Climate change and economic crisis
Sri Lanka is highly vulnerable to the adverse effects of climate change. Risks include natural disasters such as prolonged droughts, flash floods, and landslides that impact on lives and livelihoods of people.
This fragile environmental context is particularly important in Sri Lanka, as it is one of the 36 biodiversity hotspots. These areas are of a global interest, since conserving them will be essential to preserving biodiversity and, a fortiori, human societies.
Conserving biodiversity will have a direct impact on Sri Lanka’s tourism industry and on the country’s economic development. Sri Lanka’s biodiversity is also linked to other key sectors including agriculture, forestry, and blue economic activities.
Since mid-2022, a complex and terrible economic crisis has hit the country. Sri Lanka should build back better its economy by re-strategising from a linear and resource-intensive economy into a sustainable and circular one. Doing so will contribute not only to safeguarding the country’s biodiversity resources and supporting the mitigation of Sri-Lankan greenhouse gas emissions, but also to stabilising the macrofiscal and macroeconomic balances of the country, which will yield real dividends for Sri Lanka.
Contributing to the economic recovery in Sri Lanka
In this context, the Green Policy Dialogue Facility will harness policy experiences and knowledge from the European Union, along national and regional ones, to contribute to the inclusive green recovery (medium term) and transition (long term) of the Sri Lankan economy and society.
Establishing inclusive national green, blue and sustainable public policy
The initiative will support the Ministry of Environment and the Ministry of Finance of Sri Lanka in establishing an inclusive policy dialogue and raising awareness on the green economic recovery and transition of the country. The promotion of the external dimensions of the European Green Deal, will form an integral part of this dialogue.
Promoting an inclusive circular economy
The initiative will assist the dialogue and advocacy between European and Sri Lankan market actors. It will promote and integrate sustainable consumption and production policy instruments into the overall private sector policy framework. This will improve the green economy business climate by supporting the reform and update of the related policy framework.
Improving accessibility and availability to green and sustainable finance
The initiative will support the operationalisation and implementation of the policy and regulatory sustainable finance framework. Better coordination could be reached among European Development Financial Institutions to facilitate the development of their future activities directed towards Sri Lanka.
All results should serve as inputs for a policy and programme that bridge identified gaps. This project will support European donors in leveraging internal or external funds to address inclusive green economy priorities.
Beneficiaries
The project will benefit two main groups:
1. The public sector actors: the Ministry of Finance, the Ministry of the Environment, as well as various other line-ministries and institutions connected to economic recovery will benefit from the project.
2. The private sector actors: the media, chambers of commerce, financial institutions, producer organisations and cooperatives, professional bodies, consumer associations and SMEs, as well as Civil Society Organisations and environmental groups will benefit directly and indirectly from the initiative.
Moreover, the green policy dialogue facility will also support the activities of the EU and its Member States in Sri Lanka, especially in line with the Team Europe Initiative.
