MALE', February 26, 2024 – A new World Bank report emphasizes key recommendations for Maldives to safeguard its natural capital, which is the foundation of its economy. The Country Environmental Analysis (CEA) evaluates the environmental and climate challenges that hinder the Maldives' development and offers a comprehensive set of recommendations for a sustainable and resilient future.
The Maldivian economy and job market are heavily dependent on the tourism and fisheries sectors, which constitute together about 50 percent of GDP and employment. Both sectors critically rely on natural capital such as marine, coral reef and coastal ecosystems. Coral reefs are also critical for climate resilience, and their deterioration would lead to significant annual flood damage costing approximately 8 percent of Maldives’ GDP.
"The Maldives is a country highly dependent on natural capital, yet our economic development strategies have been undervaluing our marine and coastal ecosystems. That said, a paradigm shift is in motion towards a sustainable Blue Economy through efforts to incorporate nature-based solutions for coastal protection, strengthen waste management, increase the coverage of protected areas, and advance data generation, monitoring, and strategic planning," said Dr. Muaviyath Mohamed, Minister of State, Ministry of Climate Change, Environment and Energy. “The findings and recommendations of the Maldives Country Environment Analysis will move forward productive discussions and collaborative action for achieving a more sustainable Blue Economy,” he continued.
The CEA indicates that while the Maldives has attained notable economic and human development, this development path has placed significant pressure on natural capital due to unsustainable coastal development, pollution, overuse of natural resources, and climate change.
“Healthy marine and coastal ecosystems are at the heart of economic development in Maldives because the two main sectors – tourism and fisheries – depend on it,” said Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka. “Reducing the environmental footprint of coastal development, tackling pollution, and strengthening natural resource management is key to enabling a sustainable blue economy that provides jobs and prosperity,” he added.
The report advocates for strengthening Maldives’ environmental framework through improved monitoring, national planning, and institutional capacity building. Other recommendations include conserving biodiversity-rich areas, sustainable coastal protection, better pollution management, and sustainable resource use in tourism and fisheries. The CEA also notes that nature-based solutions for coastal defense like coral reef or mangrove restoration are underused and could be a cost-effective approach to climate adaptation in the Maldives.
The CEA emphasizes the critical need to address the shortfall in nature and climate finance, which amounts to $12 billion, with only $1.6 billion secured since 2015. Bridging this gap may require innovative financing methods, such as conservation trust funds or use-of-proceeds bonds for which the proceeds are specifically used for achieving environmental outcomes.
“To build climate resilience, a sound natural capital accounting policy is vital to explore alternative financing opportunities and access much needed climate finance given the high level of debt distress in Maldives,” added Hadad-Zervos.
The CEA was developed with extensive input from the Maldivian government, civil society, academia, and international development partners. The CEA will be followed by the upcoming Maldives Country Climate and Development Report.
