Climate Risks, Resilience, and Funding in Small Islands

Climate change has, particularly in recent years, moved to the forefront of policy conversations, as its effects have been more widely felt. Particularly notable are climate change effects in small island nations. Though these have contributed very little to global emissions levels, the states are bearing the brunt of climate change. Small islands are especially vulnerable to rising sea levels, coastal erosion, marine ecosystem changes, and climate change-induced extreme weather events. Aside from well-being impacts, climate change is already beginning to affect the economies of small island development states (SIDS), as many of these have sun-sea-sand tourism as one of their primary industries. Coastal erosion and extreme weather events damage tourism infrastructure, forcing states and businesses to spend large amounts on rebuilding. However, small island nations are aware of their vulnerabilities, and many have created national climate resilience plans in an effort to mitigate climate change effects. Furthermore, international agreements and actors have produced joint climate strategies and climate funding mechanisms, which aim to reduce climate vulnerabilities. 

For 39 SIDS, the ocean comprises 70% of their biosphere, thus changes in the ocean will have great impacts on these nations

Climate Change Risks in Small Islands

Small Island Developing States (SIDS) have high vulnerabilities to climate change effects, which are largely driven by climate change-induced changes in the ocean. Rising sea levels, ocean warming and acidification, and the chain effects of these on marine life have already begun to affect SIDS. Islands in the Pacific have experienced high sea level rises compared to the global average – almost twice the global rate in the western tropical Pacific (WMO, 2024). Small islands also bear higher vulnerability to seal level rises due to their low elevation (ibid). Furthermore, for 39 SIDS, the ocean comprises 70% of their biosphere, thus changes in the ocean will have great impacts on these nations (UN Trade & Development CITE, 2025). Damages from these will have large economic impacts on SIDS, in addition to greatly affecting residents’ wellbeing. Many small island nations rely on “sun-sea-sand” tourism for revenue, with many activities centered around coastline and ocean activities (Wolf et al., 2022). However, rising sea levels and climate change pose a threat to these industries, as the intensity of coastal flooding and erosion increase due to climate change effects (ibid). Furthermore, these events have the potential for large-scale infrastructure damage, resulting in further economic losses. 

International Cooperation and Resilience Strategies

Current initiatives from SIDS to target potential damage from sea level rises include “protection, accommodation, advance and planned relocation,” (IPCC, 2023). The “International Conference on Small Island Developing States,” serves as a platform for SIDS to collaborate on joint priorities, including climate. During the most recent conference (SIDS4), participating nations decided to “mainstream disaster risk reduction and strengthen disaster preparedness” (Small Island Developing,,,” CITE 2024). This initiative would allow SIDS to prepare plans – evacuation and relocation – for climate-induced disasters. However, only 1/3 of SIDS currently have early warning systems in place, indicating a need to scale up disaster mitigation efforts (ibid). The projects, as well as others, will require increased funding; UNCTAD reveals that 64% of ocean-related climate projects for SIDS will require external funding (UN Trade & Dev CITE, 2025). 

Maldives 

The Maldives is one of the world’s most vulnerable nations to climate change, primarily due to its low-lying geography. With most of its islands barely above sea level, the country faces an imminent risk from rising sea levels, coastal erosion, and salinity intrusion. Additionally, the nation’s limited land area exacerbates challenges related to natural disasters, making it a critical hotspot for climate-related hazards. Coral bleaching is an example of the many climate threats facing Maldives. It refers to significant bleaching of coral reefs across multiple oceaning sectors. However, it manifests as an existential threat to Maldives due to the central role of corals in the country’s ecosystem. Called the rainforests of the sea, much of the Maldivian archipelago is supported by corals and the life forms they support. Further, Maldives’ economic necessities and requirements for land reclamation are creating significant risks for underwater ecosystems. The creation of artificial islands destroys corals’ natural habitat and disturbs associated species. Ecologists hence fear that Maldivian corals may follow the catastrophic decline of Australia’s great barrier reef (Reef check, 2017).. Therefore, the country must find the optimal balance between its economic priorities and environmental conservation to serve its long term development ambitions. 

Key industries in the Maldives, particularly tourism and fisheries, are at significant risk from climate change. Travel and tourism directly contribute up to 48% of Maldives’ GDP, with their indirect contribution rising to 95% when their effects on supply chains and employment are considered (Stojanov et al., 2017). The nation’s famed coral reefs, essential for both marine life and the tourist experience, are suffering from ocean warming and acidification. Similarly, the fishing industry—vital for local livelihoods and food security—is disrupted by shifting marine ecosystems and declining fish stocks, affecting both economic stability and community well-being.

In response to these challenges, the Maldives has initiated several adaptation measures aimed at bolstering climate resilience. Efforts include the construction of protective sea walls, the elevation of vulnerable infrastructure, the enhancement of early warning systems for extreme weather events, and investment in renewable energy. The climate crisis has been instrumental in driving Maldives’ transition to green energy and limiting its reliance on imported diesel. Moreover, it has provided a significant boost to trade as the country is attracting investments in the renewable energy sector. For instance, the World Bank and Asian Infrastructure Investment Bank (AIIB) co-financed ARISE project aims to integrate solar power systems and battery technology in Maldivian power grids with a total investment of $107.4 million (The World Bank, 2021). While these measures are steps in the right direction, the scale of the threat means that ongoing investments and innovations in climate resilience remain critical for the nation’s future. Further, a push for local innovation will provide Malé with an opportunity to bolster domestic research and development, reducing its dependence on foreign intellectual property. 

Fiji

In its current state, Fiji has been highlighted as a country particularly vulnerable to climate change effects, though the nation is only responsible for 0.006% of global emissions (“National Climate Finance”…, 2022). These effects will be unevenly dispersed across its 332 islands (110 inhabited) (WBG, 2021). Fiji’s vulnerability to climate change effects is driven by its real vulnerability to climate change impacts (i.e. rising sea levels) and low resilience to these, but also by its economic and infrastructural vulnerabilities to these effects. In the 2020 ND-GAIN Index, which “calculates a country’s vulnerability to climate change and other global challenges as well as their readiness to improve resilience” Fiji was ranked 77 out of 182 (WBG, 2021). As the world increasingly begins to feel the effects of climate change, it will be necessary for Fiji to drive forward initiatives focused on climate adaptability and resilience.

Climate Change Risks

Fiji experiences frequent natural disasters, including tropical cyclones, floods, and landslides, which occur typically between November and April. Annually, losses from extreme weather events cost the state around $130 million in damages, largely from storms and high wind speeds (WBG, 2021). Climate change is linked to more extreme weather events, meaning that increases in these will cause significant economic losses for Fiji. Other threats facing the country include rising sea levels, loss of coastal/marine resources, soil erosion, and rising global temperatures. Since Fiji is a country composed of small islands, rising sea levels will have a particularly large effect on land size. Coastal and marine resources such as coral reefs and freshwater resources are also at risk, and losses of these will have snowballing effects on fishing and agriculture sectors (ibid). Coral plays a vital role in the ocean’s ecosystem, thus bleaching events can lead to decreases in fish availability. Lack of available freshwater will not only negatively affect Fiji’s inhabitants, but it will also have a detrimental effect on the country’s subsistence agriculture sector. Agriculture may also be affected by soil erosion and changes to precipitation patterns. Though Fiji is expected to warm by about 0.6°C and 2.6°C by the 2090s – lower than the global average – this warming may cause a decline in agricultural productivity. Furthermore, Fiji’s economy is highly dependent on tourism, receiving around 71.5% of its GDP from this sector in 2017 (“Climate Change Portal…”), therefore damages to infrastructure and coastlines will have disastrous effects on this industry. Crucially, climate change effects in Fiji will be felt the most by the country’s poor, marginalised, and remote communities (WBG, 2021). As air conditioning, adaptation technologies, and water storage systems become increasingly important, these remain unaffordable to Fiji poor communities (ibid). Similarly, remote communities largely rely on subsistence fishing, which will be impacted from loss of natural resources due to climate change effects.  

Climate Resilience Plans

Fiji ranks highly in vulnerability to climate change effects and disasters caused by these, driven by its “high levels of social vulnerability and low coping capacity” (WBG, 2021). A 2017 report found that the nation will require around $9.3 billion in investment by 2027 – almost 100% of Fiji’s GDP – to achieve resilience (“Climate Change Portal…”). Positively, Fiji has developed plans and infrastructure to invest in adaptation technologies and climate change resilience. These include its National Climate Finance Strategy and its Renewable Energy Investment Program.

National Climate Finance Strategy

Fiji’s National Climate Finance Strategy, published in 2022, outlines a plan for the nation’s economy to become climate-resilient and low-carbon by 2029 (“National Climate Finance,” 2022). Currently, Fiji’s largest emissions stem from its energy sector, 59%, thus the nation plans to transition to 100% renewable energy by 2036 (REI). Energy Fiji Limited (EJL), Fiji’s national electricity company, already utilises high amounts of renewable energy –  57.1% hydropower, 0.12% wind power, 6.87% biomass from independent power producers, and 35.83% imported diesel fuel as of 2022 (“National Climate Finance,” 2022). Thus, a complete clean energy transition by 2036 is certainly realistic. Included in energy plans is also infrastructure to target vulnerable populations; The Fiji Rural Electrification Fund (FREF) has been created to increase electricity access in remote and energy poor regions, using renewable energy sources. Already, FREF has provided energy to Vio Island inhabitants. The Fund has also identified five communities in need of electricity access, and is actively seeking investors to realise these electrification plans. Others included in Fiji’s national plan are climate position initiatives such as the “30 million trees in 15 years” plan to plant trees and the Technology Needs Assessment (TNA), which identifies needed adaptation technologies (“National Climate Finance,” 2022).

Renewable Energy Investment Program

Fiji’s Renewable Energy Investment Program is dedicated to realising the country’s goal of achieving 100% renewable energy. Outlined in the plan are five policy pillars: “Energy Security and Resilience”; “Energy Access and Equity”; “Energy Sustainability”; “Energy Efficiency; “Energy Governance” (REI). This program is expected to attract private investors for renewable energy use in Fiji, and creates funding mechanisms for energy projects and infrastructure to ensure equitability and inclusivity in future projects.

Climate Financing 

Currently, climate financing is mobilized through a mix of public and private investments, with funds allocated to both mitigation and adaptation initiatives. Governments, development banks, and international organizations are channeling resources into renewable energy projects, resilient infrastructure, and community-based adaptation measures. The Global Climate Fund is particularly active in small island developing states, including Fiji and Maldives. For instance, it developed a two-phase climate action plan for Fiji, improving its climate change readiness (Global Climate Fund, 2022). Aimed at providing direct access to climate finance, the program forms the foundation to develop capacity and strategic planning in the country. However, as the severity of climate impacts escalates, especially in vulnerable regions, the existing funds often fall short of meeting the full scale of required interventions. Further, private investment is often motivated by short-term profit-making rather than long-term climate risk mitigation. 

Climate funds and green investment face significant challenges in the case of small island countries, particularly due to their remote location and diseconomies of scale. However, these nations find themselves in the most pressing need for climate finance due to their frontline position with regards to climate disasters. Fankhauser and Ward (2010) highlight this disparity by asserting that small island states need to earmark 3.4% of their GDP annually to combat climate change, compared to 1.1% of GDP expected from upper-middle-income countries. Further, the World Bank expects climate finance needs to increase in countries that contribute the least to global warming and where financial market access is limited. Hence, while efforts by institutions like the Global Climate Fund provide a good starting point, climate research underscores the steadily rising need for climate finance. 

The rise of financialization has significantly limited the scope of green finance in low-lying and economically inviable areas. Investors and countries must realise the long-term potential of climate finance in capacity building and risk mitigation. This calls for a departure from finance’s myopic wall street bonus culture, discouraging investment in communities that do not yield immediate financial reward. This means that while opportunities for climate finance may be capitalized on in advanced economies emerging markets such as the United States, Europe, India, and China, small island countries do not get the required attention. Research from the Boston Consulting Group (2023) concluded that humanitarian response was one of the least opportunistic areas of climate finance according to investors surveyed. Small island states face a significant need for investment in this area due to their vulnerability to extreme weather events such as flooding, and long-term climate impacts like land erosion. Therefore, small island countries must do more to attract investment and diversify investment channels, lest climate finance be concentrated in a few sectors and regions. 

Conclusions

As climate change increases globally, small island nations are particularly vulnerable to its effects. Rising sea levels and changes in natural resources, such as ocean ecosystems will have particularly large impacts on small island states, which rely on these for food and touristic purposes. Low altitudes on islands mean that rising sea levels and coastal erosion will decrease land size and destroy physical infrastructure. Small islands will experience negative impacts in both economic and well-being spheres in the absence of climate resilience infrastructure. The Maldives and Fiji are nations that have been highlighted as particularly susceptible to detrimental climate change impacts, both due to their low resilience levels, and their reliance on tourism as a large portion of their GDPs. Yet, new national and international small island climate resilience plans and climate funding mechanisms may indicate a promising future. These must be escalated, however, in order to effectively combat climate change effects. Current disparities between estimated funding needed and funding provided remain large. Thus, national and international actors must prioritise climate resilience in small island nations more highly, particularly small island developing states (SIDS).  

Annette Sorensen and Ishan Jasuja are research fellows at the Sixteenth Council

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