Seychelles: Selected Issues
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International Monetary Fund. African Dept.
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Selected Issues

Abstract

Selected Issues

Enhancing Resilience to Climate and Natural Disasters in Seychelles1

A. Climate Change: A Global Emergency, More Pronounced in Small Islands

1. Climate change, compounded by the recent El Niño, has put Seychelles’ archipelago and biodiversity systems at higher risk. 14 of the 15 warmest years on record have occurred since year 2000 (Figure 1), resulting in a drastic change in the weather pattern of Seychelles. It has also contributed to rising sea levels and massive bleaching of coral, which is significant to islands, particularly for the coastal areas. For Seychelles, which relies heavily on fishing and tourism, the potential damage could be significant, both economically and socially. Rising tides have eroded the coast and contaminated fresh water supply. Changes in rainfall patterns are resulting in intense precipitation events in the wet season while extended periods of drought characterize the dry season. Floods are washing greater amounts of effluents into the sea, resulting in a higher acidification of oceans and accelerating coral bleaching.

Figure 1.
Figure 1.

Seychelles: Global Surface Temperature, Deviation from 20’ – Century

(Average 0C)

Citation: IMF Staff Country Reports 2017, 161; 10.5089/9781484304792.002.A001

Sources: National Center for Environmental Information; and IMF staff calculations.

2. Climate-induced coral bleaching is currently among the greatest threats to coral reefs in Seychelles, causing widespread loss of live coral cover. The ongoing global coral bleaching since mid-2014, exacerbated by a subsequent 2015-16 strong El Niño, continues to be the longest, most widespread, and most damaging on record (NOAA, 2017). Stressful conditions are rapidly expanding to the Indian Ocean, prompting massive coral bleaching2 in Seychelles (Figure 2).

Figure 2.
Figure 2.

Seychelles: Coral Reef Watch 60% Probability Coral Bleaching Thermal Stress

Citation: IMF Staff Country Reports 2017, 161; 10.5089/9781484304792.002.A001

Source: NOAA.

3. The climatic changes have caused significant damage to the country’s coral and mangrove ecosystems. Vital to Seychelles economic activity, coral reefs are increasingly affected by ocean acidification while coastal areas are eroded every year by about 50 cm (Pouponneau 2015). Coral bleaching has led to deleterious impacts on economic and social development through various channels, including (i) reduction of fisheries output upon which the economy is highly dependent (ii) impairment of the coral reefs’ defensive capacity against land erosion and rising sea levels and (iii) intensification of the magnitude of storm events induced by higher stronger tides and leading to severe erosion of coastline upon which tourism activity highly depends.

4. Rising sea levels and ocean acidification could wreak havoc on Seychelles’ economic and social development. On a global scale, sea levels have already risen by roughly 9 inches since 1880 (Figure 3) and are projected to increase by another 12 to 35 inches by 2100 3. In fact, this alarming effect is more perilous for Seychelles given its low-lying elevation and the high concentration of economic development (about 80 percent) along its narrow coastal zones. In Seychelles, sea levels are rising by a 2.3 mm every year, posing serious threats to livelihoods as coastal erosion and flooding continue to emerge. Less obvious to the eye is the danger of ocean acidification contaminating Seychelles fresh water source and irrigated crops.

Figure 3.
Figure 3.

Seychelles: Global Average Absolute Sea Level Change

Citation: IMF Staff Country Reports 2017, 161; 10.5089/9781484304792.002.A001

Sources: Commonwealth Scientific and Industrical Research Organization (CSIRO); andNational Oceanic and Atmospheric Administration (NOAA).Note: Satellite data are based solely on measured sea level, while the long-term tide gauge data include a small correction factor because the size and shape of the oceans are changing slowly over time.

5. Climate-induced natural disasters have caused significant damage to the Seychelles’ economy. Given its steep terrain, low-lying4 archipelago, and geographic location, Seychelles is highly vulnerable extreme weather events. During the period 1997-2016, Seychelles experienced seven natural disasters that affected around 26, 000 people or 30 % of the population and led to a combined economic damage of over 4.6 percent of GDP (Table 1). The increased severity of these natural calamities challenges the country’s capacity to cope with such events. For example, Seychelles declared a state of emergency in 2013 as thunderstorms ravaged the island, damaged coastal arears, and caused evacuation.

Table 1.

Seychelles: Natural Disasters

article image
Sources: EMDAT database; and IMF staff calculations.

B. Impact of Natural Disasters on the Seychelles’ Economy Relative to its Peers

6. The economic cost of natural disasters is higher in Seychelles relative to other small states in sub-Saharan Africa (SSA). Located slightly outside the cyclone belt, Seychelles is relatively less exposed to frequent natural disasters compared to its regional peers (Figure 4). On a regional scale, the average economic cost of natural disasters in Seychelles is roughly 1 percent of GDP, almost twice as much the average damage cost of SSA peers (Figure 5).

Figure 4.
Figure 4.

Seychelles: Calamity Strikes in Small States by Region (1990-2016)

Citation: IMF Staff Country Reports 2017, 161; 10.5089/9781484304792.002.A001

Source: EMDAT database; and IMF staff calculations.Note: Other disasters include extreme temperature, insect infestation, landslide, volcanic activity, and wildefire; Other regions include Montenegro and Djibouti.
Figure 5.
Figure 5.

Seychelles: Repoted Damage Cost and Population Affected by Natural Desasters (1990-2016)

Citation: IMF Staff Country Reports 2017, 161; 10.5089/9781484304792.002.A001

Sources: EMDAT database; WEO and IMF staff calculations.Note: SSA excludes Seychelles; Other Regions include Djibouti and Montenegro.

7. Relative to sub-Saharan African peers, the human cost of natural disasters in Seychelles is predominately the result of storms, floods, and epidemics (Figure 6). While the human costs of storms and epidemics are small in a regional context, they accounted for the lion’s share of population affected by natural disasters in Seychelles during 1990-2014, affecting 15,610 people or 16.6 percent of the population. In a similar vein, floods accounted for 22 percent of the population affected by natural disasters in Seychelles, roughly twice as much the proportion affected in SSA peers. Given its relatively smaller economic base, large disasters are a “fatter tail risk “for Seychelles. For example, a tsunami that struck Seychelles in 2004 affected 4630 people and caused an estimated damage of 3.6 percent of GDP. While droughts accounted for most of the population affected due to natural disasters in SSA small states, the climate-induced and prolonged dry season Seychelles have recently experienced gives cause for concern.

Figure 6.
Figure 6.

Seychelles: Population Affected by Natural Desasters

(1990 2016)

Citation: IMF Staff Country Reports 2017, 161; 10.5089/9781484304792.002.A001

Sources: EMDAT database; and IMF staff calculations.
Figure 7.
Figure 7.

Seychelles: Event Analysis, Impact of Natural Disasters on Economic Indicators (1990-2016)

Citation: IMF Staff Country Reports 2017, 161; 10.5089/9781484304792.002.A001

Sources: EM-DAT database; Madagascar authorties; WEO and IM F Staff calculations.

C. Policy Response: Adaptation and Mitigation

8. A more proactive sector-specific strategy should be articulated to build resilience of the blue economy. With scarce resources, priority should be given to climate-sensitive economic sectors. Regarding the fishing industry, better management of fisheries and marine ecosystems coupled with increased coverage of marine protected areas could significantly mitigate the impact of climate change on the economy. In a similar vein, sustainable development of the tourism sector entails harnessing the power of tourism to foster habitat restoration, geo-spatial planning, as well as maintenance of green areas and beach vegetation.

9. To mitigate the impact of climate change, ex-ante resilience policies should be further reinforced. Geo-spatial planning should be further improved and mainstreamed across all sectors. In this regard, the Seychelles government should improve building codes and most importantly, ensure their rigorous enforcement. Adaptation measures should be centered around watershed and coastal rehabilitations since Seychelles topography limits the water storage capacity. Against this backdrop, a nation-wide drainage study should be undertaken to minimize damage from floods and preserve the nation’s pristine coastline – the country’s main tourist attraction. Areas of long-term adaptation to climate change include:

Water security: the government should seek a fully integrated approach to water management tailored to address issues such as ecosystem health, waste management, water treatment and supply, sewage, and agriculture.

Energy security: Seychelles could benefit from a more resilient energy base with greater emphasis on renewable energy where possible. In addition, efficient fuel-based land transport and more use of electric vehicles charged with renewable energy technology is recommended.

Food security: New and innovative technologies across all food production, supply and value chains coupled with a reinforcement of skilled human resources, should be introduced to enhance the resilience of the agriculture sector. These measures should be consistent with the Blue Economy framework as well as Seychelles Strategic Plan 2015.

10. Some diversification away from tourism into fisheries and offshore financial services has reduced Seychelles’ vulnerability to external shocks, but tourism will likely remain the mainstay for the next 25-50 years. Consequently, it is important to minimize the impact of all tourism activities and ensure that eco-tourism activities are as non-intrusive as possible. Involvement of local communities in local tourism development and diversification is a proven method to develop adequate resilience against external shocks to the tourism industry. Such measures will optimize receipts from recreational activities and ensure inclusive growth. In turn, engaged communities would better commit to the protection of coastal areas.

11. Sizable investment in capacity building remains imperative to weather the impacts of climate change. Acquiring a better gauge of cyclone patterns, ocean and air currents, and the interplay between climate change and the economy can enhance preparedness and reduce the impact on population. This entails shoring up reefs as natural storm barriers, installing early storm warning systems and information dissemination systems, as well as building evacuation shelters and sea walls.

D. Financing Options

12. The mobilization of adequate financing for climate-related projects remains an enduring challenge to the economy. To strengthen financing capacity, the government took important measures, including (1) the set-up of focused unit aimed at overcoming hurdles to access climate funding and (2) buildup of innovative financing resulting from lasting engagement with the Word Bank, recently on the blue bond. However, cost effectiveness test must be applied on ongoing basis.

13. Drawing on its budgetary flexibility and independent monetary policy, Seychelles should create larger fiscal buffers for climate change adaptation and mitigation. For instance, introducing a specific carbon tax, would enable a reduction in other distortionary taxes as well as strengthening revenue mobilization. Innovative financial instrument should be further explored, including weather derivatives, debt swaps, and carbon markets. These instruments would allow the government to centralize and mainstream the climate financing needs related to both mitigation and adaptation.

E. Conclusions

14. Seychelles is highly vulnerable to climate change. Rising sea levels, changing rainfall patterns, increasingly intense and frequent tropical cyclones, and massive coral bleaching are compounding economic and social risks in Seychelles. These risks are further exacerbated by the economy’s high dependence on its coastal zone for urban development that is pivotal for its main economic pillars: tourism and fisheries.

15. The increased frequency and severity of natural disasters in Seychelles is worrisome. Climate change coupled with the 2015 El Nino effect further increased Seychelles’ vulnerability to natural disasters. While the frequency of natural calamities remains lower compared to SSA small states’ average, their damage cost is relatively high in Seychelles and poses serious threat to the economy’s key sectors – tourism and fisheries.

16. A policy mix focused on combining adaptation and mitigation strategies is ideal for Seychelles. Such policies should not only be aligned with Seychelles’ NDC, but also with the technical and financial capacity of the government. Experience from other small states suggest that small policy changes can still have a significant impact. To the extent adaptation and mitigation measures are inadequate, insurance policies and innovative financial instruments need to be exploited further.

1.

Prepared by Mounir Bari (AFR).

2.

In a recent survey (2016) conducted by a research team from the University of Essex in collaboration with the Seychelles National Park Authority (SNPA)and aimed at understanding the future for Seychelles coral reefs under climate change, average bleaching levels of 80 per cent were documented, but up to 95 per cent for some sites surveyed

3.

United Nations IPCC assessment report 2014.

4.

2–6 meters above sea level on average (NDC 2015).

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Seychelles: Selected Issues
Author:
International Monetary Fund. African Dept.
  • Figure 1.

    Seychelles: Global Surface Temperature, Deviation from 20’ – Century

    (Average 0C)

  • Figure 2.

    Seychelles: Coral Reef Watch 60% Probability Coral Bleaching Thermal Stress

  • Figure 3.

    Seychelles: Global Average Absolute Sea Level Change

  • Figure 4.

    Seychelles: Calamity Strikes in Small States by Region (1990-2016)

  • Figure 5.

    Seychelles: Repoted Damage Cost and Population Affected by Natural Desasters (1990-2016)

  • Figure 6.

    Seychelles: Population Affected by Natural Desasters

    (1990 2016)

  • Figure 7.

    Seychelles: Event Analysis, Impact of Natural Disasters on Economic Indicators (1990-2016)