World Bank recommendations not enough for Caribbean countries to prepare for new Climate shocks 

By Sir Ronald Sanders

A new analysis by the World Bank provides a troubling analysis of the new shocks that Caribbean countries can expect from the worsening effects of Climate Change, particularly as there is no slowing down in its magnitude. But, the recommendations place the entire burden of preparation for these new shocks entirely on the governments that are already faced with beleaguered economies.

Nowhere in the analysis entitled, “360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks”, is there any recommendation that the World Bank, the International Monetary Fund (IMF) or the major polluting countries should do more to help these countries which are victims of the conditions of climate change and global warming to which they are the least contributors.

In its introduction, the analysis states quite clearly that: “Caribbean countries are not prepared for the new challenges posed by climate change, compounded by uncertainty on future tourism markets and a lack of fiscal space. The strategies that have worked in the past will not be enough in the future. Climate change threatens to intensify natural hazards and brings new sources of volatility through impacts on health, agriculture yields, and coastal landscapes”.

Investigating each country toward 2050 – less than 30 years away – the analysis suggests that, even with moderate CO2 emissions, 13 percent of nearshore hotels will experience beach loss resulting in a 17 percent decrease in tourism revenue for the region by 2050. Specifically, the analysis projects that, in the absence of adaptation, by 2050, countries like Trinidad and Tobago, Antigua and Barbuda, Saint Lucia, and The Bahamas will see a large proportion of hotels unable to profit from proximity to a sandy beach. The scenario is equally troubling with regard to flooding, loss of land mass from sea level rise, the impact of hurricanes, financial instability, and other socio-economic effects, such as the loss of skilled workers through migration.

The report makes three broad recommendations for governments to build resilience to the new generation of shocks that it anticipates is coming. These are: increase government efficiency, empower households and the private sector, and reduce future physical risk. Each of these recommendations are high cost and require funding that Caribbean governments do not have, particularly in the current COVID-19 crisis whose effects will last for years to come.

The analysis admits that the 2008 global financial crisis and the COVID-19 pandemic have had devastating effects, with debt-to-GDP ratios increasing by approximately 15 percent between 2008 and 2010. It also records that the pandemic’s impact on debt-to-GDP ratio has also been adverse: apart from Guyana, which started producing oil in 2020, all countries saw an increase in debt-to-GDP ratio between 2019 and 2020.

Against this background, it is nearly impossible to figure how governments could pay to implement the recommendations in the report, particularly as the Paris Club (a group of powerful countries) is refusing to write-off or reschedule burdensome debt. Additionally, the IMF, World Bank and other European-based agencies continue to impose the criterion of per capita income, rather than evident vulnerability, for access to concessionary financing.

Further, the lending policies of the international financial institutions are not sufficiently aligned to development needs. For instance, the report states that: “In the absence of appropriate funding and asset management systems for adequately maintaining coastal protection infrastructure, governments should consider alternative strategies, including natural barriers and managed relocation”. The latter two suggestions are not free of cost. Managed relocation of populations should not continue to be deferred in places such as Belize, Guyana and Suriname, but significant costs are involved, and, therefore, will not be easily achieved.

The report also rightly recommends that governments should invest in digital infrastructure and build digital skills to strengthen businesses and build human capital. It points out that many sectors of the society would benefit, including tourism, education, and provision of financial services. Indeed, many Caribbean countries started down this path prior to the COVID-19 pandemic. Several sectors, especially education and financial services benefitted during the pandemic. But the decline in revenues and significant GDP loss caused governments to slow investment in favour of building public health facilities and supporting the vulnerable, including the poor and unemployed. Unlike the governments of rich countries, they did not have the option to print money their economies did not generate.

The report is valuable for the data it provides showing that a large proportion of the region’s assets is exposed to hurricanes and landslides, and that a significant portion is also exposed to floods and earthquakes – all of which are set to worsen. The analysis solidly substantiates that the region is vulnerable

However, it falls short by missing the essential point that, given the battering these economies have had over the last 40 years, plus the significant socio-economic and financial blows that they have endured from COVID-19, international assistance is urgently required.

The resilience that Caribbean governments are being told to build is not the result of their abuse of the global environment. Those who are responsible for the damage should compensate.