Fiji, a small island developing state (SIDS) in the South Pacific Ocean, contributes a mere 0.004% of the world’s total emissions, yet it faces immediate and existential threats from climate change impacts. Without significant climate action, sea level rise will inundate 4.5% of existing buildings in the country by 2050,rising to 6.2% by 2100 (Government of Fiji, 2023). Fiji’s high vulnerability to climate change impacts poses significant economic, social, and environmental challenges.
To adequately address these challenges, Fiji must mobilise financing to fund its efforts towards mitigation, adaptation, and responding to loss and damage. This article explores Fiji’s multi-faceted approach to securing climate finance to build its resilience and ensure a sustainable future while managing its sovereign debt. It is based on our country case study “The Nexus of Climate Change, Sovereign Debt, and Climate Finance in Fiji,” which provides a more in-depth analysis and can be accessed here.
Fiji is significantly threatened by sea level rise, shifting climate patterns, and increasingly more frequent and intense extreme weather events like cyclones. The economic losses resulting from these climate change impacts are substantial, affecting infrastructures, homes, and critical services. The non-economic losses, such as loss of cultural heritage, social cohesion, and mental health, are equally significant.
Given Fiji’s unique vulnerability to climate change impacts, there is a national understanding that addressing the climate crisis is a top national priority. However, climate action requires substantial funding. Between 2016 and 2019, Fiji’s identified climate finance needs were estimated to be FJD 3.28 billion per year. During the same period, Fiji was allocated around an annual FJD 1.94 billion, but yearly spending only amounted to FJD 781 million. These figures are both well below the required financial needs, highlighting the huge gap between funding commitments and actual financial flows, limiting the nation’s ability to effectively implement climate action.
In addition to limited availability, the majority of climate finance is provided in the form of loans that require borrowers to pay interest repayments. Countries like Fiji often lack the financial resources to face climate-related events and disasters, consequently, they are sometimes forced to take out loans, adding to existing debt distress. In 2023, Fiji’s total national debt grew to around FJD 9.7 billion, equaling 83% of the country's gross domestic product that year.
For Fiji, climate finance is both a lifeline and a challenge; however, due to its debt burden, its fiscal policy to invest in crucial climate action is extremely constrained. This begs the question of how a small island nation like Fiji can fund its mitigation, adaptation, and disaster recovery efforts without increasing its debt distress.
Recognising the existential threats of climate change impacts to its economy and society, Fiji has been proactively exploring holistic pathways to addressing this global crisis, most notably by establishing robust regulatory and legal frameworks and developing innovative financial instruments and mechanisms.
Fiji has consistently promoted strong frameworks of climate policies, strategies, and action plans as a response to the climate crisis. For instance, Fiji’s Climate Change Act, one of the most comprehensive climate legislation globally, sets forth long-term commitments towards achieving net-zero emissions, establishes carbon budgets, and prompts carbon market development.
On adaptation and resilience, Fiji developed the National Adaptation Framework and the National Adaptation Plan (NAP), which provide a strategic road-map for integrating climate change adaptation across sectors and guiding specific interventions to strengthen the country’s resilience to the impacts of climate change.
Furthermore, the country developed policies and action plans to address the issue of relocating communities displaced by climate impacts, including the Planned Relocation Guidelines (PRG) and the Climate Relocation of Communities (CROC) Act. These policy and regulatory frameworks ensure that Fiji has the institutional arrangements to coordinate national efforts to enhance climate resilience.
As previously described, Fiji faces the impossible task of securing the necessary resources to finance its climate initiatives without increasing its debt burden. To address these issues, Fiji has explored innovative financial mechanisms, such as issuing sovereign green and blue bonds and carbon credits. The bonds have funded projects that strengthen rural water supply, rebuild cyclone-resilient schools, coral reef restoration, and mangrove reforestation, to name a few. Although these financial instruments required borrowing, Fiji put in place debt management strategies, including prioritising concessional financing, to ensure new borrowing remained within sustainable limits.
In addition to issuing bonds, Fiji also implemented climate and disaster risk financing instruments, such as parametric insurance, to enhance its national capacity to recover from climate shocks. Climate and disaster risk insurance, like parametric insurance, is developed to provide rapid relief to communities affected by natural disasters such as cyclones and floods. In other words, they provide immediate liquidity following a disaster, thus reducing the need for additional borrowing.
To conclude, recognising its vulnerability to climate change, Fiji proactively explores holistic ways to mobilise financial resources to fund its national resilience-building efforts. Fiji’s approach is multifaceted and innovative.
This article highlighted two main approaches: using innovative financial instruments and mechanisms and integrating robust regulatory frameworks. Financial instruments such as green and blue bonds and risk insurance enable Fiji to fund climate projects and ensure timely disaster response and recovery. Coupling these instruments with debt management strategies allows Fiji to manage its debt while building climate resilience.
Fiji is also a pioneer in establishing regulatory frameworks that integrate mitigation and adaptation into national development plans. Fiji’s exemplary efforts to fight climate change not only enhance the country’s resilience but also contribute to global efforts to address the climate crisis.
As part of SLYCAN Trust’s series of thematic modules on climate change, sovereign debt, and the global financial system, this case study provides insights into the implications of the nexus for action at the national level, as well as strategies and solutions towards addressing key challenges. The full case study was drafted by Gabriel S. J.Mara with support from SLYCAN Trust’s research & knowledge management division.
SLYCAN Trust is a non-profit think tank. It has been a registered legal entity in the form of a trust since 2016, and a guarantee limited company since 2019. The entities focus on the thematic areas of climate change, adaptation and resilience, sustainable development, environmental conservation and restoration, social justice, and animal welfare. SLYCAN Trust’s activities include legal and policy research, education and awareness creation, capacity building and training, and implementation of ground level action. SLYCAN Trust aims to facilitate and contribute to multi-stakeholder driven, inclusive and participatory actions for a sustainable and resilient future for all.
Fiji, a small island developing state (SIDS) in the South Pacific Ocean, contributes a mere 0.004% of the world’s total emissions, yet it faces immediate and existential threats from climate change impacts. Without significant climate action, sea level rise will inundate 4.5% of existing buildings in the country by 2050,rising to 6.2% by 2100 (Government of Fiji, 2023). Fiji’s high vulnerability to climate change impacts poses significant economic, social, and environmental challenges.
To adequately address these challenges, Fiji must mobilise financing to fund its efforts towards mitigation, adaptation, and responding to loss and damage. This article explores Fiji’s multi-faceted approach to securing climate finance to build its resilience and ensure a sustainable future while managing its sovereign debt. It is based on our country case study “The Nexus of Climate Change, Sovereign Debt, and Climate Finance in Fiji,” which provides a more in-depth analysis and can be accessed here.
Fiji is significantly threatened by sea level rise, shifting climate patterns, and increasingly more frequent and intense extreme weather events like cyclones. The economic losses resulting from these climate change impacts are substantial, affecting infrastructures, homes, and critical services. The non-economic losses, such as loss of cultural heritage, social cohesion, and mental health, are equally significant.
Given Fiji’s unique vulnerability to climate change impacts, there is a national understanding that addressing the climate crisis is a top national priority. However, climate action requires substantial funding. Between 2016 and 2019, Fiji’s identified climate finance needs were estimated to be FJD 3.28 billion per year. During the same period, Fiji was allocated around an annual FJD 1.94 billion, but yearly spending only amounted to FJD 781 million. These figures are both well below the required financial needs, highlighting the huge gap between funding commitments and actual financial flows, limiting the nation’s ability to effectively implement climate action.
In addition to limited availability, the majority of climate finance is provided in the form of loans that require borrowers to pay interest repayments. Countries like Fiji often lack the financial resources to face climate-related events and disasters, consequently, they are sometimes forced to take out loans, adding to existing debt distress. In 2023, Fiji’s total national debt grew to around FJD 9.7 billion, equaling 83% of the country's gross domestic product that year.
For Fiji, climate finance is both a lifeline and a challenge; however, due to its debt burden, its fiscal policy to invest in crucial climate action is extremely constrained. This begs the question of how a small island nation like Fiji can fund its mitigation, adaptation, and disaster recovery efforts without increasing its debt distress.
Recognising the existential threats of climate change impacts to its economy and society, Fiji has been proactively exploring holistic pathways to addressing this global crisis, most notably by establishing robust regulatory and legal frameworks and developing innovative financial instruments and mechanisms.
Fiji has consistently promoted strong frameworks of climate policies, strategies, and action plans as a response to the climate crisis. For instance, Fiji’s Climate Change Act, one of the most comprehensive climate legislation globally, sets forth long-term commitments towards achieving net-zero emissions, establishes carbon budgets, and prompts carbon market development.
On adaptation and resilience, Fiji developed the National Adaptation Framework and the National Adaptation Plan (NAP), which provide a strategic road-map for integrating climate change adaptation across sectors and guiding specific interventions to strengthen the country’s resilience to the impacts of climate change.
Furthermore, the country developed policies and action plans to address the issue of relocating communities displaced by climate impacts, including the Planned Relocation Guidelines (PRG) and the Climate Relocation of Communities (CROC) Act. These policy and regulatory frameworks ensure that Fiji has the institutional arrangements to coordinate national efforts to enhance climate resilience.
As previously described, Fiji faces the impossible task of securing the necessary resources to finance its climate initiatives without increasing its debt burden. To address these issues, Fiji has explored innovative financial mechanisms, such as issuing sovereign green and blue bonds and carbon credits. The bonds have funded projects that strengthen rural water supply, rebuild cyclone-resilient schools, coral reef restoration, and mangrove reforestation, to name a few. Although these financial instruments required borrowing, Fiji put in place debt management strategies, including prioritising concessional financing, to ensure new borrowing remained within sustainable limits.
In addition to issuing bonds, Fiji also implemented climate and disaster risk financing instruments, such as parametric insurance, to enhance its national capacity to recover from climate shocks. Climate and disaster risk insurance, like parametric insurance, is developed to provide rapid relief to communities affected by natural disasters such as cyclones and floods. In other words, they provide immediate liquidity following a disaster, thus reducing the need for additional borrowing.
To conclude, recognising its vulnerability to climate change, Fiji proactively explores holistic ways to mobilise financial resources to fund its national resilience-building efforts. Fiji’s approach is multifaceted and innovative.
This article highlighted two main approaches: using innovative financial instruments and mechanisms and integrating robust regulatory frameworks. Financial instruments such as green and blue bonds and risk insurance enable Fiji to fund climate projects and ensure timely disaster response and recovery. Coupling these instruments with debt management strategies allows Fiji to manage its debt while building climate resilience.
Fiji is also a pioneer in establishing regulatory frameworks that integrate mitigation and adaptation into national development plans. Fiji’s exemplary efforts to fight climate change not only enhance the country’s resilience but also contribute to global efforts to address the climate crisis.
As part of SLYCAN Trust’s series of thematic modules on climate change, sovereign debt, and the global financial system, this case study provides insights into the implications of the nexus for action at the national level, as well as strategies and solutions towards addressing key challenges. The full case study was drafted by Gabriel S. J.Mara with support from SLYCAN Trust’s research & knowledge management division.
