Climate change represents a threat to many small island developing states like Kiribati. This note summarizes the main ways in which climate change may negatively affect the economy of Kiribati. It then shows how Kiribati may cope with these negative effects by implementing adaptation projects, as well as by contributing to global mitigation efforts. Finally, the note describes some issues related to climate finance and how authorities of Kiribati may direct their efforts in the most productive way to ensure that climate-related projects obtain the proper financial backing and are carried out to fruition in a timely fashion.

Abstract

Climate change represents a threat to many small island developing states like Kiribati. This note summarizes the main ways in which climate change may negatively affect the economy of Kiribati. It then shows how Kiribati may cope with these negative effects by implementing adaptation projects, as well as by contributing to global mitigation efforts. Finally, the note describes some issues related to climate finance and how authorities of Kiribati may direct their efforts in the most productive way to ensure that climate-related projects obtain the proper financial backing and are carried out to fruition in a timely fashion.

Climate Change in Kiribati: The Way Forward1

Climate change represents a threat to many small island developing states like Kiribati. This note summarizes the main ways in which climate change may negatively affect the economy of Kiribati. It then shows how Kiribati may cope with these negative effects by implementing adaptation projects, as well as by contributing to global mitigation efforts. Finally, the note describes some issues related to climate finance and how authorities of Kiribati may direct their efforts in the most productive way to ensure that climate-related projects obtain the proper financial backing and are carried out to fruition in a timely fashion.

A. Introduction

1. The negative effects of climate change threaten the future of the world economy. According to the latest Intergovernmental Panel on Climate Change AR-6 Report (IPCC, 2022), the negative effects of anthropogenic climate change have already started to materialize across the globe. The global average temperature will almost certainly rise to 1.5 degree Celsius above pre-industrial levels in the coming decades, even if the world economy were to implement policies to aggressively reduce carbon emissions starting from today. Accordingly, the risk of runaway climate change, which most scientists predict to occur if the global average temperature were to increase to and above 2 degrees Celsius above pre-industrial levels, is deemed very high.

2. Against this backdrop, small island developing states (SIDS) are in a precarious position. This is because their location and geographic features make them vulnerable to climate induced disasters like tidal inundation, tropical cyclones, droughts, and heatwaves. In addition, economies of SIDS are often heavily dependent on natural resources, for instance groundwater and fisheries, which could be negatively affected by some of these novel natural processes associated to climate change like sea level rise. Finally, the size and current development of their economies hinder efforts both to adapt and to recover from natural disasters.

3. Global changes in weather patterns may lead to a host of hazards for Kiribati, albeit a great deal of uncertainty remains in model-based projections of risk. A rising global average temperature naturally leads to more frequent occurrence of dangerous heatwaves, including marine heatwaves—periods of abnormally high sea temperature—which intensify and lead to severely negative effects on marine ecosystems within Kiribati’s exclusive economic zone. Droughts on the atolls of Kiribati are primarily meteorological, meaning that they reflect a prolonged lack of rainfall and thus require projections of future precipitation patterns. Finally, inundation and windspeed damage from storms, while historically not affecting Kiribati as harshly as other SIDS, are tightly linked to future evolution of tropical cyclone tracks, a field in which more research is needed.

4. Sea level rise (SLR) has already impacted Kiribati islands through territory loss and forced relocation. Residents of the village of Tebunginako, in the island of Abaiang, Northern Gilbert Islands, have already been forcibly relocated, after SLR, erosion, and salinization rendered it uninhabitable. More generally, many of the low-lying islands of Kiribati are predicted to be submerged due to the naturally low elevation of the coastal areas on almost all islands as melting ice sheets lead to higher average sea levels over the coming decades.

5. Climate hazards have the potential to disrupt crucial natural resources in Kiribati. Freshwater lenses, soils, and fisheries are the most critical natural resources for the economy of Kiribati. Thickness of freshwater lenses and soil enrichment depend heavily on natural rainfall on the atolls and will thus follow future rainfall patterns. Moreover, saltwater intrusion could pose additional challenges, as lenses are depleted during prolonged periods of scarce rainfall, which are increasingly frequent, and permanent damage is inflicted on groundwaters by saline contamination. SLR and ocean acidification also have the potential to inflict heavy damage to ecosystems. More frequent coastal inundation may lead not only to direct infrastructure damage, given that the high point on most of Kiribati’s atolls is at or below 4 meters, but also to decline and eventual loss of cultivatable lands and permanent destruction of ecosystems as wildlife will be unable to survive. In addition, ocean acidification may disrupt coral reef replenishment and in turn lead to extinction of marine species that constitute the bulk of fishing activity. Moreover, climate change is projected to lead to migration of tuna stocks outside of current exclusive economic zones of some Pacific Islands.2

6. Damages may also affect economic and social outcomes, both directly and indirectly. The agricultural sector of Kiribati could be disrupted primarily by water scarcity and more frequent extreme weather events and heatwaves. Moreover, crop diversity is limited given the low fertility of the soil, making adaptation more challenging. Social outcomes, including poverty, inequality, gender disparity, social peace, and health, could further be deteriorated by an intensification of adverse climate events. Indeed, research has shown that poorer strata of the population, as well as women and children, stand to bear the brunt of climate change (WB, 2016). Health outcomes, already negatively impacted by the COVID-19 pandemic, could see further deterioration by the more frequent occurrence of droughts or depletion of freshwater resources by saltwater intrusion.

7. International cooperation is critical to help Kiribati address its challenges from climate change. As pointed out in the speech of Kiribati’s President at the 2022 United Nations Climate Change Conference (COP27), the cost of maintaining the livelihoods in Kiribati in the face of climate change already exceeds its means. Therefore, international cooperation not only on full implementation of the Paris Agreement, but also on financial support—either through bilateral/multilateral funding mechanisms or through climate funds—is crucial to help Kiribati cope with existential climate threats.

8. Meanwhile, the nation should continue to undertake effort to mitigate climate impact, which is the main consideration of this paper. To safeguard the future of their nation, Kiribati should undertake both adaptation and mitigation efforts by drawing to the maximum extent on available climate finance resources. The next sections will detail some of the adaptation and mitigation efforts, highlighting the key projects and challenges faced by the authorities. The conceptual scheme of this paper is presented in Figure 1.

Figure 1.
Figure 1.

Kiribati: Conceptual Description of Climate Note and Policy Advice

Citation: IMF Staff Country Reports 2023, 226; 10.5089/9798400247606.002.A001

B. Adaptation

9. Kiribati has been working actively on climate adaptation, which is crucial given its vulnerability to climate change. Initial attempts were made in the early 1990s, when the government requested scientific advice on SLR. The first climate project—the US Country Study Programme developing a country profile for Kiribati—was conducted in 1995 (Republic of Kiribati, 2015). Since then, the government has issued several adaptation policies, plans and agreements such as the 2012 National Disaster Risk Management Plan, the 2013 National Communication under the United Nations Framework Convention on Climate Change, the Nationally Determined Contributions (NDCs) 2016 and the revised NDCs 2022, the 2018 Kiribati Climate Change Policy, the Desaster Risk Management and Climate Change Act 2019, and the 2021 New Enviroment Act.

10. These key policies have been translated into action aimed at improving infrastructure. The 2019 report from the Global Commission on Adaptation (GCA, 2019) highlights five key adaptation focus areas that give outstanding cost-benefit ratios once all relevant impacts are considered, including early warning systems, resilient infrastructure, protecting dryland agriculture crop production, mangrove planting, and making water resources management more resilient. In Kiribati, projects to monitor and improve water pipe leakage and water distribution services have been being carried out in Tarawa, including a water desalination plant being built to secure sustainable fresh water supply. Mangrove planting and coastal protection infrastructure such as seawalls help protect coastlines from seawater intrusion and inundation as well as help reduce coastal erosion.3 Physical infrastructure of roads, runways, causeways, bridges, ports, berths, and public buildings have been reconstructed and rehabilitated to be more resilient to the negative effects of climate change. In parallel, efforts were made to monitor the ecosystem, enhance food security through agriculture training programs, and strenthen community awareness of healthy lifestyles (nutrition, sports and exercise, sanitation, and hygiene), environment protection, and climate change and disaster risks management. With the new Environment Act of 2021 focusing on 5 areas, including climate change and environmental data and spatial planning, further progress may be achieved provided that regulations, including effective and efficient enforcement and implementation, are put in place in a timely manner.

11. Labor mobility is one of the climate adaptation areas under the government focus. The risks of permanent inundation is recognized as a key long-term challenge by the Government of Kiribati (GoK, 2014). The 2015 Kiribati Household Survey revealed that 94 percent of households had been impacted by natural hazards within the 10 years preceding the survey, 75 percent of households saw the need of migration for one or more family members if sea levels continued to rise, and climate change was the second main reason of migration after work (Voigt-Graf and Kagan, 2017).4 Migration from outer islands to Tarawa, partially due to climate impact and poor infrastructure, results in high population density and unemployment in the main island. As such, labor migration serves as an important strategy for temporary migration and job creation in response to both rapidly growing population and climate change threats to livelihoods and job security at home while also help generate remittances. Efforts have been made to increase the number and size of labor schemes, mainly with New Zealand and Australia (text chart).5 If carefully designed to prevent brain-drain impact of skilled workers, these policies could be beneficial by reducing unemployment and providing I-Kiribati with better opportunities abroad.

uA001fig01

Number of Oversea Workers

(Persons)

Citation: IMF Staff Country Reports 2023, 226; 10.5089/9798400247606.002.A001

Source: Kiribati Ministry of Employment and Human Resources.Note: Pacific Labor Scheme (PLS) and Seasonal Worker Program (SWP) are with Australia; Recognized Seasonal Employer (RSE) and Sealord are with New Zealand.

12. The country also works on environmental data to improve climate forecasts. Access to credible and up-to-date environmental data is often very limited in Kiribati, creating sustaintial data gap and making it challenging to forecast climate change and its impacts as well as to build relevant long-term planning in response to the climate change. Efforts have been proposed to ensure that the entire pacific region gets access to improved information systems and infrastructure that can be used to more accurately predict the occurrence and severity of natural disasters, such as tropical cyclones. One such project is the Climate Information and Early Warning Systems, One Pacific Programme, submitted as a concept note in December 2021 at the Green Climate Fund by the Secretariat of the Pacific Regional Environment Program. This is a concerted effort across 14 Pacific SIDS, including Kiribati, to gather and apply critical hydrologic and meteorological information. The objective is to provide reliable, trusted early warnings about climate change hazards and technical advice that will allow local, vulnerable communities to plan for and undertake effective adaptation interventions (GCF, 2021).

13. Climate change will keep posing challenges and require further efforts from Kiribati. World Bank (2017) estimated that adaptation costs exclusively for coastal protection in Kiribati—protecting the low-lying atolls from rising sea level through sea dike construction and port upgrade—could reach US$54 million (equivalent to 11 percent of GDP per year) in the 2040s.6 Additionally, Dabla-Norris et al. (2021) uses a model-based estimation to show that Kiribati would need to invest more than 25 percent of its GDP annually to upgrade and retrofit its infrastructure with the objective to contain annual expected losses to below 1 percent of GDP, a higher number than other Pacific Islands countries (Figure 2). These estimates give a sense of the scale of the challenge in terms of financing these climate investments.7 Thus, while it is important that the government secure enough financing resources for climate adaptation, which is highly relevant for achieving a greener post-COVID recovery, Kiribati needs to adopt a strategic approach in incorporating adaptation costs in its medium- and long-term fiscal planning by first ensuring fiscal space from general budget, along with continuing seeking support from development partners for stronger institutional and financial capacity.

Figure 2.
Figure 2.

Kiribati: Estimated Annual Climate Adaptation Costs

(In percent of GDP)

Citation: IMF Staff Country Reports 2023, 226; 10.5089/9798400247606.002.A001

Sources: Dabla-Norris et al. (2021); and IMF staff calculations.Notes: Bars correspond to the sum of upgrading and retrofitting costs in the public sector and coastal protection costs. The level of protection being costed corresponds to the protection that keeps average annual losses below 0.01 percent of local GDP for protected areas. DAta labels in the figure use International Organizarion for Standardization (ISO) country codes.*Missing values in the private sector for Papua New Guinea.

C. Mitigation

14. Although being one of the smallest emitters in the world, Kiribati pledged ambitious reductions of greenhouse gas (GHG) emissions in the Nationally Determined Contributions of the Paris Agreement. The country currently emits about 79 kilotons of CO2 per year, or 0.68 tons per capita, which is a marked increase from 0.32 tons of CO2 in 1990, but still very low (WRI, 2021). Nonetheless, under the principle of common but differentiated responsibilities, all countries are expected to contribute to the global efforts to mitigate climate change in accordance with their capacity. Indeed, Kiribati has committed to reducing emissions by 8.0 percent by 2030 compared to a business-as-usual (BAU) projection (Republic of Kiribati, 2022). On the condition of receiving international support, the commitment becomes significantly more ambitions, up to a reduction of 23.8 percent against the 2030 BAU projection.

15. Introducing renewable energy is one of the most effective ways to achieve emissions reductions for Kiribati. Solar panels were first installed since 1990s. However, development stagnated due to high cost of maintenance—only 0.35 percent of total power generation nationwide in 2017 was from solar energy (GoK, 2021). In its Development Plan 2020–2023, the government embraces an ambitious goal of being a “100-percent solar-powered country by 2036” by developing a centralization of solar power system, both in outer islands and in South Tarawa.

The outer islands have no on-grid power systems, except for Kiritimati islands. The main power supply is from private diesel generators. Since early 1990s, Kiribati has developed solar energy with the installation of off-grid solar panels in the outer islands, which was then enhanced in 2005 under funding from development partners such as European Union and Taiwan Province of China. This led to significant results. In 2019, over 70 percent of households in Central Gilbert relied on solar panel electricity for lightning (KNSO, 2021). The numbers were also high for other groups of outer islands: Southern Gilbert, 49 percent; Line and Phoenix Islands, 35 percent; and Northern Gilbert, 15 percent.8 In 2021, the Promoting Outer Island Development through the Integrated Energy Roadmap (POIDIER), a climate mitigation project funded by the Global Environment Facility (GEF) trust fund, was launched to enhance renewable energy and energy efficiency targets in outer islands. When completed, the project is anticipated to install and distribute “high-quality solar grid system at globally competitive costs” for the outer islands, as well as creating a demo of electricity revenue and billing system to facilitate financial sustainability and secure maintenance cost (MISE, 2021).

South Tarawa: Electricity in the capital South Tarawa is produced using diesel generators and transmitted to the main grid for consumption. In 2019, 88 percent of household in South Tarawa used on-grid electricity, while the use of electricity from solar panel was only 2 percent (KNSO, 2021). Accordingly, about 50 percent of the country’s total imported fuel in 2019 was used for the main-grid power generation (GoK, 2021). The Kiribati Grid Connected Solar Photovoltaic (PV) Project started in 2012, with the help of grants from the GEF and Australian government, had jumpstarted the power system and increased the share of renewable energy in the main grid to 9 percent when the project finished in 2018. Another on-going project—the South Tarawa Renewable Energy Project (STREP), funded by the Asian Development Bank (ADB), Strategic Climate Fund, and Government of New Zealand—is expected to further increase the share to 44 percent in 2024 after completion.

16. Besides renewable energy, other non-price-based instruments can be deployed for climate mitigation. In general, instruments that have been applied in other countries include CO2 intensity standards set for industries, fuel economy requirements such as CO2 per kilometer, or emissions targets for new buildings. The Kiribati NDC Investment Plan 2021 have identified two primary mitigation options in transport and energy efficiency sectors. This is expected to be done by promoting bicycle and electric vehicle initiatives, introducing low carbon mini-container and cargo ship, and increase capacity in design and construct low energy buildings through thermal insulation retrofits. In addition, while Kiribati does not have any specific emission target for buildings, it is constructing a “climate resilient and low carbon water supply infrastructure”—a water desalination plan transforming sea water to fresh water enough for the need of at least 95 percent of South Tarawa’s population. The energy consumption of this building will be self-supplied from a newly installed 2,500-kilowatt solar photovoltaic system.

17. Once renewable energy is installed and made available to firms and households, Kiribati’s mitigation efforts could be strengthened through a carbon tax. A carbon tax is a fee imposed on the burning of fossil fuels (e.g., natural gas, coal, oil) based on how much carbon dioxide or carbon dioxide equivalent of gas is released into the atmosphere from each fuel. It is easy to administer because it can be collected “upstream,” at the point of extraction or, in the case of Kiribati, at the point of importation into the country. The carbon tax would then be passed along the supply chain so that firms and households internalize the cost that burning fossil fuels has for the environment, incentivizing the shift to a low-carbon economy. Crucially, for it to achieve the intended goal of reducing emissions, alternatives to fossil fuel burning must be available to firms and households, which is why this tool should be considered for future use.

18. A carbon tax of US$25 per ton would increase prices of energy goods and indirectly raise the price of other goods (Figure 3). Parry et al. (2021) advise a carbon tax of $25 per ton for low-income emerging market economies as part of an international carbon price floor. In this case, the price of gasoline and electricity would increase by 9.7 and 8.6 percent, respectively. And the price of liquefied petroleum gas (LPG) would rise by 7.3 percent. Other carbon-intensive goods, such as transit, would also become more expensive as the higher price of energy goods is passed through the supply chain.

19. The burden of the carbon tax would fall mostly on the richest households as energy goods are disproportionately consumed by households in the richest quintiles. On average, households in the richest quintile spend 6 times more on electricity and 2.5 times more on gasoline than households in the poorest quintile (in percent of household consumption). Thus, the carbon tax would imply a loss equivalent to 1.7 percent of household initial consumption for the richest quintile, but of only 1.1 percent for the poorest quintile (Figure 4). The loss of labor income for workers in the energy sector would similarly be shouldered mostly by the richest, but this loss would be small due to the lack of extractive activities in Kiribati.

Figure 3.
Figure 3.

Kiribati: Price Increases Due to a Carbon Tax of $25 per Ton

(In percent)

Citation: IMF Staff Country Reports 2023, 226; 10.5089/9798400247606.002.A001

Source: IMF staff estimates based on 2006 Household Income and Expenditure Survey and the IMF’s Carbon Pricing Assessment Tool.Note: See Alonso and Kilpatrick (2022) for further detail.
Figure 4.
Figure 4.

Kiribati: Burden of Higher Prices by Quintile for a Carbon Tax of $20 per Ton

(In percent of household initial consumption)

Citation: IMF Staff Country Reports 2023, 226; 10.5089/9798400247606.002.A001

Source: IMF staff estimates based on 2006 Household Income and Expenditure Survey and the IMF’s Carbon Pricing Assessment Tool.Note: See Alonso and Kilpatrick (2022) for further detail.

20. Resources raised by the carbon tax would be about 0.35 percent of GDP. These resources could be partly used to protect the most vulnerable from the increase in prices. For example, using proxy-means testing to target a uniform cash transfer to the poorest two quintiles would cost only a fifth of the resources raised by the carbon tax and ensure that this group is no worse off on average. This would leave the authorities with significant resources to finance investments in education and health needed to achieve the 2030 Sustainable Development Goals (IMF, 2021) and to continue adapting to climate change by building resilient infrastructure. These investments would not only increase productivity but deliver sustainable and inclusive growth.

D. Climate Finance

21. Given Kiribati’s limited ability to internally generate resources for long-term climate change mitigation and adaptation investments, leveraging climate finance is critical. As discussed in previous sections of the note, the scale of the financing required for climate investments is very large and may exceed 11 percent of GDP annually in 2040. Fouad et al. (2021) detail how the Government of Kiribati (GoK) may access funding for climate projects, including through bilateral donations from foreign governments, multilateral development banks (MDBs), and climate funds (CFs). The latter two often involve a CF (such as the Green Climate Fund, GCF, or the Adaptation Fund, AF) partnering with an Accredited Entity (AE). AEs may be either MDBs such as the Asian Development Bank (ADB) and the World Bank (WB), or regional institutions such as the Secretariat of the Pacific Regional Environment Programme (SPREP) and Pacific Islands Forum Secretariat (PIFS).

22. Approved funding for climate projects has only covered a small fraction of the total estimated investment needs, with actual disbursements at significantly lower levels. In 2016, the GoK established the Climate Finance Division within the Ministry of Finance and Economic Development, with the aim to build the necessary infrastructure to access climate funds. The Ministry of Finance and Economic Development has been designated as the national entity managing the climate projects to be co-funded with the help of international AEs and CFs.9 As shown in Figure 5, the gap between approved and disbursed GCF funding for Kiribati is wide and in line with that experienced by other Pacific island countries (PICs).

Figure 5.
Figure 5.

Kiribati: Funding Approved and Disbursed by the GCF as of May 2021

(In USD million)

Citation: IMF Staff Country Reports 2023, 226; 10.5089/9798400247606.002.A001

Sources: Green Climate Fund; OECD Climate-related Development Finance Database; and IMF staff calculations.

23. The main challenges in access to CFs are the procedures required to secure and disburse climate funding. The process of obtaining Direct Access (DA) status, which helps directly assessing climate fundings, requires fulfilling hundreds of criteria on Fiduciary Standards, Transparency and Accountability, compliance with Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) requirements, Environmental and Social Safeguards (ESS) and Gender Policy issues. These stringent requirements on Public Financial Management (PFM) and Public Investment Management (PIM), can make it overwhelmingly complicated and time-consuming for PICs, including Kiribati, to obtain direct access status at any of the largest CFs (Dabla-Norris et al., 2021). Moreover, the experience of peer nations in the PIC group shows that the effort may not be reflected in expanded funding access.10 In addition, even if the status was granted, each project would need significant background work to ensure, among other things, that proper cost-benefit analysis is undertaken, and progress measured using quantitative indicators. This may entail significant ongoing expenses to ensure that projects are indeed brought to fruition. While helpful to ensure the effective use of funds, the stringent criteria and requirements required by CFs might have adverse effect due to high compliance cost, especially for countries with relatively severe institutional and human resource capacity constraints like Kiribati, and should be streamlined (Dabla-Norris et al., 2021).

24. In the short-term, GoK should seek to obtain funding either through bilateral or AE financing. Kiribati should take a strategic, comprehensive, and coordinated view of how best to direct climate proposals to bilateral or multilateral sources. Specifically for multilateral sources, while MDBs are under a lot of pressure to coordinate climate projects, they are better equipped to navigate the complex requirements of CFs to ensure a higher likelihood that large climate projects are approved for financing and successfully implemented. Experience of PICs suggests that regional institutions are relatively more successful at obtaining funding for projects of smaller size and scope. The experience garnered by working with bilateral donors and AEs could serve as the steppingstone for future efforts to gain direct access status at CFs.

25. In fact, Kiribati has been following this strategy and effectively leveraging on bilateral support and AEs for climate funding. Kiribati has been receiving external grants from bilateral donors, especially from Australia, the EU, Japan, and New Zealand, for its infrastructure projects. It also receives funding support from MDBs, with the ADB and the WB the two largest donors. The South Tarawa Water Supply Project is the example of a multilateral-funded project approved in the last few years with contributions from the GCF.11 This medium-scale project is based on a three-way arrangement between the ADB’s Asian Development Fund acting as the AE, the WB, and the GCF. The first disbursement occurred in February 2021, and the project has faced some delays because of the COVID-19 pandemic and the border closures. Delays in disbursements from the GCF seem to continue as of the first quarter of 2023, and the GoK should continue its close cooperation with the partners to ensure the project is implemented.

26. Going forward, embedding climate projects in a coherent national strategy, improving capacity, and coordinating with other PICs is important to unlock climate financing. In the medium to long term, a national strategy on climate would benefit Kiribati by reducing the time needed to produce concept notes for submission at AEs, and by clarifying the roles and responsibilities of all branches of governments. This should streamline decision making within GoK and reduce the time between inception and implementation of climate projects. PFM/PIM capacity building is an area where all PICs struggle, and the IMF has been actively aiding these efforts especially through its Pacific Financial Technical Assistance Center (PFTAC). Refocusing these efforts in the areas targeted by CFs’ PFM requirements, such as audit and control frameworks, may be a good way to ensure better climate finance access for Kiribati in the medium term. Finally, Kiribati may benefit from expanded collaboration with other PICs in the fora of SPREP and PIFS, with a view to coordinate efforts with nations that face similar challenges in terms of climate adaptation and mitigation needs and possibly gain from economies of scale in the preparation of concept notes and applications.

E. Conclusion

27. Kiribati is among the nations most exposed to the risks posed by a changing climate. Climate change may lead to new and intensified natural hazards, even though significant uncertainty remains in model-based projections of risk and localized effects from climate change are hard to predict with confidence. Sea level rise has impacted Kiribati islands through territory loss and forced relocation and is predicted to further endanger communities scattered across the atolls. Crucial natural resources such as fisheries and freshwater lenses, on which Kiribati is heavily dependent, are also endangered directly by climate change.

28. Adaptation and mitigation projects are crucial to protect and increase the resilience of the economy of Kiribati. Adaptation efforts have been undertaken for decades but will have to be scaled up to ensure viability of public infrastructure and protection of natural resources. Despite contributing almost nothing to global greenhouse gas emissions, Kiribati has made ambitious pledges to decarbonize its economy. Measures like solar panels installation, environmental standards, and regulatory requirements, and possibly carbon taxes are instruments that could be considered to implement these plans.

29. Leveraging climate finance effectively is critical to ensure Kiribati implements climate projects. Given the size of its economy and the scale of the challenge, Kiribati needs external support to finance mitigation and adaptation investments. To date, approved bilateral and multilateral funds have covered a small fraction of the total estimated investment needs, with actual disbursements at significantly lower levels. In the short-term, the GoK should seek to obtain funding either through bilateral or multilateral donors. In the medium to long term, the GoK should embed climate projects in a coherent national strategy, continue improving PFM/PIM capacity, and coordinate with other PICs to undertake joint regional projects.

30. Above all, international cooperation is crucial to help Kiribati overcome climate threats. The impact of climate change is far beyond the ability of any countries to cope with it alone, not to mention small atoll islands like Kiribati. The Paris Agreement needs to be fully implemented as soon as possible to mitigate climate risks globally. In parallel, Kiribati is also in need of international cooperation for financial support to fund climate adaptation and mitigation activities. To make progress in this direction, CFs should consider streamlining accreditation requirements given their high compliance cost for countries (especially small and fragile countries) and prioritize requirements in areas where strong capacity will significantly strengthen financial safeguards (Dabla-Norris et al., 2021).

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1

Prepared by Michele Fornino (STA), Anh Thi Ngoc Nguyen (APD), Cristian Alonso, and Joel Kilpatrick (both FAD). The note benefitted from inputs and discussions with Natalija Novta (APD).

2

While there may be an increased presence of tuna in Kiribati according to some projections (Pacific Community, 2018, and Brouwer et al., 2019), there is still uncertainty regarding tuna stock displacement due to climate change.

3

Mangroves, along with seagrass, can also help mitigate part of the greenhouse gas emissions as they serve as a carbon sink.

4

The survey also revealed that 9 percent of people reported to have attempted to migrate but failed, and only 1.3 percent of people had migrated for more than 3 months in the past 10 years.

5

The Government of New Zealand has recently raised the cap on their Recognized Seasonal Employer (RSE) scheme by about 3,000 workers for the 2022/23 season for all Pacific Islands, a significant increase from the 16,000 workers in the previous year. Kiribati also has the Pacific Access Category, a permanent visa scheme with New Zealand with an annual cap of 75 slots. In October 2022, the Government of Australia launched the Pacific Engagement Visa to provide permanent migration to allow up to 3,000 individuals from Pacific countries to Australia. The Pacific Australia Labor Mobility (PALM) scheme is also being reformed and will subsume pre-existing visa schemes.

6

According to DGIZ et al. (2020), Kiribati accessed about AU$76.5 million of external funding during 2011–2018, of which 46.4 percent was used for climate adaptation. This was equivalent to an annual average of 1.69 percent of 2018 GDP.

7

A full assessment of the environmental impact, maintenance, and sustainability of these infrastructures in the long term, which are yet to be included in these estimates, will further raise costs.

8

The lower shares of solar electricity in Phoenix Islands and Northern Gilbert islands reflect their ability to access to on-grid electricity in Kiritimati Islands and South Tarawa, respectively.

9

According to the website of the KCFD, the MFED is the National Designated Authority (NDA) to the Green Climate Fund (GCF), the Focal Point to the Climate Investment Funds (CIF), the Designated Authority to the Adaptation Fund (AF), and more recently the Operational Focal Point for the Global Environmental Facility (GEF).

10

An example is the recent experience of the Fiji Development Bank, which obtained DA at the GCF in 2017 for projects up to US$10 million, and of the Cook Islands Ministry of Finance and Economic Management, which obtained DA at the GCF in 2018 for projects up to US$50 million. As of end-May 2021, only one project of the Fiji Development Bank has been approved, but no disbursements have been made. For more details, see the discussion in Dabla-Norris et al. (2021).

11

The focus of this project is both on adaptation and on mitigation, with a view to provide inhabitants of Tarawa with safe and clean drinking water by means of desalination and by powering the plant with solar panels. This infrastructure will not only enhance the resilience of Kiribati to climate-change induced depletion of its underground water resources, but also lower carbon emissions because residents will no longer have to boil water to make it potable.

Kiribati: Selected Issues
Author: International Monetary Fund. Asia and Pacific Dept