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Contents
AcknowledgmentsI
List of acronyms II
Introduction and report structure III
Executive summary IV
1. Putting climate at the center of Jordan’s development model 1
1.1. Jordan’s development priorities and objectives 1
1.2. Risks and development opportunities from climate change and natural hazards  4
1.3. Risks and opportunities for a low-carbon growth path 8
2. Strengthening policies and capacities to meet Jordan’s climate commitments 12
2.1. Climate change adaptation and mitigation commitments 12
2.2. Existing policies for mitigation and adaptation 13
2.3. Government budgets, existing investments, and institutional arrangements  15
2.4. Financing and institutions for climate action 18
3. Pathways towards adaptation, resilience, and low-carbon growth 22
3.1. Integrated solutions for the water-energy-food security nexus 22
3.1.1. The water, energy, and food security nexus 22
3.1.2. Challenges and opportunities 23
3.1.3. Pathways to adapt to water scarcity 25
Priority 1: Ensuring fiscal sustainability of the water and energy sectors 25
Priority 2: Reducing fresh water use in agriculture while safeguarding livelihoods 27
Priority 3: Boosting system-wide resilience with a focus on drought 28
Priority 4: Leveraging mitigation opportunities in the agri-food and water sectors 29
3.1.4. Recommendations 29
3.2. Integrated solutions for low-carbon and resilient urbanization  31
3.2.1. The urban-transport-energy nexus 31
3.2.2. Challenges and opportunities  31
3.2.3. Pathways to low carbon and resilient urban growth  33
3.2.4. Recommendations 34

4. Macroeconomic perspective, financing for climate-responsive

development and jobs  37
4.1. Macroeconomic perspective 37
4.1.1. Scenario 1: Assessing the impact of heat and flooding 38
4.1.2. Scenario 2: Impacts of increasingly severe water scarcity 39
4.1.3. Scenario 3: Selected water scarcity adaptation measures 39
4.2. Unlocking finance for climate responsive development  41
4.2.1. Identifying financing needs 41
4.2.2. Recommendations 46
Improving government practices for efficiency and impact 46
Improving fiscal discipline, budgeting, and transparency  47
Strengthening the financial sector to mobilize private investment 47
Strategic partnerships for engaging the private sector 48
 4.3. Creating inclusive, climate-responsive jobs and skills 48
4.3.1. Jordan’s long-standing employment challenges 48
4.3.2. Synergies between climate action and better jobs 50
4.3.3. Policy recommendations 52

5. Conclusion and recommendations 54

5.1. Ensuring climate-responsive economic modernization 54
5.2. Thinking long-term and acting now 55
Appendix–The Macro-Fiscal Model for Climate Change (MFMod-CC) 57
Brief description of MFMod-CC 57
Scenarios’ assumptions and results 57
References68

List of tables
Table 1. Strategic objectives of economic growth drivers, 2022-2023 4
Table 2. Climate change impacts under different scenarios 5
Table 3. Overview of Jordan’s key strategies, policies, and legal documents on climate change 13
Table 4. Jordan: baseline benchmark for long-term growth 38
Table 5. Jordan – WiB impact of a 20 percent increase in water scarcity on the economy 39
Table 6. Selected water scarcity adaptation scenarios 40
Table 7. Impact of selected adaptation measures on the economy, Jordan 40
Table 8. Summary of financing needs across packages of priority interventions 42
Table 9. Jordan: Indicative additional investment needs related to climate change. 44
Table 10. Summary climate investment needs (2030 horizon) 54
Table A1. Jordan- baseline benchmark for long-term growth 59
Table A2. Jordan - Impact of heat on growth-macro baseline 61
Table A3. Jordan - Impact of increasing water scarcity on the benchmark growth-macro baseline. 62
Table A4. Cost assumptions under each scenario 64
Table A5. Jordan - Impact of selected adaptation measure, combining desalination/conveyance with non-
revenue water reduction, on the benchmark growth-macro baseline. 64
Table A6. Jordan - single- and multi-site infrastructure investments. 66
Table A7. Jordan - impact of infrastructure investments on growth and macroeconomic benchmark. 66

List of figures
Figure ES1. Insights from integrated spatial scenarios for Greater Amman for 2050 VIII
Figure ES2. A snapshot of priority investment packages to 2030 X
Figure 1. Household per capita consumption distribution in Jordan, 2017–2018, relative to
the national poverty line 1
Figure 2. Unemployment rates in Jordan in percentages 2
Figure 3. Jordan’s performance on the SDGs: Sustainable Development Report 2021 3
Figure 4. Key economic and climate indicators: Jordan versus selected peers 5
Figure 5. Climate change impacts on crop yields in Jordan, under 3 °C and 5 °C increase scenarios 7
Figure 6. Sectoral distribution of the bank loan portfolio in Jordan and a qualitative assessment
of exposure to climate change risks 7
Figure 7. Cardon dioxide emissions by sector In Jordan (1990–2019) 9
Figure 8. Electricity generation by source, Jordan 1990–2018 10
Figure 9. Spatial distribution of GHG emissions and urban clusters 11
Figure 10. GHG net emissions (2016) 11
Figure 11. Country comparison in GHG intensity of key export sectors in 2014 (KG/US$) 11
Figure 12. Carbon dioxide emissions projections to 2050 under current commitments 12
Figure 13. Summary of Jordan’s updated NDCs 12
Figure 14. Scenarios for electricity generation mix - medium demand growth 14
Figure 15. Grid emissions factor - medium demand growth 15
Figure 16. Progress toward the 2015 NDC financing requirement, in million US$  17
Figure 17. Cumulative capacity of renewable energy projects 17
Figure 18. Government of Jordan capital projects in green growth sectors 2020, in JOD million 18
Figure 19. Experience with financing approaches in Jordan 18
Figure 20. Investment map in utility-scale and self-generation renewable energy in Jordan 20
Figure 21. High-level summary of the financial sector and capital market stance in
the green finance area 21
Figure 22. The water-energy-food security nexus in Jordan 23
Figure 23. Debt (MJD) in 2040 with/without efficiency gains 24
Figure 24. Deficit (MJD) in 2040 with/without efficiency gains 24
Figure 25. Crop yield and water application comparison for Israel, Jordan, and Palestine 28
Figure 26. Setting priorities for the nexus 30
Figure 27. Insights from integrated spatial scenarios for Greater Amman for 2050 33
Figure 28. Estimated priority financing needs (US$ Million) 42
Figure 29. Employment and emissions per US$1 million of sectoral investment 51
Acknowledgments

This Country Climate and Development Report (CCDR) is a collaborative effort of the World Bank, IFC, and
MIGA, produced by a core team led by Marianne Grosclaude, Monali Ranade and Paul Adrian Moreno Lopez.
Contributions and comments were received from Abdallah Barhoush, Abeer Kamal Shalan, Abdullah Jefri,
Adeel Abbas Syed, Ali Ahmad, Alia Jane Aghajanian, Alisan Dogan, Andrea Juarez, Andrew Burns, Andrius
Skarnulis, Angela Elzir Assy, Armine Juergenliemk, Arthur Kochnakyan, Ashar Raza, Ashraf Megahed, Ayesha
Malik, Christos Kostopoulos, Dahlia Khalifa, Deborah Beth Berger, Derek Ensing, Dinorah Leon, Dragan
Obrenovic, Elizabeth Ruppert Bulmer, Eric LeBorgne, Evelyn Sanchez Hernandez, Ghada Abdel Rahman
Shaqour, Haizea Samaniego Fernandez, Harika Masud, Holly Welborn Benner, Husam Mohamed Beides,
Jaikishin Asnani, Julie Carles, Julien Alain Thureau, Ilhem Salamon, Jacqueline Marie Tront, Jon Kher Kaw,
Justin Hill, Kamel Braham, Karina Sawaya, Kevin Carey, Kevwe Pela, Khaled Walid Qutob, Khalid Ahmed Ali
Moheyddeen, Laura Rodriguez Takeuchi, Marcel Rached, Mena Cammett, Mira Morad, Mohamed Zakaria
Kamh, Mohammad Al Akkaoui, Momina Aijazuddin, Monica Vidili, Muneer Ferozie, Muneeza Mehmood Alam,
Nancy Lozano Gracia, Nataliya Biletska, Nubihiko Daito, Rada Nawwaf Nafe Naji, Ricardo Ochoa, Ross Marc
Eisenberg, Rui Su, Rusmir Music, Saadia Refaqat, Salim Rouhana, Shafick Hoossein, Silvia Redaelli, Steven
Louis Rubinyi, Susan Razzaz, Tania Mohd Nor, Thi Thanh Thanh Bui, Tobias Baedeker, Tom Carlowitz, Waad
Tammaa, Wilfried Hundertmark, Yanchao Li, Yavar Moini Ziad Al Douaihy, Zheng Judy Jia and Zivanemoyo
Chinzara.
Detailed feedback, suggestions, and comments were received from the internal peer reviewers Ellysar
Baroudi, Fan Zhang, Harikumar Gadde, Stephane Hallegatte and Vivek Pathak.
The preparation of the CCDR benefitted from important contributions from the Government of Jordan, which
were coordinated by Sireen Adwan, Ministry of Planning and International Cooperation and Belal Shqarin,
Ministry of Environment. In particular, the CCDR team held regular exchanges with the National Committee
on Climate Change, chaired by H.E. Dr. Muawieh Khalid Radaideh, Minister of Environment. The CCDR also
benefited from consultation sessions with representatives of civil society, the private sector, and international
partners of Jordan.
The CCDR was prepared under the guidance of Ferid Belhaj (World Bank Regional Vice President), Hela
Cheikhrouhou (IFC Regional Vice President), Merli Baroudi (MIGA Director), Saroj Kumar Jha (Former
Country Director), Jean-Christophe Carret (Country Director), Ayat Soliman (World Bank Regional Director
for Sustainable Development), Paul Noumba Um (World Bank Regional Director for Infrastructure), Nadir
Mohammed (World Bank Regional Director for Equitable Growth, Finance, and Institutions), Keiko Miwa
(World Bank Regional Director for Human Development), and K. Aftab Ahmed (IFC Director).

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Country Climate and Development Report: Jordan
List of acronyms

AAC Aqaba-Amman National Desalination and Carrier Project

BAU Business As Usual
BUR Biennial Update Report
CBAM Carbon Border Adjustment Mechanism
CBJ Central Bank of Jordan
CCD Climate Change Directorate
CCDR Country Climate and Development Report
CO2 Carbon Dioxide
CPS Current Policy Scenario
CSA Climate-Smart Agriculture
EE Energy Efficiency
EPM World Bank Electricity Planning Model
EU European Union
EV Electric Vehicles
FDI Foreign Direct Investment
GAM Greater Amman Municipality
GDP Gross Domestic Product
GgCO2e Grams of Carbon Dioxide Equivalent
GHG Greenhouse Gas
GoJ Government of Jordan
HEV Hybrid Electric Vehicles
IPP Independent Power Producer
JOD Jordanian Dinar
JREEEF Jordan Renewable Energy and Energy Efficiency Fund
KG Kilograms
LTS Long-Term Strategy
MCM Million Cubic Meters
MENA Middle East and North Africa
MFMod World Bank Macro-Fiscal Model
MIGA Multilateral Investment Guarantee Agency
MRV Monitoring, Reporting, Verification
MW Megawatt
NAP National Adaptation Plan
NCCP National Climate Change Policy
NCCC National Committee on Climate Change
NDC Nationally Determined Contribution
PEFA Public Expenditure and Financial Accountability
PIM Public Investment Management
PM Particulate Matter
PPP Public-Private Partnership
PV Photovoltaics
ND-Gain Notre Dame Global Adaptation Initiative
RCP Representative Concentration Pathway
RE Renewable Energy
SDGs Sustainable Development Goals
SME Small and Medium Enterprise
tCO2e Tons of carbon dioxide equivalent
UNFCCC United Nations Framework Convention on Climate Change
WIB Water in the Balance

II
Country Climate and Development Report: Jordan
Introduction and report structure
The Jordan Country Climate and Development Report (CCDR) assesses the interplay between the country’s
development goals and climate change. The CCDR was prepared between July 2021 and September 2022,
building on the extensive body of relevant knowledge in Jordan. Additional analytical work was also carried
out, including background notes.1
Report preparation also included inputs and feedback collected through engagements with the Government
and civil society, private sector, and international partner stakeholders from September 2021 to September
2022.
The report consists of five chapters. The first chapter reviews the country’s current development priorities
and objectives (Section 1.1), the risks and opportunities from climate change and natural hazards (Section
1.2), and the risks and opportunities for investment in a low-carbon growth path (Section 1.3). This part lays
out initial conditions and provides cross-country benchmarking, including emissions per capita and other
metrics.
The second chapter reviews existing country climate commitments through international agreements, e.g.,
the Nationally Determined Contribution (NDC); domestic legislation, and sub-national commitments (Section
2.1). The chapter reviews country commitments and the set of policies and institutional arrangements
required to achieve these commitments, covering resilience and risk management (Section 2.2) and
mitigation (Section 2.3). Beyond climate policies, Section 2.4 assesses the capacity to manage the economic
transition in response to climate change.
The third chapter explores climate-related interventions and identifies priorities for the next five years based
on their synergy with development goals, economic and social costs and benefits, the availability of different
financing modalities, and the actions’ time scales. The section summarizes deep-dive findings into two areas
in which sector transformation is an imperative in the context of climate change: (a) the water/food security/
energy nexus and (b) low-carbon urban development and its linkages with the transport and energy sectors.
The fourth chapter uses a macroeconomic modelling exercise to assess the impact on growth, macroeconomic
and fiscal stability of selected climate impacts and adaption and mitigation investments within a medium- to
long-term (2050) time horizon. This chapter also summarizes the findings of deep dives in two cross-sectoral
dimensions: (a) unlocking financing for investments in climate-responsive, green solutions and (b) creating
opportunities for inclusive, climate-responsive jobs.
The final chapter summarizes the CCDR’s findings regarding synergies and trade-offs between Jordan’s
climate commitments and its development goals and priorities in the next five years to inform decision-
making.

1
Background paper 1: Deep Dive 1 Water-Food-Energy Nexus Technical Background Paper
Background paper 2: Pathways for Decarbonizing Growing Cities across the Urban-Transport-Energy Nexus in Jordan
Background paper 3: Amman Urban Growth Scenarios
Background paper 4: Jordan Urban Climate Risk Analysis
Background paper 5: Deep Dive 3: Unlocking Financing for Climate Action in Jordan
Background paper 6: Employment Effects of Climate Change in Jordan: How Can Climate Action Bring Opportunity to Jordan’s Workers?
Background paper 7: Trade and Climate Change Dynamics: The Impact of Climate Change on the Competitiveness of Jordan’s Export Sectors
Background paper 8: Jordan Trade and Climate Change Diagnostics: A Background Paper to the Jordan CCDR
Background paper 9: Climate Change Risks and Opportunities for the Private Sector in Jordan
Background paper 10: Climate Change Risks and Opportunities for the Financial Sector in Jordan
Background paper 11: The Macro-Fiscal Model for Climate Change (MFMod-CC) in Jordan

III
Country Climate and Development Report: Jordan
Executive summary
Putting climate at the center of Jordan’s development model
Jordan’s development trajectory has been altered by external shocks that have tested the country’s resilience
over the past 15 years and will continue to shape its path to economic recovery. The global financial crisis
in 2008, followed by the regional conflicts that erupted in 2011, disrupting trade routes to key trade partners
and leading to the influx of 1.3 million Syrian refugees, have had a profound and lasting socio-economic
impact. The doubling of the population from 5 million to 11 million over the past two decades has increased
pressure on service delivery and on Jordan’s already very limited natural resource base, including extremely
scarce water and land resources. The national poverty rate for Jordan was estimated at 15.7 percent in
2017–2018 with many more households near the poverty line and indications of increased poverty since
2019. Given the COVID-19 pandemic, the war in Ukraine, and the country’s geopolitical location, Jordan’s
path to economic recovery is shaped by uncertainty and risk. GDP growth is projected to remain around 2.3
percent until 2024, while the debt to GDP ratio is projected to rise to 117.9 by 2024 from 113.7 percent in
2021. The high unemployment rate (22.6 percent in the second quarter of 2022) and the need to create
jobs for the large cohorts of young Jordanians entering the labor market every year, are also key factors
shaping the country’s development path.
Natural resource poor and import-dependent, Jordan is particularly vulnerable to external shocks
underscoring the country’s need to ensure water, energy, and food security as part of its development
model. Jordan is facing an existential water crisis. As one of the most water scarce countries in the world
with only 97 m³ per capita per year, available water is well below the absolute water scarcity threshold of
500 m³ per year. Climate change will decrease water availability even further for agriculture, cities, firms, and
social systems (30 percent less water per capita by 2040) while increasing water demand. Climate change
is also increasing the frequency and intensity of droughts in Jordan, and multi-year droughts that parallel the
current one will become the new normal, where municipal water supply nears humanitarian thresholds and
food insecurity is further exacerbated by lack of irrigation water. Food imports represented nearly 20 percent
of total imports in 2019, leading to an import bill of approximately US$4.5 billion (over 10 percent of GDP).
Jordan also continues to import over 90 percent of its energy. Such vulnerabilities, underscored by strained
fiscal space, place improving water, energy and food security at the core of Jordan’s development needs.
There are also substantial co-benefits from climate action with regards to energy, water and food security.
Jordan is a small GHG emitter globally and compared to peer countries; however significant development
and adaptation co-benefits are associated with climate mitigation actions in the urban, transport and
energy sectors. Jordanian cities present significant opportunities for climate action. With 91 percent of the
population living in urban areas, cities greatly contribute to GHG emissions. Jordan’s urbanization rate is high
relative to peer countries, and the urban population is expected to increase by 15 percent by 2030. Jordan’s
cities have not fully leveraged the benefits of agglomeration, productivity gains, firm entry and jobs, and
better services associated with urbanization. Inefficient urbanization increases pressure on infrastructure,
service delivery costs, job access, and leads to loss of agricultural land, while also adding to a higher carbon
footprint. The transport sector is catching up with the energy sector as the country’s top GHG emitter and
transport-related inefficiencies are equivalent to at least 6 percent of GDP.
While delays in confronting climate realities will further exacerbate Jordan’s development challenges,
climate-responsive development can bridge inequalities, protect livelihoods and promote social cohesion.
Climate change is a challenge and an opportunity in a country facing increasing pressures on poverty,
debt, income distribution, and demand for jobs. The challenge stems from the disproportionate impacts of
projected climate change on specific economic sectors where energy and water are major inputs (such as
agriculture and tourism), vulnerable labor segments (informal and youth), and household groups – creating
pressing adaptation needs in a strained macroeconomic and fiscal context. On the other hand, Jordan’s
notable human capital, innovation, and entrepreneurship strengths are real assets that can be leveraged to
position the country as a leader in a growing regional climate service economy.
To meet Jordan’s development and climate goals, carefully prioritized and sustained action is needed,
considering significant domestic constraints. Maintaining the status quo would likely further harm people,
the economy, and the country’s natural capital. The Country Climate and Development Report (CCDR) explores
pathways to help Jordan meet its development goals while promoting resilient and low-carbon growth. Jordan

IV
Country Climate and Development Report: Jordan
has taken strides in climate action with commendable integration of climate goals (manifested in Jordan’s
ambitious NDCs) into the country’s development plans. The 10-year Vision for Economic Modernization Vision
launched in June 2022 considers sustainable practices and green investment as an integral part of Jordan’s
future economic growth and improving quality of life. The Jordan CCDR aims to support these efforts by
offering an analytical assessment of policy and investment pathways that can unleash the country’s economic
potential and improve Jordanians’ living standards in a changing climate. More specifically, the CCDR reviews
how climate action can help the country meet its development objectives—increased investment, higher
growth and productivity, job creation, poverty reduction, and more efficient use of scarce natural resources.

Strengthening policy implementation and financing adaptation needs are

key challenges
An early mover in the MENA region with regards to submitting its Nationally Determined Contribution (NDC)
in 2015, Jordan has been consolidating the strategic framework for implementing its climate commitments,
laying solid foundations for a transition to more climate-responsive development. The legal framework
for climate action has been strengthened, notably with the Climate Change Bylaw enacted in 2019, which
established the National Climate Change Committee (NCCC). Sector policies have gradually mainstreamed
climate change considerations. Regarding adaptation needs, Jordan submitted its National Adaption Plan
(NAP) in 2021, reiterating the urgency of implementing adaptation measures.
Despite being a small GHG emitter, Jordan has set ambitious national, sub-national, and sectoral climate
commitments; while the country is on track to meet its updated NDC commitments by 2030, total GHG
emissions are estimated to continue to increase toward 2050. The electricity sector is on a low-carbon
trajectory, with an increasing share of renewables significantly higher than the NDC target of 31 percent.
Jordan’s current National Energy Strategy focuses on energy security with an ambitious goal of reaching
a share of 50 percent renewables in the electricity mix by 20302. Achieving this goal requires significant
investment in stronger regional interconnections, smart grid infrastructure and pumped hydro storage, and
a reduction in energy consumption by 9 percent through energy efficiency by 2030. GHG emissions from the
transport sector have been rapidly increasing, becoming the largest source of emissions. Jordan has recently
launched the preparation of the Long-Term Strategy for Low-Carbon and Climate Resilient Development
(2050) as part of the Paris Agreement, which should also create a robust social dialogue toward defining and
implementing a ‘Whole-of-Economy’ vision for a climate-responsive Jordan.
Meeting Jordan’s NDC commitments largely depends on securing as-yet-unidentified financing. Jordan has
made significant progress in mobilizing resources to meet the financing estimate of US$5.7 billion in its 2015
NDCs; however, donor dependency for climate action is high, as evidenced by the conditionality of the GHG
target and framing of the NDCs. At the sub-national level, the Greater Amman Municipality (GAM) is a regional
leader in climate change with an ambitious goal of reaching net-zero carbon emissions by 2050; however, a
financing strategy to meet GAM’s ambitious plans is yet to be developed.
A greater focus on implementing existing strategies and citizen engagement is needed. Despite Jordan’s
increasing focus on climate change and progress in preparing climate strategies, implementation remains
slow as the government perceives development and climate action as competing priorities in a challenging
fiscal and socioeconomic environment, and as capacity needs to be built in line agencies. Greater engagement
with citizens and the private sector will also be key to achieve Jordan’s climate targets, to secure support for
needed reforms, change behaviors and practices, and to leverage the necessary financing.
The financial sector could significantly contribute to addressing the financing gap for the transition to a
resilient and low-carbon economy. This should be encouraged and accompanied by supportive policies and
incentives and training of key financial sector institutions, including the Central Bank of Jordan (CBJ). The
successful implementation of the CBJ’s Strategy for Greening the Financial Sector can be a major step in
increasing the climate responsiveness of the financial sector in Jordan. This includes enhancing climate risk
management, given the large size of Jordan’s financial sector (181 percent of GDP) and the impact of climate
change on financial risks, which could spill over into the real economy.

2
In 2021, the RE share of the electricity generation mix increased to 26 percent, up from 20 percent in 2020.

V
Country Climate and Development Report: Jordan
Preserving debt sustainability is a challenge to financing Jordan’s climate-smart development. Reforms, non-
financial incentives, leveraging private investment and Jordan’s extensive experience in innovative financing
would help. Project-based financing, combined with de-risking instruments and grants, has played a key role
in accelerating utility-scale solar and wind power production in Jordan. The country has implemented various
credit lines and refinancing schemes to support clean technologies in the industrial and MSME sectors. Jordan
is planning to mobilize project-based financing, private finance and green finance to support investment in
desalination and non-revenue water reduction. Non-financial measures, such as extra floor space for builders
constructing green buildings have also enabled investments. A combination of climate-related policy reforms
and innovative financing packages from public and private financing sources, complemented by climate-
specific financing sources, will be required considering the country’s macroeconomic and fiscal situation.

Pathways towards adaptation, resilience, and low-carbon growth

Jordan’s trajectory in meeting its climate and development goals will be largely determined by policy and
investment choices in five strategic sectors - water, energy, agriculture, transport and urban development. The
transformation of those sectors towards a resilient and low carbon path would need to be closely coordinated
along two nexuses to maximize co-benefits and to reduce potentially negative socio-economic impacts: the
water-energy-food security nexus, in a context of extreme water scarcity and pressing adaptation needs, and
the urban-transport-energy nexus, which is at the core of the shift towards a low-carbon growth path.
The water-energy-food security nexus: Adapting to increasing water scarcity and higher temperatures
Water efficiency and conservation are a priority across all sectors to minimize the financial burden of
investments in water supply. Climate change will exacerbate water scarcity while simultaneously increasing
water demand. Opportunities to augment Jordan’s water supply are few and costly including to: (i) desalinate
water and transfer it a long distance at considerable expense (current plans include the Aqaba-Amman
National Carrier Project or AAC); or (ii) purchase water from other countries which may be less expensive but
introduces sovereignty and political concerns. As Jordan advances the AAC Project as a significant supply-
side investment, the country also needs aggressive action on water efficiency (more than 50 percent of water
in the system is lost to leakage or commercial losses). Advancing supply augmentation or demand control
measures alone will not close the increasing supply-demand gap, they must be combined to achieve water
security and adapt to climate change. The financial sustainability of the water sector is also a persistent
challenge. Achieving cost recovery is an important goal for the water sector, requiring a broad suite of demand
control actions to achieve it. The Water Sector Financial Sustainability Roadmap (FSR), prepared through
a consultative process by the Government of Jordan, outlines a set of policy and investment measures that
will close the sector’s operational deficit by 2029 and reduce debt accumulation. Efficiency gains outlined in
the FSR include systematically reducing non-revenue water from 53 percent to 25 percent by 2040, energy
efficiency and energy load shifting improvements and a tariff reform program. A large part of the water
sector’s fiscal deficit is due to the water supply being highly energy-intensive and inefficient. Adopting the FSR
policy and investment measures would reduce water sector debt by billions of JOD by 2040, helping to return
the sector to operational cost recovery before the AAC comes online.
To address the adverse effects of increasing water scarcity, a combination of policy measures and
investments is needed to adapt to declining water availability without over-pressurizing the energy sector
or derailing mitigation ambitions. Building on the FSR, those investments include (a) improving the efficiency
of water use in urban areas, energy efficiency investments, and an economically efficient tariff structure that
recognizes the time of use, (b) investing in in-network storage to enable a shift in peak energy demand of
the water sector, (c) investing in pumped hydro storage, (d) introducing ‘smart’ net metering/billing policies
that encourage the use of solar energy by accounting for the time of consumption, (e) adopting policies that
accelerate the deployment of smart grid infrastructure, and (f) cooperating regionally on energy and water.
As water productivity improvements plateau, without major shifts, extreme water scarcity will constrain
growth in the agri-food sector, impacting food security, rural employment, and vulnerable groups. In Jordan,
as in many countries, the agriculture sector is the largest consumer of water resources, using 51 percent of
the water consumed. Jordan’s agri-food sector is also a major source of rural employment and income for the
most vulnerable groups, including refugees. Irrigated agricultural water productivity has improved steadily,
though it will be difficult to achieve further improvements without cropping and technological shifts such as
controlled environment agriculture.

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Country Climate and Development Report: Jordan
Fortunately, viable avenues to increase water efficiency and reduce fresh water use in agriculture while
maintaining agricultural livelihoods exist off-farm and on-farm, through a combination of complementary
policies and investments. Those include investments in (a) rehabilitating the King Abdullah Canal (KAC)
to reduce conveyance losses, and (b) enhancing treated wastewater (TWW) infrastructure to increase the
volume of reclaimed water and its use in the Jordan Valley. Substituting fresh water with treated wastewater in
agriculture is a promising intervention to reduce overall fresh water use in agriculture, and (c) using enhanced
remote sensing to reduce illegal groundwater abstractions. Finally, substantial gains can be expected from
shifting crop selection towards less water-intensive crops and more climate-resilient crops and improving the
water-use efficiency of the existing crop mix, including scaling up the use of cover for vegetable production,
and upgrading irrigation methods and technology where necessary.
The above package of priority policies and investments are expected to generate significant benefits by
2030, including increased financial sustainability of the water and energy sectors (e.g., reducing the need for
additional electricity generation), and significantly reduced agricultural demand for fresh water. Importantly,
the shift to energy and water efficiency measures and new agricultural technologies are also expected to
generate new, higher-skilled jobs.
The urban-transport-energy nexus: resilient and low carbon urban services
Given the urban concentration of Jordan’s population, decoupling growth from emissions requires spatially
integrated solutions across the urban, transport, and energy sectors. An urban growth scenario analysis was
carried out for Amman, considering the concentration of population in the municipality, its share of GDP, and
its ambitions in terms of climate action. The scenarios considered include (a) a business-as-usual scenario,
(b) the municipality’s current development plan, (c) a more ambitious scenario within the municipality’s
current targets, and (d) an ambitious net-zero scenario. The analysis suggests that Amman can substantially
reduce energy consumption and GHG emissions through integrated and complementary policy levers, and
by controlling urban sprawl. Modelling results (Figure ES1) demonstrate numerous benefits, from reduced
energy consumption and GHG emissions, by 27 percent and 41 percent by 2050 respectively, through
more aggressive measures beyond GAM’s current plans; reduced exposure to flood risks; reduced urban
expansion through better planning and improved connectivity; and reduced infrastructure investment costs
by 25 percent by 2050 under the ambitious scenario. Reaching net zero emissions, however, will require
doubling capital investments for renewable energy and related infrastructure.
A combination of policy measures and financing opportunities have been identified to begin the long-
term transformation of urban areas in Jordan, starting with Amman, into inclusive, green, resilient cities.
Those include (a) integrating green urban and transport planning to deploy transit-oriented development
and facilitate public transport reform, (b) integrating priority investment opportunities in green infrastructure
and services, particularly public spaces and nature-based solutions, to mitigate floods and heat islands, (c)
prioritizing urgent “no regret” infrastructure in Amman and municipalities, including recycling and sorting
facilities, upcycling hubs, sanitary landfills, and collection and transfer systems, (d) accelerating energy
efficiency (EE) across sectors, including investments in electricity demand-side management enabled by
a smart grid, supported with advanced metering infrastructure, (e) adopting Electric Vehicle (EV) goals and
an action plan to signal a national commitment to this market transformation, (f) promoting a modal shift
towards cleaner and greener freight transport, (g) enhancing financial sustainability and modernizing the
management of the road sector, and municipal public land and assets, and (h) launching housing sector
reforms in conjunction with land-use planning and zoning improvement and stronger enforcement of building
regulations.

VII
Country Climate and Development Report: Jordan
Figure ES1. Insights from integrated spatial scenarios for Greater Amman for 2050
GHG emissions (kgCO2eq/capita/annum) and energy use (MJ/capita/annum)

2,826 2,479
15000 3,000 Commuting
2,500 Public Lighting
1,472
10000 2,000 Wastewater
1,500
Water
5000 1,000
500 Buildings
17
0 0 Solid Waste
BAU Plan Ambitious Net Zero GHG Emissions

Population exposed to fluvial and pluvial flooding (people) by 2050

15,000 600,000

10,000 400,000
Fluvial Floods
5,000 200,000 Pluvial Floods

0 0
BAU Plan Ambitious Net Zero

Urban land consumption and natural land loss (km2) by 2050

910
784
1,000
615 570
Agriculture Land Loss
0 Natural Land Loss
-4 0
-128 Land Consumption Forecast (2050)
-467 Urban Footprint(2020)
-1,000
BAU Plan Ambitious Net Zero

Municipal and private expenditure (US$ mil.) by 2050

100,000
Municipal Service
50,000 Private Sector
New Infra. and Policies
0
Carbon Market
-50,000
BAU Plan Ambitious Net Zero

Total capital expenditure for new infrastructure, local policies (US$ mil.) by 2050

$14,000
$11,943
$12,000
Renewable Energy Electrification of Public Buses
$9,769
$10,000 Green Infrastructure Public Lighting

$7,480 Green Spaces and Parks Enforcement of Buildings Codes

$8,000
Water Management Demand Side Management
$5,590
$6,000 Waste Management Urban Planning
Controlled Parking Grey Infrastructure for Flood
$4,000
Pedestrianisation Grey Infrastructure
$2,000 Mass Public Transit

$0
BAU Plan Ambitious Net Zero

VIII
Country Climate and Development Report: Jordan
The macroeconomic perspective, financing climate action and an inclusive
transition for workers
The macroeconomic perspective
Four scenarios have been explored to examine the macroeconomic costs of climate change damages and
the costs and benefits of identified investments to promote resilience and low-carbon growth: Scenario I
models climate change damages linked to increased temperatures and extreme weather effects (floods);
Scenario II explores the impacts of increasingly severe water scarcity on the economy; Scenario III explores
the impact of selected water scarcity adaptation measures aiming at addressing the damages from increased
water scarcity on the economy; and Scenario IV explores the impacts of investments of approximately US$9.5
billion—the identified additional priority investments from 2022 to 2030 across the two strategic nexuses
—on the baseline.
Adopting adaptation measures to cope with water scarcity lessens its impact on GDP but may come at a
high economic cost depending on numerous factors including financing model for adaptation investments.
Scenario I which models the impacts of heat and flooding under three separate climate change scenarios
resulted in negative impacts on economic activity as real GDP decreased by -0.2 by 2050 in the most extreme
climate scenario (RCP 8.5). Water scarcity under Scenario II resulted in GDP decreases of up to 6.6 percent by
2050 compared to the baseline depending on assumptions made with regards to capital and labor mobility.
Scenario III modeled low- and high-cost adaptation strategies to eliminate a 200 million cubic meters (MCM)
additional shortfall in water supply by 2050. Real GDP could decrease from -2.2 to -4.5 percent in 2050
compared to the baseline, depending on the adaptation scenario. Based on the assumptions in the model of
full public sector financing for water-related adaptation measures, the ensuing government financing needs
result in a significant increase in public debt, which could unhinge a strong private investment crowding out
effect. With a debt-to-GDP ratio of nearly 100 percent at the beginning of the projection period, interest rates
would need to increase to incentivize investors to finance additional spending; however, this could crowd out
other private sector investments, lowering potential output and incomes. This calls for implementation of the
Water Sector FSR measures to reduce the sector’s debt burden on the economy, including pursuing options
to minimize the cost of capital (such as grant and concessional financing), to reduce operational costs and
to enhance predictable revenue flows through planned tariff reform.
Investments in infrastructure aiming at climate change mitigation and adaption raise overall economic
activity over time. However, the share of government financing for the additional investments increases
macroeconomic risks. The impact of a US$9.5 billion investment package in key sectors (transport,
energy, water, urban and agriculture) until 2030 is assessed without including the climate-related benefits
derived from them due to data constraints. These investments provide a sustained increase in real GDP
growth of over 1 percent above the baseline by 2050. However, the financing composition of the additional
investments (public vs private, and level of grant financing of the public component) are key factor impacting
macroeconomic outcomes. Finally, the increased investment, with their private and public components, come
at the cost of contracting private and public consumption (as a share of GDP) compared to the baseline.
Unlocking finance for climate responsive development
The CCDR estimates Jordan’s incremental investment needs 3 for resilient and low carbon development in key
sectors at US$9.5 billion (not including the AAC) for priority actions to be fully implemented by 2030. These
financing needs, covering priority actions identified in Chapter 3 under the two strategic nexuses considered,
build on the NDC priorities and include projects contributing to adaptation and resilience across the water,
agriculture, energy, transport, and urban (including green buildings and waste management) sectors. Figure
ES2 summarizes those priority investment packages, including whether they are included in the NAP and/
or NDC, and the degree of emphasis placed on them in the new Vision for Economic Modernization Vision.
Those packages include a combination of policy reforms and new investments, which are to be considered
jointly to achieve the intended adaptation, mitigation and development co-benefits. The CCDR also identifies
ways to mobilize the financing needed for those priority investments through a combination of actions, while
noting the critical role of concessional financing considering macro-fiscal constraints.

3
This assessment does not include projects already approved by the government and under development (such as the AAC). The costs include those
of priority investments identified in Chapter 3 of this CCDR in the two nexuses covered, for priority activities to be fully implemented by 2030. Refer to
Chapter 3 for the list of priority investments that have been included.

IX
Country Climate and Development Report: Jordan
Implementation of these recommendations will establish the enabling environment for increasing private
sector participation and attracting new funding sources. Notably, private sector investments represent a
large share of the prioritized investment needs identified in this CCDR (over 60 percent of the US$9.5 billion
incremental financing needs).

Figure ES2. A snapshot of priority investment packages to 2030

Target Sectors and Economic

Estimated Priority Climate Change Modernization
Nexus Packages of Priority Interventions * Total costs in NDC Priority Vision
(US$ million) or NAP
(2030-2050) (2022–33)
Adapting to increasing water scarcity and ensuring
Water-energy-agriculture

fiscal sustainability of the water and energy 1,363 NAP

sectors Water, Agriculture and
and food nexus

Reducing fresh water use in agriculture while Energy -

1,860 NAP
safeguarding livelihoods Increasing water
productivity; improving
Boosting system-wide resilience with a focus on resource-use
685 NAP
drought efficiency
Optimizing energy use and leveraging mitigation NAP and
303
opportunities in the agri-food and water sectors NDC
Integrating green urban-transport planning, Urban, Waste,
reforming public transport, and deploying transit- 1,588 NDC Transport and Energy -
LLow-carbon urban

oriented development. Increasing the share

development

Investing in green infrastructure for urban of RE,

rejuvenation, waste management, and circular 990 NDC reducing GHG
economy emissions from energy
and waste and
Promoting Energy Efficiency and green public improving resource-
2,716 NDC
buildings use efficiency
Total 9,505
Last column: Darker green means stronger emphasis in the Economic Modernization Vision 2022-2033
* This assessment does not include projects already approved by the government and under development (such as the AAC)

The first area for action to mobilize green finance is improving government practices with regards to public
investment management and leveraging private investments. Jordan could explore opportunities to:
a. Fully operationalize existing instruments for public investment management to leverage financing
for climate action: this includes, among others,using the Public Investment Management (PIM)/Public
Private Partnerships (PPP) policy and legal framework and its implementation tools, such as the National
Registry of Investment Projects (NRIP), to develop a robust pipeline of climate-responsive capital
investment, piloting innovative government support mechanisms to strengthen the bankability of the
PPP projects, and scaling up State-Owned Enterprises’ (SOEs) role in financing green infrastructure and
climate-responsive projects;
b. Adopt green procurement and performance contracting practices and strengthen national quality
infrastructure to encourage greening of the supply chains;
c. Integrate climate criteria into private sector development programs and strategies, such as FDI-related
strategic plans, export development (e.g., new National Export Strategy), access to finance initiatives,
innovation policy and entrepreneurship (e.g., amending the National Entrepreneurship Policy) to drive
existing and new firms and industries to adapt their business models and technologies. It is also crucial to
fully operationalize the climate finance governance system to strengthen coordination across government,
the private sector, the financial sector, and the general public.
The second area for action is improving fiscal discipline, budgeting and transparency. This includes
ensuring the traceability of climate action strategies and plans to the medium-term fiscal framework and
strengthening the management of financial and non-financial assets and liabilities to reduce emissions,
promote adaptation, and build resilience. Transparently identifying climate-related actions, defining related
policies and investments needs and tracking of expenditures to ensure attribution is essential for scaling-up
financing for climate action. This will enable both financing from traditional and from climate finance sources.

X
Country Climate and Development Report: Jordan
Finally, the third area for action is strengthening the financial sector to mobilize private investment. Access
to finance is still a significant challenge for MSMEs, while Jordan’s banking sector has witnessed a persistently
high liquidity in the last decade and more. While broader efforts to increase access to finance are needed,
enhancing access to green financing will require strong low-carbon policies and national commitments to
incentivize the financing sector and the private sector. Several steps can be taken in that area.
a. Implementing the CBJ’s Strategy for Greening the Financial Sector, active consultations between
the private and financial sectors to align their vision for greening the financial sector, and adopting a
national green taxonomy to add consistency to how financial institutions classify economic activities and
respective borrowers or loans;
b. Implementing targeted awareness-raising measures for the private sector, using climate action and
green financing to incentivize SMEs to join the formal economy, and fostering green entrepreneurship,
including facilitating local service providers and start-ups with technology and service solutions; and
c. Accelerating the development of disaster risk finance and insurance products.
While policy reforms and improved public investment management are an integral and essential part of
the solution to finance climate action in Jordan, additional sources of climate finance will also need to
be identified. While all the above actions will ensure more efficient use of existing resources, help leverage
financing from the private and the financial sectors, as well as provide stronger incentives for demand-side
investments in climate-responsive solutions, this report recognizes that Jordan would still need to mobilize
additional financing for the prioritized investments. As shown by the modeling exercise carried out for this
CCDR, access to concessional financing is a critical determinant of long-term economic outcomes; in the
absence of such financing, the achievement of priority climate actions may be at risk. This is particularly the
case for critical investments that are less likely to attract private financing due to their public goods nature
or to lower returns on investments. Jordan is currently working on a climate investment plan (forthcoming)
which provides an opportunity to refine the financing strategy for priority adaptation and mitigation actions.
An inclusive transition for workers
Climate impacts will impinge on workers’ livelihoods, ranging from reduced incomes to complete
displacement from jobs. However, Jordan’s highly segmented labor market impedes workers’ capacity
to move between segments to find better or alternative jobs. There are various channels through which
public policies and programs can help narrow the gaps that characterize Jordan’s segmented labor market;
by reducing the differences in job characteristics between segments, workers can transition more easily.
Climate actions to reduce GHG emissions and improve water efficiency and conservation can be growth- and
jobs-generating if accompanied by supportive labor policies. The education sector has a major role to play
in facilitating the transition to a resilient and low carbon development path in Jordan, by ensuring that new
entrants in the labor market are equipped with the skills required by the growing green industry and services
sectors and by contributing to changing awareness and behaviors related to climate action.
Climate actions can create new growth opportunities through emerging green industries and environmental
services. Many jobs can be adapted and created through climate actions in renewable energy, but more so
in the construction and agri-food sectors. Benchmarking with other countries also reveal significant scope to
improve the performance of the tourism sector both in terms of job creation and reducing GHG emissions.
Decentralized renewable energy,4 solar water heating, and biogas capture and reuse in wastewater treatment
plants, water, and energy efficiency investments emerge as cost-effective approaches to climate change.
Similarly, rainwater harvesting,5 and water-efficient agriculture can also reduce GHG emissions and create
jobs. The higher skill level required for such jobs could attract Jordanian workers. Climate actions can prioritize
vulnerable groups through targeted interventions based on a deeper understanding of their short- and long-
term adaptation needs. Finally, Jordan’s social protection system can be leveraged to mitigate negative
impacts on the most vulnerable.

4
As solar PV is economically feasible and profitable at a small scale, energy can be supplied in a decentralized way based on investments from
households and businesses with the private sector doing the manufacturing, installation, and operation and maintenance. If the cost of energy storage
continues to fall, it may eventually be economically feasible for consumer/producers to disconnect from the grid.
5
See FAO (2016) for discussion.

XI
Country Climate and Development Report: Jordan
Conclusion
In Jordan, natural resource scarcity and import dependence mean pronounced climate change impacts are
inevitable and adapting to climate change is a pressing development priority. However, there are options
to mitigate the risks identified in this report and use climate action as a platform to reimagine Jordan’s
economy, cities and labor force. Coping with water scarcity will make Jordan’s economy more resilient.
Investing in human capital, innovation, and empowering the private sector and entrepreneurship will break
labor market barriers; using climate change as a means for inclusion instead of being a disproportionate
force of inequality will strengthen Jordan’s social cohesion. For example, initiating a systematic process of
climate consultations could democratize climate actions and bring sensitive issues such as pricing reforms
closer to the public arena, aiding transparency.
Jordan will need to use a combination of avenues to leverage financing for priority climate action. Selected
policy reforms to improve the management of public investment in key sectors, attract and leverage private
sector financing, incentivize end-users and change behaviors, and ensure greater engagement of the
financial sector will all be essential for the achievement of Jordan’s climate priorities. Equally important
will be the identification of additional financing for priority investments, without which the country’s climate
commitments may remain out of reach.
Building on its extensive experience in climate action, Jordan also has a lot to offer regionally and globally.
With its well-educated population, climate action appetite, and experience in driving the climate agenda,
especially on renewable energy, Jordan is well-position to take a leading role in innovative regional climate
dialogue and initiatives.

XII
Country Climate and Development Report: Jordan
1. Putting climate at the center of Jordan’s development
model
Jordan is a small upper-middle income country with scarce natural resources and is particularly exposed
to regional and global shocks. Over the past two decades, Jordan’s population has doubled from around 5
million to 11 million, increasing pressure on service delivery and on its fragile natural resource base, including
scarce water and land resources. Jordan has also faced a series of external shocks which have altered its
development trajectory. Headwinds started with the global financial crisis in 2008, followed by the regional
conflicts that erupted in 2011, disrupting trade routes to key trade partners and leading to the influx of 1.3
million Syrian refugees. Growth slowed to 2 percent on average over 2016–2019, impacted by the decade-
long Syrian crisis and high energy, transport, and labor costs. Given the protracted COVID-19 pandemic, the
war in Ukraine, and climate change, Jordan’s path to economic recovery is uncertain. Implementing Jordan’s
climate commitments could mitigate risks and produce development co-benefits.

1.1. Jordan’s development priorities and objectives

Two years into the COVID-19 pandemic, future economic prospects remain uncertain. Jordan faces
increasing poverty, poorly distributed income, and inclusion pressure. The COVID-19 pandemic severely
impacted small and medium enterprises (SMEs), which provide 52 percent of private-sector employment.
In 2021, Jordan’s real GDP grew by 2.2 percent, reflecting a good recovery after a 1.6 percent contraction
in 2020. The economic rebound in 2022 may aid household recovery but may be slow and uneven. GDP
growth is projected to remain around 2.3 percent until 2024. The working-age population is expected to
increase from 4.4 million in 2020 to 6 million in 2030 (NES 2011–2020). The World Bank’s Jobs Diagnostic
(2019) indicates that Jordan’s economy needs at least 6 percent growth to reduce unemployment. Foreign
direct investment (FDI) flows notably declined from 6.1 percent to 1.5 percent of GDP from 2010 to 2019,
foregoing a potential source of productivity gains and external economic funding. Jordan faces binding fiscal
constraints with considerable contingencies in key sectors. Debts and liabilities in the energy and water
sectors amounted to 20 percent and 7 percent of GDP at the end of 2019, respectively. At the end of 2021,
Jordan’s public and publicly guaranteed debt reached 113.7 percent of GDP. The national poverty rate for
Jordan was estimated at 15.7 percent in 2017–2018 (MOSD, MOPIC, UNICEF 2019). Many households live
near poverty, and even a small shock to income or increase in prices can tip them into poverty (Figure 1),
particularly under rising unemployment (Figure 2). Food security is also of concern.

Figure 1. Household per capita consumption distribution in Jordan, 2017–2018, relative to the national
poverty line
006

004
Kdensit y pcespi

002

0
0 100 200 300 400 500
Per capita expenditure (JD/person/month)

Source: 2017–18 HEIS and World Bank calculation

1
Country Climate and Development Report: Jordan
Figure 2. Unemployment rates in Jordan in percentages

50
44.3

40
34.5
30.7
30 26.7
24.1
23.2
20 21.7
15.3 Total
12.5
Female
10
Youth (ages 20-24 years)
Structural
break
0
2008
2009

2011
2012

2015

2019
2001

2004
2003

2014

2020
2000

2010

2013

2016
2002

2005
2006
2007

2017
2018
Sources: Department of Statistics, WB staff estimates. Note: The Department of Statistics adopted a new methodology for the labor force survey during
Q1-2017 based on recommendations from the International Labor Organization.

Slow job creation has worsened labor market outcomes (Figure 2). The labor market is extremely segmented
across three main dimensions: public-private, informal-formal, and local-migrant, with gender inequality
being a cross-cutting concern. Under 14.2 percent of Jordanian women are in the labor force, one of the
lowest rates in the world (Lugo et al., 2020). Fifty-seven percent of workers in Jordan are informal, i.e., not
registered with social security (LFS, 2019), most working in small and microenterprises and many living in
poor and near-poor households (MOSD, MOPIC, UNICEF 2019). Ninety-five percent of working refugees are
informally employed (LFS, 2019) and among the country’s poorest individuals. Most poorly remunerated, low
productivity, unskilled jobs are filled by non-Jordanians willing to accept less attractive employment terms.
This pattern is strongest in the agriculture and construction sectors. Among Jordanians, 75 percent of the
poorest decile work in the services sector, particularly in wholesale and retail trade.
The economic impact of the COVID-19 pandemic has intensified poverty and labor market trends. The labor
market’s deterioration is the most significant threat to household welfare. Unemployment rose significantly
during the pandemic, reaching 25 percent at its highest point in Q1–2021. Women and youth, who already
had structurally high labor participation unemployment rates, have been hit hardest. Youth unemployment
jumped to unprecedented levels during the pandemic—50 percent in Q4-2020 among 15–24 and is still
above pre-pandemic levels at 46.1 percent. Most of the jobs that are being created are low-skilled, low-wage
jobs.
Jordan’s Vision 2025, launched in 2015, articulates the country’s development goals. It argues for a shift
to a new development model to address the formidable challenge of providing decent job opportunities
for its young population.6 Jordan’s Vision 2025 recognizes that Jordan must transition to a high-productivity
economic model led by the private sector that can generate high-quality jobs. Vision 2025 also notes the
unsustainable level of social spending—8.4 percent of GDP in 2013—including subsidies in several sectors –
energy, water, food, education, health - arguing for a greater focus on jobs and incomes to address issues of
poverty and inclusion. It focuses on attracting private investments, increasing exports, and addressing fiscal
imbalances. Several priority clusters were identified (Box 1.1), many impacting or likely to be impacted by
climate change, e.g., construction, transport, logistics, tourism, and financial services.
Ensuring energy, water, and food security features at the core of Jordan’s Vision 2025. Jordan is one of
the world’s most water-scarce countries, which constrains growth. Jordan imports over 90 percent of its
energy. Over the past decade, Jordan has pursued energy security, including by exploring domestic fossil fuel
resources and expanding renewable energy. Most arid and semi-arid areas suffer from land degradation due

6
More than half of the population is under the age of 24.

2
Country Climate and Development Report: Jordan
 Box 1.1. Jordan vision 2025
In May 2015, the GoJ launched Vision 2025, a ten-year strategy that called for transforming Jordan’s
socioeconomic development model to achieve growth and prosperity based on competitiveness and
providing more employment opportunities. The strategy is based on the principles of (a) promoting the
rule of law and equal opportunities, (b) increasing participatory policymaking, and (c) achieving fiscal
sustainability and strengthening institutions. Jordan aims to achieve sustained economic growth by
improving infrastructure, enhancing education and health, and strengthening the role of the private
sector and civil institutions.
Jordan’s Vision 2025 identifies priority export markets beyond the current regional crisis, aiming to
become a regional trade hub. It also identifies priority clusters to drive growth and create jobs, building
on existing strengths and identifying opportunities in new clusters based on emerging trends. The
clusters identified as having high potential are construction and engineering, transport and logistics,
tourism and events, health care, and services in life sciences, business, education, and finance.
Depending on the progress achieved, the Vision offers two scenarios: the targeted scenario offers a
7.5 percent real growth rate by 2026, while the baseline scenario offers a 4.8 percent growth rate.

JORDAN Middle East and North Africa

to overgrazing, erosion, poor irrigation practices, and urban encroachment. Desertification is a significant
OVERALL PERFORMANCE AVERAGE PERFORMANCE BY SDG
risk. Food imports represented nearly 20 percent of total imports in 2019.
COUNTRY RANKING COUNTRY SCORE SDG SDG
The geographic pattern of Jordan’s economic development is resource intensive. The1 population is nine-
17 100
tenthsJordan

72
SDG SDG

urban, with many in the capital Amman. The population’s geographic 16 concentration in2 the Northern
75
parts of the country, far from the port of Aqaba, translates into high transportation costs
50 and GHG emissions
3
SDG SDG

for imports and exports. Freight transport70.1

15
relies on roadways and suffers from inefficiencies.
25 Rapid urban
/165
population growth has increased the demand for water and the water sector’s energy intensity. Urban sprawl
SDG
SDG
14 4
and poor public transportation are drivers of high energy use.
REGIONAL AVERAGE: 67.1 SDG
Jordan SDG
Jordan’s progress toward achieving the Sustainable Development13Goals (SDGs) has been mixed and below 5
its ambitions. Despite Jordan’s success in integrating SDGs into national strategies and frameworks, progress SDG
STATISTICAL
has been slow due PERFORMANCE INDEX
to limited policy implementation and regional shocks.
12 With regards to SDG performance,
6
SDG

0 (WORST) TO 100 (BEST)

in 2021 Jordan ranked 72 out of 165 countries and scored 70.1, compared to the regional average of 67.1.7 SDG

Gains were made in clean water (SDG 6), affordable andD clean energy (SDG 7), and industry, infrastructure,
SDG
11 7
and innovation 62.0
(SDG 9). Four further SDGs were evaluated as moderately improving and eight as stagnating
SDG SDG
0 10 0 10 8 SDG
9
(Figure 3).

SDG DASHBOARDS AND TRENDS

Figure 3. Jordan’s performance on the SDGs: Sustainable Development Report 2021

D 5 D 5 5 L

L 5 L • 5 •
D 5 5 D 5
Major challenges Significant challenges Challenges remain SDG achieved Information unavailable
p Decreasing 5 Stagnating D Moderately improving L On track or maintaining SDG achievement • Information unavailable
Notes: The full title of Goal 2 “Zero Hunger” is “End hunger, achieve food security and improved nutrition and promote sustainable agriculture”.
The full title of each SDG is available here: https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals

7
Sustainable Development Report 2021
INTERNATIONAL SPILLOVER INDEX
0 (worst) to 100 (best)
3 100
0 0 (worst) to 100 (best)
Country Climate and Development Report: Jordan
0 100

z
OECD members 70.1
Several years after launching Vision 2025, progress towards the country’s development goals has been
uneven. The key development challenges identified in 2015—stronger growth, more and better jobs,
fiscal sustainability, and more sustainable pathways for water, energy, and food security—remain partially
unaddressed. Reduced economic opportunity due to the COVID-19 pandemic and the continued impact of
the Syrian crisis has led to a tense social context. The Government’s Economic Priorities Program 2021-
23, under implementation, recognized those challenges and was designed to accelerate the economic
recovery following the COVID-19 pandemic.
A new 10-year Vision for Economic Modernization was launched in June 2022. This vision is based on
two strategic pillars: (a) accelerating growth through unleashing Jordan’s full economic potential and (b)
improving the quality of life for all citizens, with sustainability as a cornerstone of this vision. The first pillar
focuses on qualitative leaps in economic growth and job creation, with the continuous growth of the net
income of individuals, and the second pillar on tangibly improving the quality of life. The vision encompasses
eight interlinked objectives that recognize the importance of a green and sustainable development path
(Table 1).

Table 1. Strategic objectives of economic growth drivers, 2022-2023

High Value Industries Develop Jordan into a regional industrial hub through high growth exports with high quality and value products
Achieve excellence in services sectors to enhance national development and increase exports of services on
Future Services
regional and global levels
Destination Jordan Position Jordan as a prime tourism and film production destination
Develop and prepare local talents to meet the needs of future skills, required resources and institutions to
Smart Jordan
accelerate economic growth and enhance quality of life
Optimise the use of natural resources to ensure sustainability, unleash inclusive sectoral growth and enhance
Sustainable Resources
quality of life
Stimulate domestic and foreign investments through an attractive and efficient investment and doing
Invest Jordan
business ecosystem
Green Jordan Support sustainable practices as a pillar of Jordan’s future economic growth and enhance quality of life
Improve quality of life for Jordanians through developing and adopting higher life standards that revolve
Vibrant Jordan
around the citizen and the environment

1.2. Risks and development opportunities from climate change and

natural hazards
Jordan is increasingly vulnerable to climate change, with impacts already evident. The country ranked
75 out of 182 countries in the ND-GAIN index for climate vulnerability in 2019, sliding from 63 in 2015.
The ND-GAIN Index ranks countries using a score that calculates their vulnerability to climate change,
other global challenges, and their readiness to improve resilience.8 Jordan received a vulnerability score
of 0.375 on par with peer countries (Figure 4), driven by high sub-scores on freshwater withdrawal, urban
concentration, and energy import dependency. Since the 1960s, annual maximum temperatures have
increased by 0.3–1.8 °C, and minimum temperatures have risen by 0.4–2.8 °C across climate regions.
The annual precipitation has declined by 5–20 percent, depending on the region.9 Future climate modeling
(Table 2) shows (a) further decreases in total precipitation; (b) increasing variability in the location, timing,
and quantity of rainfall; (c) warmer average temperatures of up to 2.9 °C by 2050; (d) increased drought
occurrence, length, and severity; and (e) more frequent extreme events.10 Climate change impacts will vary
across the country. For example, the northern region and King’s Highway are projected to experience the
largest precipitation declines.

8
ND-Gain Note Dame Global Adaption Initiative
9
Harris et al., “Updated High-Resolution Grids of Monthly Climatic Observations – the CRU TS3.10 Dataset,” International Journal of Climatology 34,
no. 3 (2014): 623–42, https://doi.org/10.1002/joc.3711
10
United Nations Economic and Social Commission for Western Asia (ESCWA) et al., “Arab Climate Change Assessment Report – Main Report” (Bei-
rut: United Nations Publication E/ESCWA/SDPD/2017/RICCAR/Report, 2017), https://www.unescwa.org/sites/www.unescwa.org/files/publications/
files/riccar-main-report-2017-english_0.pdf;
United Nations Development Programme (UNDP), “Jordan’s Third National Communication on Climate Change”; IPCC, “Fifth Assessment Report —
IPCC,” n.d., https://www.ipcc.ch/assessment-report/ar5/.

4
Country Climate and Development Report: Jordan
Climate change will exacerbate Jordan’s development challenges by impacting people, natural resources,
and the economy, creating pressing adaptation needs across sectors. Prolonged and more intense heat
waves and reduced water availability and quality will affect the population’s health. Higher temperatures will
make outdoor work such as construction and agriculture a health risk. They will reduce worker productivity,
meaning lower earnings for many workers and companies, compounding existing growth and job challenges.
Only 12 percent of the rural and 21 percent of the urban populations have air conditioning access.11 Extreme
weather events will impact infrastructure, agriculture, water availability, and labor productivity12. Prolonged
dry seasons will affect low-income rural communities in poverty pockets such as the western and southern
parts of the Badia desert. Finally, climate change will affect Jordan’s competitiveness, generating new risks
and opportunities for the private sector.

Figure 4. Key economic and climate indicators: Jordan versus selected peers
GDP per Urbanization Unemployment CO2 emissions CO2 emissions Water stress Climate
Capita per capita Vulnerability Index
(current US$) in Urban population Unemployment, total (kt) in 2018 (metric tons per WRI Water stress 2019; high value=
2019 (% of total (% of total labor capita) in 2018 score; 2019 hihg vulnerability
population) in force) modeled ILO
2020 2020
Jordan 4,405 91.418 18.5 24,700 2.47 4.56 0.37

Morocco 3,230 63.532 10.15 66,680 1.85 3.89 0.37

Egypt 3,019 42.783 10.45 246,260 2.85 3.07 0.43
Tunisia 3,351 69.568 16.69 29,980 2.59 3.67 0.38
Lebanon 7,583 88.758 6.61 27,710 4.03 4.82 0.41

Armenia 4,622 63.313 20.21 5,550 1.88 2.53 0.38

Georgia 4,697 59.453 12.05 9,460 2.53 1.39 0.38
Romania 12,889 54.194 4.84 74,880 3.84 1.85 0.39
Turkey 9,126 76.105 13.92 412,970 5.01 3.56 0.34
Bulgaria 9,828 75.686 5.71 41,130 5.85 2.53 0.33
Panama 15,727 68.414 10.23 10,140 2.42 0.23 0.38
Malaysia 11,414 77.16 4.55 239,620 7.60 0.28 0.36

Peers 7,772 67.17 10.49 105,852 3.64 2.61 0.38

MENA non-oil 4,119 68.54 11.09 74,224 2.29 3.76 0.41
MENA 17,003 77.28 10.88 105,133 9.17 4.08 0.40
10,000
0

10

0.5
50

5
0

0
20,000

100

20

10

10

Source: World Development Indicators, World Resources Institute, ND-GAIN Country Index

Table 2. Climate change impacts under different scenarios13

Parameters RCP2.6 RCP4.5 RCP8.5

2050 2100 2050 2100 2050 2100

Temperature +1.7°C +1.7°C +1.2 to 1.5°C +1.5 to 2.1°C +1.7 to 2.9°C +3.2 to 5.9°C
Precipitation NA NA -4 to -15% -7 to -25% -7 to -15% -13 to -22%

Drought +5 days +5 days NA +30 to 40 days NA +>40 days

+4 days with +8 days with
No significant No significant No significant No significant
Floods precipitation precipitation
change change change change
>20mm >20mm
200 days per
Heat Waves 45 days per year 45 days per year NA NA 75 days per year
year
Source: Water in the Balance: The Economic Impacts of Climate Change and Water Scarcity in the Middle East. World Bank, 2020

11
Department of Statistics, 2015 population census
12
The agriculture and construction sectors are major employers for vulnerable groups such as refugees and women. These sectors are particularly
sensitive to extreme weather events.
13
Roadmap for Jordan LTS 2050 – Annex 3

5
Country Climate and Development Report: Jordan
Climate change will decrease water availability while increasing water demand for agriculture, cities
and social systems, and will negatively affect Jordan’s agriculture sector and food security. Jordan is
facing an existential water crisis. Population growth and increasing demand from economic development
have reduced the amount of water per person. With only 97 m3 per capita per year, available water is well
below the absolute water scarcity threshold of 500 m³ per year. By 2025, water demand is estimated to
exceed available water resources by over 26 percent.14 The World Bank’s ‘Water in the Balance’ report
estimates that a 20 percent reduction in water availability (a plausible scenario reflecting scientific
consensus) could decrease GDP by up to 6.8 percent. Around half of Jordan’s available water is used
for domestic and industrial water supply and half for agriculture. Higher evapotranspiration levels due
to climate change are expected to increase Jordanian irrigated agriculture water demand by 5 to 20
percent by the 2070s. Higher temperatures may impact crop growing phases, increasing yield loss15
and impact severely Jordan’s rainfed crops, including barley and wheat (Figure 5).16
The projected output declines for some agricultural products - such as grain and fodder for livestock - brings
higher food security risks.
Jordan’s three largest cities, Amman, Irbid, and Zarqa, which play an outsized role in the economy, will
all experience increased hazard exposure under future climates. All three cities will become drier yet will
experience more extreme precipitation events, which can worsen flooding. The built-up area exposed to pluvial
flood hazards has increased and will continue increasing under all climate scenarios, disproportionately
affecting low-income households. Air pollution is also a serious concern in all three cities. The average
particulate matter 2.5 (PM2.5) concentration has increased to levels well above the WHO guideline threshold
for health outcomes, set at 10 micrograms per cubic meter of air, standing at 43, 32, and 21 micrograms
per cubic meter of air in Zarqa, Amman, and Irbid, respectively. Climate change will also heighten urban heat
further. Zarqa has already seen a 3°C rise in surface temperature over the past eight years. Jordanian cities
must invest in climate change adaptation measures while limiting GHG emissions.
Climate change represents a serious threat to the growing tourism industry. Tourism is the largest export
sector in Jordan, accounting for more than 30 percent of goods and services’ trade before the pandemic.
Climate change impacts tourist locations, tourism seasonality and influences operating costs. Changes,
including water availability, biodiversity loss, diminished landscape aesthetics, altered agricultural production,
increased natural hazards, coastal erosion and inundation and damage to infrastructure will impact tourism
to varying degrees.17 The water footprint of the tourism sector can be high in dry climates, reaching up to
15 percent of domestic water consumption in Mediterranean countries such as Spain, Greece and Malta.
Jordan’s trade structure is highly vulnerable to the impacts of climate change, and climate change may
negatively affect the country’s trade balance. Jordan imports over 92 percent of its energy and around 70
percent of its staple food needs, with the food import bill expected to increase with climate change.18 19 The
five largest export sectors—textiles, chemicals, fertilizers, pharmaceuticals, and rare minerals, with an export
value of US$5.28 billion—accounted for 60 percent of total export volume in 2019. They are either highly
energy-and water-intensive or sensitive to energy and water tariffs. Firms expect to be impacted by climate
change, with increased scarcity and costs of water and energy inputs being the key threats; however, many
SMEs are unprepared for those changes.

14
Ministry of Water and Irrigation. National Water Strategy: 2016–2025.
15
Jawad Taleb Al-Bakri et al., “Impact of Climate and Land Use Changes on Water and Food Security in Jordan: Implications for Transcending ‘The Trage-
dy of the Commons,’” Sustainability 5, no. 2 (February 2013): 724–48, https://doi.org/10.3390/su5020724; Rodomiro Ortiz, “Crop Genetic Engineering
Under Global Climate Change,” Annals of Arid Zone 47 (September 1, 2008): 343–54.
16
Ortiz, “Crop Genetic Engineering Under Global Climate Change.”
17
The MOE National Climate Change Policy
18
IRENA 2021, The Hashemite Kingdom of Jordan: Renewables Readiness Assessment
19
Carnegie Endowment: The Cost of Food Security in Jordan

6
Country Climate and Development Report: Jordan
Figure 5. Climate change impacts on crop yields in Jordan, under 3 °C and 5 °C increase scenarios

a. Impacts of a +3°C increase in temperature due to climate change on crop yields in the middle east

Vegetables Other
Country Rice Wheat Coarse grains Oil crops Sugar crops Fibers and fruits crops
Iran, Islamic
-0.4 +18.8 -15.7 4.2 8.9 -1.2 2.8 5.6
Rep.
Iraq -5.1 -24.8 -24.0 11.2 9.0 -5.7 3.6 -2.8

Jordan 0.0 -15.6 -9.3 12.1 0.0 0.0 2.1 1.2

Lebanon 0.0 -11.8 -10.6 12.0 8.7 0.0 2.9 7.7

Syrian Arab
0.0 -12.1 -12.0 12.0 8.6 -3.0 2.5 4.4
Republic
Turkey 4.6 -13.8 -11.6 11.6 8.5 -1.7 2.9 2.1
RME -1.7 -17.3 -10.0 11.2 9.7 -2.8 4.5 3.4

Note: RME= Rest of the Middle Est

b. Impacts of a +5°C increase in temperature due to climate change on crop yields in the middle east

Vegetables Other
Country Rice Wheat Coarse grains Oil crops Sugar crops Fibers and fruits crops
Iran, Islamic
-0.4 +18.8 -15.7 4.2 8.9 -1.2 2.8 5.6
Rep.
Iraq -5.1 -24.8 -24.0 11.2 9.0 -5.7 3.6 -2.8

Jordan 0.0 -15.6 -9.3 12.1 0.0 0.0 2.1 1.2

Lebanon 0.0 -11.8 -10.6 12.0 8.7 0.0 2.9 7.7

Syrian Arab
0.0 -12.1 -12.0 12.0 8.6 -3.0 2.5 4.4
Republic
Turkey 4.6 -13.8 -11.6 11.6 8.5 -1.7 2.9 2.1
RME -1.7 -17.3 -10.0 11.2 9.7 -2.8 4.5 3.4
Note: RME= Rest of the Middle Est

Given the large size of Jordan’s financial sector—181 percent of GDP—the impact of climate change on
financial risks could have strong spillover effects on the real economy. Banks have significant sovereign
exposures—25 percent of total assets—and are major investors in GOJ securities; if climate change adds to
an already high public debt level, this could lead to financial risks to banks. The construction, real estate, and
industrial sectors account for 38 percent of Jordan banks’ total credit portfolio (Figure 6). Conversely, while
the low share of loans in the agriculture sector would indicate low exposure to risks related to the impact
of climate change on agriculture, the lack of access to finance impedes the agri-food sector’s adaptation to
climate change and its ability to mitigate risks through investments in climate-smart agriculture (CSA).

Figure 6. Sectoral distribution of the bank loan portfolio in Jordan and a qualitative assessment of
exposure to climate change risks

Portfolio
Sector Risk Potential impacts
share

• Transition: energy efficiency standards and regulations; additional capital

Construction and real injections for refurbishment.
26%
estate
• Physical: natural hazards affect lifetime of buildings; reduced asset value.

• Transition: low-carbon policies; large investments for adaptation; need to

Public services and utilities 15% significantly adjust the energy mix; pressure on financial sustainability of
public water/energy service providers.

• Transition: change in consumer preferences; change in trade regulations

General trade 15% (e.g., EU CBAM);.
• Physical: disruption of supply chains due to increased extreme events.

7
Country Climate and Development Report: Jordan
 Portfolio
Sector Risk Potential impacts
share
• Transition: impact of low-carbon policies (industry is the third biggest
emitter in Jordan); change in consumer preferences; significant increase
Industry 12% in inputs’ prices (water, energy).
• Physical: disruption of supply chains due to increased extreme events.
• Transition: changing tourist preferences; increased demand for eco-
tourism; low-carbon policies; links to other sectors (e.g., transport: land,
Tourism, Hotels, and air).
2%
Restaurants
• Physical: negative impact on key tourism assets; changing suitability of
locations; seasonality.
• Transition: low-carbon policies; consumer preferences; environmental
Agriculture 1% regulations.
• Physical: decreased water availability; decreased productivity.

• Transition: low-carbon policies (large emitter); capital injections for flee

Transportation services 1%
upgrading; electrification.

• Transition: low-carbon policies; environmental standards; stranded

Mining 1% assets.
• Physical: suitability of locations; erosion.

Other (consumer loans) 24% • Limited impact.

Source: WB staff assessments and CBJ

Climate change policies and actions are becoming increasingly integral to preserve the state-citizen contract,
which not only includes acknowledging the urgency of climate change, but also underscoring the changes
required for Jordan’s economy and society. From a climate change mitigation perspective, citizen views and
behaviors have emerged as a central concern for those involved in building sustainable, low-carbon futures
to avert public resistance and the need to gain social acceptance of policies, the desire to change behaviors,
and efforts to understand citizens’ actions to drive solutions in more bottom-up ways through community or
grassroot innovations. From the standpoint of climate change adaptation, there is increasing recognition of
the value of promoting equity and participation in decision-making and efforts to incorporate bottom-up and
place-based approaches.

1.3. Risks and opportunities for a low-carbon growth path

Jordan is a very small GHG emitter globally compared to peer countries (Figure 4). In 2018, Jordan’s total
GHG emissions—35.81 metric tons of carbon dioxide equivalent—represented 0.06 percent of the global
total, compared to 0.19 percent for Morocco and 0.67 percent for Egypt. Emissions per capita are low
and decreasing and stood at 3.6. tons/capita in 201820 which is comparable with other non-oil producing
countries in MENA, such as Egypt and Morocco. Energy consumed by unit of GDP has decreased in the
past two decades and is comparable with other upper-middle-income countries. While Jordan is a small
GHG emitter globally, significant development and adaptation co-benefits are associated with investments in
climate change mitigation in the urban, transport, and energy sectors.
The transport sector is catching up with the energy sector as the country’s top emitter. As of 2018, the
energy sector was the main source of GHG emissions (65.5 percent), followed by waste (15.6 percent),
industrial processes (5.6 percent), and agriculture (3.3 percent). Regarding final energy use, the transport
sector accounts for almost half of final energy consumption, and at the current growth rate, it could surpass
power generation as the top emitter (Figure 7).

20
World Bank Open Data; CAIT Data Explorer

8
Country Climate and Development Report: Jordan
Figure 7. Cardon dioxide emissions by sector In Jordan (1990–2019)21
Mt CO2

14 Agriculture

Electricity and heat producers

12

10

Transport
6

4
Industry

2
Commercial and public services
Residential Final consumption not elsewhere specified Other energy industries
0

2012

2014

2016
1998

2006

2008
1992

1996
1990

2010

2018
1994

2000

2002

2004

Reducing emissions from the energy sector in Jordan would require addressing inefficiencies in the
transport sector while providing development and mitigation co-benefits. Transport-related inefficiencies
are equivalent to at least 6 percent of Jordan’s annual GDP. According to the GAM, traffic congestion losses
in Amman amount to JOD 1.5 billion annually, approximately 5 percent of the total GDP. Other costs include
losses due to traffic fatalities and injuries, amounting to approximately 1 percent of Jordan’s GDP in recent
years (JOD 296 million in 2020); noise pollution, with costs ranging between JOD 54 and JOD 160 million in
2014; and pollutant emissions. Public transport inefficiencies increase household expenditures and hinder
women and youth from joining the workforce. Finally, the road network in Jordan has not yet fully incorporated
climate risks into its technical design and maintenance, resulting in unsafe road conditions and accidents
during extreme weather events.
Energy sector emissions have decreased thanks to renewable energy (RE) and energy efficiency (EE)
initiatives; however, overall energy demand is likely to rise with climate change and population growth.
Jordan imports over 92 percent of its energy for transport and electricity generation. In 2020, nearly 80
percent of its electricity was generated from natural gas. Jordan was one of the early movers in the MENA
region on wind and solar energy IPPs. Since 2015, the share of renewable energy has steadily grown (Figure
8). In addition, with oil being replaced with natural gas, emissions have steadily declined. However, this rapid
decline in GHG emissions is expected to slow down with the commissioning of the oil-shale power plant. The
islanded nature of the Jordanian grid and its relatively small size22 render system operations challenging
with large shares of utility-scale renewables23. Currently, the total installed capacity of transmission and
distribution connected RE projects in Jordan accounts for 37 percent of the total installed capacity in the
system. Extensive RE and EE initiatives across the public and private sectors and for end-users have been
implemented. However, since 2018, the economic slowdown has resulted in negative growth, oversupply,
and financial unsustainability in the energy sector.

21
Source: IEA
22
Peak load of approximately 4010 MW in 2022
23
2063.3 MW installed capacity in 2020 including extensive net metering and wheeling schemes that exceeded 600MW of distribution connected
self-generation in 2020

9
Country Climate and Development Report: Jordan
Figure 8. Electricity generation by source, Jordan 1990–201824
GWh
20,000

17,500

15,000

12,500
Natural gas
10,000

7,500 Oil

5,000

2,500
Solar PV
Biofuels Hydro Wind
0

2012

2014

2016
1998

2006

2008
1992

1996

2018
1990

2010
1994

2000

2002

2004
Cities present significant opportunities for climate action – both for adaptation and mitigation, with
development co-benefits. With 91 percent of the population living in urban areas, cities greatly contribute
to GHG emissions (Figure 9). Jordan’s urbanization rate is high relative to peer countries, and the urban
population is expected to increase by 15 percent by 2030. Jordan’s cities have not fully leveraged the benefits
of agglomeration, productivity gains, firm entry and jobs, and better services associated with urbanization.
Inefficient urbanization increases pressure on infrastructure, service delivery costs, job access, and leads to
loss of agricultural land, while also adding to a higher carbon footprint.
Based on the latest data, as of 2016, 56 percent of total industry GHG emissions from industrial processes
and product use came from cement production (Figure 10), meaning a large share of Jordan’s industrial
emissions is generated by a relatively small industrial segment. An industrial decarbonization strategy,
especially targeting high emitters clustered around Amman such as the cement, glass, and steel industry,
will be crucial to mitigating a significant source of emissions. Benchmarking with more advanced economies
shows room for improvement (Figure 11).
Jordan’s agriculture sector was the fourth largest GHG emitting sector in 2017, emitting 4.8 percent of the
country’s GHG emissions (FAOSTAT).There are opportunities in the livestock and land use sectors to improve
emission efficiency, reduce emissions and increase carbon sequestration in rangelands. A large share of agri-
food system GHG emissions could be mitigated by reducing the high level of loss and waste in supply chains,
such as the estimated 45 percent in Jordan’s vegetables and fruit sector.25
Jordan must carefully manage climate-related trade risks given its significant share of emission-intensive
exports. A significant share of Jordan’s key export sectors is highly emission-intensive industries. Multiple
countries are planning to introduce environmental regulations linked to trade, such as carbon border
adjustment mechanisms (CBAM). While immediate consequences for Jordan are likely to be moderate,
indirect and medium-term effects could be significant. The EU CBAM, scheduled to be introduced in late
2022, could become a barrier to exporting chemicals.
Jordan faces the challenge of financing a climate-responsive, inclusive, and sustainable recovery during
a tight fiscal situation featuring declining private investment. Jordan’s existing international commitments
focus on electricity and transport-related emissions, but a broader set of climate actions is needed to sustain
Jordan’s economy and safeguard the resources on which current and future generations depend.

24
Source: IEA (https://www.iea.org/data-and-statistics/data-browser?country=JORDAN&fuel=Electricity%20and%20heat&indicator=ElecGenByFuel)
25
FAO Capacity Building for Food Loss Reduction in the Near East.

10
Country Climate and Development Report: Jordan
Figure 9. Spatial distribution of GHG emissions and urban clusters26
GHG emissions estimates Urban clusters

33

32

31

30

29
35 36 37 38 39 35 36 37 38 39

t CO2 / (year*area) Urban clusters: Build up area

2e+05 4e+05 6e+05

Figure 10. GHG net emissions (2016)

1%
Other process uses of
carbonates

7%
Chemical industry

11%
Metal industry

57% 24%
Mineral industry Product uses as
substitutes for ODS
(refrigeration, air
conditioning, fire
protection

Figure 11. Country comparison in GHG intensity of key export sectors in 2014 (KG/US$)
0.098
0.116
0.072

0.025
0.131
0.096
0.021
0.162

0.033

0.635
0.141
0.290
0.243
0.079

0.072
0.024
0.013
0.021
0.003

0.046
0.162
0.079
0.029
0.007
0.46

1.364
1.046
0.519
0.326
0.326

0.807
0.865
0.542

0.819

0.548
0.645
0.141
0.156
0.309

0.171
0.188
0.067
0.010
0.010

0.711
0.296
0.361
0.272
0.062
1.658

2.5

1.5

0.5
0
China
Jordan

Switzerland

Brazil
Spain

China
Jordan

Australia
Belgium
Germany

Vietnam
Italy

United States

Netherlands

Jordan

Germany
Ireland
United States
China

Jordan
Germany

China
Jordan
Netherlands
United States

CO2
NON-CO2

Chemical products Wearing apparels Vegetables and Basic pharmaceutical Other mining extraction
fruits products

26
Source: Emissions estimates were developed with data from Emissions Database for Global Atmospheric Research. Area units are 0.1 x 0.1 degree.
Build up area was retrieved from WorldPop, 2020.

11
Country Climate and Development Report: Jordan
2. Strengthening policies and capacities to meet Jordan’s
climate commitments
2.1. Climate change adaptation and mitigation commitments
Despite its relatively low emissions levels, Jordan was an early mover in international climate commitments.
Jordan was among the first group of developing countries to ratify the UNFCCC. Jordan ratified its Nationally
Determined Contributions (NDCs) in November 2015 and developed an NDC Action Plan in 2019. Its National
Climate Change Policy (NCCP) of 2013–2020 was the first comprehensive climate policy in the MENA region.
Jordan has established ambitious GHG emission reduction targets relative to peer countries in the MENA
region. In October 2021, Jordan increased its commitment to reduce GHG emissions from 14 to 31 percent
by 2030, with 26 percent conditional on financing and 5 percent unconditional (Figure 13). The new 31
percent GHG reduction target would imply emissions of 30,291 carbon dioxide equivalent (Gg) compared to
43,989 CO2 eq (Gg) under business-as-usual in 2030, against 2012 baseline figures. The costs associated
with this new GHG emissions reduction target amount to US$7.5 billion. Jordan’s increased commitments are
also reflected in more ambitious sector targets, such as generating 35 percent of electricity from RE by 2030
and a 50 percent share of electric vehicles in the public fleet by 2030.

Figure 12. Carbon dioxide emissions projections to 2050 under current commitments

55.00
50.00
45.00
Mt CO2 Equivalent

40.00
35.00
Updated NDC
30.00
25.00
20.00
15.00
10.00
5.00
2010 2011 2012 2013 2014 2015 2016 2017 2018 2020 2025 2030 2035 2040 2050

Source: Jordan NDCs and BUR 2017

Figure 13. Summary of Jordan’s updated NDCs

35% Electricity Generated from RE

9% EE Improvement across all sectors
31% +33 Mitigation Actions +
Adaptation Measures Promoting HEV/EVs:
GHG emission
reduction compared a. 50% of Public fleet EVs
to BAU 2012
2030 b. 2% annual increase in private cars
Unconditional target: 5% - US$565m Government own means
USD7.54 billion
Conditional target: 26% - US$6.97bn subject to availability of
international financial support

Jordan is on track to meet its updated NDC commitments; however, Jordan’s GHG emissions are estimated
to continue rising toward 2050. According to the overall GHG Inventory estimates, Jordan contributed 35,810
GgCO2e in 2018, which puts it on the trajectory toward achieving the updated NDC goal. Without any actions,
however, GHG emissions will continue to increase by 2050, driven by population growth (Figure 12).
Meeting Jordan’s highly ambitious NDC commitments depends on securing as-yet-unidentified financing.
Jordan’s target reflects a relatively high level of conditionality (26 percent conditional and 5 percent

12
Country Climate and Development Report: Jordan
unconditional) compared to some regional peers (Morocco 18.3 percent unconditional and 45.5 percent
conditional; Lebanon 20 percent unconditional and 31 percent conditional) but is more ambitious relative to
peers such as Egypt.
At the sub-national level, the GAM is a regional leader in climate change with an ambitious goal of reaching
net-zero carbon emissions by 2050. GAM, home to more than 40 percent of Jordanians, conducted two GHG
emissions inventories for 2014 and 2016. Since then, they have adopted the Amman Climate Plan – A vision
for Amman 2050 to achieve net-zero emissions and the Green City Action Plan (2021), a first in the region,
supported by several related initiatives such as the Resilience Strategy, Smart City Roadmap, and a Financial
Reform Plan. Amman is also a member of C40, a network of the world’s megacities committed to addressing
climate change.

2.2. Existing policies for mitigation and adaptation

Jordan has been consolidating the strategic framework for implementing its climate commitments. Jordan
adopted a National Green Growth Strategy in 2016 and developed the National Plan for Green Growth
(2017–2025) to encourage investment in six priority areas: energy, water, transport, agriculture, tourism,
and waste management. Jordan has also adopted a large body of general and sector-specific climate policies
and strategies at national and sub-national levels (Table 3).
The legal framework for climate action has also been strengthened. In 2019, the country enacted Climate
Change Bylaw No. 79 as the legal framework for climate action, focusing on four areas: (a) institutional
processes, particularly establishing a National Climate Change Committee; (b) developing the country-wide IT
and technical infrastructure for Monitoring, Reporting, Verification (MRV) and National Registry for all Climate
mitigation actions; (c) developing sectoral strategies for achieving NDC goals by 2030 and towards the 2050
long-term strategy to achieve climate neutrality, and (c) defining innovative financial and climate finance
options to accelerate climate action. The Renewable Energy and Energy Efficiency Law of 2012 aims to
strengthen the private sector’s role.

Table 3. Overview of Jordan’s key strategies, policies, and legal documents on climate change

Strategies
National:
• Jordan Economic Modernization Vision 2033
• Jordan Vision 2025 GIEP (former EDP) 2021–2023 Government Priorities 2021–2023
• The National Green Growth Plan (NGGP, 2017) Green Growth National Action Plans (GG-NAPs, 2020) for Energy, Water, Agriculture,
Transport, Tourism, and Waste sectors
Sectoral strategies:
• Jordan Energy Strategy (JES) 2020–2030
• National Water Strategy & Master Plan (NSMP) 2016–2025
• Climate-Smart Agriculture Investment Plan (2021) and National Agriculture Strategy (2022–2025)
• Health Sector Strategic Plan 2018–2022
• National Climate Change Health Adaptation Strategy and Action Plan of Jordan (2012)
• National Tourism Sector Strategy 2020–2025
• Jordan Long Term National Transport Strategy and Action Plan
Policy documents
• National Climate Change Policy 2013–2020 (NCCP)
• National Climate Change Adaptation Plan (NAP), 2021
• Climate Change Policy for Resilient Water Sector (2016)
Legal provisions and international commitments
• Jordan’s NDCs to the Paris Climate Agreement
• Environment Protection Law No 6. of 2017
• The Climate Change Bylaw 79/2019
• Instructions on climate change expenditure definition, 2021
• Jordan Environment Fund (JEF) Bylaw 18/2018 (updated 2019)
• The Renewable Energy and Energy Efficiency law No. 3 of 2010.
• Jordan Renewable Energy and Energy Efficiency Fund (JREEEF) Bylaw 49/2015
• The General Electricity Law No. 64 of 2003
• Waste Management Framework Law No 16 of 2020.
Source: Jordan Climate PEFA

13
Country Climate and Development Report: Jordan
The electricity sector is on a low-carbon trajectory with an increasing share of renewables. Jordan’s current
energy strategy aims to achieve 50 percent renewable energy by 2030, significantly higher than the NDC target
of 31 percent. Reaching these goals will require significant investment in stronger regional interconnections,
smart grid infrastructure and pumped hydro storage, and a 9 percent reduction in energy consumption by
2030. The Clean Energy Transmission Modelling analyzed four specific scenarios: (a) Current Policy Scenario
(CPS) by 2050 and compared to CPS (b) Reducing Emissions by 60 percent (NZ60), (c) Reducing Emissions
by 80 percent (NZ80), and (d) Reducing Emissions by 100 percent (NZ100). Results are presented in Figures
14 and 15. The analysis indicates that achieving net-zero emissions would require additional investments
in the network, energy storage, carbon capture, renewable energy and early retirement of 1.3 GW of CCGT
plants starting in 2026. Compared to the current policy scenario, which requires additional investments of
US$12 billion by 2050, achieving net zero emissions requires US$24.2 billion. This is excluding the cost
of transmission grid reinforcement requirements and the cost of early economic retirement of gas-fired
power plants. Unless these additional investments are secured through grants, the annual levelized cost of
electricity would increase by 22 percent in 2050 compared to the CPS (from 34.6 USD/MWh to 42.3 MWh).
The corresponding grid emissions factor (tCO2/MWh) for the four scenarios is depicted in Figure 15. Under
the CPS, the grid emissions factor is on a declining trajectory.

Figure 14. Scenarios for electricity generation mix - medium demand growth
2021

79% 13% 8%

CPS.MD 35% 11% 27% 19% 8%

NZ60. MD 28% 11% 30% 19% 12%

2030

NZ80.MD 26% 12% 30% 20% 12%

NZ100.MD 24% 12% 30% 21% 13%

CPS.MD 38% 8% 32% 14% 7%

NZ60.MD 24% 4% 34% 25% 13%

2040

NZ80.MD 16% 4% 33% 33% 13%

NZ100.MD 8% 4% 32% 45% 11%

CPS.MD 45% 38% 9% 8% Import

Wind
NZ60.MD 15% 37% 36% 11% CSP
PV
2050

Shale
NZ80.MD 6% 39% 45% 10%
Diesel
HFO
NZ100.MD 0% 33% 61% 4% CCS
GAS

10 20 30 40 50 60 70 80 90 100
Energy Generation Mix (%)

14
Country Climate and Development Report: Jordan
Figure 15. Grid emissions factor - medium demand growth
0.337

0.272 0.264
Annual Emissions (MT)
0.257
0.250 0.244

0.195
0.172
0.139
0.097
0.083

0.040
0.0

NZ100.MD.F

NZ100.MD.F
NZ100.MD.F
NZ60. MD.F

NZ80.MD.F

NZ60.MD.F

NZ80.MD.F

NZ60.MD.F

NZ80.MD.F
CPS.MD.F

CPS.MD.F

CPS.MD.F
2021 2030 2040 2050

Grid emissions factor (t-CO2/MWh)

In 2021, Jordan submitted its National Adaption Plan, which seeks to mainstream climate change adaptation
in the development planning processes to enhance climate resilience and adaptive capacities and reduce
climate vulnerability within all relevant sectors. The plan identifies the urgency of implementing adaptation
measures to address the impacts of climate change, which are already becoming evident in terms of climate
variability and extreme weather events.
Jordan continues to strengthen its coordination mechanisms for enhancing disaster preparedness,
systematic implementation of strategies, and risk financing. The government established the National
Center for Security and Crisis Management (NCSCM) in 2015 and the multi-stakeholder National Disaster
Risk Reduction Platform under NCSCM in 2017. A Jordan National Natural Disaster Risk Reduction Strategy
2019–2022 has also been developed and the focus should now turn to implementation, including disaster
preparedness, mitigation measures, early warning systems, and disaster risk financing instruments.
Jordan requires a whole-of-economy approach to address complex and interrelated development and
climate change challenges. As further discussed under Chapter 3, reaching Jordan’s development goals in
the context of climate change will primarily depend on coordinated action to accelerate the transformation
of key sectors (energy, water, agriculture, transport and urban development). Accordingly, the Government
of Jordan, with World Bank support, is preparing its Long-Term Low-Carbon and Climate Resilient Strategy
2050 (LTS). This strategy will incorporate the analysis in this CCDR and build on a stakeholder consultation
process to develop pathways to achieve a net zero emissions target, and climate-resilient economic and
social development. This process also aligns with Jordan’s fourth National Communication submission to the
UNFCCC.

2.3. Government budgets, existing investments, and institutional

arrangements
The Ministry of Environment (MoE), established in 2003, coordinates the implementation of national
commitments toward the UNFCCC. The Climate Change Directorate (CCD) was created at the MoE in 2014,
following approval of the National Climate Change Strategy, to address climate change issues and establish
appropriate policies. The CCD’s role has increased to include coordinating with sector ministries, agencies,
and development partners. As of 2022, climate change work led by the CCD has been recognized through
a dedicated budget line. In light of this achievement, the CCD’s mission would now benefit from additional
specialized in-house technical expertise on climate change.

15
Country Climate and Development Report: Jordan
The CCD is leading Jordan’s National Committee on Climate Change (NCCC) in implementing legal
instruments, policies, and strategies related to climate change. The NCCC which was established under the
2019 Climate Change By-law consists of 16 high-level members from relevant public authorities. The NCCC
recognizes representatives of key entities representing governmental sectors, sub-national agencies, civil
society, research institutions, universities, and the private sector. These representatives can be called upon
to form technical committees on specialized topics.
Systematic and proactive public engagement on climate change issues remains limited, however. Based
on feedback from sessions with civil society organizations and youth groups during the CCDR’s preparation,
some institutional challenges include limited coordination between national and subnational level entities
responsible for climate change. There is a lack of a strategic approach for consistent information sharing
and public education on climate change, and public engagement for planning, implementing, and monitoring
climate-change commitments.
Donor dependency for climate action is high, as evidenced by the conditionality of the GHG target and
framing of the NDCs. For the 2000 to 2019 period, Jordan attracted significant climate financing. OECD DAC
statistics indicate that Jordan received over US$5 billion towards climate change-related activities during
that period. Of this, over US$3 billion was for mitigation actions (63 percent) and nearly US$2 billion for
adaptation (37 percent). This funding was concentrated on water supply, sanitation and energy, and banking
and financing activities.
Jordan has made significant progress in mobilizing resources to meet the financing estimate of US$5.7
billion in its 2015 NDCs. The Second Biennial Update Report (2nd BUR) to the UNFCCC estimates that
Jordan had mobilized nearly US$3.7 billion by 2020 (Figure 16). This includes investments in water and
wastewater treatment plants, solid waste, and green transport solutions, although they remain relatively
limited compared to large utility-scale wind and solar power plants with associated infrastructure like Jordan’s
Green Corridor. Jordan’s Monitoring, Reporting, and Verification (MRV) system was launched in 2021 and will
improve climate finance tracking.
Despite Jordan’s progress in preparing climate strategies and plans, implementation remains slow. There is
a growing gap between climate action financing needs and available resources. Fiscal constraints affect the
policy and regulatory environment, particularly incentives for investments in climate-responsive solutions.
Many commitments remain aspirational and lack financing sources. Inter-agency coordination to align policies
and incentives is a common challenge. There has been limited progress in developing locally appropriate and
innovative non-fiscal, non-financial incentives for climate action. Jordan’s budget documentation provides
insight into expected performance in climate-related sectors, but budget programs are not directly linked to
the national climate change framework. GoJ must therefore align its budget with its commitments to the Paris
Agreement climate goals.
Jordan could more purposefully mainstream climate concerns in public investments. In 2020, the
Government allocated under 30 percent of Jordan’s capital projects’ budget towards the six ‘green growth’
sectors: tourism, energy, agriculture, water, transport, and buildings. Most projects in those sectors do not
fulfill the climate-responsive eligibility criteria established by the national government (Figure 18),27 though
most projects could be redesigned to meet those criteria. For example, once the Ministry of Public Works and
Housing (MoPWH) adopts green public buildings standards, nearly 96 percent of the budget could promote
adaptation and mitigation.

27
The nine eligibility criteria cover potential mitigation, adaptation and, resilience benefits from a capital expenditure project, (e.g., increasing efficiency
or adopting renewable energy). If the project fulfills any one or more of the criteria, it is tagged as a ‘climate responsive CapEx’.

16
Country Climate and Development Report: Jordan
Figure 16. Progress toward the 2015 NDC financing requirement, in million US$ 28

147.36
Water and Wastewater

166
Transport

229.47
Solid Waste

3171.7
Energy

Figure 17. Cumulative capacity of renewable energy projects29

1000
900
800
700
600
500
400
300
200
MW Capcity Cummulative
100 Wheeling and Net Metering
0 MW Capacity PV Utility-Scale
2015 2016 2017 2018 2019 2020 Systems

By 2021, the government introduced climate-responsive eligibility criteria in the Public Investment
Management (PIM) and Public-Private Partnership (PPP) framework. Jordan’s PIM and PPP processes are
governed by the 2018 PIM-PPP Governance Framework and the 2019 PIM-PPP Policy, which requires public
projects to consider climate change early at the project concept note stage. Eligible projects will be flagged in
the National Registry of Investment Projects (NRIP) and MRV system, with relevant projects entered into the
National GHG Registry. This is expected to inform the budget’s prioritization process and build a pipeline for
upstream identification of climate financing needs.

28
Source: Jordan. Second Biennial update Report (2nd BUR).
29
Government of Jordan Capital Projects 2019-2021

17
Country Climate and Development Report: Jordan
Figure 18. Government of Jordan capital projects in green growth sectors 2020, in JOD million30

32.43
0.075

27.13

169.5
177.4
6.51

1.09

46.2

9.49

22.5

0.23

63.8

57.2

24.9

11.9
72.3
14.2

0
180

160

140

120

100
80

60

40

20

0
Tourism

Energy

Water

Buildings
Agriculture

Transport
Total Budget (JD) Climate Responsive Climate Potential

2.4. Financing and institutions for climate action

Jordan was an early mover on climate change in the MENA region and has gained extensive experience in
innovative climate action financing. The US$3.5 billion in climate financing from 2015 to 2020 has primarily
come through project-based financing, supported by derisking instruments, fiscal incentives, and public
investments. Figure 19 presents a high-level summary of the financing approaches used in Jordan.31

Figure 19. Experience with financing approaches in Jordan

1 5
Project-Based Financing Fiscal Incentives
•Solar & Wind IPPs •RE tax and customs exemption
•Landfill Gas •Hybrid and EV cars tax rebates
•EE/RE Credit Lines •Cost reflective pricing of fuels

2 6
De-risking Investments Non-financial Incentives
•Loan Guarantees •GAM Green Building Incentive
•Payment Guarantees •Certifications & Recognition (e.g.,
•Political Risk Insurance (MIGA QAIA)
for RE)

3 Financial Incentives (full/partial grant)

7 Markets-based approaches
•Energy Efficiency (SMEs, Households) •Amman Carbon Program (proposed)
•Solar PV (Agriculture, Water, •Pilot Carbon Market Transaction
Households) (upcoming)
•Solar Water Heaters

4 8
Public Investments Financial Sector / Capital Markets
•Assessment of climate-responsive •Green Bond Guidelines
projects in government budget •Greening the Financial Sector (CBJ)
(starting FY22)
•Budget support for climate actions

30
Government of Jordan Capital Projects 2019-2021
31
WB, Transformative Climate Finance, 2020.

18
Country Climate and Development Report: Jordan
Project-based financing, coupled with derisking instruments and grants, has played a key role in
accelerating utility-scale solar and wind power production in Jordan. This success is proving challenging to
replicate across sectors as the astounding growth in renewable energy was created through a convergence
of influencing factors. Figure 20 captures the policy and incentives that led to investment in utility-scale
and self-generation renewable energy in Jordan. It is useful to note that the level of cross-subsidy increased
high enough to create a quasi ‘price signal,’ which coupled with effective fiscal policy incentives (particularly
exemptions on import of RE equipment) helped generate strong private sector interest in renewables. MIGA
has provided political risk insurance guarantees for solar projects under the first Renewable Energy Round,
whose success led to subsequent rounds attracting more investors at lower tariffs.
Jordan has implemented various financing programs to support clean technologies in the industrial and
MSME sectors, particularly credit lines and refinancing schemes. In addition to targeted financing programs
supported by AFD and EBRD, CBJ offers a low interest refinancing program supporting renewable energy.
This program of JOD 1.2 billion32 has financed around 500 projects, including renewable energy solutions
for hospitals, manufacturing, and food storage facilities, for a total amount of around JOD 230 million. The
Jordan Renewable Energy and Energy Efficiency Fund (JREEEF), the Jordan Loan Guarantee Corporation
(JLGC), and several commercial banks signed an agreement in 2016 to finance renewable energy projects
for SMEs and households, wherein JLGC guarantees up to 70 percent of the value of loans issued by the
banks. The uptake is limited, with only six loans taken out by 2020, attributed to a lack of interest from
SMEs, banks lacking credible market references for borrowers, and an inability to verify project assumptions
or risks.
Several grant schemes provide full or partial financing for clean technologies across sectors. GAM-certified
green buildings are also awarded non-financial measures, e.g., extra floor space. The Solar Grant program,
‘Fils-Al-Reef’ (FAR), has provided free solar photovoltaic (PV) systems to low-income households since 2019
under the National Aid Fund (NAF), on the condition that their electricity usage does not exceed 300 KWh/
month. With co-financing from development partners, partial grant programs support clean technologies for
residential, water, agriculture, MSME, tourism, education, and other priority sectors. The electricity sector has
a high level of cross-subsidy, with the burden borne by the productive sector. High costs and scarcity drive the
business case for large industries undertaking investments in energy and water. Similar efforts have been
successful in micro water harvesting, and rangeland conservation at the community scale, with extensive
technical assistance and civil society involvement through the Adaptation Fund, Global Environment Facility,
and UN agencies.
Carbon pricing has been extensively explored in the Jordanian context, though Jordan has limited experience
with carbon markets. There are only four registered Clean Development Mechanism (CDM) projects and
one registered Voluntary market project in Jordan (those include fuel switch projects replacing heavy fuel
oil with natural gas, at the Aqaba Thermal Power Station and Samra power plant and landfill gas recovery
and utilization for power generation at the Ruseifeh and Ghabawi landfills). Government and civil society
stakeholders noted the challenges facing energy and water subsidies and the tax policy and fiscal constraints
as barriers to introducing a carbon tax or any similar charges in the coming years. Based on stakeholder
feedback, this CCDR is not assessing carbon pricing; this question will, however, be further discussed during
the upcoming development of the LTS 2050. As Jordan has implemented a MRV system and GHG Registry,
the forthcoming Paris Agreement Article 6 strategy, should create a stronger governance framework to
support carbon market participation.

32
The loan ceiling for renewable energy is 4 million JD, with the 10-year maximum loan term and grace period up to 24 months. The funds are provided
to commercial banks at 1 percent interest rate for projects inside Amman, and 0.50 percent for projects outside Amman. Banks can relend these funds
with 3–4 percent interest rate for projects inside Amman, and 2.5–3.5 percent for projects outside Amman, which is significantly below market interest
rates in Jordan.

19
Country Climate and Development Report: Jordan
Figure 20. Investment map in utility-scale and self-generation renewable energy in Jordan

Other factors

Direct Govt. Support High cross-subsidy,

Good business case
Sovereign Guarantees,
Partial Grants
Original Policy Goal

11% share of RE in
Credit Lines Guarantees total energy mix in
(MIGA) 2025 Private Investment in
Renewable Energy
International Donor Co-finance (23% in 2021)
Support
DFI: IFC, EBRD, EIB,
Other Public Interventions others

Technical Capacity
Assistance Building
Related Energy Policies
Investments in Infrastructure
(e.g., Green Corridor)
• 2012. RE & EE Law No. (13) of 2012
• 2012. Regulation 3583 Transmission costs
• 2012. Regulation 3579 Use of the grid for self-consumption from RE
• 2012. The Reference Price List record for the calculation of the electrical energy
sources
• 2012. The Directive for the costs of connecting RE facility to the distribution system of
direct proposals and competitive tenders
• 2012. Instruction and Requirements for Proposals Preparation and Submission (IRPP)
– Solar PV/CPV Projects connected to the grid
• 2013. The Bylaw on Exempting RE and Systems and Energy Saving Equipment from
Custom Fees and Sales Tax Bylaw No. 10 of 2013, amended in 2015, 2017 and
2018.
• 2015. RE & EE Fund By-law (JREEEF)
• 2015. The Directive Governing the Sale of Electrical energy generated from RE
Systems (Net Metering – Roof Tops)

Fiscal incentives such as tax breaks are successful but at significant cost to the government, and green loans
account for under 2 percent of commercial banks’ portfolios in Jordan. Recent experience in the transport
sector has highlighted the importance of a thorough analysis of government costs and a full understanding
of the interaction between fiscal and sectoral policy goals to avoid declining government revenue. In terms
of green loans, there is neither a well-developed definition nor accurate data on green loan portfolios in
Jordan’s banking sector. Banks consider ‘green loans’ as those that support implementing renewable energy
or energy efficiency solutions. IFC estimates that around 30 percent of bank balance sheets in emerging
markets should be green by 2030 to meet global climate goals.
Commercial banks acknowledge that the financial sector lacks the climate investment capacity to
contribute to climate finance mobilization and mainstream climate considerations into risk management
frameworks. Addressing capacity and information gaps is expected to be among the key milestones of the
CBJ’s Strategy for Greening the Financial Sector. Larger firms do not identify access to finance as a major
issue in implementing climate-smart business practices. However, access to finance is still a broader issue for
SMEs, while Jordan’s banking sector has witnessed a persistently high liquidity in the last decade and more.
The appetite and capacity of the financial sector for green financing therefore needs further assessment. All
interviewed banks expressed the need to combine their financing with targeted technical assistance to their
client firms, particularly SMEs.
Capital markets in Jordan are nascent; broader regulatory work is needed to advance Jordan’s capital
markets in general. The outstanding domestic treasury bills and bonds at the end of October 2021 amounted
to JOD 10,955 million or 34.2 percent of the estimated GDP. The corporate bond market is very small at
present. According to MOF, corporate bonds—including public entities—accounted for JD 451 million (1.4
percent of GDP) as of October 2021. The Amman Stock Exchange (ASE) had a market capitalization of JOD
12.9 billion (or 41.5 percent of GDP) in 2020. Market capitalization has been declining since 2007; for
example, market capitalization was over 60 percent of GDP in 2017. The annual turnover has been relatively
low and declining in 2017–2020, from 25.74 percent in 2017 to 17 percent in 2020. The institutional
investor base is underdeveloped, except for a large public pension fund.

20
Country Climate and Development Report: Jordan
 The Green Bond Guidelines issued in 2021 provide a high-level framework to stimulate dialogue with private
sector stakeholders.33 There are currently no green bonds or other green capital market instruments issued
in Jordan (Figure 21). If present, these could diversify a currently highly concentrated investor base, as banks
hold over 80 percent of GOJ domestic securities. However, in the short- to medium-term, the aim is to achieve
Jordan’s climate change objectives through non-debt-creating channels to the maximum extent possible.

Figure 21. High-level summary of the financial sector and capital market stance in the green finance area

Capital markets are at early stage of development Total commercial bank loans to the private
GOJ domestic securities: 11 bn JD sector: US$39 bn
Corp. bonds (incl. public entities): 451 mn JD If 30% portfolio is made green, it would be
No green instruments yet equivalent to 1.7x current climate finance gap
for mitigations NDCs
Medium-term: wide array of potential green
finance instruments Green portfolio: 3-5% in larger banks
With targeted market development efforts Typically for renewable energy and
Jordan could take advantage of many types energy efficiency projects. More than a
of green finance instruments half – through CBJ facility

Need to enhance coordination Successful practices:

There is no concerted coordination of green finance Combining loans with targeted TA; connecting
mobilization on a national level borrowers with suppliers. Offering cashback
and other incentives.

33
Subsequently, IFC is working on its first Green Bond in Jordan.

21
Country Climate and Development Report: Jordan
3. Pathways towards adaptation, resilience, and low-
carbon growth
Jordan’s trajectory in meeting its climate and development goals will be determined largely by the policy
and investment choices the country makes in five strategic sectors - water, energy, agriculture, transport
and urban development. The transformation of those sectors towards a resilient and low carbon path would
need to be closely coordinated along two nexuses to maximize co-benefits and to reduce potentially negative
socio-economic impacts: the water-energy-food security nexus, in a context of extreme water scarcity, and the
urban-transport-energy nexus, which is at the core of the shift towards a low-carbon growth path. In the water-
energy- food security nexus, adaptation considerations are intrinsically linked to mitigation considerations,
primarily through energy use in the water and agriculture sectors. In the urban transport-energy nexus,
mitigation considerations are closely linked to adaptation and considerations of other co-benefits for Jordan
and its people. This chapter discusses policy and investment synergies and trade-offs in those two critical
nexuses to inform prioritization over the next five years.

3.1. Integrated solutions for the water-energy-food security nexus

3.1.1. The water, energy, and food security nexus
The expected increased water scarcity in Jordan makes water efficiency and conservation a paramount
strategic priority across all sectors, but significant challenges remain:
• While the share of agricultural water use is less than in past decades, the sector’s water consumption
remains suboptimal. Agriculture is the largest consumer of water resources in Jordan, consistent with
other countries. It accounts for 51 percent of total water usage: 33 percent surface water, 39 percent
groundwater, and 28 percent treated wastewater (MWI, 2016). Agriculture’s productivity per cubic
meter of water is about US$1.6, while the corresponding figures are orders of magnitude higher in other
sectors.3435 The cost of producing new water through desalination is projected to be over US$3 per cubic
meter,36 while the average provision cost of municipal water in Jordan was US$2 per cubic meter in
2020.37
• Non-revenue water (NRW)—water supplied to networks but not billed to end users due to commercial or
physical losses—accounts for approximately 50 percent of municipal water in Jordan, a high figure.39
Jordan’s water supply is also highly energy-intensive and inefficient. Water losses are high due to leaks
in the water distribution system infrastructure and poor commercial performance, including under-
registration.40 Progress in reducing NRW has been challenging due to Jordan’s topography, the limited
natural endowment of water resources, and the lack of a holistic, systematic approach by utilities. As many
consumers are geographically distant from water sources, some deep underground, increasing energy is
required for withdrawal. Up to 90 percent of Amman’s drinking water comes from 125–325 kilometers
away.41 Other problems include inefficient, outdated pumps and the need to pump continuously to meet
pressure requirements, given the low water availability.
The concurrent effects of climate change on the water, energy, and agriculture sector and their strong
linkages require integrated solutions. The mutual dependencies between sectors (Figure 22) require cross-
sectoral solutions in four priority areas of intervention:
a. Ensuring the financial sustainability of the water and energy sectors, shifting the current unsustainable
trajectory towards financially sustainable pathways that can cope with increasing water scarcity through
immediate interventions;

34
World Bank 2018. Beyond Scarcity: Water Security in the Middle East and North Africa.
35
and the cost of producing new water through desalination is projected to be more than US$3 per cubic meter
36
World Bank 2018. Beyond Scarcity: Water Security in the Middle East and North Africa.
37
World Bank Calculation

22
Country Climate and Development Report: Jordan
 b. Improving the efficiency of water use and reducing fresh water use in the agriculture sector while
safeguarding livelihoods and addressing structural issues through combined policy and investment
packages to achieve a water-use trend reversal in the short medium-term;
c. Boosting system-wide resilience with a focus on drought, adapting to progressively more frequent and
long-lasting drought events in the short and medium-term;
d. Leveraging mitigation opportunities in the agri-food and water sectors in the medium- and longer-
term.

Figure 22. The water-energy-food security nexus in Jordan

less Water
30%
e r capita by 2040
p r debt 15
secto %G
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Wa W
Ha ate
3) lf o r s
/m n De f wa ecto
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US n c duc lan

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Jor tional
u

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Calls for reduc y side

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energ
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costs
rgy u
Rising cost of sup

y utilization
areas and

are electricity
se by 2026
Water, Energy &
Food Nexus

UISD)
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A g ri c
50 % o

B illi o n
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u lt

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/P

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l a ti o n ation needs increase; d e bt
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3.1.2. Challenges and opportunities

The water sector is facing severe financial sustainability challenges. Opportunities to augment water supply
are limited and increasingly costly. By the end of 2019, the water sector deficit was JOD 310 million (1
percent of GDP) and sector debt was 2,524 MJD (7% of GDP). This deficit and the debt accumulation are
partly due to rising energy costs and significant capital investments needed to (a) augment the bulk water
supply, (b) improve the urban water supply networks to meet the needs of a growing population, and (c)
significantly expand modern wastewater treatment facilities. Opportunities to augment water supply include:
i) desalinating water and transferring it a long distance at considerable expense (current plans include the
Aqaba-Amman National Carrier Project or AAC); or (ii) purchasing water from other countries which may be
less expensive but introduces sovereignty and political concerns.
Augmenting water supply with desalinated water will likely place more financial burden on the water sector,
although additional water supply is needed to close the supply-demand gap in Jordan and to respond to
adaptation needs. Efficiency measures alone will not close the supply-demand gap, and options for national
projects for supply augmentation are limited. The anticipated deficit and debt in 2040 with and without
efficiency measures and the AAC are shown in Figures 29 and 30.38 Energy represents around 50 percent of

38
The cost of capital scenarios was based off the cost of the Disi pipeline and conveyance, which delivers 100MCM per year. An annual lease payment of
196 MJD/a is equal to 3x the cost of the Disi pipeline, as the AAC is expected to deliver 300 MCM per year once operational. An annual lease payment of
121 MJD/a was developed to reflect a lower cost of capital scenario and is equal to 1.85x the cost of the Disi pipeline.

23
Country Climate and Development Report: Jordan
AAC’s anticipated operating costs, depending on the final design/financial structuring of the project and the
cost of energy. 39 Figures 23 and 24 show that efficiency measures would reduce debt accumulation
Efficiency measures and investments in tangible, near-term renewable energy projects could significantly
improve water sector debt. The Water Sector Financial Sustainability Roadmap (FSR) 40, prepared through a
consultative process, outlines a set of policy and investment measures (loss reduction investments, energy
efficiency investments, agricultural water management investments and tariff reform) that will close the
sector operational deficit by 2029 and reduce debt accumulation. Investing in these adaptation measures
would reduce water sector debt by billions of JOD by 2040, helping to return the sector to operational cost
recovery before the AAC comes online.

Figure 23. Debt (MJD) in 2040 with/without Figure 24. Deficit (MJD) in 2040 with/without effi-
efficiency gains ciency gains

Without
efficiency gains 10,328 Without
efficiency gains 634
121MJD/a BOT 121MJD/a BOT
Lease payment 11,842 746
Lease payment

With
efficiency gains 7,791 With
efficiency gains 430
121MJD/a BOT
Lease payment 9,305 121MJD/a BOT 542
Lease payment

Without
efficiency gains 11,343 Without
efficiency gains 686
196MJD/a BOT
Lease payment
12,857 196MJD/a BOT
Lease payment 798

With
efficiency gains 8,806 With
196MJD/a BOT efficiency gains 483
Lease payment 10,320 196MJD/a BOT
Lease payment 595

57 fils/kwh 57 fils/kwh
0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

96 fils/kwh
0
100
200
300
400
500
600
700
800
900

96 fils/kwh

Jordan’s agri-food sector shapes the economy outside of Jordan’s main urban centers. It is a major source
of rural employment and income for smallholders and vulnerable groups, including refugees. Approximately
48 percent of employed Syrians work in the agricultural sector. Twenty-six percent of the country’s utilized
agricultural area is owned by smallholders (<5 ha), most of whom are heavily impacted by the effects of
climate change.41 Jordan also imports around 70 percent of its staple food needs, exposing it to price
fluctuations.42
Agriculture must reduce the absolute quantity of fresh water it consumes. The sector benefits from large
implicit subsidies through water pricing, with a marginal cost of water to the agricultural user below US$0.2
per cubic meter compared to an average cost of water provision of US$2. The government maintains an
imperfect system of water quotas that fail to adequately incentivize better water use, efficient crops and
practices, and uptake of treated wastewater. However, as discussed below, opportunities exist to reduce
agricultural fresh water use while maintaining agricultural livelihoods.

39
Two energy costs scenarios were developed to reflect potential energy costs for treating and pumping water once the AAC is operational. The first
energy cost scenario is 96 fils/kWh, which is the cost recovery tariff for the energy sector while the second energy cost scenario is 57 fils/kWh.
40
Water Sector Financial Sustainability Roadmap, 2022
41
Jordan National Agriculture Census 2017
42
https://carnegieendowment.org/sada/84424

24
Country Climate and Development Report: Jordan
Irrigated agricultural water productivity has steadily improved through water-saving technologies and
policies. Further improvements in water productivity will become increasingly difficult to achieve and
require cropping and technological shifts. Measures including shifting the crop mix from grains towards
horticulture, high adoption rates of advanced irrigation techniques in large- and medium-scale farms, and
substituting fresh with treated wastewater (TWW) have improved water productivity. At the aggregate level,
Jordan’s agricultural water value is approximately US$1.6 per cubic meter, above many other countries in
the region but well below Israel with under US$ 2.5 per cubic meter. Irrigated agriculture water value has
constantly risen in Jordan, from US$ 0.87 per cubic meter (2003–2007) to US$ 1.96 per cubic meter by
2017. Recent data indicate a slowdown in the rising value of agricultural water, suggesting more advanced
technologies such as hydroponics and a shift towards water-efficient crops will be required. Implementing
a set of agricultural water savings and reallocation options in agriculture could lead to a possible overall
increase in water use efficiency from 81 to 86 percent. Increasing treated wastewater reuse by 31 MCM,
building on the existing blended 144 MCM reused each year, would facilitate reallocating fresh water to
higher value uses in municipal and industrial supply.
Unauthorized groundwater abstraction makes up a large proportion of irrigation water use. A remote-sensing
analysis in Jordan identified that unauthorized groundwater abstraction accounted for around 30 percent of
recorded groundwater abstraction, equaling around 106 MCM43. Groundwater abstraction for agriculture is
substantial in the highlands, partly due to a high number of illegal wells and the limited metering of private
abstractions. Groundwater over-abstraction is also prevalent in the Jordan Valley, where it is used to meet the
gap between supply and demand, particularly during drought years. The actual abstraction in various aquifer
systems is estimated between two and three times the officially stated safe yields.
The water and agriculture sectors are large energy consumers, using around 16 percent of all energy in
2020. The water sector is the largest single energy consumer in Jordan, with half of water utilities’ operational
costs for electricity. As a result of Jordan’s hydrogeology and topography, significant energy is required for
pumping water to urban and agricultural areas. The accumulated arrears of the water sector to the energy
sector (concentrated in NEPCO) have reached more than JD350 million by the end of 2020.
Climate change will significantly increase the energy demand of the water and agriculture sector. This
demand increase will put further pressure on the energy sector’s fiscal sustainability and load management.
Additional massive capital investments in the energy sector will be required to meet increasing water demand,
e.g., energy storage, regional integration, grid reinforcement, etc., which may increase the fiscal burden of the
energy sector. While renewable energy could technically reduce electricity costs, Jordan’s small and islanded
grid makes it increasingly difficult to buildout wind and solar RE projects without occasionally curtailing these
capacities to reliably manage the grid. The cash-flow challenges of Jordan’s water sector may deteriorate
and be transferred to the energy sector. In addition, higher energy demand from desalination projects could
provide further challenges for load and demand management.

3.1.3. Pathways to adapt to water scarcity

Priority 1: Ensuring fiscal sustainability of the water and energy sectors
Adapting to water scarcity will involve efficiency and conservation measures and harnessing new water
sources such as treated wastewater, desalinated brackish water, and seawater. Options to augment the water
supply in Jordan are costly and energy intensive. Desalination from open water sources requires significant
energy. Transporting water from sources to population centers must overcome significant elevation (>1000 m)
and distances (>400 km), leading to enormous energy needs for pumping. While desalination from brackish
water would reduce the energy costs of pumping, it would still be costly. Further options to augment the water
supply face similar challenges. Expanding the substitution of freshwater with treated wastewater for use in
agriculture implies upgrading treatment facilities and transporting water from centralized and decentralized
wastewater treatment plans, often located close to the population center to agriculture production areas as
well as lifting of re-allocated freshwater resources from the King Abdullah Canal up to 1000 m of elevation.

43
GIZ Assessment of Ground Water Abstraction in Jordan during Years 2017, 2018 and 2019

25
Country Climate and Development Report: Jordan
Water sector measures needed to adapt to declining water availability will be even more energy-intensive.
In 2020 the average energy density of each cubic meter of water produced was 6.0 kilowatt-hours per cubic
meter. Many consumers are geographically distant from water sources requiring significant energy for water
pumping. Geographical limitations, energy intensive extraction, and lack of maintenance investments have
led to energy consumption levels well above international benchmarks; energy consumption for water supply
in Egypt, India, and Brazil is under 2 kWh/m3 . The water sector’s energy consumption is expected to increase
due to decreasing groundwater levels, increasing salinity in existing supply wells, and the need to augment
existing supplies with seawater desalination at Aqaba.
The energy policy for the water sector was developed in 2016 with two main objectives: increasing energy
efficiency and using renewable energy for better cost recovery. In 2022 the water sector’s energy policy
is being updated to improve energy performance, including energy management practices. However, the
degree of freedom for the water sector to define its energy policy is constrained by GOJ’s overall energy
policy. Cabinet Resolution no (2714) dated 9/1/2019 limits the water sector to developing renewable energy
projects with a maximum of 1-megawatt-hour peak capacity. The cabinet resolution was issued due to general
grid integration concerns of renewable energy and is planned to be in place until the Ministry of Energy and
Mineral Resources has studied the grid’s ability to absorb additional renewable power.44,45
Achieving cost recovery is an important goal for the water sector, and a broad suite of operational efficiency
and demand management measures is required to achieve it. As set out in the FSR, tariff increases are a key
policy tool in achieving cost recovery.
A combination of policy measures and investments is needed to adapt to declining water availability without
putting undue pressure on the energy sector or derailing mitigation ambitions:
a. Energy efficiency in the water and agriculture sectors: Investments in pump replacement and energy
management systems;46
b. Investing in in-network storage to enable a shift in peak energy demand of the water sector;
c. Adopting an economically efficient time of use electricity tariff incentivizes consumers to consume
during the day when ample renewable energy exists. This and investment in storage within the water
distribution network could significantly reduce energy utilization during peak energy load hours and
reduce costs.
d. Pumped hydro storage: The energy and water sectors would benefit from utilizing pumped storage
in water reservoirs to provide supplemental variable power supply for the grid or to contribute to water
pumping requirements in the water sector;47
e. Introduce “smart” net metering/billing policies that encourage using solar energy by accounting for
the time of consumption.
f. Adopt policies that accelerate the deployment of smart grid infrastructure, including smart meters,
energy accounting practices, and energy storage, to reduce grid losses and improve reliable integration of
variable renewable generation in the distribution grids.
g. Regional cooperation on energy and water: Jordan has significant photovoltaic power potential on
large tracts of land. Regional cooperation or trade agreements focusing on exporting energy and importing
water may provide additional water.

44
https://edama.jo/wp-content/uploads/2019/01/The-Cabinet-Resolution-on-Suspending-Approvals-for-Renewable-Energy-Projects.pdf
45
IRENA 2021 Renewables Readiness Assessment: The Hashemite Kingdom of Jordan
46
Potential energy-efficiency investments are costed at US$250 million, reducing the energy requirements of the water sector by 350 gigawatt hours per
year (from 2866 GWhr in 2020). An energy management system is estimated at US$1.5m, reducing energy demand by 53 gigawatt hours per year.
47
NEPCO is currently pursuing the detailed feasibility study of establishing a pumped hydro storage facility (~450 MW capacity) at the Mujib Dam
site

26
Country Climate and Development Report: Jordan
Priority 2: Reducing fresh water use in agriculture while safeguarding livelihoods
Water conservation is a strategic adaptation priority in the agriculture and domestic water supply sectors to
help reduce the growing water-availability gap. Despite the national efforts to improve water conservation in
recent years, for example, by increasing water productivity and treated wastewater (TWW) reuse and reducing
non-revenue water, the country is yet to develop its full water savings potential to close the water demand gap
and reduce the need for costly water supply augmentation projects. Improvements in water use efficiency
across the economy may reduce the economic impact of water scarcity in Jordan by up to 40 percent (World
Bank, 2020).
Preparing Jordan for some of the inevitable consequences of water scarcity means recognizing water’s
productive value. Although there is widespread recognition that water is scarce in Jordan, its economic value
is rarely recognized. Efforts to value water can take many forms, from economic instruments to administrative
tools, communication, and law enforcement campaigns. For domestic users, valuing water usually means
rationalizing water tariffs, improving billing and collection, and enforcing illegal use. Water tariffs must be
increased carefully to ensure the poorest and most vulnerable populations retain access to water. At the
agricultural level, monitoring use, modernizing irrigation systems, increasing on-farm water productivity, and
reducing losses in food-supply chains could be beneficial. Strong legal frameworks will be essential to ensure
equitable resource allocation while providing the opportunity for efficiency gains (World Bank, 2018).
Viable avenues to reduce freshwater use in agriculture while maintaining agricultural livelihoods exist, both
off-farm and on-farm through a combination of policies and investments:
a. Rehabilitating the King Abdullah Canal (KAC) to increase the availability of fresh water in agriculture
by reducing conveyance losses, potentially increasing water availability for irrigation from 50 MCM to 64
MCM.
b. Enhancing the treated wastewater (WW) infrastructure to scale up the volume of reclaimed water and
its use in the Jordan Valley.
c. Using enhanced remote sensing to tackle the formidable challenge of illegal groundwater abstractions.
d. Substituting freshwater with treated wastewater in agriculture is a most promising intervention to
reduce overall fresh water use in agriculture. The existing crop mix in Jordan would allow for a considerable
expansion of treated wastewater use in agriculture of 31 MCM per year with the benefit of freshwater
reallocation to municipal supply water, with an expected IRR of 27 percent. TWW used in agriculture
must comply with the highest food safety and environmental standards. Soil salinization risks must be
managed prudently and the distribution system to farms requires separate delivery systems, one for
freshwater and another for TWW and brackish water.
e. Shifting crop selection towards less water-intensive crops, while preserving priority value chains
and crops with large export potential. A shift in crop selection would imply moving towards livestock,
vegetables, and certain stone fruits (dates, olives) with higher water values.
f. Improving the water-use efficiency of Jordan’s existing crop mix. If Jordan would realize water
productivity levels similar to Israel, it could maintain its agricultural output while reducing agricultural
water consumption between 50–168 MCM/year or around 10–30 percent (Figure 25).48

48
Richter et al. (2017) Opportunities for saving and reallocating agricultural water to alleviate water scarcity

27
Country Climate and Development Report: Jordan
Figure 25. Crop yield and water application comparison for Israel, Jordan, and Palestine
Clover
Clover

Olives
Olives
Tomatoes
Tomatoes
Banana
Banana
Apples
Apples
Dates
Dates
Watermelons
Watermelons
Grapes
Grapes
Wheat
Wheat
Onion, dry
Onion, dry
Citrus
Citrus
Eggplant
Eggplant
Potato ISR Yield ISR Water
JOR Yield Potato JOR Water
Cucumber PAL Yield PAL Water
Cucumber
0 2 4 6 8 10 12 14 16
Crop Yield t/du/yr
0

3,000
3,500
4,000
500
1,000
1,500
2,000
2,500
Water Applied m3/du/yr

Priority 3: Boosting system-wide resilience with a focus on drought

Jordan would benefit from shifting toward a multi-sectoral drought risk management framework and
strengthening drought monitoring, prediction, response systems, risk mitigation measures, and key
stakeholder dialogue and communications. The specific measures the government might consider follow the
pillars of drought risk management: (a) improving the Drought Monitor, forecast, and early warning system as
the anchor point for tracking and predicting the location and intensity of droughts to inform decision-making
and trigger preparedness and contingency responses, (b) Drought Resilience and Impact Assessment that
identifies who and what is at risk along with protocols for assessing impacts, and (c) Mitigation and Response
Planning and Measures which includes pre-drought actions to reduce risks, an Operational Response Plan
with well-defined measures for when a drought hits, and a social safety net program to protect the most
vulnerable. Finally, strengthening the country’s approach to disaster risk financing strategies, including
insurance and risk-layering strategies, could also be a beneficial adaption strategy.
Improving the water storage system and controlling abstractions can enable water managers to better
capture surface water runoff for use during dry years. Given the high variability in precipitation, reservoir
and groundwater storage is instrumental in capturing runoff from seasons with a high level of precipitation
for use in dryer years. Though Jordan has a portfolio of dams on major rivers and wadis and active water user
associations, in some cases, sedimentation limits the active storage in the reservoir. Limited infrastructure
maintenance may also impact structural integrity. Dam rehabilitation is needed to reduce the risks of failure
and improve the storage system’s performance.
Developing rainwater harvesting systems and reducing groundwater overdraft will increase climate
resilience. Rainwater harvesting systems (RWH) are effective interventions for adapting to increasing water
variability. In Jordan, piloted rainwater harvesting systems have shown to be cost-effective solutions—yet a
national RWH strategy must inform the scale-up and further development of these interventions. Groundwater,
if managed well, can also provide a supplemental water source during droughts. Jordan should reduce the
unsustainable use of groundwater to ensure this water source can sustainably support water needs during
the increasingly frequent drought periods.

28
Country Climate and Development Report: Jordan
Finally, the scale-up of CSA technologies offers further opportunities to build resilience to climate change in
rainfed systems. These include rainfed olive and barley production, practices such as contouring, terracing,
and using appropriate plows, polymers, and organic matter that can improve crop infiltration and soil storage
capacity. For agropastoral goat and sheep production, land degradation can also be offset by integrated
land restoration programs. Selective breeding of the local Awasi sheep can increase productivity and expand
markets. Meeting CSA technologies’ potential requires strengthening extension services and improving
farmers’ adaptive capacity. Plans to refine agriculture risk insurance instruments should be explored to
enable farmers to manage production risks better.

Priority 4: Leveraging mitigation opportunities in the agri-food and water sectors

Considering renewable energy in agriculture in Jordan, particularly through solar water pumping, could
reduce GHG emissions and energy costs. A large share of farmers in Jordan uses fossil-fuel-powered
generators or grid electricity for water pumping and other agricultural activities. In 2010, only 1,000 kW of
solar PV was installed in rural areas, used for lighting, water pumping, and other social services.49 Replacing
fossil-fuel- or grid-powered pumps with solar water pumps could reduce energy use and emissions. Jordan
could provide financial support to agriculture-focused RE programs through the JREEF funding facility at
MEMR.
Deploying solar water pumps poses a risk for sustainable water use in Jordan without supported and
enforced policy frameworks to reduce potential over-pumping. Solar water pumps reduce irrigation costs
and increase farmers’ access to cheap groundwater, which risks over-pumping. Promising solutions include
increased groundwater monitoring, combined schemes with water-saving technologies, metering, low-power
water pumps, and social learning interventions. An equally effective intervention is buying back solar electricity
from farmers connected to the grid (feed-in tariff). The additional revenue stream from solar energy creates
an incentive for efficient farm irrigation, reducing the risk of over-pumping. This intervention will require
investments in smart grid technologies and grid resilience solutions, enabling the grid to reliably and safely
absorb decentralized renewable energy.
Further opportunities for mitigation in the agriculture sector should be explored. These include the generation
of soil carbon sequestration through improved land management and restoration. For example, the Badia’s
restoration can improve natural ecosystem resilience as landscapes inhabited by local and native rangeland
species are better adapted to extreme climate variance and provide micro-ecosystems benefitting soil health
and moisture.
Reducing food loss and waste can contribute to better use of scarce water and land resources. Over 45
percent of Jordan’s vegetables and fruits are wasted or lost.50 Basel et al. (2019) found that 34 percent of
the total wheat supply in Jordan from local production and imports is lost or wasted, costing the country
about US$105 million annually.51 Food waste disposal accounted for around 7 percent of emissions in 2019.
Therefore, reducing food waste and loss can generate mitigation benefits and optimize scarce resources.

3.1.4. Recommendations
The four priority areas above have been selected based on urgency, impact—at the sector level, on jobs,
vulnerable groups, and growth—political feasibility and readiness. All proposed interventions listed below
are considered to have a high potential impact, adequate readiness, and be politically feasible within the
time horizon of 2030. Figure 26 places the interventions on a spectrum between urgency over the short term
(5 years) versus the medium term (5–10 years). It indicates whether they are expected to generate synergies
or trade-offs with other development objectives.

49
Jordan Third Annual Communication on Climate Change
50
FAO Capacity Building for Food Loss Reduction in the Near East
51
https://link.springer.com/article/10.1007/s12571-019-009627#:~:text=Our%20results%20show%20that%2034,of%20losses%20in%20natural%20
resources.

29
Country Climate and Development Report: Jordan
Figure 26. Setting priorities for the nexus

More Urgent Less Urgent

Short-term:1-5 years Medium-term:1-10 years

Adapting to water scarcity and

ensuring fiscal sustainability of
the water and energy sectors

Synergies
Boosting system-wide resilience with focus on drought

Reducing fresh water use in urban areas

and the agriculture sector while
safeguarding livelihoods
Optimize energy use and
leverage mitigation
opportunities in the agrifood
and water sectors

Trade-offs

Three of the four intervention areas are considered priority areas of focus in the next five years, while the
fourth could be implemented over a five to ten-year time frame:
a. Priority 1: The fiscal imbalances across the nexus are rapidly worsening, particularly as large-scale
adaptation investments are proposed for development. Fortunately, fiscal efficiency measures at the
water-energy nexus have positive returns across all dimensions, with strong synergies between climate
and development objectives.
b. Priority 2: Reducing fresh water use in urban and agricultural settings is equally urgent, given the
worsening water scarcity trends departing from an already extreme situation. However, in addition to
synergies to be realized through efficiency interventions, important trade-offs between water allocations
to different uses will need to be made, including considerations of distributional impacts and how
vulnerable populations would be affected.
c. Priority 3: Building drought resilience through cross-sectoral systems is becoming important in the
short term but will become more so as time progresses, and slow-onset drought trends intensify.
d. Priority 4: Emissions reductions across the nexus are not immediately urgent considering other more
pressing priorities and may require significant trade-offs. Current exploratory efforts should be reinforced
to establish proof of concept for emission-saving opportunities in the medium term.
The package of priority policies and investments identified in the four priority areas is expected to yield
many economic benefits in the next five years. The estimated financing needs associated with these priority
interventions is US$4.2 billion until 2030. An important share of those investments corresponds to demand-
side interventions, and an estimated 50 percent would need to come from the private sector, including
agricultural producers. Those investments lead to many benefits, further described under Chapter 4, Section
4.2.

30
Country Climate and Development Report: Jordan
3.2. Integrated solutions for low-carbon and resilient urbanization
3.2.1. The urban-transport-energy nexus
Jordan’s economy, population, and GHG emissions are spatially concentrated in Amman agglomeration and
several other major cities. Between 1990 and 2015, Amman’s agglomeration built-up area and population
grew by 71 percent and 114 percent, respectively.52 The Greater Amman Municipality (GAM) is responsible
for 55 percent of employment. Jordan’s transportation and logistics sector is also vital to the economy and
contributes over 8 percent of the country’s GDP. GHG emissions are also spatially concentrated around urban
centers like Amman and Irbid (see Figure 9). There are significant opportunities for Jordan’s cities to deploy
mitigation strategies, build resilience, and support adaptation measures to reduce climate-induced risks.
A sustained focus is required on adopting policies that (a) promote energy transition, including energy
efficiency and renewable energy in urban areas; (b) decouple growth from emissions and facilitate low-
carbon pathways; (c) enable spatially-integrated solutions across the urban, transport, and energy sectors;
and (d) support these actions through smart governance and sustainable financing models. A prominent
example is the opportunity to complement the recent Bus Rapid Transit (BRT) investments in Amman with
land-use policies that allow for more efficient and resilient uses of urban land. This integration will allow for
a modal shift towards low-carbon public non-motorized forms of green transport. It will help control urban
sprawl, a significant contributor to GHG emissions53 and costly infrastructure expenses.
Access to smarter financing for climate investments will be critical. Several opportunities could be explored.
Unlocking land-based financing through better urban and transport planning, shifting towards transit-oriented
development (TOD) models, optimizing service delivery and costs, and enhancing municipal asset (land and
buildings) management are much-needed climate-smart investments. Scaling climate-responsive solutions
requires mobilizing the private sector in energy efficiency and renewable energy, solid waste management,
and sustainable road-sector financing at the national and city level. Furthermore, to avoid being locked into
an unsustainable growth path, the following mitigation actions need to be urgently pursued:
a. Curb potent methane gas emissions from waste. Methane is the most powerful driver of climate
change among short-lived substances.
b. Manage the rise in GHG emissions from sectors such as transport, especially with the rise in private
vehicle use, and from urban sprawl and fragmentation which are significant contributors to GHG emissions.
c. Address sectors responsible for a major share of energy use and GHG emissions by investing in
complementary combinations of policy levers, such as energy efficiency in buildings, transport, and
industry.

3.2.2. Challenges and opportunities

Current land-use planning and building regulations in cities in Jordan produce low-density urban forms
that are costly to service, making investing in high-efficiency public transit options harder. As a result, most
Jordanians rely on cars, increasing congestion and worsening air pollution and CO2 emissions. The number
of private vehicles almost doubled between 2008 and 2018, reaching over a million. This situation results in
high pressure on the transport infrastructure and negative impacts on accessibility, the environment, public
health, and the economy.
The major cities in Jordan have seen a large influx of refugees into urban communities, putting significant
pressure on service delivery, municipal finance, and planning, affecting cities’ resilience. As of end-2021,
65 percent of registered Syrian refugees reside in the three largest cities of Jordan.54 The influx of refugees
since 2013 and the increase in Jordan’s population in urban areas have strained municipal finance, service
delivery, and growth patterns in the major urban centers. The Syrian refugees remain highly vulnerable.

52
These figures are based on ’Degree of Urbanization,’ endorsed by the UN Statistical Commission in 2020. Under this methodology, a city or urban
center is composed of contiguous grid cells of 1 km2, having density of at least 1,500 inhabitants/km2, and total population of at least 50,000. More
details on the methodology can be found on the European Commission’s Joint Research Center website.
53
The IPCC AR6 WGIII report suggests that integrated spatial planning to achieve compact and resource-efficient urban growth could reduce GHG emis-
sions between 23-26% by 2050 compared to the business-as-usual scenario. Reductions could be achieved through co-location of higher residential and
job densities, mixed land use, and transit-oriented development.
54
Amman (30%), Irbid (20%), and Zarqa (15%). Another 25% of registered Syrian refugees reside in Mafraq, a city 80 km north of Amman, along the
Syrian border.

31
Country Climate and Development Report: Jordan
Social inclusion remains a major challenge. It is estimated that 16-25 percent of Amman’s urban population
live in vulnerable settlements with overcrowding, lack of services, and widespread violation of both zoning
and building regulations. Neither public transport vehicles nor transit infrastructure are adapted universal
accessibility standards or consider gender mobility differences even as 13 percent of Jordanians have a
disability, and 84 percent of these people live in urban areas. It takes the urban poor in Amman twice as
long to commute to work compared to residents from affluent neighborhoods due to distance between poor
neighborhoods and workplaces, making it both more costly and unsafe for women and girls, especially when
public transport is scarce.
Despite major progress in promoting more uptake of renewable energy (RE) and energy efficiency (EE)
measures in Jordan, penetration of RE and EE in end-use remains limited. Notably, Amman’s renewable
energy use for heating/cooling applications has been limited and based mostly on solar water heaters, while
the transport sector relies almost exclusively on imported fossil fuels.55
Solid waste is responsible for a large and rapidly growing share of GHG emissions. The waste sector’s
GHG emissions account for 10.6 percent of total emissions, 98.6 percent resulting from methane gas from
managed landfills.56 The increased waste generated has strained collection and disposal capacities, with only
an estimated 5 percent to 10 percent of the total municipal waste produced annually recovered or recycled.
A shift towards circular economy approaches could help address current challenges, including financial
constraints,57 a shortage of proper equipment, fleet, and trained labor, limited technical knowledge and
funds for capital investments in sanitary waste disposal, and a lack of public awareness on waste handling.
An industrial decarbonization strategy targeting high emitters, such as the cement, glass, and steel
industries clustered around Amman, will be crucial to mitigating a significant source of emissions while
improving the efficient use of resources needed for urban growth and economic profitability. Companies
reduce their energy, water, and material consumption by investing in decarbonization projects, which reduce
their operating expenses. The industry’s decreased natural gas, electricity, and water consumption also
mean efficient use of finite resources needed for healthy urban growth. A combination of decarbonization
technologies (e.g., trigeneration, waste heat recovery, heat integration, variable frequency drives, alternative
fuels, waste to energy, sustainable water practices, renewable energy) could bring industry emissions down
competitively. Regulatory frameworks and operational/business models are needed to drive the transition
towards a circular economy by increasing reuse, repair, and remanufacturing.
Given the high levels of urbanization in Jordan, inter-urban transport connectivity is vital for moving people
and goods, aiding Jordan’s economic development. Transport in Jordan relies heavily on the roads sector.
The trucking sector is highly fragmented and aging, with the average truck age reaching 19.25 years in 2020,
making the transport of goods inefficient, costly, and environmentally damaging. Despite Jordan’s strong
reliance on roads for the flow of people and goods, the sector suffers from chronic underfunding (0.5 percent
of GDP compared to an average of 1-3 percent in developing countries) for road asset management. It also
leads to faster deterioration of roads, more frequent major rehabilitation, and a greater risk of destruction
due to flash floods and landslides.
Climate change is poised to intensify shocks and chronic stress to major urban areas, putting highly
concentrated lives, livelihoods, infrastructure, and assets at risk. Climate change will increase the demand for
climate-resilient and adaptive city planning, infrastructure, and urban services. For example, (a) air pollution
is severe in the largest Jordanian cities, where the concentration of the PM2.5 particles is higher than the
WHO standard of 10 μg/m3, constituting a significant health risk for a large number of the urban population;
(b) urban heat in Jordanian cities, especially the increasing summer daytime surface temperature above 40
degrees Celsius, will pose increasingly significant impact in urban health and productivity; (c) pluvial flooding
risk is projected to be higher under climate scenarios. In Amman, over 50 percent of the at-risk households
are low-income with a lower capacity to cope with flood hazards.

55
As of early 2022, the total number of vehicles in Jordan was 1.8 million, out of which 31,816 were electric cars (around 1.8% EV penetration).
56
Waste sector- national green growth action plan
57
SWM fees only cover about 29 percent of MSWM costs as estimated by municipalities.

32
Country Climate and Development Report: Jordan
3.2.3. Pathways to low carbon and resilient urban growth
An urban growth scenarios analysis suggests Amman can significantly reduce energy consumption and
GHG emissions through integrated and complementary policy levers and by controlling urban sprawl.
The following four scenarios were modeled, two based on Amman’s current plans. The model suggests
that adopting more aggressive measures under GAM’s current plans (ambitious scenario) can reduce GHG
emissions by 41 percent. Figure 27 presents a summary of key findings:
• Business as usual scenario 2050. A baseline scenario that does not promote green policies and
interventions and urban expansion is projected based on historical growth.
• Planned scenario 2050. The scenario is based on geospatial information provided by GAM and simulates
the interventions and policies determined in various action plans, including Amman Climate Action Plan
for 2050. The main policy levers are built-up area expansion, green building codes, energy efficiency
measures, and mobility systems.
• Ambitious scenario 2050. The ambitious scenario builds on the planned scenario by adopting more
aggressive measures within the urban, energy, and transport sectors. The scenarios also include
additional interventions based on Jordan’s NDCs.
• Net zero scenario 2050. This scenario simulates what it would take to reach net zero carbon emissions
by 2050. Building on the ambitious scenario, it includes additional GAM-proposed green projects with
community benefits, maximizing infill development and minimizing urban expansion and spatial growth.

Figure 27. Insights from integrated spatial scenarios for Greater Amman for 2050

GHG emissions (kgCO2eq/capita/annum) and energy use (MJ/capita/annum)

GHG emissions (kgCO 2eq/capita/annum) and energy use (MJ/capita/annum)
2,826 2
2,479
Amman can reduce its energy 15000 3,000 Commuting
2,826
2,826 2,479
2,479
consumption and GHG emissions by 27 15000
15000 3,000
3,000
2,500 Commuting
Commuting
Public Lighting
percent and 41 percent, respectively, 10000
1,472
2,500 Public Lighting
Lighting
2,500
2,000 Public
Wastewater
through more aggressive measures 10000
1,472
1,472
2,000
10000 2,000
1,500 Wastewater
beyond GAM’s current plans. Reaching Wastewater
Water
5000 1,500
1,500
1,000
net zero carbon emissions by 2050 Water
Water
Buildings
5000
5000 1,000
1,000
500
requires additional measures. 17 Buildings
Buildings
0 17 500
0500 Solid Waste
17
0
0 BAU Plan Ambitious Net Zero 0
0 Solid Waste
Solid Waste
GHG Emissions
BAU
BAU Plan
Plan Ambitious
Ambitious Net Zero
Net Zero GHG Emissions
GHG Emissions
Population exposed to fluvial and pluvial flooding (people) by 2050
Population exposed to fluvial and pluvial flooding (people) by 2050
15,000 600,000
Current plans are estimated to have 15,000
15,000 600,000
600,000
10,000 400,000
significantly reduced exposure to flood Fluvial Floods
10,000
10,000 400,000
400,000
risks. Mitigation investments may yield 5,000 200,000 Fluvial Floods
Fluvial Floods
Pluvial Floods
further adaptation benefits, potentially 5,000
5,000 200,000
200,000 Pluvial Floods
Pluvial Floods
reducing exposure by up to 15 percent. 0 0
0
0 BAU Plan Ambitious Net Zero 0
0
BAU
BAU Plan
Plan Ambitious
Ambitious Net Zero
Net Zero
Urban land consumption and natural land loss (km2) by 2050
Urban land consumption and natural land loss (km2) by 2050
910
784
1,000 910
910 784
784 615 570
A more spatially efficient urban form 1,000
1,000
615 570
615 570 Agriculture Land Loss
can be achieved through better planning,
connectivity, and controlled expansion. Agriculture Land
Agriculture Land Loss
0 Natural Land Loss Loss
The ambitious scenario anticipates a 22 0
0 -4 0 Natural Land
Natural
Land
Land Loss
Loss
Consumption Forecast (2050)
-128 0
percent reduction in urban expansion -4
-4 0 Land Consumption
Consumption Forecast
Forecast (2050)
(2050)
-467 -128
-128 Land
Urban Footprint(2020)
against current plans. -1,000 -467
-467 Urban Footprint(2020)
Urban Footprint(2020)
-1,000
-1,000 BAU Plan Ambitious Net Zero
BAU
BAU Plan
Plan Ambitious
Ambitious Net Zero
Net Zero
Municipal and private expenditure (US$ mil.) by 2050
Municipal and private expenditure (US$ mil.) by 2050
100,000
100,000
100,000 Municipal Service
50,000 Municipal Service
Municipal Service
Private Sector
50,000
50,000 Private Sector
Sector
Private
New Infra. and Policies
0
New Infra.
New Infra. and
and Policies
0
0 Carbon Market Policies
-50,000 Carbon Market
Carbon Market
-50,000
-50,000 BAU Plan Ambitious Net Zero
BAU
BAU Plan
Plan Ambitious
Ambitious Net Zero
Net Zero

Total capital expenditure for new infrastructure, local policies (US$ mil.) by 2050
Total capital expenditure for new infrastructure, local policies (US$ mil.) by 2050
$14,000
$14,000
$14,000 $11,943
$12,000 33 $11,943
$11,943
Country Climate Renewable Energy Electrification of Public Buses
$12,000
$12,000 $9,769and Development Report: Jordan
Renewable Energy
Renewable Energy Electrification of
Electrification of Public Buses
$10,000 $9,769
$9,769 Green Infrastructure Public Lighting Public Buses
$10,000
$10,000 Green Infrastructure
Green Infrastructure Public Lighting
Public Lighting
$7,480 Green Spaces and Parks Enforcement of Buildings Codes
$8,000 Green Spaces
Spaces and
and Parks
Parks Enforcement of of Buildings
Buildings Codes
Codes
$7,480
$7,480 Green
Water Management Enforcement
Demand Side Management
 Urban land consumption and natural land loss (km2) by 2050

910
784
1,000
615 570
Agriculture Land Loss
0 Natural Land Loss
-4 0
-128 Land Consumption Forecast (2050)
-467 Urban Footprint(2020)
-1,000
BAU Plan Ambitious Net Zero

Municipal and private expenditure (US$ mil.) by 2050

100,000
Municipal Service
50,000 Private Sector
New Infra. and Policies
0
Amman can realize cost-efficiencies and Carbon Market
other co-benefits to achieve synergies -50,000
by investing in complementary BAU Plan Ambitious Net Zero
combinations of policy levers. A shift
from grey to green infrastructure and Total capital expenditure for new infrastructure, local policies (US$ mil.) by 2050
smarter and complementary policies
$14,000
across the urban, transport, and energy $11,943
sectors may reduce total infrastructure $12,000
investment costs by 25 percent by 2050 $9,769
Renewable Energy Electrification of Public Buses
under the ambitious scenario. Reaching $10,000 Green Infrastructure Public Lighting
net zero emissions will require doubling $7,480 Green Spaces and Parks Enforcement of Buildings Codes
$8,000
capital investments (compared with Water Management Demand Side Management
the ambitious scenario) for renewable $6,000
$5,590
Waste Management Urban Planning
energy and related infrastructure. Controlled Parking Grey Infrastructure for Flood
$4,000
Pedestrianisation Grey Infrastructure
$2,000 Mass Public Transit

$0
BAU Plan Ambitious Net Zero

3.2.4. Recommendations
A combination of policy measures and financing opportunities have been identified to begin the long-
term transformation of urban areas in Jordan, starting with Amman, into inclusive, green, resilient cities.
Implementing these recommendations is estimated to cost approximately US$5.3 billion until 2030,
potentially attracting US$ 3.7 billion by encouraging consumer and private sector participation:
a. Integrate green urban-transport planning to deploy transit-oriented development and facilitate
public transport reform. Policy measures and investments in the public transport system and active
mobility include expanding the BRT in Amman, connecting Amman to nearby secondary cities, and
integrating public transport with walkability and non-motorized transportation infrastructure; facilitating
market responsive land use planning and building regulations that encourage compact walkable cities
and reduce sprawl and fragmentation; investing in urban planning capacity and leveraging digitization
and spatial data platforms to support integrated and compact spatial planning, evidence-based policies
and service delivery efficiencies.
b. Define priority investment opportunities in green infrastructure and services, particularly public
spaces and nature-based solutions, to mitigate floods and heat islands. This includes improved water
recycling from stormwater harvesting for non-potable uses. This will also reduce financial losses from
disaster risks. The cost of temporary relocation and productivity loss due to a three-day flooding event in
Amman alone could cost US$25 million, which is avoidable through these investments.
c. Prioritize urgent “no regret” infrastructure in Amman and municipalities, including recycling and
sorting facilities, upcycling hubs, sanitary landfills, and collection and transfer systems. Other efforts
should include developing a comprehensive system-wide solid waste management master plan for
Amman, and reforms to promote upstream waste minimization for municipal waste, i.e., reduce, recycle,
and recovery strategy. Efforts should also include institutional governance and financial sustainability
reforms and developing models for private sector participation.
d. Accelerate energy efficiency (EE) across sectors, including investments in electricity demand-side
management enabled by a smart grid, supported with advanced metering infrastructure (AMI). This will
unlock growth and innovation potential by establishing the energy service market for innovative business
models. Actions include promoting green building standards, investing in public buildings’ energy efficiency,
and ensuring deeper penetration of green building codes for private and public buildings. Actions can also
include retrofitting public buildings and strengthening enforcement of building codes, including thermal

34
Country Climate and Development Report: Jordan
 codes, actively exploring energy service company (ESCO) business models, and leveraging land-based
financing. The electrification of major energy systems in buildings, e.g., heating, should be promoted so
local RE resources can be utilized, reducing the reliance on imported fossil fuels.
e. Adopt Electric Vehicle (EV) goals and action plan to signal a national commitment to this market
transformation. The goal could relate to a gradual increase in EVs or phasing out vehicles with internal
combustion engines. The corresponding targets for charging infrastructure, e.g., the planning of EV
charging infrastructure, should synergize with overall urban spatial planning. The action plan should
include enhanced pricing policies that encourage day-time charge to maximize RE usage, regulatory
support for expanding EV charging infrastructure, and incentives for vehicle owners to adopt EVs.
f. Enhance financial sustainability and modernize the management of the road sector, and municipal
public land and assets. This encompasses: (a) enabling public-private partnerships for the construction
and maintenance of climate-resilient roads; (b) implementing a road asset management system and
performance-based maintenance contracts; (c) improving subnational financial performance through
better debt and revenue management and rationalizing O&M costs; (d) adopting long-term planning;
(e) enabling land value capture and unlocking land-based financing options; (f) enhancing municipal
companies’ governance and performance, and (g) enhance overall city creditworthiness.
g. Promote a modal shift towards cleaner and greener freight transport. This can start with fleet renewal
and consolidation in the short term and shift to railways in the medium term for a cleaner and greener
solution for freight movement,58 especially along Highway 15.
h. Launch housing sector reforms in conjunction with land-use planning and zoning improvement and
stronger enforcement of building regulations. These actions will enable the implementation of a residential
green buildings program. This will also reduce unpermitted and unsafe housing units, disproportionately
affecting the poor and vulnerable households; encourage infill and affordable housing development, and
minimize sprawl and fragmentation.
The economic benefits of priority policies and investments identified in the four priority areas in the next
five to ten years are summarized below. An important share of those investments corresponds to demand-
side interventions. This is further discussed in the next chapter.
a. Improved access to jobs and economic opportunities in Western Amman, where 86 percent of
businesses and 78 percent of shopping centers in GAM will be located within 2km of a BRT station.
Other benefits would include enhanced livability of Western Amman due to reduced congestion and better
air quality by removing 14,500 cars off the road along the corridor daily. Improved road and non-motorized
transport networks will reduce traffic congestion and emissions. Reduced travel time would lead to an
aggregate saving of 603.8 million hours per year. Improved road safety is expected to result in an average
reduction of 116 fatalities from road traffic accidents per annum. Finally, benefits include better access
to urban services for vulnerable groups such as Syrian refugees and improved climate resilience, e.g.,
reducing vulnerability to flooding.
b. If by 2030,59 Jordan’s EV fleet reaches a share of 8.3 percent of the country’s total vehicles,60 average
annual CO2 emissions are expected to be 241,000 tons lower.61 Even at this low level of EV adoption
by 2030, these savings are equivalent to 0.7 percent of Jordan’s national CO2 equivalent emissions in
2018. Using World Bank shadow prices for carbon, from 2022 to 2030, Jordan could save an estimated
US$70 million through lower carbon emissions from the vehicular fleet.62

58
The carbon footprint of railways is estimated to be over 4 times lower than road sector for the movement of freight.
59
Based on the Scoping Model developed under the forthcoming World Bank Economics of Electric Mobility Flagship Report, the adoption of electric
vehicles in Jordan could yield significant environmental gains.
60
Based on a target that 30% of new car and bus sales are EVs by 2030 and 72% of new 2-wheeler sales are EVs by 2030. This global target has been
set by many countries.
61
Savings are estimated over the lifecycle of the EVs purchased from now till 2030.
62
Estimated in NPV using a discount rate of 12 percent.

35
Country Climate and Development Report: Jordan
c. Managing the drivers of urban sprawl and fragmentation can result in agglomeration economies
and city productivity and limit agricultural land encroachment. Other benefits include reduced emissions
related to transit due to better urban configuration and improved city walkability, reduced urban heat
and air pollution from an increase in open green spaces inside the city boundaries, and reduced use of
cars. Building resilient infrastructure to diverse climate change impacts will reduce financial losses from
increased natural disaster risks.
d. A debt management program for GAM will ensure that debt service remains within sustainable
limits. Improved revenue performance will increase operating surplus, freeing up more borrowing capacity.
Improved forecasting, budgeting, accounting, and reporting will increase investor/lender confidence in
GAM’s ability to undertake and manage long-term financial commitments. These improvements will enable
GAM to achieve and maintain investment-grade ratings for its municipal debt obligations. Clear long-term
financial planning will increase investor/lender confidence, while citizen and stakeholder involvement will
ensure public support for municipal investment priorities.

36
Country Climate and Development Report: Jordan
4. Macroeconomic perspective, financing for climate-
responsive development and jobs
This chapter examines the impacts of climate change and combatting actions across Jordan’s economy,
building on the risks and opportunities (Chapters 1 and 2) and the priorities identified (Chapter 3).
It focuses on the country’s key development goals from a macroeconomic perspective (Section 4.1) and
then explores leveraging financing for climate-responsive development (Section 4.2). Finally, it discusses
opportunities for creating inclusive, climate-responsive jobs and skills (Section 4.3). The recommendations
presented in Chapter 3 focus on priority actions for the next five to ten years in the context of Jordan’s NDCs,
to maximize synergies between climate commitments and development goals and to avoid being locked into
unsustainable development pathways. In the long run, 2030-2050 and beyond, decision-making would need
to be informed by plausible long-run scenarios in priority dimensions. These scenarios should be regularly
updated and refined with new data and information emergence.

4.1. Macroeconomic perspective

Four scenarios that capture the interplay between climate change impacts and Jordan’s macro-fiscal picture
were examined. Under Scenario 1, the impacts of increased heat due to climate change on agriculture yields
and labor productivity are included in the benchmark growth and macroeconomic baseline. Scenario 2
explores the impacts of increasingly severe water scarcity on the economy. Scenario 3 explores the impact
of selected adaptation measures to address water scarcity damages on the economy. The fourth scenario is
presented under Section 4.2. It explores the impacts of a package of investments of approximately US$9.5
billion—the identified additional priority investments from 2022 to 2030, excluding investments related to
desalination and conveyance under the AAC—on the baseline. Appendix presents a detailed description of
the model used, data sources, assumptions, and results. The set of scenarios presents the key underlying
assumptions and channels through which impacts are reflected in the model, followed by simulation results
and interpretation. The macroeconomic modelling in this chapter uses MFMoD63 to analyze several climate-
related scenarios on economic growth and macroeconomic outcomes and account for sectoral dynamics in
a climate-aware macrostructural setup. The scenarios explored for this CCDR focus on damages across three
climate scenarios: RCP2.6, RCP4.5, and RCP8.5.
Scenarios are cast in long-term growth and macroeconomic baseline as a benchmark for comparison (Table
4). The baseline incorporates key features of the Jordanian economy up to 2050. It incorporates historical data
and extrapolates current economic trends through a slow adjustment path. The sectoral composition shifts
gradually towards Services, while Industry and Agriculture slightly reduce their contributions to the overall
economy, reflecting their gradually slowing productivity. Short- to medium-term macroeconomic projections
reflect the headline macroeconomic framework consistent with the IMF’s 3rd Review completed in October
2021, running up to 2026. Commodity price projections are taken from the World Bank’s Prospects Group
until 2035. External demand aggregates are sourced from the latest World Bank’s Macro Poverty Outlook up
to 2024. Model dynamics determine the longer-run projections.

63
MFMOD is a macrostructural standalone model frequently used by the Jordan team for economic monitoring products and medium-term growth and
macroeconomic forecasts. The model is dynamic and features intertemporal consumption utility optimization and firm expenditure minimization; sticky
prices and wages; distinguishes consumer and producer prices; detailed fiscal and external balances; sectoral VA; international linkages through trade,
commodities, remittances, and tourism; and is based on time series with annual data. The model contains several factors that disturb equilibrium in-
cluding tax wages, investment adjustment costs, and short-run prices and wages stickiness. Key features include focus on price level, inflation, exchange
rates and role of monetary policy (using interest rate as policy instrument); costly debt accumulation, and exogenous TFP. Appendix 1 contains a technical
presentation of how MFMOD integrates climate related damages features into the model.

37
Country Climate and Development Report: Jordan
Table 4. Jordan: baseline benchmark for long-term growth

Supply side (%annual growth rates) Sectoral decomposition (% of GDP at market prices)
TFP Capital stock Potential GDP Agriculture Industry Services Net taxes
Historical trends
1980-2020 0.68 3.64 3.89 5.44 24.97 61.32 8.27
2010-2020 -0.52 2.84 2.65 4.60 24.77 57.68 12.95
Baseline
Adjusted baseline
2050 0.32 3.09 2.64 3.90 19.00 67.60 9.50

Note: “adjusted baseline” takes the Jordan CE team’s assumption on the sectoral shares in 2050

4.1.1. Scenario 1: Assessing the impact of heat and flooding

This scenario focuses on internalizing the impact of heat and flooding under different climate scenarios
into the economy’s growth and macroeconomic baseline. It excludes the effects of water scarcity, which
have been examined separately. This scenario simulates the economic effects of those damages under
RCP2.6, RCP4.5, and RCP8.5. Key assumptions used in this scenario are found in Appendix.
Scenario 1 results signal only modest negative impacts on economic activity in general. Based on the
damages considered and assumptions made, the size of shocks suggests that significant output losses are
not to be expected. The impacts of the modeled climate change damages on real GDP growth are mild and
suggest the damages do not pose a major risk for Jordan. In RCP 2.6, the GDP growth rate impact of -0.1
percent over the baseline reflects the mild effects on labor productivity caused by heat damage. RCP 4.5 and
8.5 confirm mild effects, more specifically, no deviation from the baseline in GDP growth in RCP 4.5 and a
decrease of –0.2 in RCP 8.5. In RCP 4.5 and 8.5, the agriculture impact is somewhat strong. The RCP 4.5
effect of a slight productivity bump towards the end of the forecast horizon is due to increasing agriculture
yields, which are also increasing in RCP 8.5 but at a slower pace. The diverging yield increases in the two
scenarios reflect non-linear effects on agriculture productivity.64 Despite these results, the overall impact
on GDP growth is countered by the negative effects of heat affecting labor productivity, consistent with the
characteristics of RCP 4.5 and 8.5. This contrasting result suggests that over time, with limited climate
change action, the negative impact of damages on labor productivity could potentially dominate the positive
impacts on the agriculture sector, leading to intervention trade-offs in different sectors. However, the impacts
of heat on labor productivity are proxied by the figures from Tunisia, as damage estimates for Jordan do not
yet exist. In addition, this scenario does not include damages from increased water scarcity.
Scenario 1, including the agriculture modeling, assumes neither a further reduction in water availability with
climate change nor accounts for increasing water stress. There is an established biophysical relationship
between heat stress and water availability. Water stress increases heat stress because water availability
through rainfall or irrigation provides an evaporative cooling effect, and air moisture reduces physiological
heat stress. The interplay between rising temperatures and water stress will impact agriculture and labor
productivity. These effects, when appropriately quantified for Jordan, can be integrated into future macro-
structural economic modeling scenarios.
In terms of macroeconomic internal and external balances, the simulation results yield very marginal
impacts on external balances and fiscal aggregates, including public debt, once again reflecting the limited
impact of the modeled climate change damages on the economy. The internal dynamics of all variables
indicate relatively well-performing transmission channels in the model, as the direction of the changes is
reasonable over time.

64
In agriculture yields calculated by IMPACT- FAO, only one-third of livestock/crops experience damages while two-thirds produce stronger yields over
time, and stronger in RCP 4.5, indicating that the damages/benefits are not proportional or linear.

38
Country Climate and Development Report: Jordan
4.1.2. Scenario 2: Impacts of increasingly severe water scarcity
Results highlight the importance of water for Jordan’s long-term economic growth and the nature of trade-
offs for its development path. This scenario studies the impacts of different levels of increasing water scarcity
in Jordan on real long-term growth under different labor and capital mobility assumptions. Key assumptions
are detailed in Appendix. The ‘Water in the Balance’ report (WiB, 2020) examined the impact on the economy
of a 5, 10, and 20 percent increase in water scarcity in Jordan.65 The WiB report found the real GDP growth
rate would decline by -0.5 to -6.8 percent by 2040, depending on the extent of water scarcity modeled
against the baseline and contingent on the specific modeling assumptions. For this scenario, MFMoD is
calibrated to adjust to WiB assumptions.
Increased water scarcity is projected to have the largest negative impact on Jordan’s economic prospects
compared to other potential climatic effects under full labor and capital immobility assumption. Table 5
below reflects the impacts on real GDP growth deviations of the 20 percent increase in water scarcity, the
largest shock considered in WiB. The results related to all other WiB scenarios are reported in Appendix.

Table 5. Jordan – WiB impact of a 20 percent increase in water scarcity on the economy

20% water scarcity +

20% water scarcity +
20% water scarcity + Primary sectoral effects+
Baseline 100% capital and labor
Primary sectoral effects some labor and capital
immobility
immobility
2020 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050
Deviation from Baseline Deviation from Baseline Deviation from Baseline
(Percent)* (Percent)* (Percent)*
Average Growth (%)
Real GDP 1,0 1,3 1,5 1,7 -0,3 -0,7 -1,1 -1,1 -2,8 -4,5 -1,7 -4,1 -6,6
Real GDP per capita -0,7 1,1 1,0 1,3 -0,3 -0,7 -1,1 -1,1 -2,8 -4,5 -1,7 -4,1 -6,6

Ensuring labor and capital mobility is essential to attenuate the drastic impacts of water scarcity in Jordan,
highlighting the importance of addressing structural issues to adapt to climate change. A fundamental
assumption in the modeling is that capital and labor are immobile. Given this assumption, all sectors are
severely impacted. Increased water scarcity changes the shadow price of water by 550 percent in the case
of the 20 percent scarcity increase. This increase would raise the cost of doing business and reduce firms’
profits and returns to labor in sectors that depend on water as an input. In other scenarios where capital
and labor are allowed to reallocate, the overall impact is materially attenuated, as new investments and
labor flow into sectors less impacted. This analysis shows the importance of labor and capital mobility in
enabling the Jordanian economy to adapt to the impacts of climate change. Regarding labor mobility, it
highlights the importance of addressing continuing structural issues in the labor market to mitigate potential
negative effects of climate change on the economy and jobs, a point further discussed in Section 4.3 below.
Finally, the sub-scenarios explored point to more significant impacts on GDP when increased water scarcity
is considered, confirming the importance of adaptation options for Jordan’s long-term growth.

4.1.3. Scenario 3: Selected water scarcity adaptation measures

Four sub-scenarios cover combinations of selected water supply investments and water efficiency
interventions to resolve an additional water gap between demand and supply in the amount of 200 MCM by
2050 (Table 6). The modelling assessed their economy-wide impact on real growth, investment productivity,
internal and external macroeconomic balances related to the investment costs, and the benefits of resolving
the aggregate 200 MCM gap. A significantly more disaggregated model would capture the full economic
benefits of having water available to meet water demand in Jordan, including health, industrial growth, and
agricultural productivity. Water demand in Jordan significantly exceeds the supply available through current
natural endowments and purchases. This sub-scenario focuses only on the additional anticipated water
supply-demand gap arising from climate change, adopting a value of 200 MCM, which corresponds to the 20
percent increase in the water scarcity scenario in the WiB report66.

65
A 20 percent increase in water scarcity is a conservative estimate, compared to the scientific consensus of a 30 percent increase in water scarcity by
2040
66
Key assumptions used in this scenario are found in Annex 1.

39
Country Climate and Development Report: Jordan
The ranges of adaptation costs in Table 6 reflect the uncertainty of the future cost of capital and energy,
to which modeling results are sensitive. Capital expenditure (CAPEX) ranges of desalination/conveyance
are based on the current information about the AAC project, which is based on the cost structure of the Disi
pipeline PPP and a scenario where the future cost of capital is reduced. Operating expense (OPEX) ranges
reflect the uncertainty of future energy prices, considering high and low energy price scenarios. Possible ways
to minimize the cost of capital include increasing the grant component, accessing concessional loans from
international financial institutions, blending with climate and refugee financing, and accessing guarantees or
phasing implementation of the project to defer costs.

Table 6. Selected water scarcity adaptation scenarios67

Low cost - Desalination and conveyance High cost - Desalination and conveyance
Desalination low: JOD 100.1 m per 100 MCM, CAPEX Desalination High: JOD 182.7 m per 100 MCM, CAPEX
Low cost - NRW 40.2%, OPEX 59.8% 36.8%, OPEX 63.2%
Reductions NRW low: JOD 54.9 m per 100 MCM, 97.5% CAPEX, NRW low: JOD 54.9 m per 100 MCM, 97.5% CAPEX, 2.5%
2.5% OPEX OPEX
Desalination low: JOD 100.1 m per 100 MCM, CAPEX Desalination High: JOD 182.7 m per 100 MCM, CAPEX
High cost – NRW 40.2%, OPEX 59.8% 36.8%, OPEX 63.2%
Reductions NRW High: JOD 97 m per 100 MCM, 97.5% CAPEX, 2.5% NRW High: JOD 97 m per 100 MCM, 97.5% CAPEX, 2.5%
OPEX OPEX
Note: CAPEX = capital expenditure; OPEX = operating expenses; NRW = non-revenue water; MCM = million cubic meters;

Results show that eliminating the 200 MCM additional shortfall in water supply by 2050 may come at a
high economic cost. The possible effects on real growth and macroeconomic dynamics (Table 7) reflect a
range of estimated effects, exposed to the high uncertainty endemic to macroeconomic projections exercises.
Although these economic costs may seem lower than those reported in Scenario 2, they are not comparable;
in these sub-scenarios, labor and capital resources are mobile and reallocated by firms over time to respond
to scarcity conditions. The ensuing government financing needs could result in a significant increase in debt
(Table 7), which could unhinge a sizeable private investment crowding out effect. With a debt-to-GDP ratio
of nearly 100 percent at the beginning of the projection period, interest rates would need to increase to
incentivize investors to finance the additional spending, which could crowd out some private sector investment
and lower potential output and incomes. Overall, real GDP could thus be negatively impacted by a -2.2 to
-4.5 percent growth rate by 2050 (Table 7). Lower incomes would reduce domestic demand, amplifying the
effects of financing a portion of the government borrowing from earnings. The increase in foreign capital
flows to finance the debt would cause the current account deficit to widen, putting downward pressure on the
currency, resulting in lower and more expensive imports.

Table 7. Impact of selected adaptation measures on the economy, Jordan

Low-cost Desal
Low-cost Desal + Low- High-cost Desal + Low- High-cost Desal + High-
Baseline + High-cost NRW
cost NRW scenario cost NRW scenario cost NRW scenario
scenario
2020 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050
Deviation from Deviation from Deviation from Deviation from Baseline
Baseline (Percent)* Baseline (Percent)* Baseline (Percent)* (Percent)*
Average Growth (%)
Real GDP 2,0 2,7 3,1 3,4 -0,1 -0,6 -2,2 -0,1 -1,0 -3,6 -0,1 -0,7 -2,9 -0,1 -1,1 -4,5
Real GDP
-1,4 2,2 2,0 2,5 -0,1 -0,6 -2,2 -0,1 -1,0 -3,6 -0,1 -0,7 -2,9 -0,1 -1,1 -4,5
per capita
Fiscal Aggregates (% of GDP)
Fiscal
22,7 23,5 24,3 22,8 0,0 0,1 0,2 0,0 0,1 0,4 0,0 0,1 0,3 0,0 0,2 0,5
revenue
Fiscal
29,9 30,4 30,4 27,2 0,8 1,9 3,4 1,2 3,0 6,2 1,0 2,6 5,0 1,4 3,7 8,6
expenditure

67
For desalination and conveyance, most costs are OPEX, driven by additional electricity costs; the difference in the high and low figures is largely due to
the electricity price for the AAC. AAC CAPEX costs equate to the total cost of the AAC, allocated evenly from 2027 to 2040 to derive the annual figure. For
all results that include the AAC, figures are based on information shared among the development partner community. The final CAPEX/OPEX costs will be
determined only at financial close.

40
Country Climate and Development Report: Jordan
 Low-cost Desal
Low-cost Desal + Low- High-cost Desal + Low- High-cost Desal + High-
Baseline + High-cost NRW
cost NRW scenario cost NRW scenario cost NRW scenario
scenario
2020 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050
- o/w
Interest 4,2 3,9 3,9 3,4 0,5 2,0 4,1 0,8 3,2 7,7 0,7 2,7 6,2 0,9 4,0 11,0
payments
Budget
-7,3 -5,3 -5,7 -4,4 -0,8 -1,8 -3,2 -1,1 -2,8 -5,8 -1,0 -2,4 -4,7 -1,4 -3,5 -8,1
deficit
Public debt 109,0 114,2 111,7 96,9 3,7 13,4 27,7 5,4 20,4 46,4 5,0 17,9 39,1 6,6 25,2 61,6
- o/w
External 45,4 36,8 32,4 26,5 0,9 3,4 7,0 1,4 5,1 11,6 1,3 4,5 9,8 1,7 6,4 15,5
Public Debt

The economic costs projected in these sub-scenarios call for options to alleviate the government financing
needs and promote more efficient use of water resources. Since water losses and increasing the water
supply are significant and highly costly, tariff reform could reduce price distortions. The shadow price of water
is around 450 percent (WiB report). Implicitly this puts the demand elasticity of water at 20/450 = 0.04,
where 20 percent is the estimated increased water scarcity. Even at that very low elasticity, a price signal on
a scarce resource such as water could help manage demand and efficiently allocate scarce water resources
between uses. A more comprehensive analysis of water demand elasticity would need to distinguish water
for agriculture, urban, and industrial consumption to support the design of water tariff reform. Water tariff
reform, however, requires further time-pressing empirical analysis in Jordan in key dimensions. There are
significant social, humanitarian, and political dimensions to be considered, alongside the time needed to
prepare and implement a water tariff reform. In addition, a complementary financial analysis of the water
sector shows sustained NRW reductions positively impact water sector debt by achieving operational
cost recovery and would help improve fiscal sustainability.68 Along with these dimensions, impacts on
economic growth and macroeconomic balances could be enriched with more granular information on water
consumption, production, and pricing for different uses, i.e., agriculture, urban consumption, and industrial.
Such information could also inform a distributional impact analysis of water tariff reform on households.
At the same time, despite the estimated high costs in the sub-scenario analyses, there are benefits that a
macro-structural model cannot fully capture from investments in water scarcity adaptation. These still need
to be assessed. Without investments in adaptation Jordan would face an additional water deficit that would
put the country even further below the absolute water scarcity threshold. Investing in adaptation measures
could also deliver significant human capital benefits, including health, as Jordan would avoid a significant
reduction in already scarce water resources. Additionally, adaptation measures could help increase industrial
productivity and employment in agriculture and agro-industry through increased water availability, especially
if the investment environment in Jordan becomes increasingly favorable to private sector development.

4.2. Unlocking finance for climate responsive development

4.2.1. Identifying financing needs
Chapter 3 identified additional investment needs that would contribute to achieving Jordan’s development
goals while enhancing climate resilience and reducing GHG emissions by 2030 (Table 8). These financing
needs build on the NDC priorities and include projects contributing to mitigation, adaptation and resilience
across the agriculture, energy, transport, urban (including buildings and waste management), and water
sectors. This assessment does not include projects already approved by the government and under
development (such as the AAC). In total, the investment needs are assessed as US9.5 billion to be secured/
committed in the coming years to ensure that the initiatives can be fully implemented by 2030, including
US$3.1 billion that end-users and consumers are expected to contribute, particularly toward demand-side
projects. Nearly 75 percent of these priority investments, for a total amount of US$7 billion, are included
under the NDC or NAP.

68
NRW reduction investments which aim to achieve sustained reductions of 2% of NRW per year have a positive net present value (NPV) and internal
rate of return (IRR) to 2040.

41
Country Climate and Development Report: Jordan
The financing needs are categorized into three broad areas to reflect the distinctly different approaches
and potential sources for these funds (Figure 28). The packages of priority interventions listed in Table 8
include policy measures, incentives and supply- and demand-side investments. The cost estimates for the
incentives and investments are drawn from national action plans, cost-benefit analyses, sectoral strategies,
and relevant publications of the government and development partners, and complemented with high-level
estimates compiled for this CCDR. This section presents a high-level snapshot of the priority investment
needs. Detailed investment plans, including financing options and sources, are being prepared as part of an
ongoing project69, including a cost-benefit analysis.

Table 8. Summary of financing needs across packages of priority interventions

Estimated Total Costs Priority in NDC

Packages of Priority Interventions
(US$ million) or NAP
Adapting to increasing water scarcity and ensuring fiscal sustainability of the water 1363 NAP
agriculture, and

and energy sectors

Water, energy,

food nexus

Reducing fresh water use in agriculture while safeguarding livelihoods 1860 NAP
Boosting system-wide resilience with a focus on drought 685 NAP
Optimizing energy use and leveraging mitigation opportunities in the agrifood and 303 NAP and NDC
water sectors
Integrating green urban-transport planning, reforming public transport, and deploying 1,588 NDC
development
Low-carbon

transit-oriented development.
urban

Investing in green infrastructure for urban rejuvenation, waste management, and 990 NDC
circular economy
Promoting energy efficiency and green public buildings 2,716 NDC
Total 9,505

Figure 28. Estimated priority financing needs (US$ Million)

Energy efficiency, upgraded

1,674
irrigation methods, Green Major Bus Rapid Transit Systems,
buildings, electric vehicles 4,721 Infrastructure Pumped Hydro Storage,
Wastewater Treatment Plant
Demand-side
Projects

3,110
Dispersed
Infrastructure

Solid waste management, rainwater

harvesting systems, water pumping
stations, climate Resilient Roads

• Major infrastructure: Large, single-site investments that require over US$100 million in financing. These
projects require a long lead time averaging over five years from concept to commissioning and a similarly
long timeframe from project structuring to financing. These could be implemented as public investments,
PPPs, and private-sector-led projects depending on the financial and economic returns, optimal business
case, and risk profile. There are several major projects identified as a priority for implementation before
2030:

69
The Jordan Transparent, Inclusive and Climate Responsive Investments Program for Results (PforR) includes a result area on preparation of plans for
priority climate investments.

42
Country Climate and Development Report: Jordan
 a. Bus Rapid Transport (BRT) system expansion in Amman, including expansion of the BRT
to Salt and Zarqa. This is a priority for reducing GHG emissions, improving local air quality,
providing much-needed equitable and inclusive public transport options, encouraging the local
government to enhance its asset inventory, and exploring land value capture (LVC) instruments
to create green infrastructure, using the BRT corridor as a catalyst.
b. Pumped hydroelectric storage can serve the dual purpose of harvesting and storing water
under variable rainfall and utilizing the reservoir system to manage variable renewable energy
supply, generating electricity when the supply is short, and storing the surplus.
c. Reinforcing power interconnection with Egypt is crucial to strengthen the reliability of the
electricity grid in Jordan, which is a small system with a very high share of variable renewable
energy. This interconnection is also a step towards regional power integration, which will
conceptually allow for an increased share of RE in the pan-Arab electricity mix. 70
d. Enhanced wastewater treatment enables substituting fresh water, particularly groundwater, with
treated water. Urban areas and industrial zones generate a significant amount of wastewater,
which is currently a waste.
• Dispersed infrastructure: Large, multi-site projects that require over U$20 million in financing. These
projects can be phased to be implemented as funds become available. These could also be implemented
as PPPs, Performance Based Contracts, and green procurement methods. These could also include co-
financing from end-users. Below is a summary of the identified priority investment areas:
a. Solid waste and circular economy, creating opportunities for recycling, improve waste
management practices and infrastructure to reduce methane emissions.
b. Climate resilient road sector, improving rehabilitation practices and ongoing operation and
management of roads to reduce severe damages and disruptions, particularly due to flash
floods, landslides, and extreme heat.
c. Urban green rejuvenation creates multi-use, inclusive green spaces that promote
pedestrianization, non-motorized transport, charging infrastructure, and green cover to reduce
the urban heat island effect, among other benefits. This is particularly important for low-income
neighborhoods and host communities.
d. Optimizing energy consumption in the water sector, improving energy efficiency in pumping
stations, strategic integration of renewable energy, and shifting demand to reduce consumption
during peak hours.
e. Reducing non-revenue water, improving water networks and metering systems to reduce
physical and commercial losses in unbilled water.
• Demand-side initiatives: These are demand-side measures to be adopted by the private and residential
sectors, especially for optimizing water or energy consumption. These projects are likely to be partially
or fully financed by the end-user and could involve public funding as an incentive and the private sector
as a service provider. These are likely to be implemented over several years, requiring constant effort to
generate interest of the end-user, including through targeted awareness and communications campaigns.
These initiatives could also be structured as large-scale programs, for instance, a national green
buildings program, a CSA value chain program, or a bulk procurement program for energy/water efficient
equipment. Priority investment areas include: (i) demand-side EE improvement and deployment of smart
meters across public, industrial, commercial and residential sectors. (ii) Improved water management,
through reducing illegal abstraction of water on and off-farm, improved rainwater harvesting, and
reducing water losses on the demand-side; (iii) climate smart agriculture solutions, (iv) increasing the
share of green buildings, particularly public buildings, through rehabilitation and retrofitting, (v) reducing
emissions from vehicles through increased adoption of electric cars and renewal of truck fleets.

70
Reinforcing Egypt-Jordan interconnection project is identified as a key pan Arab grid interconnection project, as depicted in the World Bank’s 2021 Re-
port for the The Value of Trade and Regional Investments in The Pan-Arab Electricity Market:Integrating Power Systems and Building Economies, available
at https://openknowledge.worldbank.org/handle/10986/36614

43
Country Climate and Development Report: Jordan
Using MFMoD, Scenario 4 was modeled, focusing on the economic impact of priority investment plans for
climate-responsive development across key sectors: transport, energy, water, urban areas, and agriculture.
This scenario did not include climate change damage functions or adaptation mitigation plans per se, nor the
benefits of such investments. Key assumptions used in this scenario are found in Appendix.

Table 9. Jordan: Indicative additional investment needs related to climate change.

Investments (in US$ million) Total 2023-2030

Total Investment $9,505.1
o/w Public Investment (including Grants) $3,521.5
o/w Grants $1,901.0
Private Investment $5,983.6

Those interventions, described in Chapter 3, are expected to yield a broad range of economic benefits over
the next 5–10 years, including those summarized below:
Interventions under Water-Energy-Agriculture and Food nexus:
a. Increased financial sustainability of the water and energy sectors to ensure continued service provision,
appropriate system maintenance, operational efficiency and to avoid continued debt accumulation. The
proposed measures would leverage Jordan’s strengths and regional synergies to adapt to increasing
water scarcity;
b. Reduced need for additional electricity generation, particularly to cover peak hour requirements and
provide green options for variable load energy generation to cover peak demand;
c. Increased energy efficiency in the water sector is expected to save 261.8 GWh/a translating to 35 MJD
per year in savings71;
d. The pumped hydro storage sector is expected to save 277.2 GWh/a translating to 5.5 MJD per year72
in savings;
e. Strategic integration of renewable energy into the water sector is expected to save 222.9 GWh/a
translating to 25.6 MJD per year73;
f. The energy efficiency domain is a promising area for creating more and better jobs, as further discussed
in Section 4.3. The targeted promotion of energy efficiency measures in highly subsidized segments, such
as low-income consumers, would help reduce their energy bills;
g. Increasing productivity of agriculture sector interventions is expected to have a significant growth
impact. In the highlands, where farmers exclusively use groundwater for irrigation in a significant overdraft,
the water savings realized through the proposed efficiency measures (approximately 100 –115 MCM)
would be distributed within the irrigated system to fill the existing deficit. The benefit will be increased
productivity and reduced over-draft of the critical longer-term groundwater reserves, equating to about
US$200–230 million at the current marginal cost of supplying water. In the Jordan valley, an additional
30 MCM of freshwater resources could be diverted from agricultural to other users through substitution
with treated wastewater, representing about 10 percent of the proposed volume of the AAC;
h. Shifting towards less water-intensive crops and scaling-up vegetable covers and irrigation technology
can also help Jordan to unlock its US$ 1 billion agricultural export potential, including high-value
vegetables, with large positive effects on job creation;
i. Scaling-up irrigation technology can additionally lead to job creation for local input suppliers and
related services and advisory. These interventions will support rural livelihoods and protect employment,
particularly for poor herders and farmers engaged in rainfed agriculture.

71
World Bank Calculations
72
World Bank Calculations
73
World Bank Calculations

44
Country Climate and Development Report: Jordan
Interventions towards low-carbon and resilient urban development:
a. Improved access to jobs and economic opportunities in Western Amman, where 86 percent of
business centers and 78 percent of shopping centers in GAM will be located within 2km of a BRT station;
b. If, by 2030, Jordan’s EV fleet reaches a share of 8.3 percent of the country’s total vehicle fleet, 74,75
then average annual CO2 emissions are expected to be 241,000 tons lower;
c. Limiting urban sprawl and fragmentation will have significant benefits in terms of limiting encroachment
on agricultural lands;
d. A debt management program for GAM will ensure debt service remains within sustainable limits, e.g.,
15 percent of operating revenues.
The total amount anticipated as investment needs is approximately US$9.5 billion, spread over eight years
(2030 horizon) with different annual implementation schedules, as estimated by the CCDR team. For this
scenario, the modeling assumption is that these investments are productive capital investments. There is
no explicitly provided benefit in terms of increasing productivity or efficiency in the model. The annualized
investment path and financing structure is aggregated from the multi-sectoral major infrastructure investments
(single site), dispersed infrastructure Investment (multi-site), and demand-side projects until 2030, with the
amounts treated as real 2020 US$. A high-level estimate of investments and financing sources is summarized
in Table 8. The public investment includes the government’s revenues, funding from bilateral sources,
development financing institutions, and global climate-related funding sources. This includes concessional
loans but does not include grants, which may be available from public or private sources. Private investment
covers financing foreign and domestic investment, including financial institutions.
Investments in infrastructure raise overall economic activity over time. They boost real GDP growth by over
1 percentage point above the baseline as the investments build up the productive capital stock for the
economy, adding to the economy’s production capacity.76 The additional investments represent around 23
percent of GDP in 2020 and are spread over eight years. They represent about 2.3 percent of GDP per annum
of additional investment. Between 2012 and 2018, Jordan attracted foreign capital of around 5 percent of
GDP per year to fill financing needs other than debt, although this trend is now slowing down.
However, the share of government financing for the additional investments increases macroeconomic risks
and access to concessional funds is essential. Government financing, including grants, would be about 37
percent of the total, with the remaining 63 percent provided by private investments. While public financing
would initially cause a deviation of over 11 percentage points by 2040 of the public debt/GDP ratio, this
deviation would slightly decrease to less than 11 percentage points by 2050 as the additional investments
complete their cycle and some increase of real GDP growth has materialized. The increased public borrowing
causes an increase in borrowing costs (sovereign risk premium), as debt accumulates faster than the
economy, which furthermore induces crowding out of private investment. In addition, the government’s ability
to mobilize domestic savings to finance its share could prove challenging given the sovereign’s already large
baseline gross financing needs. This difficulty would be somewhat attenuated by the expected 54 percent
share of grant in public financing. Realistically, additional investments related to climate change would still
need to keep track of investment trends in Jordan to avoid extreme results from the perspective of economy-
wide impacts and financing sources. Finally, the increased investment plans, with their private and public
components, come at the cost of contracting private and public consumption (as a share of GDP) compared
to the baseline.
Mobilizing supplementary flows of private investment, foreign and domestic, would require Jordan to
implement reforms to achieve noticeable increases in its attractiveness as a destination for foreign capital
compared to the rest of the world. Short of that, capital mobilization could involve prohibitive interest rate
levels for Jordan, especially given the already elevated starting and projected debt-to-GDP ratios. The foreign-
domestic financing mix for additional investments is furthermore sensitive to recent and ongoing financing

74
Based on the Scoping Model developed under the forthcoming World Bank Economics of Electric Mobility Flagship Report (Jordan Country Snapshot).
75
Based on a target that 30% of new car and bus sales are EVs by 2030 and 72% of new 2-wheeler sales are EVs by 2030. This is a global target that
has been set by many countries around the globe.
76
This scenario does not incorporate benefits from the investments through the identified possible climate change interventions. A more complete story
would emerge if investments were accompanied by quantified benefits directly linked to resolving and/or alleviating the biophysical damages that moti-
vated them in the first place. Neither adaptation nor mitigation impacts can be formulated yet without quantified benefits.

45
Country Climate and Development Report: Jordan
features. Jordan’s climate action plans heavily depend on external funding, as described in Chapter 2.

4.2.2. Recommendations
The following recommendations have been identified to scale up financing for climate-responsive activities in
Jordan. Implementing these recommendations will establish the enabling environment for increasing private
sector participation and attracting new funding sources. Recommendations are based on consultations
with relevant government agencies, surveys, discussions with the private sector, and broader stakeholder
engagement.

Improving government practices for efficiency and impact

Utilize PIM/PPP policy and legal framework and its implementation tools such as the National Registry of
Investment Projects (NRIP) to develop a robust climate responsive capital investment pipeline and engage
development partners and the private sector in mobilizing finance for climate action. Climate actions are
rarely large stand-alone projects. Most are a combination of policies and projects, some of which are climate
responsive by nature, and most can be designed to be climate responsive. The PIM/PPP policy and legal
framework should be enforced to reflect the government climate change strategic priorities and objectives in
the selection and prioritization of projects, including by using the MRV framework for project appraisal.
Leverage available government resources to overcome the issue of competing priorities and to attract new
sources. National-level Climate and Nature conservation Key Performance Indicators (KPIs) can be defined
to incentivize non-debt KPI budget support and debt instruments linked to KPIs that create additional fiscal
space for financing. PIM indicators can be utilized to prepare a project portfolio, which can tap into growing
demand from development partners and Socially Responsible investors for the issuance of ‘use of proceeds’
green bonds. The national-level KPIs can also be used to issue Sustainability-linked Bonds (SLBs), designed
to promote sustainability while providing general-use liquidity to the issuer. Ecological criteria could be
introduced to existing intergovernmental fiscal transfer systems: Ecological Fiscal Transfers (EFTs77). EFTs
are a type of intergovernmental fiscal transfer that, based on pre-defined KPIs, compensates governorates or
municipalities for ecological services and conservation efforts. Implementing EFTs will require strengthening
local government’s capacity to plan and prepare capital investment, utilize the existing formula for fiscal
transfers and enhance it further.
Design and pilot innovative government support mechanisms to strengthen the bankability of PPP projects.
Subject to strengthened supervisory framework and improved public investment management, scale up
SSIF’s and, more broadly, SOEs’ role in financing green infrastructure and climate-responsive projects.
There is increasing interest and an emerging pipeline of climate-responsive PPPs in Jordan. The development
and implementation of these projects have been slow as they face evolving institutional structures and
capacities, fiscal constraints, and uncertainties common to projects that introduce new technologies or are
not revenue-generating (self-sustaining). Innovative government support mechanisms such as a viability gap
and guarantee fund can enhance the affordability and bankability of climate-responsive projects. The Social
Security Investment Fund (SSIF) is well-capitalized, and its resources could finance green infrastructure and
projects. Also, since SOEs finance nearly one-third of public investment, it is important to strengthen their
financial and operational governance to promote climate-responsive investments.
Adopt green procurement and performance contracting practices and strengthen national quality
infrastructure to encourage supply chain greening for goods and services. Government agencies spend yearly
on new construction, rehabilitation, operation, and maintenance projects. Green procurement enables the
utilization of higher quality, greater efficiency, or more durable materials and techniques and could gradually
transform the stock of public assets. This would reduce utility bills (water, energy), improve productivity, and
encourage the private sector. The government can set the example for Jordan’s corporate sector to adopt
green supply chain practices and support the SME sector in transforming its business practices. Immediate
actions include adopting green procurement practices, new contracting approaches (performance-based
contracts, leasing), new financing instruments (land value capture, asset refinance), and strengthening the
quality infrastructure for improved product/equipment standards. Each of these helps improve the efficiency

77
Experiences with EFTs have been captured in other regions. See ‘Fiscal Foundations for Decarbonization: Carbon Charges in Brazil’ (World Bank 2021)
for further information.

46
Country Climate and Development Report: Jordan
of available funding and resources, representing the convergence of mitigation, adaptation, and resilience
priorities.
Integrate climate criteria into existing and upcoming private sector development programs and strategies,
such as FDI-related strategic plans, export development (e.g., new National Export Strategy), access to
finance initiatives, innovation policy and entrepreneurship (e.g., amending the National Entrepreneurship
Policy) to drive existing and new firms and industries to adapt their business models and technologies.
Climate considerations could also be mainstreamed into the new Financial Inclusion Strategy currently being
prepared.
Operationalize the climate finance governance system to strengthen coordination across government,
private sector, financial sector, and the general public on climate action. Doing so will enhance the role of
the National Climate Change Committee and the goals of the Climate Change By-Law to facilitate effective
dialogue and actions. The system would enable stronger coordination between government ministries and
the private sector through relevant line ministries.as well as institutions like the Central Bank of Jordan and
the Chambers of Commerce. This can address the need for a ‘one window/platform’ on climate change and
a green economy for the private sector.

Improving fiscal discipline, budgeting, and transparency

Ensure traceability of climate action strategies and plans to the medium-term fiscal framework. While
Jordan is yet to strengthen its fiscal policy planning capacity further, the main climate change actions
articulated in the Green Growth National Action Plan, with the bulk of the climate change actions in priority
sectors, are fully costed. These costs are reflected in the annual sector ceilings. Beyond the Green Growth
National Action Plan, the climate change strategic framework is costed mainly for capital expenditure, not for
all revenue and expenditure policies.
Strengthen the management of financial and non-financial assets and liabilities to reduce emissions,
promote adaptation, and build resilience. The GoJ reports on a cash basis IPSAS-compliant accounting
framework. Most government financial assets and liabilities are accounted for in the notes to financial
statements and debt reports but not in a consolidated annual balance sheet. Records on non-financial assets
are decentralized, and existing registries are yet to be valued uniformly and consolidated. Furthermore, SOEs
need to report on their climate-related expenditures for the central Government to assess alignment with the
country’s national climate change priorities.

Strengthening the financial sector to mobilize private investment

Develop and implement the CBJ’s Strategy for Greening the Financial Sector, which will help to increase
financial sector resilience to climate risks and strengthen the enabling environment for the financial sector
to contribute to mobilizing climate finance. The CBJ’s Green Finance Strategy for greening the financial
sector and broader engagements for developing green capital market tools should become part of national-
level climate finance efforts. The CBJ, together with the financial sector participants, should implement
a wide array of actions to ensure the financial sector becomes climate-responsive, contributes to green
finance mobilization, and addresses climate-related financial risks. The first stepping-stone is to conduct
a comprehensive climate-risk assessment for the financial sector in Jordan. The assessment will require
strengthening the data collection to quantify physical and transition risks and use these results as input for
further steps in greening the financial sector.
Support active consultations between the private and financial sectors to align expectations and vision for
greening the financial sector in Jordan. Cross-cutting efforts should be spent on capacity building for the
CBJ and financial sector participants to ensure sustainability and successful implementation of the CBJ’s
strategy. CBJ should more actively engage in a broader national effort in developing national green taxonomy,
mobilizing climate finance, expanding the green bonds market with targeted capacity building, and creating
the supporting market infrastructure for investors.
The lack of a national classification system of climate-responsive or sustainability-linked activities, i.e.,
national taxonomy, was highlighted by financial sector stakeholders as a significant gap. A national taxonomy
would help level the playing field and add consistency to how financial institutions classify different economic
activities and the respective borrowers or loans; it would also help companies identify if their activities or
projects qualify for green finance. This taxonomy could draw on international experience and reflect Jordan’s
local circumstances. The current draft instructions being prepared under the Climate Change Regulation No.

47
Country Climate and Development Report: Jordan
79 (2019) to provide definitions for climate-responsive capital expenditure could be taken as a starting point
to be leveraged into a national taxonomy. If there is no willingness to adopt a national taxonomy, CBJ could
develop a green/sustainability taxonomy for the financial sector to progress in its mandate of assessing
climate-related vulnerabilities and potential systemic risks. Adopting a green taxonomy is crucial to deepen
the green finance market, increase green lending, and increase credibility.
Accelerate development of disaster risk finance products. This work would directly support the implementation
of the Jordan National Natural Disaster Risk Reduction Strategy. It would require performing a comprehensive
diagnostic to identify actions that would help develop or enter into climate and disaster risk financing
mechanisms that best fit Jordan’s needs. Moreover, the broader insurance market development actions
should integrate the objective of developing disaster risk insurance products to protect people, businesses,
and the state against financial shocks caused by natural disasters.
Expand the scope of capital market development efforts to include green finance instruments and align it
with the national debt management framework. This should include an action plan with short-, medium-,
and long-term measures for developing green finance instruments, especially for longer tenors. This will
ensure issuance of green or other labeled bonds is an integral part of broader debt management. Targeted
development efforts could help capital markets expand and diversify, complementing concessional financing
sources. With concerted efforts to advance capital market development, Jordan could take advantage of
various green finance instruments, including green loans, green bonds and others.

Strategic partnerships for engaging the private sector

Implement targeted awareness-raising measures for the private sector. For private sector actors to dedicate
time and resources to operating in a more climate-friendly way, there has to be a clear business case
demonstrating the payoff of these actions, especially since the upfront investment cost may be high. Relevant
private sector bodies can develop sector-level cost-benefit analyses with concrete quantitative estimates,
provide examples of existing businesses that benefitted from green investments, and provide information on
the benefits of specific climate-responsive solutions for firms across sectors.
Identify opportunities for international technology transfers and the development of new financing
instruments. Climate action and green financing should incentivize SMEs to join the formal economy.
Industry segments can engage with the global community and bilateral trade partners in identifying clean
technology solutions, new opportunities for industry-segments technology transfer, knowledge sharing, and
development of new financing and risk-sharing instruments. Targeted public-private partnership programs
could encourage market linkages and coaching/mentoring connections for greening supply chains between
large enterprises and MSMEs. It is important to leverage the applied research sector in enhancing private
sector competitiveness through developing and applying innovative climate-smart technologies. The high
level of informality, information barriers, and lack of strong management systems are significant constraints in
tapping green financing for smaller companies. There are ongoing programs in Jordan focused on supporting
SMEs in increasing their management and business capabilities, without which it is difficult to implement
effective company-level climate-responsive activities.
Foster green entrepreneurship, including the facilitation of local service providers and local start-ups with
technology and service solutions, to build on the existing market opportunities. Given the large numbers of
SMEs and their relatively small environmental impact, such green entrepreneur initiatives should be based
on providing information rather than resource-intensive support. The exception may be financial support to
green knowledge-based start-ups, which may need to draw on specialized investors and technical support
from established digital start-ups.

4.3. Creating inclusive, climate-responsive jobs and skills

4.3.1. Jordan’s long-standing employment challenges
Without addressing underlying structural issues in the labor market, Jordan would be ill-equipped to
mitigate the potentially negative impacts of climate change on workers. A key feature of the Jordanian labor
market is its high level of segmentation. Existing labor market segmentation has many contributing factors,
including certain restrictive labor policies, government hiring practices, social norms, misalignment between
job seekers’ skills and expectations, and private employers’ demands. Jordan’s job segmentation patterns
reflect limited dynamism in the private SME sector, where firms struggle to enter, grow, compete and create

48
Country Climate and Development Report: Jordan
jobs. This context makes it difficult to stimulate the labor market and mobility across work status categories
and sectors. Data from the Jordan Strategy Forum also indicate labor productivity has been falling since
2010, in contrast to positive productivity trends in Egypt and Morocco.78
• The public sector plays a major role in Jordan’s labor market, where civil service employment accounts for
24 percent of total employment and 58 percent of all formal jobs. Government is the primary employer
of Jordanians, concentrated in public administration, followed by education and health. Higher education
workers are more likely to work in the public sector.
• Few Jordanians work in the agriculture and construction sectors, with poorly remunerated, unskilled jobs
filled by foreign workers. In 2017, agricultural workers were primarily Egyptians (73 percent) and Syrian
refugees.79
• Informality is widespread among non-Jordanian workers and in sectors dominated by non-Jordanians.80 It
is also increasingly affecting the entire labor force. Panel data81 reveals that the overall share of informal
workers rose from 44 percent to 58 percent between 2010 and 2016. Even among employed tertiary
graduates, the share not covered by social security rose from a quarter to over a third in the six years of
observation.82
The dominance of the public sector squeezes private sector growth and job creation. Jobs in private services
are ubiquitous but offer relatively poor compensation, require low skill levels, and employ a high share of
foreign labor. Productivity and job quality gaps contribute to increased marginalization of Jordanian youth,
reflected by high unemployment and other issues. Although the private sector generates jobs, most are low-
wage, low-skill, and provide no stability or social security coverage. Migrant workers are willing to take these
low-quality jobs, contributing to a vicious cycle of widening employment gaps.
The agriculture sector provides essential employment to some of Jordan’s poorest households. Forty
percent of agriculture sector households are considered poor.83 Non-Jordanians characteristically hold
agriculture jobs. Much of the work is low-paid, informal, seasonal, and located in remote areas. Agriculture
wages are very low, and mostly lack non-wage benefits such as social security, making them informal.84
Among Jordanian women working in farming, most are engaged in family livestock and crop production rather
than waged employment.
Most construction workers are informal wage employees with extremely low levels of education; three-
quarters of construction workers have primary education or less, similar to levels observed in agriculture
(2019 LFS data). Whereas in many countries the returns to construction sector work are relatively high, given
the low levels of education required, construction wages in Jordan are meager, averaging JD266 per month
(LFS 2019)., 7 percent lower than the average commerce sector wage and only 15 percent higher than
waged earnings in agriculture
Climate change will have profound negative implications for employment, especially for vulnerable workers.
Yet this bleak future scenario is not inevitable. Without climate action, climate change could worsen some
of the long-standing issues in Jordan’s labor market. Yet several climate actions could minimize negative
consequences and advance Jordan’s employment goals while meeting international commitments.

78
A similar trend is reflected in Jordan’s Economic Complexity Index since the 1970s. According to the Economic Complexity theory, economic complexity
is defined as a measure of the accumulated productive knowledge of a country as reflected in the complexity of the goods it manufactures. Economic
complexity is measured by evaluating the diversification and sophistication of a country’s basket of manufactured goods (for details, see Jordan Strategy
Forum (2017).
79
WANA (fn19)
80
See Jordan National Social Protection Strategy background papers, and ILO reports. See also WANA report
81
The Jordan Labor Market Panel Survey was carried out by the Economic Research Forum in 2010 and 2016. Jordan’s LFS data does not capture
changes over time at the individual level.
82
Although the law does not require employers to provide social security to day laborers or agriculture workers, these groups account for only a very
small share of workers in informal employment. For further discussion on working conditions, see Razzaz (2017).
83
Jordan (2020) Green Growth National Action Plan 2021–2025 Agriculture Sector.
84
By work status and residency status, informality shares of agriculture employment are as follows: 93 percent of Jordanian wage employees; 98 percent
of non-Jordanian wage employees; 77 percent of Jordanian own-account workers; 82 percent of non-Jordanian own-account workers; 56 percent of
Jordanian employers; 17 percent of non-Jordanian employers; 100 percent of Jordanian contributing family workers (by definition); and 100 percent of
non-Jordanian contributing family workers (by definition). Razzaz et al. (2021) (based on LFS data).

49
Country Climate and Development Report: Jordan
4.3.2. Synergies between climate action and better jobs
While climate change will negatively affect jobs and economic production, climate-change measures can
help offset impacts and generate job opportunities. An approach is needed that joins climate considerations
with economic growth and job creation objectives to identify sectors where such opportunities lie. Climate
action can be conceived in multiple ways, whether through multi-sectoral policies or sector-specific actions
that address some aspect of climate change. Each sectoral entry point will generate employment effects.
Understanding the employment transmission channels of production across different economic sectors in
an economy can be aided using Input-Output tables.
In a recently developed tool that overlays Input-Output data with sectoral emissions data, Aguilar-Restrepo
et al. (2021) create a framework for comparing the relative contributions of each sector to GHG and air
pollutant emissions while considering their respective contributions to GDP and inclusive employment.
The authors applied three filter criteria to rank Jordan’s economic sectors against global averages related to
three desired benefits: creating jobs and economic growth, fostering sustainability, and enhancing inclusion
(Aguilar-Restrepo et al., 2021). This approach can identify sectors with potential job creation and their
emissions intensity and capacity to offer inclusive employment.85 By benchmarking these sector measures
against other countries, it is possible to identify opportunities where Jordan can catch up to other countries.
The analysis below focuses on four sectors of relevance, namely crop production, food processing, tourism,
and transport.86 It estimates the direct and indirect87 employment and GHG emissions associated with US$1
million of sector output. For each sector, the employment and emissions generated by US$1 million worth
of capital investment are compared in two ways: against other sectors in Jordan and the same sector in
other countries. The exercise can identify sectors that can support Jordan’s NDC commitments and help the
economy deliver more good jobs for its population. The results presented below, taken from Aguilar-Restrepo
et al. (2021), focus on job creation potential and GHG emissions.88 These estimates are complemented by a
recent study by the Regional Center for Renewable Energy and Energy Efficiency (RCREEE and GWS 2020)89,
which examines Jordan’s renewable energy and energy efficiency sectors and the associated job impacts.
Jordan’s energy-related sectors and the water sector generate far higher levels of GHG emissions than other
sectors. Oil, gas, electricity, water, and petroleum are highly emitting and generate modest employment levels,
albeit with some variation. Transportation activities are the next highest emitting, with modest-to-moderate
employment effects. Tourism is not highly emitting but generates modest employment. Food processing and
construction, by contrast, generate significant direct and indirect employment per $1 million investment,
partly due to low wages and labor-intensive technologies (Figure 29).
Jordan is progressing in its transition to renewable energy, providing stimulus through the construction
sector. RCREEE and GWS (2020) document a nine-fold increase in Jordan’s renewable energy jobs since
2013. Over 5,000 people in Jordan work in renewable energy, mostly in electricity generation and water
heating.90 In comparison, the electricity sector based on fossil fuels employs about 30,000 workers while
mining, gas distribution and related manufacturing employs another 23,000 workers. Regarding energy
efficiency employment, around 6,000 workers in the construction sector are engaged in upgrades such
as greener lighting and other building improvements. Jordan’s 11,000 sustainable energy jobs compare
favorably to the 8,800 jobs observed in Egypt (2016) and almost 6,500 in Algeria (Lehr and Banning 2018).

85
Note that inclusion in this exercise is defined with respect to female employment share.
86
Note that chemical manufacturing is also assessed but the results are not presented here.
87
Whereas LFS data captures direct employment within each sector, the Input-Output approach captures employment that is indirectly linked with each
sector’s production, providing a more comprehensive count.
88
The paper by Aguilar-Restrepo, Lozano-Gracia and Sanchez (2021) rates countries along three indices: growth (which includes jobs as well as val-
ue-added), sustainability (which includes emissions and air pollutants), and inclusion (which is measured by female employment share). Rather than
presenting the full indices here, we instead focus on employment separately from growth because employment is only indirectly addressed in the growth
index (the value of the index for growth is calculated as the minimum between rank-size distribution of jobs created and the rank size distribution of
value-added).
89
The estimates developed by RCREEE and GWS (2020) are based on Jordan’s 2016 Input Output table, complemented by regional analysis of structur-
al allocations of renewable energy inputs, and informed by expert consultations in Jordan regarding domestic capacity to manufacture renewable energy
inputs.
90
Note that the renewable energy sector is not defined as a distinct sector in standardized industry coding (such as ISIC Rev. 4), and therefore falls
under other sector classifications.

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Country Climate and Development Report: Jordan
Figure 29. Employment and emissions per US$1 million of sectoral investment
25

Education

20

Construction
Financial and Insurance services
Water
Health
15
Employment

Food processing
Oil Gas

Comunication

10 Trade Transport Other

Mining MIneral Metal
Textile, Clothes, Leather Transport Air
Electronic
Machi Public Administration
Warehousing Electricity Transmission
Wood, paper Transport Water
Chemicals, Rubber Petroleum
5 Livestock
Hotel, Restaurant,
Forestry Electricity Other Electricity Gas
Recreation
Crops
LivestockOap
Fishing

0 Dwelling
100 200 300 400 500 600 700 800 900
Emissions

Source: Aguilar-Restrepo, Lozano-Gracia and Sanchez (2021)

The urban concentration of Jordan’s economic activity is emissions-intensive for various reasons but has
also benefited from agglomeration economies in terms of stimulating job creation. Urban development
depends on inefficient road transport. Road transport services create roughly ten direct and indirect jobs for
every US$1 million invested but generate nearly 200 tCO2-eq. because they run primarily on oil and natural
gas (Aguilar-Restrepo et al. 2021). Transport sector workers are disproportionately male Jordanians, with
similar education levels to construction, wholesale, and retail sectors, although transport wages tend to be
higher. The sector absorbs 5 percent of employed workers, and nearly a third are self-employed. The level of
informality is relatively high.
Whereas construction skills feature prominently in renewable energy installation activities and energy
efficiency building upgrades, they are largely comprised of moderate skill levels. This conclusion is consistent
with IRENA and ILO (2021) global estimates that over four-fifths of new jobs generated under an energy
sustainability scenario will require a secondary education or less. The moderate skill and low construction
sector wages limit the sector’s attractiveness to Jordanian workers. Aguilar-Restrepo et al. (2021) estimate
that 16 direct and indirect jobs would be generated by a $1 million investment in construction, although this
high return is partly a function of the sector’s low productivity.
This comparative ranking exercise highlights trade-offs between job creation potential and emissions
impact in several key sectors. While some sectors perform well in terms of employment, and others perform
well in terms of GHG emissions, none perform particularly well in both dimensions. There are therefore
opportunities to help the Jordanian economy decouple growth from emissions, moving it further along its
green economic transformation path.
a. There are opportunities for low-emissions job creation in food processing, further enhancing the job
multiplier effect along the value chain. There is room for upgrading the sector’s skill content, shifting
toward more specialty products, to generate more attractive work opportunities.
b. The crop sector shows mixed prospects, reflected in its low employment multiplier and relatively low
emissions intensity. The rising temperatures and reduced water availability mean some crops will no longer
be viable without significant adaptation, which in turn may displace farm workers, which are some of the
most vulnerable groups. However, some of Jordan’s agriculture products could be replaced to enhance its

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Country Climate and Development Report: Jordan
 untapped export potential.91 While national food security is important, the sector holds limited potential to
create new high-quality jobs unless strategic technological and crop-mix changes are introduced.
c. Tourism is the country’s leading export sector with a significant contribution to GDP; however, its
structure has created fewer overall jobs, particularly inclusive ones, relative to competitor countries. Its
emissions are also higher than comparators.
d. Smarter urbanization and more efficient transport services could bring about significant emissions
reduction. Increasing urbanization reduces the transportation demand and can increase agglomeration
effects.92 Investing in transport sector efficiency through expanded public transportation, better road
infrastructure, and interurban truck transport connectivity can reduce transport costs for firms and
workers. Direct job creation during the construction, operation and maintenance of road infrastructure
investment will likely be concentrated in less skilled occupations.
e. Renewable energy and energy efficiency investments are central to the Government’s climate
commitments, and they are already generating jobs. Yet the potential benefit to Jordan’s economy is under
what it would be if more Jordanians worked in the sector. As a dynamic emerging market, renewable energy
installation services and energy efficiency upgrades will increasingly require a higher mix of occupations,
such as service and market sales workers and professionals, similar to those observed in countries more
advanced in the green energy transition process (IRENA 2017a and 2017b).93 In the near term, growing
demand for renewable energy installation services and energy efficiency upgrades will offer opportunities
for micro firms and independent contractors to enter or expand their operations in response to growing
demand. This is expected to create new market opportunities for existing and new construction design
and services firms that could absorb some of Jordan’s underutilized human capital.

4.3.3. Policy recommendations

Climate impacts will impact workers’ livelihoods, ranging from reduced incomes to complete displacement
from jobs, but Jordan’s highly segmented labor market impedes workers’ capacity to find better jobs.
Households’ ability to respond to income shocks will be impacted. Labor policy instruments to support worker
transition to new jobs are critical but insufficient in the context of Jordan’s market distortions and inadequate
private labor demand. Complementary policies are needed to create the enabling environment to foster
economic diversification and job creation in sustainable activities, including green tech and CSA.
Public policies and programs can narrow the gaps that characterize Jordan’s segmented labor market;
workers can transition more easily by reducing job differences between segments. Policy “nudges” can
target labor supply, for instance through education and skills interventions, or labor demand, such as
through investment incentives to stimulated SME growth. Coordinated labor and complementary policies are
essential to meet the wide-ranging needs and capacities of affected workers and firms in multiple sectors
when transitioning to greener, more sustainable activities. Policies should include (a) short-term passive
labor transition policies, offering temporary income support through the existing social assistance system,
(b) short-term active labor market policies (ALMPs) that help connect workers to potential employers, for
example, through job search assistance, soft skills training, and mobility grants. For these policies to be
impactful, private sector vacancies/unmet demand for Jordanian labor need to be enacted, (c) longer-term
ALMPs that train workers for jobs in sustainable industries and sustainable livelihoods (training in CSA, agri-
entrepreneurship, food processing, energy efficiency retrofitting and solar panel installation, for example), (d)
programs that stimulate private sector labor demand such as through investment (fiscal) incentives, matching
grant or wage subsidy interventions programs to green innovating MSMEs that create jobs, incentives for firm
partnership and mentoring, including through higher education institutions, (e) labor regulations that foster
labor mobility and promote firm agility to create jobs, and (f) longer-term development policies that support

91
Agricultural exports have increased strongly since the late 1990s, reaching US$2 billion in 2015, up by more than 400 percent from its 2000 value.
Some key constraints identified in the World Bank (2017) study “Enabling the Business of Agriculture” are post-harvest losses, poor quality-standards
and insufficient agricultural finance.
92
Cities like Amman will need to shift their growth patterns along all three dimensions—vertical layering, infill development enabled by future economic
productivity, and in some cases horizontal expansion at the city’s edge (like East Amman).
93
Based on international averages estimated by IRENA (2017a) and IRENA (2017b), installation activities primarily use craft occupations (72 percent,
compared to 15 percent professional occupations), whereas the operations and maintenance phase of renewable energy typically requires a more bal-
anced occupational mix (38 percent craft workers, 20 percent professional, 16 percent services and market sales, and 15 percent machine operators).

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Country Climate and Development Report: Jordan
human capital accumulation and labor productivity, including school curriculum reform to build STEM skills,
sustainability knowledge, and entrepreneurship skills.
Climate actions can create new growth opportunities through emerging green industries and environmental
services. Those include climate-related technology design, adaptation, and services, local innovation by
MSMEs to meet changing food or housing needs; low- or high-tech environmental monitoring and services;
adapting infrastructure (energy efficiency building retrofits, solar installation); climate-smart agriculture. New
green industries will require labor inputs across a mix of skills. Some activities can be adopted by existing
workers and firms, such as farm and construction workers whose tasks will shift to greener techniques or
inputs, possibly requiring some on-the-job re-training.
Decentralized renewable energy, solar water heating, biogas capture and reuse in wastewater treatment
plants, water and energy efficiency investments, rainwater harvesting,94 and water-efficient agriculture
emerge as cost-effective approaches to reducing GHG emissions and creating jobs.95 Climate actions in
these categories often have fiscal and financial benefits, saving money from the public budget or generating
a profit due to short payback periods.
Climate actions can create many jobs in renewable energy, but even more in the construction and agri-food
sectors.96 Estimates by RCREEE and GWS (2020) suggest that the number of construction jobs generated
by energy efficiency upgrades to lighting and buildings exceeds the number of jobs in the renewable energy
sector. In the agri-food sector’s case, climate actions may be necessary to maintain jobs lost due to climate
change. Renewable energy and energy efficiency investments and initiatives will principally generate
construction-related work requiring modest upskilling for many workers. However, there will be a demand for
technicians and those with management and other skills. In agriculture and construction, start-ups will have
significant scope to enter new green market niches.
The higher skill level required for many jobs created through climate actions could attract Jordanian workers,
including entrepreneurs. For example, there is significant scope for the entry of new green building firms to
perform energy efficiency audits and retrofits and install rooftop solar, and for new entries in residential solar
water heating and greenhouses. Agri-entrepreneurship in food processing holds potential for new firms to
emerge and exploit new markets, domestic and external. Jordanians will still value adequate compensation,
job security, and social security coverage, which means there may still be a gap between labor demand and
supply if Jordanians are unwilling to take up these new jobs.
Climate actions can be growth- and jobs-generating in Jordan if accompanied by labor policies supporting
supply and demand. Entrepreneurship training and support will facilitate start-ups and furnish the skills
needed for success. The curriculum reform supporting innovative thinking, entrepreneurship, and soft skills
will be a strategic investment in the next generation of graduates seeking good quality employment outside
the public sector. Training in sustainability principles through STEM and climate-change knowledge, and
specifically in green technology applications at the mid and high-skill levels will be essential for meeting the
emerging demand for energy transition, energy efficiency investments, and environmental services.
Climate actions can prioritize vulnerable groups through targeted interventions based on a deeper
understanding of their short- and long-term adaptation needs. These could include geographically marginal
communities affected by ecosystems degradation, such as in the Badia. Public programs such as payments
for environmental services related to land conservation and biodiversity protection can sustain livelihoods in
these remote areas while generating positive environmental outcomes.

94
See FAO (2016) for discussion.
95
IFC (2021) and U.S. Environmental Protection Agency (2018) both conclude that per US$1 million in sector output, decentralized climate actions
(renewable energy and energy efficiency) generate more jobs than centralized renewable energy generation investments.
96
Note that much of the research estimating the level of future job creation based on modeling the pass-through of future investments in renewable
energy to the rest of the economy is based on advanced economies and thus is not directly applicable to Jordan.

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Country Climate and Development Report: Jordan
5. Conclusion and recommendations
The CCDR aligns Jordan’s economic modernization vision with the country’s climate change commitments
toward long-term sustainability. Jordan is a natural resource-scarce and human resource-rich country, with a
small contribution to global GHG emissions but facing an increasingly and severely damaging impact of climate
change. The CCDR adopted a cross-sector nexus approach to identify priority interventions for enhancing
water-energy-food security with adaptation to climate change as the primary climate change co-benefit and
for transforming the urban-transport-energy nexus with mitigation and resilience as the primary climate
change co-benefits. The recommendations on policy measures and investment needs have been prioritized
based on their development benefits, particularly improved resource-use efficiency, reduced fiscal burden,
social inclusion and their level of urgency. These recommendations align with the recently released Vision for
Economic Modernization, as noted in Table 10. The CCDR also presents recommendations based on analyses
of the potential financing sources and approaches to addressing investment needs. All recommendations
seek to align short-term benefits for the Jordanian people with the potential for creating long-term climate-
responsive economic growth and protecting Jordan’s people, economy and natural resources from climate
risks.

Table 10. Summary climate investment needs (2030 horizon)

Climate Investment Needs Climate Change Priorities Economic

CCDR Focus Modernization
(2022-30) (2030-2050) Vision (2022–33)
Reducing fresh water use in agriculture while safeguarding livelihoods
Increasing water
Enhancing Water Boosting system-wide resilience with a focus on drought
productivity; improving
Energy- Food Ensuring the financial sustainability of the water and energy sectors resource-use efficiency
Security in a context of increasing water scarcity
Leveraging mitigation opportunities in the agri-food and water sectors Increasing the share of RE
Greening Integrating green urban-transport planning, reforming public Solutions;
transport, and deploying transit-oriented development. reducing GHG emissions
Urban-Transport-
Energy Nexus Investing in green infrastructure for urban rejuvenation, waste from energy and waste;
management, and circular economy improving resource-use
Facilitate deep penetration of energy efficiency (EE) in all sectors efficiency
Inclusive Passive and active labor market policies
transition for
Labor regulations fostering mobility and firm agility to create jobs
workers Creating green jobs,
Revamped school curricula for green jobs
Creating climate business
Improving government practices for efficiency and impact opportunities,
Improving fiscal discipline, budgeting, and transparency Improving investment in
Unlocking finance resource-use efficiency
for climate action Strengthening the financial sector to mobilize private investment
Enhancing strategic partnerships for engaging the private sector

Note: The color pattern in the right column reflects the degree of focus in the Economic Modernization Vision

5.1. Ensuring climate-responsive economic modernization

Building long-term resilience in Jordanian society is key to reducing recurrent exogenous shocks affecting
people and economic growth. In the past decades, regional conflict, the related refugee crisis, and recurrent
global economic challenges have increased short-termism in planning and policy. As Jordan emerges from
the COVID19 pandemic, the economy now faces the twin problems of rising fuel and food prices brought
on by the war in Ukraine and increasing interest rates designed to tackle inflation. Climate change need
not add to this uncertainty. Shifting to a longer-term time horizon is essential for setting policy goals that
are effective climate actions and socio-economically transformational. Through sound policies, innovation,
entrepreneurship, and citizen engagement, Jordan can attract investment and encourage the behavioral

54
Country Climate and Development Report: Jordan
change necessary to address climate and development challenges.
Jordan is facing high climate change adaptation costs, and financing pressing adaptation is a priority. A
combination of carefully coordinated policies and investments across key sectors will be needed; with private
investments expected to play a significant role. This calls for greater engagement with the private sector on
the climate change agenda and progress in addressing barriers to greater private sector involvement, as
discussed in this CCDR. Mobilizing new and innovative sources of finance could also play an important role.
Several opportunities have been explored in Chapter 4.
The transport, industry, and electricity sectors will lead the way to decarbonization in Jordan. The transport
sector is Jordan’s main consumer of fossil fuels, particularly liquid fuels. Improving public transport to reduce
dependence on passenger vehicles presents the most important opportunity to reduce air pollution and
GHG emissions and create equitable, inclusive, and safe mobility options. The electricity sector is on a low-
carbon pathway, with abundant solar and wind resources. This could allow electric vehicles to reduce to near-
zero GHG emissions. This requires a comprehensive vision, policy, and institutional framework for mobility.
Consultation with the large, essentially export-oriented, industrial sector indicates a strong awareness of the
ramifications of climate change on business. So far, all investment decisions, climate mitigation or adaptation,
were influenced by high energy prices and water scarcity. There remains significant potential to continue the
path towards decarbonization and explore new avenues for investment and export of low-carbon products.
Jordan has a strong foundation of climate policy framework, which can help the country enhance
participation in global climate change dialogue, engage with future carbon markets, create and support
climate action in the country and the region, and build robust and inclusive governance for mainstreaming
climate change in development. The effectiveness of this and all other policies lies in quality, pace, and
perseverance in implementation. This requires strengthening institutional capacity regarding staffing and
expertise, improved government and private sector coordination, and deeper engagement with academia,
civil society, and citizens. Jordan has recently begun preparing the Long-Term Strategy for Low-Carbon and
Climate Resilient Development (2050) as part of the Paris Agreement. This process should create a robust
social dialogue and public engagement toward defining and implementing a ‘Whole-of-Economy’ vision for a
green Jordan.

5.2. Thinking long-term and acting now

The recently launched ten-year Vision for Economic Modernization seeks to unleash Jordan’s economic
potential and improve Jordanians’ quality and standard of living by enhancing services, including education,
health care, transport, and infrastructure. The Vision identifies bolstering innovation and entrepreneurship
and efficiency and productivity as key to sustainable growth. The findings in the CCDR align with this new
economic vision and recognizes a renewed urgency for action. Status quo is not an option. Today’s actions to
address climate change and development challenges will benefit the Jordanian people, natural resources, and
the economy while addressing pressing adaptation needs across sectors and generations. The government’s
commitment to the climate change agenda and sustainable economic growth is widely acknowledged; this
must translate into credible progress towards faster implementation.
Encouragement of innovation and entrepreneurship, a key pillar of the new Vision for Economic
Modernization, must apply to innovation services to promote resource-use efficiency and new technology
applications in energy, agriculture, and industry. It is common for the discussion in these areas to focus on
Information Technology (IT) and IT Enabled Services (ITeS), linked with the global market. However, there
is a significant opportunity to encourage youth engagement in revitalizing sectors and services crucial for
sustainable growth. Jordan has a dynamic community of entrepreneurs and enterprises interested in green
business opportunities. Local adaptation of technology solutions and service industry business models
across sectors could help improve productivity and efficiency. Technology examples include, solar heating
and cooling, agricultural technologies such as aeroponics, aquaponics, hydroponics, and electric mobility.
Service industry examples include energy services company (ESCO), potentially for energy management in
facilities, and provision of heating/cooling as service.

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Country Climate and Development Report: Jordan
Human capital is Jordan’s greatest asset, creating avenues to address behavior change and youth
employment. Creating more jobs faster is essential, especially to gainfully engage youth and women in the
economy and society. The current challenges with youth employment and the very low rate of participation of
Jordanian women in the labor force are fundamental issues that require comprehensive labor market reform.
As discussed in Chapter 4, climate actions can create new employment opportunities across sectors, skill
levels, and urban and rural areas. Proactive measures to address climate change offer an opportunity to
begin the long-term process of structural change in the job market, creating new opportunities and building
the labor force of the future.
Building a strong foundation for inclusive and sustainable growth will reduce future uncertainties due
to climate change. Accelerated progress on structural reforms, enhancing institutional capacity, and
strengthening policy enforcement are critical elements for building private sector confidence, and encouraging
growth and investments. The recommendations from this CCDR should be considered as the government
implements the ongoing reform program and designs the roadmap for implementing the new Vision for
Economic Modernization.

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Country Climate and Development Report: Jordan
Appendix–The Macro-Fiscal Model for Climate Change
(MFMod-CC)
Brief description of MFMod-CC
MFMOD is a macrostructural standalone model frequently used by the World Bank for economic monitoring
products, medium-term growth, and macroeconomic forecasts. This dynamic model features intertemporal
consumption utility optimization and firm expenditure minimization; sticky prices and wages; distinguishes
consumer and producer prices; detailed fiscal and external balances; sectoral VA; international linkages
through trade, commodities, remittances, and tourism; and is based on time series with annual data. The
model contains several factors that disturb the economic equilibrium, including tax wages, investment
adjustment costs, short-run prices, and wage stickiness. Key features include a focus on price levels, inflation,
exchange rates, monetary policy’s role—using interest rate as policy instrument—costly debt accumulation,
and exogenous total factor productivity (TFP).
The MFMod-CC extends the core MFMod macrostructural model, including a standard set of variables and
equations necessary for forecasting, economic policy, and budgetary planning analyses typically conducted
by central ministries. A detailed technical description of MFMod is provided in Burns et al. (2019), while
Burns et al. (2021) describe some of the climate change extensions included in the MFMod-CC.
The long-run behavior of the model follows a neo-classical framework. The equations’ functional forms are
derived from economic theory, where household tends to optimize consumption decisions to maximize
utility, and firms minimize costs by adjusting their use of factor inputs. Although not fully micro-consistent
in the way that CGE or DSGE models are, MFMod-CC is a general equilibrium model that covers the entire
macroeconomy by linking various accounts through a set of identities and behavioral equations. While the
functional forms of equations are similar across countries, parameters at the country level are country-
specific, being econometrically estimated or calibrated to the specific features of the economy. An error-
correction formulation for most behavioral equations means that the model’s speed of adjustment (a
reflection of underlining rigidities) is country-specific and data-driven. Formulated in this way, external and
domestic shocks (including climate and policy shocks) will immediately affect the model’s long-run equilibrium
state. However, adjusting to that new equilibrium will be gradual, reflecting labor market, product and capital
market rigidities.
The model’s climate extensions draw from existing literature to introduce emissions and pollution modules,
damage functions from higher temperatures, pollution and flooding, and an adaptation module to analyze the
economic benefits of adaptation investments, notably in the water sector. The extended model incorporates
the following features:
• A more disaggregated energy sector, integrated into the model’s production and consumption sides;
• An emissions and pollution module was added to track and convert emissions from each form of energy
into CO2 equivalents. Particulate pollution from the burning of different hydrocarbons and their impacts
on human health, labor productivity, and health-care expenditures are also tracked;
• Damage functions were introduced to capture how climate change affects the economy. In the standard
model, higher temperatures aggregate labor and agricultural productivity following estimates from Roson
and Sartori (2016). Changes in rainfall levels and patterns are also tracked as the increased and severity
of flooding and the damages inflicted on the capital stock;
• Adaptation investment functions were introduced to explain how investments to increase the economy’s
climate resilience can reduce damages that might otherwise occur. The benefits of avoiding an increase
in water scarcity were calibrated to the damages presented in Taheripour et al. (2020), which estimated
the economic impacts of increased water scarcity in the Middle East, including Jordan.

Scenarios’ assumptions and results

Four scenarios are produced, independent from each other, to simulate their effects on the growth and
macroeconomic benchmark. The scenarios’ modeling follows a clear structure that allows for simple and

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Country Climate and Development Report: Jordan
reasonable comparisons of the influence of climate challenges and policy responses. The modeling sets a
benchmark at the outset that purely reflects the Jordanian economy’s growth and macroeconomic features.
The scenarios progressively simulate the impacts of (a) climate change damages on the economy, excluding
water scarcity effects, (b) water scarcity scenarios based on the Water in the Balance report, (c) a combination
of high and low costs interventions for desalination and conveyance, and non-revenue water reduction,
and (d) priority infrastructure investments additional to the investment plans reflected in the growth and
macroeconomic benchmark. These scenarios can be treated independently from each other. Through this
approach, it is possible to isolate each scenario’s influence on the economy and derive trade-offs.
Scenario results are presented in CCDR standardized tables, capturing deviations from the growth and
macroeconomic benchmark. They are interpreted accordingly in the CCDR’s main text. For instance, a Real
GDP result of -0.7 for 2050 indicates that, by 2050, there will be a -0.7 percent decline in the real GDP
average growth rate compared to that projected in the baseline scenario for 2050. It indicates a drop in the
growth rate from the baseline resulting from the changes under consideration, and not that the average
growth rate is -0.7 percent.

The benchmark growth and macroeconomic baseline

A pure growth and macroeconomic benchmark denotes business-as-usual government expenditure,
productivity growth, and no further climate change impacts or mitigation/adaptation interventions. Therefore,
there is no climate change action in this baseline, and it does not include large projects to increase water
supply, such as the AAC. The AAC and other interventions play key roles in the scenarios simulated below,
reflecting the impact of investments and shocks on the benchmark, as presented below.

Assumptions:
Long-term growth in MFMod is determined by capital accumulation, and labor force and productivity growth.
In the baseline, TFP growth is assumed to continue over the forecast period at the same rate as over the most
recent 15-year period. Labor force growth is assumed to grow with the working-age population as forecast by
the United Nations (https://population.un.org/wpp/). Capital accumulation proceeds in line with investment
behavior, which in turn is determined by productivity and labor force growth and factors such as inflation and
the business climate, which determine the cost of capital. While these items are endogenous in the model,
they are assumed to be constant in the baseline. Under simulation, long-term growth will respond to changes
in variables such as interest rates and inflation.
Employment in MFMod-CC for Jordan is not broken down by sectors. The modeling explicitly allows for
unemployment and non-participation. In the baseline, the structural unemployment rate is assumed to be
a constant share of the labor force, and the labor force a constant share of the working-age population.
No distinction is made between foreign, domestic, or refugee workers. Under simulation, when demand
is over (less than) supply, the unemployment rate will temporarily fall (rise) below (above) its equilibrium
rate. The speed of adjustment back to equilibrium reflects rigidities in the labor market and is estimated
econometrically, based on historical time series data.
Regarding water scarcity and the AAC, the growth and macroeconomic benchmark assumes a counterfactual
business-as-usual scenario without any climate change and, therefore, no additional water scarcity. This
baseline assumes no additional investment beyond what would naturally be required to maintain the existing
capital stock. Bringing the AAC fully to the baseline can be done, but all the scenarios must be redone.
Key implications would be higher debt to GDP rates than in the current baseline, slower growth (due to
higher debt), and logically reduced damages since much of the increase in water shortage would have been
eliminated by the AAC.
Specific assumptions are as follows:
• Time horizon: 2020–2050.
• Time series incorporate historical data and extrapolate current economic trends through a slow adjustment
path. The sectoral composition shifts gradually towards Services, while Industry and Agriculture slightly
reduce their contributions to the overall economy, reflecting their gradually slowing productivity.
• Short- to medium-term macroeconomic projections: headline macroeconomic framework consistent
with IMF’s 3rd Review completed in October 2021, running up to 2026.

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Country Climate and Development Report: Jordan
 • Commodity prices projections are from the World Bank’s Prospects Group, until 2035.
• External demand aggregates are from the latest World Bank’s Macro Poverty Outlook up to 2024.
• Longer-run projections are determined by model dynamics.

Table A1. Jordan- baseline benchmark for long-term growth

Supply side (%annual growth rates) Sectoral decomposition (% of GDP at market prices)
TFP Capital stock Potential GDP Agriculture Industry Services Net taxes
Historical trends
1980-2020 0.68 3.64 3.89 5.44 24.97 61.32 8.27
2010-2020 -0.52 2.84 2.65 4.60 24.77 57.68 12.95
Baseline
Adjusted baseline
2050 0.32 3.09 2.64 3.90 19.00 67.60 9.50
Note: “adjusted baseline” takes the Jordan CE team’s assumption on the sectoral shares in 2050
Source: World Bank staff and IMF’s 3rd Review completed in October 2021.

Scenario 1: Assessing the impact of heat on agriculture yield and labor productivity
This scenario simulates the effects of reduced labor productivity due to heat, flooding damage, and rising
temperatures on agricultural yields97 in RCP2.6, RCP4.5, and RCP8.5 on the growth and macroeconomic
benchmark. The results reflect the combination of the three types of damage for each RCP. For instance,
the reported results for RCP 8.5 reflect the combination of damage functions in agricultural yields due to
heat, labor productivity due to heat, and flooding. This scenario does not include a further reduction in water
availability beyond current levels of water scarcity.

Assumptions:
• Heat and labor productivity: estimated workdays lost for outside workers taken from the report Climate
Change and Labour: Impacts of Heat in the Workplace (UNDP, 2016). Damages are calculated against a
baseline that includes pre-existing temperature increases. As no heat damage data exists for Jordan, the
estimated working hours lost are calibrated to match UNDP estimates for Tunisia. Lost workdays modify
effective labor in the production function: they reduce potential output and labor supply (extensive
margin), reducing consumption and investment. Aggregate supply and demand impact prices, causing
indirect effects on the economy.
• Flooding damage: Flood damages in US$ from the 2015 Global Assessment Report on Disaster risk
reduction (GAR 15). The modeling includes deterministic (expected value losses) and stochastic (drawn
from an empirical distribution) shocks for different RCP scenarios.
• Agricultural yields: Rising temperatures change agricultural productivity against a baseline where no
temperature increases are assumed. The agriculture impact by RCP is aggregated by summing up the
Total Production change between different RCPs to the No-Climate Change baseline by the IMPACT
model (2015 by IFPRI) at the crop- and livestock-level, weighted that specific crop/livestock share of
total agriculture production in 2019 by FAOSTAT (the last historical year). The aggregated impact shows
very small but positive changes in agriculture production for Jordan under RCP 4.5 and RCP 8.5. It is
important to note that the IMPACT modeling has the following limitations: (a) the model incorporates
only precipitation and temperature variability and presumes no changes in groundwater or irrigation
water availability; (b) estimated yield improvements are relative to other local crops and the same crop
globally; (c) the model assumes the adoption of new technologies, e.g., heat-tolerant crop varieties, is
increasing over time, following a logistic adoption function, therefore partially increased yields are due to
technological improvements; (d) the model covers a limited number of value chains, and (e) the IMPACT
model does not adequately incorporate the effect of increased drought frequency and climate change
on the livestock sector—which represents 50 percent of the agriculture sector—due to model and data

97
Only part of the agriculture sector is modeled, in particular a large component of the livestock sector is not modelled

59
Country Climate and Development Report: Jordan
 limitations.
• These findings are consistent with the Water in Balance study (2020), which finds an increase in the
productivity of oil crops, vegetables, and fruit, but a decrease in wheat and coarse grains under increased
temperature. The findings are less positive than the regional MNA estimates (without adaptation) in
the “Climate Change Impacts and Mitigation in the Developing World: An Integrated Assessment of the
Agriculture and Forestry Sectors” paper (2015, World Bank). The modeling connects the aggregated
agricultural output changes for RCP 4.5 and 8.5 to the supply side. The agricultural impact changes
TFP because the same amount of capital and labor under different RCPs produce a different amount
of output compared to the baseline. Since MFMoD estimates whole-economy TFP only, the agriculture
impact is rescaled by the share of real Agriculture Value Added to GDP in the last historical year, 2020.
The agricultural yield damages do not include water scarcity impacts. The IMPACT model assumes that water
continues to be available without constraints during the whole period considered. Water scarcity is, however,
explored in other scenarios results below.
For Jordan, the current selection focus on damages across three climate scenarios:
• RCP 2.6: Damage to labor productivity due to heat, flooding, and a combination of these 2.
• RCP 4.5 and RCP 8.5: Damage to agricultural yields and labor productivity due to heat, flooding, and a
combination of these three factors.
MFMoD for Jordan is extended to include the following climate change features:
The National Income Accounts (NIA)-Production breakdown incorporates agriculture (total), water, energy
(distinguishing electricity and non-electricity), other industries, and services; and an Input-Output mapping to
final and intermediate demand. Jordan authorities produce NIA. On water issues, as in other sectors, standard
procedures indicate that sectoral departments process sectoral information, which is transmitted to the
statistics department and duly cleared. The statistical department processes and integrates the information
in its national accounting statistics. Therefore, the NIA does not contain an independently conducted water
supply and demand analysis.
The energy sector enters the demand and production sides and is further disaggregated by fuel type (coal,
oil, gas, and renewables: hydro, solar, and wind). ‘True prices’ of energy include subsidies.
Results from economic activity and three types are considered: (a) PM2.5 from combustion, affecting
productivity and health expenditure; (b) energy CO2 pollution from combustion, generated by fossil fuels for
electricity and non-electricity; and (c) economy-wide pollution from sectoral activity in agriculture, energy,
industry, and solid waste.
Damages and protection channels are built-in to treat: (a) abrupt, destructive climate events, such as pluvial
flooding that destroys capital stock and requires adaptation, and (b) the gradual long-term impact of higher
temperatures on productivity, impacting labor and agriculture.

Results:
Results are presented according to the CCDR guidance, with interpretations reflected in the main report.

60
Country Climate and Development Report: Jordan
Table A2. Jordan - Impact of heat on growth-macro baseline
Baseline RCP 2.6 RCP 4.5 RCP 8.5

2020 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050

Deviation from Baseline Deviation from Baseline Deviation from Baseline

(Percent)* (Percent)* (Percent)*
Average Growth (%)
Real GDP 2.0 2.7 3.1 3.4 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.2
Real GDP per capita -1.4 2.2 2.0 2.5 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.2

Per Capita Income and Consumption (Constant 2020 USD)*

Real GDP Per Capita 4,289 5,350 6,498 8,345 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.2
Real Household Consumption Per Capita 3,491 5,023 6,522 7,506 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1

Shares in GDP (% of GDP)

Private Consumption 80.5 92.9 99.3 89.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1
Government Consumption 17.9 17.2 14.9 13.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Private Investment 14.5 17.2 20.3 22.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Government Investment 2.6 3.4 3.5 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Exports -16.8 -31.9 -39.1 -29.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1

Sectoral shares in GDP (% of GDP)

Agriculture 5.5 5.1 4.7 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Industry 27.5 25.3 23.1 21.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Services 67.0 69.6 72.2 74.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

GDP expenditure components changes in levels (as % of baseline)

Private Consumption 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1
Government Consumption 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1
Private Investment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Government Investment 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 -0.1
Exports 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.2
Imports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
GDP sector changes in levels (as % of baseline)
Agriculture 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.2
Industry 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.2
Services 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.2
Real wages 5394.3 8503.6 9592.9 10654.0 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.3

External balance (% of GDP)

Exports, Goods and Services 23.7 37.7 32.6 33.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Imports, Goods and Services 42.2 56.0 65.0 62.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Current Account Balance -8.1 -7.8 -22.6 -19.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1

Fiscal Aggregates (% of GDP)

Fiscal revenue 22.7 23.5 24.3 22.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal expenditure 29.9 30.4 30.4 27.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
- o/w Interest payments 4.2 3.9 3.9 3.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Budget deficit -7.3 -5.3 -5.7 -4.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Public debt 109.0 114.2 111.7 96.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1
- o/w External Public Debt 45.4 36.8 32.4 26.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Emissions
Emissions (Mtons C02) 21.1 17.1 24.2 30.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Emissions per unit of ouput (tons C02) 713.5 444.0 463.2 410.8 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.1 0.2

Impact channels (% of GDP)

Total 0.0 0.0 -0.1 0.0 0.0 0.0 0.0 -0.1 -0.2
-o/w Agriculture n/a n/a n/a 0.1 0.1 0.2 0.1 0.1 0.1
-o/w Labor Productivity (Heat) 0.0 0.0 -0.1 0.0 -0.1 -0.2 -0.1 -0.2 -0.4
-o/w Flooding 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Memorandum Items
Population (Millions) 10.2 10.7 11.9 12.9

* Deviations from baseline are expressed as percent of baseline level for Real GDP Per Capita, Emissions, and Carbon Price. For all other variables deviations from
baseline are expressed as percentage points of GDP in the corresponding scenario less the % of GDP in the baseline scenario. Damages are not additive.

(1) Average annual growth since preceding decade (2010 for the first column)

Source: World Bank staff, using MFMoD – CC for Jordan.

Scenario 2: Impacts of increasingly severe water scarcity

This scenario reproduces the effects of increased water scarcity on real GDP and sectoral performance
from the Water in the Balance report (WiB, 2020). It clarifies the conditions under which these results are
obtained. The WiB report examines the impact on the economy of a 5, 10, and 20 percent increase in water
scarcity in Jordan and finds that the real GDP growth rate would decline by -0.5 to -6.8 percent in the long run
against the baseline. Results depend on the extent of the assumed water scarcity and the specific modeling
assumptions. These effects are significantly larger than the mild effects derived in Scenario 1, based on
climate-related damage functions that do not consider increasing water scarcity. The review of the results

61
Country Climate and Development Report: Jordan
confirms the importance of water in long-run economic growth for Jordan and the implied trade-offs for its
development path.
This self-standing scenario explores the impact of severe water scarcity on the growth and macroeconomic
benchmark without including other climate change damages. The baseline scenario excludes climate change
and additional water damages beyond those implicit in the historical data. Water-related damages implicit to
the historical data are not identified but will contribute to lower estimates of productivity growth than if those
damages had not occurred.

Assumptions:
MFMod is recalibrated to replicate WiB results; therefore, the assumptions in this scenario are those retained
in the WiB report. This recalibration allows for examining the strengths and implications of those assumptions.
As in the WiB report, it is assumed that there could be a 5, 10, and 20 percent increase in water scarcity in
Jordan, each with distinct impacts on the economy over the long run.
The overall impact of water scarcity increases on real GDP growth was calibrated to reproduce the decline
in average real GDP growth rates compared with the baseline, as in WiB. This was achieved by reducing
agricultural output by an amount consistent with the WiB estimates and reducing total factor productivity in
the rest of the economy by an amount sufficient to reproduce the overall WiB impact.
Government revenues and expenditures, deficits and debts, domestic aggregate demand—investment,
consumption, exports, and imports—and foreign investment were all assumed to react to the decline in GDP
in line with historical behavior as encapsulated in the MFMod model’s econometric equations.
While water availability decreases are a likely outcome of climate change98, the scenarios run in WiB do
not include the full range of damages from climate change and reflect the damages due to increased water
scarcity alone. This feature is replicated in MFMod for this scenario. As a result, Scenario 1, which focuses
on the impact of heat on agriculture yields, labor productivity, and flooding, differs from Scenario 2, which
focuses only on the impact of increased water scarcity.
A fundamental assumption in WiB that explains 87 percent of the negative impact on GDP is that capital and
labor are immobile, though WiB also includes scenarios where capital and labor are allowed to reallocate;
such assumptions are integrated into MFMod.

Results:
Results are presented according to the CCDR guidance, with interpretations reflected in the main report.

Table A3. Jordan - Impact of increasing water scarcity on the benchmark growth-macro baseline.

20% water scarcity 20% water scarcity 20% water scarcity

5% water scarcity - 10% water scarcity - 20% water scarcity-
Baseline + Primary sectoral + Primary + Labor + 100% capital and
Agriculture only Agriculture only Agriculture only
effects capital immobility labor immobility
2020 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050
Deviation from Deviation from Deviation from Deviation from Deviation from Deviation from
Baseline (Percent)* Baseline (Percent)* Baseline (Percent)* Baseline (Percent)* Baseline (Percent)* Baseline (Percent)*
Average Growth (%)
Real GDP 1,0 1,3 1,5 1,7 0,0 -0,1 -0,1 0,0 -0,1 -0,1 -0,1 -0,2 -0,4 -0,3 -0,7 -1,1 -1,1 -2,8 -4,5 -1,7 -4,1 -6,6
Real GDP per capita -0,7 1,1 1,0 1,3 0,0 -0,1 -0,1 0,0 -0,1 -0,1 -0,1 -0,2 -0,4 -0,3 -0,7 -1,1 -1,1 -2,8 -4,5 -1,7 -4,1 -6,6
Per Capita Income and Consumption (Constant 2020 USD)*
Real GDP Per Capita 4.289 5.350 6.498 8.345 0,0 -0,1 -0,1 0,0 -0,1 -0,1 -0,1 -0,2 -0,4 -0,3 -0,7 -1,1 -1,1 -2,8 -4,5 -1,7 -4,1 -6,6
Real Household Consumption
3.491 5.023 6.522 7.506 -0,1 -0,1 -0,1 -0,1 -0,1 -0,2 -0,1 -0,3 -0,5 -0,4 -1,0 -1,7 -1,4 -3,8 -6,4 -2,1 -5,7 -9,5
Per Capita
Shares in GDP (% of GDP)
Private Consumption 80,5 92,9 99,3 89,0 0,0 0,0 0,0 0,0 0,0 -0,1 0,0 -0,1 -0,1 -0,1 -0,3 -0,5 -0,2 -1,0 -1,8 -0,4 -1,6 -2,8
Government Consumption 17,9 17,2 14,9 13,9 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 -0,1 0,0 -0,1 -0,3 0,0 -0,2 -0,4
Private Investment 14,5 17,2 20,3 22,9 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,1 0,2 0,2 0,2 0,3
Government Investment 2,6 3,4 3,5 3,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 -0,1 -0,2 0,0 -0,1 -0,3
Net Exports -16,8 -31,9 -39,1 -29,9 0,0 0,1 0,1 0,0 0,1 0,1 0,0 0,2 0,3 0,1 0,6 0,8 0,5 2,2 3,3 0,8 3,2 4,8
Sectoral shares in GDP (% of GDP)
Agriculture 5,5 5,1 4,7 4,3 0,0 0,0 0,0 0,0 -0,1 -0,1 -0,1 -0,2 -0,2 -0,1 -0,2 -0,3 -0,2 -0,2 -0,4 -0,2 -0,2 -0,5
Industry 27,5 25,3 23,1 21,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Services 67,0 69,6 72,2 74,7 0,0 0,0 0,0 0,0 0,0 0,1 0,1 0,1 0,2 0,1 0,2 0,2 0,2 0,2 0,4 0,2 0,2 0,5
External balance (% of GDP)
Exports, Goods and Services 23,7 37,7 32,6 33,5 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,1 0,1 0,2 0,4 0,3 0,9 1,4 0,5 1,3 2,1
Imports, Goods and Services 42,2 56,0 65,0 62,3 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 -0,1 0,0 -0,1 -0,2 0,0 -0,5 -1,0 0,0 -0,7 -1,5

98
The scientific consensus is 30 percent increase in water scarcity in Jordan by 2040 based on current trends. See among other sources: GIZ, 2020,
Rapid Assessment of the Consequences of Declining Resources Availability and Exploitability for the Existing Water Supply Infrastructure.

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Country Climate and Development Report: Jordan
Current Account Balance -8,1 -7,8 -22,6 -19,9 0,0 0,0 0,0 0,0 0,0 0,1 0,0 0,1 0,2 0,1 0,4 0,6 0,4 1,4 2,5 0,6 2,1 3,7
Fiscal Aggregates (% of GDP)
Fiscal revenue 22,7 23,5 24,3 22,8 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 -0,1 -0,1 -0,1 -0,3 -0,4 -0,2 -0,4 -0,7
Fiscal expenditure 29,9 30,4 30,4 27,2 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 -0,1 0,0 -0,1 -0,3 0,0 -0,1 -0,4
- o/w Interest payments 4,2 3,9 3,9 3,4 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,1 0,1 0,2 0,2
Budget deficit -7,3 -5,3 -5,7 -4,4 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 -0,1 -0,2 -0,2 -0,1 -0,2 -0,2
Public debt 109,0 114,2 111,7 96,9 0,0 0,1 0,1 0,0 0,1 0,1 0,1 0,3 0,3 0,3 0,8 1,0 1,1 3,1 3,9 1,6 4,7 5,9
- o/w External Public Debt 45,4 36,8 32,4 26,5 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,1 0,1 0,2 0,3 0,3 0,9 1,1 0,5 1,4 1,6
Emissions
-1 21,1 17,1 24,2 30,0 -0,1 -0,1 -0,1 0,0 -0,1 -0,2 -0,1 -0,3 -0,5 -0,3 -1,0 -1,6 -1,3 -3,8 -6,3 -1,9 -5,7 -9,3
-1 713,5 444,0 463,2 410,8 0,0 0,0 0,0 0,0 0,0 -0,1 0,0 -0,1 -0,2 0,0 -0,3 -0,5 -0,2 -1,1 -1,9 -0,3 -1,6 -2,8
Damages
Air polution (PM2.5) 10,2 10,7 11,9 12,9 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Working days lost 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Heat related health expenditure 1,3 0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
(% of GDP)
Memorandum Items
Population (Millions) 0,0 0,0 0,0 0,0
* Deviations from baseline are expressed as percent of baseline level for Real GDP Per Capita, Emissions, and Carbon Price. For all other variables deviations from baseline are expressed as percentage points of
GDP in the corresponding scenario less the % of GDP in the baseline scenario. Damages are not additive.
(1) Average annual growth since preceding period (2010 for the first column)

Source: World Bank staff and WiB report.

In this table, the column headings report results that correspond to WiB scenarios:
5 percent water scarcity – Agriculture only: The scenario results from a 5 percent increase in water scarcity,
with impacts reflecting only those in the agriculture sector;
10 percent water scarcity – Agriculture only: The scenario results from a 10 percent increase in water
scarcity, with impacts reflecting only those in the agriculture sector;
20 percent water scarcity – Agriculture only: The scenario results from a 20 percent increase in water
scarcity, with impacts reflecting only those in the agriculture sector;
20 percent water scarcity + Primary sectors: The scenario results from a 20 percent increase in water
scarcity, with impacts on primary productive sectors contributing to GDP, free of constraints on capital and
labor mobility;
20 percent water scarcity + Primary sectors + Labor capital: The scenario results from a 20 percent increase
in water scarcity, with impacts on primary productive sectors contributing to GDP and some capital and labor
mobility constraints. Note, WiB is unclear about the specifics; MFMod calibrates capital and labor mobility to
achieve WiB results;
20 percent water scarcity + 100 percent capital and labor: The scenario results from a 20 percent increase
in water scarcity and full immobility of capital and labor.

Scenario 3: Selected water scarcity adaptation measures

This scenario comprises four sub-scenarios resulting from a combination of high-cost/low-cost interventions
in desalination/conveyance and non-revenue water reduction. These combinations aim to resorb 200 MCM
of additional water scarcity in Jordan, corresponding to a 20 percent increase in water scarcity, as in the WiB
report.

Assumptions:
• Damages from water scarcity are assumed to be equal to the values coming from the 20 percent increase
in water scarcity in the WiB report;
• High-cost and low-cost interventions are identified for the desalination and conveyance investments and
the non-revenue water reduction investments. The energy cost associated with the high-cost scenario is
96 fils/kWh, which is the cost recovery tariff for the energy sector. The energy cost associated with the
low-cost scenario is 57 fils/kWh. The costs of desalination/conveyance in this scenario are based on the
current information around the AAC project that is based on the cost structure of the Disi pipeline PPP;
• It is assumed that through these interventions, the 200 MCM shortfall in water supply by 2050 will be
eliminated, equivalent to the full elimination of the additional water scarcity from the WiB scenarios;
• Half of the additional water is assumed to be derived from NRW reduction, and the other half from
desalination, with their respective costs and CAPEX/OPEX distribution. For desalination and conveyance,
most costs are OPEX, driven by additional electricity costs – the difference in the high and low figures is

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Country Climate and Development Report: Jordan
 largely due to the electricity price for the AAC. AAC CAPEX costs equate to the AAC’s total cost allocated
evenly from 2027 to 2040 to derive the annual figure. For all results that include the AAC, figures are
based on information shared among the development partner community. The final CAPEX/OPEX costs
will be determined only at the financial close. The distribution of CAPEX/OPEX is as follows:

Table A4. Cost assumptions under each scenario

Low cost - Desal & conveyance High cost - Desal & conveyance

Desal low: JD 100.1 m per 100 MCM, [CAPEX 40.2%, Desal High: JD 182.7 m per 100 MCM, [CAPEX 36.8%, OPEX
Low cost - NRW OPEX 59.8%] 63.2%]
Reductions NRW low: JD 54.9 m per 100 MCM, [97.5% CAPEX, NRW low: JD 54.9 m per 100 MCM, [97.5% CAPEX, 2.5%
2.5% OPEX ] OPEX ]

Desal low: JD 100.1 m per 100 MCM, [CAPEX 40.2%, Desal High: JD 182.7 m per 100 MCM, [CAPEX 36.8%, OPEX
High cost – NRW OPEX 59.8%] 63.2%]
Reductions NRW High: JD 97 m per 100MCM, [97.5% CAPEX, NRW High: JD 97 m per 100MCM, [97.5% CAPEX, 2.5%
2.5% OPEX] OPEX ]

• It is assumed that CAPEX does not add to the productive capacity of the economy beyond reducing the
damages;
• Spending on CAPEX/OPEX is assumed to be financed by the government via debt financing, and domestic
savers and foreign investors contribute to the financing;
• A key assumption is that for every 10 percent increase in the government’s debt-to-GDP ratio, the interest
rate on its debt rises by 1 percentage point.
Two main channels are at work in these scenarios: (a) reducing or eliminating the damages caused by
additional water scarcity, as estimated in WiB. All the adaptation scenarios assume that the initial impact
on GDP is the same, i.e., eliminating the damages from increased water scarcity, equivalent to 200 MCM.
The only difference across scenarios is the amount of spending associated with each and the mechanism
by which the reduction in water scarcity is achieved, as per Table A4; and (b) there are crowding out effects
caused by increased government financing of investment needs.

Results:
Results are presented according to the CCDR guidance, with interpretations reflected in the main report

Table A5. Jordan - Impact of selected adaptation measure, combining desalination/conveyance with
non-revenue water reduction, on the benchmark growth-macro baseline.

Baseline Low-cost Desal + Low- High-cost Desal + Low- Low-cost Desal + High- High-cost Desal + High-
cost NRW scenario cost NRW scenario cost NRW scenario cost NRW scenario

2020 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050 2030 2040 2050

Deviation from Baseline Deviation from Baseline Deviation from Baseline Deviation from Baseline
(Percent)* (Percent)* (Percent)* (Percent)*

Average Growth (%)

Real GDP 2,0 2,7 3,1 3,4 -0,1 -0,6 -2,2 -0,1 -1,0 -3,6 -0,1 -0,7 -2,9 -0,1 -1,1 -4,5

Real GDP per capita -1,4 2,2 2,0 2,5 -0,1 -0,6 -2,2 -0,1 -1,0 -3,6 -0,1 -0,7 -2,9 -0,1 -1,1 -4,5

Per Capita Income and Consumption (Constant 2020 USD)*

Real GDP Per Capita 4.289 5.350 6.498 8.345 -0,1 -0,6 -2,2 -0,1 -1,0 -3,6 -0,1 -0,7 -2,9 -0,1 -1,1 -4,5

Real Household 3.491 5.023 6.522 7.506 0,0 -0,3 -1,1 0,0 -0,5 -1,9 0,1 -0,4 -1,5 0,1 -0,6 -2,4
Consumption Per Capita

Shares in GDP (% of GDP)

Private Consumption 80,5 92,9 99,3 89,0 0,1 0,3 0,9 0,1 0,4 1,5 0,1 0,3 1,3 0,2 0,5 2,0

Government 17,9 17,2 14,9 13,9 0,2 0,3 0,5 0,4 0,5 0,9 0,2 0,3 0,6 0,4 0,5 1,1
Consumption

Private Investment 14,5 17,2 20,3 22,9 -0,1 -0,7 -1,5 -0,1 -1,0 -2,3 -0,2 -1,0 -2,1 -0,2 -1,3 -3,0

Government Investment 2,6 3,4 3,5 3,0 0,2 0,3 0,3 0,3 0,4 0,4 0,4 0,4 0,5 0,4 0,5 0,6

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Country Climate and Development Report: Jordan
 Net Exports -16,8 -31,9 -39,1 -29,9 -0,4 0,1 0,4 -0,6 0,1 0,5 -0,5 0,2 0,6 -0,7 0,2 0,7

Sectoral shares in GDP (% of GDP)

Agriculture 5,5 5,1 4,7 4,3 0,0 0,0 0,0 0,0 0,0 0,1 0,0 0,0 0,0 0,0 0,0 0,0

Industry 27,5 25,3 23,1 21,0 0,0 0,0 -0,2 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0

Services 67,0 69,6 72,2 74,7 0,0 0,0 0,2 0,0 -0,1 -0,1 0,0 0,0 0,0 0,0 0,0 0,0

GDP expenditure components changes in levels (as a % of baseline)

Private Consumption 0,0 -0,3 -1,1 0,0 -0,5 -1,9 0,1 -0,4 -1,5 0,1 -0,6 -2,4

Government Consumption 1,1 1,3 1,4 2,1 2,5 2,7 1,1 1,3 1,5 2,1 2,5 2,8

Private Investment -0,7 -4,1 -8,7 -0,9 -6,1 -13,4 -1,0 -5,5 -11,7 -1,2 -7,5 -16,9

Government Investment 7,0 7,3 8,1 8,9 9,2 9,8 10,1 10,6 11,7 12,0 12,4 13,2

Exports -0,2 -0,3 -1,0 -0,3 -0,5 -1,8 -0,2 -0,3 -1,3 -0,4 -0,6 -2,2

Imports 0,6 -0,3 -1,2 0,9 -0,4 -1,8 0,7 -0,4 -1,6 1,0 -0,5 -2,3

GDP Sectors changes in levels (as a % of baseline)

Agriculture 0,1 -0,2 -1,5 0,2 -0,3 -2,4 0,0 -0,5 -2,5 0,1 -0,6 -3,6

Industry -0,2 -0,8 -3,0 -0,1 -0,9 -3,4 -0,1 -0,7 -2,9 -0,1 -1,1 -4,5

Services 0,0 -0,6 -2,0 -0,1 -1,1 -3,7 -0,1 -0,8 -2,9 -0,1 -1,2 -4,6

Real wages -0,2 -0,3 -1,3 -0,4 -0,6 -2,3 -0,3 -0,4 -1,7 -0,4 -0,7 -2,8

External balance (% of GDP)

Exports, Goods and

23,7 37,7 32,6 33,5 -0,1 0,3 0,8 -0,1 0,4 1,4 -0,1 0,4 1,2 -0,1 0,5 1,9
Services

Imports, Goods and

42,2 56,0 65,0 62,3 0,2 0,4 0,9 0,3 0,6 1,8 0,3 0,5 1,4 0,4 0,8 2,5
Services

Current Account Balance -8,1 -7,8 -22,6 -19,9 -0,5 -0,6 -1,1 -0,7 -1,1 -2,2 -0,6 -0,8 -1,7 -0,9 -1,3 -3,2

Fiscal Aggregates (% of GDP)

Fiscal revenue 22,7 23,5 24,3 22,8 0,0 0,1 0,2 0,0 0,1 0,4 0,0 0,1 0,3 0,0 0,2 0,5

Fiscal expenditure 29,9 30,4 30,4 27,2 0,8 1,9 3,4 1,2 3,0 6,2 1,0 2,6 5,0 1,4 3,7 8,6

- o/w Interest payments 4,2 3,9 3,9 3,4 0,5 2,0 4,1 0,8 3,2 7,7 0,7 2,7 6,2 0,9 4,0 11,0

Budget deficit -7,3 -5,3 -5,7 -4,4 -0,8 -1,8 -3,2 -1,1 -2,8 -5,8 -1,0 -2,4 -4,7 -1,4 -3,5 -8,1

Public debt 109,0 114,2 111,7 96,9 3,7 13,4 27,7 5,4 20,4 46,4 5,0 17,9 39,1 6,6 25,2 61,6

- o/w External Public

45,4 36,8 32,4 26,5 0,9 3,4 7,0 1,4 5,1 11,6 1,3 4,5 9,8 1,7 6,4 15,5
Debt

Memorandum Items

Population (Millions) 0,0 0,0 0,0 0,0

* Deviations from baseline are expressed as percent of baseline level for Real GDP Per Capita, Emissions, and Carbon Price. For all other variables deviations from
* Deviations from baseline are expressed as percent of baseline level for Real GDP Per Capita, Emissions, and Carbon Price. For all other variables deviations from
(1) Average annual growth since preceding period (2010 for the first column)

Source: World Bank staff

Scenario 4: Additional priority investments for climate-responsive development

This scenario focuses on the economic impact on the growth macroeconomic benchmark of the single-site
large infrastructure investments and multi-site infrastructure investments, all aggregated and extracted from
the list of priority investments identified in Chapter 3 of this CCDR. These investments are assumed to be
productive capital investments. They are expected to positively impact long-term real growth. These positive
impacts interact with other economic impacts based on the model dynamics, as expected in a structural
macro-econometric model. At the same time, this scenario is not a climate change scenario in that these
potential investment programs are not accompanied by quantified information on how they would contribute
to adaptation/mitigation plans, nor on the specific benefits that would counter climate change damage
functions. As a result, the scenario produced is closer to a conventional investment increase scenario.

Assumptions:
The total amount anticipated as investment needs is about US$9.5 billion (treated as real 2020 US$), mostly
on infrastructure, spread over eight years with different annual implementation schedules. These investments
are assumed to be productive capital investments, not accompanied by explicitly provided quantified benefits
in increasing productivity or efficiency at the sectoral levels. In other words, this scenario does not include
information on how these potential investments would contribute to adaptation/mitigation plans or the
specific benefits that would counter climate change damage functions. Investments and financing sources are
summarized in Table A6:

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Country Climate and Development Report: Jordan
Table A6. Jordan - single- and multi-site infrastructure investments.

Investments (in US$ million) Total 2023-2030

Total Investment $9,505.1
o/w Public Investment (including Grants) $3,521.5
o/w Grants $1,901.0
Private Investment $5,983.6
Source: World Bank staff estimates

The list excludes projects such as BRT I, AAC, and some EE actions. As such, the scenario results pertain to
the listed projects’ economic impact on the growth and macroeconomic benchmark. This neither includes
climate change action nor the impacts of the projects excluded from the list of potential projects above.
Finally, as the investment period stops in 2030, the scenario results being extended to 2050 reflect economy-
wide dynamics resulting from the model structure after the end of the investment period. The date on the
list of potential projects, the financing needs, and the sources of financing in this scenario reflect data as of
August 2022.

Results:
Results are presented according to the CCDR guidance, with interpretations reflected in the main report.

Table A7. Jordan - impact of infrastructure investments on growth and macroeconomic benchmark.

Baseline Infrastructure Priority Interventions

2020 2030 2040 2050 2030 2040 2050
Deviation from Baseline (Percent)*
Average Growth (%)
Real GDP 2,0 2,7 3,1 3,4 0,1 2,5 1,1
Real GDP per capita -1,4 2,2 2,0 2,5 0,1 2,5 1,1
Per Capita Income and Consumption (Constant 2020 USD)*
Real GDP Per Capita 4.289 5.351 6.503 8.353 0,1 2,5 1,1
Real Household Consumption Per Capita 3.491 5.022 6.520 7.503 -0,1 1,3 0,7
Shares in GDP (% of GDP)
Private Consumption 80,5 92,8 99,2 88,9 -0,2 -1,2 -0,3
Government Consumption 17,9 17,2 14,9 13,9 -0,2 -1,1 -0,9
Private Investment 14,5 17,2 20,3 22,9 0,9 -0,5 -0,2
Government Investment 2,6 3,4 3,5 3,0 0,7 0,3 0,1
Net Exports -16,8 -31,8 -39,0 -29,8 -1,2 1,6 1,2
Sectoral shares in GDP (% of GDP)
Agriculture 5,5 5,1 4,7 4,3 0,0 0,0 0,0
Industry 27,5 25,3 23,1 21,0 0,0 0,0 0,0
Services 67,0 69,6 72,2 74,7 0,0 0,0 0,0
GDP expenditure components changes in levels (as % of baseline)
Private Consumption -0,1 1,3 0,7
Government Consumption -1,1 -5,0 -5,8
Private Investment 5,6 0,0 0,0
Government Investment 19,7 10,2 2,8
Exports -0,9 3,0 2,2
Imports 1,5 -1,2 -0,8
GDP sector changes in levels (as % of baseline)
Agriculture 0,0 0,0 0,0 0,0 0,1 2,5 1,1
Industry 0,0 0,0 0,0 0,0 0,1 2,5 1,1
Services 0,0 0,0 0,0 0,0 0,1 2,5 1,1
Real wages 5394,3 8503,0 9591,4 10651,3 1,1 2,7 1,5

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Country Climate and Development Report: Jordan
 External balance (% of GDP)
Exports, Goods and Services 23,7 37,7 32,6 33,4 -0,1 0,6 0,4
Imports, Goods and Services 42,2 56,0 64,9 62,1 1,4 -0,7 -0,6
Current Account Balance -8,1 -7,7 -22,5 -19,7 -1,8 0,8 0,6
Fiscal Aggregates (% of GDP)
Fiscal revenue 22,7 23,5 24,2 22,8 0,4 0,2 0,1
Fiscal expenditure 29,9 30,4 30,4 27,2 1,6 1,0 0,8
- o/w Interest payments 4,2 3,9 3,9 3,4 1,1 1,7 1,5
Budget deficit -7,3 -5,3 -5,7 -4,4 -1,2 -0,8 -0,7
Public debt 109,0 114,1 111,6 96,8 7,4 11,2 10,9
- o/w External Public Debt 45,4 36,8 32,4 26,5 2,0 2,9 2,7
Emissions
Emissions (Mtons C02) 21,1 17,1 24,2 30,0 -0,6 -0,1 0,0
Emissions per unit of ouput (tons C02) 713,5 443,9 462,8 410,3 -0,8 -2,5 -1,1
Impact (% of GDP)
Large Infrastructure Investments 0,1 2,5 1,1
Memorandum Items
Population (Millions) 10,2 10,7 11,9 12,9
* Deviations from baseline are expressed as percent of baseline level for Real GDP Per Capita, Emissions, and Carbon Price. For all other
variables deviations from baseline are expressed as percentage points of GDP in the corresponding scenario less the % of GDP in the baseline
scenario.
(1) Average annual growth since preceding period (2010 for the first column)
Source: World Bank staff

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Country Climate and Development Report: Jordan
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