Measuring the climate cost to Pacific development

Tropical cyclone Lola slammed into Vanuatu’s northern islands last week, the third high intensity storm to hit the island nation in seven months. Lola was also the earliest Category 5 cyclone on record in the Pacific. Early reports suggest extensive destruction.

Climatic disasters of this intensity were once less frequent in the Pacific. While the region has always been cyclone prone, analysis of recent data illustrated in the chart below shows that the intensity of tropical cyclones has increased dramatically over the past half century. Highly destructive tropical cyclones that had occurred roughly twice a decade now occur closer to twice a year.

Vanuatu’s previous climate-related shock was a twin cyclone event in March, affecting more than 80% of the population, some 250,000 people. It resulted in widespread flooding and extensive damage to infrastructure. Damage estimates surpassed 40% of GDP.

The growing intensity of these climatic shocks poses immense challenges to the livelihoods of Pacific people and regional development. While international relief and support have been significant, mounting costs from higher intensity disasters are outpacing efforts to rebuild and adapt local economies.

This regional vulnerability to climate shocks stems in large part from the structural barriers to development faced by small island states. The region’s economies depend on a narrow set of income streams heavily exposed to environmental risks, such as tourism, agriculture and fisheries. Rapid population growth and urbanisation are adding to the strain on social systems such as medical services and quality housing.

Vanuatu’s twin cyclone event destroyed upwards of 90% of crops in the worst affected provinces, according to government estimates. Cyclone Pam in 2015 and Cyclone Harold in 2020 had similar consequences across the region, leaving widespread food and water shortages and causing significant economic damage.

The cumulative effect of intensifying climatic shocks is a drag on Pacific development. Every dollar spent by a Pacific government on rebuilding and recovering from extreme weather events is a dollar lost to long-term investment in social services and public infrastructure.

And it’s not only disasters. Higher intensity weather events are also accelerating coastal erosion and the loss of traditional land. In Kiribati, Fiji and Marshall Islands, millennia-old cultural sites are disappearing into the ocean and entire villages have been destroyed, driving internal migration.

Climate resilience is explicitly tied to the region’s prosperity and stability. But the multifaceted economic and security threat posed to Pacific Island countries by the changing environment is a concern to all partners with an interest in the development and stability of the region.

Analysis of data from the latest edition of the Lowy Institute Pacific Aid Map, released this week, shows that funding for Pacific recovery and adaptation falls short of current disaster costs and projected adaptation needs.

While exact like-for-like comparisons between estimated needs and current funding levels are difficult due to variances in measurement standards, the full sum of climate-related financing in the Pacific clearly falls multitudes below estimated needs.

On average over the past decade, financing devoted to all climate and disaster-related projects has been less than a third of the estimated level of need. If this is narrowed to funding explicitly targeting climate goals, financing over the same period has fallen well short of the target – less than a tenth of required levels. Put simply, the most generous tallies of climate-related financing still fall well below the most conservative estimates of what is required.

It’s true that the trajectory of climate-related financing has improved in recent years. But analysis via the Pacific Aid Map raises further questions over the quality and potency of the financing.

Tracking spending on climate issues relies on donors self-reporting the way they target the adaptation, mitigation and disaster recovery goals for individual projects. Relevant financing is identified by donors using a binary system, where a project is marked as having either a “principal” or “significant” focus on climate goals – with the latter category introducing a high degree of ambiguity.

These “significant” tagged funds made up the bulk of the additional climate-related financing seen in recent years. This was particularly noticeable in 2021, where the majority of new climate development financing was made up from climate outcomes built into Covid-19 recovery packages. The largest of these was Japan’s US$270 million Emergency Support Loan to Papua New Guinea, which despite being marked as significantly focused on climate outcomes has no clear climate-related provisions.

Adding to this uncertainty, the delivery of these funds through rapid budget support measures also raises questions about the durability of the increase in climate-related financing, since much of this was provided as a form of rapid crisis response.

Beyond the clear need for an influx of additional financing targeting climate adaptation, solving measurability issues must be prioritised. Without improved transparency and reporting by development partners, the true size of the adaptation gap will remain unclear. This ambiguity is an obstacle to effective action and that’s not an option for the region as costs mount and livelihoods are increasingly threatened.

This article was first published by the Lowy Institute on their blogsite – The Interpreter. Riley Duke is a Research Associate working on the Lowy Institute Pacific Aid Map. Prior to joining the Institute in 2022, Riley worked as an intern at the Institute for Economics and Peace and was a recipient of a scholarship position for the Think Pacific internship program. Gilliane De Gorostiza is a Research Assistant at the Lowy Institute working on the Pacific Aid Map.