The Climate Change Risk Reduction Trap

Oil-rich Gulf states face a complex challenge: how to pivot away from fossil fuels while avoiding climate risks stemming from economy-wide restructuring. Using Kuwait as a case study, this paper warns that without careful planning attempts to diversify petroleum-based economies could inadvertently increase domestic vulnerability to climate impacts.

The Middle East’s petroleum-dependent states are in a precarious economic position, say authors Sara Mehryar, Mohammad Alsahli and Viktor Rözer. With 38% of known oil reserves and 61% of gas reserves, the region has the highest share of assets that will need to be stranded in global decarbonisation efforts, as well as some of the highest per capita emissions globally.

Gulf countries where economic development has relied heavily on oil and gas exports are now working to diversify their economies in anticipation of declining fossil fuel demand. This will require them “to entirely restructure their economies compared to indi­vidual sectors in most countries”, states the paper.

Simultaneously, the region is grappling with acute climate risks. Temperatures are rising faster than global averages, highlighting the urgent need to curb emissions. Kuwait alone faces potential land losses worth US$193.8bn by 2100 due to sea level rise. Heat-related deaths are projected to increase by up to 5% by the 2050s, depending on the severity of climate change, with temperatures potentially surpassing human survivability thresholds, say the authors.

Kuwait’s diversification plan aims to shift the economy towards sectors like sustainable infrastructure and private finance. This vision hinges on various large-scale construction projects, including a new business hub as well as new cities and transport systems to accommodate a growing population.

Urban growth will increase flood and sea-level rise risk in Kuwait

However, the authors argue that the demographic, fiscal, and land use changes this entails could open “a number of channels for an increase in climate disaster risk through exposure and vulnerability”.

Kuwait’s transition model is expected to boost labour demand, attracting skilled workers from other countries and spurring population growth. Using geo-spatial data, the authors demonstrate that the planned urban development to accommodate this growth would significantly increase Kuwait’s exposure to flash floods and sea-level rise.

Additionally, as over 90% of Kuwait’s annual revenue comes from oil rents, declining oil exports may lead to budget deficits, welfare spending cuts, and food and water security risks for this import-dependent economy. These shifts can exacerbate inequality and social vulnerability, further heightening climate change disaster risk – which is a function of hazard, exposure and vulnerability – and associated adaptation costs.

To avoid what authors term the “climate change risk reduction trap”, they emphasise the need for vigilant planning and robust risk assessment, proposing that environmental impact assessments are integrated into economic transition planning.

Such measures are key, they argue, to ensure new low-carbon developments are strategically located and designed with future climate hazards and vulnerabilities in mind.