Analysis shows how climate finance to Pacific Islands varies across countries

The Small Island Developing States (SIDS) of the Pacific are highly vulnerable to climate change impacts, due to sea-level rise and anticipated impacts on water supplies, food security, fisheries and coral reef ecosystems, and health. Addressing these threats will require a wide range of adaptation measures, along with bringing forward investments in key development priorities – which builds resilience – and in disaster risk reduction. The expected costs far exceed most countries’ financial capacities.

External finance is thus critical to the Pacific Islands. However, there is very little synthesized data on climate finance in the region, making it difficult to know how much support is flowing, and what kinds of outcomes it is delivering for Pacific peoples and ecosystems.

A new SEI study aims to fill that gap. It synthesizes data reported by donor countries and multilateral climate funds to the Organisation for Economic Co-operation and Development (OECD) for 2010–2014, along with more recent data on flows from multilateral climate funds.

The analysis covers 15 countries: the Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, Niue, Palau, Papua New Guinea, Republic of Marshall Islands, Samoa, Solomon Islands, Timor Leste, Tonga, Tuvalu and Vanuatu.

It shows that in 2010–2014, a total of US$748 million in finance principally targeting climate change was committed to those countries, almost all as grants. Around 59% was for adapting to the expected impacts of climate change, 36% for reducing greenhouse gas emissions (mitigation), and 5% for both objectives together. About 72% of this funding was sourced through bilateral channels.

Among the multilateral funds, the Global Environment Facility, combining the GEF Trust Fund and the Least Developed Countries Fund, was by far the largest source through 2014, though since 2015, there have been several large allocations to some Pacific countries, particularly from the Pilot Program for Climate Resilience and the Green Climate Fund.

“For the Pacific Islands, climate change is an urgent, immediate concern,” said Aaron Atteridge, lead author of the study and co-leader of the SEI Initiative on Climate Finance. “If we want to understand whether these countries are getting the support they need to adapt, gathering the data in a systematic way is a crucial first step.”

Atteridge, who took a leave of absence from SEI in 2013–2014 to serve as a climate adviser for the Secretariat of the Pacific Community (SPC), based in Fiji, said his original goal with this study was to examine how effective climate finance in the region has been at reducing vulnerability.

“Tackling climate change has become important to communities and governments in the Pacific, and concerns are emerging about whether climate action was aligned with the region’s other development priorities,” he said. “When we realized there was no synthesis of data on financial flows, which is the basis for any meaningful discussion about effectiveness, we decided to fill that gap ourselves.”

The analysis shows that climate finance flows vary greatly by country. The Melanesian countries of Papua New Guinea, Fiji, Vanuatu and the Solomon Islands have received some of the largest amounts – unsurprisingly, given they are larger and have bigger populations than many of the countries in Micronesia and Polynesia. Yet among similar-size countries, Polynesian nations such as Samoa, Tuvalu and Niue have been much more successful at attracting climate finance than Micronesian countries such as Palau or Nauru. This is true both in terms of total finance, and per capita. On a per capita basis, the median is Kiribati, at US$276 in 2010–2014; Papua New Guinea, however, only received US$6 per person, while Tuvalu received US$3,835 per person

“I don’t know why the Polynesian countries have been noticeably more successful in accessing funding,” Atteridge noted. “It could be their administrative structures, or they are better prepared with climate and development plans, or have closer relationships with key donors. But it’s worth exploring further, as it might offer valuable insights to the other Pacific countries.”

The vast majority of the funding (86%) is being delivered as project-based support, while direct budget support is rare. In terms of sectoral distribution, the largest share of funding has supported work to create an “enabling environment” – such as policy development and planning.

“The data shows that certain sectors that are critical for development and resilience-building, such as education and health, don’t appear at all,” Atteridge said. “We need a better understanding of the political economy that influences where finance goes and what it is spent on. Conversations we’ve had with stakeholders in the Pacific suggest that funds are often being used in an ad hoc way. If that is the case, we need to understand why.”

Study co-author Nella Canales noted that it’s possible that the sectoral analysis missed projects focused on education and health because it covers only finance labelled as the top priority, not flows with climate co-benefits. “That highlights the importance of mainstreaming climate change into development projects, which is also quite relevant to the Pacific Islands,” she said.

The paper also identifies patterns that warrant further exploration, such as differences between bilateral and multilateral flows and between countries. It also calls for greater efforts to make available more transparent, comprehensive climate finance data.

“I think accountability is crucial,” said Canales. “Beyond negotiations, this can be the start of a stronger, better informed conversation between countries and development partners to make sure climate change is addressed according to Pacific countries’ priorities.”

Canales presented the study findings at a side-event at the Marrakech Climate Change Conference, and Atteridge will be visiting Samoa and Fiji in the next two weeks to discuss the findings with regional organizations and governments.

“We’ve also had quite some interest in this work from the other SIDS regions, in the Caribbean and Indian Ocean, and have begun to undertake a similar analysis for them,” he said. “We really hope this work will be useful for the small island states as they try to address structural weaknesses and vulnerabilities, and grapple with the threats posed by climate change.”

Read the analysis »

Learn more about the SEI Initiative on Global Finance »

VIDEO: COP22 side-event on Pacific climate finance