One-third of Bangladesh's agricultural GDP could be lost and 1.3 core people could become internal climate migrants by 2050, according to a World Bank report.
In case of severe flooding, the country's GDP could fall by as much as 9%, adds the report, "Country Climate and Development Report", published on Monday.
The report also notes that climate change will hit the poor and vulnerable people the hardest.
Average tropical cyclones cost Bangladesh about $1 billion annually, says the report, adding that the country also faces a high level of air pollution, which costs about 9% of GDP annually.
The report estimates that Bangladesh can raise up to $12.5 billion in additional financing in the medium term for climate action. Financing options include budget prioritisation, carbon taxation, external financing and private investment.
The World Bank highlights three priority areas for Bangladesh's climate-resilient growth and development – people-centric, climate-smart development, delivering development benefits with de-carbonisation, and enabling environment and institutional realignment.
Speaking at the report launching ceremony, Planning Minister MA Mannan said, "We don't want to blame anyone for the damage caused by climate change. It is a global phenomenon. We have to fight this together."
"Bangladesh has taken bold steps toward its goal of supporting global efforts for combating climate change," said Hiroshi Matano, executive vice president of the Multilateral Investment Guarantee Agency (MIGA), and a member of the World Bank Group leadership team.
"The World Bank report provides vital guidance for the country to continue its long-term strategy for energy security that is more responsive to climate issues," he added.
Martin Raiser, World Bank vice president for South Asia, said Bangladesh has led the way in adaptation and disaster risk management, adding, "But with ever-increasing climate risks, further adaptation efforts are vital, and a low-carbon development path is critical to a resilient future for Bangladesh."
Bangladesh should continue climate loss and damage advocacy and respond quickly to financing opportunities, said John Roome, regional director of the World Bank.
This will require strong international partnerships and development partner financing, building on the needs and commitments of Bangladesh, he added.
The World Bank recommends that the removal of subsidies, rationalisation of gas tariffs, uniform value-added tax on fuel transport via different modes, and a gradual introduction of a carbon tax will improve energy efficiency, reduce road congestion and generate revenue redistribute and climate adaptation programmes.
"Removing energy subsidies and domestic protection of inefficient industries will be critical to encouraging domestic and foreign investment," says the World Bank.
"In the face of multiple severe risks from climate change, Bangladesh urgently needs to spur more private sector involvement not only to deliver the billions of dollars needed for climate action but also to drive innovation and efficiency to benefit and protect the country's people," said John F Gandolfo, IFC's acting regional vice president for Asia and the Pacific.
He observed that increased private sector involvement in renewable energy and energy transmission, housing, transport, and climate-smart agriculture is both necessary and possible, with concerted efforts to speed up needed reforms to overcome barriers to domestic and foreign investment and green the financial sector so more funding is available for green projects.
At the report launch, the World Bank awarded the winners of the IdeaBuzz Championship – a youth competition seeking climate-smart solutions for inclusive growth in Bangladesh.
The first, second and third prizes were awarded to the students of the Islamic University of Technology, Bangladesh University of Engineering and Technology, and the Institution of Business Administration, University of Dhaka.