World Bank Group October, 2022February, 2024 © 2023 The World Bank Group1818 H Street NW, Washington, DC 20433Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank Group with external contributions. “The World Bank Group”refers to the legally separate organizations of the International Bank for Reconstruction and Development(IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and theMultilateral Investment Guarantee Agency (MIGA). The World Bank Group does not guarantee the accuracy, reliability or completeness of the content includedin this work, or the conclusions or judgments described herein, and accepts no responsibility or liability forany omissions or errors (including, without limitation, typographical errors and technical errors) in the contentwhatsoever or for reliance thereon. The boundaries, colors, denominations, and other information shown onany map in this work do not imply any judgment on the part of the World Bank Group concerning the legalstatus of any territory or the endorsement or acceptance of such boundaries. The findings, interpretations,and conclusions expressed in this volume do not necessarily reflect the views of the organizations of theWorld Bank Group, their respective Boards of Executive Directors, and the governments they represent. The contents of this work are intended for general informational purposes only and are not intended toconstitute legal, securities, or investment advice, an opinion regarding the appropriateness of any investment,or a solicitation of any type. Some of the organizations of the World Bank Group or their affiliates may havean investment in, provide other advice or services to, or otherwise have a financial interest in, certain of thecompanies and parties named herein. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privilegesand immunities of any of the organizations of The World Bank Group, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because The World Bank Group encourages disseminationof its knowledge, this work may be reproduced, in whole or in part, for non-commercial purposes as long asfull attribution to this work is given and all further permissions that may be required for such use (as notedherein) are acquired. The World Bank Group does not warrant that the content contained in this work will notinfringe on the rights of third parties, and accepts no responsibility or liability in this regard. All queries onrights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H StreetNW, Washington, DC 20433, USA; e-mail: pubrights@worldbank.org. Editing: Chandrahas ChoudhuryPhoto Credit: World Bank CollectionEditorial Credit: Ha DoanDesigned By: Roots Advertising Services COUNTRY CLIMATE ANDDEVELOPMENT REPORTETHIOPIA Contents Priority 1: Accelerate implementation of structural reforms and promotesocial safety net programs..................................................................................................16Priority 2: Invest in climate-resilient infrastructure..........................................................16Priority 3: Support greater decentralization of climate response..................................17 1.1 Development context.....................................................................................................22 1.1.1 Weakening economic performance............................................................................................ 221.1.2 A stalled structural transformation............................................................................................ 231.1.3 An ambitious reform agenda...................................................................................................... 261.1.4 Addressing development needs amidst conflict and inflation.................................................. 26 1.2 Increasing risks from climate change.........................................................................27 1.2.1 High impacts of natural hazards.................................................................................................271.2.2 Increasing climate variability and uncertainty under climate change..................................... 281.2.3 Climate change could threaten development goals................................................................. 29 1.3 Challenges and opportunities of a green transition.................................................30 2. Climate Change Commitments on Mitigation and Adaptation......................................32 2.5 Mainstreaming climate change into public expenditure management................38 2.5.1 Integrating climate into budget management........................................................................... 382.5.2 Climate change