FANALEI. A 2-kilometre-wide island in the Solomon Islands. Once home to 500 people. Now, almost empty. The reason a young student and her peers are taking on the world.
Just over 2000 kilometers away, a man in his late 30s sits surrounded by acres of the lush greenery of a sugarcane farm that fed two generations of a sprawling clan. But at his turn at the tiller of life, the income from sugar is so poor that he has started a second, home-based building business to support his family, while his wife works in the tourism sector.
Snapshots from our region, where long-standing economic development issues have suddenly been forced to the front burner because the Goliath of climate crisis is already chewing away at whatever developmental gains the Pacific Islands have been able to manage, threatening to leave them with next to nothing—if they don’t fight back.
Polycrisis
“The Pacific islands are now at a cliff edge,” Fiji’s Deputy Prime Minister and Minister of Finance, Professor Biman Prasad told the Forum Economic Ministers Meeting (FEMM) in Suva, Fiji last month. The components of the threat are several-fold.
“The growing burden of the climate crisis that impacts all areas of human life – on livelihood, on human security … with a fierceness not seen before,” said Prasad. “Second … the region has made some progress on Sustainable Development Goals. Nevertheless, our region is largely falling behind. Several of the goals are getting out of reach altogether.” Third, “the growing, multi-dimensional, multi-sectoral vulnerabilities touching all aspects of human life.”
In his address to FEMM, the Executive Secretary of the Economic Commission for Asia and the Pacific (ESCAP), Armida Alisjahbana, noted: “With the polycrisis, there is a growing temptation to delay climate action.
The global polycrisis has been described as the entanglement of crises in multiple global systems in ways that significantly degrade humanity’s prospects.
“Today, the pandemic-hit economic recovery, the war in Ukraine and the cost-of-living challenges are constraining the sustainable development agenda,” Alisjahbana told the Pacific economic ministers.
Released just weeks before the FEMM, ESCAP’s Asia-Pacific Disaster Report 2023 issued a stark warning about the threat to sustainable development in the region: “The Asia-Pacific region has a narrow window to increase its resilience and protect its hard-won development gains from the socio-economic impacts of climate change. In the absence of immediate action, temperature rises of 1.5°C and 2°C will cause disaster risk to outpace resilience beyond the limits of feasible adaptation and imperil sustainable development.”
Recovery ‘not real’
The region’s economic prospects in the face of such demands, are far from comforting.
The latest World Bank Pacific Update shows the region recovering from the COVID-19 battering of the past two years. Fiji was the first country to reopen its borders and led the comeback with 18.6% GDP growth in 2022. Average growth of 3.9% is projected for 2023 across the region but is expected to slow down to 3.3% as tourism slows.
The worry is inflation. In 2022, it made a huge increase of 5.2% compared to the 2019-21 average. With inflation expected to remain elevated at an average of 6% in 2023, the World Bank Pacific Update warned that, “persistently elevated international food and energy prices [has the] potential to push vulnerable populations into poverty.”
World Bank Pacific economist and co-author of its Pacific Update, Reshika Singh, conceded in an interview with Islands Business that the region may be recovering from the devastation of COVID-19, but in the context of achieving sustainable economic growth, the trends are superficial at best.
“We talk about all this recovery in 2023, we see this pent-up demand, post-border reopening. But it’s not real. We’re only going back, still comparing to 2019 levels, and we are in 2023 now. The long-term growth (forecast) is 2.6% for the Pacific – that’s the current estimate. But we see there’s potential to do more and that’s where there’s a need for structural reforms – that will be crucial,” said Singh.
Singh acknowledged that in view of the increasing impacts of natural disasters on island countries and the resulting need to build social protection systems for the more vulnerable parts of the population, the long-delayed need to meet the challenge of sustained economic growth meant that Pacific Island countries “have many competing priorities”.
As she puts it, “right now, it’s a matter of survival and getting back on track [with economic growth] but that is where we need to look beyond the horizon and make sure that growth is sustainable.”
Diversification
The farmer driven to make a living elsewhere is a victim of the structural problems in Fiji’s ailing and inefficient sugar industry.
In a paper published in 2020, titled The Fijian Sugar Industry: Sustainability Challenges and the Way Forward, Mohseen Riaz Ud Dean summarised the well-known woes of an industry that, for over a century, shaped the development of Fiji’s economy.
“Decreasing profits from sugarcane production, coupled with cultivation, harvesting, and transportation costs and the non-renewal of land leases, have all led to the loss of farmer faith in the industry,” the paper said. “As a result, many sugarcane farmers have moved to urban centres of Fiji and overseas to seek easier and better-paying jobs over the past 20 years. In the current times, most of the sugarcane fields are cultivated by the middle-to late-age farmers, with their children leaving to attend universities to receive the education they need for white-collar jobs. Consequently, the farmers of this middle– to late-age group do not feel secure and are not passing on their farms to the next generations. Considering the sugar industry’s unresolved problems, particularly those related to the sugarcane farmers, the industry is now in crisis.”
Tourism overtook sugar as Fiji’s leading foreign exchange earner in the late 1990s, but COVID-19 showed up Fiji’s dependence on tourism – and the long-standing need to diversify its economic base.
Highlighting opportunities for Fiji to take concrete steps toward future change, the World Bank’s Country Private Sector Diagnostic identified “unlocking new sources of growth beyond tourism” as part of a strategy to help Fiji “build back better” following COVID-19. The other parts of the strategy were: strengthening economic and climate resilience, leveraging the nation’s potential as an economic hub in the Pacific region, and creating inclusive job opportunities.
The report said the “lack of sectoral diversification” was among some of Fiji’s “long-standing structural vulnerabilities”.
Ambition against crisis
Back in Solomon Islands, watching parts of Fanalei slowly being lost to the ocean is what pushed law student Cynthia Houniuhi, President of Pacific Islands Students Fighting Climate Change (PISFCC) , into climate advocacy. PISFCC, with Vanuatu’s backing, has successfully taken the Pacific’s fight against the climate crisis to the United Nations (see p14), getting the UN to ask the International Court of Justice to outline the legal obligations of states to combat climate change.
At least five of her country’s 992 islands have disappeared under the rising seas, and another six have lost large parts of their land. Some communities are losing sacred lands where their families are buried.
“When you have that context where climate change is not a dinner table topic but a reality for our people and our children, and understanding that the world is an island, and it is sinking because of our inaction, it moves you to act,” she wrote in Nature Briefing.
That’s the same message that ESCAP head Alisjahbana delivered to the Forum Finance Ministers in Suva, that even though volatile fiscal conditions and lack of investment-led growth are creating challenges, “we must not lose sight of ambition”.
Despite this urgency, the FEMM hardly ended on an ambitious note. There were no major announcements except the approval of the implementation of the redesigned Pacific Resilience Facility (PRF), which aims to make access to climate finance for adaption needs much faster and more accessible.
Ministers did discuss Correspondent Banking Relationship challenges, which have proved crippling for some countries where banking services have dramatically contracted, the continued presence of some economies on the European Union’s list on non-cooperative tax jurisdictions issues and the economic implications of labour mobility schemes.
They also focused on long-standing calls for deeper and more accessible financing beyond the PRF to fund climate and disaster resilience.
Pacific Islands Forum Chair and Cook Islands PM, Mark Brown said if the region’s donor partners are serious about helping Pacific economies grow and recover, they “have to be serious about looking at changing the rules around financing, and debt management.
The inextricable links between climate change and the region’s economies—and the gap between rhetoric and action—were again highlighted a week after FEMM by Pacific Elders’ Voice, a group of key Pacific Island leaders, including several former national leaders. They called on their countries not to support Australia’s plan to host COP31 in 2026 until it stops expanding fossil fuels.
In a full-page newspaper advertisement to coincide with Australian Climate Change minister, Chris Bowen’s visit to Fiji, Pacific Elders’ Voice said while the world had moved into what the UN Secretary General, António Guterres, called an era of global boiling, Australia was stuck in “the era of fossil fuel expansion.”
From Nadaro village in Fiji where he was visiting to see Australian-funded climate resilient infrastructure, Bowen said he is confident of the Pacific’s support for COP31. He pledged Australia’s continuing support for resilience projects.
ESCAP says that under both 1.5°C and 2°C climate scenarios, the Pacific region faces losses of around 8% of their GDPs, and that adaptation costs in the Pacific SIDS “could place a strain on government budgets, compromising disaster preparedness and recovery efforts. Economic contractions also often lead to reduced public spending, affecting healthcare and education.”
