderate, household-level and system-wide healthcare effects might still be very significant due to increases in mortality and morbidity caused by climate change. Adaptation measures considered in this report would enable a reduction of 63 percent in malaria-related deaths, 46 percent in malaria incidence, and 63 percent in incidence and 83 percent in deaths from water-borne diseases. Climate change poses a particular threat to the health of women and adolescent girls by impeding their access to services and increasing the risks associated with maternal and child well-being. Studies suggest that extreme heat increases the occurrence of stillbirths,67 while climate change contributes to the expansion of vector-borne diseases like malaria and other emerging and reemerging diseases due to climate change.68 These illnesses are known to be associated with adverse outcomes for both mothers and newborns, negatively impacting their human capital.69 Natural disasters may also amplify the risks of maternal mortality and pregnancy-related health complications.70 In the case of climate disasters, displaced women and adolescent girls frequently lose access to sexual and reproductive health services, leading to a rise in unintended pregnancies 71 and sexually transmitted infections.72 Increasingly scarce water resources could also adversely affect human health outcomes and increase fragility risks. The change in precipitation distribution is expected to decrease groundwater and surface water stocks, causing early 66 Caruso, G. D. (2017). The legacy of natural disasters: The intergenerational impact of 100 years of disasters in Latin America. Journal of Development Economics, 127, 209-233. doi: https://doi.org/10.1016/j.jdeveco.2017.03.007 67 Ha, S. Z. (2017). Ambient temperature and air quality in relation to small for gestational age and term low birthweight. Environmental research, 155, 394-400 68 Watts, N. A.-K. (2018). The Lancet Countdown on health and climate change: from 25 years of inaction to a global transformation for public health. . The Lancet, 392(10163), 2479-2514. 69 Mubashir, M. A. (2020). Dengue and malaria infections in pregnancy. Wien Klin Wochenschr, 132, 188–196. Doi: https://doi.org/10.1007/s00508-019-01606-8 70 Davis et al. 2010; Rylander et al. 2013. 71 UNFPA, 2021. 72 w, W. H., de Walque, D., & Nathan, R. (2014). Rewarding Safer Sex : Conditional Cash Transfers for HIV/STI Prevention. Washington D.C.: Policy Research Working Paper No. 7099. doi: http://hdl.handle.net/10986/20617 71 Official Use Only drying up of wells and watercourses. This makes the water sector highly vulnerable at the national level, and particularly in the Savanes, Kara, and Maritime regions. Reduced access to drinking water could heighten conflicts around water supply sources.73 An increased frequency of flooding and sea level rise could also impact the quality of freshwater resources. Projections show sea levels could rise by up to 0.34m by 2050, resulting in permanent saltwater intrusion in coastal rivers and shallow aquifers. Coastal and densely populated urban areas, such as Lomé and its surroundings, would experience the biggest losses, as the impacts of flooding would be exacerbated by the unplanned growth of informal settlements in low-lying lands, the lack of functioning storm water drainage systems, and insufficient gutters. Flooding events can lead to groundwater contamination, polluting the private wells on which most of Lomé’s inhabitants depend on for potable drinking water. The lack of improved sanitation facilities also increases the risk of contaminating potable water sources used for drinking water, representing a significant public health hazard. iii. Building a more resilient, productive, and inclusive society To offset climate change impacts and to build a more resilient, productive, and inclusive society, the Government will need to put in place climate-smart reforms and redirect investments. The first strategic objective of the Government Roadmap 2020-2025 is to "strengthen inclusion and social cohesion and ensure peace.� The roadmap seeks to reduce inequalities, vulnerability, and insecurity through coordinated actions, and to boost human capital outcomes through reforms and investments in social protection, health, and education. While this CCDR encourages the Government to continue pursuing investments in the existing programs in education, health, and social protection, it also calls for reforms and targeted investments to address climate change impacts on its population more specifically to avoid lasting consequences on the socio-economic wellbeing of future generations, with a focus on those most vulnerable and least able to cope with the impacts. Such foundational investments include building information systems sensitive to climate change concerns, including unique identification, social registries, and resilient delivery across all social sectors. a. Develop productive safety net programs focused on supporting the resilience and livelihoods of vulnerable populations and the conservation of natural resources Productive safety net programs play an important role in strengthening the resilience of poor households and better preparing for climate change impacts and other shocks. There is strong evidence that social safety nets help build resilience74 and contribute to reducing extreme poverty. In Togo, unconditional cash transfers (UCTs) have increased maternal and child (18-23 months) food consumption by 4.5 and 9.1 percentage points, respectively; alleviated household food insecurity by 10.7 percentage points; reduced financial barriers to seeking health care for sick children by 26.4 percentage points and reduced physical violence by intimate partners by 7.9 percentage points. In addition, women who received cash transfers were more likely to give birth in a health facility (+10.6 ppt), and less likely to give birth to babies weighing less than 2,500 grams (-11.8 ppt).75 Investments in human capital through safety net programs not only strengthen today’s household resilience, but also improves the productivity of the next generation of the workforce, supporting the country’s structural transformation. Despite the importance of social assistance in building household resilience, current programs are not reaching the poorest and most vulnerable. Coverage of social safety nets (Figure 4-5) and social protection programs (Figure 4-6) in Togo remains below that of regional peers, with spending on social safety nets reaching 0.6 percent of GDP compared to an average of 1.4 percent for other low-income countries. Also, apart from cash transfers, COVID-19 support, and in-kind transfers, most social assistance spending in Togo does not effectively reach the poorest, with 56 percent of all beneficiaries being non-poor (Figure 4-7).76 However, cash transfers appear to be the most effective form of intervention to target poverty risks.77;78 For instance, more than 52 percent of beneficiaries of COVID-19 73 République Togolaise. (2021). Contributions Déterminées au Niveau National (CDN) Révisées - Document intérimaire. 74 For more information: https://thedocs.worldbank.org/en/doc/c132eb4f7f6d589a67d865b5cd3bc77a-0010052024/related/FR-VER-Infographic-Final.pdf 75 https://journals.plos.org/plosmedicine/article/file?id=10.1371/journal.pmed.1003388&type=printable 76 Poor households are those in the bottom four deciles, which is relatively close to the percentage of poor according to the national poverty line (43.8% according to the latest EHCVM 2021 data). 77 World Bank: Public Expenditure Policy Note (2022). 78 For the FSB cash transfer project, 83 percent of the funding directly reduced the poverty gap, whereas for the electricity subsidy and student allowances the figure is merely 9 and 5 percent, respectively. 72 Official Use Only related cash transfers were poor, largely due to the focus on beneficiary identification and the use of digitally enabled targeting tools. The low coverage and the lack of a clear pro-poor targeting strategy for social assistance programs highlights the importance of operationalizing the National Non-Contributory Social Protection Program (PNPSNC or Programme National de Protection Sociale Non-Contributive), launched in May 2023, and further developed in the upcoming National Social Protection Policy (Politique Nationale de Protection Sociale, PNPS, 2024-2035). It is necessary to translate the vision behind the new flagship program into decisions regarding its institutional set-up, financing and deployment strategy. This work should include both fine-tuning the design of the accompanying measures to reflect the climate change adaptation objectives, and continued investment in the delivery system to ensure its responsiveness to shocks. The strengthening of interoperable delivery systems for more efficient and effective targeting of social programs is already at the core of the PNPSNC. The Social Registry of Individuals and Households (Registre Social des Personnes et des Ménages, RSPM) is expected to be operationalized starting 2025, and will serve as a platform for social program targeting, thus improving efficiency. Further enhancements to the RSPM include integration with hazard data and early warning systems, and adaptive targeting mechanisms. Figure 4-5 - Social safety net coverage in Togo is lower Figure 4-6 - …so is the coverage of social protection than among regional peers programs SSN coverage in 2018 (percent of population) SPL coverage in 2018 (percent of population) 35 33.09 50 30 38.96 24.40 40 25 30 27.16 20 17.07 17.31 14.94 18.11 18.86 15 17.43 20 10 10 5 0 0 Togo Sierra Leone Benin Senegal Cote d'Ivoire Togo Benin Sierra Leone Senegal Cote d'Ivoire Source: World Bank, using ASPIRE Data Source: World Bank, using ASPIRE Data Figure 4-7 - Cash transfer programs tend to better target the poor Distribution of beneficiaries by decile, 2021 Source: World Bank Staff calculations based on EHCVM 2021 The new flagship social safety net program consolidates and leverages innovations in non-contributory social protection in Togo to improve the welfare and shock resilience of poor and vulnerable households. The new PNPSNC aims to scale up the Novissi platform established during the COVID-19 pandemic with the aim of reaching 1.8 million 73 Official Use Only extremely poor people with cash transfers,79 a savings account, shock-responsive safety net, and accompanying measures to strengthen and protect human capital outcomes in the face of shocks. The new flagship social safety program plans to institutionalize support for households to build resilience before, and protect human capital amid, climate shocks, through cross-sectoral collaboration, strengthening delivery systems and defining a framework on when and how poor and vulnerable households affected by shocks will be supported through monetary and in-kind support. This program will also help to address gender disparities, 80 as it prioritizes women as recipients of benefits and will contribute to changes in the gender norms that perpetuate gender inequalities and make women more vulnerable to climate change. In addition, the program has the potential to address social cohesion concerns related to displacement. Moving forward, the program will leverage an interoperable delivery system with the RSPM at its core. Operationalizing the RSPM will be key to ensure that safety net programs reach the poorest, and that resources are allocated efficiently. The RSPM lays the foundation for harmonized and more reliable and efficient beneficiary identification for social services and programs to reduce inclusion and exclusion errors as well as program duplication. Starting in 2025, households will be registered in the RSPM through self-reported socio-economic information, cross-referenced with administrative data, to determine their eligibility for social programs and services based on pre-approved vulnerability criteria. Benefits will be paid through a multi-program and multi-provider payment platform. Operationalizing and maintaining a dynamic and interoperable RSPM and payment platform are prerequisites for enhancing resource allocation and improving the effectiveness of social programs that promote household resilience. The institutionalization of a shock response program to provide cash benefits to poor and vulnerable households affected by climate shocks will require adjustments to the social protection delivery system. The following measures are recommended: First, combining georeferenced information from the RSPM with hazard data will produce more accurate hazard maps of household exposure to shocks. These data and maps can then help build socio-economic resilience models that estimate the potential effects of asset losses on income, consumption, and well-being at the household level, calibrating the magnitude and duration of the support in the event of an impact. It will also allow the government to prioritize those households most vulnerable to climate shocks for the flagship safety net program. Second, there is a need for a decision framework defining shock response triggers and modalities, including in which case cash or in-kind support is most appropriate to support poor and vulnerable households affected by a climate shock. Third, the use of a digital delivery platform for mobile cash transfers would ensure rapid responses, avoiding long waiting periods that can amplify disaster-induced losses. Using a unique identification number will make it possible to build a payment bridge to potential beneficiary households so that they will receive cash benefits in a timely manner. Fourth, risk financing mechanisms will need to be prioritized, including by creating a dedicated budget line for the shock response program. Greater emphasis on climate-smart accompanying measures and economic inclusion can deliver additional benefits in terms of food security, climate adaptation, and mitigation. The PNPSNC is a vehicle to raise the awareness of poor households and encourage their adoption of climate-smart practices. The flagship program’s accompanying measures include land restoration efforts and agroforestry systems, crop diversification, and integrated soil management to increase soil fertility. However, a more comprehensive package of economic inclusion activities would provide vulnerable households with support for the development of skills that meet the green economy’s needs. Households most vulnerable to climate shocks tend to have lower levels of formal education and will therefore need targeted support and training to benefit from the transition to a low-carbon economy. In addition, labor-intensive public works (LIPW) programs can support building a more resilient natural and physical asset base. LIPW programs have been shown to improve landscape management through reforestation efforts, promotion of agroforestry, soil and water management, and crop diversification. Togo already has successfully implemented LIPW in the past, most recently under the Employment Opportunities for Vulnerable Youth Project ( Projet Emplois des Jeunes Vulnérables) which created more than 14,000 temporary employment opportunities for youth in 200 of the 79 Approximately 440,000 extreme poor households, based on an average household size of 4.2. 80 Not only through changing bargaining power of women within the household, but also through the accompanying measures to both women and men that will utilize information campaigns to increase community awareness of maternal and reproductive health benefits and promote financial literacy among women. 74 Official Use Only poorest communities.81 Togo has also adopted a legislative framework for LIPW, allowing future scale up. 82 Additionally, context-specific social safety nets, especially comprising re-skilling programs, and promoting access to green job opportunities will be needed for displaced migrants and youth to ensure their active participation in the workforce and greater social cohesion in receiving localities. Finally, it is crucial to increase women's active participation in structural transformation and strengthen their role in public and private sectors. This includes recognizing women's critical role in households’ resilience building83 and empowering them in climate change-related issues84 by prioritizing women as beneficiaries of social protection programs, improving women’s land tenure security85 and access to extension services and training on climate-smart agriculture.86 Besides strengthening women’s economic resilience, key actions focusing on women’s voice and participation in climate action could involve: i) building women’s capacity and knowledge on climate adaptation strategies; ii) developing women’s skills needed for success in the green economy, iii) and ensuring women’s representation in climate action decision-making, including in consultation processes on urban planning, disaster risk management (DRM), and climate change adaptation policies. It will be critical to promote women's leadership in building community resilience and strengthening gender-sensitive climate policies. b. Strengthen human capital through more climate-smart education and health systems 1. Education systems Concerted reforms and investments in basic education to improve learning outcomes are a precondition for an equitable and sustainable transformation process. This requires ensuring stronger foundational skills among students, which currently are not learning even if attending schools. In fact, Togo has one of the highest learning poverty rates globally, reaching 82 percent. Without basic literacy and numeracy skills, any climate education risks being ineffective. Hence, Togo needs to sustain efforts towards improving quality education, especially at the early grades. Investments in early education are likely to be a higher-impact investment compared to specialized climate curriculum.87 Additionally, to ensure an equitable structural transformation of the economy and support climate change adaptation, upskilling the country’s current and future workforce will be key. As Togo’s economy transitions away from agriculture to manufacturing and services, it will likely have wide ranging impacts on labor markets and the demand and supply of skills. Quality higher education and Technical and Vocational Education and Training (TVET) will be critical to ensure that the workforce is able to navigate the transition and reap future job opportunities. Moreover, investment in climate-smart school infrastructure will create a better learning environment and improve learning outcomes. Specific investments include the construction of climate-smart school infrastructure, the maintenance and improvement of existing infrastructure, and scaling up tree planting and reforestation efforts to serve as natural buffers. By 2050, all new school buildings should meet new norms and standards across all education levels. Other important measures include adjusting buildings for emergency preparedness, through temporary shelters, and reception and distribution centers for food and basic necessities. Better preparedness and adaptation may systematically rely on enhanced school feeding programs to improve children's education and health outcomes. Enhanced planning and data collection are key to supporting the gradual move to climate-smart school infrastructure, with the aim of ensuring continued access to education during adverse weather conditions. The 81 Ministère du Développement à la Base, de l’Artisanat, de la Jeunesse et de l’Emploi des Jeunes, MDBAJEJ - Rapport d’achèvement. 2021. Access in July 2023. 82 https://www.togofirst.com/en/economic-governance/2806-3440-togo-issues-public-works-monitoring-law-to-better-coordinate-large-projects 83 Kalle and Muller, 2024. 84 Deininger F. H., Woodhouse, A. F., Kuriakose, A. T., Gren, A. I., & Liaqat, S. (2023). Placing Gender Equality at the Center of Climate Action (English). World Bank Group Gender Thematic Policy Notes Series. Washington, DC: World Bank Group. Retrieved from http://documents.worldbank.org/curated/en/099718102062367591. 85 Agyei-Holmes, Andrew; Buehren, Niklas; Goldstein, Markus; Osei, Robert; Osei-Akoto, Isaac; Udry, Christopher. 2020. The Effects of Land Title Registration on Tenure Security, Investment and the Allocation of Productive Resources: Evidence from Ghana. Policy Research Working Paper; No. 9376. © World Bank, Washington, DC. http://hdl.handle.net/10986/34423 License: CC BY 3.0 IGO.� 86 Kondylis, F., Mueller, V., Sheriff, G., Zhudo, S. 2015: Do Female Instructors Reduce Gender Bias in Diffusion of Sustainable Land Management Techniques? Experimental Evidence From Mozambique. World Development Vol. 78, pp. 436–449, 2016 0305-750X/ 2015 Elsevier Ltd. All rights reserved. 87 Sabarwal, Shwetlena; Venegas Marin, Sergio; Spivack, Marla; Ambasz, Diego. 2024. Choosing Our Future: Education for Climate Action. © Washington, DC: World Bank. 75 Official Use Only Information System in the sector needs to be consolidated and migrated to an Education Management Information System (EMIS) that also considers climate change related elements. Climate-smart infrastructure and education sector reform will have to be complemented by adjustments in school schedules and curricula, reinforced teacher training, and digitalization incorporating adaptation to climate change. Adjustments to school schedules could help reduce heat stress by limiting students' exposure to peak heat, improving learning conditions, and saving energy costs. Behavioral change can be facilitated through the integration of climate change education across curricula and training modules, enabling teachers to empower learners to adapt to climate change and respond to climate shocks. This will require training and upskilling teachers, based on scientific evidence, ideally by leveraging digital tools to overcome logistical challenges and optimize time management. Reforms and innovations, as well as teacher training, are part of the ongoing process of reducing learning poverty and lowering access barriers, particularly for girls. Digitizing the learning environment, including by connecting schools to the internet and implementing a multimodal digital learning platform accessible to all teachers, students, and participants in the system, offers an opportunity to enhance learning opportunities at all education levels, and to counteract a reduction in learning time due to climate induced shocks. Digitizing the learning environment will require a holistic approach, by improving connectivity and access to electricity, including in remote areas, and by investing in the promotion of age-appropriate digital skills, to successfully complement the existing learning environment and improve access and quality. Several e-learning platforms were deployed in Togo in response to the COVID-19 pandemic and could be reinforced to respond to climate hazards. During the COVID-19 pandemic, most institutions turned to online or remote options (internet, radio, and television) to continue delivering courses to learners. An initiative is underway to provide the country with a national Open and Distance Learning (ODL) policy to create innovative learning opportunities for teachers. ODL will enable virtual access to training with flexible learning opportunities tailored to learners' needs. In the agriculture sector, online courses on the Agricultural and Rural Training Centers’ platform (CFAR or Centres de Formation Agricole et Rurale) have been developed to strengthen the capacities of agricultural producers throughout the agricultural value chain to increase their productivity. The Government should ensure the sustainability of e- learning platforms that are particularly useful in ensuring the continuity of teaching and research after climatic shocks, and explore how to expand access to underserved population groups. Drawing on the lessons from previous initiatives, the Government could work with public and private sector players in the education sector on an e-learning platform model to deliver courses remotely in the event of climate shocks, when traveling is not possible, or when facilities are inaccessible (because of events like floods). Digitalizing the learning environment will require long-term planning and adequate funding, not just to ensure the platform's viability, but also to prepare and implement reforms and investments to strengthen infrastructure, including digital connectivity. 2. Health systems Adapting the healthcare system to climate change through universal health coverage and the provision of quality services could prevent any additional deaths linked to vector-borne and water-borne diseases. To significantly reduce the impacts of emerging and reemerging diseases due to climate change and to meet national commitments, the implementation of adaptive and innovative actions must be reinforced. The recommendations for improving the health system and making it more resilient are structured around the four objectives of the World Health Organization's operational framework for climate-resilient health systems.88 Strengthen health-related policies and strategies will be key to adapt the health sector to the effects of climate change. To accelerate Togo’s efforts to address the impacts of climate change on the health sector, it is imperative that the Government adopt and implement the recommendations of the National Health Policy and the National 88 World Health Organization. 2015. "Operational framework for building climate-resilient health systems. Geneva: World Health Organization. https://www.who.int/publications-detail-redirect/9789241565073 76 Official Use Only Health Development Plan 2023-2027.89 In addition, the National Climate Change Adaptation Plan for the health sector should be updated to reflect the urgency of responding to climate-related challenges. Food and nutrition security becomes a priority in a context where climate change is exerting further pressure on nutrition and food availability and accessibility. In Togo, 57 percent of the population was moderately or severely food insecure between 2021 and 2023.90 Furthermore, similarly to its neighboring countries of Ghana and Benin, Togo is experiencing a triple burden of malnutrition critically affecting young children, with an increase in obesity and overweight in children in urban areas, a remaining high burden of child undernutrition, which constitutes a major risk for the development of young children, and micronutrients deficiencies as a major problem with 72 percent of children ages 6 to 59 months old suffering from anemia. Indeed, nearly 18 percent of children aged 0-5 are underweight, with 23.8 percent being stunted. Safety net programs, including emergency financial support and accompanying measures on nutrition, have proven to improve children’s nutrition. Togo's multi-sectoral national strategic plan for nutrition recommends the establishment of a multi-sectoral platform to coordinate these efforts and work in collaboration with other cross-sectoral platforms. To prevent and cope with climate change effects on the healthcare system, a resilient workforce and infrastructure are key. Togo's health facilities have several shortcomings in their ability to respond to climate change-induced events, such as frequent shortages of essential medicines and absent or inadequate water and sanitation infrastructure.91 Capitalizing on efforts to adapt the health infrastructure by renovating 300 health facilities and constructing 200 more, the country should expand the assessment of resilience gaps. Particular attention should be paid to Water, Sanitation, and Hygiene services, which are inadequate in many health facilities, social centers, and medical centers and at the household level.92 To remedy inadequacies of the healthcare facilities' drug supply chain, the national strategic plan for optimizing the healthcare supply chain (CAPS) should be adopted and implemented. In addition, there is an urgent need to create climate-resilient health facilities and address gaps in geographical accessibility to health professionals, while at the same time prioritizing the deployment of health professionals trained in the effects of climate change on health and nutrition outcomes and on climate-sensitive diseases, particularly as it relates to heat exposure. Climate services and data are essential to better plan for, prepare for, and respond to climate shocks and their impacts on the health of populations. Enhanced cooperation between meteorological and health services is needed to harness meteorological information as part of an early warning system to respond to climate-sensitive diseases. Collaboration between the health and meteorology sectors could include the development of climate and health indicators, and the integration of climate data into the district health information software (DHIS2). Moreover, through the Human Resources Strategy for Health for vulnerable populations, health professionals should receive ongoing training in the monitoring and evaluation of climate and health data for the planning for and treatment of climate-related diseases. The curricula of health professionals should systematically include knowledge of climate and health, as well as practical training in the identification of climate-related health impacts, climate- and health- related indicators, and reporting and response mechanisms to emerging and reemerging diseases due to climate change. Comprehensive coverage of essential health services for climate-vulnerable groups is at the core of a healthy society. The introduction of Universal Health Insurance (Assurance Maladie Universelle, AMU) in 2021 is a significant step towards achieving universal health coverage. However, to ensure equitable access to and coverage of essential health and nutrition services, healthcare baskets should consider services for the prevention and treatment of climate-related illnesses. These include basic nutrition, maternal and child health, and treatment for vector-borne and water-borne, neglected tropical and non-communicable diseases. Furthermore, maternal, newborn, and child healthcare must be prioritized in the climate change response, and robust health and social programs must be put in 89 The Policy and Plan’s recommendations includes combating the effects of climate -sensitive diseases through the strengthening (i) the country‘s strategies for adapting the health sector to the effects of climate change, (ii) the operational capacities of epidemiological surveillance teams and, (iii) the integration of animal health, environmental and hydrometeorological data with human health data. Furthermore, the Policy calls for implementation of the joint health-environment action plan and the establishment of a “Climate Change and Health� unit. 90 FAO, FIDA, OMS, PAM et UNICEF. 2024. L’État de la sécurité alimentaire et de la nutrition dans le monde 2024. Des financements pour éliminer la faim, l’insécurité alimentaire et toutes les formes de malnutrition. Rome. 91 58% of health facilities have basic water services and 32% of health facilities have no sanitation services. UNICEF. 92 In 2016, only 14% of the population had handwashing facilities with soap and water at home, and 11% used basic sanitation services. UNICEF. 77 Official Use Only place. For example, the WEZOU program (or “Breath of Life� in one local language in Togo), while an important step forward, still needs to be improved to cover all the essential needs of pregnant women and all possible beneficiaries, not only pregnant women aged 18 or older. Additionally, sexual and reproductive health activities contribute to the structural transformation process in terms of reduced fertility (see Chapter 1). , The way forward is to design, fund, and implement a comprehensive maternal and child health program that will be covered by the AMU to better mitigate the effects of climate stress and achieve better maternal and child health outcomes. Table 18 - Key investments for a more resilient human capital Recommendations Lead Investment Needs Investment Needs Policy by 2035 by 2050 type1 Viability2 Impact3 Overall4 Cumulative, Cumulative, Average, Average, Present Value Present Value %GDP %GDP US$ US$ Implement mandatory green building standards for new MEPSTA, constructions to reduce energy US$398.13M 0.2 US$1385M 0.2 A 1.67 1 1.33 MEF, MTP consumption in the building sector. Adapt programs and textbooks to MEPSTA US$47.01M 0.03 US$110M 0.02 A&M 1.33 2 1.67 take account of climate change. Strengthen teachers’ training in climate adaptation and mitigation efforts, new MEPSTA US$6.97M 0.004 US$17M 0.003 A&M 1.67 2 1.83 technologies, and distance learning. Ensure that pupils have access to computers and tablets for MENTD US$202.83M 0.1 US$467M 0.1 A 1.33 1 1.17 digital content and e-learning. Develop and implement climate- sensitive health and nutrition MSHPAUS US$7.60M 0.01 US$9.41M 0 A&M 2.00 2 2.00 strategies and policies. Rehabilitation and construction of climate-resilient health MSHPAUS US$152M 0.12 US$188M 0.06 A 2.33 1 1.67 infrastructures. Implement the Human Resources Strategy for the Health sector for climate- vulnerable deprived and rural MSHPAUS US$38M 0.03 US$47M 0.02 A 2.33 2 2.17 communities and provide health professionals with climate- sensitive training. MSHPAUS, Adopt and implement a MEPSTA, Preparedness Plan for food and US$7.6M 0 US$11.2M 0 A 1.67 1 1.33 MAPAH, nutrition security (FNS). MERF Establish and maintain community-driven early warning MSHPAUS; surveillance systems as part of a MAPAH, US$76M 0.06 US$94M 0.03 A 2.00 1 1.50 larger Disaster Risk Reduction MERF (DRR) program. Ensure comprehensive coverage for the provision of essential INAM, CNSS, US$535M 0.4 US$790M 0.26 A 2.67 1 1.83 health and nutrition services to MSHPAUS climate-vulnerable groups. Operationalize a dynamic RSPM ANID, with up-to-date socio-economic MDBAJEJ, US$27.0M 0.02 US$40.5M 0.01 A 1.33 1 1.17 household data combined with MENTD, georeferenced and hazard data. MERF, MEF Expand access of flagship safety ANID, net program to all poor MDBAJEJ, US$190.6M 0.15 US$347.2M 0.11 A 1.67 1 1.33 households to build resilience MENTD, and human capital. MERF, MEF Institutionalize shock response ANID, program and provide adequate MDBAJEJ, US$67.6M 0.05 US$112.6M 0.04 A 1.67 1 1.33 levels and duration of shock MENTD, response transfers to all poor MERF, MEF 78 Official Use Only and vulnerable households affected by climate shocks. Total Human Capital US$1,756M 1.174 US$3,619M 0.853 Note: Total cumulative investment needs by 2035 and by 2050 are computed in present value using an annual discount rate of 6 percent. Investment as a share of GDP are annual averages for the periods 2025-35 and 2036-50 Source: World Bank Table 19 - Key policy recommendations for a more resilient human capital Policy Recommendations Lead Viability2 Impact3 Overall4 type1 Develop climate-sensitive education sector reform strategy with a focus on MEPSTA, MEF, MTP A&M 2.00 1.50 1.75 green skills. Develop climate-sensitive health and nutrition strategies and policies, MSHPAUS A&M 2.00 1.00 1.50 including a Preparedness Plan for food and nutrition security (FNS). Develop the legal foundations and criteria for an accreditation body for healthcare/health facilities to ensure standard regulations for MSHPAUS, MASCS; MP A&M 1.67 1.00 1.33 infrastructure, Human Resources, patient care protocols, safety measures, and administrative processes. MFPTDS; MDBAJEJ; Approve the National Social Protection Policy, clarifying the Government's MASSPF; MPDC; MENTD; A&M 1.33 1.00 1.17 policy priorities with regards to non-contributory social protection MSHPAUS; MASCS; MEPSTA; MEF MFPTDS; MDBAJEJ; Create a multisectoral Social Protection institutional coordination MASSPF; MPDC; MENTD; A&M 1.33 1.00 1.17 framework MSHPAUS; MASCS; MEPSTA; MEF Approve the operational manual and financing strategy for the new flagship MDBAJEJ, ANID, MEF A&M 1.67 1.00 1.33 safety net program, to be expanded to all poor households Develop and approve a legal framework for community-driven early warning MP, President Office MERF, A 1.67 2.00 1.83 surveillance systems for climate shocks MDBAJEJ, MSPC MP, MASSPF, MDBAJEJ, Develop a legal framework and institutionalize a shock response program A 1.67 1.00 1.33 MSPC Create a unified protocol and institutional framework for donor coordination MEF, MERF, MPDC, M 2.00 1.50 1.75 in the case of climate disasters and humanitarian emergencies MASSPF, MDBAJEJ, MSPC Nomination of remaining members of the IPDCP (Data Protection Agency) MENTD A&M 2.00 2.00 2.00 Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 79 Official Use Only CHAPTER 5. ASSESSING INVESTMENT NEEDS AND FINANCING OPTIONS Addressing climate change while meeting broader development needs will require selectivity in climate actions as well as innovative financing solutions. Togo might need to prioritize in the short term low-cost, high-return investments, integrate climate considerations across the spectrum of public policies, and explore new revenue sources to develop additional financing and encourage low-carbon and environmentally friendly technologies and practices. Additionally, developing a strong financial sector, proper disaster response systems, the regulatory framework for carbon markets and an enabling environment for foreign direct investments will be crucial to accelerate the transition to a sustainable, resilient and low-carbon economy. 5.1. Investment needs and impacts Significant investments will be needed to accelerate structural transformation and adapt to the reality of climate change. As illustrated in previous chapters, there are strong synergies between actions needed to put Togo on a faster development trajectory and those needed to increase its resilience to climate change and transition to a low- carbon economy. In particular, the analysis presented in this CCDR demonstrated that structural transformation is in itself a factor of resilience as fewer people are exposed to intense heat stress, access to mechanization and irrigation in the agriculture sector increases its capacity to face climate shocks, and reduced demographic pressures contribute to the preservation of natural resources. Modelling results showed in fact that climate impacts could be reduced by between 28 percent to 38 percent in a structural transformation scenario, depending on climate assumptions (Figure 5-1). In addition, investments in adaptation and mitigation would further reduce those impacts. Priority investments were identified in agriculture and natural resources management (US$1.9 billion in net present value), urban and coastal resilience (US$2.05 billion), energy (US$3.8 billion), transport (US$1.6 billion), digital (US$0.14 billion) industry (US$0.62 billion), and human capital (US$3.6 billion) (Error! Reference source not found.). T hese investments would sum up to US$8.49 billion by 2035 (annual investments of 6.23 percent of GDP) and US$13.9 billion by 2050 (annual investments of 4.1 percent of GDP from 2036 to 2050). If financing for such investments could be found, the adverse impact of climate change could be largely avoided under wet/warm conditions and be reduced by about 60% under dry/hot conditions (Figure 5-1). As a result, the adverse effect on poverty could be entirely avoided by 2050 in the wet/warm scenario and reduced by almost 80 percent in the dry/hot scenario (Figure 5-2), while GHG emission intensity could also be lowered by 55 percent by 2050 (Figure 5-3). Figure 5-1 – Combining structural transformation and Figure 5-2 – Adverse effects on poverty could also be adaptation measures could reduce climate impacts by significantly reduced, particularly in more exposed rural between 60 to 90 percent. areas. Impact of climate shocks by 2050 on real GDP per capita levels under Impact of climate change by 2050 on poverty headcount under different different scenarios scenario Source: World Bank 80 Official Use Only Table 20 - Adaptation and mitigation investments across key sectors over the period 2025-50 Objectives Investment Needs by 2035 Investment Needs by 2050 Cumulative, Present Value US$ Average, %GDP Cumulative, Present Value US$ Average, %GDP Total Agriculture 1,160 M 0.892 1,926 M 0.451 Total Urban and Coastal Resilience 1,093 M 0.78 2,068 M 0.8 Total Energy 2,984 M 2.22 3,885 M 1.25 Total Transport 1,008 M 0.781 1,666 M 0.529 Total Digital 115 M 0.089 136 M 0.012 Total Industry 379 M 0.294 625 M 0.201 Total Human Capital 1,756 M 1.174 3,619 M 0.853 TOTAL INVESTMENTS 8,495 M 6.23 13,925 M 4.1 Source: World Bank Some adaptation and mitigation efforts will have large development co-benefits. While demonstrating positive effects on climate adaptation and mitigation, mobilizing such level of resources without jeopardizing other development objectives or crowding out private investments might be challenging in Togo’s context. This emphasizes the importance of prioritization measures that combine climate and development benefits, bridge adaptation and mitigation efforts, and have a clear sight on financing options. Such investments include support for climate-smart irrigation, resilient seeds and nature-based solutions or energy production in agriculture that has the potential to boost productivity and farmers’ income while also preserving land and reducing emission s. Similarly, gradually shifting towards improved building standards for roads and bridges, supporting public transportation, smart traffic management, and land use efficiency can raise productivity; reduce emission, and limit transport disruptions due to climate hazard. In the energy sector, the promotion of modern bioenergy, clean cooking, and a general shift towards renewable energy for power generation could help reduce greenhouse gas emissions but will also mobilize climate financing and support industrial competitiveness as trading partners increasingly tax emissions embedded in imported products. Other key measures that offer adaptation, mitigation and development co-benefits include improved land-use planning and building codes in urban and coastal areas, preventing coastal erosion, reinforcing drainage and water systems, investing in climate-smart schools and health facilities, and institutionalizing shock response programs for all poor and vulnerable households affected by climate shocks. Figure 5-3 – Structural transformation combined with adaptation and mitigation investments could result in a 55 percent reduction in GHG emission intensity. GHG emissions in the dry/hot scenario with sectoral mitigation measures and a US$7.5 carbon tax Source: World Bank 81 Official Use Only Despite strong development co-benefits from many of the proposed climate actions, Togo’s ability to mobilize necessary financing is currently limited. Necessary fiscal consolidation efforts in coming years and the need to guarantee debt sustainability over the medium term make it challenging to afford ambitious climate actions, many of which have high upfront costs. In fact, identified investment needs are greater than what the public sector can reasonably afford, especially given the needs to develop basic infrastructure and services, including necessary improvements to education, healthcare, and social protection. In the near term, Togo will therefore need to select and focus on relatively low-cost, high-return climate measures. Over the medium term, it should focus on the quality of public spending and revenue mobilization efforts, on leveraging climate financing instruments and incentivizing private investment. 5.2. Climate financing options i. Current context and challenges Climate financing in Togo has so far been limited. To implement its 2021 NDC, the government has estimated its investment needs by 2030 at US$2.7 billion (in nominal terms) for mitigation and US$2.8 billion (in nominal terms) for adaptation measures, with most of that financing conditional on support from international partners (US$4.2 billion). Current and expected funding from sources like the Global Environment Facility (GEF), the Adaptation Fund (AF), the Least Developed Countries Fund (LDCF) and the GCF, falls well short of the needs, while results-based financing instruments (RBCF and carbon markets) and green bonds are still to be developed. Mobilizing additional domestic resources and leveraging bilateral, multilateral, and private sector financing will thus be critical. Togo currently lacks the institutions and legislation needed to effectively mobilize concessional climate financing. The country does not have well-defined standard procedures for developing and submitting project proposals to multilateral funds. Nor has it coupled the process with public investment management reforms to ensure alignment with climate objectives. The environment ministry has emerged as the de facto leader in climate finance but must coordinate more closely with other institutions that play key roles in mobilizing fiscal instruments. Climate-smart financing of future industrial development can be mobilized through private sector funding if the correct policy frameworks and performance standards (as suggested in this report) are enacted and enforced. However, financing of legacy impacts, such as impacts from historical mine operations and processing, will be a financial obligation for public funds or the historical owners of these past operations. This report recommends three avenues for financing climate action. First, increase public financing by raising additional revenue (for example, through a carbon tax) and improving financial and investment management so that money can be spent efficiently. Second, mobilize additional resources from multilateral and bilateral development partners and tap into foreign direct investment and capital from institutional investors (including through the issuance of climate themed bonds). Third, encourage domestic and international private investments in climate- related projects by using pricing instruments (such as carbon credit markets) or by developing market-based instruments and de-risking tools (such as insurance products). The government could also prepare a list of bankable green infrastructure transactions, including through PPPs. The next section describes how Togo can best make use of these financing options. ii. Creating fiscal space for climate investments Greening public spending Togo has begun to consider climate objectives in its budget. In the first pilot of its kind in the WAEMU region, nine ministries in Togo tagged their spending as being climate favorable, neutral or unfavorable. They labelled 26.8 percent of their expenditures as favorable, such as measures to increase biodiversity, improve water access, control pollution, manage waste, and increase forest cover (Figure 5-4). In the pilot, only 4.3 percent of spending was unfavorable across the nine ministries. While the green budget exercise is an important first step, the integration of climate objectives and considerations into public investment management and public procurement is still in a nascent stage. The government should integrate climate considerations into investment project planning and implementation processes, ensuring that climate resilience becomes a fundamental criterion in investment decisions, while strengthening institutional 82 Official Use Only capacity for climate risk assessment and management. Currently, there is no obligation to evaluate all public investment projects with respect to climate impacts and risks, nor to put in place systems for monitoring the effects of climate change on these projects. A specific reference to public investment as an area of action in the climate change framework legislation should be included to strengthen these links. Rules and procedures need to be established to assess climate risks and include them in the appraisal and selection of projects, with role and responsibilities clearly assigned, to ensure conformity with government’s climate and economic development objectives. A climate change risk assessment system could be put in place to help determine the potential risk of climate change to project success and include appropriate treatment of climate change hazards to reduce or minimize the physical and socio-economic impacts of an anticipated climate event. Furthermore, in view of the country’s significant SOE portfolio, it will be critical to promote climate reporting by SOEs to help align their investments with NDCs and climate change objectives and to lay the foundation for accessing green finance. 93 Figure 5-4 - Togo’s green budget is mostly geared towards adaptation, which is appropriate given its exposure to shocks Composition of climate-related spending in 2024 Source: World Ministry of Economy and Finance Public procurement law designates sustainable development as the central principle of public purchasing but lacks a concrete implementation pathway. Through a reform program supported by the World Bank, the government aims to implement green public procurement through energy efficiency standards and climate resilience criteria. These guidelines will establish specific criteria for evaluating public procurement, integrating energy efficiency standards and resilience measures into the procurement evaluation process, which should enable government-wide greenhouse gas emissions reductions. The purchasing process, overseen by the National Directorate for the Control of Public Markets (DNCCP or Direction nationale du contrôle des commandes publiques) and the public markets regulatory authority (ARCOP or Autorité de régulation de la commande publique), is predominantly paper based, but implementation of automation and rollout of e-procurement will make it easier to monitor contracts and collect data on environmental impacts. Togo spends considerable resources subsidizing fossil fuels, electricity, and fertilizers, which tend to be socially regressive and environmentally harmful. Subsidy reforms could represent a critical opportunity to create fiscal space for climate-related investments while enhancing economic efficiency and equity. Phasing out ineffective subsidies, which often disproportionately benefit wealthier households and contribute to environmental degradation, is essential to redirect resources toward sustainable development priorities. Instead, subsidies should be better targeted to protect the poor and vulnerable, ensuring they have access to essential energy, electricity, and agricultural inputs. For instance, replacing blanket subsidies with direct cash transfers or vouchers can help support low-income households while avoiding market distortions. Additionally, the fiscal savings from these reforms can be reinvested in renewable energy, climate-resilient agriculture, and social protection programs, strengthening Togo’s 93To access climate and green finance, SOEs should improve transparency of their operations and aim to meet requisite Environmental, Social and Governance standards. 83 Official Use Only capacity to adapt to climate change and promote inclusive growth. Transparent communication and gradual implementation will be key to managing potential social and economic disruptions during the transition. Reforming wasteful and regressive subsidies could therefore help finance climate action while itself leading to more efficient use of energy, reducing pollution and damage to human health. Boosting green revenues Togo does not yet have a clear strategy for using the tax structure to finance or provide incentives for climate adaptation or mitigation activities. Currently, the Office Togolais des Recettes (OTR) collects several eco-taxes, but it is not clear if these revenues are being used to fund climate change activities. Moreover, tax expenditures, currently representing 17.3 percent of total revenues, are causing increased greenhouse gas emissions and environmental degradation. Togo has created a national fund for the environment (FNE) to manage national financial resources, including ecotaxes, ecological fees, and carbon mechanisms, but it is not yet operational. Fiscal instruments can play a critical role in funding and incentivizing climate adaptation or decarbonization activities. A comprehensive climate finance strategy that is co-led with ministries of finance and planning based on the framework developed with support from the Global Green Growth Institute (GGGI) in 2022 would maximize their potential. Figure 5-5 - Carbon taxation could yield significant Figure 5-6 - …and reduce emission intensity even with revenue gains… modest taxation levels Tax revenues by 2035 under different carbon tax scenarios Change in the GHG emission intensity by 2050 under different adaptation and mitigation scenarios Source: World Bank Source: World Bank Note: STR stands for structural transformation scenario and ADP for adaptation scenario Modeling shows that carefully designed carbon taxes could provide an important source of financing for adaptation and mitigation. In particular, the gradual introduction of a carbon tax at US$7.5 per ton of CO2 in sectors that are significant sources of emissions and for which low-carbon alternatives exist like energy, transport, industry, and agriculture could raise an average of 1 percent of GDP per year by 2035 (Figure 5-5) and reduce emissions by 9.9 million tons of CO2Eq by 2050, which would lower the emissions intensity of economic activity by 6 percent (Figure 5-6). More specifically, such a tax in the power sector would be expected to reduce emissions by 9 percent by 2050, thanks to the availability of cost-effective solar alternatives, but a technical-economic study on this would be necessary. In other sectors, effectiveness would depend on the possibility of scaling up low-emission alternatives at scale, which could take time such as in the case of agriculture, transport or industry, but simulations suggest that the largest potential for emissions reduction are in the industrial and agriculture sectors. Higher and more targeted carbon taxation levels could yield more significant emission reduction, lowering emission intensity by up to 27 percent (Figure 5-6). A fee and rebate system could provide greater incentives by subsidizing low-carbon activities, while discouraging those with high carbon intensity. The experience of other countries shows it is important to announce carbon taxes well ahead of their implementation to help households and firms avoid locking-in carbon- intensive technologies and investments and to kick-start innovation towards more efficient products and processes, which will help lower the costs of the transition. 84 Official Use Only Leveraging new debt financing instruments Togo currently relies heavily on regional bond markets for debt financing but has the ambition to access international capital markets. One promising option is thematic green bonds. Such bonds are earmarked for specific environmental themes, such as sustainable forestry and agriculture or renewable energy, and can attract investors seeking both financial returns and environmental impact. Maximizing the potential of thematic bonds requires clear national climate strategies and effective project management. Togo therefore needs to establish a strong framework with transparency and impact assessment, and a robust pipeline of well-defined thematic projects. Togo can also explore sustainability-linked bonds (SLBs), which tie their financial performance to progress made towards agreed- upon Key Performance Indicators (KPIs) but are not linked to specific projects. Still another option is outcome-based bonds, issued by the World Bank to allow private investors to support individual development projects and fund specific project outcomes. The return to investors is based on the outcome of the project. Examples include the World Bank’s Wildlife Conservation Bond in 2022, and the Emission Reduction Linked bond in 2023. Optimizing access to concessional and blended financing Togo should maximize the full range of concessional and semi-concessional financing. Some of the most important funds, such as the GCF and GEF, have already provided financing for initiatives in Togo. Despite efforts to facilitate access the GCF and to develop a climate finance strategy, Togo has not yet received the proper accreditation. In addition, several new financial institutions are expanding to Africa, creating the potential for new blended financing. One example is the European Investment Bank (EIB) Global, launched in January 2022, which will support climate action, economic growth, and development beyond the European Union. Such finance could blend IDA grants and credits, and funding and guarantees from other multilateral development banks, development institutions, and public sector funds to support nature and biodiversity conservation, or climate-resilient infrastructure, transportation, and agriculture in Togo. There also is potential for using innovative financial structures from concessional and semi- concessional resources, such as creating a price floor under a power purchase agreement for renewable energy projects, to provide incentives for private sector investments. Meanwhile, a fund designed to respond to loss and damage from climate impacts is being developed after a decision made at the COP28, with the World Bank acting as trustee. It would be therefore critical to assign the ministry of finance a technical leadership role in establishing the fiduciary systems and standards needed to access increased international climate finance. Strengthening transparency and accountability measures would be crucial for maximizing potential to access climate finance. Togo has made some progress in addressing corruption in its extractive industries, which are closely tied to environmental and climate concerns. Through EITI implementation, the government is improving management and transparency of beneficial ownership data through the operationalization of a beneficial ownership database. Overall, while the legal and institutional arrangements for the accountability system are in place, their effectiveness can be strengthened by reinforcing institutional capacity and autonomy of the various control and oversight entities. Recent policies include an anti-corruption strategy (Stratégie nationale de prévention et de lutte contre la corruption et les infractions assimilées au Togo -SNPLCIA) that was approved in 2022 and Organic Law 2020-003 to regulate the disclosure of public officials’ assets. However, to date, large enforcement gaps remain, undermining the impact of the intended effects of policies and legislation. This is the case of the asset declaration framework, which is not yet fully effective and restricts the use of declarations under strict conditions. iii. Mobilizing the private sector Attracting foreign direct investments to boost the green transition Developing a more attractive environment for foreign direct investment could play a critical role in fostering technological transfers, driving innovation, and spreading cutting-edge practices needed to improve efficiency and sustainability. FDI is essential for modernizing and greening the agriculture, manufacturing, energy, water, transport and logistics sectors. After peaking in mid-2000s, driven by port infrastructure development, inward FDIs have declined significantly in Togo to reach 1.6 percent of GDP on average since 2012. These investments have also yielded limited direct jobs when compared with peers, and their origin is highly concentrated among a handful of countries. This decrease highlights the need for a more stable and strategic approach to attracting and retaining 85 Official Use Only foreign investments. Despite these challenges, there are signs of renewed investor confidence, suggesting that Togo has the potential not only to restore but also to exceed previous levels of foreign capital if it positions itself as a destination for sustainable investments. Recent projects, such as the Adetikope Industrial Platform (PIA) and OLAM’s investments in the cotton sector, highlight Togo's commitment to creating the foundation a more competitive and sustainable economy. These initiatives have introduced new technologies that enhance productivity while adhering to global environmental standards. To fully leverage the benefit of FDIs, Togo should therefore focus on improving its regulatory framework and providing an enabling environment to attract critical long-term capital in sustainable agriculture, renewable energy, value-added logistics services, financial services, and climate-resilient infrastructure. Strategic collaborations between domestic enterprises and foreign investors can also lead to the co-creation of technologies tailored to local conditions. Furthermore, FDI can introduce best practices, cutting-edge equipment, and capacity-building opportunities, accelerating the diffusion of climate-smart technologies across sectors. By aligning FDI attraction strategies with national climate goals, Togo can harness global resources to bolster its domestic technological base and build resilience against climate change. Encouraging private sector participation through PPPs Public-private partnerships are critical tools for increasing private sector involvement in climate-resilient infrastructure and decarbonization efforts. PPPs in Togo have so far focused on energy, with five projects in electricity generation that have attracted private investments totaling 2.7 percent of GDP, and transport, with the Lomé Container Terminal (LCT) port project, funded by private investment amounting to 5.4 percent of GDP. The 2025 Roadmap assumes a significant increase in PPP projects in coming years, including for the Unity Highway, which would represent 20 to 22 percent of GDP. In addition, several ministries are considering a PPP development strategy. However, current capabilities for undertaking such projects are still limited. For example, the statement on budgetary risks includes no information on current and planned PPPs, or on the budgetary risks they may pose. On the legal front, the current law governing PPPs adopted in 2021 does not address specifically climate change challenges and objectives, and thus fails to ensure that PPP practitioners understand the distinction between environmental and climate considerations, particularly for adaptation and climate risks assessments. It is important that, exposure to climate shocks and adaption solutions are taken into account in the development of PPP projects. For example, engineering designs already build in resilience to existing hydro-meteorological hazards as a standard best practice, particularly in hydropower or dam projects. But challenges remain in identifying and distributing the risks associated with climate change correctly or fairly among the partners. Current contracts typically contain clauses that partially or fully indemnify the concessionaire against exogenous or unforeseeable risks. In practice, the risks covered by these clauses represent potential financial liabilities that are held by the State. It is important, therefore, to fill the existing gaps in the PPP law by clarifying standards, methodologies, and data, and by building capacity to disseminate information on climate change. To enhance transparency and effectiveness in the use of PPPs, Togo could also establish a common Public Procurement and PPP Portal and speed up procurement processes to enhance the quantity and quality of projects supported by the private sector. Strengthening the business climate Togo is performing well on key metrics for the business environment such as business entry, attractiveness as a location, and dispute resolution frameworks but continues to show room for improvement in market competition, financial services and labor regulation. Based on the 2024 Business-Ready scores (Annex 4 for details), Togo is generally considered an attractive location for investment with foreign firms not facing specific business entry restrictions, the law providing significant safeguards in mediation and good practices in land dispute mechanism. However, Togo lags on market competition which requires strengthening legal and regulatory frameworks to ensure a level playing field and prevent monopolistic control over critical infrastructure, such as port activities. Policies should focus on digitizing payments to enhance financial inclusion, diversifying bank credit to promote balanced growth, and providing targeted financial services for women entrepreneurs and sectors where the poor work, particularly in agriculture. Aligning social security contributions and labor taxes with regional standards will reduce burdens on employers and employees and will also make the labor market more competitive. 86 Official Use Only Encouraging domestic solutions and local entrepreneurship Encouraging innovation-driven entrepreneurship will enable the design and implementation of context-specific solutions to climate challenges, reduce reliance on imported technologies and create jobs. Innovation hubs and incubators for climate-focused startups could be particularly effective in stimulating technological development by providing mentorship, funding, and market access. Public-private partnerships can play a crucial role by aligning national climate goals with private sector capabilities, ensuring that locally designed solutions address the unique socio-economic and environmental challenges faced by communities. To stimulate private innovation, Togo can help develop a more supportive policy framework for research and development (R&D) in green technologies. Additionally, strengthening partnerships between academia, private enterprises, and public institutions can bridge the gap between research outcomes and marketable innovations. By fostering innovation and entrepreneurship in green industries, Togo can establish a robust network of small and medium enterprises (SMEs) that further amplify the jobs potential of addressing climate challenges in Togo. With targeted investments in technical education and vocational training, the country can equip its labor force with the necessary skills to drive this transition, meet the demands of a green economy, and facilitate the scaling of local technological solutions. iv. Operationalizing carbon credit markets Carbon market initiatives offer opportunities to accelerate the transition to a more sustainable, inclusive, and low- carbon economy. Demand for carbon credits originating from African countries grew at a compound annual rate of 36 percent between 2016 and 2021, with considerable untapped potential. Creating high integrity, high quality carbon credit projects in Togo would not only provide climate mitigation and adaptation benefits but help preserve natural capital to accelerate development. The Africa Carbon Market Initiative, of which Togo is one of its first members, estimates that voluntary carbon credit projects could achieve up to 50 percent of Togo’s targets for GHG emissions reductions, mobilize up to US$60 million per year, and support up to 100,000 new jobs. Togo is currently developing the regulatory framework for carbon markets with support from the World Bank. The country adopted a first Decree in March 2023 that provided a regulatory framework for carbon market mechanisms. This framework now needs to be supplemented by implementing regulations to set up a pricing strategy, and market infrastructures (national registry as well as national MRV), and develop a pipeline of high-integrity projects that utilize credible methodologies. To be attractive, the new framework will need to ensure a certain level of clarity and predictability as well as legal certainty for both potential partner countries and private investors wishing to engage in mitigation actions via the carbon market. To this end, a roadmap for the development of the legal and institutional framework for the use of Article 6 in Togo has been developed, with a view to ensuring that Togo’s regulatory and institutional framework meets the Paris Agreement criteria for eligibility of activities, namely that they (i) support the implementation of Togo’s NDC and raise its level of ambition; (ii) contribute to sustainable development; (iii) ensure environmental integrity, which presupposes that the activities do not lead to other forms of emissions or uncontrollable environmental damage; (iv) guarantee transparency, including in terms of governance; (iv) ensure reliable accounting and therefore verifiability of emissions reductions as well as no double counting. The credibility of carbon markets is critical to ensure buy-in. Recent investigations have found that some cookstove and deforestation avoidance projects were overstating their emissions reduction effects. As a result, carbon market projects have lost some credibility. Several efforts are underway to address these integrity concerns globally, notably through the operationalization of Core Carbon Principles published by the Integrity Council for Voluntary Carbon Markets (ICVCM) to set a minimum benchmark for supply-side quality. Through their two-step process, ICVCM has announced some crediting programs to be “CCP-eligible� and has undertaken assessments to approve specific crediting methodologies under these programs. REDD+ methodologies, such as Verra’s jurisdictional REDD+ and ART TREES methodology were among the first batch to receive approval in 2024, while several others are currently being assessed (including cookstove related categories). In addition, during the COP29, the Article 6 rulebook was finalized and adopted by Parties, including approval of clear methodological guidelines, paving the way for increased momentum and trust in global carbon trading. In Togo, the operationalization of the FNE could serve as an effective mechanism to enhance carbon market participants' confidence through improved traceability of climate finance flows and transparent resource allocation frameworks. Implementing a robust monitoring and reporting system would 87 Official Use Only enable better demonstration of the impact of carbon revenues on climate outcomes, potentially enhancing the ability of the government to attract climate finance. v. Greening bank lending to stimulate climate-smart investment Banks dominate the financial sector in Togo, representing more than 80 percent of total assets, but their ability and willingness to finance green projects is limited. At present, bank lending to the private sector only represents about 27.5 percent of GDP, with few long-term loans that are needed for climate investments. Moreover, authorities have not yet introduced formal labels for green lending products o r for banks’ financing flows for climate and environmental projects. Other constraints to bank lending for green projects include a high exposure to state-owned enterprises; a history of bad and nonperforming loans well above the regional average (at 11.5 percent); competition from government securities; and lack of adequate collateral. These constraints also hamper the development of more vibrant capital markets and corporate green bonds, with no issuance in Togo so far, and adoption in the WAEMU remaining negligible. The lack of a green taxonomy framework for Togo's financial sector impedes investors from identifying environmentally sustainable economic activities. A green taxonomy is a classification system that defines what economic activities are considered environmentally sustainable. It essentially creates a list of economic activities that align with Togo's climate goals. This classification system helps identify projects that contribute to environmental objectives like reducing greenhouse gas emissions or mitigating climate risks. This taxonomy gives investors and financial institutions a clear understanding of what constitutes a climate-friendly investment in Togo, which will help attract financing towards sustainable projects that address climate change. This also helps financial institutions identify and manage climate-related risks in their portfolios. With a green taxonomy in place, a wider range of financial products could help support climate-smart activities, including green corporate bonds, green loans with preferential rates for businesses or individuals undertaking sustainable activities, and climate insurance products tailored to protect against financial losses due to climate-related events like floods or droughts. By developing these financial products, Togo can incentivize investments in renewable energy, sustainable agriculture, and climate- resilient infrastructure. This can help Togo adapt to the impacts of climate change while also mitigating its contribution to greenhouse gas emissions. vi. Strengthening disaster risk financing and insurance schemes Disaster risk finance (DRF) increases resilience by alleviating the fiscal impacts and economic losses caused by natural hazards. DRF includes disaster reserve funds, which pay for preparedness and quick emergency responses; contingent credits or grants to complement the reserves in the medium term, and post-disaster credit to finance long- term reconstruction. For more extreme but rare shocks, risk transfer instruments like insurance can provide additional protection to governments, businesses, households, and farmers. However, Togo has fewer disaster risk financing options than many regional peers. Like most countries, Togo has taken out macro-level (or sovereign) insurance policies, including insurance against droughts during the agriculture season from the regional African Risk Capacity (ARC) Group, but the sum insured are small compared to potential agricultural losses. More generally, Togo’s insurance market remains underdeveloped, with access to crop insurance remaining very low. Togo needs a more comprehensive Disaster Risk Financing Strategy. As a first step, Togo should develop a DRF diagnostic, which would quantify the economic and fiscal impacts of disasters like floods and droughts; assess existing mechanisms to finance these costs; review potential insurance and capital market options for disaster risk finance; and identify other funding gaps. The next step would be a comprehensive disaster risk financing strategy that includes the most suitable sources of financing and instruments and identifies gaps and opportunities to improve the current funding framework. In general, it may be most cost effective to use a dedicated reserve fund to respond to more predictable disasters – those that are likely to occur every year. The ability of the government to manage and meet obligations arising from shocks should be strengthened. The ANPC, who is leading the national platform to manage climate and disaster risks, is already working to strengthen disaster management capabilities at the municipal level but its financing is not assured, relying largely on donors and budget reallocations in the aftermath of an event. There are currently plans to create a National Response Contingency Fund to address those issues, but it still needs to be operationalized. 88 Official Use Only Table 21 - Policy recommendations on investment and financing Recommendations Lead Policy type1 Viability2 Impact3 Overall4 Expand green budget tagging to encompass as many expenditures as possible across government operation including MPDC, MEF, state-owned enterprises and extra-budgetary units at the A&M 1.33 1.50 1.42 MERF national level, with potential extension to subnational governments Develop rules and procedures to assess climate risks to public investments and include them in the appraisal, selection, design MPDC, MEF, and implementation of projects including a climate change risk A 1.33 1.50 1.42 MERF assessment system to help determine the potential climate risks Develop green public procurement guidelines including specific criteria for evaluating procurement bids, integrating energy Presidency, MEF A&M 1.33 1.50 1.42 efficiency standards and resilience measures into the procurement evaluation process Integrate climate risk exposure and mitigation objectives in public procurement and PPP legislation and increase MEF A&M 1.67 2.00 1.83 transparency Phase out regressive and environmentally harmful fossil fuel, MEF A&M 1.33 1.50 1.42 electricity, and fertilizer subsidies Evaluate and rationalize tax expenditures with the objective of MEF A&M 1.67 2.00 1.83 aligning them with climate objectives Operationalize the national fund for the environment (FNE) to manage national financial resources for climate mitigation, MEF, MERF M 1.33 1.50 1.42 including ecotaxes, ecological fees, and carbon mechanisms Consider the introduction of carbon taxation in key sectors with a fee and rebate system to encourage low-carbon activities and MEF, MERF M 2.33 2.00 2.17 discourage carbon intensive activities Establish the framework needed for the successful issuance of thematic bonds such as green, sustainability-linked and MEF, MERF M 1.33 1.00 1.17 outcome-based bonds Implement the legal and institutional framework for carbon MERF A&M 1.33 1.00 1.17 markets to provide policy certainty and boost buyers’ confidence Establish the framework needed for the successful issuance of thematic bonds such as green, sustainability-linked and MEF, MERF A&M 1.33 1.50 1.42 outcome-based bonds Ensure that regulation on FDIs a more conducive to long-term investment in sustainable agriculture, renewable energy, and MIPI A&M 1.33 1.50 1.42 climate-resilient infrastructure Support local development of green technologies through PPPs and a more supportive policy framework for research and MIPI A&M 2.00 2.00 2.00 development (R&D) Update the national disaster risk management policy, including at subnational/urban levels, develop a “Risk Layering Approach� MEF, MERF A&M 1.33 1.00 1.17 to Disaster Risk Financing Source: World Bank 1Policy type: A: Adaptation, M: Mitigation; 2Investment viability is computed by averaging the scores of the following components: Urgency (High=1 Medium=2 Low=3); Implementation period (<3 years=1 Medium-term=2 Long-term=3); and Operability (Easy=1 Medium=2 Complex=3). 3 Investment impact is computed by averaging the scores of the following components: Development co-benefits (High=1 Medium=2 Low=3); and Impact on the most vulnerable (High=1 Medium=2 Low=3). 4 The overall priority score is computed by averaging Viability and Impact scores. 89 Official Use Only ANNEXES Annex 1: Modelling approach and assumptions i. Climate impact channel evaluation Developing climate impact channels involves four stages: (i) obtaining gridded historical and projected climate data for a set of climate scenarios; (ii) selecting, tailoring, and/or developing biophysical models that convert changes in climate data into biophysical shocks for each of the impact channels evaluated for the country; (iii) aggregating grid- level biophysical shocks to national and/or sectoral scales using high-resolution geospatial data; and (iv) producing shocks to be fed into the country’s macroeconomic and poverty models (see figures A1.1 and A1.2). Results are aggregated either to national scale inputs (e.g., capital or labor) or to economic sectors (e.g., agriculture) to match the macroeconomic model’s resolution. Figure A1.1: Analytical approach to impact channels CLIMATE BIOPHYSICAL GEOSPATIAL MACROECONOMIC POVERTY VARIABLES MODELS AGGREGATION MODEL OUTPUTS • ½ degree data on • Conversion of climate • Aggregation to national • Shocks to: • Spatially disaggregated precip and temp variables to biophysical scale using weights • Sector productivity • Informed by • 2020-2050 effects • e.g., land cover or • Labor household survey data • Multiple SSP scenarios • E.g., yields, productivity, population • Capital flood depths Source: World Bank, Industrial Economics Table A1.1 provides a high-level description of some of the key impact channels broken down by categories. The shocks caused by climate change through each impact channel are calculated based on changes in climate variables (e.g., monthly precipitation or daily maximum temperature) for the 30-year period from 2021 to 2050 (i.e., the period covered in the CCDR), relative to a climate baseline from 1995 to 2020. These shocks are then used as input to the macroeconomic and microsimulation models (see below for a discussion). As summarized in the table, each individual impact channel relies on stylized biophysical models that are capable of accepting climate information and projections, and simulating changes in biophysical (e.g., streamflow or infrastructure conditions) and/or socioeconomic (e.g., labor supply hours) variables under these altered climatic conditions. The biophysical models are customized by using country-specific inputs, obtaining key assumptions from country experts and available literature, and calibrating outputs using local data. Where locally collected data are not available, global sources are used. Table documents the specific data sources utilized in the impact channel analysis. Scenarios that consider different possible development and adaptation policy decisions and investments are captured in the modeling by modifying inputs and assumptions. 90 Official Use Only Table A1.1. Overview of selected impact channels Human Development 1 Labor Heat Stress Shock to labor productivity and learning outcomes at school from daily heat stress. Considers occupation-specific work ability curves. 2 Human Health Shock to labor supply from changes in the incidence and mortality of vector-borne (malaria and dengue), water-borne (i.e., diarrheal), and temperature-related diseases. Agriculture and Land Use 3 Crop Production Shock to crop revenues through changes in yields. Based on crop-specific yield response functions to water availability and heat stress. 4 Livestock Production Shock to livestock revenues through changes in productivity by animal and product type. Considers extreme heat and feed availability effects through animal-specific impact curves. 5 Soil Erosion Crop revenues due to topsoil erosion and flooding due to vegetation conditions. Impacts on erosivity from changes in rainfall are based on the Revised Universal Soil Loss Equation model. Infrastructure and Services 6 Inland Flooding Shock to capital from changes in the recurrence of peak precipitation events that result in fluvial (riverine) flooding. Models streamflows and floodplains, with damages estimated using depth-damage curves. 7 Urban Flooding Shock to capital in selected cities from peak precipitation events that result in pluvial flooding. Estimates drainage and flood depths through the Itzi model and uses depth- damage curves for damage estimation. 8 Coastal Flooding Coastal capital from changes in mean sea level and storm surge, using a bathtub approach. 9 Roads and Bridges Shock to capital due to damages to and increased maintenance of roads and bridges, as modeled using the Infrastructure Planning Support System model. Also considers labor supply effects of road disruptions. Table A1.2. Sources for geospatial data Data Sources Population · United Nations Population database. · META high-resolution-population-density-maps · Office for the Coordination of Humanitarian Affairs in West & Central Africa (OCHA ROWCA) Households · Households Survey data 2021/22. Agriculture · Food and Agriculture, FAOSTAT – Crops and Livestock Products · ISCRIC Data Hub · European Space Agency Infrastructure · Geo-Referenced Infrastructure and Demographic Data for Development (GRID3) · OpenStreetMap database · Google Earth Engine · Fathom · GHSL / BUILT-S 91 Official Use Only ii. Climate scenarios Future climate is inherently uncertain, due to variability in the earth’s physical responses, uncertainty in future greenhouse gas emissions trajectories, as well as uncertainty across different climate model projections for the coming decades. As such, a total of eight climate scenarios were selected from among a larger set of available scenarios to explore the impacts under a range of possible future climatic conditions. Available climate scenarios were first obtained from the World Bank’s Climate Change Knowledge Portal for 29 General Circulation Models (GCMs) from the Coupled Model Intercomparison Project 6 (CMIP6) suite of model outputs. Each GCM has up to five combinations of Shared Socioeconomic Pathway (SSP) and Representative Concentration Pathway (RCP) emissions scenario runs available. For each GCM-SSP combination, a modeled history from 1995 to 2014 and projections from 2015 to 2100 were available, for monthly mean temperature and precipitation at a 1x1 degree grid resolution. Given that GCM output is biased relative to observed climate conditions, bias-correction and spatial disaggregation was conducted, before then interpolating monthly variables to a daily timestep. Figure A1.1 shows the projected mean temperature (left panel) and precipitation (right panel) in the country through 2100 across a range of SSP-RCP combinations. The bold lines are averages across GCM projections for each of the four SSP-RCPs, and the shaded zones surrounding those lines are the full range of GCM projections within an RCP. As can be seen, while GCM ensemble averages for precipitation (the bold lines in the right panel) do not change significantly relative to baseline precipitation, the precipitation projected across the full range of GCMs (the shaded zones in the right panel) varies widely. This emphasizes the importance of selecting a set of climate scenarios that capture a wide range of possible future conditions. Figure A1.1 Projected Climate Variables Across a Range of SSP-RCPSs Source: World Bank Climate Change Knowledge Portal Following World Bank guidance titled Global scenarios for CCDR analyses (February 3, 2022), two of the eight scenarios included in this study were selected to allow for comparisons across emissions scenarios - these are referred as mitigation scenarios. The guidance specifies the following two mitigation scenarios: - Ensemble average of SSP3-7.0 GCMs: Pessimistic Case. Scenario in which warming reaches 4°C by 2100, due to lax climate policies or a reduction in ecosystems and oceans’ abilit y to capture carbon. 92 Official Use Only - Ensemble average of SSP1-1.9 GCMs: Optimistic Case. Represents reductions in greenhouse gas emissions in line with limited 1.5°C of warming by 2100. In addition to enabling comparison across emissions scenarios, climate scenarios were also selected in such a way as to capture the broadest range of climate change effects across GCMs. In doing so, the vulnerability of the economy and the performance of adaptation options under possible wet vs. dry and hot vs. warm GCM outcomes can be assessed. We selected the following set of scenarios, based on changes from the baseline climate as compared to the period between 2051 and 2060: - Dry/hot scenarios: Three scenarios around the 10th percentile of mean precipitation changes (i.e., dry) and the 90th percentile in mean temperature changes (i.e., hot), across SSP2-4.5 and SSP3-7.0 GCMs. Final channel results will also include the average climate impact of the three Dry/Hot GCMs selected. - Wet/warm scenarios: Three scenarios around the 90th percentile of mean precipitation changes (i.e., wet) and the 10th percentile in mean temperature changes (i.e., warm), across SSP2-4.5 and SSP3-7.0 GCMs. Final channel results will also include the average climate impact of the three Wet/Warm GCMs selected. The selected climate scenarios are summarized in Table A1.1. As noted, mitigation scenarios are relevant for comparing channel results across scenarios of different global mitigation efforts, while dry/hot and wet/warm scenarios are appropriate for exploring individual realizations of climatic conditions, providing a low- and high-end estimate of impacts. Given that the differences between the two mitigation scenarios are relatively minor in the period leading up to 2050, the results presented in this report focus primarily on the projected impacts under the Dry/Hot and Wet/Warm futures. Table A1.1. Selected Climate Scenarios TYPE SCENARIO MITIGATION SSP1-1.9 mean SSP3-7.0 mean DRY/HOT FUTURE SSP2-4.5 CNRM-ESM2-1 SSP3-7.0 GFDL-ESM4 SS-3-7.0 KACE-1-0-G WET/WARM FUTURE SSP3-7.0 INM-CM4-8 SSP3-7.0 MIROC6 SSP3-7.0 INM-CM5-0 These same climate scenarios are utilized across all impact channels except for the channels looking at inland flooding, urban flooding, and coastal flooding. Both the inland and urban flooding analyses rely on data for the peak 1-day precipitation magnitude and frequency, rather than mean precipitation volumes. Since these data are only available for SSP ensemble aggregates in the Climate Change Knowledge Portal, we do not consider Dry/Hot or Wet/Warm futures and instead perform the analysis for SSP1-1.9, SSP2.4.5, and 3-7.0 median (50th percentile) results. In addition, for the impact channel that examines coastal flooding, our analysis does not utilize raw climate data from the Climate Change Knowledge Portal. Rather, we rely on processed variables resulting from changes in global temperatures and other effects on atmospheric and oceanic phenomenon from global climate change (i.e., changes in global and regional mean sea levels, frequency, magnitude, and duration). While these estimates are based on the 93 Official Use Only same underlying data from the CMIP6 suite of model outputs, projections are not available for each individual GCM, hence we utilize median (50th percentile) results for SSP1-1.9 and 3-7.0. Expected Changes by 2050 Projected change in mean temperature throughout the country in the period from 2031-2050 relative to 1995-2020 for the selected Dry/Hot and Wet/Warm climate scenarios are relatively uniform across the country for each of the different climate scenarios. As expected, changes in temperature relative to 1995-2020 are expected to be greatest under the selected Dry/Hot GCMs, with changes in temperature peaking at around 1.5 ˚C. Table A1.2 pre sents the change in average temperature by decade throughout the country under the Dry/Hot mean and Wet/Warm mean scenarios relative to baseline conditions. Overall, we expect temperatures to increase in each decade relative to baseline conditions, with average temperatures peaking in the 2040s. Table A1.2. Change in Average National Temperature by Decade Relative to Baseline Scenario 2020s 2030s 2040s Dry/hot mean +0.58 ˚C +1.05 ˚C +1.44 ˚C Wet/warm mean +0.36 ˚C +0.56 ˚C +0.82 ˚C Regarding precipitations, varied trends are expected over the period 2031-2050. Under some Dry/Hot GCMs we expect a decrease in rainfall in the north, while other GCMs predict wetter conditions in this area. Under the selected Wet/Warm scenarios, we generally expect wetter conditions throughout the country, with the wettest conditions occurring in the south and the east. Overall, changes in precipitation relative to 1995-2020 are expected to be greatest under the Wet/Warm GCMs, with increases up to 15 percent possible in some parts of the country. Table A1.3 presents the change in average precipitation by decade throughout the country under the Dry/Hot mean and Wet/Warm mean scenarios relative to baseline conditions. Under the Wet/Warm mean scenario, we expect precipitation to increase in each decade throughout the country, with the change in precipitation peaking in the 2040s. Under the Dry/Hot mean scenario we expect a decrease relative to baseline conditions by the 2040s. Table A1.3 Percentage Change in Average National Precipitation by Decade Relative to the Baseline Scenario 2020s 2030s 2040s Dry/hot mean +2.2% +1.5% -3.2% Wet/warm mean +3.7% +8.5% +11.1% 94 Official Use Only iii. Macro-modelling: Long Term Growth Model, CGE, and Climate Impact Vectors The World Bank Long-Term Growth Model (LTGM) was used to calibrate both baseline and structural transformation scenarios. The LTGM is dedicated to analyzing future long-term growth scenarios in developing countries, building on the Solow-Swan growth model. The focus of the tool is on simplicity, transparency, and ease-of-use. Total factor productivity (TFP), investment/savings, and human capital are key growth drivers, but the model includes other growth fundamentals, such as demographics and labor market participation (disaggregated by gender). While growth constraints and opportunities are heterogeneous across countries, the most common result when applying the LTGM in developing countries is that investment-led growth is unsustainable in the long run. This is due to a rising capital- to-output ratio when investment is driving growth, which implies a diminishing marginal product of capital (MPK) that reduces the effectiveness of new investment. Instead, sustainable growth requires broad-based growth fundamentals, such as fast TFP or human capital growth, to keep the capital-to-output ratio down. Another challenge of high investment rates is that they usually require high rates of domestic savings. The World Bank’s Mitigation, Adaptation and New Technologies Applied General Equilibrium (MANAGE-WB) model has been used as the main macro-simulation tool in the CCDR to assess the impact of climate shock under different scenarios. MANAGE-WB is a single-country recursive dynamic computable general equilibrium (CGE) model.94 It takes the standard assumptions found in a single country CGE models: firms minimize costs under constant return-to-scale technologies, households maximize utility, economic agents own the production factors and supply them to firms, all agents are price takers in perfectly competitive markets for products and production factors. The model has been extended to focus on energy, emissions, and climate change impacts. In addition, the MANAGE model includes a detailed energy specification that allows for capital/labor/energy substitution in production, intra-fuel energy substitution across all demand agents, and a multi-output, multi-input production structure. The MANAGE-WB model can account for both direct and indirect effects of climate change on the economy. The former is introduced in the macro model through damage vectors on productivity, labor supply and the capital stock using a biophysical model. Indirect effects accrue from various channels such as production linkages, factor substitution and intersectoral mobility, the fiscal framework, and trade. MANAGE-WB is sufficiently flexible and detailed to deal with a wide range of transmission channels of climate shocks and can capture the effects along several dimensions. These include national accounts (GDP, consumption, and investment); the fiscal framework (government revenue, deficits, and debt); the external account (trade, foreign investment, and the current account); as well as the distributional impact across industries, factors of production, and households (identifying those likely to be most adversely affected). Climate action is introduced via adaptation and mitigation policy scenarios capturing the effects of various financing options and identifying trade-offs. A detailed analysis of energy supply and demand has been incorporated, taking into consideration various sources of electricity generation and the corresponding energy mix. Finally, the model is set up to include and track the evolution of GHG emissions by type and source. Microsimulation tools were used to complement the macroeconomic modelling and simulate the impact of shocks on welfare at the household level. Results presented throughout the report compare deviations from baseline scenarios across climate shocks channels with and without additional adaptation and mitigation efforts. Climate impact vectors were evaluated through to separate biophysical models. These models convert changes in climate data into biophysical shocks for each of the impact channels evaluated for this CCDR. Grid-level biophysical shocks are then aggregated at the national and/or sectoral level using high-resolution geospatial data to develop impact vectors to be included in the MANAGE-WB model. Among others, these biophysical models measure the crop- specific yield impact of water availability, heat stress, topsoil erosion and flooding due to vegetation conditions; shock to livestock revenues through changes in productivity by animal and product type; shocks to the capital stock from 94A detailed description of the latest version of MANAGE-WB can be found in Lulit Mitik Beyene, Wolfgang Blitz, Martin Christensen, Hasan Dudu, Ragchaasuren Galindev (forthcoming). MANAGE-WB: The Mitigation, Adaptation and New Technologies Applied General Equilibrium Model of the World Bank. Model documentation and user guide. 95 Official Use Only changes in the recurrence of peak precipitation events resulting in fluvial (riverine) flooding, mean sea level rise and storm surges, damages to and increased maintenance of roads and bridges; impacts to labor productivity and learning outcomes from daily heat stress, the impact on labor supply from changes in the incidence and mortality of vector-borne (malaria and dengue), water-borne (i.e., diarrheal), and temperature-related diseases. The modeling has been undertaken with uncertainties about future climate outcomes, technologies, policies, and development paths. It quantifies results using a large set of assumptions to help assess the challenges and trade- offs. However, the answers are not definitive, and specific numbers should be used cautiously. The key modeling caveats and limitations are summarized below: Missing channels and pathways: There are many potential impact channels; however, for this report only ten channels have been modeled, so estimates of GDP impacts are not comprehensive. Some important channels are difficult to model, for example, the impact of climate change on nutrition, which have life-long consequences for individuals’ learning, productivity, and earnings. Magnifying effects: The macroeconomic modeling stops at 2050 and does not include potential magnifying factors in the region such as intensified conflicts over resources (for example, water), the possibility of ecosystem collapse, and the acceleration of climate-induced outmigration. The risks of these magnifying factors being realized are considerable, especially past 2050 if global emissions do not drop rapidly. They would make total GDP and poverty impacts much larger than what is estimated in this report. Not fully capturing the positive effect of inclusive development on reducing the impacts of climate change: The modeling only marginally accounts for how higher incomes, better access to infrastructure (such as power for fans, improved water and sanitation, and improved access to health care) and financial support (such as access to finance and insurance, and strong social protection) will enable adaptation responses by households and firms to reduce the impacts of climate shocks. A combination of eight macroeconomic and climate scenarios have been developed for the CCDR. The baseline is a business as usual scenario where historical trends as extended over the entire projection period, with demographic changes driving a gradual slowdown in economic growth. The structural transformation scenario assumes that continued structural reforms will yield an increase in total factor productivity (TFP) and human capital gains by about 0.2 percentage points per year above pre-crisis trends, increase female labor force participation by 1.5 percentage, increase the private investment rate by 5 percentage points of GDP by 2030, ensure a faster shift in labor supply from agriculture to services and industry and a lower fertility rate increasing demographic dividends. Climate shocks under both dry/hot and wet/warm conditions were applied to both scenarios. All adaptation measures identified in the CCDR were included in adaptation scenarios. Table A2.1: Key macroeconomic aggregates in the absence of climate change shocks Business-as-usual Structural transformation 2025 2030 2040 2050 2025 2030 2040 2050 Income levels (constant 2020) Real GDP (CFAF billions) 5450 6937 10901 16631 5481 7227 13036 23236 Real GDP (US$billions) 9.3 11.8 18.6 28.4 9.4 12.3 22.2 39.7 Real GDP per capita (US$) 982 1121 1438 1834 994 1189 1806 2783 Real consumption per capita (US$) 622 721 925 1180 631 766 1163 1793 Annual growth (percent) Real GDP 5.4 5.2 4.6 4.3 5.4 5.6 6.1 5.9 Real GDP per capita 3.1 2.9 2.5 2.5 3.1 3.5 4.3 4.4 Sector output (percent of GDP) Agriculture 23.8 23.8 23.8 23.8 23.8 21.8 19.3 15.4 Industry 21.0 19.1 20.0 21.4 21.0 25.5 24.6 23.7 Services 55.2 57.1 56.2 54.9 55.2 52.7 56.1 60.9 96 Official Use Only Sector employment (percent of LF) Agriculture 36.0 30.8 28.0 25.1 36.0 33.2 26.9 20.9 Industry 18.8 24.1 24.5 25.1 18.8 20.1 22.8 25.8 Services 45.1 45.1 47.5 49.8 45.1 46.7 50.3 53.4 Fiscal (percent of GDP) Tax revenue 14.5 15.2 15.2 15.2 14.5 15.4 15.4 15.4 Fiscal expenditure 19.3 20.3 20.3 20.3 19.2 20.6 20.6 20.6 Borrowing requirement 4.9 4.8 4.8 4.8 4.8 4.9 4.9 4.9 Public debt 62.5 57.8 57.8 57.8 62.2 55.8 55.8 55.8 - o/w external public debt 22.1 27.2 27.5 27.5 22.1 27.0 27.7 27.7 Population Total population (millions) 9.5 10.6 12.9 15.5 9.4 10.4 12.3 14.2 Total population growth rate (%) 2.4 2.3 2.1 1.8 2.4 2.1 1.7 1.5 97 Official Use Only Table A2.2: Key macroeconomic aggregates in a Wet/Warm climate scenario Business-as-usual Structural transformation Adaption 2025 2030 2040 2050 2025 2030 2040 2050 2025 2030 2040 2050 Income levels (constant 2020) Real GDP (CFAF billions) 5378 6841 10582 15561 5417 7164 12777 22101 5424 7202 13020 22962 Real GDP (US$ billions) 9.2 11.7 18.1 26.6 9.2 12.2 21.8 37.7 9.3 12.3 22.2 39.2 Real GDP per capita (US$) 969 1106 1396 1716 982 1179 1770 2648 984 1185 1804 2751 Real consumption per capita (US$) 615 714 904 1117 625 763 1149 1729 626 765 1165 1779 Annual growth (percent) Real GDP 5.4 5.1 4.5 3.9 5.4 5.5 6.0 5.6 5.4 5.6 6.1 5.8 Real GDP per capita 3.1 2.7 2.4 2.1 3.1 3.4 4.1 4.1 3.1 3.4 4.3 4.3 Sector output (percent of GDP) Agriculture 23.7 24.0 24.3 24.0 23.7 22.1 20.0 15.9 23.7 22.1 19.9 15.9 Industry 21.1 19.0 19.8 21.2 21.1 25.4 24.3 23.5 21.1 25.4 24.4 23.6 Services 55.2 56.9 55.8 54.8 55.2 52.5 55.8 60.6 55.2 52.5 55.7 60.5 Sector employment (percent of LF) Agriculture 36.4 31.2 28.6 26.7 36.4 33.0 26.6 21.2 36.4 32.9 26.3 20.7 Industry 18.6 23.8 24.1 24.4 18.6 20.0 22.7 25.4 18.6 20.1 22.9 25.7 Services 44.9 45.0 47.3 49.0 44.9 46.9 50.7 53.4 45.0 47.0 50.9 53.6 Fiscal (percent of GDP) Tax revenue 14.5 15.1 15.1 15.1 14.5 15.4 15.4 15.4 14.5 15.5 15.6 15.6 Fiscal expenditure 19.2 20.3 20.3 20.1 19.1 20.7 20.8 20.6 19.1 20.7 20.8 20.7 Borrowing requirement 4.8 4.9 4.9 4.8 4.7 5.0 5.2 5.3 4.8 4.9 4.9 4.9 Public debt 62.9 58.1 58.2 59.1 62.6 56.3 57.3 59.7 62.4 55.9 55.8 56.1 - o/w external public debt 22.3 27.4 28.1 28.7 22.2 27.1 28.2 28.7 22.2 27.0 27.8 28.0 Population and employment Total population (millions) 9.5 10.6 12.9 15.5 9.4 10.4 12.3 14.2 9.4 10.4 12.3 14.2 Total population growth rate (%) 2.4 2.3 2.1 1.8 2.4 2.1 1.7 1.5 2.4 2.1 1.7 1.5 Table A2.3: Key macroeconomic aggregates in a Dry/Hot climate scenario Business-as-usual Structural transformation Adaption 2025 2030 2040 2050 2025 2030 2040 2050 2025 2030 2040 2050 Income levels (constant 2020) Real GDP (CFAF billions) 5332 6689 10149 14554 5365 7000 12266 20799 5374 7051 12617 22036 Real GDP (US$ billions) 9.1 11.4 17.3 24.8 9.2 11.9 20.9 35.5 9.2 12.0 21.5 37.6 Real GDP per capita (US$) 961 1081 1339 1605 973 1152 1699 2492 974 1160 1748 2640 Real consumption per capita 610 701 874 1057 620 747 1112 1645 (US$) 622 752 1136 1719 Annual growth (percent) Real GDP 5.4 4.8 4.3 3.7 5.4 5.3 5.8 5.4 5.4 5.4 6.0 5.7 Real GDP per capita 3.1 2.5 2.2 1.8 3.1 3.2 4.0 3.9 3.1 3.2 4.2 4.2 Sector output (percent of GDP) Agriculture 23.8 23.7 24.5 23.8 23.8 21.9 20.1 15.8 23.8 21.9 19.9 15.5 Industry 21.1 19.1 19.8 21.3 21.1 25.6 24.4 23.6 21.1 25.5 24.4 23.7 Services 55.2 57.1 55.7 54.9 55.2 52.5 55.5 60.6 55.2 52.6 55.6 60.8 Sector employment (percent of LF) Agriculture 36.7 32.2 30.3 29.4 36.7 34.1 28.1 23.4 36.7 33.9 27.6 22.4 Industry 18.5 23.4 23.4 23.3 18.5 19.7 22.2 24.5 18.5 19.7 22.4 25.0 Services 44.8 44.4 46.3 47.3 44.8 46.2 49.7 52.0 44.8 46.3 50.0 52.6 Fiscal (percent of GDP) Tax revenue 14.5 15.2 15.1 15.2 14.5 15.4 15.3 15.4 14.5 15.3 15.6 15.3 Fiscal expenditure 19.2 20.1 20.2 19.7 19.1 20.5 20.7 20.3 19.1 20.5 20.7 20.4 Borrowing requirement 4.8 4.7 4.8 4.2 4.7 4.7 5.1 4.8 4.8 4.9 4.9 4.9 Public debt 63.0 57.7 57.3 55.7 62.6 55.8 56.2 56.5 62.7 56.4 56.5 56.8 98 Official Use Only - o/w external public debt 22.4 27.8 28.8 29.9 22.3 27.5 28.9 29.9 22.3 27.4 28.3 28.7 Population and employment Total population (millions) 9.5 10.6 12.9 15.5 9.4 10.4 12.3 14.2 9.4 10.4 12.3 14.2 Total population growth rate 2.4 2.3 2.1 1.8 2.4 2.1 1.7 1.5 (%) 2.4 2.1 1.7 1.5 99 Official Use Only iv. Micro and poverty simulations The microsimulations discussed in this Annex are a tool that can allow us to forecast the impacts of climate change and climate policies on poverty, inequality, and the overall income distribution, and identify potential winners and losers. More precisely, in this section, when we talk about the “distributional impact of climate� we will be referring to a “microsimulation model linking macro model outputs produced for the CCDR to household level outputs�. Data Two main types of data are required for this analysis: macro-level inputs that feed the CGE model and micro-level information collected from a household survey. In this section, we present the main sets of variables that will be used in the analysis. The EHCVM 2018/19 is a nationally representative household survey implemented within the West Africa Economic Monetary Union (WAEMU) with the goal to produce household survey data in Benin, Burkina Faso, Chad, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal, and Togo. For Togo, the survey collects information from approximately 8,000 households across all geographic regions of the country. The survey was implemented in two waves to account for the seasonal patterns of consumption. Across these waves, the survey collected comprehensive household-level information covering a spectrum of areas, including education, healthcare, employment, sources of non-employment income, savings and credit patterns, food consumption, food security, nonfood expenditure, nonagricultural business ventures, housing, household assets, financial transfers, encountered shocks, survival strategies, agricultural pursuits, etc. Methodology The approach used for simulating the micro-impacts of climate change in Togo follows a microsimulation based on a CGE reweighting approach. This method involves three stages. Figure A3.1 illustrates the different stages involved in the CGE approach followed. The first stage of the microsimulation involves preparing the household data and the main variables required for this analysis. The two key variables in the top blue panel are the vector of welfare “y�, and the vector of weights “w�. For the baseline, both variables are typically obtained from the household survey. The weights allow us to compute statistics on our sample that are representative from the entire population (i.e., assuming the household survey followed a standard representative sampling design). In Togo, the household survey we rely on is the Enquête harmonisée sur les Conditions de Vie des Ménages (EHCVM) from 2018/19. Using the welfare and weights vectors is sufficient to create a welfare vector that allow us to estimate poverty, inequality, and other distributional statistics. The second stage of this procedure consists of simulating the vectors of welfare y^sim and weights w^sim in future periods, starting from the base welfare (y) and weight (w) vectors. These new vectors will be used to produce simulated poverty and inequality statistics from 2021 to 2050. This analysis requires using three main inputs: population projections, education projections, and projections of macroeconomic inputs such as the share of employment by sector and skill level. These inputs are used to perform the reweighting procedure that allows to match the population projections under a set of constraints. Population projections: since the objective of the simulation is to produce long-term projections, we need information on the future size and profile of the population (e.g., for instance, gender, age cohort group, and/or location). We rely on United Nations (UN) projections (by 5-year age group). 100 Official Use Only Education projections: In practice, the microsimulation model does not require the specific years of education but uses the education attainment to classify the population by skill level for the purposes of the labor market (e.g., alternative classifications include skilled/unskilled, or low-skill/mid-skilled/high-skilled). Changes in employment by gender and skill level: The CGE model produces employment allocations across different economic sectors based on the classification available on the social accounting matrix (SAM) available for Togo. Figure A3.1: CGE approach Then, we use linkage variables to obtain the new simulated welfare vector. These variables include the change in prices, the change in wage by sector and education levels, and the change in aggregate income. Next, it is necessary to rescale and recenter wages and then income/consumption to account for changes in the wage/income structure by sector and type of worker (when possible) between baseline and target years. To improve the estimates of consumption, we also use pass-throughs that reflect how changes in income translate into changes in consumption. These improved estimates of the sensitivity of consumption to changes in income would also allow us to produce a more nuanced projection of the evolution of poverty and inequality in the long run. Baseline welfare, labor, and non-labor income To simulate the long-term impacts of climate change on poverty and inequality, it is necessary to define a measure of welfare. The measure of welfare in this analysis is the per capita household income aggregate defined as the sum of labor income and non-labor income. Labor earnings are aggregated across all household members in all sectors of activities. Non-labor earnings can come from transfers, remittances as well as transfers from the government. Labor income might present a challenge in many instances if either individual labor earnings are not available or if this variable is missing for many households. Solutions employed in the literature generally include either the imputation of missing values using the observed ones or the assignment of an “assumed� lab or income which is defined as the gap between household consumption (expenditure) and the income from non-labor household sources. The next step is to produce estimates of the size of the population by age group and by education level (or by skill level). Typically, the CCDRs use United Nations population projections (by 5-year age group) or projections from national statistics office (when available). A novel approach in this exercise is that we augment the UN population projections with spatially disaggregated population projections. Long-term projections of populations by education level are generally not available. To work around this, we make two assumptions following the GIDD model (Bourguignon & Bussolo 2013). 101 Official Use Only The first assumption is that the young cohort in current years will keep their level of education in the future. The second assumption is that the young cohort in the future does not improve its level of education vis-à-vis the young cohort of the present. Reweighting and micro-simulations. The next step in the microsimulation approach is to construct new weights for each household over the projection period. The reweighting involves the usage of age-sex composition, human capital accumulation, and changes in the employment structure. This procedure is achieved through the following steps. Bringing UN population projections and aggregating cohorts This step amounts to importing UN population projections and aggregating them by age and sex. The resulting population dataset will include as many rows as age groups and as many columns as gender by year groups. In the case of these microsimulations, this dataset would include 21 rows and 60 variables (30 years * 2 genders). Generating target matrices based on education and cohorts The next step is to create target matrices that incorporate the different constraints that the reweighting process faces. Two main sets of target matrices are important here. The first includes the target employment shares. These matrices include for each scenario and projected year the share of people employed by industry and skill level. In the case of this CCDR, we have 9 industries and two skill levels. The second set of matrices includes for each projection year the share of the population in each region. Benin has 12 regions, therefore each of these matrices includes 12 rows and one column. These target matrices, along with the age-sex population projections, define the constraints that the reweighting process will follow. Reweighting The final step of this process involves an exercise of optimization under constraints. Essentially, the optimization problem changes the distribution of certain variables (linkage variables) as it chooses new weights. Practically, we need to find an N-vector that optimizes an objective function Z(w^',w); a function that evaluates the distance between the newly computed weights w^', and the old survey weights w under a set of constraints (Agénor et al. 2003). Rescaling and recentering The outcome of the reweighting process is a new vector of weights for all households, but we also have newly generated linkage variables. Since the distribution of these variables has been altered, it is necessary to recenter these variables to align them with the macro-inputs for the CGE model. Re-scaling total per capita income (since it includes non-labor income) using projected per capita GDP/consumption growth – between baseline and target year. Adjust welfare for changes in relative consumption prices, typically for food and non-food but this can be extended to include other items (e.g., carbon-intensive goods). Projecting measures of poverty Now that we have both a vector of welfare (y^sim) and of weights (w^sim), the final step is to compute indicators of poverty and inequality across the projection years. We use international poverty lines to define the poor and estimate inequality using the Gini inequality index. 102 Official Use Only Annex 2: Togo’s adaptation and resilience diagnostic95 i. Adaptation and Resilience Diagnostic and Scoring Tool Building on the Adaptation Principles framework 96 , a team led by the Climate Change Group conducted an Adaptation and Resilience (A&R) Diagnostic for Togo to better understand the existing institutional framework and capacity for adaptation and resilience in the country. This macro-level assessment is designed to assess a country’s adaptation and resilience readiness, identify gaps, facilitate policy and target setting, and monitor progress towards increasing resilience across sectors using a whole-of-economy approach. This diagnostic seeks to inform the Togo Country and Climate Development Report (CCDR). The assessment is organized around six pillars, each supported by a set of priority actions. Under each action lies a set of key indicators to evaluate progress towards implementing these actions. According to specific scoring criteria, the assessment defines three levels of readiness and classifies the indicator as: Nascent (red) when the country does not meet the standard or includes areas that are only starting to emerge, or ranked in the lower tier of a benchmark group Emerging (yellow) when the country partially meets the standard and has progressed beyond the initiation point, or is ranked in the middle tier of a benchmark group Established (green) when the country meets the standard, or is ranked in the higher tier of a benchmark group ii. Togo’s Adaptation and Resilience Diagnostic A lite version of the full A&R assessment was piloted for Togo based on feedback from previous A&R diagnostics to accelerate implementation and provide timely inputs into CCDR’s. A total of 101 indicators were used in this assessment, of which 29 percent are quantitative indicators where data are sourced from publicly available global databases. The ratings for these indicators are assigned according to Togo’s performance as benchmarked against a group of peer countries. For Togo’s A&R assessment, the selected benchmarking group was “Sub Saharan Africa � (SSA), although the benchmarking exercise was also conducted against “Low Income Countries� (LICs). The remaining 71 percent of indicators evaluated for the assessment contain qualitative information collected through consultations with sectoral and country experts as well as expert judgement based on review of relevant and publicly available legislative and executive documents, including strategies, regulations, plans and other policy documents. The findings from the assessment are presented below, including an overview of Togo’s overall A&R performance a nd a summary of the aggregated results and recommendations by pillar. iii. Overall findings and recommendations Although Togo has made progress in increasing climate change resilience, with over 61% of indicators classified as Emerging (51%) and Established (10%), it can address substantial gaps to improve adaptive capacity and create the enabling environment needed to deliver on adaptation and resilience. The key recommendations emerging from the assessment include: (i) integrating climate resilience impacts and risks into macroeconomic planning and budgeting processes, (ii) developing a cohesive climate and disaster financing strategy, including closer engagement with the private sector, (iii) improving capacity and coordination to promote resilient food, water, environment, and land use 95 Togo’s A&R Diagnostic results was prepared by Jia Jun Lee and Esther Naikal as part of the Togo CCDR. 96 Hallegatte, Rentschler, and Rozenberg (2020): Link. 103 Official Use Only systems, (iv) strengthening adaptation plans, targets setting and tracking, and communication of information to manage risks, and (v) enhancing the provision of basic services to increase the adaptive capacity of vulnerable populations. Figure 1: Summary chart of adaptation and resilience performance of Togo across all pillars Note: The number in each bar indicates the number of indicators per rating category. a. Foundations for rapid, robust, and inclusive growth Solid foundations for rapid, robust, and inclusive growth are the first prerequisite for reducing vulnerability and impacts of climate change. Adaptation and resilience policies or strategies can only deliver when there is a functional socioeconomic environment, that has strong foundations which support macroeconomic stability, financial inclusion, and social protection. Compared to other Sub-Saharan African countries, Togo appears to have made progress in advancing economic growth with a relatively low unemployment rate and high human capital index. However, there remain significant challenges such as limited access to basic services. Only 56 percent of the population has access to electricity, with this share dropping to 25 percent in rural areas. Meanwhile, just 19 percent of the population has access to safe drinking water with 6 percent having access to safely managed sanitation, which can have negative outcomes on health and education while affecting climate resilience. To improve human development and ensure that vulnerable populations have the adaptive capacity to cope with climate shocks, Togo can enhance the provision of basic services (education, healthcare, water, sanitation, electricity, ICT). Figure 2: Foundations for rapid, robust, and inclusive growth b. Facilitate adaptation of people and firms There are some mechanisms in place to enhance adaptive capacity in Togo but more need to be done to create the enabling conditions help private actors take adaptation action and create more resilient business models and investments. Togo is mostly assessed as ‘Emerging’ (45 percent) and ‘Nascent’ (50 percent) under this priority area, indicating that adaptive capacities need to be either established or implemented and updated periodically to scale up 104 Official Use Only adaptation. For example, Togo has a hydromet data system and flood map for certain regions, completed vulnerability assessments for various economic sectors under its Fourth National Communication, created a social registry to collect socioeconomic household data, developed certain measures to address A&R finance risks in the private sector, and identified some sunset sectors in its macroeconomy. To address remaining gaps in adaptive capacity, four key areas for improvement were identified. First, Togo can strengthen private sector engagement and adaptation action, including by integrating adaptation planning and climate action in business model and operations for private sector actors and industries, establishing green jobs growth strategies, and considering resilience in business continuity plans. Second, clarify targets and responsibilities for A&R, including setting residual risk targets, for example through publicly available national maps of residual flood risk, and outline clear responsibilities for firms and individuals. Third, ensure financing is available to the poorest and most vulnerable populations, specifically increasing access to basic services and job opportunities for refugee settlements. Finally, Togo can facilitate structural economic change, by identifying and supporting the development of sunrise sectors such as solar panels, electric motorcycles, organic fertilizers, and others. Figure 3: Facilitate adaptation of people and firms c. Land use plans and critical public assets and services Strengthening institutional capacity to manage and protect public assets is essential for resilient growth. Most indicators (more than 60 percent) under this pillar are assessed as “emerging�, followed by “nascent� at 33 percent, and a minority (less than 5 perc ent) achieved an “established� rating. Togo’s healthcare system has the highest preparedness ratings, while sectors such as land use planning and urban development, critical public assets, water security, natural ecosystems including forests, and energy resilience have the largest room for improvement. The three paragraphs below describe the A&R diagnostic’s findings and recommendations for its deep dives into the priority sectors.97 Enhancing food and water security while protecting forests and other natural ecosystems. Togo has a food vulnerability index score of 0.60 (1 indicates highest and 0 lowest vulnerability), which ranks in the middle tercile amongst Sub Saharan Africa countries. It has also published a National Adaptation Plan of Action (NAPA) which includes adaptation efforts focused on the country’s most vulnerable sectors including agriculture, forestry, and water resources. However, there are opportunities to enhance food and water security while protecting natural ecosystems. First, Togo can strengthen agriculture sector resilience by improving capacity in hydromet and early warning services as well as increasing awareness and coverage of agricultural insurance for farmers. Second, enhance water security including considering climate adaptation in national water strategies and masterplans and establishing integrated water resources management at the basin level. Finally, protect forests and natural ecosystems by using nature-based 97 Priority sectors were selected based on discussion with the CCDR TTL and the Togo CCDR Outline Draft in February 2024. 105 Official Use Only solutions for climate resilience and encouraging implementation of REDD+ Strategy (outlined in NDP 2018-2022) through specific forest projects. Figure 4: Land use plans critical public assets and services Increasing the resilience of critical public assets, infrastructure, and energy systems. Togo has made progress in developing a national physical infrastructure masterplan and construction standards for buildings, but it is unclear if these plans consider resilience to climate impacts. Further, the national “Togo 2025� strategy aims to modernize infrastructure, with biomass and electricity subsectors aligned with the national vision. The following three recommendations can help Togo to increase resilience of its critical public assets, infrastructure, and energy systems. First, Togo can strengthen the resilience of energy systems by developing an operational emergency response plan in the event of outages, assessing vulnerability risks in the power sector (including generation stations and substations, transmission, and distribution), and accelerating implementation of the “Togo 2025� plan. Second, develop geolocated inventory of critical public assets to identify critical infrastructure along with assessments of their exposure and vulnerability to climate change. Third, integrate adaptation and resilience considerations into national long-term infrastructure masterplan and in building standards with enforcement mechanism. Develop risk-informed land use plans, urban development strategy and coastal zone management. Togo has some mechanisms in place such as the involvement of several ministries in the legislation for urban and land use planning, regular coastal erosion monitoring conducted by the University of Lomé until 2016 with an early warning weather system being developed for coastal and marine environments, and the preparation of a multi-sector investment plan for its coastal areas. To improve urban and coastal resilience, Togo can develop climate risk-informed urban land use plans by identifying climate risks to urban areas, assets, and sectors, and providing basic services and support in informal settlements. Togo can also strengthen integrated coastal zone management by regularly updating coastal erosion monitoring with communication of information to the public and integration of community and environmental issues into coastal plans. d. Manage residual risks and climate change impacts Residual risks to communities from climate disasters need to be managed and prepared in advance to prevent and avoid losses and damages. Strengthening resilience to and preparedness for extreme weather and disaster risks is particularly critical in the context of Togo, where flooding and coastal erosion have led to significant socioeconomic 106 Official Use Only costs.98 More than 70 percent of the indicators in this priority area are assessed as “nascent�, suggesting that substantial strategies and actions are needed in Togo to ensure people and firms can better manage residual risks and recover from their impacts. Key recommendations from the A&R diagnostic include the following four items. First, Togo can enhance access to risk management instruments, including a national disaster risk management (DRM) strategy and better access to financial instruments. Second, link social protection system to DRM shocks, through data sharing, allocating financing commitments, and stronger institutional partnerships. Third, strengthen recovery after disasters, through establishing resilient recovery and reconstruction plans and emergency procurement planning and procedures. Finally, Togo could develop the insurance sector, by encouraging private-public partnerships to offer affordable and reliable insurance to households, firms, and public actors. Figure 5: Manage residual risks and climate change impacts e. Manage financial and macro-fiscal issues Integrating adaptation considerations into macro-fiscal policies requires an understanding of the economic costs of climate change and disasters which can then be reflected in fiscal policies, budget allocation, and public investments. Togo is assessed as mainly in the “Nascent� (86% of indicators) category when assessing capacity to manage financial and macro-fiscal issues including macroeconomic stability, public finances, and debt sustainability. Climate risks are mentioned in fiscal risks statements for the budget law preparation but are not quantified while the government has created a debt web portal which includes the Medium-Term Debt Strategy. However, Togo has several opportunities to further integrate adaptation into macro-fiscal policies. First, Togo can integrate climate and disaster risks in the planning and budgeting process, including climate assessments in fiscal policy and measurement of contingent liabilities in budget documents. Next, Togo could develop financial strategy to manage contingent liabilities, including to establish a national disaster risk financing strategy and the use of disaster risk financing instruments. Finally, plan for long-term macroeconomic impacts, by developing a long-term plan to diversify tax revenues away from climate- vulnerable sectors. Figure 6: Manage financial and macrofiscal issues 98 Croirotu, Miranda, and Sarraf (2019): link. 107 Official Use Only f. Prioritization, implementation, and progress monitoring Governments must not only prioritize actions to make them compatible with available resources and capacity for adaptation and resilience; they must also establish a robust institutional and legal framework, and a consistent system for monitoring progress. Togo has A&R actions, policies, and targets outlined in the Fourth National Communication on climate change in 2022, its National Climate Change Adaptation Plan (PNACC), and its first communication on adaptation in 2023. To maintain such progress and accelerate implementation, Togo can focus on making more progress in setting targets, tracking progress, financing, building capacity, and developing a long-term strategy. First, Togo can develop a Long-Term Strategy for a decarbonization transition that includes adaptation and resilience objectives and considerations. Second, improve coordination of A&R priorities, including Ministry for Economy and Finance coordination with line ministries and clear responsibilities to achieve A&R targets with adequate financing. Finally, Togo could increase the capacity of A&R activities including the National Committee on Climate Change (CNCC) and green budgeting, which can promote a transparent framework for information, consultation, and monitoring of progress. Figure 7: Prioritization, implementation, and progress monitoring 108 Official Use Only Annex 3: Togo's Commitments under the NDC and Sectoral Strategies Main measures and priorities for mitigation Measures/Priorities Objectives/Description Government Roadmap 2020 - 2025 - Continuation of the electrification roadmap for all through the extension of the grid and deployment of decentralized systems (e.g. individual solar panels) to reach 75 percent electrification by 2025. - Increased power generation, transmission, and distribution capacity; Increase the share of renewable energy in energy production to 50 percent by 2025. - Increase the share of electric vehicles in the acquisition of new vehicles to 3 percent by 2025. - Extension of the rural road network – Construction of 4,000 km of rural roads targeting agricultural areas with high export potential. - Construction of the Unity Highway (RN1 linking the hinterland to the agglomeration of Lomé and the port). National Electrification Strategy (1) - Increase the rate of electrification to 100 percent by 2030: (i) deploy more than 300 mini-grids by 2030, representing approximately 9 MW of installed capacity; (ii) electrify 555,000 households with solar kits by 2030, i.e. up to 85 MW of installed solar generation capacity in 2030; and (iii) expand and densify the grid to approximately 670,000 connections by 2030, representing approximately 108 MW of additional capacity. National Bioenergy Action Plan (PANBE) pending - Increase the utilization rate of improved cookstoves from 40 percent in 2020 to 80 adoption percent in 2030. - Increase the share of charcoal produced with improved techniques from less than 1 percent in 2020 to 45 percent in 2030. - Increase the share of the population using biogas for cooking to 4 percent in 2025 and to 12 percent in 2030 in urban areas; 6 percent in 2025, and 15 percent in 2030 in rural areas. - Increase the share of the population using briquettes to 15 percent in urban areas and 10 percent in rural areas by 2030. - Increase the share of the population using LPG to 35 percent in urban areas and 8 percent in rural areas by 2030. 109 Official Use Only Annex 4: B-Ready scores for Togo 110 Official Use Only REFERENCES Acevedo, M. C. (2014). The Effect of Extreme Hydro-Meteorological Events on Labor Market Outcomes: Evidence from the Colombian Caribbean. Harvard Environmental Economics Research Seminar. 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