A fair share of resilience finance for Small Island Developing States: Closing the gap between vulnerability and allocation

Emily Wilkinson, Vibrant Panwar, Laetitia Pettinotti, Yue Cao, Rachid Bouhia, Jack Corbett

Research output: Book/ReportCommissioned ReportOther

Abstract

Small Island Developing States (SIDS) have long argued that their unique condition, including their small populations and geographic location, makes them especially vulnerable to multiple climate impacts that they have had a negligible role in generating. Yet this vulnerability is barely accounted for in the allocation of development or climate finance, and only partially embedded in international organisations (IOs), including across the UN system, World Bank, and World Trade Organisation. This vulnerability will only increase, with climate change and disaster impacts driving higher and higher debt levels, which in turn undermine SIDS’ resilience and adaptation potential. Yet investments can and do increase SIDS’ ability to cope with external shocks, and to adapt and build resilience to future climate change impacts. Until now, it was unclear how much and which types of finance were being allocated to SIDS to build resilience. This paper provides clear evidence of the gap between vulnerability and allocation of finance.

The authors find that total levels of resilience finance allocated to SIDS are lower than for other developing country groups.1 SIDS receive seven times less finance than least developed countries (LDCs) (excluding SIDS), 11 times less than lower- middle-income countries (LMICs) (excluding SIDS), and 5 times less than upper-middle-income countries (UMICs) (excluding SIDS). This means that the allocation of climate finance is not linked to levels of vulnerability.

Pacific SIDS, in particular, have high levels of vulnerability to climate change and disasters, followed by Caribbean SIDS and then Atlantic, Indian Ocean, Mediterranean and South China Sea (AIMS) SIDS, but there is variation in each SIDS group, and some non-SIDS have higher levels of environmental vulnerability than some SIDS, including very low-lying states. Despite this, those developing countries receiving the highest levels of resilience finance are not among the most vulnerable countries (as per the Sustainable Development Solutions Network (SDSN)’s pilot Multidimensional Vulnerability Index (MVI) score for environmental vulnerability) . Meanwhile, the most vulnerable countries including SIDS receive below-average resilience finance flows (in relation to the developing country group as a whole).

The lesson is that, as many individual SIDS’ governments have intuited, this group of countries is being disadvantaged by development and climate finance institutions who are charged with providing them the resources to ameliorate their condition. This effectively compounds the impacts of the climate crisis for SIDS because, despite their negligible contribution to the problem and their acute vulnerability to impacts, IOs are favouring other states instead in their resource allocations. Whether they mean to or not, the net effect is a form of systemic injustice against a significant proportion of their membership. In response the report proposes several practical steps that these institutions could take to better meet the needs of SIDS, including:

1. special consideration of SIDS in relation to ODA eligibility
2. the endorsement and uptake of an MVI for finance allocations of donors and MDBs, and
3. a defined climate finance target for SIDS and
other vulnerable countries.

A combination of these changes can ensure that international donors and climate finance institutions are more responsive to the unique needs of SIDS, which in turn will increase their ability to adapt and thrive in a warming world. Through this research and other advisory activities, ODI’s Resilient and Sustainable Islands Initiative (RESI) is helping SIDS and their partners to bring about changes in international development and climate finance, and find solutions to growing sustainability challenges
in small islands.
Original languageEnglish
Place of PublicationUnited Kingdom
PublisherOverseas Development Institute (ODI)
Number of pages44
Publication statusPublished - Apr 2023

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