Enhancing Resilience to Climate Change in the Maldives

The main finding of this research is that there is a significant dividend associated with building resilient infrastructure

Abstract

The increased likelihood of adverse climate-change-related shocks calls for building resilient infrastructure in the Maldives. Fulfilling these infrastructure needs requires a comprehensive analysis of investment plans, including with respect to their degree of climate resilience, their impact on future economic prospects, and their funding costs and sources. This paper analyzes these challenges, through calibrating a general equilibrium model. The main finding is that there is a significant dividend associated with building resilient infrastructure. Under worsened climate conditions, the cumulative output gain from investing in more resilient technologies increases up to a factor of two. However, given the Maldives’ limited fiscal space, particularly after COVID-19, the international community should also step up cooperation efforts. We also show that it is financially convenient for donors to help build resilience prior to the occurrence of a natural disasters rather than helping finance the reconstruction ex-post.

This work is part of the ‘Macroeconomics in Low-income countries’ programme

Citation

Giovanni Melina and Marika Santoro (2021) Enhancing Resilience to Climate Change in the Maldives. IMF Working Paper No. 2021/096

Enhancing Resilience to Climate Change in the Maldives

Updates to this page

Published 23 April 2021