Having witnessed six years of drought over the past decade, Tunisia is considered the fifth country in the world most at risk of drought and water shortages. With the high rate of fresh water resource extraction and the decrease in the capacity of dams, the water sector is the second most-vulnerable sector after the agricultural sector, with a high degree of vulnerability resulting from the low ability of this sector to adapt to climate change.
The report explained that the effects of climate change in Tunisia have already become tangible, but they will be significant by 2050 and constitute one of the main development challenges facing the country. Among them are rising temperatures, decreased rainfall, and increased frequency and duration of extreme events will have negative repercussions on crops, water and soil resources, both in quantity and quality, as well as water scarcity, coastal erosion, and the escalating threat of flooding.
The agricultural and water sectors represent the sectors most affected by climate change. Tunisia is already classified below the water poverty line at less than 500 cubic meters per inhabitant annually, compared to 1,000 per capita according to international standards.
A drought that lasted for six consecutive years caused the water in the dams to recede to alarming levels, reaching about 37% of their total absorption capacity by March 2024 due to scarcity of rainfall. As a result, grain crops declined by 60% last season compared to 2022. Tunisia recorded record and unusual temperatures throughout the year, reaching about 50 degrees in the summer of 2023.
Tunisia expects a sharp decline in export-oriented agricultural production, such as olive production by 2.2% annually and dates by 2% annually until 2050. A decline in irrigated crops and livestock production is expected at a rate ranging between 0.3 and 0.9% annually.
Other major repercussions on the economy and an increase in food imports, thus exacerbating the demand for foreign currencies, which could lead to a decline in the real exchange rate.
Therefore, climate change will exert added pressures on already precarious populations and push still other groups to unprecedented levels of vulnerability and deprivation. Efforts to adapt to a changing climate will also exact a steep price, exposing existing governance shortfalls and deepening deficits. As climate change escalates burdens on state capacity, it will become even more urgent for the country to take proactive measures, including developing its climate governance to protect its vulnerable populations and maintain economic and social stability.
In response to these and other effects of climate change, Tunis has been the locus of numerous projects seeking both adaptation to, or mitigation of climate change with support from the major multilateral financing facilities. These efforts at “green transition” are the subject of review to help the general public understand the processes and trends underway in the country. While bilateral development cooperation and other public and private investments also could be described as “green finance,” the present inquiry tracks the international public funds dedicated to Tunisia’s green transition since 2010.
Grounded in a preliminary study in 2022 Going Green: Monitoring the Green Transition in the Arab Region, in cooperation with its partners in the Arab Non-Governmental Organizations Network for Development (ANND), Housing and Land Rights Network (HLRN) has worked to develop reliable tools and easily accessible information and data on work related to climate change in “green transition” policies in Arab countries in 2022. This effort is in response to the ongoing need for improved knowledge and public information about consequences climate change and the efforts to face them.
Research methodology
The first major problem lies in integrating all the currently widespread information into one easily accessible format. Only then can information be collated and presented to help the public track climate action. In order to collect project-specific data into a single research tool, this assessment was made possible by searching the websites of all major climate finance mechanisms. Enabling searching across multiple parameters requires creating a single array with consistent categories.
The result is a single matrix that orders the specifications of each project in one-stop research instrument. The matrix is a living document subject to periodic updating and the current edition for Tunisia is accessible here. Below are the key take-aways emerging from the harnessed data.
Climate Finance Partners
This review covers projects supported by green finance institutions and mechanisms of:
- Adaptation Fund (AF)
- African Development Bank (AfDB)
- Climate Investment Fund (CIF)
- European Bank for Reconstruction and Development (EBRD)
- Green Climate Fund (GCF)
- Global Environment Facility (GEF)
- Middle East/North Africa Transition Fund (MENA) and
- World Bank (WB).
Six of the seven major climate finance institutions in the MENA region have provided funding for projects in Tunisia, to varying degrees of scale. During this review period, the two funds that did not participate in important reforms in Tunisia were the Global Environment Facility and the MENA Transition Fund.
The Deauville Partnership with Arab Countries in Transition requested the establishment of the MENA Transition Fund, which was awarded in 2012. By providing funding for technical cooperation to strengthen public institutions and governance, as well as promoting country-led reforms with the aim of improving the lives of citizens in countries in transition. The Fund aimed to support the transformation currently taking place in countries in the region at the time. However, the Transition Fund has come under the umbrella of the World Bank, with no information reported about a new phase.
Mitigation versus adaptation?
Similar to the general pattern across the Middle East and North Africa, most externally funded green transformation initiatives in Tunisia focused on reducing greenhouse gas emissions, with adaptation measures accounting for about 20% of the projects. The cumulative value of the seven adaptation projects in Tunisia is $178,886,538, but the seventeen mitigation projects amount to about $2.35 billion. Five of the projects under review, classified as having both adaptation and mitigation objectives, have received funding from financial institutions.
The importance of projects for the “green transition” can be better understood by taking a closer look at them. There are twelve projects related to energy, five related to water and sanitation, two related to housing, and only one related to transportation. These initiatives are widespread in most development sectors. Initiatives that directly support the industrial, mining and quarrying sectors as well as agriculture are lacking. Three projects address urban and environmental issues, and three others address urban and environmental infrastructure. One project deals with solid waste management
Four projects were financed by the African Development Bank: One in the energy sectors and four in the water sector. As for the missing information about four projects out of the five projects that the AfDB financed, no information is available about their activities, the values associated with it, or the stage of the project. As a result, it is impossible to verify implementation details. However, we still cite them for completeness.
In another case, the Climate Investment Fund has undertaken only one small initiative in Tunisia. It provided a loan worth one million dollars, but no other details were available regarding the source of funding, the sector involved, the field of the development, or the implementation phase.
The European Bank has supported four projects, including only one project in the infrastructure field and three projects in the energy sector. The projects were granted as loans worth $2 billion. The European Bank had the most-accessible search mechanism.
The Green Climate Fund has provided financing for 16 projects: Two in the fields of agriculture d municipal infrastructure, one to support housing and one for transportation, and six in the energy sector. Many other initiatives lack information and do not indicate the activities or values involved, or even the stage the project has reached. For the sake of comprehensiveness, we provide unverifiable details regarding implementation.
The Global Environment Facility is implementing three projects in Tunisia, two of which are related to natural resources and the third in the water sector. Significantly, the water-sector project targets the private sector as beneficiary, which can be seen as consistent with the World Bank and OECD promoting privatization of Tunisia’s water sector. The total grants obtained by these projects from local and external sources amount to 101.15 million US dollars, and each of them includes a joint financing element.
The World Bank is one of the clearest sources of information. Its online information indicates financing five projects in various fields. Only two projects in the energy sector, and two projects in the financial sectors, and joint financing is estimated from various sources, local and external sources is estimated at $175.78 million in both the public and private sectors.
Follow the money
Of the 31 initiatives evaluated, 15 were implemented and benefited by the public sector. The estimated value of all green transition projects in Tunisia since 2010 totals US$3,719,556,857, with US$451,540,120 in grants and US$3,092,138,767 as loans, contributing to the Tunisian people’s sovereign debt. Equity investments are equivalent to US$150 million, with US$25,877,970 coming from domestic public funds.
Contrastingly also, just over US$2.24 billion is included in the 11 initiatives targeting private sector implementers and beneficiaries. Of this funding for the private sector, US$125,082,970 is in form of grants from the multilateral climate-finance facilities, and just under US$800,000 comes from domestic public funding. The rest, over US$2.1 billion will be added to the public debt. That leaves some US$1 billion of resulting indebtedness for projects aimed at public-sector implementers and beneficiaries.
Conclusion
If we look at Tunisia`s green transition through the lens of contemporary climate finance, we may notice that activity is somewhat limited, relative to other big green funding recipients in the region such as Egypt and Morocco. Nonetheless, given the Tunisian people’s stake in the green transition—at least in the form of longer-term indebtedness for mitigation and adaptation projects—public participation requires access to information about these important initiatives, but there are still obstacles to overcome. For example, the display of project information varies depending on the financing mechanism and even the currency used. Improved coordination, standardization, centralization of language, data types and presentation would facilitate public access to relevant information across various financial modalities.
There is also a degree of imbalance in the strategy to combat climate change. Few initiatives are preparing for the future, while the majority are working to mitigate its effects. Both matters require immediate attention.
Clearly, other topics need further research and scrutiny. For example, implementation reports and project evaluations—most of which are still in the implementation phase—contain information on beneficiaries in the public and private sectors respectively. Responses to these inquiries also reveal the degree to which climate finance may impact national assets subject to state oversight, or lead to further privatization of essential public goods and services. Another important area of public interest that needs further research is the weight of public debt and the prospects for repayment.
Although discussions between nations continue to dominate the arena, a people-friendly, people-centered strategy is still needed to address the problems posed by the shared climate crisis we all face. The relative lack of Arab governments’ participation in financing green transformation initiatives raises a number of problems, especially with regard to the distinction between foreign and domestic policies and the actions of individual countries.
In national, regional and international efforts to transition to a green economy, whether through climate change mitigation or adaptation, the participation of civil society is crucial. Concerns that affect us all, as well as climate action and the green transition, demonstrate the interconnectedness between state and civil society. Both civil society and state-led mechanisms require intentional support from each other. To ensure that these promises are shared and benefited from by all segments of the country’s population, civic participation in implementing the promises made by the public sectors and companies as well as external parties is essential.
Many question marks remain about the Climate Investment Fund, as there are ten projects that the Investment Fund is supposed to finance, but there is no information related to them or about how to finance.
We can see this as just the tip of the evaluation iceberg.
Download the complete Tunisia Green Transformation Matrix
Photo on front page: View of Tunisia as seen from outer space. Source: NASA Visible East. Photo on this page: Tunisia’s Ariana Lagoon, normally covering over 5,000 hectares, is where hundreds of bird species migrating from Europe to south of the Sahara stop to rest and feed. This satellite photo shows the shocking reduction in the lagoon’s size between August 2021 and 2023. Source: European Union, Copernicus Sentinel-2 imagery.
