The price of a changing climate: extreme weather and economic loss and damage in SIDS
This policy brief presents these initial calculations and recommends that the Fund for Responding to Loss and Damage (FRLD) develop a budget support mechanism that can help governments of Small Island Developing States (SIDS) and other vulnerable countries address the extended impacts of extreme weather on their economies. An increase in concessional finance will also be needed to support rapid recovery in key sectors and avoid some of the indirect impacts on economic output.
The new FRLD will be considering how best to support governments struggling to respond to the immediate impacts of extreme weather. But the indirect or knock-on effects impacts on economic growth and fiscal balances are harder to estimate, and in Small Island Developing States (SIDS), this indirect economic loss and damage (IELD) is significant. Research conducted by the Resilient and Sustainable Island Initiative (RESI) finds that, from 2000 to 2022, IELD in SIDS may have reached $107 billion, of which $39 billion (36%) can be attributed to climate change. When added to the direct costs, the numbers are even bigger, and by 2050, the cumulative attributable loss and damage in SIDS could reach $75.2 billion under a 2°C global warming scenario.
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