Selected Issues Papers

Sea-level rise presents long-term risks in Aruba that can lead to sizable permanent costs with potentially large macroeconomic and fiscal consequences. Aruba cannot control global sea-level, but it can manage how it affects the country by adapting. Using the state-of-the-art model CIAM, IMF Staff estimates finds that planned coastline protection—in the form of dykes, revetment, floodgates, costal dunes, etc.—can reduce losses by approximately 40 percent by avoiding permanent inundation of land and relocation of population. Estimates of protection costs in Aruba are around 0.4 percent of annual GDP with a moderate emission scenario and do not grow. This will likely require an increase in public spending as coastal protections are public infrastructure.