Countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAAP) region are among the most water-scarce in the world and increasingly vulnerable to heat extremes, droughts, floods, and sea-level rise. Rising temperatures are already reducing labor productivity, straining health systems, intensifying desertification, and contributing to water scarcity, crop losses, and higher energy demand for cooling, while deepening fragility, poverty, and displacement risks. These circumstances create an urgent need to respond. This report focuses on two concrete and immediate examples of how heat- and trade-related policies in destination markets affect firms and the broader economy of the MENNAP region. The report first quantifies the effect of more frequent periods of extreme heat on firm performance in MENAAP and underlines a generally negative impact, especially for smaller firms and those outside global value chains. Second, new and forthcoming climate mitigation policies in Europe—a key trading partner—
