Enhancing Resilience to Climate Change in the Maldives

Giovanni Melina and Marika Santoro

No 2021/096, IMF Working Papers from International Monetary Fund

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.

Keywords: IMF working paper Asia-Pacific; climate condition; climate resilience; adaptation infrastructure; disaster shock; Infrastructure; Natural disasters; Public investment spending; Private investment; South Asia (search for similar items in EconPapers)
Pages: 21
Date: 2021-04-23
New Economics Papers: this item is included in nep-env
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