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E A S T A SI A PAC IFIC THE PACIFIC ATOLL COUNTRIES COUNTRY CLIMATE AND DEVELOPMENT REPORT 2024 CONTENTS 03 18 31 Pacific Atolls & the Climate Climate Commitments Pathways to Climate Challenge & Capacities Adaptation Goals 62 79 Economics of Prioritized Funding Resilient Actions for a Development Resilient Future Pathways I C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T FIGURES FIGURE 1.1 FIGURE 1.2 Satellite view of Funafuti, Tuvalu..................................................................................................6 Aerial view of Ebeye, RMI, looking north.....................................................................................6 FIGURE 1.3 Wave and sedimentary processes form and maintain atoll islands.......................................6 FIGURE 1.4 Pacific Atoll countries are among the most remote in the world............................................9 FIGURE 1.5 Costs and public spending are higher in the Pacific Atoll countries.......................................9 FIGURE 1.6 High fiscal deficits are financed by grants............................................................................... 10 FIGURE 1.7 Growth has been slightly slower than in other PICs............................................................... 10 FIGURE 1.8 Pacific Atoll Country Poverty Rates(Percent of Population).................................................. 12 FIGURE 1.9 Projected global sea-level rise in the 21st century................................................................. 17 FIGURE 2.1 Atoll countries’ commitments in climate mitigation and adaptation.................................. 21 FIGURE 3.1 Percentage of buildings hit by tidal flooding (left) and storm flooding (right) for Tarawa (upper) and Kiritimati (lower), Kiribati, at different sea levels.............................................. 34 FIGURE 3.2 Percentage of buildings hit by tidal flooding (left) and storm flooding (right) for Funafuti (Tuvalu) for different climate scenarios in 2060 and 2100.................................................. 34 FIGURE 3.3 Percentage of buildings hit by tidal flooding (left) and storm flooding (right) for Majuro and Ebeye (Kwajalein Atoll) (RMI) at different sea levels...................................................... 35 FIGURE 3.4 Options for adaptation to sea-level rise.................................................................................... 36 FIGURE 3.5 Dynamic Adaptive Policy Pathways........................................................................................... 38 FIGURE 3.6 Indicative pathways for Kiribati showing a stepwise adaptation to sea-level rise.............. 40 FIGURE 3.7 Indicative pathways for Tuvalu (top) and RMI (bottom) showing a stepwise adaptation to sea-level rise................................................................................................................................. 42 FIGURE 4.1 Estimated average annual losses from climate-related events............................................ 65 FIGURE 4.2 Estimated losses from a 1-in-20 year climate-related event................................................ 65 FIGURE 4.3 Share of government revenues from fishing access fees (excl. grants, 2015-18, Percent)................................................................................................ 66 FIGURE 4.4 Estimated change in purse-seine catch by 2050 under RCP4.5 and RCP8.5 (Percent).. 66 FIGURE 4.5 Adaptation Financing in Kiribati, Tuvalu and RMI, and Benchmarks (US$ per capita)..... 72 FIGURE 5.1 Prioritization Approach for Policy Options................................................................................ 81 BOXES BOX 1.1 BOX 1.2 Historic Climate Trends in the Pacific Atoll Countries................................................................5 Sea-Level Rise: Uncertainties and Potential Impacts............................................................. 14 BOX 2.1 Streamlining and Improving Effectiveness of ODA................................................................. 28 BOX 3.1 Physical adaptation options: The Maldives’ experience......................................................... 34 BOX 3.2 The DAPP Modeling Methodology and Cost Estimates.......................................................... 43 BOX 4.1 Ensuring ongoing rights to Exclusive Economic Zones is critical for future revenue streams......................................................................................................... 75 TABLES TABLE 1.1 TABLE 2.1 Economic characteristics of Pacific Atoll Countries...................................................................8 Legal, Regulatory and Policy Framework for Climate Change.............................................. 21 TABLE 2.2 Institutional Arrangements for Climate Change in the Pacific Atolls................................... 22 TABLE 2.3 Summary of Climate Change PFM in Atoll Countries............................................................. 25 TABLE 3.1 Indicative costs of two pathway options (by country, US$ millions) .................................... 42 TABLE 3.2 Potential adaptation options to improve construction aggregate security......................... 46 TABLE 3.3 Adaptation options for coastal fisheries and ecosystems..................................................... 48 TABLE 3.4 Adaptation options for the power sector.................................................................................. 49 TABLE 3.5 Options to prepare for climate-induced mobility..................................................................... 57 TABLE 4.1 Revenue enhancing options for fisheries................................................................................. 65 TABLE 4.2 Selected Economic Indicators.................................................................................................... 65 II ACKNOWLEDGMENTS The report was authored by a core team (in alphabetical order) led by David Gould (Lead Economist and Program Leader for Equitable Growth, Finance and Institutions, Papua New Guinea and the Pacific Islands), David Kaczan (Senior Economist), and Sonya Woo (Program Leader for Sustainable Development, Papua New Guinea and the Pacific Islands). Additional core contributions were provided by Richard Croad (Senior Infrastructure Consultant) and Artessa Saldivar-Sali (Senior Infrastructure Specialist). The CCDR includes analytical work undertaken by an extended technical team (in alphabetical order) comprising: Abel Bove (Senior Public Sector Specialist), Abidah Billah Setyowati (Senior Social Development Specialist), Alain Ouedrao- go (Senior Energy Specialist), Allan Oliver (Senior Agriculture Specialist), Andrew Blackman (Senior Economist), Anuja Kar (Senior Agriculture Economist), Ashley Wan (Economist, IFC), Aude-Sophie Rodella (Lead Water Economist), Bonnie Sirois (Senior Financial Management Specialist), Christopher Miller (Senior Pri- vate Sector Specialist), Daniel Street (Senior Country Officer, IFC), Fiona Howell (Consultant), Gayatri Kanungo (Senior Environmental Specialist), Gordon Jon Pierre Brown (Young Professional), Hector Pollitt (Senior Economist), Hua Du (Consultant), Ian Cunningham (Consultant), Jan Willem Overbeek (Economist and Director, Overbeek Consultancy Services), Jian Vun (Senior Disaster Risk Management Specialist), John Campbell (Consultant), Juliana Weingaertner (Public Sector Specialist), Kasia Mazur (Environmental Economist), Katsuyuki Fukui (Senior Power Engineer), Kebede Feda (Senior Economist), Keisuke Iyadomi (Senior Climate Change Specialist), Kirsty Anantharajah (Consultant), Margareta Norris Harrit (Senior Health Specialist), Mesulame Ratu Namedre (Health Specialist), Michael Osborne (Senior Procurement Specialist), Moham- med Thabet M Audah (Economist), Muthukumara S. Mani (Lead Environmental Economist), Nang Mo Kham (Senior Economist), Netsanet Walelign Workie (Senior Economist), Nguyen Hoai-Son (Consultant), Raghava Neti (Senior Wa- ter Supply and Sanitation Specialist), Rebekah Ramsey (Social Development Specialist), Rajesh Rohatgi (Lead Transport Specialist and Program Leader), Ryoko Tomita (Senior Education Specialist), Sharad Alan Tandon (Senior Econo- mist), Slavena Georgieva (Energy Specialist), Son Thanh Vo (Senior Agriculture Specialist), Stephanie Tam (Senior Climate Specialist), Thomas Walker (Lead Economist and Program Leader), Tsubasa Enomoto (Social Development Spe- cialist), Vincenzo Vinci (Social Protection Specialist), Virginia Horscroft (Senior Public Sector Specialist), Vishesh Agarwal (Economist), Wayne Irava (Health Specialist), Xavier Vincent (Lead Fisheries Specialist), and Ximing Peng (Senior Energy Specialist). The outreach strategy was supported by Viak Waradi (Exter- nal Affairs Analyst) and Hamish Wyatt (External Affairs Officer). Administrative support was provided by Nika Asasi, Bridgette Hogan, and Miguel Payawal Ferido (Team Assistants), and Manju Venkiteswaran (Program Assistant). III C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Additional technical analysis was provided by Kalim U. Shah (Consultant) and Colleen Butcher-Gollach (Consultant). Adaptation pathways modelling inputs were provided by a team from Deltares, including Ad Jeuken (Team Lead), Rob- ert McCall, Nienke Vermeer, Eva Costa de Barros, Mark de Bel, Tess Davids, and Guilherme Nogueira. Cost estimates were prepared by a team from Tonkin and Taylor, including Tom Shand (Team Lead), Holly Blakely, Michael Paine, and Nathan Hickman. Additional input was received from Jim Hancock and Karan Singh (Food and Agriculture Organization) and David George (Griffith Universi- ty). The team benefitted from peer review comments provided by Jana El-Horr (Senior Social Development Specialist), Martin Heger (Senior Environmental Economist), Nancy Lozano Gracia (Lead Economist for Sustainable Develop- ment), David S. Knight (Lead Economist and Program Leader), Habib Rab (Lead Economist and Program Leader), and Madu Raghunath (Practice Manager). The report was edited by Chris Stewart. Graphic Design was by Kamal Muhamad. The team greatly appreciates the insights and advice provided by government, development partners, and other stakeholders during consultations. • IN TUVALU, the team met with representatives from the Asian Development Bank; Australia High Commission; Central Statistics Division; Central Proj- ect Management Office; Department of Climate Change; Department of Environment; Department of Information and Communication Technology; Department of Local Government; Gender Affairs; Lands and Survey Depart- ment; Ministry of Finance and Economic Development; Ministry of Natural Resources Development; Ministry of Home Affairs, Climate Change and Environment; Ministry of Foreign Affairs and Trade; Ministry of Transport, Energy , Communications and Innovations; National Disaster Management Office; New Zealand High Commission; Office of the Attorney General; De- partment of Planning, Budget, and Aid; Te Fuliga Fou; Tuvalu Electricity Cor- poration; Tuvalu Coastal Adaptation Project; Tuvalu National Private Sector Organization; Tuvalu National Youth Council; and Tuvalu Red Cross Society. • IN RMI, the team met with representatives from the Climate Change Direc- torate; International Organization for Migration; Japan International Coop- eration Agency; Marshall Islands Conservation Society; Marshall Islands Marine Resources Authority; Ministry of Culture and Internal Affairs; Min- istry of Foreign Affairs and Trade; Ministry of Health and Human Services; Ministry of Works, Infrastructure and Utilities; Ministry of Transportation, Communication and Information Technology; National Disaster Manage- ment Office; National Energy Office; Office of the Chief Secretary; Public School Systems; Ministry of Education Sports and Training; Postal Services Authority; Ministry of Finance, Banking and Postal Services; US Embassy; and Weather Station Office. • IN KIRIBATI,the team met with representatives from the Australian Depart- ment of Foreign Affairs and Trade; Kiribati Chamber of Commerce; Kiribati National Expert Group; Meteorological Office; Ministry of Culture and In- ternal Affairs; Ministry of Environment, Lands and Agriculture; Ministry of Infrastructure and Sustainable Energy; Ministry of Finance and Economic Development; Ministry of Fisheries and Marine Resources; Ministry of For- IV eign Affairs and Trade; Ministry of Women Youth Sport; and Social Affairs; Office of the President; and Te Atinimarawa Co., Ltd (TACL). The report was a collective effort of the World Bank Group, including the World Bank, International Finance Corporation (IFC), and Multilateral Insurance and Guarantee Agency (MIGA). The CCDR was prepared under the guidance of Manuela V. Ferro (World Bank Regional Vice President for East Asia and Pacif- ic), Lalita M. Moorty (Regional Director), Anna Wellenstein (Regional Director), Stephen N. Ndegwa (Country Director for Papua New Guinea and the Pacific Islands), Lars Moller (Practice Manager), Ann Jeannette Glauber (Practice Manager), Kim-See Lim (Regional Director, IFC), Judith Green (Country Manager, IFC), and Moritz Nebe (Acting Director, MIGA). Financial support was provided by the Climate Support Facility Whole of Econ- omy Program, the PROBLUE Multi-Donor Trust Fund, and the Global Facility for Disaster Reduction and Recovery through the Africa Caribbean Pacific – European Union Disaster Risk Management Program. V C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T ABBREVIATIONS AND ACRONYMS AI Artificial Intelligence MTEF Medium-term Expenditure Framework AOSIS Alliance of Small Island States MTRS Medium-term Revenue Strategy ASP Adaptive Social Protection NACC National Advisory Council on Climate Change CAT DDO Catastrophe Deferred Drawdown Option NAP National Adaptation Plan CCAP Climate Change Action Plan NAPA National Adaptation Program of Action CCD Climate Change Division NbS Nature-based Solution CCDR Country Climate and Development Report NCCPF National Climate Change Policy Framework CIF Climate Investment Fund OECD Organisation for Economic Co-operation and Development CoFA Compact of Free Association ODA Overseas Development Assistance COP Conference of the Parties OECS Organisation of Eastern Caribbean States DAPP Dynamic Adaptive Policy Pathways PAC Pacific Access Category DPO Development Policy Operation PALM Pacific Australia Labor Mobility DRM Disaster Risk Management PEC Pacific Environment Community EAP East Asia Pacific PFM Public Financial Management EEZ Exclusive Economic Zone PIC Pacific Island Country ENSO El Niño-Southern Oscillation PIM Public Investment Management EOA Engineering Options Analysis PNA Parties to the Nauru Agreement ESMF Environmental and Social Management Framework PPP Public-Private Partnership FAO Food and Agriculture Organization PREP Pacific Resilience Program FFA Forum Fisheries Agency RCP Representative Concentration Pathway FICI Food Import Capability Index RE Renewable Energy FRDP Framework for Resilient Development in the Pacific RMI Republic of the Marshall Islands GCF Green Climate Fund RWH Rainwater Harvesting GDP Gross Domestic Product SFU Social Fund for Unemployment GEF Global Environment Facility SIDS Small Island Developing States GHG Greenhouse gas SoE State-owned Enterprise GVA Gross Value-added SPC Secretariat of the Pacific Community HCI Human Capital Index SPREP Secretariat of the Pacific Regional IFMIS Integrated Financial Management Information System Environment Programme IMF International Monetary Fund SROCC Special Report on the Ocean and the Cryosphere IPCC Intergovernmental Panel on Climate Change in a Changing Climate SSP Shared Socioeconomic Pathway KJIP Kiribati Joint Implementation Plan TRP Target Reference Point KNEG Kiribati National Expert Group TTEC Tile Til Eo (Light the Way) Committee LCC Life-cycle Cost UNEP United Nations Environment Programme LiDAR Light Detection and Ranging UNFCCC United Nations Framework Convention LMIC Lower-Middle-Income Country on Climate Change MDB Multilateral Development Bank UNGA United Nations General Assembly MIC Middle-Income Country VDS Vessel Day Scheme MPA Marine Protected Area WCPFC Western and Central Pacific Fisheries Commission MSY Maximum Sustainable Yield WSS Water Supply and Sanitation VI T U VALU VII C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T INTRODUCTION T his Country Climate and Development Report (CCDR) explores the unique climate change challenge faced by the Pacific Atoll Coun- tries (“Pacific Atolls”)—the Republic of Kiribati, the Republic of the Marshall Islands (RMI), and Tuvalu. It explores the key sources of climate vulnerability, as well as the development and adaptation strategies that are needed for preserving livelihoods, ecosystems, and the countries’ long-term viability. The Pacific Atolls confront some of the most severe existential threats from climate change of any region in the world. This CCDR notes the urgent need for action on the part of each island country and the global community of nations in the face of severe climate change impacts. The Pacific Atolls have shown significant climate leadership and have been proactive in planning for climate change’s impacts. Their leadership in global climate change discussions has played a vital role in securing the Paris Agree- ment which aims to limit the global average temperature increase to 1.5°C. The starting point for the CCDR is, therefore, the Pacific Atolls’ own aspirations and stated goals. The CCDR’s findings aim to complement country initiatives with foundational analysis to support their decision making on development and climate change adaption options over the coming years and decades. The CCDR provides the Pacific Atolls with near- and medium-term options to help them reach their long-term adaptation and development goals while also helping to reduce knowledge gaps on associated costs. These options include strengthening institutions, enhancing legal and regulatory frameworks, building human capital, and improving participation and consensus-driven decision making. It provides analysis of investments that could be used to protect islands from sea-level rise, safeguard water and energy supplies, and build the resilience and mobility of citizens. Increased domestic and interna- tional mobility is expected as citizens seek safer environments and economic opportunities. The CCDR shows that better education, health, and citizen en- gagement as well as traditional culture can support mobility and build a strong foundation for social and economic inclusion. Given the substantial costs of climate adaptation and financing constraints, navigating complex trade-offs is essential in determining which actions to prioritize and when to implement them. The discounted present value costs presented in Chapter 3 for physical adaption to 0.5 meters of sea-level rise are estimated at US$3.7 billion for Kiribati, US$1.0 billion for Tuvalu, and US$5.0 billion for RMI. Key trade-offs include deciding which islands to prioritize for protection, determining the types and extent of protection to implement at different stages, choosing between human capital versus strengthening physical infrastructure, and choosing between current livelihood subsidies or alternative support mechanisms. The CCDR also addresses the need for enhanced revenue collection, fiscal reforms, and the management of fiscal risks from natural disasters. Despite growing support from the international community, securing increased concessional financing from international development part- ners is crucial for Pacific Atolls to address financing gaps for short- and 1 medium-term climate adaptation and sustainable development. Greater efforts by the international community are needed to align donor funding with national priorities, harmonize financing requirements, and make financing more accessible. Limited domestic capacity limits access to climate finance and results in opportunity costs for countries. The CCDR highlights five key messages, each supported by priority policy actions, to guide efforts in this direction and toward a resilient future: 1 Engaging communities early in planning and assessing trans- formative options ensures their ownership of decisions and their future. It also helps balance individual, community, and national interests in climate change decisions, fosters broad ownership, and preserves unique traditions, local knowledge, and cultural identities. 2 Investing in human capital and supporting mobility are nec- essary because they contribute to development, job oppor- tunities, and climate resilience, and help individuals make informed decisions about whether to stay or move. 3 Enhancing land administration, spatial planning, and aggre- gate (building material) sources for construction are essential for short- and medium-term physical adaptation and long- term development efforts. Maintaining a balance between traditional land tenure systems, intrinsic to cultural heritage, and their potential limitations on human mobility and es- sential public works is crucial for preserving cultural identity while fostering development and accessibility. 4 Protecting freshwater resources, fisheries, coral reefs, and other ecosystems is necessary for sustaining island habit- ability, ensuring food security, and maintaining the natural resilience of the islands. 5 Enhancing governance and prudent spending mechanisms are critical due to the increased financing needs required to meet countries’ goals in human development and climate adaptation. The following five chapters explore these issues. Starting with an assessment of the Pacific Atolls’ unique vulnerabilities (Chapter 1), the CCDR assesses governments’ climate commitments and capacities (Chapter 2). It then presents options for adaptation that could address vulnerabilities and improve capacities (Chapter 3) before discussing financing opportunities and needs (Chapter 4). The CCDR concludes by presenting priority near- and medium-term policy options and trade-offs (Chapter 5), while recognizing that climate adaptation will require continued efforts well beyond the actions covered in this report. 2 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 1 PACIFIC ATOLLS AND THE CLIMATE CHALLENGE PAGE 3—17 KI RI BAT I KEY 1 Kiribati, the Marshall Islands, and Tuvalu are highly vulnerable to MESSAGES climate change due to their small size, dispersed population, low island elevation, economic circumstances, and high exposure to hazards such as sea-level rise, wave over-wash, and drought. 2 These countries have shown strong leadership on the global stage to bring attention to the risks they face and the need to safeguard the rights and heritage of their populations. They have a significant stake in global reductions in greenhouse gas (GHG) emissions and have played an important role advocating for the Paris Agreement. 3 Adapting to climate change is now their most urgent priority. They are investing in measures to protect against sea-level rise, safeguard water supplies, and prepare for increased effects of storms and flood- ing. Despite uncertainties, they are taking initial steps to mitigate vulnerabilities. 4 Many of these climate adaptation measures also further develop- ment goals with investments in fisheries, human capital development, social protection, and public finance capacity‒yielding benefits regard- less of climate change. Physical adaptation will incur very significant costs, however, and the Pacific Atolls will need to find new sources of financing and carefully weigh trade-offs. T he Pacific Atoll countries‒the Republic of Kiribati, the Republic of the Marshall Islands (RMI), and Tuvalu‒are uniquely vulnerable to climate change. Consisting of 55 inhabited islands and innumerable islets spread over 6.4 million square kilometres (km2) of the Pacific Ocean, they are among the smallest, most dispersed, and remote countries in the world. They stand out even among other Small Island Developing States (SIDS) in terms of their small population and land size, narrow economic base, and confront some of the most severe existential threats from climate change of any region in the world. They confront unique climate-related risks that amplify existing economic challenges while adding new threats to their ecosystems, economies, and long-term survival. The CCDR adopts the Intergovernmental Panel on Climate Change’s (IPCC) medium emissions scenario as a baseline for global climate change assump- tions as well as a high-risk scenario as a robustness check. This is equivalent to IPCC Shared Socioeconomic Pathway SSP2-4.5 [RCP4.5]1 and SSP5-8.5 [RCP8.5]). The corresponding sea-level rise scenarios, which are consistent across the three countries, indicate that: (i) 0.5 meters of sea-level rise will most likely happen between 2070 and 2110 but could occur as early as 2050 in a worst-case scenario; (ii) 1 meter of sea-level rise will most likely happen between 2110 and 2150 but could occur as early as 2090 in a worst-case 1 RCP: “Represen- scenario; and (iii) 2 meters of sea-level rise is unlikely before 2150 (including tative Concentration Pathway.” under a worst-case scenario). 4 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 1.1 T U VALU THEPACIFIC ATOLLS’ UNIQUE GEOGRAPHIC AND ECONOMIC CIRCUMSTANCES T he Pacific Atolls are distinct from other islands. They were formed by geological and wave processes involving coral sands and coralline algae fragments over the past 5,000 years to create low islands on top of karsts or rock mounds created some 0.5–5 million years ago.2 They typically have elevations of not more than 2 or 3 meters (m) above sea level, with narrow land areas and long exposed shorelines (FIGURE 1.1) surrounding a lagoon. They are naturally fragile and dynamic landscapes, reliant on their surrounding reefs and continuously shaped by the ocean (FIGURE 1.3). Shorelines shift due to natural erosion and sand deposition. Several studies 2 See Doxler and Jorry (2023) for confirm that, despite historical sea-level rise, some atolls have grown in area a more complete explanation of Atoll formation. A summary video is available (Kench et al. 2014). This growth, and related movement of shorelines, occurs (link). through waves overtopping which moves reef sediments along the shorelines 3 Since World War II, and especially during the 1960s to 1980s, many and onto the islands‒posing threats to people and infrastructure (Wandres islands were joined by causeways that, while improving connectivity, have et al. 2024). Human activities, increased populations and waste, especially affected tidal flows between the islands, lagoon flushing, and sediment transport in urbanized areas over the past 50 years–have led, however, to shoreline (for example, South Tarawa in Kiribati, hardening through reclamations and low seawalls, interrupting ecosystems Majuro in RMI, and Ebeye to Gugeegue in RMI). See Biribo and Woodroffe 2016. and these dynamic processes (FIGURE 1.2).3 5 P acific A tolls and the C limate C hallenge F I G U RE 1 . 1 F IG U RE 1 . 2 Satellite view of Funafuti, Tuvalu Aerial view of Ebeye, RMI, looking north F I G U RE 1 . 3 Wave and sedimentary processes form and maintain atoll islands REEF ECOSYSTEM REEF ISLAND Ocean waves Wave breaking Overwash t deposition en m di Se OCEAN Sediment Transport LAGOON ISLAND Carbonate Carbonate Sediment REEF PLATFORM Sediment Production REEF PLATFORM Production F R EE RE FO Source: Mtcv via Wikimedia Commons, 2024 (upper left); Garry Venus: (upper right) used with permission (link); Masselink and Kench (2021) (bottom). The Pacific Atolls’ unique geography presents physical challenges‒including increasing susceptibility to sea-level rise and flooding, limited freshwater, and poor soil for agriculture. Low elevation exposes islands to sea-level rise, flooding from storm surges, and high tides (see BOX 1.1 for an overview of climate vulnerability in each of the Pacific Atoll countries). While ecosystems are biodiverse, they are vulnerable to even slight climatic alterations. Water resources are very limited, and the porous nature of the coral soil can lead to groundwater contamination (Storlazzi et al. 2015). Socially and culturally, citizens’ lifestyles and traditions are closely tied to their marine surroundings. 6 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T B OX 1 .1 Historic Climate Trends in the Pacific Atoll Countries A ll three countries share warm, tropical climates characterized by high temperatures and significant precipitation variability influenced by regional phenomena like the El Niño-Southern Oscillation (ENSO) and the South Pacific Convergence Zone. In Kiribati, temperatures currently remain between 27°C and 28°C year-round, while in Tuvalu and RMI, temperatures range from 27°C to 29°C. Kiribati’s precipitation peaks at 180 millimeters (mm) from March to May and falls below 60 mm from August to October. Tuvalu, with annual precipitation between 2,500 and 3,000 mm, sees twice as much rain in wet years as in dry ones. In RMI, the wet season (May to November) peaks between August and October, with monthly rainfall exceeding 300 mm, while the dry season (December to April) has rainfall below 200 mm. Historical trends reveal that the countries are becoming warmer, consistent with global warming trends. Across the South Pacific, mean temperatures have risen by about 1°C since 1970. Maximum temperatures in Kiribati increased by 0.18°C per decade from 1950 to 2009. Tuvalu's minimum and maximum temperatures have risen by 0.24°C and 0.21°C per decade, respectively, since 1950, while temperatures in RMI have seen statistically significant increases since 1955. There are variations between the island groups, however, these are more noticeable in precipitation levels. Precipitation trends among the countries are more varied. Kiribati’s annual rainfall varies between 1,000 millimeters (mm) per year and 3,000 mm per year across the country, with the northern parts of the Gilbert and Line groups typically receiving more rain and the Phoenix group experiencing drier weather. The country is subject to the effects of ENSO, which typically brings heavy rain to Kiribati, and La Niña, which coincides with drought periods for Kiribati. Annual rainfall increased significantly between 1946 and 2013 on Kiritimati Island (in the northern part of the Line islands). In the capital, Tarawa, there has been no significant change in annual precip- itation over the same period. Tuvalu’s mean annual precipitation rates are around 500–600 millimeters (mm) lower in Tuvalu’s northern-most atoll, Nanumea, than in the capital, Funafuti. Its precipitation variability is high, with wet years receiving twice as much rainfall as dry years. Variability is linked to regional weather patterns, with higher rates in ENSO years and reduced rates during La Niña years. RMI’s annual rainfall varies consid- erably from north to south within the archipelago, with atolls in the south receiving 300–340 centimeters (cm) rainfall annually, perhaps as much as three times more than northern atolls. Future projections for all three countries under the SSP2-4.5 scenario suggest significant warming and modest changes in precipitation. By the 2050s, temperatures are expected to rise by 1.1°C in all three nations and by 1.5°C, 1.4°C, and 1.5°C in Kiribati, Tuvalu, and RMI respectively by the 7 P acific A tolls and the C limate C hallenge RM I 2090s. While warming trends persist, natural climate variability will still cause fluctuations with warm and cool periods. Precipitation projections and drought severity remain uncertain due to modeling challenges, related to Intertropical Convergence Zone intensity and ENSO influence as well as lack of data on historical trends, but evidence from different regions of Asia suggests increasing intensity of extreme rainfall events with temperature rise. Future precipitation intensity and totals will also be strongly influenced by future cyclone behavior which is also uncertain. Marine heat waves in the Western Tropical Pacific are predicted to expand in spatial coverage, du- ration, and intensity‒posing threats to marine ecosystems and livelihoods. Sea-level rise poses a growing risk for the Pacific Atolls due to long-term encroachment on coastal areas, but also due to the projected increase in the frequency of extreme sea-level events. Localized sea-level rise is complex to measure and model, notably due to the influence of large-scale climate phenomena such as ENSO. Some studies have suggested that the western Pacific has been experiencing above average rates of sea-level rise, but the extent to which this is attributable to human-driven climate change and/or likely to continue requires further research. Sea-level rise is further discussed in BOX 1.2. Sources: The World Bank Group (2021); The World Bank Group (2021a); and The World Bank Group (2021b). KI RI BAT I The three countries have a combined land area of just 0.016 % The Pacific Atolls are among the world’s smallest, most dispersed, and remote countries. The three countries’ land area totals a mere 1,018 km2 compared to 6.4 million km2 of oceanic area4 (their Exclusive Economic Zones or of their ocean exclusive economic zone EEZs).5 Combined, they have less than 200,000 people.6 Even when compared to the other Pacific Island countries (PICs), and to the Caribbean countries, the Pacific Atolls are extreme outliers (FIGURE 1.4). Their geographic isolation limits access to markets, increases supply chain costs, and raises the costs of infrastructure and public service delivery (FIGURE 1.5 ). There is, however, a 4 This yields a 9:1 water-to-land area ratio (as per Article 47(1) of the Decla- significant and growing concentration of the urban population in the Pacific ration of Baselines & Maritime Zones Atolls. Estimates for 2020 put the population living in formally recognized Outer Limits of 2016, which establishes archipelagic baselines). urban areas at 57 percent in Kiribati, 79 percent in RMI, and 66 percent for 5 An EEZ, as prescribed by the 1982 2022 in Tuvalu (World Bank 2023e). Across the PICs, rural-to-urban migration United Nations Convention on the Law of the Sea, is an area of ocean in which a is driven primarily by employment opportunities and the comparatively high sovereign state has special rights regard- ing the exploration and use of marine natural population growth rate of the youthful urban populations. Analysis resources (link). indicates that over the next three decades, many Pacific countries are likely 6 The populations of RMI, Kiribati, to see stronger population growth in the main islands than the national rates and Tuvalu are approximately 42,000, 123,000 and 12,000, respectively. due to migration and natural growth (World Bank 2021). 8 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T F I G U RE 1 . 4 F IG U RE 1 . 5 Pacific Atoll countries are among Costs and public spending are higher the most remote in the world in the Pacific Atoll countries ALL COUNTRIES CARIBBEAN INDIAN OCEAN CURRENT SPENDING CURRENT SPENDING OTHER PACIFIC PIC-9 CAPITAL SPENDING CAPITAL SPENDING PERCENT OF GDP, AVERAGE FY16–FY22 16000 AVERAGE DISTANCE TO MARKET (KM) PERCENT OF GDP, AVERAGE FY16–FY22 160 ATOLL OTHER COMPARATORS 160 ATOLL OTHER COMPARATORS COUNTRIES PICS 14000 140 COUNTRIES PICS 140 120 120 12000 100 100 80 80 PEERS 10000 STRUC.PEERS 60 PEERS 60 ASP.PEERS 40 40 STRUC. 8000 20 MICS SIDS PLW SAM FSM NAU 20 TON MICS RMI TUV VUT SIDS ASP. KIR PLW SAM FSM NAU TON RMI TUV VUT KIR 0 0 6000 LOG POPULATION 10K 1M 10M 100M 1B Notes: KIR=Kiribati; TUV=Tuvalu; RMI=Republic of Marshall Islands; NAU=Nauru; Source: World Bank staff estimates and FSM=Federated States of Micronesia; PLW=Palau; TON=Tonga; VUT=Vanuatu; World Bank 2023 and 2023d. SAM=Samoa; Struc. Peers=Structural Peers; Asp. Peers=Aspirational Peers; MICs=Middle-Income Countries PIC-9 = Pacific Island Countries (those listed above). Confined by a narrow economic and natural resource base, economic activity centers on a few industries. These activities are fishing (largely licensed to for- eign vessels), low value-added agriculture, infrastructure construction financed by international partners, and household remittances (TABLE 1.1 ). External assistance is crucial for economic development due to low levels of human capital (as measured by the human capital index, HCI), limited diversification and economies of scale. While government debt levels are not high relative to Gross Domestic Product (GDP), structural fiscal deficits (FIGURE 1.6 ) and low growth, high disaster risk, and low revenue mobilization constrain external debt financing. As a result, countries have low debt carrying capacity and are unable to borrow in commercial markets. In the 20 years prior to COVID-19, economic output in the countries grew slowly, averaging 2 percent per annum compared to 2.5 percent in the rest of the PICs (FIGURE 1.7). Remittances from abroad are an important but unpredictable source of revenue for households, contributing about 10 percent of GDP. RMI also receives funding under its Compact of Free Association (CoFA) agreement with the United States. Pacific Atolls have a low capacity to produce crops and livestock due to lack of arable land, water, and other constraints. They rely heavily on food imports, leading to high levels of food price volatility and nutrition challenges. The Food Import Capability Index (FICI)7 ranks them amongst the most exposed countries in the world to imported food price shocks. Most households in Kiribati, for example, focus on a limited range of crops (12 percent of households cultivate vegetables like coconuts, pumpkins, spinach, and cabbage, while 8 percent 7 The FICI was developed by the Food and Agriculture Organization (FAO) and grow root vegetables such as taro and sweet potatoes) (Rimon and McGregor is an aggregate measure of a country’s food security. The FICI is the ratio of 2020). The Kiribati 2020 census indicates that over 70 percent of households food imports to total mercantile exports. The premise on which the FICI has been grow crops solely for consumption. Coconut farming is practised more widely, established is that a country’s food although propped up by heavy subsidies. The livestock sector is also constrained security depends on its ability to both produce and buy food. by frequent drought that affects pasture quality. 9 P acific A tolls and the C limate C hallenge TAB L E 1 . 1 Economic characteristics of Pacific Atoll Countries RELIANCE ON OVERSEAS DEPENDENCE RELIANCE DEVELOPMENT GROSS ON FISHING GENERAL ON WAGE ASSISTANCE NATIONAL ACCESS FEE GOVERNMENT REMITTANCES (ODA) FLOWS INCOME REVENUES HUMAN CAPITAL GROSS DEBT (PERCENT OF (PERCENT OF (PER CAPITA, INDEX (HCI) (PERCENT OF (PERCENT OF COUNTRY POPULATION GDP) GDP) US$) (AND RANK) GDP) GDP) Kiribati 126,614 9.7 26.3 2,888 0.48 (118th) 64.9 17 RMI 43,550 11.8 50.1 6,570 0.40 (136th) 9.2 22 Tuvalu 11,081 4.7 70.8 6,654 0.44 (130th) 56.0 11 Atoll avg. 60,415 8.7 49.1 5,371 0.45 43.4 16.7 Other Pacific Islands 129,276 14.9 23.5 7,942 0.51 8.6 42 avg. Caribbean OECS avg. 119,800 5.7 8.9 8,942 0.56 0.0 80 Source: IMF (International Monetary Note: (i) Data is 2018-22 average. Gross ODA data is 2019-21 average. HCI data are only available for 2018 and 2020; (ii) HCI index Fund) WEO; IMF Article IV reports; ranking is out of 177 countries; highest is 1; (iii) OECS: Four middle- to upper-middle-income countries of the Organisation of Eastern WDI; World Bank staff estimates; Caribbean States (OECS), including Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines. OECD Statistics. F I G U RE 1 .6 High fiscal deficits are financed by grants AVG FY10-14 AVG FY15-19 AVG FY20-21 INCL. GRANTS FISCAL BALANCES EXCLUDING GRANTS (BARS) AND INCLUDING GRANTS (DOTS). PERCENT OF GDP 30 ATOLL COUNTRIES OTHER PICS 20 10 0 -10 -20 -30 -40 -50 RMI TUV KIR SAM PLW VUT TON FSM NAU F I G U RE 1 .7 Growth has been slightly slower than in other PICs ANNUAL AVER AGE RE A L G DP G ROW T H , 2 0 0 0 – 2 0 1 9 8 ATOLL OTHER PICs AVERAGES 7 6 5 4 3 2 1 0 KIRIBATI RMI TUVALU NAURU PALAU SAMOA TONGA FSM VANUATU PACIFIC ATOLLS OTHER PICs Source: World Bank (2023). 10 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 1.2 RMI VULNERABILITIES TO CLIMATE SHOCKS T he economic viability of the Pacific Atolls is closely tied to their environment. Climate change affects their economies through multiple channels, including erosion and flooding, damage to elec- tricity supplies and water resources, changes in fish stocks, and loss of coastal ecosystems, among others. This is expected to lead to population displacement and changes in livelihoods. A large share of the population is vulnerable to falling into extreme poverty in response to coastal flooding and other climatic shocks. Though the extent varies across countries, Kiribati, RMI and Tuvalu do not experience significant levels of monetary poverty owing to social funds and transfers. Extreme poverty averages below 5 percent in the three countries, and land ownership helps 8 Based on estimates of the cost of coastal flooding and other climatic to provide a buffer. Approximately 23 per­ cent of the population across the shocks to which atoll countries are vulnerable (for example, Kunze and countries is, however, vulnerable to falling into extreme poverty in response Strobl 2024). Use of poverty maps would to climatic shocks.8 The population of Kiribati and Tuvalu is most vulnerable be helpful in exactly determining risks to the poor and vulnerable, however, these with 32 percent and 27 percent of the population respectively being either are not available for the Pacific Atolls. This is an additional area where further poor or vulnerable to falling into poverty, whereas approximately 10 percent analytical work would be useful for assessing climate impacts on the poor. of the population in RMI is vulnerable (FIGURE 1.8 ). The size of the vulnerable 9 Adaptation strategies, such as mi- population grows substantially with the severity of climate shocks (nearly all grating away from the most climate-af- fected regions, can substantially reduce the Pacific Atolls’ population lives within 100 m of the shoreline), suggesting vulnerability to falling into poverty significantly worse poverty outcomes in all three countries if the severity of (Desmet et al. 2021). The CCDR turns to adaptation strategies in Chapter 3. shocks worsens.9 11 P acific A tolls and the C limate C hallenge F I G U RE 1 .8 Pacific Atoll Country Poverty Rates (Percent of Population) EXTREME POOR VULNERABLE TO POVERTY – 2X POVERTY LINE 35 30 25 20 15 Note: Vulnerability was defined as living below 10 two times the extreme poverty line of US$2.15 5 (2017 PPP). 0 Source: World Bank staff estimates. KIRIBATI RMI TUVALU OTHER SIDs Focusing solely on extreme poverty understates the potentially devastating impacts that more frequent coastal flooding might have on the population. The share of the population in each country experiencing non-monetary depri- vations is significantly larger than the share living in extreme poverty. These non-monetary deprivations include access to a range of services that are es- sential to developing adequate human capital, such as access to clean water, improved sanitation, and education. Importantly, the main causes of poor access to such services include large, fixed costs relative to thinly populated regions and other logistical challenges associated with remoteness. Climate change-induced storms and flooding threaten electricity supplies‒ thereby affecting power generation, transmission, and distribution. Many power utilities lack resilient design, power reserve margin, and robust mainte- nance leading to power outages that affect critical services and impede growth. Power infrastructure near coastlines is particularly vulnerable from cyclones and storm surges. Aging diesel systems and poorly maintained distribution networks, often without redundancy, further compromise power reliability. Transportation, digital connectivity, and coastal protection infrastructure face heightened risks impacting all economic activity. The costs of construct- ing and maintaining coastal infrastructure, such as seawalls and roads, are amplified due to the need to import materials and susceptibility to damage from the saline environment. Ensuring digital and telecommunications connectivity for emergency services, disaster risk monitoring, and economic development is a challenge due to the Pacific Atolls’ remote locations and limited infrastructure. Internet connectivity is primarily provided through satellite communications and submarine cables. Climate-related events such as tropical cyclones, storm surges, and sea-level rise can damage critical digital infrastructure, including submarine cables. Digitalization can facilitate the delivery of climate informa- tion services by providing real time data. In addition, digital platforms can play a crucial role in raising awareness about climate change issues among remote communities as well as enable the delivery of essential services, including health care and education. The high costs of land leases further complicate public infrastructure projects. 12 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T “ Transportation, digital connectivity & coastal protection infrastructure face heightened risks impacting T U VALU all economic activity. Scarcity of clean water, due to drought, saltwater intrusion or seawater and pollutant groundwater contamination, is a growing threat. Populations frequently have access to less water than the minimum daily requirement suggested by the World Health Organization. Water supplies rely on rainwater and freshwater lenses‒bodies of fresh groundwater that sit above the seawa- ter under the islands. Overextraction, sea-level rise, and pollution, including from poor sanitation, compromise groundwater quantity and quality. Periodic droughts have repeatedly compromised the availability of rainwater and potable groundwater in all three countries‒leading to emergency declarations and the installation of desalination units.10 Rainfall variability, extreme weather events, and saltwater intrusion affect the viability of the agriculture sector, causing decreased production and even the expected extinction of taro by 2050 due to rising salinity levels. Evidence shows that a 10 percent reduction in average rainfall by 2050 caused by climate change would result in a 20 percent reduction in the size of the freshwater lens on Tarawa Atoll, Kiribati. Furthermore, repeated climate shocks have led to an increase in the spread of pests and diseases, severely impacting crop yields. Rhinoceros beetles have reduced the productivity of coconut palms. 10 See for instance Coastal ecosystems and fisheries are at risk due to climate change. A diverse the South Tarawa Water Supply Project financed range of fish thrive in coral reefs, mangroves, and seagrass meadows around by the World Bank (link). the atoll islands. These ecosystems sustain fisheries production of over three 13 P acific A tolls and the C limate C hallenge tonnes of edible fish per square kilometer annually, providing 50-90 percent of animal protein consumed in the Pacific Atolls. Between 44-75 percent of their people are involved in fishing, mostly small-scale. By 2100, under moderate climate change (SSP2-4.5), mangrove coverage in Kiribati and RMI could drop by 50 percent and in Tuvalu by 30 percent, while coral reefs may decline by 47 % 50-75 percent in all three countries. A consequent 9 to 16 percent decrease in coastal fisheries catch is predicted under moderate climate change (Bell 70 et al. 2011) as coastal fish move to cooler and deeper areas. Bivalves may become smaller and less abundant. TO Further offshore, climate change will drive changes in the distribution and of domestic government abundance of migratory tuna, impacting the Pacific Atolls’ largest source revenues of the Pacific Atoll countries are from of domestic revenues. The countries receive fishing access fees that contrib- fishing access fees ute 47-70 percent of their domestic government revenues. Warmer oceans are expected to drive an eastward shift in migratory tuna species (skipjack, yellowfin, and bigeye).11 The resulting change in catch by 2050 under RCP4.5 is slightly positive for the Pacific Atolls (with an estimated increase of 6.9 per- cent in Kiribati), but under more severe climate change (RCP8.5) significant declines are projected for Kiribati (-8.2 percent), RMI (-0.7 percent), and Tuvalu (-23.4 percent) (Bell et al. 2021). The CCDR analyses the fiscal implications of fishery impacts in Chapter 4. Health care systems face increasing pressure from rising tempera- tures which exacerbate heat-related illnesses and reduce productivity– particularly affecting outdoor workers. The transmission of diseases like den- gue fever is rising due to shifting vectors‒straining health care resources and labor productivity. In response, RMI's Ministry of Health and Human Services has developed a strategic plan for 2022-30 that focuses on enhancing health care services and addressing the impacts of climate change. Tuvalu's govern- ment has included health security, Disaster Risk Management (DRM), outbreak control, and climate adaptation in its National Health Strategic Plan 2020-2024. More residents are likely to migrate towards urban centers to seek improved living conditions and access to education and employment. In 2021, 77.7 percent of RMI’s population lived in designated urban areas compared to 66.8 percent in 1980 (RMI Census 2021). While the increasing trend and overall levels of urbanization are comparable to those in other Middle-Income Countries (MIC), severe overcrowding is occurring in urban areas given land and infrastruc- ture constraints, placing severe strain on services (including housing, fresh wa- ter, and sanitation). Extreme weather events are significant disruptors to urban environments and likely to amplify socioeconomic inequality for the urban poor and vulnerable in peri-urban and informal settlements in hazard-prone areas. Climate-related hazards and environmental degradation has also led to displacement and a loss of traditional lands, cultural traditions, and commu- 11 As tuna migrate towards the Eastern Pacific, they move into high nity-based resource management systems. Shifts in agricultural viability and seas areas beyond the control of the Parties to the Nauru Agreement (PNA), alterations in food gathering and preparation practices affect dietary habits and the highly effective cooperative manage- impact community health and social practices. Environmental and economic ment framework for tuna fishing in the Western Pacific. pressures also cause the loss of historical sites and the displacement of com- 14 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T munities from their place of origin‒thereby eroding communal bonds, informal support networks, and cultural attachment to land. Displaced individuals often bear the brunt of climate-related disasters due to limited access to resources, economic opportunities, and decision-making processes, but such losses also reflect a deeper erosion of identity, heritage, and tradition. These traditional governance systems, including communal land ownership and resource man- agement, are increasingly under pressure from modern economic systems and legal frameworks. Prioritizing social inclusion can help to address disparities involving vulnerable groups in decision making and resilience-building efforts and support communities to adapt to climate change while preserving cultural values and traditions. KI RI BAT I 1.3 THE ADDED CHALLENGE OF UNCERTAINTY E valuation of these vulnerabilities is made more difficult by the un- certainty inherent in climate change and lack of data. Climate im- pacts, including storm surges, floods, and droughts that intensify over time, will require a level of protection that will depend on uncertain timing and impacts. Sea-level rise is the most significant underlying factor and faces significant uncertainties (BOX 1.2). Population movements are poorly understood, and contingent upon the frequency and intensity of these and other climate impacts. One important response to this uncertainty is an investment in data and modelling‒including climate impacts on the Pacific Atolls’ physical land areas, water resources, fisheries, and ecosystems. The CCDR returns to this topic in Chapter 5. A scenario-based approach is needed to plan for adaptation and weigh trade-offs. In uncertain contexts decision making for public investment requires 15 P acific A tolls and the C limate C hallenge innovative approaches. While the impacts of sea-level rise, ocean acidification, warming, and extreme weather events are known, the specifics like the pace, magnitude, location, and timing are uncertain. This can lead to problems like over-design, inadequacy, and lock-in when investing in public projects. Tradition- al cost-benefit analysis may be insufficient. Innovative methods like Dynamic Adaptive Policy Pathways (DAPPs) (which is applied in Chapter 3), Adaptive Policy Pathways, Info-Gap Theory, Engineering Options Analysis (EOA), and Robust Decision-Making (Kalra et al. 2014) can help support decisions with long-term consequences and deep uncertainty. When addressing sea-level rise, for example, decision makers should consider multiple options and sce- narios, focusing on robustness and sequencing rather than optimizing for a single scenario. Despite uncertainty, acting on adaptation needs now is imperative. The following chapters demonstrate that even modest adaptation efforts–commen- surate with midrange climate scenarios–can help mitigate some vulnerabilities 0.55m and enhance opportunities for citizens. Some measures will deliver develop- ment co-benefits irrespective of climate outcomes. These include investments in “no regret” actions, such as strengthening education, health care, and social A midrange global emissions scenario protection. Similarly, investments in government capacity and financial man- (RCP4.5) gives projections agement‒the focus of Chapter 4‒improve the Pacific Atolls’ ability to raise of 0.55 meter of sea-level rise (with a range of 0.39- financing for both climate and development objectives. Others will involve large 0.72 meters) by 2100. costs and significant trade-offs. B OX 1 .2 Sea-Level Rise: Uncertainties and Potential Impacts Scientists are confident that climate change is causing sea-level rise, however, the pace of future sea-level rise is uncertain. The 2019 Special Report on the Ocean and the Cryosphere in a Changing Climate (SROCC) concluded that under a high GHG emissions scenario (RCP8.5), the likely global sea-level rise by 2100 would be 0.84 meter (with a range12 of 0.61- 1.10 meters) (FIGURE 1.9 ), largely driven by ice loss from the Antarctic Ice Sheet. Under a low emissions scenario (RCP2.6, consistent with the Paris Agreement) a rise of 0.43 meter (with a range of 0.29-0.59 meters) by 2100 is projected. A midrange emissions scenario (RCP4.5) gives projec- tions of 0.55 meter (with a range of 0.39-0.72 meters) by 2100. Under all scenarios, an eventual sea-level rise of 2 meters seems unavoidable sooner or later beyond 2150 (van de Wal et al. 2022). The IPCC has not given an upper bound on eventual sea-level rise due to the uncertainty of ice dynamics. Global mean sea level has risen over the past century by 0.16 meters (with a range of 0.12–0.21 meters) with a present rate of rise (2006–15 period) of 3.6 mm per year. The present rate is a strong acceleration 12 The range means versus the historical rate of rise of 1.4 mm per year observed between the 15-85 percentile of all model projections 1900 and 1990. Projected rates under further climate change are a under that RCP. 16 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T KI RI BAT I F I G URE 1 .9 Projected global sea-level rise in the 21st century LIKELY RANGE (MEDIUM CONFIDENCE) MEDIAN (MEDIUM CONFIDENCE) SSP5-8.5 LOW SSP5-8.5 LOW CONFIDENCE CONFIDENCE 95 TH PERCENTILE 83 RD PERCENTILE 2.5 METERS 2 1.5 SSP5-8.5 SSP3-7.0 1 SSP2-4.5 SSP1-2.6 0.5 SSP1-1.9 0 1990 2000 2050 2100 2150 Source: Adapted from IPCC 2023 (link). further acceleration, at 4 mm (2-6 mm), 7 mm (4-9 mm), and 15 mm (10-20 mm) per year under RCP2.6, RCP4.5, and RCP8.5 respectively (IPCC 2019). Rates vary by location due to factors such as trade winds. In their natural state, Atolls and reef islands have considerable geomorpho- logical resilience, however, there is uncertainty as to how the islands will respond under climate change and human land uses. Many atolls have re- mained stable or even grown in area over the last 20–60 years due to sed- iment movement and accretion‒despite sea-level rise to date.13 There are, however, challenges to this resilience: (i) geomorphology is highly dynamic: these dynamics conflict with human uses‒particularly built infrastructure in urbanized areas (Duvat 2018); (ii) the accelerated rates of sea-level rise projected may outstrip Atoll sand accretion processes; and (iii) climate impacts on coral growth (expected to be severe) may reduce coralline sand generation (on which Atoll replenishment relies). For non-urbanized 13 Coral reefs enhance reef elevation 13 islands, changes in habitability (due to water source contamination, storm through calcium carbonate deposition, which is then shifted to land by wave surge, and vegetation change) remain threats. Forward-looking projections action. RMI's atolls and mid-ocean reef of Atoll countries show instability and loss of habitability (due to impacts islands experienced more accretion than erosion from 1945 to 2010, resulting in on water and infrastructure, and wave overtopping) by mid-century under a 0.37 km² expansion (Ford and Kench 2015). Tuvalu and Kiribati also experi- accelerated sea-level rise (Kane and Fletcher et al. 2020). enced slight increases. 17 2 CLIMATE COMMITMENTS & CAPACITIES PAGE 1 8—27 L AUR A , RM I KEY MESSAGES 1 Pacific Atolls have made ambitious mitigation and adaptation commitments, supported by climate strategies and policies. They have played a key role in shaping global climate policies and the Paris Climate Agreement. 2 They are strengthening their legal and regulatory frameworks, rec- ognizing that the urgency and cost of climate adaptation necessitates strong institutional, fiscal, and technical capacity. This includes climate and disaster response laws–providing a broad legal foundation for climate action. 3 Significant improvement is needed in implementation capacity and governance. Strengthening institutions is crucial to enhance absorptive capacity and effectively translate climate policies into concrete adaptation outcomes. 4 Improved Public Financial Management (PFM) systems and practic- es are also required, including enhanced budget execution, more effective coordination of aid which finances the bulk of public investment in Pacific Atolls, improved Public Investment Management (PIM) including central and local government asset management policies and practices, and sus- tainable procurement practices. 5 These actions are critical for ensuring efficient utilization of re- sources, attracting international financing, and fostering sustainability in climate-related investments. T he PICs, including leaders from the Pacific Atolls and Council of Regional Organizations in the Pacific, have been instrumental in shaping climate policies and the Paris Climate Agreement (Unit- ed Nations Framework Convention on Climate Change: UNFCCC 2015). The countries strongly advocated for limiting warming of the global mean temperature to 1.5°C and have advocated for the establishment of a loss and damage fund. They have made ambitious commitments through their nationally determined contributions (NDCs) while also developing more detailed and long-term climate strategies. The urgency, uncertainties, and ad- aptation cost of climate change in the Pacific Atolls means strong institutional, fiscal, and technical capacity is required to achieve these commitments. This chapter details the climate commitments of the Pacific Atoll countries, how they relate to national development objectives, and the governance structures they are using for implementation. It highlights opportunities for strengthening insti- tutions and legal and regulatory frameworks to better implement climate action. 19 C limate C ommitments & C apacities KI RI BAT I 2.1 CLIMATE & NATIONAL DEVELOPMENT STRATEGIES D espite their minimal GHG emissions in absolute terms, the Pa- cific Atolls have set ambitious targets to reduce emissions.14 The Pacific Atolls total contributions to global GHG emissions are modest‒well below the global average15‒and more than offset by oceanic carbon sequestration within their EEZs. These NDC com- mitments send a strong signal to the world of the importance they place on global emissions reductions. RMI and Tuvalu have pledged to achieve net-zero carbon emissions by 2050, while Kiribati aims for a 70 percent reduction in GHG emissions by the same date. Key sectors for mitigation include renewable energy, waste management, and transportation, alongside initiatives for wa- ter supply, sanitation, coastal protection, and infrastructure. While the small size of the Atolls means these commitments have little impact on global GHG emissions, they help enhance economic and climate resilience by reducing their exposure to imported fuel. 14 Republic of Kiribati Nationally Determined Contribution (Revised), November 2022 (link); Tuvalu’s Updated The Pacific Atolls have prioritized climate resilience and adaptation in Nationally Determined Contribution, No- vember 2022 (link); and Republic of the their national development plans (FIGURE 2.1). Each of their national plans Marshall Islands, “Nationally Determined Contribution” 22 November 2018 (link). have pillars on climate change. Kiribati's 20-Year Vision (KV20) 2016-2036 15 Per capita emissions in 2021 prioritizes the environment, climate change and sustainable development as were 3.6t CO2e/yr in RMI, 0.5 in Kiribati, and 1.0 in Tuvalu. Global per cross-cutting issues.16 The Kiribati Joint Implementation Plan (KJIP 2019- capita emissions were 4.6t CO2e/yr. The 2028) outlines targets for adaptation, along with policies, strategies, and Lower-Middle-Income Countries average was 1.79t CO2e/yr and the Upper-Mid- actions. RMI's National Strategic Plan 2020-2030 prioritizes sustainable de- dle-Income Countries average was 6.54t CO2e/yr. Source: World Bank staff using velopment and resilience as core principles. Infrastructure and environment Our World in Data (link). The Kiribati Development Plan 2024-2027 (in draft) are key pillars‒with dedicated attention to DRM, strengthened coordination specifies climate and disaster resilience as key policy areas. among stakeholders, and mainstreaming climate into planning and budgeting. 16 The Kiribati Development Plan Tuvalu’s Sustainable Development Strategy 2021-2030 integrates resilience 2024-2027 (in draft) specifies climate into its vision, with national goals on disaster resilience, meteorological and and disaster resilience as key policy areas. land management, and energy. 20 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T F I G U RE 2 . 1 Atoll countries’ commitments in climate mitigation and adaptation Mitigation NDC 2018 incl. 2020 revision By 2025, 32% GHG emissions reduction NDC 2022 Revision By 2030, 45% GHG emissions reduction By 2025, reduction of GHG emission of 9.5% (unconditional) By 2035, 58% NDC 2022 Update up to 16.7% (conditional) By 2050 net zero GHG emissions By 2050, net zero emission by 2030, GHG emission reduction of 8% (unconditional) Priority Sectors: Priority Sectors: up to 23.8% (conditional) • Energy generation (100% • Energy (by 2030, 100% GHG Renewable energy by 2050) emissions reduction thanks Priority sectors: • Transport, Domestic to Renewables, and Energy • Renewable energy Shipping: 40% GHG emission efficiency gain in Funafuti • Energy efficiency reduction by 2030 and full by 30%) • Maritime/Land/Air transport decarbonization by 2050 • Transport (maritime • Waste • Waste infrastructure; e-mobility) • Hydrofluorocarbons • Energy efficiency (cooking and • Waste • Mangroves lighting) • Biogas Kiribati Marshall is. Tuvalu KJIP 2019-2028 2023 NAP NAP (in preparation) Emphasizes actions Defines pathways, periods, and Identifies short- and medi- in the following areas: decision points: um-term priorities across six • Policies' alignment sectors: and coordination 2023-33: • Water • Citizen engagement, • Prepare for the future: public • Agriculture • Access to finance sector capacity and modern- • Education • Greening the private sector ization, land tenure, financing • Health • Water and food security pipeline, environmental and • DRM • Health construction norms, citizen • Coastal Protection • Infrastructure development engagement and land management • Adapt (protect relocate, Areas mentioned in 2007 • Education and awareness strengthen access to service) National Adaptation Program • Early warning systems differently in Outer, Semi-Ur- of Action (NAPA) and DRM ban, and Urban Atolls • Coastal resilience • Renewable energy • Food security 2033-90: • Water security and efficiency • Sovereignty and cultural • Select and protect atolls • Health against 2m rise, consolidate • DRM heritage social services (2040-70), and support relocation (2070-90) Adaptation Action plans for: • Infrastructure, utilities, trans- port and telecommunications • Health and social services • Education & training • Fisheries • Internal Affairs • Natural resources & trade • Spatially distributed commu- nities • Gender equity 21 C limate C ommitments & C apacities All three countries have strengthened their legal and regulatory frameworks. Kiribati and Tuvalu have enacted climate laws, providing a broad legal foun- dation for climate action. They provide strategic direction for national climate policy, are multisectoral in scope, and set out institutional arrangements for climate governance at the national level, including accountability mechanisms (TABLE 2.1). Specifically: Kiribati’s Disaster establishes institutional arrangements, including the Kiribati National Risk Management and Expert Group (KNEG) on Climate Change and Disaster Risk Manage- Climate Change Act ment as a key technical oversight body. It outlines the responsibilities 2019 of Island Disaster Committees, provides for funding arrangements, establishes the Disaster and Climate Change Rapid Response Fund, and mandates community engagement and accountability. Tuvalu’s Climate defines the functions and powers of the Climate Change Department Change Resilience Act and the National Advisory Council on Climate Change (NACC) (which 2019 includes government and non-governmental actors). In 2023, Tuvalu updated its constitution17 to legally commit the government to climate action and to reaffirm its statehood (that is, its EEZ boundaries) notwith- standing the effects of climate change. In addition, Tuvalu established the Tuvalu Climate Change and Disaster Survival Fund (2016) with the objective to provide immediate vital services and respond to future climate change impacts and natural disasters in a coordinated manner. RMI’s National outlines strategies for climate adaptation and mitigation across key Climate Change sectors such as energy, infrastructure, and health (Government of the Policy Framework Republic of the Marshall Islands 2011). Although it lacks the legal (NCCPF), 2011 status seen in Kiribati and Tuvalu, it establishes coordination mecha- nisms led by the Chief Secretary and the national climate change (Tile Til Eo)18 committee. The Disaster Risk Management Act, enacted in 2023, addresses DRM aspects of RMI’s climate response. RMI also recently approved The Sea Level Rise (2023) and Adaptation Policy (2023) that provides a framework to assist with decision making focusing on adapting to sea-level rise. In addition, RMI enacted the Marshall Islands Resilience and Adaptation Trust Fund Act (2022), establishing a fund that will support long-term climate adaptation and resilience-building efforts. Since 2018, the Pacific Atolls have developed long-term plans to support their climate change goals. Kiribati’s Climate Change Policy (2018) and KJIP 2019-2028 provides a high-level vision and direction for climate action. (A long-term adaptation strategy which focused on coastal resilience and land reclamation is also under preparation). RMI’s “2050 Climate Strategy – Lighting the Way” adopted in 2018, outlines a pathway for achieving net-zero emissions, 100 percent renewable energy, and enhanced adaptation and resilience. RMI’s NAP, also referred to as its “Survival Plan,” was adopted by the Cabinet in 2023 17 For more details, see Library of Con- and presented at COP28 (Conference of the Parties) in December 2023. Tuva- gress (2023) (link) and the Constitution lu’s National Climate Change Policy 2021-2030 prioritizes accessing climate Amendment Bill (2022) (link). finance, reducing vulnerabilities, managing human mobility, and sovereignty 18 Tile Til Eo, translated in Marshallese as “Light the Way”. protection. Tuvalu is in the process of finalizing its NAP. 22 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T TAB L E 2 . 1 Legal, Regulatory and Policy Framework for Climate Change NOT YET YES UNDER PREPARATION GOVERNANCE KIRIBATI RMI TUVALU FUNCTION Climate Change 2019 Kiribati Disaster Risk 2023 Disaster Risk Management 2019 Climate Change Resilience Framework Law Management and Climate Change Act (includes institutional Act Act structure and framework for climate change in disaster risk management) Long-Term Strategy ▸ 2022 revised NDC ▸2018 "2050 Climate Strategy - ▸ 2022 revised NDC or 2050 Climate ▸ 2018 Joint Implementation Plan Lighting the Way" ▸ CC & DRM Strategic Plan 2012- Change Plan for Climate Change and Disaster ▸ 2022 NDC 2016 Risk Management 2019-2028 ▸ 2023 NAP "National Survival ▸ NAP (in preparation) ▸ 2018 Kiribati Climate Change Plan" Policy ▸ Sea-level Rise Policy (2023) Coordination Nested in the Climate Change Nested in the Climate Change Nested in Climate Change Mechanism Division, Ministry of Environment, Directorate, Office of the Department, Ministry of Home Lands and Agricultural President Affairs, Trade, Climate Change Development and Environment KI RI BAT I 2.2 19 The executive offices of the president in Kiribati and prime minister BRIDGING THE GAP BETWEEN STRATEGY & IMPLEMENTATION in Tuvalu are the designated climate change focal points. In RMI, this function is jointly led by the Chief Secretary and Minister of Environment. In Kiribati, the KNEG is the main advisory body, and B includes senior officers from ministries, local government, the Kiribati Chamber of Commerce and Industry, and other non-government actors. In RMI, there ridging the gap between strategy and implementation in the are three working groups under the Tile Pacific Atolls requires enhancing governance and state capacity. Til Eo Committee focused on adaptation, mitigation, and NDC partnerships with The Pacific Atolls have put in place institutions,19 processes, and membership comprising sectoral minis- tries. In Tuvalu, DRM is overseen by the coordination mechanisms at senior levels of government, (TABLE 2.2) National Disaster Office while climate change coordination is overseen by the however, governance challenges must be overcome to transform NACC which advises the prime minister. The Climate Change Department (under strategies into effective policies, regulations, and outcomes. While the most the Ministry of Home Affairs, Climate important coordination functions have been created, further strengthening and Change and Environment) is the Secre- tariat for the NACC. operationalization of those coordination functions is required. 23 C limate C ommitments & C apacities TAB L E 2 . 2 Institutional Arrangements for Climate Change in the Pacific Atolls NOT YET YES UNDER PREPARATION GOVERNANCE FUNCTION KIRIBATI RMI TUVALU Clear and high-level leadership Office of Te Beretitenti with Office of Chief Secretary and Office of the Prime Minister Climate Change and DRM Ministry of Environment20 with National Disaster Office units and Secretary of Government chairing NACC Stakeholder platform with KNEG overseeing the TTEC without dedicated NACC and National Disaster independent advisory implementation of the KJIP secretariat but three Committee with dedicated mechanism supported by a (Adaptation, Mitigation and secretariat dedicated secretariat NDC Partnership) working groups Departments in charge of budget Ministry of Finance in the Ministry of Finance/Division Ministry of Finance’s Climate and donor coordination KNEG; KJIP under guidance of International Development Change Division (CCD), of Office of Te Beretitenti Assistance is a member of NACC’s Planning and Budget and Department of Climate the TTEC's project review and National Disaster Change committee Committee Local authorities Ministry of Culture and Reimaanlok21 framework Island Disaster Committees, Internal Affairs and whole-of- piloting local adaptation Falekaupule and Kaupule island approach led by Office plans (potential for climate change of Te Beretitenti policy too) Transparency and accountability No reports on short-term No reports on short-term No reports on short-term planning and progress planning and progress planning and progress Source: These critical elements are based on World Bank (2020) and Grantham Research Institute on Climate Change and the Environment (2022). Public institutions play a vital role in addressing collective action problems, providing public goods, creating an enabling environment for private actors, and shielding the economy and citizens from shocks. The range of public institutions needed for effective climate change response is substantial. Im- portant institutional contributions are needed in almost every sector as well as across levels of government, however, strengthening these institutions presents significant challenges for the Pacific Atolls. To ensure sustained progress, com- mitment and resources are essential, necessitating enhancements in policy, systems, staffing, financing, management practices, and incentives. Regular 20 Chapter 7.2 of the NAP proposes a review of the institutional arrangements monitoring, reporting, and integrating lessons from experience into institutional for the implementation of the NAP, as outlined in the sea-level rise policy, development efforts for climate change response will be instrumental in over- including retaining the TTEC with a new coming these challenges. Greater local participation and ownership22 is also committee structure, reforming the Ministry of Environment Act, and retain- needed. While Kiribati and Tuvalu have a strong legal basis for climate actions ing the CCD under a more appropriate ministry structure. (as described above), RMI could also consider a climate law.23 Meanwhile, 21 Reimaanlok is a Marshallese word Tuvalu could look to follow RMI in adopting a NAP. All three countries would meaning “look towards the future.” The Reimaanlok Framework is RMI’s benefit from translating their NAPs into rolling, annual action plans to inform national framework for communi- budget preparation. Finally, reporting on NAP implementation and high-level ty-based conservation area planning and management. committees’ decisions could be put in place to strengthen the accountability 22 RMI’s recent NAP process is an of line ministries and government, and trust with partners and citizens. example of comprehensive consultation and local participation. 23 Most of the required elements are Limited civil service capacity affects climate planning, implementation, and already in RMI’s Climate Policy, Strategy and NAP. Comprehensive Climate frame- management of international climate finance. Recruitment and retention of work laws tend to strengthen climate qualified staff, especially for high-level technical and managerial positions, is action over the long term by providing policy certainty and durability. challenging in climate change departments (CCDs, as is common across these 24 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T civil services), with small teams required to take on expanding responsibilities. Tuvalu’s CCD manages to retain qualified staff and institutional memory by redeploying project staff between development partner projects as they close and are succeeded by others, however, public sector wage bills in the Pacific Atolls are structurally high as a share of GDP (World Bank 2023).24 Tuvalu exem- plifies these challenges, with a 29 percent increase in civil service wages over five years.25 Nevertheless, despite investment in human resources, vacancies for key positions remain high, and staffing for key functions appears limited given the dispersed territory. Human resource capacity and the civil service workforce across all three countries are also challenged by citizens seeking economic opportunities abroad. While private sector opportunities are limited due to the small size and remoteness of the islands, the private sector can potentially play a larger role in supporting public institutions to finance adaptation and enhance human capital development. As set out in Chapters 3 and 4, the Pacific Atoll governments can actively promote investment opportunities in key sectors such as renewable energy, construction, tourism, fisheries, and education and training. To attract more interest, however, the countries will need to streamline procedures for business registration, oversee land tenure reforms, and ensure legal protections for investors, including the development of risk mitigation instruments. Measures to strengthen civil service capacity in the Pacific Atolls require innovative approaches due to limited fiscal space and geographical chal- lenges. Traditional methods like recruitment and building technical capacity are hindered by factors such as labor pool availability and mobility issues. Alter- native strategies (BOX 2.1) include: (i) pooling expertise regionally and drawing on experiences and frameworks from organizations like the Secretariat of the Pacific Regional Environment Programme (SPREP). Twinning programs and regional communities of practice could optimize skill utilization and knowledge sharing; (ii) outsourcing expertise through contract frameworks for short- to medium-term tasks requiring specialized skills. Secondments from partner countries are limited, while outsourcing to private firms poses challenges in quality control. Consortiums of universities could provide specialized expertise with internal peer review; (iii) enhancing staff retention and recruitment attrac- tiveness through non-financial benefits like temporary mobility, access to inter- 24 The average share of GDP for FY15-21 was 28 percent for Kiribati, national training, and recognition; (iv) implementing short training solutions for 22 percent for RMI, and 32 percent existing public administration through online certification programs to mitigate for Tuvalu, compared to 7 percent for SIDS and 8 percent for MICs. As a share distance costs; and (v) utilizing digital solutions such as artificial intelligence of current spending: 41 percent for Kiribati, 38 percent for RMI, 37 percent (AI) to mitigate labor needs, particularly in areas where data availability allows, for Tuvalu, compared to 36 percent for MICs. This underscores high spending as such as disaster risk assessment or customs/tax controls. a proportion of GDP. This is not unique to the Atolls with the share of current spending broadly in line with Pacific Given the context of territorial dispersion and customary land tenure, strong peers (World Bank 2023d). coordination with local authorities and spatial planning is critical. In the 25 Kiribati is adjusting civil service wages and salaries, with the 2024 Pacific Atolls, customary land tenure is prevalent, with land ownership and use recurrent budget showing a 38 percent increase above 2023. Tuvalu is reviewing rights passed down through generations within local communities. This system its civil service salary structure and plans is closely intertwined with local traditions, cultural identities, and socioeconom- to undertake a functional review of its public service. ic practices. Beyond the main islands and urban centers, the capacity of the 25 C limate C ommitments & C apacities central government to reach out to outer islands is limited. Local authorities, traditions, and arrangements have a central role to play in climate change ad- aptation policy planning and supporting human mobility opportunities‒even in situations where formal devolution to local governments is very limited. Elected representatives and traditional authorities play a pivotal role in land tenure, local governance, and decision-making processes. These actors are key for building community resilience. Their support is needed to translate na- tional climate change objectives into actionable plans that are tailored to local contexts and for ensuring acceptance and ownership. Their role underscores the importance of inclusive and participatory approaches. Local authorities’ ca- pacity to mobilize communities is also key for the functionality of early warning systems and for maintaining coastal protection infrastructure (such as small revetments, seawalls, or nature-based solutions-NbSs) (Mycoo et al. 2022; Robinson and Butchart 2022; and Donner and Webber 2014). Evidence shows that participatory local development planning of coastal protection measures leads to better ongoing maintenance (Mycoo et al. 2022). The Pacific Atoll Countries are working to improve transparency, account- ability, and inclusivity in their climate change initiatives. RMI’s NAP was developed through an extensive consultation process with 15 communities nationally, involving youth groups, women’s groups, churches, government ministries, and the private sector. Likewise, Tuvalu’s NAPA process involved consultations with local communities and stakeholders to ensure their par- ticipation in decision making. Building on these efforts, Atoll governments could consider periodic monitoring and communication of climate strategy implementation to foster accountability and raise public awareness‒especially among stakeholders who may not be represented by established constituen- cies. Fostering a culture of collaboration and inclusivity is crucial to bridging the gap between climate strategy and successful implementation. Beyond the national consultations on the formulation of NAPs, the countries could harness and strengthen existing channels for two-way communication: top down on adaptation commitments and large projects, bottom-up information on climate risks, impacts, community needs and aspirations. 26 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 2.3 CLIMATE–INFORMED PUBLIC FINANCIAL MANAGEMENT D espite some activities and projects being included in current and capital budgets, including ODA financing, climate change is not mainstreamed in PFM nor reflected in the budgets of the Pacific Atolls (TABLE 2.3). None of the Pacific Atolls implement cli- mate-informed fiscal risk assessments, budget guidelines, budget tagging, screening for public investment projects, or impose green/sustainable procurement provisions.26 Tuvalu plans to introduce climate budget tagging in fiscal year 2024-25, which enhances line ministries’ accountability on climate efforts, and supports climate financing advocacy. Assessing climate priorities in the budget is challenging due to factors such as reporting inconsistencies and the absence of multi-year performance-based programs. Tuvalu has translated its climate vision into a list of priority projects for infrastructure investment, 26 Green/sustainable procurement re- fers to the practice of purchasing goods, incorporating climate criteria for prioritization. In all countries, own-source services, and works that have minimal negative impact on the environment revenue can basically only fund current expenses, with the small portion that and promote sustainability as well as is allocated to capital investments focusing on human capital (schools and accounting for the product’s life-cycle costs. health needs). TAB L E 2 . 3 Summary of Climate Change PFM in Atoll Countries NOT YET YES UNDER PREPARATION CLIMATE PFM KIRIBATI RMI TUVALU Climate-Informed Local Level Whole-of-island pilot includes Reimaanlok Framework Island Disaster Committee Risk Assessment risk assessment for community-based involving Local Government conservation area planning & (Falekaupule & Kaupule) management Climate-Informed Fiscal Risk No No No Assessments Climate-Informed Budget No No No Guidelines Climate Expenditures No No Climate budget tagging in Budget or Tracked initiated Climate-Informed Project No – National Economic No – ODA investment projects Tuvalu Infrastructure Strategy Screening Planning Office's prioritization include climate screening and Investment Plan 2016- of projects does not explicitly 2025 includes climate include climate change but criteria in selection ODA investment projects include climate screening Green Public Procurement No – Green public No No Practices in Law procurement planned in revised 2022 NDC with regards to energy efficiency 27 C limate C ommitments & C apacities While increased ODA for the climate agenda can be expected (World Bank 2023), in a weak PFM context the financing challenges include: A Limited capacity and financial information management systems hinder full reporting of ODA in the budget. This makes coordination with aid agencies difficult for the minis- tries of finance, especially with limited civil service capacity and aid agencies' limited presence in remote islands. Efforts to consolidate information have helped align donors, such as Kiribati recording ODA in its Integrated Financial Man- agement Information System (IFMIS) and publishing annual development budgets, RMI implementing an IFMIS that could also monitor ODA flows, and Tuvalu's CCD mapping out line ministries' projects to mobilize partners. B Financing infrastructure for adaptation, like large-scale coastal protection structures or resettling populations, poses challenges for international partners. They require assessments and preparation activities for high-risk invest- ments to be completed in short timeframes that have the potential to disrupt coastal and marine ecosystems, criti- cal habitats, and cause loss of livelihoods. Discrepancies emerge between the countries' risk management practices and environmental and social standards required by ODA agencies and/or Good International Industry Practice, due to limited resources, capacity, and government support. RM I 28 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Basic PFM systems and practices are needed. This entails actions aimed at enhancing budget execution, aid coordination, PIM, public asset management policies, and sustainable procurement practices (see IMF 2021). These actions, focusing on short- and medium-term impacts, are critical for ensuring efficient resource use, attracting international financing, and fostering sustainability in climate-related investments. They include: 1 2 3 Strengthening budget Enhancing aid Strengthening PIM: execution and controls: coordination: by monitoring by centralizing data on through improved cash aid flows through IFMIS, investment projects, management, IFMIS, and centralizing key operational establishing a process and fund periodic financial reporting. and financial information of for asset management, climate Training and capacity building ODA-financed projects including scenario testing and feasibility are essential for sustaining ODA compliance with reporting studies (potentially run by a reforms and attracting requirements and convening third-party), and setting up a international financing such as regular development partner Maintenance Fund. Lessons green/climate treasury meetings (BOX 2.1); can be drawn from Kiribati's bonds or grants; Maintenance Fund and Tuvalu's Deferred Maintenance Fund; 4 5 Setting up a public Mainstreaming green asset management and sustainable public policy: which incorporates procurement: through climate change impacts legislative reforms, developing in public asset life-cycle tools for life-cycle costing,27 management and climate- and introducing procurement informed asset registry; and management systems. While higher initial costs may be incurred, cost savings and sustainable development benefits will accrue over the longer term. Enhancing PFM is imperative, despite capacity constraints and pressing 27 Life-cycle cost models (LCC) timelines. By aligning donor support with national priorities, strengthening consider all expenses from acquisition investment selection processes, improving financial oversight, and promoting to disposal of an asset. This is crucial for long-term infrastructure investments sustainability, Pacific Atolls can maximize the effectiveness of their climate where ongoing costs, including sus- tainability factors, often exceed initial adaptation efforts and build the confidence of international financing partners, capital outlay. The Atolls (and other PICs) could consider pooling regional expertise including potential private sector investors. Improving PIM increases the effi- to share costs and information for LCC ciency of investment and, hence, improves the economic outcomes per dollar analysis. See World Bank (2023a) and Government of Samoa (2022). of capital expenditure. 29 C limate C ommitments & C apacities Finally, good asset management planning is needed to ensure that invest- ments in resilience can be sustained. In essence, asset management means regularly inspecting assets and carrying out maintenance, repairs, and reha- bilitation (Posch and Partners 2016).28 This is relevant to Pacific Atoll local governments, the central government, state-owned enterprises (SoEs), and the private sector. For government departments and utility companies that own and operate major assets of national significance, asset management should be used to evaluate needs and set investment priorities. Good asset management planning allows the funding gap to meet objectives to be quantified, and aids decision making in committing expenditures where funds are constrained (as is almost always the case). The ethic of applying asset management principles 28 See International Standards Organi- zation (ISO) 55000:2014. to asset planning and operations is often missing in the Pacific Atolls. B OX 2 .1 Streamlining and Improving Effectiveness of ODA International partners supporting the Pacific Atolls could significantly increase the effectiveness of their support by pooling resources into a country or regional multi-donor trust fund, and/or, by harmonizing support. This would entail common approaches to: (i) assessing the ro- bustness of financed projects under different climate scenarios; (ii) pooling technical capacity at the country level, at least with regards to fiduciary and environmental and social risk-management staff and processes; (iii) pool procurement processes at regional level; and (iv) mainstream green procurement standards. In the near term, international partners could have a significant impact by helping to build civil services and strengthen PFM basics. This would include: Building the capacity of public administration through steady and long-term investment. Pluri-annual support and innovative support at the regional level would have significant and lasting impacts: multi-year programmatic support would enable predict- ability, staffing stability, and institutional learning. This could be implemented at the regional level, involving outside support to fill missing expertise and enhance client learning, and civil ser- vants with rotation duties in home and peer countries to foster cross-border fertilization. Supporting PFM basics. This could focus on: (i) maintenance, including through local authorities for efficient small infrastruc- ture and equipment maintenance; (ii) domestic revenue mobili- zation–to ensure sustainability of investment projects financed by ODA for adaptation; and (iii) control and financial reporting to increase fiscal space through spending efficiency and access to climate financing. 30 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 3 PATHWAYS TO CLIMATE ADAPTATION GOALS PAGE 31—61 RMI KEY 1 Pacific Atoll countries can benefit from the DAPP approach for MESSAGES planning in the context of uncertainty. The CCDR presents a Dynamic Adaptive Policy Pathways (DAPP) analysis based on rising sea levels due to climate change scenarios. The analysis aims to provide options and a framework for considering trade-offs, while recognizing that specific adaptation choices are a matter for the Pacific Atoll’s governments and citizens (that is an inclusive decision-making process is needed). 2 Projections under 1-in-10 year extreme wave conditions, estimate that 50–80 percent of major urban areas in the Pacific Atolls will be flooded under conditions of 0.5 meters of sea-level rise. There are three categories of potential responses: protect, accommodate, or retreat; a com- bination of each is likely necessary–tailored to the specific characteristics of the landscape and the needs of the population. 3 Each country has unique challenges for adapting and relocating people to higher (raised or reclaimed) ground, including governance issues and complexities related to land ownership. 4 Infrastructure projects require aggregates in the form of sand, gravel, and rock. Importing aggregates is expensive, while local sources of aggregates face environmental, social, and market impediments. National, rather than project-level, approaches are needed. 5 The Pacific Atolls have achieved close to universal electricity access. There is a need to strengthen the resilience of the power system to sustain and enhance services. 6 Food security, fisheries management, and water resources man- agement are key for improving living conditions now and into the future. 7 Social protection systems linked with disaster response protocols, will need to provide targeted support, economic resilience, and inclusivity, to ensure that benefits reach the most vulnerable. 8 Investing in education and health is also needed as it underpins economic opportunity both at home and in cases where people choose to migrate. 32 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 3.1 ADAPTING TO PHYSICAL RISKS AND UNCERTAINTIES T he Pacific Atolls confront many uncertainties regarding the pace, magnitude, location, timing, and variability of climate change. Ad- dressing uncertainties necessitates comprehensive data collection, scientific research, monitoring, and modeling to refine projections and deepen understanding of climate change impacts. Given this uncertainty, flexibility and adaptive management approaches will be critical. Strategies will need to be adjusted with experience and as new information and technologies emerge. A DAPP approach, combined with enhanced institutional and decision-mak- ing strategies (described in Chapter 2) and complementary socioeconomic adaptive strategies (described later in this chapter), offers structured plan- ning in the context of such uncertainty. Utilized globally, the DAPP approach describes a sequence of development choices that aim to keep climate risks within tolerable limits.29 When one adaptation measure becomes ineffective, DAPP directs policy makers to the next option. The CCDR presents DAPPs for the major islands of the Pacific Atolls, in which levels of sea-level rise (and associated levels of flooding) trigger sequential implementation of each ad- aptation pathway. The DAPP is not prescriptive, instead it presents a series of options within each pathway. The CCDR’s use of medium (SSP2-4.5) and high emissions (SSP5-8.5) scenarios imply: (i) 0.5 meter of sea-level rise is most likely between 2070 and 2110, with the worst-case scenario by 2050; (ii) 1 meter of sea-level rise is most likely between 2110 and 2150, with the worst- case scenario by 2090; and (iii) 2 meters of sea-level rise is unlikely before 2150 (including under the worst-case scenario). The primary physical challenge for the Pacific Atolls’ is sea-level rise. The islands low elevation‒lacking substantial areas over 3-4 m‒provides no natu- 29 The DAPP approach ral refuge from flooding risks. In many areas, sea-level rise of just 0.5 meters, has been applied in countries including RMI, anticipated between 2070 and 2110, could submerge significant portions Bangladesh, Thailand, the Philippines, the Neth- (possibly up to 20 percent in South Tarawa, Kiribati) during high tide. Minor erlands, and the USA. flooding, seen at present only during king tide conditions, will become more See Haasnoot, Warren, and Kwakkel (2019). frequent (FIGURE 3.1). 33 P athways to C limate A daptation G oals F I G U RE 3 . 1 Percentage of buildings hit by tidal flooding (left) and storm flooding (right) for Tarawa (upper) and Kiritimati (lower), Kiribati, at different sea levels CURRENT SEA LEVEL 0.5m SLR 1m SLR 2m SLR 120 BUILDINGS IMPACTED (%) 120 BUILDINGS IMPACTED 100 100 80 80 60 60 40 40 20 20 0 0 BETIO SOUTH NORTH BETIO SOUTH NORTH TARAWA TARAWA TARAWA TARAWA BUILDINGS IMPACTED (%) 70 25 100 BUILDINGS IMPACTED (%) 60 80 Notes: The percentage of buildings hit is 20 50 the same as the percentage of people 15 60 40 hit. The histogram values include error 30 10 40 bars showing the effect of ±0.5 m bias in the digital terrain model elevations. 20 5 20 10 Source: CCDR modelling (Deltares) 0 0 0 based on data from the Secretariat of LONDON OTHER LONDON OTHER the Pacific Community (SPC). TABWAKEA VILLAGES TABWAKEA VILLAGES Projections under 1-in-10 year extreme wave conditions, estimate that 50- 80 percent of major urban areas will flood with 0.5 meters of sea-level rise. Current storm impacts are already severe; for instance, 35 percent of Majuro and 69 percent of Ebeye (RMI), already experience flooding during such events. CCDR modelling indicates that with a typical 1-in-10 year event on top of 0.5 meters of sea-level rise, over 50 percent of the urban areas in Tarawa (Kiribati) and Majuro (RMI) would be affected, and in Funafuti (Tuvalu) and Ebeye (RMI) over 80 percent would be affected (FIGURE 3.2 and FIGURE 3.3 ). These events cause significant property and infrastructure damage. In RMI, projected annual damage, including direct and indirect costs plus losses from areas becoming inhabitable could reach nearly 30 percent of GDP. Under more pessimistic scenarios (SSP5-8.5), a 1-meter rise in sea level could occur as early as 2090. Model projections reveal that critical conditions in Funafuti (Tuvalu) and Ebeye (RMI) and in parts of Southern Tarawa (Kiribati) F I G U RE 3 . 2 Percentage of buildings hit by tidal flooding (left) and storm flooding (right) for Funafuti (Tuvalu) for different climate scenarios in 2060 and 2100 CURRENT SEA LEVEL SSP2–4.5 2060 SSP2–4.5 2100 SSP5–8.5 2060 SSP5–8.5 2100 60 BUILDINGS IMPACTED (%) 120 BUILDINGS IMPACTED (%) Source: CCDR modelling 50 100 (Deltares) based on data from SPC. 40 80 Notes: (i) The percentage 30 60 of buildings hit is the 20 40 same as the percentage of people hit; (ii) the 10 20 SSP2-4.5 value for 2100 is a little over 0.5 meters 0 0 in sea-level rise. FONGAFALE OTHER VILLAGES FONGAFALE OTHER VILLAGES 34 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T F I G U RE 3 . 3 Percentage of buildings hit by tidal flooding (left) and storm flooding (right) for Majuro and Ebeye (Kwajalein Atoll) (RMI) at different sea levels CURRENT SEA LEVEL 0.5m SLR 1m SLR 2m SLR 100 100 80 80 60 60 40 40 20 20 Source: CCDR modelling (Deltares) based on data 0 0 from SPC. MAJURO EBEY-GUGUEEGUE MAJURO EBEYE-GUGEEGUE are reached earlier than in other parts of Kiribati and in Majuro (RMI). This is mainly due to differences in present land levels and, to a lesser extent, due to differences in extreme water levels. Kiritimati, with the highest average land levels and milder extreme wave and tide conditions, appears less vulnerable, however, more detailed land elevation data, such as from recent LiDAR (Light Detection and Ranging) surveys, currently unavailable for Kiribati, is required for more accurate assessment. There are three categories of options that the Pacific Atoll countries can use to physically cope with increasing flood risks: (i) protect; (ii) accommo- date; or (iii) retreat (FIGURE 3.4). These are not mutually exclusive. The degree to which these strategies are needed will vary, requiring a nuanced approach tailored to specific circumstances. It will also require additional measures to ensure that the needs of citizens and vulnerable peoples are adequately addressed (described later in this chapter). ‘Protect’ options aim to protect coastline via different types of infrastructure such as revetments and seawalls, or by vegetated natural buffer zones (NbSs). The latter can reduce the erosive effects of waves and can help islands adapt naturally through sediment capture, but not completely block flooding. ‘Accommodate’ options accommodate the increasing floods by raising dwellings, by raising existing land, or by reclaiming new land from the sea. ‘Retreat’ options are those for when flooding becomes unacceptable. People may need to move further away from the shore (behind setback lines) or move to higher places within the country, including to land areas that may have been artificially raised or reclaimed. Migration, either tem- porary or permanent, is a strategy that may appeal to citizens at various stages. Adaptation to sea-level rise is complicated by land constraints, limited aggregate material (sand, gravel, and rock) to build protection, and the need to consider the natural resilience of islands. Physical protection and accommodation options (that is hard construction such as sea wall and land raising) is most suited to areas with already high population densities such as the Delap-Uliga-Djarrit (DUD) area of Majuro and Ebeye (RMI), Fongafale (Tuvalu), and Betio and other urban centers of South Tarawa (Kiribati). These options are costly, put pressure on vulnerable coastal environments, and may not be suited for less densely populated areas (BOX 3.1). In the context of the narrow shape of the islets, however, hard infrastructure such as seawalls may be necessary to protect the urban landscape. The significant investment 35 P athways to C limate A daptation G oals F I G U RE 3 . 4 required would most likely only be prudent for major urban centers where shorelines are already highly modified. It is less prudent for these investments Options for adaptation to sea-level rise in outer islands, which may naturally adapt as people and infrastructure are scarce. NbSs and setbacks are more feasible in these locations from a cost "Protect" Options perspective and allow for continued ecological and geomorphic responses to sea-level rise (up to a point). Seawall The CCDR presents adaptation pathways, and possible sequences of actions to adapt to sea-level rise for the urbanized and rural outer islands of the three Revetments Pacific Atoll countries. The model differentiates between the categories of islands‒outer islands, intermediate islands, and urban islands‒based on their unique physical characteristics and current levels of urban development (FIGURE Natural Buffer 3.5 ). The pathways for the outer islands consist of NbSs, house raising, and Zones retreat options (moving dwellings within the same island) in addition to other inclusive measures like locally led climate adaptation projects. These options can mitigate flood risk until roughly 0.5 meters of sea-level rise (expected be- "Accomodate" Options tween 2070 and 2110 under SSP2-4.5). Beyond that level, citizens may need to move to better protected or raised areas or relocate. The pathways for the urban and intermediate islands combine these strategies with additional flood Raise land protection measures such as seawalls and revetments. At about 0.5 meters of sea-level rise and beyond, tidal-induced flooding will become too frequent, and Raise dwelling/ areas will need to be created either by raising land or reclaiming new land that building will offer safe living spaces up to at least 2 meters of sea-level rise. Land reclamation B OX 3 .1 Physical adaptation options: The Maldives’ experience T "Retreat" Options he Maldives has a geography with some similarities to the Pacific Atoll Countries and has experience with several of the adaptation options assessed in this chapter. The country Move dwelling same island comprises 1,192 coral islands and a land area of 298 square kilometers, of which 80 percent is less than 1 m in elevation. Government and private business have invested in coastal protection mea- Setback lines sures to address flooding, sea-level rise, and erosion, and to protect tour- ism infrastructure, on about three-quarters of the 188 inhabited islands. Internal migration Hard protection measures have been prioritized on urban areas and more developed rural islands, where the consequences of land loss External are least tolerable. About 20 percent of the inhabited islands now have migration predominantly artificial shorelines, featuring a variety of structures such as seawalls, breakwaters, revetments, and groynes. These structures Source: Authores have proven to be effective in reducing coastal flood risks, however, some structures have exacerbated coastal erosion due to disrupted sediment transport, while others have degraded in effectiveness over time. On over half of modified islands, coral reefs showed degradation in their ability to weaken wave energy and provide sediments due to construction (Duvat and Magnan, 2019). There is thus an important need for careful planning 36 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T and siting of hard infrastructure within locations where it will not disrupt natural resilience and exacerbate future climate vulnerabilities. As an al- ternative or a complement, NbS are being used on some Maldives islands, most commonly beach replenishment around resorts, but also reef and mangrove protection activities. The Maldives also has considerable experience with land reclamation, with over 1,300 ha of construction to date. The island of Hulhumalé is the largest example, developed to reduce congestion in the capital city of Malé. The new 400 ha landmass sits approximately 2 m above mean sea level. The country has a state-owned Company for protection works as well as aggregate procurement policies. While the Maldives, with its much higher income levels, differs greatly in economic terms with the Pa- cific Atolls, there are likely lessons in the country’s experiences, including for policies and planning processes, as well as for physical construction. Source: World Bank Group (forthcoming). M AL DI V E S Under the modelled adaptation pathways, increasing sea levels trigger in- creasingly more costly adaptation options. Assumed levels of sea-level rise first precipitate investment in the low-cost adaptation actions, and subsequently trigger internal migration from outer islands to higher ground in the main urban areas (for example, South Tarawa and Kiritimati Island in the case of Kiribati), once investments in the destination areas make this feasible. International mobility and migration is also anticipated. It should be noted that different combinations of adaptation options are possible, and different adaptation tipping points may apply, than those assumed here. Heavy flood protection infrastructure (seawalls, land raising, and revetments) is not considered for the outer islands given its high cost (explored in depth below); and lesser suitability described above. Fundamental to all planning options is a robust DRM framework‒including policy, financing, and investments and establishing linkages between social protection programs and early action and disaster response protocols. This involves integrating climate mitigation and adaptation measures into national DRM and social protection legislation and policies, accessing climate and di- saster risk financing tailored to country risk profiles (for example, contingent financing and climate financing mechanisms, which are explored in Chapter 37 P athways to C limate A daptation G oals 4), and incorporating future climate scenarios into investment planning for risk reduction. In addition, emergency response, shelter and food provision, and multi-hazard early warning systems capable of handling events exceeding a one-in-10 year magnitude are necessary. Also fundamental to all strategies is a robust and inclusive consultation process, the preservation of ecosys- tems (particularly the coral reefs that underpin the islands’ natural resilience and replenishment), protection of infrastructure assets and water resources, risk-informed urban planning strategies, and investments in human capital and health. The physical adaptation options are discussed below for each country, followed by an examination of other enabling and adaptation measures. F I G U RE 3 . 5 Dynamic Adaptive Policy Pathways 1 PROTECT, This pathway is more suitable for urban islands. Seawalls and revetments RAISE/ provide protection up to 0.5 m sea-level rise. A tipping point is unacceptable RECLAIM: flood risk expected around 0.5 m. Beyond this, adaptation could shift to either raising or reclaiming land. The role of NbS is limited in these already-highly modified environments although protection of reefs and ecosystems remains important for resilience. EARLY WARNING NATURE-BASED SOLUTIONS SEAWALLS/REVETMENTS RAISE BUILDINGS LAND RAISING LAND RECLAMATION RELOCATE LANDWARDS RELOCATE TO OTHER ISLAND RAISE OTHER ISLAND & RELOCATE INTERNATIONAL MIGRATION m + MSL (MGVD17) 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2 PROTECT, This pathway is more suitable for intermediate centers. Relocation of dwell- RETREAT, ings inland may be feasible up to 0.25 m sea level rise. Seawalls and revetment AND RAISE/ RECLAIM: investments could provide supplementary protection up to 0.5 m. Beyond this, adaptation could shift to either raising or reclaiming land. Early warning systems and NbS are promoted throughout. EARLY WARNING NATURE-BASED SOLUTIONS SEAWALLS/REVETMENTS RAISE BUILDINGS LAND RAISING LAND RECLAMATION RELOCATE LANDWARDS RELOCATE TO OTHER ISLAND RAISE OTHER ISLAND & RELOCATE INTERNATIONAL MIGRATION m + MSL (MGVD17) 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 38 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T F I G U RE 3 . 5 Dynamic Adaptive Policy Pathways (cont.) 3 PROTECT This pathway is more suitable for remote outer islands. NbS plays a larger (NBS), role in these locations, which have more space and less built infrastructure, RETREAT, AND RELOCATE: and can benefit from natural island resilience. This would be complemented by relocation of dwellings inland until around 0.25 m sea level rise. Gradual relocation to other islands would follow as needed, and as destination loca- tions’ infrastructure (that is, in urban islands) is ready and protected. EARLY WARNING NATURE-BASED SOLUTIONS SEAWALLS/REVETMENTS RAISE BUILDINGS LAND RAISING LAND RECLAMATION RELOCATE LANDWARDS RELOCATE TO OTHER ISLAND RAISE OTHER ISLAND & RELOCATE INTERNATIONAL MIGRATION m + MSL (MGVD17) 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 Notes: These pathways are archetypal examples developed for RMI but are broadly ap- Source: CCDR modelling (Deltares). plicable for the three Pacific Atolls. The Country-specific pathways are presented below. For KIRIBATI , the adaptation pathways analysis suggests that raising and reclaiming land in Kiritimati and Tarawa will be the most likely adaptive pathway (FIGURE 3.6). People living in the outer islands will face challenges as climate change impacts intensify. Initial adaptations such as NbS and house raising can mitigate sea-level rise up to 0.25 meters in these locations, and relocation within the same island may address sea-level rise up to 0.5 meters. Further rises will challenge these solutions, and more frequent island wave overtopping may precipitate the movement of people, involving up to 40,000- 50,000 people from the outer islands over an extended period. An expected 70,000 people within Betio and South Tarawa may also choose to move to areas with safer, higher land, as flooding exceeds manageable levels. Options for relocation within Kiribati could involve both Kiritimati and Tar- awa. Subject to further investigation, Kiritimati, with the highest average land elevation, could be expanded to accommodate new residents, necessitating investments in economic, social, and physical infrastructure and protective measures like seawalls and land raising. In South Tarawa, areas like Temaiku could offer potential for land raising and reclamation‒enabling it to sustain its current population. Land raising would be needed earlier in Kiritimati (at around 0.25 meters of sea-level rise) compared with South Tarawa (at between 0.5 and 1 meters). For TUVALU , an option could be to expand Funafuti, the capital (FIGURE 3.6 )‒ allowing it to accommodate 11,000 Tuvaluans in the long term. Adapta- tion measures for the outer islands could involve NbSs, house raising, and within-island relocation at or before 0.25 meters of sea-level rise. Additional adaptation options in Funafuti could entail constructing seawalls (at or before 0.25 meters), land reclamation (0.5 meters), and eventual land raising (at 1 meter), establishing it as the primary settlement area for most of the popu- 39 P athways to C limate A daptation G oals lation. Some international migration is also anticipated. Australia is offering permanent residency to up to 280 Tuvaluan citizens annually. Further options may be available in future, potentially alleviating the pressure on infrastructure. RMI has already experienced outmigration, resulting in a population de- crease from approximately 53,000 to 42,000 people over the last decade (RMI Census 2021). Adaptation pathways for RMI are shown in FIGURE 3.7 (next page). Current urban centers in Majuro and Ebeye are densely populated and prone to flooding, with limited options for reclamation. These issues are recognized in the RMI Sea-level Rise Policy and National Adaptation Plan30 in which coastal protection systems provide options up to sea-level rise of 0.5 m, after which land raising will be required although, for practical reasons, only in 30 The RMI Cabinet approved the SLR Policy on June 30, 2023, and the NAP on limited areas required for government, business, and residential living space. October 20, 2023. Laura (in Majuro), and some of the semi-urban atolls, could also be considered 31 For example, the 1.8 km ocean side seawall on Ebeye for which a contract for land raising. In the near term, mechanisms such as enforcing the updated was awarded in May 2024, approximate- ly 0.4 km of coastal protection works building code to include resilience requirements in new infrastructure con- planned for construction in Majuro under the Urban Resilience Project in 2025, struction (for example, better account of flood levels and higher floor levels), as well as the RMI government’s own incremental construction of coastal protection infrastructure in urban areas,31 annual program of coastal protection revetment works. and implementing NbS solutions in outer islands, will buy time. F I G U RE 3 . 6 Indicative pathways for Kiribati showing a stepwise adaptation to sea-level rise SEAWALL RAISE LAND MOVE DWELLING SAME ISLAND INTERNAL REVETMENTS RAISE DWELLING/BUILDING SETBACK LINES IMMIGRATION NATURAL BUFFER ZONES LAND RECLAMATION MIGRATION EXTERNAL MIGRATION OUTER ISLANDS KIRITIMATI TARAWA INTERMEDIATE CENTERS URBAN CENTERS 0.25 M (>2040) 0.50 M (>2070) INTERNATIONAL MIGRATION 1.00 M (>2110) 2.00 M (>2150) 40 Notes: The width of the blue arrows roughly indicates the percentage of people. F I G U RE 3 . 7 Indicative pathways for Tuvalu (top) and RMI (bottom) showing a stepwise adaptation to sea-level rise SEAWALL RAISE LAND MOVE DWELLING SAME ISLAND REVETMENTS RAISE DWELLING/BUILDING SETBACK LINES INTERNAL IMMIGRATION NATURAL BUFFER ZONES LAND RECLAMATION MIGRATION EXTERNAL MIGRATION TUVALU 0.25 M (>2040) 0.25 M (>2040) 0.50 M (>2070) 0.50 M (>2070) 1.00 M (>2110) 1.00 M (>2110) 2.00 M (>2150) 2.00 M (>2150) OUTER ISLANDS OUTER ISLANDS FUNAFUTI URBAN CENTERS FUNAFUTI URBAN CENTERS INTERNATIONAL MIGRATION INTERNATIONAL MIGRATION RMI OUTER ISLANDS OUTER ISLANDS INTERMEDI- ATE CENTERS INTERMEDI- ATE CENTERS URBAN CENTERS URBAN CENTERS INTERNATIONAL MIGRATION INTERNATIONAL MIGRATION 41 Notes: The width of the grey arrows roughly indicates the percentage of people. Source: CCDR modelling (Deltares). E B E YE , RM I Addressing the resilience of transport infrastructure, including roads, ports, and airports, is implicit in any adaptation pathway. Efficient transport systems connect people to economic opportunities and enable access to essential services like health care and education. In the Pacific Atolls, the resilience of transport networks is fundamental for response and recovery. For ports, for example, Port Master Planning is an approach to help future-proof primary and secondary ports, accounting for demand, capacity, and the current and future required resilience to natural hazards and climate change (World Bank 2023c). RMI has developed a Domestic Sustainable Transport Roadmap, setting a goal to achieve net-zero emissions from domestic shipping by 2050.32 Adaptation 32 Sustainable Domestic Maritime can be done incrementally as part of the renewal and upgrade cycle for port Transport Roadmap in the Republic of the Marshall Islands (link) infrastructure. The same principles apply to road networks and airports. 33 This includes the Atoll Study covering Majuro and Ebeye (2021), the The CCDR’s analysis aims to complement the countries’ existing analysis, Coastal Vulnerability Assessments for Ebeye (2018, updated 2023) and Majuro initiatives and decision making. Assessments of flooding in urban areas (2023), the UNDP/ Green Climate Fund (GCF) funded work associated with the was completed previously for parts of RMI, Kiribati, and Tuvalu.33 Much of this Tuvalu Tuvalu Coastal Adaptation Project (TCAP) and the current reclamation analysis formed the basis for the NAP for RMI (NAP Chapter E and the related and coastal protection works underway SLR Policy). Under each of the countries’ own plans and initiatives, coastal in Funafuti, the Bonriki Inundation Vulnerability Analysis funded by the Aus- protection and land raising are acknowledged as important options in response tralian Government’s Pacific-Australia Climate Change Science and Adaptation to sea-level rise in selected urban areas, while a softer adaptation approach is Planning Program (PACCSAP) (2015), and New Zealand’s Ministry of Foreign promoted for outer islands. This CCDR’s findings support the Atoll countries’ Affairs and Trade funded Temaiku Land position on these issues but also inform better decision making on adaption and Urban Development Feasibility Investigations, 2015–17. options over the coming decades. 42 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T KI RI BAT I Indicative Adaptation Pathway Investment Needs Physical adaptation is costly and has uncertain development outcomes. The CCDR estimates indicative costs for physical adaptation up to 0.5 meters sea-level rise, anticipated to occur by 2070-2100 under a moderate climate change scenario (SSP2-4.5). Adaptation actions in this period entail seawalls and other hard-infrastructure measures in urban centers, and inland reloca- tion, house raising, and NbSs in intermediate and outer islands. Estimated discounted (present value) costs are US$3.7 billion for Kiribati, US$1.0 billion for Tuvalu, and US$5.0 billion for RMI (TABLE 3.1). This represents about 20 years of current GDP dedicated fully to physical adaptation measures. Present value costs per person range from US$30,000-US$100,000 (see BOX 3.2 for costing methods). Looking further ahead, protection against 2 meters of sea-level rise would entail yet greater costs.34 This level of sea-level rise is expected no earlier than 2150 (RCP8.5) and most likely after 2200 (RCP4.5). Costs are highly specu- lative given the timespans involved. The CCDR estimates discounted costs of US$4.4 billion for Kiribati, US$1.1 billion for Tuvalu, and $5.6 billion for RMI, or US$40,000 to US$110,000 per person. These discounted (present value) costs are much lower than their equivalent cashflow costs (US$48 billion for Kiribati, US$6.1 billion for Tuvalu, and US$36 billion for RMI, see TABLE 3.1) due 34 Beyond 2-meter sea-level rise, which to the extended timeframe of expenditure spanning more than 150 years. The is expected to eventually occur in the distant future under all climate scenar- most expensive physical works occur later and are thus discounted the most, ios, costs are not presented as physical particularly land reclamation and land raising (including costs for new building adaptation measures are unlikely to be sufficient to allow for habitation. and additional housing). Increasing population densities in new reclaimed areas 43 P athways to C limate A daptation G oals Indicative (present (from 230 m2/person to 85 m2/person) could reduce costs by up to 50 percent, value) costs of physical notably for Kiribati and Tuvalu, where urban densities are already high. Raising adaptation to 0.5 m land, compared to reclaiming land, reduces costs by around 20 percent as it SLR are requires less sand and other aggregates. Complications may arise, however, regarding land rights and existing occupation, except in cases when the land US$ KIRIBATI 3.7b is state-owned, as in the case in Temaiku and Kiritimati Island in Kiribati. These large costs underscore the need for careful selectivity in financing considerations and donor support under all adaptation pathways. Decisions US$ TUVALU 1.0b will need to be made regarding allocating limited financial resources among locations within each country. Decisions will also need to be made in the rela- tive level of investment made in human capital (education and health) versus 5.0b physical infrastructure. A balance will need to be found between enhancing the US$ adaptive capacity of individuals (including through mobility opportunities) and RMI enhancing the resilience of the physical islands themselves. In addition, these costs exclude adaptation measures required in many other sectors, including education and training, health, and services such as power and water. These measures are discussed in the remainder of Chapter 3. Chapter 4 discusses financing options. TAB L E 3 . 1 Indicative costs of two pathway options (by country, US$ millions) BUILDING DENSIT Y ASSUMED FOR RECLAMATION TOTAL COST PATHWAY DESCRIPTION COUNTRY (PER PERSON) TOTAL COST PV COST PER CAPITA PV COST PER CAPITA Physical ▸ Protect land and Kiribati 230m2 $4,588§ $3,741§ $0.04§ $0.03§ adaptation up to raise buildings in 0.5 meters urban centers. Tuvalu 230m2 $1,280 $1,052 $0.12 $0.10 By 2070-2100 under RPC4.5 ▸ Move inland with RMI 230m2 $6,607 $5,004 $0.12 $0.09 natural buffers (intermediate and outer islands). Physical Protect and reclaim Kiribati 230m2 $47.955§ $4,393§ $0.40§ $0.04§ adaptation land, and support up to 2 meters internal migration 85m2 $22,937§ $4,027§ $0.19§ $0.03§ Beyond 2150 from outer islands. under all Tuvalu 230m2 $6,086 $1,125 $0.58 $0.11 scenarios 85m2 $3,303 $1,085 $0.31 $0.10 RMI 230m2 $35,564 $5,620 $0.67 $0.10 Notes: The total country costs of pathways consist of a protect and reclaim strategy. The costs for reclamation vary with assumptions on target building density. Two options are shown, 230 m2/person was also chosen in the RMI study, while 85 m2/ person is close to the current density of Betio and has been proposed for the Temaiku (Kiribati) reclamation. Present value costs are based on RCP4.5 timeline for sea-level rise. All costs are in millions of US$. The Present value discount rate is 6 percent. §Cost variation (±17% cost variation due to ±0.5m uncertainty in land elevations. Cost variation not required for Tuvalu or RMI as accurate LiDAR data is available). 44 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Overcoming structural barriers is crucial for implementing these adaptation pathways. Land ownership is a significant factor in all three countries. Of the three, Kiribati has the most clearly defined land regulations, with the govern- ment owning a substantial proportion (approximately 45 percent) of the land, including all of Kiritimati. In contrast, Tuvalu and RMI operate under customary law. Leasing land is common in RMI and Kiribati but negotiating with individual landowners for land-raising projects is a time-consuming process. Collective agreements would help to streamline this process. People also need to be supported in relocating and then integrating into new host communities. Spatial and land planning policies and systems are necessary to organize land raising, reclamation, infrastructure planning, and relocation, effectively. Significant caveats apply to the modelling and costing results. (i) Estimates of flood exposure are significantly limited by the absence of a sufficiently ac- curate and validated Digital Terrain Model, especially for Kiribati, but also the outer islands of all the countries; (ii) there could be new sand supplied by reef growth, which would partially offset erosion on reef islands (Tuck et al. 2021). These dynamics are highly uncertain and are thus not included in the model- ling;35 (iii) the triggers for switching from one adaptation option to the other, especially around 0.5 meters, have been uniformly applied in the analysis. Locally, however, there may be more flexibility to postpone action because of 35 The potential for islands to grow may be offset by the impact of higher higher actual resilience; (iv) the adaptation options include cost estimates sea temperatures and pollution on coral (for example, coral bleaching). It should based on international standard designs and imported rock armor, with no also be noted that the processes which consideration given to local alternatives. This is partially due to more severe result in accretion (wave overtopping and inundation) themselves pose serious near-shore wave climate under high sea-level rise scenarios making use of threats to life and infrastructure so are unlikely to be tolerable in urban areas local rock impractical, and partially due to environmental and social policies (Wandres et al. 2024). More broadly, growth of the calcified reef flats (the limiting the use of local aggregates (discussed further below); and (v) not all geological structures underpinning the islands) is slower than that of live potential adaptation options were included in the pathway analysis. For future coral, if at all, and may act as a limiting studies it may also be useful to include novel options such as floating cities factor on islands’ natural resilience to sea-level rise. (Penning-Rowsell 2020). B OX 3 .2 The DAPP Modeling Methodology and Cost Estimates The approach used in the DAPP modeling and cost estimation is as follows: • Using regional swell- and tropical cyclone/typhoon-wave forecast mod- els, combined with elevation models of the islands, depths of wave- and tidal-induced flooding have been calculated using computational model- ing methods. The elevations for Majuro, Ebeye, and Funafuti were based on LiDAR data (±0.2m). Elevations for South Tarawa were estimated from satellite data checked against some known spot levels (±0.5m). Where LiDAR data was available, flooding was determined using the simplified physics-based “Super-Fast Inundation of Coasts” (SFINCS) model (Parodi et al. 2019; Leijnse at al. 2021). For Tarawa and Kiritimati Island, a simple bathtub approach using recorded tidal and swell levels as boundary inputs was used given the lower precision in elevations. 45 P athways to C limate A daptation G oals • Flood levels were mapped against spatial maps of local population, housing, and large-scale infrastructure to determine risks, identify hotspots, and assess appropriate adaptations to reduce the risks. This assessment was done for several sea-level rise scenarios over various timeframes to create the DAPP options. Only NbS, raising buildings, and setback options were considered feasible/appropriate for the outer islands, after which internal migration would be necessary. • Designs and costs for engineering mitigations required for the DAPP options were developed for the major urban centers and interconnect- ing transport routes where it is expected populations would continue to grow, either organically or with internal migration. These centers were: (i) Betio and the other urban areas of South Tarawa; (ii) North of Tanaea in North Tarawa; (iii) London to Tabwakea, Banana, and Poland in Kiritimati Island; (iv) Funafala, Tekavatoetoe to Lofeagai, and Amatuku, in Funafuti; and (v) Majuro and Ebeye in RMI. • The costs, benchmarked to 2024, were based on a general unit rate table for supply, transport, and installation of materials based on avail- able construction market information, previous project analysis, and assumptions on supply. • For each adaptation option, generic designs were developed including consideration of exposure and sea-level rise. • Costs include capital construction costs, annual maintenance, and development costs associated with infrastructure such as roads and utilities, demolition, and re-build, design and investigation, and land rent costs covering the footprint of the options. Costs of NbS are in- cluded. Cost multipliers were developed to account for: (i) exposure (lagoon environment versus open coast for revetments and seawalls); (ii) size (that is, small-scale vs large-scale reclamation where mobili- zation costs are high); (iii) location (urban, intermediate, and outer atolls/islands for which shipping costs vary); and (iv) sea-level rise scenario (0 – 2 meters where treatments need to be more substantial for higher sea-level rise). • A 6 percent discount rate was used to calculate the present value (PV) of options. Source: Modeling of sea-level rise and storm surge impacts, adaptation pathways, and building digitization was developed for the CCDR by Deltares with costing and technical support from Tonkin+Taylor, Although not reported here, impact assessment methods that don’t rely on access to LiDAR data have recently been developed and applied in five outer island sites in RMI (Gesch, et al. 2024). 46 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Construction Aggregate Sources Infrastructure projects, whether for regular operations or climate adapta- tion, rely heavily on an adequate supply of aggregates like sand, gravel, and rock. Sourcing, transporting, handling, processing, testing, and placing aggregates‒whether as bulk fill for land raising, or concrete in construction, or subgrades and pavements in roads or airport runways, or rock in coastal protection systems‒constitutes a significant proportion of the overall costs, accounting for roughly one-half of the direct expenses before overheads. Access to a sufficient supply of aggregates at reasonable prices is essential for infra- structure-based adaptation. Furthermore, a competitive construction market capable of handling projects on a much larger scale than what is currently experienced in the domestic markets of Pacific Atolls is crucial (Franks 2020; Franks et al. 2023). MV Tekimarawa (40m clamshell dredge), Betio, South Tarawa, Kiribati; Source: Webmedia South Pacific, and (right) Rock riprap seawall, Ebeye, RMI (example of ocean-side used with permission). shoreline protection for Atoll countries. Large-scale extraction of aggregate materials in Pacific Atolls involves significant environmental and social considerations, beyond the scope of individual projects, necessitating a national (and possibly regional) ap- proach. They often require large quantities of non-renewable resources and can cause permanent alterations to coastal processes and ecosystems if extracted too close to the shoreline. Domestic sourcing is also contentious due to its potential impact on reefs and conflicts with conservation protocols. Supporting mining operations on reef flats poses risks and may conflict with environmental frameworks in the absence of more certain scientific data. The restriction on using local aggregates affects the cost effectiveness of develop- ment. In response, the RMI EPA, for example, is spearheading a collaboration with national and subnational government stakeholders to conduct a three-site pilot study that will assess potential sustainable methods of sourcing rock-sized aggregate in country (PIFS 2022). Other development partners (for example, Japan International Cooperation Agency) have commissioned and applied studies that incorporate local aggregate use. Accordingly, it would be helpful to develop guidance for preparing project environmental and social manage- ment frameworks (ESMFs) that better align with the unique circumstances and environmental processes of the Atoll Countries. 47 P athways to C limate A daptation G oals Importing from approved quarries is an environmentally and socially respon- sible option for sourcing aggregates but raises project costs significantly. Imported sands and gravels in Pacific Atolls are up to five times more expensive for small quantities, and two to four times for large quantities (>10,000 m3), compared to local materials.36 There are also incongruities of using import- ed aggregates with the increased emissions impacts adversely affecting the countries' NDC commitments. For seawall construction, artificial armor units (concrete “rocks”) can be an alternative to rock riprap37 but are approximately 3.8 times more expensive per unit volume in place, regardless of material source.38 In RMI, an early analysis to identify aggregate sources in Majuro and Ebeye was completed in 2024 by SPC.39 Further assessment will, however, be required before there is adequate guidance for development projects. In 2013, Kiribati established a state-owned company for supplying aggregates from environmentally approved lagoon sites in Tarawa. Different strategies may be needed for other areas, especially as demand grows and changes, such as on Kiribati’s Kiritimati Island. Very large quantities of sand for land raising and reclamation will be re- quired along with large quantities of rock riprap or armor units to protect the coastal edge. These quantities of aggregates significantly exceed the quantities currently identified as being suitable for extraction within the lagoons and would, therefore, require investigation of new sources. The sources may be in deeper water, requiring larger dredging equipment and larger projects to justify their mobilization, or within adjacent atolls. Local rock that is extracted from the reef platforms (at least in RMI) is limited in size‒with lower density compared to imported armor rock‒making it less suitable for long-term protec- tion. Some Pacific Islands can provide suitable imported armor rock, notably Nauru (although no quarry is currently in operation) and Fiji (although size and quantity is limited). Quarries in Southeast Asia and the Middle East can produce larger quantities of suitable materials, although transportation and offloading remains expensive. The use of pre-cast concrete armor units, cast in locations with sufficient and suitable aggregates and shipped more efficiently, may provide a more economical solution, but likely requires large investments to achieve economies of scale and improved logistics. Given the criticality of aggregates in implementing adaptation options, options to improve aggregate security are presented in TABLE 3.2. 36 Final project costs are less disparate, however, about one-half, as local transport, handling, labor, and placement costs remain consistent. 37 Refers to a layer or mass of irregularly placed rocks or stones used to protect embankments, shorelines, or slopes from erosion by water. 38 This has been internally assessed based on designer assessed costs in RMI for the Ebeye seawall, financed under the Pacific Resilience Program Phase 2 (PREP II, P160096). 39 As part of the Pacific Community’s PREP II. 48 TAB L E 3 . 2 Potential adaptation options to improve construction aggregate security ADAPTATION OPTIONS PRIORIT Y Develop a strategic and operational plan for sourcing aggregates. Identify local sand and gravel abstraction Short-long term sites in target development areas, undertake the necessary environmental and social investigations, detailed operational and commercial due diligence, and obtain internal and donor clearances, so the sites can be used without further investigation. This would be implemented as part of a dedicated project or series of projects to allow adaptation works to proceed without delay. Construction risk and cost assessments. Include formal and site-specific construction risk and cost assessments Short term as a routine part of infrastructure project preparation. Plan, sequence, and scale projects. Ensuring adaptation projects involving infrastructure are large enough, or Short-long term sequenced, to leverage cost and market competition benefits of scale in construction operations. Terms of reference for project design. Ensure terms of reference for infrastructure design incorporate provisions Short term for reducing construction risks, optimizing the use of aggregate materials in design through value engineering, and fostering innovation to reduce construction costs while retaining durability. Study approaches used internationally. The Maldives has erected seawalls and revetments on over one-half of Short term its 180 inhabited islands. The country has a State-Owned Company for protection works as well as aggregate procurement policies. Economic and geographic differences are large but there are likely lessons in both successes and failures, including for policies, planning and institutions. Climate-Resilient Coastal Fisheries and Ecosystems Measures to protect coastal ecosystems‒mangroves, coral reefs, and inter- tidal flats‒are needed. These ecosystems make important contributions to climate resilience by providing areas for fish breeding which underpin the productivity of marine ecosystems; and by providing protective shields against storms. While they cannot protect against slow moving floodwaters, they re- duce wave energy and thus storm damage. NBSs were thus included in the adaptation pathways presented in Chapter 3.1, with a focus on outer islands. Living corals also enhance island stability through calcium carbonate deposi- tion, helping to counteract rising sea levels and maintain the islands’ physical integrity.40 Protective measures for ecosystems include Marine Protected Areas (MPAs) and Integrated Coastal Zone Management frameworks, which help mitigate the damage from coastal development, pollution, fishing, and boat- ing pressures (which make ecosystems more susceptible to climate change). Local communities’ involvement in management and monitoring is important to ensure effectiveness. Basic monitoring and management would help reduce climate risks for coastal fisheries, which provides an important livelihood source and food security for communities. Overfishing–which is reportedly occurring particu- larly near urban areas–undermines fish stock resilience. Managing overfishing requires data collection and surveillance that is currently limited. Communi- 40 Extensive review on the effects, ty-based approaches to “primary” fisheries management could be used with and guidance on mitigating the impacts, of pollutants (wastewater, industrial simple harvest controls (such as size limits, closed seasons and areas, gear discharges, and sediment) on coral reef and marine ecosystems systems rele- restrictions) determined in agreement with communities. To guide such mea- vant to atoll countries is given in Wenger et al. (2023). sures, improved monitoring of coastal fisheries activities and statistical systems 49 P athways to C limate A daptation G oals is required (supported, for example, by systematic surveys of fish caught and appearing in local markets). Transferring coastal fisheries efforts from reef to nearshore oceanic fishing could also be useful to relieve pressure on coastal stocks (TABLE 3.3). Resilience in offshore fisheries poses a distinct set of issues and requires regional coordination. The Pacific Atolls are highly reliant on revenues from ac- cess fees for the rich tuna fisheries within their EEZs; the CCDR examines these issues in Chapter 4, along with resilience- and revenue-boosting management measures that could be enacted for fisheries through regional cooperation. TAB L E 3 . 3 Adaptation options for coastal fisheries and ecosystems ADAPTATION OPTIONS PRIORIT Y Manage land-based activities that influence fisheries. Integrated coastal zone management strategies can be Medium-long used to minimize the influx of sediment, pollutants, and excess nutrient loads from land into coastal catchments term (Bell et al. 2019). Develop coastal fishery management plans and transition plans. Improve monitoring and management of coastal Medium-long fisheries via community-based harvest controls and participatory monitoring of fisheries activities. term Establish and expand marine and coastal protection zones to protect reef fisheries and ecosystems. These would Medium-long focus on areas critical for fish breeding and on ecosystems that protect land against storms (including critical term coral reefs). Resilient Essential Services: Electricity and Water The Pacific Atolls have achieved close to universal electricity access;41 now the focus must shift to strengthening the resilience of the power system to sustain and enhance services. Investments are needed to improve the resilience of power lines in high winds, including putting key elements of the distribution system underground. Vulnerable equipment will also need to be raised above flood levels or protected by levees. Long-term resilience can be strengthened by transitioning to decentralized power systems, reducing the impact of isolated outages on the broader grid. Investing in sufficient renewable energy generation and battery storage systems will prevent power outages during disasters when fuel shipments are disrupted. Strengthening policy and 41 The share of population’s access to electricity is 100 percent in Tuvalu, design standards is crucial to guide future energy investments. 97 percent in RMI, and 93 percent in Kiribati (2021). Upgrading and protecting energy infrastructure against natural and cli- 42 RMI: Total installed capacity is approximately 43 MW, of which 95 mate-related hazards is manageable. RMI is estimated to require about percent is diesel-fuel power generation and 5 percent is renewable solar PV. US$43 million by 2030, US$30 million between 2031 and 2040, and an Kiribati: There are three systems: South Tarawa (7.75 MW), Kiritimati (1.46 MW), additional US$25 million from 2041 to 2050 to protect against storm surge, and outer islands. Each system com- tidal flooding, and typhoons.42 Tuvalu’s underground distribution system neces- prises several isolated grids due to the dispersed nature of villages and islands. sitates around US$0.2 million for enhancing resilience against coastal flooding Tuvalu: The power system operates in Fongafale and seven outer islands. Total and corrosion from the seawater and salt-laden air. Kiribati would require about generation capacity is about 5 MW, of which approximately 58 percent is die- US$4 million in investment by 2030 to protect its distribution assets against sel-based, and the remaining 42 percent storm inundation and corrosion, with an additional US$12 million needed in from renewable solar PV (World Bank estimates, 2024). the subsequent decade. 50 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Policy measures are essential to support resilient energy investments and facilitate improved services in the future. Pacific Atolls will require: (i) policies promoting the development and integration of renewable energy, including targets and incentives for renewable energy projects; (ii) policies that mandate or encourage energy-saving practices in both the public and private sectors alongside retrofitting of public buildings with energy-efficient technologies; (iii) grid stability and integration policies, to determine how much and what type of renewable generation can be added to the grid and timing for grid integration; and (iv) a framework for working with the private sector for potential partici- pation in investments, recognizing that attracting private investment may be difficult and limited (TABLE 3.4). Private sector participation can be encouraged. While renewable energy development to date has been primarily funded by development partners, Tu- valu, has seen private sector involvement through projects like a 50kW solar PV in fisheries and rooftop solar PV in office buildings. International private sector involvement in the RMI power sector is yet to materialize, however, and Kiribati also lacks private power sector participation or commercial financing. All three governments are striving towards greater private sector participation but face significant barriers such as weak legal, regulatory, and institutional capacity, along with low private capital mobilization and underdeveloped fi- nancial sectors. Utilities lack sufficient tools, capacity to efficiently carry out routine activities, investments in new software, qualified staff, and financial sustainability‒hindering service quality improvements and credibility as reli- able off-takers for Independent Power Producers. Strengthening institutional capacity and financial stability within utilities is vital for attracting increased private investment. Necessitating a Public-Private Partnership (PPP) framework will require finalization of the Electricity Act (Kiribati), and a formal regulatory framework for setting electricity tariffs. Water supply and sanitation (WSS) infrastructure has suffered from main- tenance deficiencies and subsequent cycles of build-neglect-rebuild. Over the past decades, major urban and rural WSS projects have been implemented TAB L E 3 . 4 Adaptation options for the power sector ADAPTATION OPTION PRIORIT Y “Harden” power distribution infrastructure. This includes upgrades to low-voltage pillar boxes, ring main units, and Short term transformers to reduce vulnerability to flooding, wave inundation, rain penetration, and corrosion. Invest in renewable energy. Solar, wind, and possibly other variable renewable energy projects can take Short-medium advantage of abundant natural resources. term Invest in energy efficiency. Allocate funds for upgrading public and residential buildings with energy-efficient Medium-long appliances and lighting solutions. term Upgrade grid infrastructure. Focus on modernizing the transmission and distribution power grid, and low voltage Medium term service line system as the last mile to household customers to support the integration of renewable energy sources. This includes investments in smart grid technologies and energy storage systems. Strengthen policies and regulation. Strengthen energy policies and regulations to encourage renewable energy Short-medium adoption and ensure energy efficiency standards are met. term 51 P athways to C limate A daptation G oals “ Rainwater is crucial in the Pacific Atolls, but highly vulnerable to climate change. in the three countries, financed by multiple development partners, however, much of the infrastructure installed has been poorly maintained. For example, the current South Tarawa Water Supply Project in Kiribati is the third overhaul of a dilapidated WSS system in roughly 50 years. This is common in small islands, along with poor infrastructure governance compounded by climate change, fragmented knowledge, and responsibility (Foon 2023). This cycle of deterioration and reconstruction will need to be broken.43 Adapting to climate change requires appropriate choices of WSS technol- ogies with ongoing operations, maintenance, and renewals arrangements. More sophisticated technologies can be considered in the urban areas of RMI, Kiribati, and Tuvalu. Technologies adopted in rural or outer island areas need to be of a type that can be operated and maintained‒with low to no user costs and minimal operating and maintenance costs. Even where central governments have some WSS technical presence in the outer islands, the remoteness of locations and the support skills available means that WSS systems must be simple to be sustainable and bolstered by technical support. In urban areas, a combination of utility-managed piped water using infiltra- tion galleries to extract potable water from groundwater lenses,44 and de- salinated water, is optimal‒complemented by Rainwater Harvesting (RWH) systems for added storage capacity and cost efficiency. Pricing incentives and educational campaigns can promote RWH system use and maintenance. Easy- to-use consumer payment methods linked to each household are essential. Outer islands, facing higher water vulnerability, can benefit from groundwater 43 The South Tarawa Water Supply Project is attempting to do so, based on galleries with distributed water reticulation. Such systems, already used in an institutional review to guide efforts to some Kiribati outer islands, offer significant water storage capacity resilience to strengthen the capacity of the water util- ity (Public Utilities Board) and its coordi- droughts, and present an opportunity for expansion of WSS which are already nation with the line ministry (Ministry of Infrastructure and Sustainable Energy). below recommended levels. Strategies for financial sustainability are also being supported. 44 Water lenses are a natural phenom- Protecting groundwater sources from pollution is crucial amid climate enon in atoll islands in which rainwater, change. Pacific Atolls are vulnerable to groundwater contamination due to which infiltrates below the ground surface, displaces and “floats” above the the large hydraulic conductivities of coral sands. Any surface contaminants underground seawater. Groundwater lenses can store relatively large volumes are rapidly transported through the soil to groundwater. In urban areas, utili- of water with the advantage of reduced evaporative losses and can withstand ty-managed saltwater sewerage systems and flush/pour toilets are feasible, long periods of drought (several years) with financial support, with septic tanks and sewage disposal as a cost-effective provided water abstraction rates for human consumption are carefully alternative where necessary. Regulation through national building codes and managed. enforcement of construction and maintenance standards are essential. Outer 45 Recharging these lenses can be enhanced through vegetation control islands benefit from well-constructed and maintained septic tanks paired with measures. Groundwater lenses can also be protected from saltwater intrusion by flush/pour flush toilets. Safeguarding water reserves from sand mining and strengthening coastal defences through the building of seawalls and planting of informal settlements can be achieved through legally enforced water protection mangroves, although the former option zones based on risk-based spatial planning. This will help to manage potential should only be considered in already highly modified urban areas. conflicts over groundwater lenses.45 52 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Rainwater is crucial in the Pacific Atolls, but highly vulnerable to climate change. Despite average rainfall of 2,000-3,500 mm annually, it is not a continuous source due to ENSO-related droughts, limited catchment areas, tank volumes, and household demand. Underused RWH systems can be reha- bilitated at relatively low cost to boost resilience. During droughts, tanks can be filled with desalinated water where available to enhance storage capacity. Sea-level rise is also impacting freshwater lenses through salt water up-con- ing and flooding. There are existing fresh groundwater lenses in various parts of the Pacific Atolls (for example, Tarawa, Laura, Kiritimati) that currently con- tribute a considerable share in the local domestic water supply. In addition, RWH systems and, increasingly, desalination plants are serving as the major complementary fresh water sources. With a few decimeters of sea-level rise, the size of the freshwater lenses will reduce (by a few meters in depth). A thinner groundwater lens has less usable volume. Groundwater extraction can also cause more frequent and severe saltwater up-coning, reducing the reliability of this source for potable water supply. Depending on the elevation of the island, without land raising, it is likely that for between 0.5 meters and 1 meter of sea-level rise, these freshwater lenses will lose their water storage function. With increasing risk of flooding, areas with fresh groundwater lenses may be hit‒leading to salinization of the groundwater lenses underneath. It may take several years to recover. Further investigation is needed into artificially recharging water lenses in the Pacific Atolls. Recharging urban water lenses with treated household greywater46 and rainwater overflow could enhance well water availability and quality for non-consumptive use during shortages. Increased desalinated water supply, such as in Ebeye and South Tarawa, will boost greywater generation for this purpose. Pilot programs are needed to test simple treatment and infiltration systems to improve nearby well water quality (World Bank 2019). Droughts are frequent and can last for several months. Advanced warning systems, like SPC's online forecasting tools for RMI, are crucial for drought pre- paredness. Embedding these tools in user institutions and expanding them to other Atolls is a priority. Standard operating procedures for drought preparation and response, like those in RMI, could be developed in other Atolls. Drought resilience can also be bolstered by adopting stress-tolerant 46 Refers to wastewater generated agricultural approaches. Promoting salt and drought-resistant crop varieties, from household activities. especially in drought-prone outer islands, enhances agricultural resilience. 47 An interesting example is the “food cubes” initiative on Funafuti, Nukulaelae, Support mechanisms like community nurseries, seed distribution, and and Nui (Tuvalu) that allows food to be grown in recycled plastic boxes that decentralized farmer extension services can facilitate adoption. Encouraging protect against saltwater intrusion. They soil improvement, composting, home gardening, and RWH systems can further are portable enough to be relocated during storms (link). promote resilience in food production.47 53 P athways to C limate A daptation G oals Planning and Building with Resilience Densely populated urban areas will face increased flooding due to inade- quate urban planning and management. Limited capacities to implement urban planning legislation and policies in all three countries fail to keep up with urban growth‒resulting in poor physical planning and increased vulnerability to natural and climate-related hazards. Perceptions of unregulated, congested, and low-quality living have led to governments trying to “reverse” urbanization by prioritizing investment outside of urban areas. As a result, urban planning and management investments are not often prioritized beyond sector-specific investments (such as in urban drainage, sanitation, and roads) (World Bank 2021) and more attention is needed on appropriate master planning and development control policies for climate-resilient development (for example, setbacks from coastal areas, raised floor levels, strategic growth areas in less hazard-prone areas). Sea-level rise will worsen flooding‒with each 10-centi- meter increase causing a 10 percent rise in high tides. That means buildings will increasingly experience flooding. Current approaches in Pacific Atolls are reactive, ad hoc, and offer limited protection. Without change, urban security and occupant safety are not assured. Strategies that can be applied are: A Risk assessments to secure current and future growth areas using hazard, exposure, and vulnerability overlaid with land planning and land use options for key urban centers. B Regulating future development and building locations and designs, particularly during renewals and upgrades, based on risk-based land management planning and localized prac- tices. Notwithstanding traditional approaches to customary land ownership and control, regulations such as strategic master planning and practical development control policies and building codes should guide appropriate development. C Reserving and controlling land for land raising and settle- ment (part of spatial planning). D Prohibiting non-essential permanent buildings and valuable community assets within a minimum setback, such as from shore vegetation or defined lower-lying areas for some areas. E Applying and enforcing building codes in construction to set minimum floor levels or accommodation of future flood in- undation levels, static and dynamic load cases, durability, and energy efficiency. 54 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 3.2 PREPARING PACIFIC ISLANDERS TO ADAPT TO CLIMATE CHANGE P rotecting human capital is crucial for climate resilience, involving strengthening health and education systems, upgrading social protection, and ensuring services reach the poorest and most vul- nerable. All three countries have acknowledged the need to enhance human mobility pathways for citizens domestically and internationally while maintaining connections to their communities in their national strategies. RMI and Tuvalu have gone one step further and are actively seeking partner- ships and exploring options for potential relocation in the event of significant climate-related challenges. Citizen engagement mechanisms and investments in health, education, skills, and knowledge are essential regardless of climate outcomes. This chapter further explores human capital and mobility needs in climate change, opportunities for enhanced resilience, and development gains. Protecting citizens from climate shocks A key contributor to stronger human capital is the social protection system which, in the Pacific Atolls, is primarily informal. Households in Kiribati, RMI, and Tuvalu rely heavily on traditional and informal safety nets for support during hardships and natural disasters (Ellis 2011). These systems involve pooling resources within communities and extended families to cover expenses like marriage, funerals, school fees, health care, and living costs‒facilitated through reciprocal relationships within familial and social networks (World Bank 2023). Traditional safety nets face strain from challenges including rising food and fuel prices, urbanization, and recent natural disasters such as the 2022 droughts in Tuvalu and Kiribati and the COVID-19 pandemic. Climate change will exacerbate these challenges further. All three countries utilize a range of formal social protection programs although these programs only cover a modest segment of the population. Mechanisms include transfers such as food and cash, social pension schemes, disability support allowances, and public works programs. They aim to provide income support and prevent households from having to use strategies that may undermine their longer-term well-being‒such as selling assets, withdrawing chil- dren from school, and taking on additional debt during short-term crises. Most social protection programs were initially designed for formal sector workers, thus providing support to non-poor individuals through retirement funds and social insurance schemes, however, Kiribati and Tuvalu have recently intro- duced social assistance programs for the elderly and people with disability to fill this gap. Some in-kind or small cash transfer schemes are also provided on an ad hoc basis to communities affected by natural disasters. There are Active Labor Market Policies in the form of skills and training programs‒primarily to prepare workers for Labor Mobility programs. 55 P athways to C limate A daptation G oals Pacific Atoll governments also offer support through copra subsidies, re- distributing fishing access fee revenue to outer island communities in all three countries. These subsidies also aim to incentivize people to stay on outer islands, reducing urban migration. For example, in 2016, Kiribati doubled its copra subsidy from $A 1.00 to $A 2.00 per kg, providing an additional $A 62.4 million to outer islands, equating to an annual income of $A 2,000 to $A 2,500 per household. This subsidy was subsequently doubled again to $A 4.00 per kg in 2022. In RMI, copra payments represent about one-quarter of total agricultural income and approximately 10 percent of total outer island income. Redirecting copra subsidies towards a broader range of livelihood activities could better support outer island households facing climate challenges. Social protection systems in the Pacific Atolls must adapt to mitigate cli- mate change risks in five ways. They should: (i) allocate resources to handle increased disaster impacts and variability in fishery and agricultural livelihoods, requiring quicker and more extensive support; (ii) establish linkages between social protection programs and early action and disaster response protocols to ensure coordinated responses to climate-related events; (iii) adjust eligibil- ity criteria and targeting norms to ensure benefits reach the most vulnerable affected by climate shocks; (iv) enhance institutional capacity, including data collection and management; and (v) build social registries or management infor- mation systems capable of capturing vulnerability to climate change and current hardship indicators. This could be achieved by integrating data collection into existing efforts like the National Population Census and household surveys to improve targeting accuracy. For instance, Tuvalu is enhancing its disaster risk preparedness by developing risk maps of hazards to infrastructure which can also identify vulnerable households within these hazard areas‒thereby aiding the development of an Adaptive Social Protection (ASP) system (IMF 2023). Existing programs lay the foundation for building ASP systems. For instance, Kiribati's Social Fund for the Unemployed (SFU) cash transfer program currently does not target those facing hardship or climate vulnerability, nor does it boost employment opportunities. Linking SFU to skills training, secondary school completion, or resilience and disaster management courses could enhance its effectiveness. Another option is providing recipients with opportunities in nature-based public work programs on outer islands, fostering employment pathways and climate readiness. The Early Childhood Development Conditional Cash Transfer program in RMI could be adapted to include shock-responsive elements‒such as scaled-up nutrition assistance to families with young children during and after disasters. These efforts should be guided by an ASP policy framework that is informed by medium-term climate analysis which is currently lacking in all three countries.48 Establishing such a strategy can align social assistance protocols with disaster response‒thereby enhancing preparedness. Closer alignment of social protection with disaster reduction and response strategies can build resilience through climate-focused initiatives like cash-for- work programs and training. Sharing datasets and service delivery mechanisms 48 A Social Protection Bill was being can enable integrated responses, reducing time and costs. ASP can respond to drafted prior to COVID-19 to legislate social welfare programs in Tuvalu but disasters by providing food and water to vulnerable households during droughts has not been finalized.  and supporting climate risk reduction through various measures. 56 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T The coverage and funding for ASP could gradually increase‒potentially by reallocating existing expenditure on livelihood support. Extensive subsidies are utilized due to high energy and food prices resulting from geographic and market isolation. For instance, Tuvalu's subsidy expenditure rose to 16 percent of GDP in 2022, up from 11 percent in 2021, partly due to increased electricity subsidies to mitigate higher fuel prices. Redirecting copra subsidies could better serve outer island residents. For example, reducing Kiribati's co- pra subsidy from $A 4.00 to $A 2.00 per kg could yield $A 20 million in fiscal savings, potentially reducing poverty from 21.9 to 6.1 percent of households 49 RMI’s program does not have a systematic linkage of scholarships and if targeted conditional cash transfers for the poor were used. Aligning higher training programs with the country’s education subsidies with identified skill gaps in both public and private sectors strategic workforce needs, especially science, engineering, and technology. also present further opportunities.49 Preparing for Climate-Induced Mobility Climate change will increasingly disrupt community lifestyles and tradi- tions, render some places uninhabitable, and drive the movement of people. While there are numerous uncertainties as to when, and how this will happen, developing the capacity to relocate, and the capacity to stay, will be necessary in coming decades. Pacific Atoll governments and their people prioritize their right to stay in their place of origin and enjoy their rights to the land and sea. Communities also have a rich history of diverse forms of migration and mobility, however, including long-distance voyaging and inter-island travel alongside a legacy of adapting to challenges such as limited land resources and fragile freshwater supplies for over 1,000 years. While various factors influence mobility, climate change will amplify mi- gration trends. The CCDR identifies four main forms of mobility pathways, which citizens have historically adopted and will likely continue to do so: (i) Immobility; (ii) Internal migration; (iii) International migration; and (iv) Com- munity relocation. 1 Immobility, when people choose to stay in their place of origin, is generally preferred but will require substantial in situ adaptive action to maintain and secure their physical presence if location risks significantly increase. In RMI, for example, 99 percent of respondents who participated in the NAP community consultation indicated they wanted to stay. For others, immobility may be involuntary where they wish to migrate but are unable to because of limited resources, lack of destination access, or social and cultural reasons. It is projected that by 2030, approximately 64 percent of i-Kiribati adults aged 20–44 years (61,000 people) and 47 percent of Tuvaluan adults (4,900 people) will seek to migrate but will be unable to do so due to financial constraints.50 2 Individual and family migration to domestic urban cen- ters is common but they will require better access to 50 See Curtain and Dornan, 2019. services and opportunities. Some urban centers‒notably 57 P athways to C limate A daptation G oals Ebeye (RMI) and Betio (Kiribati)‒are already crowded51 and are themselves exposed to climate risks. Increasing flows of emigration to urban atolls amplifies existing challenges in –20% these areas‒including the limited availability of land, water provision, waste management, and housing provision‒as population of RMI due well as a higher demand for social services and jobs.52 An to emigration in the example is seen in the current efforts to develop Kiritimati last 10 years Island (currently low population density) in Kiribati as an economic hub to attract i-Kiribati citizens. As discussed ear- lier in this chapter, the costs of adaptation in urban centers calls for improved spatial and urban planning to cope with the continued influx of migrants. 3 International emigration from the Pacific Atolls has in- creased over time. Between 2017 and 2021, emigration 51 The three capital atolls exhibiting some of the highest population densities numbers from Kiribati and Tuvalu saw a modest increase of in the region: Funafuti (Tuvalu) 2,399, approximately 7 percent‒totaling 5,265 and 3,814 people Majuro (RMI) 2,384, and South Tarawa (Kiribati) 3,942 persons per km2. The respectively in 2021. Meanwhile, emigrants from RMI expe- urban areas Betio in South Tarawa and Ebeye in RMI have population densities rienced significant growth of about 45 percent‒rising from of 12,082 and 27,191 persons per km2, respectively (2020 and 2021 censuses). 7,504 in 2017 to 10,893 in 2021, (and contributing to a 20 There are, however, urban areas and percent decline in the population over the last 10 years). New islands with vacant and unutilized land and/or vacated buildings that are Zealand, Australia, and Fiji are the main destinations for i-Kiri- inaccessible because of ownership issues (including where the owners bati and Tuvalu migrants, facilitated by bilateral agreements, are no longer resident in the country or have died). while RMI emigrants tend to go to the USA, supported by 52 Social services in these destinations extensive work and living rights arrangements.53 One major will need to be expanded to cope, includ- ing education and health services, as cost of permanent emigration in Pacific Atolls is skill loss well as planning for employment and/ or “brain drain,” particularly in health care. Skill loss is less or provision of arable land as a source of subsistence. Past experiences are severe in temporary and seasonal migration, which also has cautionary: for example, in the 1930s, the British administration attempted better economic impacts for sending countries. Women are unsuccessfully to settle Gilbertese on the Phoenix Islands, giving each family underrepresented in labor mobility schemes due to social a plot of land on previously uninhabited obligations and traditional roles and recruiters often prefer islands. This exercise was abandoned, however, less than 30 years later when men for perceived physical capacity and risk concerns. Fund- it became evident that farming was unsustainable due to water scarcity and ing and visa criteria also pose barriers for the poor‒limiting remoteness. migration options. Elderly people are often excluded from 53 Under the CoFA, RMI citizens can enter the U.S. (including all states, terri- labor mobility schemes due to age restrictions, typically set tories, and possessions) without a visa to work and reside in the U.S. indefinitely. at 45 years. With increased climate change pres- 4 sures, it is expected that the flow of RMI citizens to the U.S. will increase. Since Community relocation involves moving all or a significant the 1980s, several working schemes have enabled i-Kiribati and Tuvaluans part of a community to a new site. This is often due to en- to migrate to New Zealand. The Pacific Access Category (PAC) was initiated in vironmental factors causing temporary/permanent displace- 2002 and allows an annual quota of ment. Relocations driven by family or relational ties or locally migrants from PICs to enter New Zea- land and work with a residence permit. negotiated processes tend to have better outcomes, however, Since 2007, seasonal work programs have been established by New Zealand state-led relocations can be lengthy, costly, and require early and Australia. Tuvalu recently signed a Falepili Union treaty with Australia which community consent and participation. Adequate support is will establish a pathway to permanent crucial for communities to transition smoothly, as relocation migration for about 280 Tuvaluan families annually. can disrupt livelihoods, culture, and social cohesion. 58 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T In response to the complex challenges posed by climate change, Pacific Atolls must enhance community-led resilience efforts and bolster human mobility pathways and can draw on a range of practices (Clement et al. 2021). Key recommendations include: (i) improving climate mobility policies to integrate movement trends and support adaptation responses; (ii) enhancing inclusive consultation processes to ensure that communities understand in situ (Clement et al. 2021) and relocation options that might be available to them; (iii) understanding and expanding access to diverse mobility pathways, includ- ing educational and vocational programs, and facilitating the safe movement of people; (iv) facilitating planned community relocation when necessary, with participatory planning and access to essential services and studies to monitor enabling factors and barriers (for example, vulnerability, economic opportunities, social networks, cultural ties, and financial support) as well as social impacts of migration; and (v) integrating gender and social inclusion in all mobility strate- 54 See Deininger et al. (2023) (link). gies54 to ensure equitable participation and decision making (TABLE 3.5). TAB L E 3 . 5 Options to prepare for climate-induced mobility ADAPTATION OPTIONS PRIORIT Y Enhance climate mobility policies: Review and update national development strategies (for example, NAPs) Short-medium and identify information gaps in mobility planning. Strengthen data collection systems to track population term movements, vulnerabilities, and drivers of mobility, enabling informed decision making and targeted interventions‒for example, displacement risk assessments. Set out an inclusive, consultative, and participatory process to ensure community engagement in, and ownership Short-medium of, in situ and relocation options and related planning processes: Establish consultation guidelines. Identify and term consult with communities who choose to stay and need support and those who aspire to relocate, as well as with communities who enable and welcome people who are relocating. Ensure that communities have a central role in outlining their future needs and aspirations with respect to relocation, climate adaptation, and sustainable development. Implement measures to address gender disparities in labor mobility schemes, ensuring equal opportunities for women's participation and addressing social norms that limit their mobility. Improve education and training: Invest in climate-resilient classroom and teacher housing and enhance access to Short-medium skills training programs that equip individuals with skills relevant to emerging employment opportunities, within term and outside the Pacific Atolls. Develop and monitor comprehensive mobility plans: Establish comprehensive plans that integrate climate Medium-long change projections and community needs to prepare for various forms of mobility, (immobility, internal migration, term international migration, and community relocation). Undertake strategic analysis on mobility options including propensity analysis, spatial planning and social integration activities within host communities and social impact analysis, assessing the social consequences of migration on both sending and receiving communities. Support people-centered adaptation and mobility: Invest in community-led adaptation strategies, enhancing Medium-long local government capacity and access to services and livelihoods. Invest in measures to enhance community term resilience, including infrastructure development, disaster preparedness, and climate adaptation strategies, to reduce the need for involuntary relocation. Prioritize marginalized groups and urban areas under stress. Enhance social protection systems to support vulnerable populations, including women, the elderly, and the poor who may face barriers to mobility due to socioeconomic factors. Collaborate with host countries and foster international cooperation: Kiribati and Tuvalu could lobby for the Medium-long consideration of “vulnerability to climate change or natural disasters” within the selection process for the Pacific term Australia Labor Mobility (PALM) and RSE programs‒giving workers from these countries a small advantage. Collaborate with international partners, including neighboring countries, regional organizations, and development agencies to mobilize resources and expertise to consider lessons from other countries and support climate-induced mobility initiatives and promote gender equality. Streamline visa processes and reduce mobility barriers, particularly for vulnerable populations, while ensuring workers' rights, safety, and protection throughout the process. 59 P athways to C limate A daptation G oals Building Strong Health and Education Foundations Investing in education and health is crucial whether people stay or move. Success in establishing new livelihoods depends largely on the ability to find work and achieve financial stability. A strong foundation in education, job-rele- vant skills, and good health are essential for creating better adaptation pathways for the current workforce and improving opportunities for migrants (Marin et al. 2024). As people seek employment elsewhere, they will need to enhance their skills to compete in higher-paying sectors and support their families back home. Climate change is adversely impacting health and education outcomes. Rising temperatures and more frequent severe weather events have led to an increase in outbreaks of vector-borne diseases such as dengue fever, Zika virus, and chikungunya. Disruptions in food production and consumption patterns contribute to health issues like obesity, diabetes, and poor morbidity and mor- tality outcomes. In 2019, Kiribati had the world’s second highest age-adjusted comparative diabetes prevalence in adults (22.5 percent). In Tuvalu, non-com- municable diseases are responsible for an estimated 82 percent of all deaths and are a large health and fiscal cost. Rates of malnutrition and stunting remain high‒affecting 35 percent of children under five in RMI. Climate stresses also impact education. Natural disasters disrupt education, causing learning deficits and potentially pulling children, especially girls, out of school to support family livelihoods and negatively impacting on their earning potential. To address health challenges, the Pacific Atolls are strengthening their health care systems, focusing on fortifying infrastructure and systems for surveillance, preparedness, and response. RMI's Ministry of Health and Human Services has outlined a vision for enhancing health service delivery through partnerships for maternal and child health, standardized care in Neigh- boring Island Health Care Centers, and health worker training. RMI's commit- ment to addressing health in the context of climate change is highlighted in its National Climate Change and Health Policy. Tuvalu and Kiribati are also advancing their health care systems, with strategies and plans emphasizing health security and climate resilience.55 Investments in water and sanitation infrastructure can reduce waterborne diseases, while improving existing facil- ities and communication technology can mitigate service disruptions during adverse weather. Telemedicine and visiting specialist medical teams are vital for outer island care, as seen in Tuvalu's Medical Treatment Scheme. Enhanced data collection, community awareness, and population movement anticipation are needed for effective planning and resource allocation. Investing in early childhood education is crucial for building resilience. Early childhood lays the foundation for future learning by developing essential cognitive, emotional, and social skills. Prioritizing investment in this area can lead to better outcomes in later school years, such as higher literacy and nu- 55 Tuvalu’s “Te Kete” meracy rates, and long-term benefits like improved employability and social strategy and National mobility. Basic learning outcomes are poor, however, and deteriorating across Health Strategic Plan emphasize health secu- all three countries. For example, in Tuvalu, 39 percent of grade 3 students rity and climate change resilience. scored zero in reading comprehension assessments. According to the 2020 60 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Human Capital Index, expected years of schooling are low: 7.4 in Kiribati, 5.7 in RMI, and 6 in Tuvalu. Secondary school completion rates are also lower than comparator countries, with Kiribati at 21 percent in 2019. Inequality persists between schools, and boys generally perform worse than girls (Jarvie and Diabagate 2023). While the Government of Kiribati invests significantly in scholarships for overseas universities, low completion rates hinder many students from qualifying for these programs‒limiting access to higher-paying jobs. Technical and Vocational Education and Training offers an alternative, options are currently limited, and it requires substantial improvements in ca- pacity, quality, and job relevance. Labor mobility brings significant economic and developmental benefits to the Pacific Atolls and can enhance climate resilience and adaptation. These benefits include employment opportunities, remittances supporting households and services, and skills and knowledge transfer. Kiribati and Tuvalu participate in Australia’s PALM and New Zealand’s RSE labor mobility schemes, while RMI migrants often go to the USA under CoFA (GAO 2020). Although the PALM and RSE schemes do not demand formal qualifications beyond a high school diploma, successful outcomes emphasize the importance of basic English and numeracy skills, along with soft skills and the ability to learn on the job. Future migrants from Tuvalu to Australia under the Falepili Agreement, like RMI migrants to the USA, will require additional (vocational) qualifications to secure decent jobs and meet higher living costs. There are, however, gaps in the end-to-end processes of seasonal/temporary migration. For instance, there are discrepancies in pre-departure training arrangements among PICs, leading to varying degrees of worker preparedness. Recruitment regulations also vary, often involving private recruitment agents. Upon completion and their return home, seasonal/temporary workers receive no workforce certifications and little or no reintegration support. Skills development is crucial for both domestic and international labor mar- kets. Providing vocational training and apprenticeships for youth is essential to reduce youth unemployment rates, fill national skills gaps, and equip them with qualifications sought after in the national labor market and for international labor mobility programs. Although skilled job opportunities in the Pacific Atolls are limited, there is a high demand for skilled workers in construction and the maritime sector. Formal employment requires high levels of literacy and digital capability, highlighting the importance of foundational learning. 61 P athways to C limate A daptation G oals 4 ECONOMICS OF FUNDING RESILIENT DEVELOPMENT PATHWAYS PAGE 62—78 62 TT COUN URVALU Y C L I M AT E A N D D E V E LO P M E N T R E P O R T KEY 1 The Pacific Atolls must carefully evaluate a range of adaptation path- MESSAGES ways. Pursuing all pathways is not financially feasible so adaptation measures need thorough evaluation and the consideration of trade-offs. Measures will need to be assessed on a case-specific basis, with costly options like land raising prioritized for high-use areas. Effective governance and decision-mak- ing mechanisms are essential as financing availability, land, and construction feasibility are the primary constraints on adaptation measures. 2 Enhanced revenue collection may help to fund adaptation measures and yield better development outcomes. With limited access to interna- tional debt markets, the financing capacity of the Pacific Atolls relies on domestic tax collection, sovereign rents, and concessional financing. Fiscal reforms aimed at enhancing efficiency and equity in subsidies and taxes across the countries could be beneficial. 3 Warmer oceans may diminish fishing revenues and cause the migration of valuable tuna further east in the Pacific. Reducing the revenue risk will require improved fisheries management. 4 The urgency of climate change necessitates a significant transfor- mation in development strategies and fiscal policy for the Pacific Atolls. This requires substantial financing through innovative solutions and credible policy measures to gain stakeholder confidence. 5 The Pacific Atolls possess large maritime territories, known as EEZs, which are vital for their economic and environmental health due to income from fishing rights and offer the potential for other maritime activities. Maintaining the integrity and sovereignty of these EEZs is crucial. 6 International development partners will continue to play a crucial role in catalyzing concessional financing to bridge funding gaps. T he urgency of climate change necessitates a fundamental shift in development strategies and macro-fiscal policy. The demands of climate financing are beyond the current capacity of the Pacific Atolls. This chapter explores actionable steps for supporting transitional climate financing, emphasizing the importance of diverse funding sources, revenue enhancement, fiscal efficiency, PPPs, and leveraging global climate finance mechanisms. Trade-offs will be necessary due to financing constraints and policy measures must align with the macro-fiscal framework to establish credibility and foster confidence among stakeholders. Adaptation costs are expected to be beyond currently available resources. As discussed in Chapter 3, the estimated adaptation costs to protect the major islands over the next decades are extraordinarily high. The costs vastly out- 63 E conomics of F unding R esilient D evelopment P athways “ The Pacific Atolls face a unique confluence of challenges arising from climate change—necessitating a reorientation of macro-fiscal policies to address climate risks. weigh what the Pacific Atolls are capable of financing themselves. A significant increase in funds will be required to make a meaningful contribution to the total. If they became available, these sources of finance would quickly dominate the countries’ external balances, which could come under further pressure from reduced fishing revenues and potential reductions in population. Even with additional external financing support, adaptation for the Pacific Atoll countries poses a significant resource challenge. While climate change adaptation investments stimulate local economies elsewhere, the Pacific Atolls have limited capacity for such initiatives. Most materials, equipment, and expertise may need to be imported, given the lack of domestic materials and capacity, resulting in economic benefits accruing externally. Large financial inflows for adaptation would be offset by increases in imports of materials and equipment. Expanding transport infrastructure such as port facilities may be necessary to facilitate the importation of necessary equipment and materials without disrupting economic activities. Developing domestic capabilities in building seawalls and elevating land could capture some economic value from construction but this potential is limited. One option to reduce external financ- ing costs is to enhance domestic construction capabilities. This option faces constraints, however, particularly in sourcing aggregates which are mostly im- ported due to domestic limitations (see Chapter 3.1). Although infrastructure design offers some potential for domestic involvement, this only accounts for 10 percent of total adaptation costs and requires specialized training. While there may be more scope for domestic involvement in rebuilding, especially in land elevation projects, the total share of costs that can be met domestically will be small, with minimal supply chain benefits due to material shortages. The Pacific Atolls face a unique confluence of challenges arising from cli- mate change‒necessitating a reorientation of macro-fiscal policies to ad- dress climate risks. The pivot towards climate-resilient development involves integrating climate considerations into fiscal policies. As described in Chapters 2 and 3, this includes governance mechanisms to support consensus decision making and targeted investments in education, health, and climate-resilient infrastructure (such as seawalls), and sustainable water sources‒including conservation initiatives‒to mitigate the impacts of sea-level rise and extreme weather events. The countries could also explore opportunities to enhance current sources of revenues and explore new revenue streams through potential carbon sequestration credits for protecting marine environments (which act as a carbon sink) or green subsidies/taxes incentivizing investment and behavior changes to boost climate adaptation measures.  64 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 4.1 PIVOTING MACRO–FISCAL POLICY TO FACE THE CLIMATE AND DEVELOPMENT CHALLENGES C F I G U RE 4 . 1 limate-related events cause significant economic losses, Estimated average estimated at 3-4 percent of GDP annually in RMI and Kiribati in annual losses from 2023, and almost 7 percent each year in Tuvalu (FIGURE 4.1). By climate-related events 2050, these losses are expected to increase modestly in RMI and 2023 2050 Kiribati but surge to 11.7 percent of GDP in Tuvalu. The continuous % OF GDP need to rebuild infrastructure, given the limited production capacity of these 0 5 10 15 countries, hinders further economic development. In Tuvalu, maintaining the RMI current capital stock could become challenging with a significant proportion of assets damaged annually by storm surges. KIRIBATI The impacts of large climate-related events are expected to escalate in the TUVALU coming decades (FIGURE 4.2). A 1-in-20 year climatic event (expected to occur before 2050) could lead to additional losses of 5 percent of GDP in RMI and 15 F I G U RE 4 . 2 percent in Tuvalu, with a smaller increase for Kiribati. These events are highly Estimated losses destructive as resources are constrained. For example, expected losses of from a 1-in-20 year more than 50 percent of GDP in Tuvalu would take several years from which to climate-related event recover, let alone develop further. Tropical Cyclone Pam in 2015, for example, 2023 2050 destroyed 20 percent of GDP in Tuvalu while 75 percent of those impacted % OF GDP were the poor (United Nations Office for Disaster Risk Reduction 2022). Beyond 0 10 20 30 40 50 60 2050, all impacts could be expected to increase as temperatures rise further RMI and the rate of sea-level rise accelerates. KIRIBATI Private sector reluctance to invest in adaptation and general infrastructure constitutes a hidden cost of climate change. While standard estimates of TUVALU climate damage typically focus on immediate damage and rebuilding, grow- ing awareness of climate risk may deter future investment, as in the case of Note: Figures are based on the current stock of assets‒that is, they tourist assets in Tonga following the 2022 eruption of the underwater volcano, do not factor in future economic growth‒in a scenario with 2°C Hunga Tonga-Hunga Ha'apai, hindering capital stock growth and economic temperature increase from pre- industrial levels by 2050. This is development. Furthermore, insurance for long-lived capital equipment could equivalent to the upper end of the become more expensive or unavailable if storm surges increase in frequency. mid-range climate change scenario of RCP4.5. This disincentive to invest further complicates financing large-scale adaptation Source: The University of measures, especially considering the small share of GDP foreign direct invest- Cambridge Institute for Sustainability Leadership ment represents (0-2 percent) in the Pacific Atolls. (2023). Losses of oceanic fishing revenues could significantly impact external income, should high emissions scenarios eventuate. Fishing access fee revenues are an important source of external income for the Pacific Atolls, contributing 47-70 percent of government revenues (excluding development assistance grants) (FIGURE 4.3 ). Fish represent 95 percent of goods exported from Kiribati (excluding fuel re-exports) (Growth Lab 2023). While moderate climate scenarios (SSP2-4.5) may lead to revenue increases with increased 65 E conomics of F unding R esilient D evelopment P athways F I G URE 4 .3 F IG U RE 4 . 4 Share of government revenues Estimated change in purse- from fishing access fees seine catch by 2050 under (excl. grants, 2015-18, Percent) RCP4.5 and RCP8.5 (Percent) % OF GDP RCP4.5 RCP8.5 0 20 40 60 80 -30 -20 -10 0 10 RMI RMI KIRIBATI KIRIBATI TUVALU TUVALU Source: Bell et al. (2021). catches, faster temperature rises (SSP3-8.5) would result in overall losses with reduced catches by 2050 (FIGURE 4.4). Under a high emissions scenario, RMI, Kiribati, and Tuvalu could see domestic government revenue declines of 0.3, 5.8, and 12.6 percent, respectively. Modelling by the IMF suggests flow-on effects through these countries’ economies of -0.1 percent, -6.5 percent, and -6.2 percent of gross value-added (GVA) for RMI, Kiribati, and Tuvalu respec- tively, although the more likely scenario is no or limited change.56 While already well-managed, there are opportunities for regionally coor- dinated management improvements that could help secure revenues. The immense benefits of Pacific tuna have been realized through cooperative man- agement under the PNA Vessel Day Scheme (VDS). The PNA has also instituted management measures to safeguard stocks and increase revenues. All four major tuna stocks (South Pacific albacore, bigeye, skipjack, and yellowfin) are deemed to be “biologically healthy.” While stocks are not overfished and are not experiencing overfishing, there is a need to create rules and mechanisms to react promptly to potential decreases in stocks or in response to overfishing, as is possible under climate change impact, and therefore complete the PNA’s stated goal of setting target reference points (TRPs) and harvest strategies that guides the management of each stock. This will help ensure stocks have a ‘buffer’ against climate-related shocks.57 56 Preliminary estimates by Gonguet and Zhou based on the EMERGING data- base, IMF GFS database, and authorities’ There is a need to build capacity for advanced fish stock modelling under data; shock calibration based on Bell et al. (2021). Upper bound estimates climate change. The SPC has plans for an “advanced warning system”‒high (RCP8.5), prior to any policy intervention, and assuming no substitution effect resolution modelling that can cover multiple self-replenishing stocks and their and no price changes. Change in GVA is relative to the size of today’s economy. migratory patterns. This capacity will be critical to understanding climate chang- 57 . The Regional Roadmap for es as they unfold. Modelling results could inform further strategies and negoti- Sustainable Fisheries (SPC 2015) anticipated establishing TRPs within ations within the Western and Central Pacific Fisheries Commission (WCPFC) three years and implementing them over over tuna access rights. One possibility is to explore the use of PNA vessel days ten years from 2015. To date, albacore has an (interim) TRP and discussions are for fishing on areas of high seas to the east (beyond “pockets”). Countries or ongoing regarding an (interim) TRP for skipjack tuna, and possibly a combined vessels that agree could be provided with preferential access to the PNA EEZ TRP for yellowfin and Bigeye. Concluding these processes provides the basis for areas. This would require extensive negotiations among WCPFC members and sound long-term management. A chal- possibly with Inter-American Tropical Tuna Commission members as stocks lenge to this action is the negotiation that is required within the WCPFC. move eastward. (Bell et al. 2021). Revenue enhancement reforms for fisheries 66 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T would require regional action by the PNA with support of the Forum Fisheries Agency (FFA) and the SPC (TABLE 4.1).58 Actions that increase revenue collection can create fiscal space to fund climate investments.59 The Pacific Atolls lack access to international debt markets, so the fiscal envelope is constrained by the taxes they can collect, sovereign rents, and concessional financing from development partners. Al- 58 The Nauru Agreement Concerning though not a panacea, tax reform may yield benefits across the Atolls, while also Cooperation in the Management of Fisheries of Common Interest (the Nauru making tax systems more efficient and equitable. The tax-to-GDP ratio in RMI Agreement) is an Oceania subregional agreement between the Federated and Tuvalu is below the global benchmark minimum of 15 percent (TABLE 4.2) States of Micronesia, Kiribati, RMI, Nau- ru, Palau, Papua New Guinea, Solomon and tax gaps in Kiribati and RMI are sizeable‒estimated at 9 and 16 percent Islands, and Tuvalu. The eight signatories of GDP.60 In Kiribati, increasing the VAT rate (in line with peers and the global collectively control 25–30 percent of the world's tuna supply and approximately average), lowering the threshold, rationalizing exemptions, and introducing 60 percent of the western and central Pacific tuna supply. electronic filing and payments could raise tax collection by up to 7 percent of 59 The analysis in this paragraph and GDP. In RMI, replacing the Gross Revenue Tax with a broad-based VAT (a low the next is based on World Bank (2023). See also IMF (2022) that supports threshold and limited exemptions) and improving property tax collection could similar recommendations. raise up to 4 percent of GDP in additional tax revenue. In Tuvalu, increasing the 60 The tax gap measures the differ- ence between estimated tax collection VAT rate (in line with peers and the global average) and improving the efficiency potential, based on the performance of of corporate income tax collection could generate up to 3 percent of GDP in other countries at a similar income level, and actual tax revenue. A lack of trade additional revenue. It should be noted that these estimates are likely an upper data makes it difficult to estimate the tax gap for Tuvalu. Given its low tax col- bound to what may actually be collected given behavioral changes and unique lection compared to regional peers, how- ever, Tuvalu can likely increase revenue aspects of the Atoll nations that may differ from peers and global experience. substantially by closing part of its policy VAT reforms that increase the tax burden on the poor and vulnerable should be and administrative gaps. Estimates are from World Bank (2023). offset by targeted public spending, such as cash transfers (see Chapter 3.2). TAB L E 4 . 1 Revenue enhancing options for fisheries REVENUE ENHANCING OPTION PRIORIT Y Ensure vessel day allocations consistent with long-term Maximum Sustainable Yield (MSY). Complete the Short-medium Regional Roadmap’s goal of setting harvest strategies with TRPs for each of the four major tuna species. term Build capacity for fish stock modelling under climate change. Enhance research capacity (potentially that within Short-medium SPC) to model climate impacts on individual tuna stocks in high resolution and to recommend the optimal vessel term days (and commensurate optimal fees) in the context of climate change. Negotiate mechanisms within the WCPFC for the use of vessel days within further high-seas regions. Explore Medium-long options for extending the purse seiner VDS to further areas of high seas to the east (beyond EEZ ‘pockets’) where term tuna will increasingly migrate under climate change. This may be possible through negotiations within the WCPFC or through conditioning future purchases of PNA vessel days on firm-level agreement. Investigate measures that could increase the price of vessel days (for example, commission modelling). These Medium- term include auctions, extended subregional pooling, and transferability of vessel days on a secondary market (which may increase prices). While not a climate measure per se, doing so could increase fishery revenues. 67 E conomics of F unding R esilient D evelopment Source: P athways World Bank and IMF staff estimates. TAB L E 4 . 2 Selected Economic Indicators KIRIBATI TUVALU REPUBLIC OF MARSHALL ISLANDS FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 Real GDP 3.3 -0.6 8.5 3.9 4.2 13.8 -4.3 1.8 0.7 3.9 10.4 -2.8 1.1 -0.6 2.9 growth (%) Inflation -1.8 2.6 2.1 5.3 9.3 3.5 1.9 6.2 11.5 5.9 -0.1 -0.7 2.2 3.2 5.4 Percent of GDP Percent of GDP Percent of GDP Revenue 147.3 104.7 72.2 69.0 100.7 111.8 129.4 102.6 119.8 110.5 64.0 70.6 70.3 67.0 62.7 ▸Taxes 19.6 15.9 17.1 16.1 16.1 15.5 13.2 14.4 13.8 15.0 13.9 13.7 13.9 14.7 ▸Grants 37.0 30.1 8.3 12.9 30.0 28.9 33.7 16.2 30.7 33.1 31.0 36.9 39.7 35.4 32.0 Expenditures 133.9 101.2 82.9 87.3 102.0 112.9 121.2 116.5 111.0 109.4 65.7 68.0 70.1 66.3 62.5 ▸Current 66.5 62.6 67.0 66.7 70.9 70.8 78.6 93.3 98.2 98.2 63.1 62.1 63.3 60.0 52.9 •Interest 0.3 0.2 0.2 0.2 0.2 0.0 0.0 0.0 0.0 0.0 0.3 0.3 0.2 0.2 0.2 ▸Capital 67.4 38.6 15.9 20.5 31.1 42.1 42.6 23.2 12.8 11.2 2.6 5.9 6.8 6.4 9.6 Fiscal Balance 13.4 3.5 -10.6 -18.3 -1.3 -1.1 8.2 -13.9 8.8 1.1 -1.7 2.6 0.2 0.7 0.2 Primary Balance 13.7 3.8 -10.4 -18.1 -1.1 -1.1 8.2 -13.9 8.8 1.1 -1.4 2.9 0.4 0.9 0.4 Public debt 19.0 17.2 14.1 13.3 11.7 11.5 12.2 11.5 10.1 8.0 33.1 29.1 27.5 24.5 21.3 More efficient spending can deliver better development outcomes and make fiscal policy more responsive to climate challenge. The Pacific Atolls’ unique economies lead to higher costs in public goods and services (even relative to comparator countries), and a large public sector. Nevertheless, there are op- portunities to improve the efficiency of spending and better integrate climate into the budget process. Climate-tagged budgeting is not yet in place in any of the countries, however, Tuvalu is improving fiscal governance and transparency. In the health and education sectors, stricter criteria and improved planning and procurement could reduce the unit costs (and increase equity) of spending on tertiary education scholarships, overseas medical referral programs, and pharmaceuticals. In PIM, adjusting project design, selection, and prioritization to include adaptation considerations can align capital spending with broader efforts to build resilience. In Kiribati and RMI, reforms to the copra subsidy (and unemployment benefits in Kiribati) could improve their poverty-reduction impact and reduce the fiscal burden–creating a triple win of lowering poverty, improving equity, and creating space for more climate-responsive spending (as discussed in Chapter 3.2). By contrast, Tuvalu’s fledgling social protection systems will require additional spending to increase coverage and improve delivery systems. Strengthening medium-term fiscal frameworks can help to manage the fiscal risks from natural disasters, climate change, and volatile sovereign rents, along with debt-related risks. Pacific Atoll governments cannot fully mitigate the economic and fiscal risks of external shocks (natural disasters, global commodity prices, and volatile aid flows). A consistent and regularly updated medium-term fiscal framework–comprising strategies for revenue, expenditure, 61 For a broader discussion of climate and debt can, however, help to reduce the impact of volatile revenues, prioritize change and debt sustainability for SIDS see Brownbridge and Canagarajah spending, and strengthen fiscal and debt sustainability in the face of these (Forthcoming). shocks.61 Medium-term revenue strategies (MTRS) should focus on increasing 68 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T domestic revenues, improving tax efficiency and equity, and improving revenue forecasting. Medium-term expenditure frameworks (MTEF) can help to prioritize spending and key investments to enhance climate resilience, and link capital and current spending. MTRS and MTEF could also be linked to fiscal rules to manage windfall revenues, including rules on sovereign wealth fund accumu- lation and withdrawal to help delink spending from revenue windfalls. Finally, these should be placed within the context of a medium-term debt strategy, to ensure that the overall fiscal strategy is sustainable, debt-related risks are managed, and contingent liabilities are monitored with sufficient buffers. Increased climate risks suggest a need for Pacific Atolls to take advantage of opportunities to reduce potential fiscal outlays in the event of a natural disaster. To access disaster risk financing, a country must have an adequate macroeconomic policy framework and a satisfactory DRM program in place (or under preparation). Disaster risk financing strategies that set out in advance the policies, protocols, and instruments for quickly mobilizing the required re- sources to respond to an emergency that may vary in specificity and implemen- tation across countries. The Pacific Atolls have DRM strategies and currently access a suite of financial products to manage financial risks associated with disasters. Financing options that countries have accessed include concessional and contingent credit lines, such as the hybrid Development Policy Operations (DPO) combined with a Catastrophe Deferred Drawdown Option (CAT DDO) that provide immediate liquidity post-disaster or health event and that complement other financing sources as part of a broader crisis preparedness and response toolkit, including the Rapid Response Option that the World Bank offers. This includes the Crisis Response Window, Pandemic Emergency Facility, as well as technical assistance from the Pacific Catastrophe Risk Assessment and Financing Initiative among DRM products provided by other Multilateral De- velopment Banks (MDBs), such as the Asian Development Bank. Ministries of Finance can play a leading role in coordinating effective disaster risk finance policies with sectoral ministries and DRM agencies. Strategies should identify different financial instruments to mobilize finance in a timely and cost-efficient way to reduce impacts on the public budget. Recognizing substantial risks, Pacific Atolls are exploring some feasible revenue diversification opportunities to enhance fiscal resilience and sup- port climate action plans. Although opportunities for economic diversification opportunities are modest in the Pacific Atolls, some areas are being explored. A notable example is the Kiritimati Island Economic Development Program which is being initiated to provide an economic growth pole for Kiribati. Plans are un- derway to investigate opportunities to use Kiritimati Island as a transshipment hub, promote sustainable tourism, and diversify local economic opportunities. Efforts are also underway to improve coastal fisheries management practices to ensure long-term sustainability of marine resources. The strategy will also help to facilitate internal movement from overpopulated Tarawa as well as from the outer islands. Kiribati is engaging in global climate forums and initiatives to mobilize resources for climate-resilience projects, including the GCF and other MDBs. These partnerships enable Kiribati to access technical expertise, financial assistance, and capacity-building support.  69 E conomics of F unding R esilient D evelopment P athways Despite efforts to create fiscal space, the Pacific Atolls will not be able to finance even limited costs of climate adaptation and maintain fiscal and debt sustainability without additional concessional financing from the in- ternational community. It is widely acknowledged that global efforts to provide 5% the necessary funding for countries to address climate risks are insufficient. The estimated global adaptation financing gap is currently growing at between US$194 billion and US$366 billion per year, 10-18 times higher than current international public adaptation finance flows (UNDP 2023). While tracking adaptation finance has been a major challenge, one analysis estimates that share of global climate finance dedicated to about 45 percent of global adaptation finance (US$28.5 billion) flows went to adaptation in 2021-22 the East Asia Pacific (EAP) region, followed by 17 percent (US$10.8 billion) to Sub-Saharan Africa and about 10 percent each to Latin America and the Caribbean (US$6.1 billion) and South Asia (US$5.8 billion). By contrast, the share of global climate finance dedicated to adaptation has declined: from 7 percent (US$49 billion) in 2019–20 to 5 percent (US$63 billion) in 2021–22 (Climate Policy Initiative 2023). MDBs including the World Bank need to play a catalytic role in incentivizing greater private sector climate finance for adaptation and resilience needs. Incentivizing the mobilization of private capital is vital. Globally, the private sector has consistently financed less than 3 percent of adaptation activities from 2019–22, of which a substantial proportion came from philanthropies (Climate Policy Initiative 2023). The opportunity for commercial financiers and private enterprises to develop and finance adaptation solutions, products, and services remains mostly untapped. Global adaptation costs are concentrated on a few key sectors linked to water, agriculture, and ecosystems, with the highest costs being for storm surge and flood protection, coastal protection, and infrastructure resilience (United Nations Environment Programme (UNEP) 2023). Despite efforts, there are significant constraints related to policy, fi- nance, and markets for private financiers and operators to assume financial risk. Adaptation investments are often considered as economically viable with public benefits (for example, environmental and social benefits) but not necessarily financially viable for the private sector to receive risk-adjusted re- turns. Adaptation projects may also be considered risky due to uncertainties of climate impacts. Finally, the benefits of many adaptation projects notably are long term in nature that often conflict with the private sector’s short- to mid-term investment horizons. T U VALU 70 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T 4.2 MAKING THE MOST OF CONCESSIONAL FINANCING T U VALU T he Pacific Atolls have managed to secure substantial concessional adaptation climate financing and collaborate with internation- al organizations, development partners, and non-governmental organizations to access and utilize climate finance; but not all financing facilities have been fully capitalized and more funding is needed. Specific projects and sources accessed by the Pacific Atolls have varied over time but include: (i) the Adaptation Fund, which finances adaptation projects and programs in developing countries that are particularly vulnerable to the adverse effects of climate change for coastal protection, water resource management, and agriculture adaptation; (ii) the Global Environment Facility (GEF) which provides grants and concessional financing to support projects that address global environmental issues, including climate change. Pacific Atolls have accessed GEF funding for projects focused on biodiversity conservation, integrated water resource management, coastal resilience, renewable energy, ecosystem-based adaptation, coastal fisheries, sustainable land management, and climate change adaptation; (iii) GCF aimed at building climate resilience, such as coastal protection measures and sustainable water management initiatives; and (iv) Climate Investment Funds (CIFs) that provide financing to support climate-resilient development and low-carbon growth in develop- ing countries. Pacific Atolls have accessed CIF funding for projects aimed at renewable energy deployment, sustainable forest management, and climate resilience building. Tuvalu and RMI have also set up trust funds (Tuvalu Climate and Disaster Survival Fund and Marshall Islands Resilience and Adaptation Trust Fund, respectively) to respond to climate change and natural disasters. These are funded by donors as well as by budget contributions from their respective governments. Tuvalu has attracted substantial financing on per capita terms, followed by RMI and Kiribati (larger than other PICs and Caribbean OECS countries) (FIGURE 4.5 ). There are opportunities to fill key strategic gaps. For instance, the integration of indigenous knowledge and traditional practices into climate adap- tation, relocation planning and resilience-building efforts, supporting capacity building, digital technology transfer as well as risk financing and insurance products. Such investments can help the countries with improved preparation and adaptation and manage and transfer climate-related risks. 71 E conomics of F unding R esilient D evelopment P athways F I G U RE 4 . 5 Adaptation Financing in Kiribati, Tuvalu and RMI, and Benchmarks (US$ per capita) 400 600 800 1000 1200 1400 1600 KIRIBATI RMI TUVALU OTHER PIC-9 CARRIBEAN OECS Source: World Bank analysis based on climate finance data (2021) from International development partners are enhancing their support for both the OECD Development Assistance climate adaptation and mitigation finance following the 28th Conference of Committee. the Parties (COP28). The World Bank, for instance, will allocate 45 percent of its annual financing to climate projects by 2025, evenly split between mitigation and adaptation, surpassing the initial 35 percent target under the World Bank Climate Change Action Plan (CCAP) 2021-25. A landmark decision at COP28 was to operationalize a fund for responding to loss and damage. The World Bank was invited, on an interim basis and subject to conditions, to act as the host for the fund secretariat and to act as trustee. The Board of the Fund held its first meeting in April 2024. The Board will further develop the operational and implementation parameters of the fund (such as eligibility and activities) in line with the Governing Instrument that was contained in the COP28 Decision. To inform financing priorities, international institutions are investing in ana- lytical work and policy reforms to help countries tackle climate change and natural disasters. This includes: (i) upstream analytics like the World Bank’s CCAP 2021–25 which guides climate efforts by ramping up diagnostics, align- ing financial flows with the Paris Agreement, and increasing climate finance; (ii) research and technical assistance for long-term strategies and NAPs, aiding credible investments and policy priorities; and (iii) policy reforms such as en- hancing national DRM legislation to mitigate natural and climate-related haz- ards proactively, developing national climate and disaster risk financing policies to inform decision making on access to financing instruments, implementing impact-based early warning systems, and developing housing guidelines and risk-informed building codes to mitigate climate hazards. Despite progress, there is a need for a deeper understanding of the current climate finance landscape and financing avenues. These include which funds countries have accessed and their utilization track record. Evaluating access requirements can help identify barriers and develop effective strategies to overcome them. Pacific Atoll governments have repeatedly voiced concerns about donor harmonization and limited domestic capacity hindering access to climate finance in various international forums such as the Pacific SIDS High-level Dialogue on Climate Change. Understanding the sources and objec- tives of bilateral and multilateral climate finance, as well as donor coordination, is crucial for better integration with national plans, ultimately improving access for Pacific Atolls. 72 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Effectively utilizing concessional financing is crucial for Pacific Atolls to fill financing gaps for climate adaptation and sustainable development. Strategic planning is key to maximizing its impact, allowing countries like Tu- valu and RMI to identify priority areas and allocate resources accordingly. For instance, Tuvalu conducts climate risk assessments to prioritize investments in coastal protection, water management, and renewable energy, aligning with its NAPA and National Sustainable Development Strategy. RMI aligns funding with national priorities outlined in its NDC and NCCPF focusing on climate-resilient infrastructure, renewable energy, and ecosystem conservation; and Kiribati has conducted integrated vulnerability assessments, identifying coastal health, water security, and energy security as the top three priorities. Capacity building is crucial for countries to access global financing mech- anisms and MDBs. This involves training government officials and local stake- holders in project management, climate resilience, and financial practices. Given limited capacity, a hybrid approach combining local and international expertise is often necessary for sustainable project management‒especially for large investments. As part of building human capital, noted earlier, initia- tives could focus on increasing opportunities for engineers and planners to collaborate with international firms on resilient infrastructure. Capacity building should also target enhancing education and health services, supported by donor partners’ best practices to strengthen higher-level functions. Establishing transparent governance mechanisms is equally crucial in en- couraging donor financing and the effective utilization of concessional financing, as they promote accountability and ensure that resources are allocated efficiently. These mechanisms may include regular audits of climate finance expenditures to ensure compliance with international standards. As part of strengthening governance, noted in Chapter 2, establishing transparent procurement processes and financial reporting systems can help to enhance public trust‒providing insights into how funds are being managed and utilized. By implementing these measures, governments can foster greater confidence among donors and the public, ultimately improving the effectiveness and vol- ume of climate finance (IMF 2021). The estimated climate-adaptation finance needs for the Pacific Atolls far exceed amounts currently available and expected future amounts. The absence of sufficient domestic sources of finance in these countries, as well as lack of domestic debt markets or access to international debt markets, necessitates exploring what innovative financial solutions might be feasible, including in partnership with the private sector and private philanthropies, to fill the remaining financing gap so that adaptation needs can be met, espe- cially in the long run. This is against the backdrop of these governments facing institutional capacity constraints which not only limit their ability to fund and implement climate adaptation projects amid an already limited fiscal space but also makes medium- to long-term strategic planning a challenge for them. 73 E conomics of F unding R esilient D evelopment P athways 4.3 LEVERAGING THE PRIVATE SECTOR FOR EFFICIENCY GAINS AND FINANCING P rivate sector involvement in adaptation and resilience invest- ments lag in the Pacific Atolls compared with other climate-vul- nerable countries. The private sector contributes 52 percent of total climate finance going to countries in the EAP region, however, it is not emerging at the rate and scale required and is even weaker among the Pacific Atolls. Financial markets are underdeveloped and private finance in the Pacific Atolls remains low in general. Private sector activity cur- rently constitutes a very small share of GDP in the Pacific Atolls, with a limited number of registered Micro, Small, and Medium Enterprises. While the overall financial flow for adaptation investments by the private sector is extremely small, several additional barriers (UNEP 2023) hinder private sector invest- ments: (i) lack of country-level climate risk and vulnerability data that can be used to guide investment decision making; (ii) lack of focused policy and regulatory frameworks; (iii) social benefits from adaptation activities tend to be higher than private returns, resulting in market inefficiencies; and (iv) lack of profitable investment opportunities (including small size and remoteness of these economies). There is also a perception that the private sector has limited opportunities to collaborate with governments in the initial design and planning of resilience and adaptation activities (Pacific Islands Forum 2021). The private sector, both domestic and international, can complement public sector and development financing and contribute to anticipatory and reac- tive climate adaptation in the Pacific Atolls. They can play a dual role: first, by providing and implementing adaptation solutions, and second, by structur- ing innovative financing mechanisms. Cooperation and collaboration with the private sector and donors are crucial to meet adaptation needs in vulnerable countries. Finding shared interests where incentives align with community needs is essential for success. Developing robust private sector and financial markets is vital for directing capital towards climate investments in Pacific Atolls, however, this poses a challenge. Adaptation finance primarily relies on debt instruments (around 80 percent), highlighting the importance for the Pacific Atolls in carefully managing fiscal space and seeking concessional financing given that access to borrowing is limited (Climate Policy Initiative 2023). Despite these challenges, the private sector has a potentially crucial role to play in identifying, implementing, and RM I 74 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T financing effective and innovative solutions for climate change adaptation and resilience. To scale up adaptation finance, additional innovative financial instruments are needed, such as MDB co-financing, guarantees, risk insurance, and securitization of sovereign revenue streams (such as marine resources), and global climate funds for de-risking investments as well as bonds (green/ blue or sustainable) or green/blue loans to raise capital for projects with envi- ronmental benefits. Incentivizing and encouraging collaboration between inves- tors, issuers, and financial institutions can also help drive investment towards projects that benefit the environment while also generating financial returns for investors. Engaging the private sector not only brings funding but also fosters innovation, expertise, and efficiency in adaptation endeavors. This requires unprecedented levels of cooperation and collaboration with the private sector and donors. Key considerations for greater private sector engagement include: A IMPROV ED PFM AND REP OR T IN G : Strengthening capacities to improve coordination amongst key domestic institutions to effectively report on financial management of climate finance is critical. Mainstreaming climate adaptation and resilience into financial management systems would support the inte- gration of climate criteria into private sector investments. This can also encourage existing firms and industries to adapt their business models and technologies to meet adaptation needs and attract new firms interested in social, environmen- tal, and climate financing. Identifying investments that are key to adaptation and mitigation efforts can help to attract finance from the growing pool of private sector players that have made net-zero commitments. B G REEN F I N AN CE FO R T HE PRI VAT E S EC TOR :So far, the up- take of green finance instruments has been limited in Atoll countries, with most adaptation finance coming from donor grants and debt instruments. For example, the Pacific Envi- ronment Community (PEC) Fund, established by the Govern- ment of Japan, provides grants to PICs for renewable energy and climate adaptation projects. Private sector firms can partner with governments to implement projects funded by the PEC Fund–such as solar power installations, energy-ef- ficient lighting, and climate-resilient infrastructure. All three countries have benefited from grant financing from the PEC Fund with private sector engagement.62 C I N CEN T I V I Z I N G T HE PRI VAT E S EC TOR FO R D I SA S T ER RI S K Using a mix of public and private financing to F I N AN CI N G : cover DRM instruments strengthens overall financial resil- ience. One option for countries is to consider “risk layering,” where events of different magnitude are covered by different types of public and private sector financing: disaster reserve funds that provide quick liquidity for small events, contingent 62 See PEC Fund Profiles (link). credits or grants and post‑disaster credit for reconstruction 75 E conomics of F unding R esilient D evelopment P athways after medium‑magnitude events, and international risk trans- fer instruments and parametric risk insurance for the largest disasters.63 For example, under the Sendai Framework for Disaster Risk Reduction and the Framework for Resilient Development in the Pacific (FRDP), there is a seat for the private sector on the Pacific Resilience Partnership Taskforce to provide advice on the coordination of project development and implementation. D While it is not yet L E V E R AG I N G L AT E S T T E C H N O L O G I E S : available for the Pacific Atolls, Google Research has invest- ed in developing and applying AI modeling to advance the field of flood forecasting and help communities address the effects of climate change with AI-based early warnings for natural disasters. The flood forecasts are provided to the public via a partnership with governments and with the World Meteorological Organization, and other organizations. This flood information is used to accelerate anticipatory actions supporting local communities. In addition, Google’s ‘Open Buildings Dataset’ is being used by various organizations such as the United Nations to adapt existing flood forecasting systems to respond to special challenges.64 E Private sector companies in the H I G H P OT EN T I AL S EC TO R S : Pacific region are already working as contractors with govern- ments on several adaptation and mitigation initiatives such as renewable energy, road infrastructure, coastal protection, and others‒albeit in limited capacities (Pacific Islands Forum 2021). Funding trends from OECD data indicate higher fi- nancing flows into the transport and storage, disaster preven- tion, and health sectors followed by agriculture and forestry. Mobilizing private finance in these and other “soft” sectors (for example training), reduces the risk perception owing to ongoing investments, can be a meaningful way to increase adaptation finance, bridge funding gaps, and enable scale-up. Pacific Atoll countries, like Kiribati, have explored the possibility of deep-sea mining. Deep-sea mining is being considered as a means of economic develop- ment and revenue generation, taking advantage of growing global demand for critical minerals that is, in part, driven by climate concerns. There is, however, significant debate and controversy surrounding deep-sea mining in the Pacific region and globally due to its potential environmental, social and climate risks 63 The Pacific Ca- tastrophe Risk Insurance and impacts. Concerns have been raised about the lack of scientific certainty Company, for example, about the potential harm of deep-sea mining and related mitigation measures‒ is a regional entity that offers (market-based) including risks related to the potential destruction of fragile marine ecosystems, parametric weather insurance for emergency potential impacts on the ocean’s capacity as a carbon sink, and risks to local response. livelihoods and cultural heritage.  In this context, the Pacific Possible report 64 Global flood infor- mation is publicly avail- (World Bank 2017) and its thematic note on deep-sea mining recommends able on Flood Hub (link). ‘Open Building Dataset’ the application of the Precautionary Approach to deep-sea mining‒including is available here. continuous updating of information, monitoring and stakeholder consultations, 76 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T regional collaboration, and investments to close knowledge gaps around deep- sea mining to allow for greater evidence-based decision making. Carbon credits, coastal fishery value chains, and tourism could contribute financing flows in future. NbSs to address impacts of climate change and enhance resilience may offer financing flows in future, including carbon credits from “blue carbon” generated by oceans sequestration (World Bank 2023b).65 There is emerging recognition of new technologies that could restore oceans while revitalizing their role as carbon sinks (Triple Pundit 2022). Evaluating this potential and readiness will require an assessment of enabling legal frame- works for the countries to participate and access such high integrity markets, and setting up related monitoring, reporting and verification systems as well as nested accounting frameworks. The tourism sector can also offer private investment opportunities where there are supporting policies and regulations. 65 The World Bank, For example, the Tourism Authority of Kiribati recently launched the first ever with PROBLUE financial support has developed a Sustainable Tourism Policy, alongside its 2024-26 Strategic Plan, that aims flagship report on a com- prehensive investment to stimulate economic growth, support job creation, and generate income for readiness framework for Kiribati communities. Coastal fisheries value chains may offer potential for fu- blue carbon ecosystems (mangroves, seagrasses, ture development if fish stocks are well-managed, if market access is improved, and salt marshes) to sup- port client governments and if production costs and impacts are mitigated through improved practices assess their level of read- iness to mobilize blue and technology (for example, promotion of energy efficiency, use of renewable carbon investments at energy, and optimization of logistics). Certainty over EEZs will be important for the country and regional levels (link). some opportunities (BOX 4.1). B OX 4 .1 Ensuring ongoing rights to Exclusive Economic Zones is critical for future revenue streams I n August 2021, leaders of the Pacific Islands Forum (PIF) issued a Declaration on Preserving Maritime Zones in the Face of Cli- mate Change-related Sea-Level Rise. The Declaration confirmed and consolidated the position of Pacific SIDS on the matter of the preservation of maritime entitlements in the face of sea-level rise and provided that having “established and notified [their] maritime zones to the Secretary-General of the United Nations, [they] intend to maintain these zones without reduction, notwithstanding climate change-related sea-level rise.” The key proclamations of the PIF Declaration were further mirrored in the Declaration by Alliance of Small Island States (AOSIS), which was adopted on September 22, 2021, and supports the consolidation of state practice concerning the preservation of existing maritime entitlements in the Pacific and among AOSIS members. The Pacific Atolls have extraordinarily large maritime territories (EEZs) that provide the basis for large income streams from fishing rights as well as possible future economic uses. These zones extend up to 200 nautical miles from the coast, granting the countries special rights regarding the exploration and use of marine resources. The integrity and sovereignty of these EEZs are crucial for the economic and environmen- tal well-being of these countries. Ensuring the ongoing rights to EEZs in 77 E conomics of F unding R esilient D evelopment P athways their territories necessitates proactive measures to address maritime challenges, uphold international agreements, and promote sustainable management practices. All these measures are critical for capturing on- going and future income streams from EEZs. The Atoll countries have taken steps to strengthen the standing of their maritime boundaries and to improve ocean management. Kiribati and Tuvalu have enacted legislation designating new archipelagic waters and establishing the outer limits for their EEZs to unilaterally reinforce the sta- tus quo boundaries. Meanwhile, the Pacific Boundaries Project has been running for more than a decade to help delineate national maritime zones and reach agreement on all maritime boundaries between the States in the region. RMI has taken steps to improve management of their vast EEZ by establishing the Marshall Islands Marine Resources Authority which oversees both inshore and offshore fishery resources. To expand fishing access fee revenues, Kiribati has opened one of the world's largest MPAs, the Phoenix Islands Protected Area, to commercial fishing, citing economic benefits for its people. There may be implications of rising sea levels on the legal standing of atoll countries’ maritime boundaries. Coastlines and small offshore features are used to determine EEZs and other maritime boundaries under United Nations Convention on the Law of the Sea. Changes to coastlines and offshore features due to sea-level rise may thus give rise to ambigu- ities or boundary disputes. There has been very little consideration, or interpretation by international courts and tribunals, of this issue. Reviews by the International Law Association Sea Level Rise Committee in 2018 and by the International Law Commission Study Group in 2020 concluded, however, that where the maritime entitlements had been delimited in accordance with the technical requirements of the 1982 Convention, they should not need to be redrawn to reflect physical changes brought about by sea-level rise. This position was widely espoused by UN Member States in the 6th (Legal) Committee of the United Nations General Assembly (UNGA). A UNGA Resolution on this might be a useful tool to crystallize this legal interpretation (Freestone and Çiçek 2023). Notes: The Pacific Maritime Boundaries Project helps PICs secure rights and responsibilities over their ocean space. The consortium of partners has supported the successful declaration of 19 shared boundaries between countries since 2001 (link). The International Law Commission Study Group’s First Issues Paper takes a definitive view: “Sea-level rise cannot be invoked in accordance with article 62, paragraph 2, of the 1969 Vienna Convention on the Law of Treaties, as a fundamental change of circumstances for terminating or withdrawing from a treaty which established a maritime boundary, since maritime boundaries enjoy the same regime of stability as any other boundaries.” See, ILC (28 February 2020), A/CN.4/740, at para 141(c). 78 CH T UN OE PT AR I FC CY ICLIA MTAO EL AC TL NODUN DTER VIEE OP LS OU CM ENTRR CL YE P M O IR TA T E A N D D E V E L O P M E N T R E P O R T 5 PRIORITIZED ACTIONS FOR A RESILIENT FUTURE PAGE 7 9—9 2 RMI KEY The Pacific Atolls CCDR demonstrates that viable adaptation options exist and, in some cases, can yield development benefits. The CCDR draws five MESSAGES key conclusions and presents priority policy actions in support of each: 1 Building consensus for inclusive adaptation pathways, by involving communities early in planning processes, and implementing social inclusion measures for vulnerable groups, are essential to ensure community ownership of decisions. 2 Investing in human capital and supporting mobility is necessary and contributes to development and climate resilience and people’s decision on whether to stay or move. 3 Enhancing land administration, spatial planning, and aggre­ gate (building material) sources for construction are essential for physical adaptation and broader development efforts. 4 Food security and protecting freshwater resources and ecosystems is key to continued island habitability. 5 Enhancing governance and spending mechanisms will be critical to meeting the human development, financial, and investment needs of Pacific Atolls. C limate change poses severe and interconnected challenges for the Pacific Atolls, where ecosystems are fragile but intricately linked to the cultural, economic, and physical survival of citizens. Fundamental economic constraints stemming from their small and dispersed populations, as well as remoteness from markets, render adaptation options costly and constrain implementation capacity. Despite these challenges, the CCDR underscores that viable pathways towards resilience exist, with significant development benefits expected from taking crucial steps along these pathways. Substantial financing needs call, however, for increased donor support and improved fiscal and governance mechanisms to optimize limited resources and manage trade-offs. While all actions discussed in this report are valuable, some are more press- ing than others. This chapter presents a selection of priority actions based on three criteria: urgency, co-benefits, and feasibility (FIGURE 5.1). Some actions are more urgent than others due to path dependencies: they generate or facilitate subsequent opportunities and benefits‒such as governance enhancements that enable larger adaptation investments. The CCDR categorizes urgency by proposing each action as a short-term priority (by 2030), a medium-term priority (by 2040), or a long-term priority (beyond 2040). The CCDR defines co-benefits to mean that some measures are expected to contribute to both 80 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T climate and development goals (by improving economic opportunity irrespective of climate impacts). These include measures that enhance economic and fiscal management, governance, and implementation capacity, as well as those that create new job and income opportunities. The prioritization of each criterion, based on sectoral expertise and judgement, will need to be discussed with each of the countries. F I G U RE 5 . 1 Prioritization Approach for Policy Options C O - BENE F I T S F E A S IBILI T Y URG E N CY Development co-benefits Financing needs When to act from climate actions and enabling conditions N E A R -T E RM -PRI O RI T Y N 3 V ERY H IG H 3 V ERY H IG H M E D I U M -T E RM -PRI O RI T Y M 2 HIGH 2 HIGH LON G -TERM-PRIORIT Y L 1 MOD ER AT E 1 MOD ER AT E The CCDR also recognizes that the feasibility of actions depends not only on their technical viability but also on their political backing. The pathways towards resilience involve trade-offs and difficult decisions with political con- siderations shaping priorities. Such actions may result in both winners and losers, underscoring the need for clear and transparent governance mecha- nisms to foster consensus on the preferred course of action. While the CCDR offers technical options, the Pacific Atoll governments and their citizens will determine how, when, and what actions to pursue. Moreover, the feasibility of implementation will heavily rely on institutional capacities. The proposed priority actions are arranged by five key messages that are derived from the CCDR’s assessment. These are: (i) the cost and benefits of adaptation measures must be understood and supported by all citizens, including the most vulnerable members of society, to prevent climate change actions from exacerbating inequality; (ii) adaptation efforts will entail some degree of mobility-both domestically and internationally. Investing in human capital is crucial for facilitating this transition over the long term, while also enhancing opportunities for shorter-term in situ adaptation (which is the primary focus of the Pacific Atolls); (iii) physical actions to safeguard selected islands and infrastructure against sea-level rise are essential. These actions require meticulous spatial planning, sequencing, and access to construction materials such as rocks, gravel, and sand. Such measures provide time for investments in human capital and for further in situ adaptation efforts; (iv) physical defenses must be complemented by protections for natural resources‒the water, ecosys- tems, and fisheries‒that sustain the habitability of the Pacific Atolls and local economies; and (v) there exists a significant disparity between the necessary adaptation actions and available financing. While this gap is unlikely to be fully bridged, improved governance and more efficient spending can help narrow the gap and encourage greater international support, thereby yielding broader development benefits. The remainder of this chapter addresses each of these five key messages and the policy actions underpinning them. 81 E conomics of F unding R esilient D evelopment P athways A Building consensus for inclusive adaptation pathways Engaging communities early in planning and assessing transformative options ensures their ownership of decisions and their future. This can also help safeguard traditional knowledge and culture‒helping to preserve the identity of communities. Protection measures (for example, NbSs and infrastructure) and locally led climate actions tend to be better maintained when developed through participatory approaches. Pacific Atoll governments can also utilize existing regional mechanisms for sharing lessons learned from past adaptation actions‒fostering collaboration and informed decision making across the region. Marginalized groups face barriers to adaptation. Underlying factors such as poverty, gender relations, physical and cognitive disabilities, and social differ- ences can compromise their ability to recover after repeated climate shocks. For example, access to resources such as land and capital is crucial for adaptive capacity, however, land rights are complex in the Pacific Atolls. In Tuvalu, for example, women are not guaranteed equal rights to land ownership under ex- isting legislation and customary laws (UN Women 2022). Limited participation of women in decision-making processes can further lead to inadequate input into the equitable distribution of, and access to, adaptation resources such as livelihood and training opportunities. Corresponding priority actions to support consensus building and social inclusion, include: CHALLENGE: POLICY OPTION A.1. Need for greater Deepen local community involvement in future planning and the consensus and buy- in across levels of selection of transformative adaptation actions. Local authorities have government and civil de facto significant responsibilities, mobilization capacity, and local knowledge society relevant to climate adaptation even though devolution mechanisms to local governments are limited. Channels for participation and feedback from civil U RG E N CY society organizations, local communities, and marginalized groups can ensure CO -BENEFITS that climate adaptation investments align with the needs and priorities of those FEASIBILIT Y most affected by climate change. RMI’s public consultations and stakeholder meetings during the development of their climate adaptation plan demonstrate these principles, as seen in local input into RMI’s NAP and sea-level rise policy. A.2. Need for wider Implement mechanisms for citizen engagement and locally led social participation in adaptation reforms development. Citizen engagement and social accountability mechanisms and projects play a crucial role in holding governments accountable for managing climate adaptation funds. Beyond the national consultations on the NAPs, Pacific Atoll U RG E N CY governments could: (i) improve and utilize existing channels for two-way commu- CO -BENEFITS nication (top down on adaptation commitments and large projects, bottom-up information on climate impact and community needs and aspirations); and FEASIBILIT Y (ii) scale up local participatory development planning with financing for small- scale projects and maintenance, and mainstream climate adaptation explicitly. 82 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T A.3. Social protection Enhance and fund stronger, more efficient (and climate-adaptive) mechanisms are not yet efficiently social protection mechanisms. Social protection programs can foster in- targeted clusion, human capital investment, and employment. They should be targeted towards the most vulnerable while also being scalable to cover the near-poor U RG E N CY and informal sector workers during shocks. Pacific Atoll countries could further CO -BENEFITS climate-adaptive social protection systems through: (i) conditional cash transfer programs (which incentivize human capital investment), supported by reallo- FEASIBILIT Y cating funds from less efficient programs like copra subsidies; (ii) integrating social protection into DRM by establishing a social registry and an interoperable Management Information System for efficient beneficiary identification and registration; (iii) digital payment mechanism for prompt aid delivery; and (iv) data for targeted and needs-based interventions, including predicting disaster relief funding requirements. Feasibility is challenged by limited data, limited social protection policies and high costs to set up registries. B Investing in human capital and supporting mobility is necessary Human capital investments are “no-regrets” investments and are particular- ly important as livelihoods opportunities evolve, either due to climate change or other economic shifts. Human capital stands as the greatest asset citizens possess. Pacific Atoll governments are making efforts to ensure adaptation is possible in situ; and skills and education will determine their people’s success in finding secure employment and raising economic growth. Individuals with greater human capital are more likely to withstand climate shocks, rely less on health and social care services, and possess greater economic mobility. Prioritizing the protection and enhancement of human capital, therefore, re- mains paramount, even amidst competing demands for resources allocated to defensive physical infrastructure projects. Expanding access to mobility pathways, whether temporary or permanent, local, or distant, is crucial. These efforts should not be seen as minimizing the aspirations of Pacific Atoll citizens and governments to stay in place. Mobility and in situ adaptation measures are complementary: mobility can generate economic resources that support in situ adaptation; while strong adaptation measures provide a basis for seeking economic opportunities elsewhere and a reason to return. Integrating climate mobility into national development planning and policies is essential and identifying and addressing barriers to movement, whether local or distant, short term or long term, is necessary. Strengthening urban management and planning to accommodate visitors and new residents from outer islands is vital. Internationally, collaboration with destination coun- tries is essential to create opportunities and reduce barriers to movement. 83 E conomics of F unding R esilient D evelopment P athways Corresponding priority actions to support human capital development and mobility include: B.1. Limited mobility Expand mobility pathways: explore bilateral agreements and re- pathways for some countries gional cooperation, (for example, the Pacific Regional Framework on Climate Mobility), to strengthen the governance, expand and U RG E N CY maximize the benefits of labor mobility, and monitor its impacts. Work with destination countries to enable greater labor market access (par- CO -BENEFITS ticularly Kiribati and Tuvalu) to ensure that migrants to those countries have FEASIBILIT Y access to livelihoods, education, health, and housing and preserve their culture as others do in the receiving country. Pursue bilateral agreements that reduce the costs and barriers to remittances, such as high transaction costs and other border restrictions, to help sustain two-way remittance links. In the long term, develop citizenship options for overseas-born second, third, or greater gener- ation diaspora. This may include multiple citizenship PIC options. B.2. Greater Strengthen and implement vocational training programs to expand investment needed in vocational training and diversify employment opportunities domestically and abroad. This will help ensure those deciding to pursue opportunities abroad have U RG E N CY access to decent employment opportunities in destination areas/countries, while contributing to their access to job opportunities at home. Women-focused CO -BENEFITS training would be valuable, given that men currently dominate labor mobility FEASIBILIT Y schemes (comprising over 85 percent of participants). Feasibility is challenged by high costs, low teaching capacity, and uncertain demand for future skills. An assessment of labor demand and supply could help (which industries are viable locally, how many jobs they can create, and what skills best open op- portunities internationally). B.3. Greater Enhance the quality of basic education and health. Investment re- investment is needed in basic education quirements include more regular and comprehensive teacher training, and and health targeted investments in early childhood education, health care infrastructure, disease surveillance and response, and health workforce training. These U RG E N CY could be supported by further investment in resilient, inclusive, and well- equipped school and health care facilities, particularly in expanding pop- CO -BENEFITS ulation centers. Subject to appropriate student-teacher ratios, expanding FEASIBILIT Y the provision of teacher and health care worker housing is essential for attracting teachers and health professionals to remote areas. The adoption of technology (for example, distance learning) for educational continuity and to supplement health care services during disasters and the integration of disaster risk reduction into education and health programs can help prepare communities for climate-related challenges. Cross-sectoral cooperation will be needed‒for example, to increase universal access to, and promotion of, healthier foods; and deliver education programs aimed at health promotion among children. Human capital investments have long lead times to reach fruition and will, therefore, need to be prioritized. 84 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T Planning processes that adopt inclusive, consultative, and participatory approaches will be important. Engaging communities early in the planning process ensures they have ownership of decisions and their future. These pro- cesses can also help safeguard traditional knowledge and culture‒helping to preserve the identity of communities. Protection measures (for example, NbSs and infrastructure) and locally led climate actions tend to be better maintained when developed through participatory approaches. Pacific Atoll governments can also utilize existing regional mechanisms for sharing lessons learned from past adaptation actions‒fostering collaboration and informed decision making across the region. C Land administration, spatial planning, and aggregate security underpin physical adaptation and long-term development Land administration and spatial planning are both crucial components of managing scarce land resources and urban development; they are a precon- dition for transformational adaptation options. Achieving a clear consensus on optimal approaches to land and property rights, land access, and manage- ment is imperative. This task presents challenges, however, particularly in the Pacific Atolls where privately owned land is predominantly held under customary tenure. For instance, RMI has the highest proportion (99 percent) of land held under customary tenure among small island nations in the Pacific, followed closely by Tuvalu (95 percent). Kiribati, conversely, features a larger fraction of public land and a smaller proportion of customary private land (45 percent). Customary tenure can sometimes conflict with society-level goals such as infra- structure development, land raising, or ecosystems conservation required for climate adaptation. Land planning, administration management, and spatial planning processes are needed that can, therefore, address two challenges: (i) technical decisions regarding what activities should be permitted where; and (ii) the need for a consultative process that can establish sufficient consensus to allow for collective adaptation actions among a collectivist land culture. Infrastructure development for adaptation requires aggregates in much greater quantities than are currently used in the Atolls. Aggregates are re- quired for constructing infrastructure such as coastal protection works, land raising, roads, and buildings. As highlighted by this CCDR, the key challenges are: (i) significant differences in cost between local and imported sources of aggregates; (ii) long lead times to undertake due diligence for new, environ- mentally acceptable local sources, which will involve submarine dredging; and (iii) the construction market requires long-term visibility of forward project opportunities to invest in new plant and improved operations. It is beyond the capacity of individual projects to resolve aggregate supply issues at scale. A national approach is needed. Climate-related hazards create risk in urban areas; efforts to reduce expo- sure through improved urban planning and governance are required. Towns and cities suffer from the lack of proactive strategic planning‒as seen in the 85 E conomics of F unding R esilient D evelopment P athways absence of a land-use policy or plans and strategies to effectively address the growing planning issues including transportation and road networks, inade- quate housing and infrastructure, an absence of green and recreational spac- es, and consideration of future disaster risk and climate scenarios. Planning is often done in a piecemeal or ad hoc manner with little or no connection to other sectoral plans or consultation with service providers and communities. Corresponding priority actions, in support of spatial planning and aggregate security include: C.1. Geographical Prepare land use plans to secure current and future growth areas. selectivity, land administration, and Spatial planning is a process of determining how land should be used and spatial planning is developed. Spatial plans should reflect climate risks (such as flood zones) and essential for physical be coupled with a policy framework explaining how the plan will be consulted, adaptation formalized, and utilized. There is a need to develop: (i) the technical capacity to undertake spatial planning (that is, to identify appropriate interventions and U RG E N CY future land use); (ii) develop plans for urban centers, with features such as CO -BENEFITS settlement zones, agricultural zones, setback lines, buffer zones, and building FEASIBILIT Y codes; and (iii) implement a consultative process that provides communities with the ability to influence and own the plans for their own island/area. In addition to guiding appropriate land use, spatial plans can help formalize previ- ously informal land ownership, enhancing security and governance. Feasibility is challenged by traditional land tenure and complex technical investigations. C.2. Need for strategic Develop a strategic and operational plan for sourcing aggregates– access to cost effective aggregates including all environmental, social, operational, and commercial due diligence, approvals, and licensing. Locations for mining need to U RG E N CY be formally identified, approved, and managed at a national level (including those operated by the private sector) to cover multi-project needs at the scale CO -BENEFITS needed for adaptation. There is a need to: (i) undertake or complete site-specific FEASIBILIT Y investigations and due diligence to gain clearances for local use of aggregates. This should be acceptable to both Pacific Atolls and donors so specific adapta- tion projects can rely on having access to materials; (ii) engage with the local and regional construction sector to build confidence in investing in plant and operational capability (for example, by mapping out a pipeline of projects); (iii) develop guidance for preparing project ESMFs that align with the unique circumstances and environmental context of the Atoll Countries, and assess the cost-benefit of imported vs local aggregates incorporating the increased emissions impacts adversely affecting the countries' NDC commitments; and (iv) invest in building a greater body of knowledge on the optimum use of coralline-based aggregates to make best use of the resource (the properties of coral- and coralline algae-based aggregates in large-scale construction are not widely researched). 86 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T D Protecting freshwater resources, fisheries, coral reefs, and other ecosystems is key to continued island habitability The habitability of the Pacific Atolls depends critically on water resources, fisheries, coral reefs, and other ecosystems; protecting their integrity is as critical as protecting land itself. The Pacific Atolls face an acute challenge in securing water from fragile water lenses, RWH, and increasingly, desali- nation. Scarcity of water resources–set to increase under climate change–is compounded by service gaps in sanitation leading to contamination. Improving the climate resilience of water management is a no-regrets option. Ecosystems are a similarly vital resource, with healthy reefs essential to the physical integrity of the islands themselves as well as to the productivity of coastal fishery resources and existing WSS infrastructure. Oceanic fisheries are the most important domestic revenue source and are relatively well managed by regional bodies, while coastal fisheries–which support over 50 percent of local protein requirements–are largely unmanaged. Corresponding priority actions, in support of water resources and ecosys- tems, include: D.1. Water sources are Prepare and implement water security plans for all islands, includ- at risk from overuse, sea-level rise, drought, ing assessment of water demand. Water security plans should assess: and pollution. the status of all available water resources and storage capacity (including groundwater lenses), current and predicted water demand, sustainable ab- U RG E N CY straction levels, salinity levels, and wastewater and other pollution risks. Spatial CO -BENEFITS planning measures and enforcement should be used to protect lenses from identified risks. Implementation of demand-side measures such as the reduc- FEASIBILIT Y tion of non-revenue water, and deployment of water meters and water tariffs to incentivize efficient water-use behaviors and existing water conservation experience can also improve the efficient use of potable water while supply-side measures can bolster poor WSS access. Water utilities need sustained support for operation, construction, and maintenance of WSS infrastructure, including funding, strengthening of governance and coordination support at all levels and skill development geared towards operations and maintenance to break the underfund-break-rebuild cycle. D.2. Coastal fisheries Develop coastal fishery management and transition plans. are largely unmanaged Community-based ecosystem approaches founded on ‘primary’ fisheries man- U RG E N CY agement and detailed in responsive fishery management plans will help keep production of reef fish and invertebrates within sustainable bounds. Manage- CO -BENEFITS ment plans would propose harvest controls (size limits, closed seasons and FEASIBILIT Y areas, gear restrictions, and protection of spawning aggregations). Monitor- ing of coastal fisheries activities, stock sizes, and relative abundance could be tracked through surveys of fish appearing in local markets (facilitated by phone-based apps). There may also be opportunities to relieve pressure on coastal demersal stocks (and increase food production) by providing training, 87 E conomics of F unding R esilient D evelopment P athways technical assistance, and financial incentives to help transition from demersal to nearshore tuna and other large pelagic species, for example, by scaling up the use of nearshore fish aggregating devices (Bell et al. 2019). D.3. Coastal Further invest in the establishment and expansion of integrat- Ecosystems require expanded protection ed coastal zone management. Conserving coastal ecosystems requires prevention of destructive fishing practices, coral extraction, reckless boat an- U RG E N CY choring, and poorly planned coastal infrastructure. It also includes raising awareness and integrating approaches across sectors, strengthening controls, CO -BENEFITS and managing the impacts of all form of pollutants affecting the health and FEASIBILIT Y growth of coral reefs and marine ecosystems (Wenger et al. 2023). In addition, enforcing bans on damaging practices such as harmful fishing methods and dredging are crucial for the protection of reef-based fish habitat. This involves identifying and designating key habitats such as coral reefs, mangroves, and seagrass beds for protection or restoration to provide refuge and breeding grounds for juvenile fish populations. Healthy ecosystems are better able to withstand climate impacts, increasing reef resistance to coral bleaching, dis- ease, and starfish predation (which undermine coastal fishery productivity). E Enhancing governance and spending mechanisms will be critical to meeting the human development, financial, and investment needs of Pacific Atolls Pacific Atolls face two underlying constraints in their adaptation efforts: (i) financial resources are insufficient to meet adaptation needs; and (ii) there is limited capacity to utilize the resources effectively. This CCDR highlights the substantial costs associated with adaptation, especially for physical infrastructure projects, which are notably high on a per capita basis. Despite advocacy efforts at national and international levels, current financial mechanisms and resource allocations remain insufficient. In addition, the small and dispersed population, along with the remote geography of Pacific Atolls, imposes significant constraints on the civil service's capacity to implement available funding. While donor funding to support climate adaptation is likely to increase, it will not be enough to address all challenges. Pacific Atoll governments will need to manage efficiently and transparently those funds to benefit their citi- zens. This entails better resource coordination to align with national priorities addressed in the NDC, NAP, and other adaptation strategies. Securing donor funds and autonomy in investment decisions hinges on demonstrating effec- tive financial management. Strategic allocation based on rigorous cost-benefit analysis, capacity building, and transparency are, therefore, imperative. Even so, funding support looks insufficient. Development partners currently provide US$200–US$1,400 per capita to the three nations; this would need to be increased substantially to make the illustrated pathway feasible. Corresponding priority actions, in support of governance and efficient spend- ing, include: 88 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T E.1. Insufficient Improve internal and ODA coordination and alignment with the prioritization in adaptation activities NAPs. The challenge is to ensure public and ODA financing goes to the most strategic areas. Pacific Atolls can better align financing with needs by: (i) priori- U RG E N CY tizing investment projects in NAPs; (ii) aligning donors behind the prioritization through both soft measures (policy dialogue as used by Tuvalu’s CCD) or hard CO -BENEFITS constraints (processes for aid projects’ approval and negotiation). Well-defined FEASIBILIT Y prioritization could help foster partners’ resource pooling; and (iii) developing a centralized evidence-based process for integrating uncertainties (that is, adequacy of response under different climate scenarios). The latter could draw on externalized expertise financed by ODA (for example, a third party or multi- lateral with low geopolitical stakes) or a pooled resource at the regional level. E.2. Weaknesses Improve public asset management and financial management for in public asset management spending efficiency. This will require measures to improve cash manage- planning and financial ment, internal control, external controls audits, and periodic financial reporting management delay in line with the accreditations of the GCF, GEF, and the Adaptation Fund. Pacific climate finance Atolls could explore the use of green/sustainable procurement in their public procurement legal frameworks. U RG E N CY CO -BENEFITS FEASIBILIT Y 5.1 TRADE-OFFS AND KNOWLEDGE NEEDS FOR RESILIENT DEVELOPMENT T he Pacific Atolls will face trade-offs as they pursue adaptation strategies. Adaptation decisions are complex and encompass a range of options, as illustrated by the pathways analysis presented in Chapter 3. Each option has its own set of consequences and benefits. While adaptation investments may help to reduce physical damage, minimize disruptions to services and curb economic losses, the high costs associated with the additional investments also imply trade-offs‒necessitating careful selectivity and prioritization. Not all investments will be feasible given limited resources. Adaptation investments may yield significant benefits but come with high costs, implying a difficult balance between building resilience and ensuring fiscal sustainability. Even concentrating on essential resilience measures as described in Chapter 3‒such as addressing sea-level rise to 0.5 meters (ex- pected between 2070 and 2110 under SSP2-4.5)‒carries substantial fiscal implications: per capita present value costs range between US$30,000 for Kiribati to US$100,000 for RMI and Tuvalu. In the longer term, the cost of pro- tection for addressing higher levels of sea-level rise (up to 2 meters), carries even greater costs. Such expenses cannot be met under current resources where government revenues are already stretched to meet annual operating 89 E conomics of F unding R esilient D evelopment P athways expenses. Increasing public debt to fund these investments is also not feasible given low debt carrying capacity. Uncertain fishing revenues, particularly under extreme climate scenarios, could pose further fiscal challenges. Another significant trade-off involves allocating limited financial resources among locations within a country. This includes decisions about which is- lands to fortify against climate and disaster risks, recognizing that it will not be fiscally feasible to protect all islands. Internal governance decision processes should be enhanced to reflect each country’s preferences for physical resilience goals‒assessing which investments will offer the greatest protective benefits while supporting human development. This will also involve non-tangible, yet equally important decisions impacting traditional lifestyles, cultural heritage, and community structures. The choice between investing in human capital‒such as education and health‒and strengthening physical infrastructure also presents a funda- mental trade-off. This decision reflects deeper strategic considerations about whether to enhance the adaptive capacity of individuals and enhance human mobility opportunities domestically and abroad or to focus on building long- term structural resilience. The effectiveness and efficiency of fiscal policies might be reevaluated to determine if they align with development goals under funding constraints. The Pacific Atolls confront some of the most severe existential threats from climate change of any countries in the world. Faced with escalating risks to their food, water security, and national sovereignty, and with limited funding sources‒both domestic and international‒these countries face difficult trade- offs. There will be losers and winners, so efficient and transparent governance and institutional frameworks should be in place to support consensus build- ing on adaptation pathways. These countries must navigate these options while preserving their unique traditions and cultural identities and establishing a strong domestic consensus on future pathways. Increased development partner support will be needed. The Pacific Atolls can also leverage regional mechanisms to share information, data and knowledge with each other and with other countries. Additional research can help to illuminate the range of adaptation invest- ments, associated costs, financing opportunities, and trade-offs for each of the Pacific Atoll countries. Improving topographical and hazard and exposure data is critical for monitoring, assessment, and decision making as govern- ments will have to plan, quantify, and make critical investment decisions for adaptation (and in the case of post-disaster response and recovery). Despite progress, there remains insufficient knowledge regarding the costs of adapta- tion measures. LiDAR data is absent in Kiribati and comprehensive groundwater resource mapping is lacking in all countries, particularly for the outer islands. Completion of a national-level aggregate resource study, including environmen- tal and market issues, for each country will also be important. Furthermore, as environmental changes increasingly displace populations, there is an urgent need for better risk-informed urban planning and for the international com- 90 C O U N T RY C L I M AT E A N D D E V E LO P M E N T R E P O R T munity to investigate and expand support for international climate migration. Comprehensive studies to analyze the propensity for individuals to migrate, monitor the progress of existing relocation efforts, and expand labor mobility schemes both domestically and internationally along with essential factors for relocating and integrating displaced populations into new communities and countries, are vital. Opportunities to identify, train and fill labor shortages in specific skilled areas such as health care (particularly childcare and aged care), construction, hospitality, and agriculture in host countries should also be studied. Finally, a comprehensive analysis of climate finance, including funds accessed by countries, their utilization, and the barriers to access, is neces- sary. Developing innovative financial instruments to encourage investment in environmentally beneficial projects with returns for investors will be crucial for increasing adaptation finance. Additional research can help to illuminate the range of adaptation invest- ments, associated costs, financing opportunities, and trade-offs for each of the Pacific Atoll countries: A PH YSICAL STUDIE S . Improving topographical and hazard and exposure data is critical for monitoring, assessment, and decision making as governments will have to plan, quantify, and make critical investment decisions for adaptation (and in the case of post-disaster response and recovery). Despite progress, there remains insufficient knowledge regarding the costs of adaptation measures. LiDAR data is absent in Kiribati and comprehensive groundwater resource mapping is lacking in all countries, particularly for the outer islands. Completion of a national-level aggregate resource study, in- cluding environmental and market issues, for each country will also be important. B POPUL ATION MOVEMENT, URBANIZ ATION, L ABOR MOBILIT Y STUDIES . As environmental changes increasingly displace populations, there is an urgent need for better risk-informed urban planning and for the international community to inves- tigate and expand support for international human mobility pathways. Comprehensive studies to analyze the propensity for individuals to migrate, monitor the progress of existing relocation efforts, and expand labor mobility schemes both domestically and internationally along with essential factors for relocating and integrating displaced populations into new communities and countries, are vital. Opportunities to iden- tify, train, and fill labor shortages in specific skilled areas such as health care (particularly childcare and aged care), construction, hospitality, and agriculture in host countries should also be studied. C The demand for aggregate materials AG G R E G AT E S T U DY. (sand, gravel, and rock) is crucial for infrastructure devel- opment, renewal and land raising in major urban centers. 91 E conomics of F unding R esilient D evelopment P athways Locally mined aggregates offer an economic source, but accessible quantities are limited in all three Atoll countries due to constraints in plant and contractor capacity, land-side operations, market demand, environmental controls, and expertise in coralline-based materials applications. Urgent investigations and studies are needed to build on prior work completed in RMI and Kiribati,66 to fully access local aggre- gates economically and at scale. D Finally, a comprehensive AN ALYS I S OF CLI M AT E F I N AN CE . analysis of climate finance, including funds accessed by countries, their utilization, and the barriers to access, is 66 In principle, this also applies to necessary. 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