The Maldives, with an economy deeply rooted in tourism and fisheries, faces significant threats from climate change. These two sectors alone account for nearly half of the nation's GDP and employment. Climate change impacts on coral reefs and fisheries are already evident and are projected to worsen dramatically by mid-century under both high and moderate emission scenarios. This environmental degradation poses severe risks to the Maldives' economy and, ecosystems. To address these challenges, the Maldives will need an estimated $2 to $4 billion for climate adaptation to combat rising sea levels and associated flooding alone. Policy reforms to ensure macroeconomic stability, creating fiscal space, and leveraging concessional financing, as well as the development of carbon markets and the expansion of public-private partnerships are crucial for funding these investments. The World Bank’s Country Climate and Development Report (CCDR) offers a comprehensive analysis of these issues, providing essential recommendations to help the Maldives achieve climate resilience and green transitions. This report is a vital resource for understanding the intersection of climate challenges and economic vulnerabilities and can help guide the nation towards a sustainable future.
Click here to download the Maldives Country Climate and Development Report
KEY FINDINGS:
- Economic Reliance on Natural Capital: Tourism and fisheries, which account for about half of the GDP and jobs, rely on the country’s natural capital that is under threat from climate change impacts.
- Rising Public Debt: High infrastructure spending has increased public debt to 123% of GDP in 2023, limiting the ability to finance critical climate and strategic investments.
- Sea-Level Rise: Projections indicate a rise of 0.5 to 0.9 meters by 2100, potentially damaging up to 3.3% of the Maldives’ total assets during 10-year floods, resulting in damages of US$0.7-1.1 billion of GDP.
- Coral Reef Degradation: Nearly all shallow coral cover could be lost if global temperatures exceed 2°C, threatening essential ecosystem services and the tourism sector.
- Future Climate Impacts: Severe impacts are expected to escalate by mid-century, emphasizing the need for global emission reductions and immediate domestic planning and adaptive capacity building.
KEY RECOMMENDATIONS
The recommendations, summarized below, aim to provide a roadmap for the Maldives to navigate towards a more sustainable and resilient future.
- Fiscal and External Buffers: Remove blanket subsidies, provide targeted cash transfers, streamline public infrastructure investments, and improve healthcare spending efficiency, to create the fiscal space needed for addressing the climate challenge.
- Climate Finance Mobilization: Operationalize the Climate Finance Hub, develop a climate investment plan, and create a national carbon market strategy.
- Island and Infrastructure Resilience: Integrate sea-level rise, flooding, and ocean heating scenarios into island-specific development and adaption planning.
- Ecosystem Resilience: Develop a coral management and investment plan, strengthen institutions like the Maldives Marine Research Institute , and expand Marine Protected Areas . Reduce additional stressors, such as pollution and coastal development (especially during coral spawning periods).
- Livelihood Resilience: Research fish migration impacts, diversify into mariculture, and strengthen regulations for climate-resilient infrastructure in tourism.
- Green Transitions: Phase out fossil fuel subsidies, mandate renewable energy use targets in resorts, and promote green mobility.
Maldives is at a critical juncture where the impacts of climate change and ongoing economic challenges converge. The Maldives Country Climate Development Report outlines a pathway for the country to not only safeguard its natural assets, but also to build a more resilient and sustainable economy. The World Bank stands ready to support the Maldives on its journey to green and climate resilient growth.
GOVERNMENT AND POLICY FRAMEWORK
- Comprehensive Policy Framework: Policy implementation needs improvement through better inter-agency coordination, actionable translation, and commitment tracking.
- Green Transition Benefits: Switching to solar and other forms of renewable energy could save on fuel imports and facilitate investments in climate resilience.
SOCIAL PROTECTION AND SKILLS DEVELOPMENT
- Enhancing Resilience: Adaptive, scalable, and targeted social protection programs are needed, along with skill development and unemployment insurance to mitigate risks from green transition policies and increasing climate change impacts.
FINANCING CLIMATE ACTION
- Restoring Fiscal Space: Major policy reforms are needed, including expenditure adjustments and revenue-side measures like increasing the Green Tax.
- Access to Finance: New sources of concessional funds, carbon markets, and public-private partnerships should be explored.
The CCDR presents 24 recommendations structured along six high-level objectives to advance socio-economic development while building climate resilience. These include improving macroeconomic stability, mobilizing climate finance, enhancing the resilience of islands, ecosystems, and livelihoods, and unlocking development benefits from green transitions in key sectors.
Explore the full report to understand the comprehensive strategies and actions needed to safeguard the Maldives' future in the face of climate change.
Last Updated: Sep 17, 2024
CONTACTS
Martin Heger
Senior Environmental Economist | mheger1@worldbank.org
Erdem Atas
Country Economist and Resident Coordinator | eatas@worldbank.org
Sebastian Forsch
Disaster Risk Management Specialist | sforsch@worldbank.org
Buddhi Feelixge
External Affairs Officer | bfeelixge@worldbankgroup.org