Pacific Economic Monitor - December 2017

The Pacific is among those parts of the world most vulnerable to weather-related disasters. To illustrate, 5 of the top 15 countries with the highest risk, and 10 of the top 30 facing the largest potential economic losses from disasters, are in the subregion. With climate change bringing additional risks from global sea level rise—and potentially heightening vulnerability to more intense, frequent, and prolonged extreme weather events—Pacific economies are stepping up adaptation efforts to brace for future adverse impacts.

These include climate-proofing vital infrastructure assets, strengthening disaster risk management, and expanding social safety nets to build resilience to disasters. Further, a number of Pacific economies are promoting green urban development to move toward more sustainable green cities. Careful monitoring and planning will also be required to manage important income flows, including fishing license fees and tourism-related revenues, amid climate-related volatilities and to maintain adequate fiscal buffers for disaster response.

Highlights

• Recent global economic gains dampened by looming risks. With better-than expected momentum in the first half of 2017, higher world economic growth is now projected for the full year and in 2018. However, medium-term risks such as tighter monetary policy, inward-looking policies, and persistently low inflation in advanced economies persist.
• Climate change adaptation and disaster risk management. Despite its relatively low contribution to the causes of climate change, the Pacific is particularly vulnerable to its effects and is stepping up efforts to adapt to more extreme weather conditions and mitigate disaster risk. These include integrating climate change and disaster risk concerns into national planning and policies, climate-proofing infrastructure, and building financial resilience.
• Expanding climate finance. Financial resilience is a key component to climate change response. A range of options, most recently disaster-contingent lines of credit and sovereign or regional insurance schemes, can be tapped to help Pacific economies recover from climate change impacts.

Policy Briefs

Mounting climate-change-associated risks and vulnerabilities demand more strategic and innovative approaches to develop a comprehensive response. In the Pacific, this will require sustained efforts to enhance coordination between development partners, implement low-carbon development strategies, and promote regional solutions to expand and optimize climate finance. New modalities, including disaster-contingent lines of credit and sovereign or regional insurance schemes, are also being tapped to build financial resilience in these small and highly vulnerable economies.

Fiji’s presidency of the recently concluded 23rd annual meeting of the Conference of the Parties to the United Nations Framework Convention on Climate Change further pushes the Pacific to a lead role in responding to climate change. By highlighting the subregion’s disproportionate vulnerability to the negative impacts of climate change, the event is seen to catalyze a renewed global focus on climate change adaptation and disaster risk management efforts in the Pacific and in small island developing states throughout the world.

• Building resiliency: Climate change and disaster risk management in the Pacific
• Financial resilience to disasters: A tool kit
• Urban solid waste management towards climate change mitigation in Timor-Leste

About the Pacific Economic Monitor

The Pacific Economic Monitor provides an update of developments in Pacific economies and explores topical policy issues. This bi-annual publication is produced by ADB with contributions from development partners and knowledge organizations engaged in economic analysis of the Pacific.