Sustainable financing for climate and disaster resilience in Atoll Islands: Evidence from Tuvalu and Kiribati

• Published date: 01 December 2019
• DOI: http://doi.org/10.1111/1468-0106.12295
• Date: 01 December 2019
• Author: Tauisi Taupo

ORIGINAL MANUSCRIPT

Sustainable financing for climate and disaster

resilience in Atoll Islands: Evidence from Tuvalu

and Kiribati

Tauisi Taupo

School of Economics, University of the South

Pacific, Laucala Campus, Suva, Fiji

Correspondence

Tauisi Taupo, School of Economics, University of

the South Pacific, Laucala Campus, Suva, Fiji.

Email: tauisi.taupo@usp.ac.fj or

jtaupo@gmail.com

Abstract

This paper examines the financing of disaster risk man-

agement. Future climate and disaster risks are predicted to

impose increasing financial pressure on the governments

of low-lying atoll nations. The aftermath of a disaster,

such as a cyclone, requires financial means for quick

response and recovery. We quantify the appropriate levels

of financial support for expected disasters in Tuvalu and

Kiribati by building on the Pacific Catastrophe Risk

Assessment and Financing Initiative (PCRAFI)-calculated

likely costs for disasters. To these, we add estimates of the

potential effects of distant cyclones, droughts, sea-level

rise, climate change and large-scale disaster shocks as

they are predicted to affect low-lying atoll islands. The

present paper focuses on the potential contribution of the

sovereign wealth funds (SWF) of Tuvalu and Kiribati in

reducing reliance on foreign aid for ex-post disaster risk

management. We forecast the future size of SWF using

Monte Carlo simulations. We examine the long-term sus-

tainability of SWF and the feasibility of extending their

mandate for disaster recovery.

KEYWORDS

disaster fund, disasters, Kiribati, sovereign wealth fund,

Tuvalu

1|INTRODUCTION

The Intergovernmental Panel on Climate Change (2012, 2014) emphasized the increasing risks asso-

ciated with extreme weather events due to climatic change. The increasing frequency of high intensity

storms is a result of climate change and warming of sea temperatures (Mei, Xie, Primeau,

Received: 26 August 2017 Revised: 15 January 2019 Accepted: 24 February 2019

DOI: 10.1111/1468-0106.12295

Pac Econ Rev. 2019;24:705–717. wileyonlinelibrary.com/journal/paer © 2019 John Wiley & Sons Australia, Ltd 705