Climate Change as an Economic Threat: How Burkina Faso Can Build Fiscal and Climate Resilience

The IMF’s Climate Policy Diagnostic finds that climate change is already undermining Burkina Faso’s economy by intensifying heat, water scarcity, and shocks that threaten growth, public finances, and food security. It argues that gradual energy, fuel, water, and disaster-risk reforms, paired with social protection can strengthen resilience, reduce fiscal pressure, and support sustainable development.

Prepared by the International Monetary Fund’s Fiscal Affairs Department with contributions from IMF climate and fiscal modeling teams, the Climate Policy Diagnostic for Burkina Faso makes a clear case that climate change is now one of the country’s most serious economic threats. Burkina Faso, home to about 23 million people, is already struggling with widespread poverty, insecurity, and weak infrastructure. More than 40 percent of the population lives below the poverty line, and most people depend on agriculture, which is highly sensitive to weather. Climate change does not arrive as a separate environmental problem; it worsens food insecurity, strains public finances, and undermines growth prospects at every level of the economy.

A Hotter, More Unpredictable Climate

Burkina Faso is already one of the hottest countries in the world, and temperatures have risen faster than the regional average over the past four decades. Extreme heat days are becoming more frequent, especially in the central and northern regions, while rainfall has become more erratic. Heavy downpours increase flood risks even as drought remains common. Climate projections suggest that, if global emissions continue on current paths, average temperatures in Burkina Faso could rise by up to 4.5°C by the end of the century. These changes would severely affect agriculture, water availability, health, and infrastructure. IMF estimates show that, without strong adaptation, climate change could reduce real GDP per capita by around 2 percent by 2050 and up to 5–8 percent by 2100, worsening poverty and inequality.

Energy Reform for Growth and Resilience

Energy policy is at the center of the report’s recommendations. Electricity access in Burkina Faso is very low, especially in rural areas, and the country relies heavily on imported fuels for power and transport. While Burkina Faso emits very little globally, it uses energy inefficiently, which raises costs and emissions per unit of economic output. The report highlights strong recent progress in solar energy, but notes that the power sector remains financially weak because electricity tariffs are far below the cost of production. This forces the government to rely on costly fuel subsidies that mainly benefit better-off households.

The IMF recommends expanding solar power combined with battery storage to ensure a reliable supply, while reforming rules so households and small producers can sell excess electricity to the grid. Gradual electricity tariff reform is seen as unavoidable. Moving tariffs closer to cost recovery, while protecting low-income consumers through social tariffs and encouraging off-peak use with time-based pricing, would strengthen the power sector and free public funds for expanding access.

Smarter Fuel Pricing and Public Finances

Fuel subsidies are another major fiscal burden. In recent years, they have cost the government several percentage points of GDP. The report analyzes different fuel pricing reform options, such as taxing heavy fuel oil and gradually increasing diesel taxes to better reflect their environmental costs. Even modest reforms, phased in over time, could raise significant public revenues by 2030 while keeping price increases manageable. While these reforms would not drastically cut emissions, because most emissions come from agriculture and land use, they would improve public finances and generate health benefits, such as fewer deaths from air pollution and road accidents. The report stresses that new revenues should be used to support vulnerable households, strengthen food security programs, and invest in infrastructure to maintain public trust.

Water, Land, and Disaster Preparedness

Water scarcity and land degradation are already serious problems in Burkina Faso and are expected to worsen with climate change. The country has limited water resources, weak coordination between institutions, and outdated pricing systems that do not reflect scarcity. The report calls for clearer rules on water use, better data and monitoring systems, and gradual water pricing reforms that improve financial sustainability while protecting poor households. Similar approaches are recommended for land use, forestry, and waste management, where better incentives can reduce deforestation, promote sustainable farming, and protect livelihoods.

Finally, the report highlights the need to shift from reacting to disasters toward better preparedness. Floods, droughts, and water crises already impose high human and fiscal costs, yet disaster risk management remains focused on emergency response rather than prevention. Strengthening planning, improving data, and developing a clear disaster financing strategy would help Burkina Faso reduce long-term costs and protect development gains.

Overall, the Climate Policy Diagnostic argues that climate action in Burkina Faso is not a luxury but a necessity. By combining gradual reforms, targeted social protection, and smarter use of public resources, the country can build resilience, stabilize its economy, and lay the foundation for more inclusive and sustainable growth.