Front Matter

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© 2022 International Monetary Fund

WP/22/179

IMF Working Paper

European Department

Waiting for Godot?

The Case for Climate Change Adaptation and Mitigation in Small Island States

Prepared by Serhan Cevik*

Authorized for distribution by Alfredo Cuevas

September 2022

IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Abstract

Global warming is the most significant threat to ecosystems and people’s health and living standards, especially in small island states in the Caribbean and elsewhere. This paper contributes to the debate by analyzing different options to scale up climate change mitigation and adaptation. In particular, the empirical analysis indicates that increasing energy efficiency and reducing the use of fossil fuel in electricity generation could lead to a significant reduction in carbon emissions, while investing in physical and financial resilience would yield long-run benefits. From a risk-reward perspective, the advantages of reducing the risks associated with climate change and the health benefits from higher environmental quality clearly outweigh the potential cost of climate change mitigation and adaptation in the short run. The additional revenue generated by environmental taxes could be used to compensate the most vulnerable households, building a multilayered safety net, and strengthening structural resilience.

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The author would like to thank Antoine Arnoud, Bas Bakker, Simon Black, Edgar Buckley, Chen, Emilia Magdalena Jurzyk, Diane Kostroch, Cheng Hoon Lim, Emanuele Massetti, Annapurna Mitra, Natalija Novta, Joanna Swirszcz, Tessy Vasquez, Nate Vernon, and Anke Weber for their insightful comments and suggestions.

Waiting for Godot? The Case for Climate Change Adaptation and Mitigation in Small Island States
Author: Mr. Serhan Cevik