The Physical Risks
Climate change is not an abstract policy consideration for Abu Dhabi and Bahrain. It is a physical threat to economic infrastructure, human habitability, water security, and the natural environment upon which both economies depend. The Gulf region is among the most exposed in the world to the combined impacts of extreme heat, sea level rise, and water scarcity — and the two economies analysed on this platform sit at the epicentre of these risks.
Understanding these physical risks is essential for assessing the long-term viability of the Economic Vision 2030 frameworks. A vision for 2030 that does not account for the climate conditions of 2030 — and the accelerating trajectory beyond — is incomplete.
Sea Level Rise
Both Abu Dhabi and Bahrain are low-lying coastal jurisdictions with significant economic infrastructure at or near sea level. Abu Dhabi’s island developments — Saadiyat, Yas, Al Reem, Al Maryah — and its coastal urban corridor are exposed to sea level rise and storm surge intensification. Bahrain, an island nation with an average elevation measured in metres, faces even more acute exposure.
Current climate projections suggest sea level rise of 0.3 to 1.0 metres or more by 2100, depending on emission trajectories. Even the lower end of this range would require significant adaptation investment — coastal defences, infrastructure elevation, drainage systems, and land-use planning adjustments — to protect existing economic assets.
For real estate and infrastructure planning, sea level rise introduces uncertainty that extends beyond the 2030 vision horizon but must be considered in investment decisions made today. Developments being planned and built now will operate for decades, and their long-term viability depends on assumptions about sea level trajectories that carry genuine uncertainty.
Extreme Heat
The Gulf region already experiences some of the highest sustained temperatures on the planet. Climate projections indicate that extreme heat events will become more frequent, more intense, and longer in duration. Wet-bulb temperatures — which combine heat and humidity to measure the limit of human thermoregulation — are approaching thresholds in the Gulf that could make outdoor activity dangerous for extended periods during summer months.
The economic implications are direct. Construction activity — essential for both economies’ development programmes — is constrained by heat. Outdoor tourism during summer months is already limited and will become more so. Labour productivity in any sector involving outdoor work is affected. Energy demand for cooling increases, placing additional strain on power generation capacity and increasing emissions from fossil-fuel-based electricity.
For Abu Dhabi and Bahrain, extreme heat is not a future risk. It is a current constraint that is worsening. The economic visions must be executed within thermal conditions that are among the most challenging in the world and are becoming more severe.
Water Scarcity and Desalination Dependency
Abu Dhabi and Bahrain have negligible natural freshwater resources. Rainfall is minimal, aquifer recharge rates are exceeded by extraction, and agricultural water demand has historically depleted groundwater reserves. Both economies are almost entirely dependent on desalination for their freshwater supply.
Desalination is energy-intensive and expensive. Thermal desalination processes — traditionally dominant in the Gulf — consume significant volumes of natural gas. Reverse osmosis technology has improved the energy economics of desalination, but the fundamental requirement for substantial energy inputs remains.
This creates a circular dependency: water supply depends on energy, energy production (particularly from gas-fired power plants) requires water for cooling, and both systems are stressed by the same climate conditions that increase demand for both. The vulnerability of this circular system to disruption — whether from energy supply interruptions, equipment failures, or extreme weather events — represents a systemic risk that neither economy has fully resolved.
Abu Dhabi has invested in strategic water reserves — including underground aquifer storage of desalinated water — to provide buffer capacity against supply disruptions. Bahrain’s smaller scale and more limited fiscal resources make comparable strategic reserves more challenging to establish.
Energy Transition Implications
The global energy transition presents a paradox for Abu Dhabi and Bahrain. Both economies’ dominant revenue sources — oil and gas for Abu Dhabi, downstream energy for Bahrain — are the targets of decarbonisation policies worldwide. A rapid global energy transition would reduce demand for Abu Dhabi’s hydrocarbon exports and undermine the refining margins that sustain BAPCO’s modernised operations.
Yet both economies also face escalating domestic energy demand driven by population growth, economic development, and the cooling requirements imposed by rising temperatures. Meeting this demand while reducing emissions requires the clean energy investments that Abu Dhabi is pursuing through Masdar, Barakah, and the broader energy transition roadmap.
The economic calculus is complex. Abu Dhabi benefits from a slow global energy transition (sustaining oil export revenue) while needing to accelerate its domestic transition (reducing the carbon intensity of its own economy). Bahrain benefits from continued regional demand for refined petroleum products while needing to diversify away from an energy sector facing long-term structural decline.
COP28 Legacy
Abu Dhabi’s hosting of COP28 in 2023 created both opportunities and obligations regarding climate action. The conference outcome — including the first explicit reference to transitioning away from fossil fuels in a COP decision text — committed Abu Dhabi and the broader Gulf to demonstrated progress on emissions reduction, clean energy deployment, and climate adaptation.
The COP28 legacy creates reputational stakes. Having hosted the conference that produced this landmark language, Abu Dhabi faces scrutiny regarding its own climate performance. Masdar’s expansion, Barakah’s operations, and CCS deployment are all measured against the commitments made at COP28. Failure to deliver on these commitments would damage the emirate’s international credibility.
Adaptation Requirements
Both economies require systematic climate adaptation:
Infrastructure resilience: Building codes, coastal defences, drainage systems, and utility infrastructure must be designed for climate conditions that are more severe than historical baselines. This requires upfront investment that increases development costs but protects long-term asset values.
Water security: Diversifying desalination technology, building strategic reserves, and investing in water efficiency across industrial, commercial, and residential uses. Water security is not optional — it is a prerequisite for economic viability.
Energy system resilience: Ensuring that power generation and distribution systems can meet cooling demand during extreme heat events, which are increasing in frequency and duration. This includes renewable energy deployment that reduces dependence on imported fossil fuels for power generation.
Public health: Monitoring and managing heat-related health risks for the large outdoor-working populations that both economies depend on for construction, logistics, and service delivery.
Outlook
Climate and water risks will intensify through 2030 and beyond. Neither Abu Dhabi nor Bahrain can prevent these physical changes — they can only adapt to them. The economic visions that both economies are pursuing must incorporate climate adaptation as a core component of economic planning, not as a peripheral environmental concern.
The financial capacity to fund adaptation differs dramatically. Abu Dhabi’s sovereign wealth provides essentially unlimited resources for climate infrastructure. Bahrain’s fiscal constraints mean that adaptation investments compete with other development priorities for limited capital. This adaptation capacity gap mirrors the broader economic asymmetry between the two economies — and may prove to be one of the most consequential dimensions of that asymmetry as climate impacts accelerate.