Waiting for Godot? The Case for Climate Change Adaptation and Mitigation in Small Island States

IMF Working Papers, September 9, 2022

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Canonical URL: Waiting for Godot? The Case for Climate Change Adaptation and Mitigation in Small Island States

Global warming is described as "the most significant threat to ecosystems and people’s health and living standards, especially in small island states in the Caribbean and elsewhere."
Empirical analysis indicates:
- Increasing energy efficiency and reducing the use of fossil fuel in electricity generation could lead to a significant reduction in carbon emissions.
- Investing in physical and financial resilience would yield long-run benefits.
From a risk-reward perspective, "the advantages of reducing the risks associated with climate change and the health benefits from higher environmental quality clearly outweigh the potential cost of climate change mitigation and adaptation in the short run."
Additional revenue from environmental taxes could be used to:
- Compensate the most vulnerable households.
- Build a multilayered safety net.
- Strengthen structural resilience.

Primary mitigation levers identified:
- Energy efficiency improvements.
- Reducing fossil fuel use in electricity generation.
Primary adaptation levers identified:
- Investments in physical resilience.
- Investments in financial resilience.
Health and environmental quality benefits are emphasized as material components of the net gains from mitigation and adaptation.

Use environmental taxes to generate additional revenue.
Deploy those revenues to:
- Compensate vulnerable households.
- Create multilayered safety nets.
- Strengthen structural resilience measures.