LATIN AMERICA AND CARIBBEAN Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines World Bank Group COUNTRY CLIMATE AND DEVELOPMENT REPORT October 2024 © 2024 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone: 202‑473‑1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank Group with external contributions. "The World Bank Group" refers to the legally separate organizations of the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). The World Bank Group does not guarantee the accuracy, reliability or completeness of the content included in this work, or the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the organizations of the World Bank Group, their respective Boards of Executive Directors, and the governments they represent. The contents of this work are intended for general informational purposes only and are not intended to constitute legal, securities, or investment advice, an opinion regarding the appropriateness of any investment, or a solicitation of any type. Some of the organizations of the World Bank Group or their affiliates may have an investment in, provide other advice or services to, or otherwise have a financial interest in, certain of the companies and parties named herein. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of any of the organizations of The World Bank Group, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because the World Bank Group encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given and all further permissions that may be required for such use (as noted herein) are acquired. The World Bank Group does not warrant that the content contained in this work will not infringe on the rights of third parties and accepts no responsibility or liability in this regard. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; e‑mail: pubrights@worldbank.org. Table of Contents Acronyms.........................................................................................................................................................iii Acknowledgements.........................................................................................................................................vi Executive Summary......................................................................................................................................viii Introduction...................................................................................................................................................... 1 1. The unique characteristics of small island states in the context of climate‑related risks .................................................................................................................................. 2 1.1.  Development in the small island states of the OECS is often hampered by external shocks...................................................................................................................2 1.2.  Climate change will deepen existing physical, social and economic vulnerabilities in OECS countries.............................................................................................................5 1.2.1.  Key transmission channels for climate impacts in the OECS........................................................7 1.2.2.  Impacts on the macroeconomy, financial sector, and poverty................................................... 13 1.3.  A move toward a low‑carbon path can contribute to increased resilience ....................................... 18 2. Country climate commitments, policies, and capacities....................................................................... 21 2.1.  Countries' global commitments for climate action are anchored in their national development strategies............................................................................................... 21 2.2.  Enhanced climate change governance will require bridging the gap between strategy and implementation................................................................................................. 23 2.3.  Public climate financing would benefit from stronger institutional arrangements and adoption of climate‑informed tools...................................................................... 25 2.4.  Support for private sector growth contributes to building climate resilience.................................27 3. Building resilience in a high vulnerability context................................................................................. 28 3.1.  Investments in infrastructure and nature‑based solutions are the foundations for a core level of resilience................................................................................. 28 3.1.1.  Nature‑based solutions can complement other investments for coastal resilience and provide significant co‑benefits............................................................. 36 3.1.2.  Investments in agriculture and the blue economy are critical for food security and resilience.......................................................................................................... 39 3.2.  Moving away from fossil fuels and improving waste management can strengthen resilience, reduce economic vulnerabilities, and support the achievement of climate commitments.................................................................... 40 3.2.1.  An increased focus on renewable energy could facilitate the adoption of cleaner transport alternatives................................................................................ 44 3.2.2.  Improved waste and wastewater management can reduce methane emissions while protecting people, the environment, and the economy.................................................................................................................................. 45 4. Supporting Resilient Human Development........................................................................................... 48 4.1.  Enhancing resilience and protecting human capital require strengthening health and education systems .................................................................................... 48 4.2.  Critical gaps remain in the region's emerging social protection systems ...................................... 52 4.3.  Maintaining and expanding access to good jobs within resilient firms will help buffer economic development from climate change................................................. 54 i Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 5. Tradeoffs and opportunities on the path to resilient development .................................................... 56 5.1.  Adaptation investments can significantly reduce climate impacts, but high costs imply trade offs.............................................................................................................. 56 5.2.  Funding the transition to a resilient core development path will require exploring a variety of policy and funding options................................................................................. 61 5.2.1.  Pivoting fiscal policy to face the climate and development challenge....................................... 61 5.2.2.  Making the most of concessional financing.................................................................................. 65 5.2.3.  Building financial resilience and leveraging private finance for climate action.................................................................................................................................. 66 5.2.4.  Addressing structural constraints to growth................................................................................ 68 6. Conclusion: Prioritized actions............................................................................................................... 70 References..................................................................................................................................................... 76 ii Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Acronyms AAL Average Annual Loss ALMP Active Labor Market Program BAU Business As Usual BCR Benefit Cost Ratio BUR Biennial Update Report CAPEX Capital Expenditure CARICOM Caribbean Community Cat DDO Catastrophe Deferred Drawdown Option CCDR Country Climate and Development Report CCIA Climate Change Institutional Assessment CCRIF SPC Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company CDB Caribbean Development Bank CDRF Crisis and Disaster Risk Finance CI Confidence Interval CO2 Carbon Dioxide CO2e Carbon Dioxide Equivalent COP Conference of the Parties CRRP Climate Resilience and Recovery Plan (Dominica) CUBIC Caribbean Uniform Building Code DOM Dominica DR Demand Response DRF Disaster Risk Financing DRM Disaster Risk Management DRS Disaster Resilience Strategy DSM Demand Side Management EAAD Expected Average Annual Damages EC Eastern Caribbean Dollar ECCU Eastern Caribbean Currency Union EE Energy Efficiency EQ Earthquake ESMF Environmental and Social Management Framework EV Electric Vehicle EWS Early Warning System FDI Foreign Direct Investment F‑gases Fluorinated Gases FMA Free Movement Arrangement FRF Fiscal Responsibility Framework GBR Global Burden of Disease GCF Green Climate Fund GDP Gross Domestic Product GEF Global Environment Facility Gg Gigagrams GHG Greenhouse Gas GRE Grenada GRM Grievance Redress Mechanism ha Hectare HFCs Hydrofluorocarbons HSI Hospital Safety Index IDA International Development Association IFC International Finance Corporation IFI International Financial Institution ILO International Labor Organization iii Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change IPPs Independent Power Projects IPPU Industrial Processes and Product Use IRENA International Renewable Energy Agency IRRP Integrated Resource and Resilience Planning Kg Kilogram KPI Key Performance Indicator KtCO2e Kilotons Carbon Dioxide Equivalent L&D Loss and Damage LAC Latin America and the Caribbean LTS Long‑term Strategy MDB Multilateral Development Bank MFMod‑CC Macro‑Fiscal Model with Climate Change MOF Ministry of Finance MSME Micro, Small, and Medium Enterprises MW Megawatt NAP National Adaptation Plan NBS Nature‑based Solution NCCC National Climate Change Committee NCD Non‑communicable Disease NIA National Infrastructure Assessment NDC Nationally Determined Contribution NP National Policy NPLs Non‑performing Loans O&M Operation and Maintenance ODA Official Development Assistance OECS Organization of Eastern Caribbean States PAHO Pan‑American Health Organization PFM Public Financial Management PM Particulate Matter PPP Purchasing power parity PPPs Public‑Private Partnerships PPS Pharmaceutical Procurement Service PSIP Public Sector Investment Program PTSD Post‑traumatic stress disorder PV Photovoltaic RCP Representative Concentration Pathway RE Renewable Energy REDD+ Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (the "+" stands for additional forest‑related activities that protect the climate) RPSD Regional Private Sector Diagnostic RST Resilience and Sustainability Trust (IMF) SDG Sustainable Development Goal SIDS Small Island Developing States SLR Sea Level Rise SLU Saint Lucia SP Social Protection SSP Shared Socioeconomic Pathway SST Sea Surface Temperature SVG Saint Vincent and the Grenadines T&D Transmission and Distribution TC Tropical Cyclone TFEC Total Final Energy Consumption TVET Technical and Vocational Education and Training UNDP United Nations Development Programme iv Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines UNFCCC United Nations Framework Convention on Climate Change VAT Value Added Tax VRE Variable Renewable Energy VRRF Vulnerability, Risk, and Resilience Fund WHO World Health Organization WTTC World Travel and Tourism Council XSR Excess Rainfall Note: throughout this report, "$" indicates US Dollars unless otherwise indicated. v Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Acknowledgements The regional OECS Country Climate and Development Report (CCDR) was a collaborative effort of the World Bank, IFC, and MIGA under the leadership and guidance of Benoit Bosquet (Regional Director Sustainable Development, World Bank), Lilia Burunciuc (Country Director, World Bank), Robert Taliercio (Country Director, World Bank), Oscar Calvo‑Gonzalez (Regional Director Equitable Growth, Finance and Institutions, World Bank), Maria Marcela Silva (Regional Director for Infrastructure, World Bank), Martin Spicer (Chief Operations Officer, IFC), Ronke Amoni (Country Manager, IFC), Elizabeth Ann Marcano (Regional Director, IFC), Moritz Nebe (Sector Manager, MIGA), Genevieve Connors (Practice Manager, World Bank), and Doerte Doemeland (Practice Manager, World Bank). The team is grateful to Stephanie Gil and Gabriela Elizondo Azuela (Practice Managers), Tatiana Nenova (Regional Manager, IFC), and Daniel Navia Simon (Senior Economist) for their feedback at various stages. The CCDR team was led by Nancy Lozano Gracia (Lead Economist), Tamoya Christie (Senior Country Economist), and Joeri Frederik de Wit (Senior Energy Economist). The core team included Sara Diane Turner (Economist), Unnada Chewpreecha (Economist), Charle Jooste (Senior Economist), Urška Zrinski (Senior Public Sector Specialist), John Bryant Collier (Program Leader), Timothy Johnston (Program Leader), Emre Ozaltin (Program Leader), Nataliya Mylenko (Program Leader), Vasilis Tsiropoulos (Economist), David Cal MacWilliam (Senior Economist), Anna Luisa Paffhausen (Economist), Trinidad Berenice Saavedra Facusse (Economist), Werner Hernani Limarino (Consultant), Silpa Kaza (Senior Urban Specialist), Winston Dawes (Senior Agriculture Economist), Hira Channa (Agriculture Specialist), Kevin McCall (Senior Environmental Specialist), Paul Martin (Lead Natural Resources Specialist), Eva Hasiner (Senior Agricultural Economist), Michael Fedak (Disaster Risk Management Specialist), Abigail Baca (Senior Disaster Risk Management Specialist), Elad Shenfeld (Senior Disaster Risk Management Specialist), Artessa Saldivar‑Sali (Senior Infrastructure Specialist), Suranga Sooriya Kumara Kahandawa (Senior Disaster Risk Management Specialist), Giuliana De Mendiola Ramirez (Urban Specialist), Mary Elinor Boyer (Disaster Risk Management Specialist), Rashmin Gunasekera (Senior Disaster Risk Management Specialist), Midori Makino (Lead Water Supply and Sanitation Specialist, Program Leader), Farah Altagracia Dorval (Senior Water Supply and Sanitation Specialist), Larissa Trejo (Water Resources Management Specialist), Alina Averchenkova (Distinguished Policy Fellow and Lead for Governance and Legislation, Grantham Research Institute on Climate Change and the Environment at the London School of Economics), Faruk Miguel Liriano (Financial Sector Specialist), Federico Alfonso Diaz Kalan (Financial Sector Specialist), Mattia Amadio (Consultant), Patricio Bofill Escuder o (Consultant), Nguyet Anh Pham (Senior Energy Specialist), Nicholas Timothy Smith (Senior Financial Sector Specialist), Cary Anne Cadman (Senior Environmental Specialist), Clemente Avila Parra (Senior Social Protection Economist), Samantha Jane Cook (Senior Financial Sector Specialist), Neha Mukhi (Senior Energy Specialist), David Bassini Ortiz (E T Consultant), Nadege Jennifer Fievre (Investment Officer, IFC), Luciana Harrington (Strategy Officer, IFC), Eunice Mabika (Investment Officer, IFC), David Bot Ba Njock (Investment Officer, IFC), Luiz Felipe Freire Goncalves De Almeida (Economist, IFC), Pablo Andres Salas Bravo (Senior Economist, IFC), Persephone Economou (Senior Risk Management Officer, MIGA), Ana Aguilera (Senior Social Scientist), and Marisa Garcia Lozano (Social Development Consultant). The team would also like to thank Julie Rozenberg (Senior Economist), Vikram Cuttaree (Lead Strategy Officer), and Frederic Verdol (Lead Energy Specialist, Program Leader) for their leadership at various stages in the development of this report. A series of background papers and deep dives generated the information featured in this report. The CCDR team is thankful for the deep engagement of the following team members who contributed to preparing th is report and for their guidance: Stephen Adaawen (Climate Change, Human Mobility, and Human Security Consultant), Boris Ton Van Zanten (Disaster Risk Management Specialist), Brenden Jongman (Senior Disaster Risk Management Specialist), Borja Gonzalez Reguero (Consultant), Alejandra Gijón Mancheño, Clara Ariza (Senior Disaster Risk Management and Climate Adaptation Consultant), Samim Cilem (Senior Public Sector Consultant), Douglas Levermore (Senior Public Sector Consultant), and Cointha Thomas (Senior Public Sector Consultant). Oxford Analytics conducted background analysis that provided important inputs to the CCDR. The report also benefited from inputs from Columbia vi Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines University and the Caribbean Catastrophe Risk Insurance Facility (CCRIF). The report benefited from key studies on nature‑based solutions where funding was provided by the Climate Support Facility (CSF). Erin Rupprecht Aylor edited the report. The team also benefited immensely from the guidance of three peer reviewers—Pierre Audinet (Lead Energy Specialist), Jun Rentschler (Senior Economist), and Hector Pollitt (Senior Economist). The team is grateful to Maria Caridad Gutierrez Cordoba (Program Assistant), Pierre‑Lynn Desgrottes (Program Assistant), Karlene Collette Francis (Senior Operations Officer), Denis Boskovski (Senior Country Officer), Ricardo Alfredo Habalian (Senior Operations Officer), Dionne Oconnor (Operations Officer) and the entire support team in the region, who facilitated arrangements for the mission meetings and provided critical administrative support. Finally, the team would like to emphasize its sincere gratitude for the excellent contributions received from representatives of the four IDA‑eligible countries of the Eastern Caribbean: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines. In Dominica, the team benefitted greatly from the feedback and contributions of Mr. Samuel Carrette, Coordinator for Resilience, Ms. Denise Edwards, Financial Secretary, Ministry of Finance, Investments, Housing and Lands and Ms. Francine Baron, Former CEO of CREAD. In Grenada, the team would like to thank Ms. Marina Jessamy, Permanent Secretary for Economic Development, Planning and Cooperatives, Ms. Chevanne Britton, Deputy Permanent Secretary (Ag.), Ministry of Finance, Mr. Mervyn Haines, Director Economic and Technical Cooperation, Ministry of Finance and Mr. Christopher Joseph, Environment and Climate Officer, Ministry of Climate Resilience, The Environment & Renewable Energy for their comments and feedback. In Saint Lucia, the team would like to thank the following individuals for their feedback and comments: Mr. Imran Williams, Director of Finance, Department of Finance; Ms. Dawn Pierre‑Nathoniel, Chief Sustainable Development and Environment Officer, Sustainable Development Division; Ms. August Duval‑Toussaint, Deputy Permanent Secretary, Department of Public Service; Mr. Jason Ernest, Director, Water Resource Management, Mr. Fabian Felix, Civil Engineer, Department of Finance, Mr. Shurman Francis, Energy Officer, Department of Infrastructure, Ms. Alison Griffith‑McDiarmed, Assistant Deputy Director, Department of Finance, Ms. Magdalene Henry‑Fontanelle, Deputy Chief – Physical Planning Officer, Department of Physical Development, Mr. Andre Joyeux, Director of Meteorological Services, Department of Infrastructure, Ms. Irma Louis, Deputy Director, Department of Finance, Mr. Junior Mathurin, Field Scientist, Water Resource Management and Ms. Renada Philogene‑McKie, Chief Engineer, Department of Infrastructure. Finally in St Vincent and the Grenadines, the team received comments and feedback from Ms. Marcelle Edwards‑John Deputy Director of Planning (ag.), Ministry of Finance, Economic Planning, Sustainable Development and Information Technology, Mr. Recardo Frederick, Director of Planning, Ministry of Finance, Economic Planning, Sustainable Development and Information Technology, Ms. Janelle Horne, Economist, Ministry of Finance and Planning, Ms. Nyasha Hamilton, Environment Officer within the Environment Management Department of the Ministry of Health and the Environment, and Ms. Deanna Ralph, Ministry of Finance and Planning. The team would also like to acknowledge the valuable comments received from the OECS Commission, including those by Mr. Chamberlain Emmanuel, Head of Environmental Sustainability Division, Mr. Crispin d'Auvergne, Program Director, Climate Change and Disaster Risk Management, Environmental Sustainability Division, Ms. Alice Clarke, Head ‑ Economic Development Unit, Economic Affairs and Regional Integration Division, Ms. Dionne O'Conner, Chief Results and Portfolio Analyst, Climate Change and Disaster Risk Management, Environmental Sustainability Division, Ms. Shanna Emmanuel, Program Officer, Climate Change and Disaster Risk Management, Environmental Sustainability Division, and Mr. Jamie McDonald, Technical Specialist/Economist, Economic Development Unit, Economic Affairs and Regional Integration Division. vii Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Executive Summary OECS countries face physical, economic, and social vulnerabilities that will deepen with climate change This regional Country Climate and Development Report (CCDR) focuses on four countries of the 11‑member Organization of Eastern Caribbean States (OECS)—Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines. The four countries chosen as the focus for this report are the only OECS member countries eligible for concessional International Development Association (IDA) financing for development objectives. The report contributes to the identification of opportunities for OECS countries to achieve their development goals and increase resilience by responding to the challenges posed by climate change in four ways: 1. It presents existing evidence on the challenges OECS countries face through multiple vulnerabilities —physical, social, and economic—and how they may deepen with climate change. 2. It provides estimates of a significant subset of the investments needed for adaptation to natural hazards in these countries. Estimated needs are large; they stand between 1 and 11 percent of discounted GDP investments annually over a 15‑to‑25‑year period, but the benefits they deliver through reduced risk and associated co‑benefits can also be large. 3. By linking investment costs to the broader fiscal and growth context through a robust macro framework, it highlights the difficult balancing act between building resilience and ensuring debt sustainability. 4. It identifies key actions that provide an opportunity to make headway on adaptation by building resilience to climate change while taking steps toward a more sustainable development path. All four countries face interlinked challenges that deeply influence their efforts to realize their development goals and respond to the challenges of climate change. First, they are all Small Island Developing States (SIDS), which makes their development pathways particularly vulnerable to external shocks. Second, they are all highly exposed to natural hazards and climate change, which directly affect a large portion of the land, assets, and population. Moreover, the high exposure to external macroeconomic shocks makes the management of natural disaster shocks even more difficult. Third, due to overly expansive fiscal policies during economic booms, all four countries have high public debt levels and little fiscal buffer to cushion their economies during downturns. Fourth, poverty remains high across all OECS countries, with official poverty rates of up to 30 percent, which increases the vulnerability of the population to shocks. Finally, all four countries exhibit gaps in human capital development, which worsened during the pandemic and could be further negatively impacted by climate change. Taken together, these challenges mean that these countries face the very real risk that climate change will deepen existing physical, economic, and social vulnerabilities. Climate change is expected to lead to the intensification and increased frequency of natural hazards, with important economic impacts. Current and expected future damages from these events are large across all four profiled islands, subject to significant uncertainty, and unevenly dispersed. Analysis done for this report1 suggests that the most severe economic losses for infrastructure result from floods and hurricanes. Dominica is most at risk, followed by Saint Vincent and the Grenadines. Median estimated annual losses through 2050 from floods are 9 percent of GDP in Dominica, 3 percent in Saint Vincent and the Grenadines and 2 percent for each of the other two countries. Within the 95 percent confidence interval, it is possible for those losses to roughly double. Median GDP losses from hurricanes (based on historical 1 The projected impacts of climate change on the overall economy were assessed in a climate‑adjusted macro‑structural model customized for each OECS country of focus. Initially, a baseline growth scenario was established for each country, projecting up to the year 2050 based on current climate conditions. The analysis then proceeded to simulate deviations in the economic trajectory that could arise from potential climate‑related shocks. This was done under various climate future scenarios, including Historical, SSP2‑RCP4.5, and SSP5‑RCP8.5 for flooding and hurricanes, as well as Optimistic and Pessimistic scenarios for heat and agriculture impacts, extending up to the year 2050. viii Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines frequencies and intensities) are lower than those for floods; in Dominica they reach around 3 percent of GDP by 2050. That said, within the 95 percent confidence interval, those losses could be as high as 23 percent within that period. Climate change will also bring slower‑onset impacts, such as rising temperatures, ocean acidification, sea level rise, beach erosion, land loss, salinization of groundwater, and reduced rainfall, all of which carry profound consequences. These processes can erode the productive capacity of the OECS economies by affecting key drivers of economic growth, through direct and indirect channels. Climate impacts can disincentivize private investment on the expectation of future damages, further undermining development trajectories. For example, rising sea levels and beach erosion may impact the tourism sector, which employs one in five workers in Saint Lucia.2,3 A reduction in precipitation of 12 percent by the turn of the century in the RCP 4.5 scenario (28 percent in RCP 8.5), as well as rising temperatures and lower crop yields, are projected to reduce GDP by up to 3.5 percent in the case of Dominica. Increasing temperatures also reduce outdoor labor productivity, with additional output losses of up to 4 percent of GDP in 2050 expected for all four countries.4 Chapter 5 elaborates on how these economic loss estimates could be driven downward through appropriate investments in climate adaptation and policies to build more resilient, diversified economies. High exposure to climate shocks and disasters across the OECS countries presents a challenge for sustained poverty reduction, which can hinder the achievement of these countries' development objectives. Poorer and vulnerable populations are often disproportionately affected by climate shocks. For example, in Saint Lucia, agricultural income accounts for between 14 and 15 percent of the household income for the two bottom quintiles of the population, compared with between 8 and 10 percent for quintiles three to five.5 In Grenada and Saint Lucia, poverty rates are expected to rise by up to 1.9 percentage points across 2030–2050 as compared to the baseline economic scenario, due to lower‑bound climate change effects on infrastructure, agriculture, and productivity.6 The most damaging effects are from hurricanes, which could increase poverty rates by an average of between 1.6 and 1.9 percentage points in Grenada. In Saint Lucia, the average deviation from the baseline is 0.3 percentage points, with little difference among the different climate future scenarios. With GHG reduction ambitions in place, the next step is to develop regulations, institutions, and coordination mechanisms for climate action All four countries have set GHG reduction targets in their Nationally Determined Contributions (NDCs) and prioritized resilience and adaptation in their national climate and sustainable development objectives. Dominica and Grenada have set absolute economy‑wide emission reduction targets, Saint Lucia has adopted an absolute emission reduction target only for the energy sector, and Saint Vincent and the Grenadines has an economy‑wide emission reduction target relative to Business as Usual (BAU). Energy, transport, and waste are the largest contributors to emissions in these countries and their governments have identified these as the priority mitigation sectors. For adaptation and building climate resilience, the priority sectors are agriculture (including fisheries), coastal ecosystems, and health. The national climate policy, strategies, and planning instruments, and most NDCs, for these countries also emphasize enhancing disaster risk reduction and management, social protection, and gender integration, and addressing loss and damage related to climate change. 2 GFDRR. (2024). "Nature based solutions for coastal resilience." Background note for the OECS CCDR. https://openknowledge.worldbank. org/bitstreams/ed18dd98-1033-4ea6-b8e7-a45bd1c6902a/download 3 World Bank staff calculations based on 2016 SLC‑HBS. Comparator countries are Barbados, Dominican Republic, Grenada, Costa Rica and Vanuatu. In Grenada, the share is 10.1 percent. 4 Agricultural impacts reflect long term changes in temperature and not specific drought events that could amplify the estimated impacts on agricultural productivity. 5 World Bank staff calculations based on Saint Lucia Survey of Living Conditions and Household Budgets 2016. 6 The poverty and distributional impacts of climate change‑related shocks were assessed by using the MFMod‑CC lower‑bound (95 CI) outputs for the baseline and climate future scenarios to perform micro‑simulations using the latest household survey data for Grenada (2018) and Saint Lucia (2015). The latest available household survey data for Dominica and Saint Vincent and the Grenadines is more than 15 years old and was therefore not used. ix Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Despite strong commitment to climate action, the legal, regulatory, and institutional frameworks for climate action remain incipient. None of the four countries has a long‑term strategy (LTS) out to 2050 and all countries lack a comprehensive climate change framework law, relying instead on various executive strategies and plans from different agencies. Dominica is the furthest along in addressing this gap, given its Climate Resilience Act 2018 and the Climate Change, Environment and Natural Resource Management Bill 2020. The latter includes provisions for the expansion of government departments with climate‑related responsibilities and the establishment of a Climate Change Committee to function as a cross‑institutional coordinating body. Furthermore, none of the countries has coordination mechanisms or stakeholder consultation mechanisms. To address these issues, National Climate Change Committees (NCCCs) need to be bolstered to improve coordination across ministries, and regular consultation and communication with stakeholders needs to be integral to policy formation. A final challenge is that no country has an independent advisory body. Given the shared challenges in climate governance, such as ensuring policy alignment across various agendas, filling data gaps on climate risks, evaluating progress towards climate goals, and compensating for limited capacity, a regional independent advisory body on climate change could be beneficial. The impacts of climate change on human mobility need to be better understood and integrated into strategic planning. Existing regional free movement arrangements (FMAs) within the OECS Economic Union and the CARICOM Single Market and Economy have facilitated intra‑regional migration by providing a legal basis for the right of entry to the nationals of member states affected by disasters. These institutional frameworks may provide a foundation for migration as a viable climate adaptation strategy. However, there is limited timely and reliable data to help address climate‑related migration effectively. This is especially true for slow‑onset events, particularly SLR and others that impact agriculture and tourism livelihoods. This report therefore recommends investments in the generation of empirical evidence on the impacts of climate change on human mobility, as well as the development of specific provisions within these frameworks to help facilitate and more effectively manage cross‑border, intra‑regional displacement and migration. Building resilience will require significant adaptation investments to either retrofit or build‑back‑better This report estimates that the investments needed to build physical resilience are well beyond current investment trends for all four countries. To illustrate the cost of resilience investments, this report uses the resilience targets established by Dominica (the only country with a Climate Resilience and Recovery Plan, or CRRP) across all four countries to define a "resilient core" scenario. This scenario meets SDGs while limiting damages and service interruptions in energy, transport, water, hospitals, schools, and residential and commercial property. Two approaches to implementing adaptation are modelled: (i) a "retrofit" scenario in which a share of the current capital assets are retrofitted to make them resilient to a 100‑year return period event for hurricanes and a 50‑year return period event for flooding over a 15 year time horizon; and (ii) a "build‑back‑better" scenario in which there is no retrofitting but all new investments for depreciated or destroyed capital are designed in accordance with the improved resilience standards over a 25 year time horizon. Results show that the total discounted cost to achieve the resilient core through the "retrofit" scenario, in which adaptation investments are made over a 15‑year time horizon to existing capital, is at least 2 percent of cumulative GDP over the period 2024–2050.7 The alternative "build back better" scenario considers resilient investments only for new capital (no retrofitting) over a 25‑year horizon, coinciding with the rate of capital stock depreciation. This scenario enables significant cost savings as compared to the retrofit scenario. However, considering that resilient investments occur only when capital fully depreciates or is destroyed, this longer‑term horizon would also mean that residual risks remain elevated for longer.8 Both estimates are conservative.9 7 Values presented here are discounted over the timeline of implementation (15 or 25 years) using a 6 percent discount rate. Undiscounted values are presented in Table 3.2 in Chapter 3. 8 Oxford Infrastructure Analytics, 2023. Estimating Investment Needs for Climate Adaptation in the Eastern Caribbean. https://openknowledge.worldbank.org/bitstreams/3485bb90-6527-431f-a6cf-3bb1970f7c0a/download 9 The estimates provided are conservative and represent a lower bound of needed adaptation investments for the targeted resilience level. They do not include adaptation needs for heat, agriculture, blue economy, or complementary investments suggested in Nature Based Solutions for adaptation, for example. They also do not include all categories of hazard that could drive losses, such as landslide. Finally, the analysis makes assumptions targeted level of resilience which influenced the cost estimates, different design standards as developed for specific projects might differ, adjusting costs. Bottom‑up project level analysis is needed to fully reflect the full scope of adaptation costs. x Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE ES.1. Total cost 2024–2050 of implementing a A focus on management of water‑related "resilient core" challenges can also help strengthen resilience. 1400 200% This report recommends the development of 180% a roadmap on different water needs and an 1200 160% 1000 140% assessment of water sources. The roadmap 800 120% should (i) consider the quantity and quality of 100% 600 80% surface and groundwater resources, (ii) outline 400 60% needed measures to secure and better utilize 40% such resources (for example through improved 200 20% 0 0% storage and, better support for aquifer recharges), 15 yr 25 yr 15 yr 25 yr 15 yr 25 yr 15 yr 25 yr and (iii) explore additional water sources such as Dominica Grenada Saint Lucia SVG rainwater harvesting, wastewater reuse, and the implementation of demand management actions, Investment cost, USD m % of GDP such as efficient irrigation and non‑revenue Source: World Bank staff calculations. water management. Expanding and reinforcing hydrological real‑time monitoring, weather and climate forecasts, and early warning systems is another, cost‑effective way to build resilience. All four states will need to address the challenge of ensuring resilient housing. The first step here is to improve land management and land use planning, including identifying and designating suitable land for housing development, ensuring equitable land distribution, and encouraging denser and more compact developments. Second is the promotion of affordable housing, the absence of which forces many households to resort to squatting in low‑quality structures that are particularly vulnerable to natural events and disasters due to their substandard construction and often precarious location. Third is investing in resilient housing (i.e., using hurricane‑resistant designs and materials), strengthening building codes and regulations, and ensuring that the provision of basic services for these households—particularly water, sanitation and electricity—is also resilient. Last, enhancing access to financing options for housing, such as microfinance programs or mortgage assistance, can improve housing conditions for low‑ and middle‑income households. Investments in agriculture and the blue economy, which will be needed to ensure food security and the resilience of key economic sectors, will also open financial and economic opportunities. The incorporation of climate‑smart technology in agri‑food systems can increase adaptation and improve resilience of the sector. For example, providing new technologies, appropriate tools, and relevant training to smallholder farmers and agri‑processors would create efficiencies. In terms of supporting the growth of the blue economy, which could deliver significant development dividends for the economies of these four OECS countries, several steps are needed. The first is investments in information, including baseline mapping of vegetated coastal ecosystems to ascertain the blue carbon potential at the national and subregional level. This mapping could inform a future blue carbon credit market and support primary research on carbon emissions from these ecosystems due to sea surface temperature (SST) change, marine heatwaves, and other climate and development impacts. Second is investments in building resilience in the fisheries and coastal tourism sectors against shocks and the lingering effects of the global poly‑crisis. This will improve food security and economic resilience, and help enable resilient growth based around marine ecosystems. Finally, addressing transboundary considerations in key blue economy sectors (tourism, fisheries, and aquaculture) will also be critical. For example, investing in circular economy solutions for sargassum and regional approaches to sargassum monitoring that allow for collecting, composting, and converting sargassum into added‑value byproducts with commercial demand could help address this challenge. Nature‑based solutions (NBS) can complement other investments in coastal resilience and provide significant co‑benefits. Beach, mangrove, and coral restoration are among the key NBS available in this context. Given the prevalence of sandy beaches across the four countries, the possibilities for cost‑effective beach restoration are the most promising (Figure E.2). For beaches, benefit‑to‑cost ratios (BCRs) are mostly greater than 1, driven primarily by benefits to tourism, rather than flood mitigation. In places where mangroves are ecologically viable, mangrove restoration brings significant benefits (BCRs in the range of 4–5), particularly due to the benefits of enhanced carbon storage. Coral restoration, on the other hand, delivers BCRs of less than 1 unless flood mitigation benefits from corals are present. This caveat highlights the need for spatial prioritization of NBS investments to target corals that provide protection against flooding. xi Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE ES.2. Effect of Nature‑based Solutions on expected average annual damages (EAAD) due to coastal flooding (a) Dominica (b) Grenada 3,8 7 6 3,6 5 EAAD (mill $) EAAD (mill $) 3,4 4 3,2 3 3,0 2 2,8 1 2,6 0 2010 2050 No NBS 2050 NBS 2050 2010 2050 No NBS 2050 NBS 2050 (c) Saint Lucia (d) Saint Vincent 14 2,0 12 1,6 10 EAAD (mill $) EAAD (mill $) 8 1,2 Total risk 2050 6 with NBS 0,8 4 0,4 2 0 0,0 2010 2050 No NBS 2050 NBS 2050 2010 2050 No NBS 2050 NBS 2050 Present risk Climate change Socio-economic growth Ecosystem degradation Risk reduction Source: GFDRR. "Nature‑based solutions for coastal resilience." Background Note for the OECS CCDR. https://openknowledge.worldbank.org/ bitstreams/ed18dd98-1033-4ea6-b8e7-a45bd1c6902a/download. Notes: The baseline risk of 2020 (including the effect of existing ecosystems) is shown in light blue. This risk increases by 2050 due to climate change (rising sea levels, in dark blue) and socio‑economic growth (which increases the value of the assets exposed to flooding, in light gray). Ecosystem degradation reduces flood‑mitigation capacity of NBS and creates additional damages (in red). Such damages can be reduced by preserving and enhancing NBS (the risk reduction by NBS is shown in light yellow, and the total risk with NBS by 2050 in blue). Finally, it will be necessary to complement all of the above investments with strong preparedness and response systems. Interventions should be structured around working with governments to holistically strengthen their emergency preparedness and response systems. This should include five components: (i) Facilities: Support the construction and maintenance of critical infrastructure such as shelters, warehouses, and state‑of‑the‑art Emergency Operations Centers, and ensure that they are well‑equipped and resilient to withstand disaster events; (ii) Information Management: Develop advanced decision support systems and emergency response plans that facilitate real‑time data sharing and decision‑making during crises; (iii) Equipment: Procure specialized search and rescue equipment and emergency management vehicles to enhance rapid response capabilities and resource mobilization; (iv) Personnel: Invest in training, exercises, and drills for emergency responders, equipping them with the necessary skills and knowledge to handle complex disaster scenarios; and (v) Legal and Institutional Framework: Strengthen the legal and institutional frameworks that underpin emergency preparedness and response, ensuring that they are adaptable, efficient, and responsive to evolving challenges. Synergistic actions that support the transition to low carbon can also help build climate resilience First, a systemic transformation of solid waste management in the OECS is needed; this will require numerous interventions that would benefit from regional cooperation to overcome a lack of economies of scale. In most Caribbean countries, waste from households and commercial enterprises is co‑mingled. Organic waste, which comprises 44 percent of the total waste among the four countries, is a major source of methane emissions for these small islands. Improved separation of recyclables and organic waste from the waste stream and treatment of both would minimize emissions, prevent leakage of waste, and reduce the landfill space required in the long term. The diversion of organic waste to composting or anaerobic digestion can reduce methane emissions. Improvements in solid waste management could improve marine ecosystem health and deliver economic benefits. Once safe treatment and disposal options are established, informal or uncontrolled disposal sites would need to be closed to prevent xii Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines further use. In parallel to these technical solutions to the identified challenges, it will be necessary to create an enabling environment aligned with integrated solid waste management. This would include, for example, the development of technical and contract management expertise at the regional level, adequate regulation to establish air quality control standards for incineration, the monitoring of water bodies, soil and air in landfills, and policies that protect both government and private sector providers and allow for the fulfillment of public‑private contracts. A second synergistic action is the move away from fossil fuels for power generation, which could strengthen resilience, reduce economic vulnerabilities, and support the achievement of climate commitments. On the supply side, the four OECS countries have ample renewable energy (RE) resources to enable the shift away from fossil fuel power generation (which currently accounts for between 80 and 98 percent of all power produced, depending on the island). Existing high electricity tariffs will help in this transition, but other elements of the enabling environment can be improved. In the short run this would include the publication of detailed solar and wind resource maps, improvements in the regulatory framework on grid access and dispatch (as well as capacity building on procurement), and aligning incentives so that utilities can support and even contribute to a RE transition. On the demand side, pilots of high‑return energy efficiency (EE) investments—for example through energy efficiency measures for public buildings—will bring valuable experience to the pursuit of larger energy efficiency ambitions. Opportunities for regional collaboration should be explored to scale up RE and EE supply chains, including through EE standard setting and the development of specialized training programs. At an early stage, the support from international donors and international financial institutions (IFIs) through technical assistance and concessional finance will be relevant for building technical and institutional capacity. There are also synergistic actions in the transport sector, where continued progress in the planning for electric mobility and the building of resilience in seaport, airport, and road infrastructure are recommended. Planning for e‑mobility can be advanced by ensuring the consideration set includes road vehicles, intra and inter‑island ferries, the on‑shore powering of cruise‑ships, and regional cooperation on interconnection standards. The expansion of e‑mobility should be carefully coordinated with the greening of the grid, both because the economic case for e‑mobility rests on a greener grid and because the increased and variable power demand from e‑mobility can have a potential impact on grid stability. Regarding transport infrastructure, the four OECS countries have little redundancy in seaports and airports, which are vital to their economies (including for tourism and the import of almost all energy needs). Bringing resilience to ports not only requires making specific investments to counter the risks of identified hazards but also embedding resilience into port operations. This means making resilience integral in governance and management, determining acceptable levels of risk, creating emergency management and recovery plans, and providing training for staff on disaster management procedures. Public‑private partnerships (PPPs) can be used to attract private sector participation in the development of digital logistics platforms to support agricultural and seafood trade, which would contribute to more efficient and resilient transport and logistic infrastructure. Digital platforms can be implemented in synergy with the new mandatory requirement from the International Maritime Organization to implement "Maritime Single Window" systems for the electronic exchange of information required on the arrival, stay, and departure of ships in ports. Beyond the resilient core of physical capital, policy reforms and investments will be critical to build the resilience of human capital through health, education, and social protection services Stronger health systems are the first critical component for enhancing resilience and protecting human capital. Rising temperatures and more frequent and severe weather events will directly affect health and well‑being, including through increased heat‑related deaths, spread of communicable diseases, and negative impacts on mental health. At the same time, climate change disrupts the very health services needed to address these challenges. Despite some progress, OECS health systems face significant gaps in health systems resilience and climate change adaptation, including preparedness and response capacity. When it comes to basic health services, gaps are present even under normal operating conditions. These will only be exacerbated by climate change; weaknesses in aspects of financing, service delivery, health workforce, and the supply chain in Eastern Caribbean health systems may increase the systems' vulnerability to climate impacts. xiii Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Building the resilience of the education system and investing in new skills and jobs tailored to the green and blue economies and adaptation to climate change is a second key component in human capital development. More frequent disasters, in the absence of mitigating measures, can lead to more frequent school closures and the consequent loss of learning, particularly for the most vulnerable. Measures include doing more to provide disadvantaged households and teachers with the tools needed for children to participate in remote learning. Also critical are investments in strengthening educational infrastructure against disasters and the development of training modules for teachers and students on climate adaptation and mitigation. In terms of developing human capital to support economic growth and transformation, all four countries could benefit from establishing pathways to develop the technical and behavioral skillsets needed to support the move toward a low‑carbon path, higher‑value‑added sectors, and diversification of economic activities (for example through eco‑tourism jobs related to preservation and protection of coral reefs, commercial production of sea moss, and the business of solar power). Regional cooperation among OECS countries would help achieve the necessary economies of scale for specialized skills training programs. For the final component of human capital, social protection (SP), systems are emerging in the region but are far and few between, with critical gaps in ensuring they are integrated, interoperable and risk‑informed. Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines have rich social protection programs across the three main SP pillars: social assistance, social insurance, and labor market interventions. Public spending on social assistance in the four countries is, on average, higher than the Caribbean, Latin America and Caribbean (LAC), and world averages. The countries have been making efforts to increase and improve their implementation capacity in SP. All that said, structural gaps in SP remain, hindering a full contribution to resilience building. The first gap is in the supply of SP interventions. For example, only Grenada offers unemployment insurance, through a program just recently established in 2023. The second issue is that coverage gaps for existing SP interventions are limiting their effectiveness. For instance, anti‑poverty cash transfer programs in the four countries reach less than half of the poor. Finally, all four countries have low institutional capacity in SP including few human resources, limited information technologies capabilities, and the lack of coordination. Adaptation investments deliver high economic benefits but entail high financing costs, provoking a difficult balancing act between building resilience and ensuring debt sustainability Even without adaptation investments, economic impacts from natural disaster shocks can be attenuated by focusing on resilient reconstruction: building back better. Modeling results for the four countries show that with timely reconstruction, the most severe annual GDP losses in 2050 would range between 2.5 percent in Grenada to 9 percent in Dominica, which is 1.5 to 16 percentage points lower than a scenario without resilient reconstruction. The overall GDP and growth impacts will depend on the speed and completeness of reconstruction and recovery. This underscores the importance of having a well‑defined disaster risk management strategy in place, with an appropriate disaster risk financing framework that includes readily available financing sources identified ex ante. Assuming that reconstruction is debt‑financed, the associated fiscal impact measured by the increase in the debt‑to‑GDP ratio could be as much as 12 percentage points in 2050 for Dominica and 3.5 percentage points for Saint Vincent. For Grenada and Saint Lucia, the economic activity generated from reconstruction has the potential to offset debt accumulation over the long run. Boosting the resilience of capital assets to hurricanes through select adaptation interventions opens the possibility of minimizing and even reversing economic losses over the long run. In both the retrofitting and build‑back‑better scenarios, this report made investments resilient to a 100‑year return period event for hurricanes and a 50‑year return period event for flooding. In the retrofitting to increase hurricane resilience scenario, after an initial period of investment during which GDP dips below the baseline level, economic benefits are evident for all countries, with median GDP rising above baseline levels. Avoided economic losses are greatest for Dominica over the long run and are shown to boost GDP by some 10 percentage points above baseline by 2050. In the build‑back‑better scenario for hurricane resilience, where adaptation interventions are incorporated only when replacing depreciated or destroyed capital assets, avoided economic losses are slightly lower as adaptation investments take xiv Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines a longer time to be realized. GDP results for adaptation interventions for capital stock exposed to floods follow a similar pattern, with avoided median annual economic losses in 2050 averaging about 1.4 percent in the retrofitting scenario and 1 percent in the build‑back‑better scenario. Exclusively financing adaptation investments through public debt is fiscally unsustainable, however, meaning that complementary fiscal measures are required. Assuming the public portion of adaptation investment is financed by new public debt, retrofitting, brings another reason why the build-back-better strategy is preferable. Modeling results show that financing adaptation investments by increasing indirect taxes will have a temporary negative impact on GDP in the short run, but over time could boost the GDP level by similar magnitudes as debt financing, and with a more modest increase in the debt‑to‑GDP ratio. Funding adaptive investments by reallocating existing public expenditures also has the potential to keep debt increases modest, but at a greater expense to long‑run GDP, particularly if adaptation investments are funded by reallocating existing capital expenditures. These impacts are illustrated for the case of hurricane resilience investments in Figure E.3. FIGUE ES.3. Alternatives to debt-financed adaptation investments for hurricane shocks under an optimistic climate future (SSP2-4.5) GDP (% differences from baseline) DMA GRD 15.0% 2.0% 10.0% 1.5% 1.0% 5.0% 0.5% 0.0% 0.0% -5.0% -0.5% -10.0% -1.0% 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 2.0% 3.0% LCA 1.5% 2020 2025 2030 2035 2040 2045 2050 2.0% 2020 2025 2030 VCT 2035 2040 2045 2050 1.0% 1.0% 2.0% 3.0% 0.5% 1.5% 0.0% 2.0% 0.0% 1.0% -1.0% 1.0% -0.5% 0.5% -2.0% -1.0% 0.0% 0.0% -1.5% -3.0% -1.0% -0.5% -1.0% -2.0% -1.5% -3.0% 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Debt (default) Indirect Tax Public Investment Debt to GDP ratio (percentage points change from baseline) DMA GRD 100 5 80 4 60 3 2 40 1 20 0 0 -1 -20 -2 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 12 20 LCA 10 2020 2025 2030 2035 2040 2045 2050 152020 2025 2030 VCT 2035 2040 2045 2050 8 126 20 10 104 8 15 2 5 60 10 4 0 -2 2 5 -4 -5 0 2020 2025 2030 2035 2040 2045 2050 0 2020 2025 2030 2035 2040 2045 2050 -2 Debt (default) Indirect Tax Public Investment -4 -5 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Debt (default) Indirect Tax Public Investment Note: World Bank staff calculations of median annual deviations in GDP and the public debt‑to‑GDP ratio from the baseline under alternative financing sources of adaptation investments for hurricane shocks under an optimistic climate future (SSP2‑4.5). Adaptation costs spread over 15 years. xv Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Fiscal policy can be reoriented to make countries more resilient to the effects of climate change and natural disasters and to contribute to climate change mitigation. Given existing high debt burdens, the OECS countries will need to reorient revenue and expenditure policy toward the creation of fiscal space to fund additional climate investments. This can be done by developing frameworks for climate resilient public investment management and green public procurement, improving efforts at domestic resource mobilization, and through expenditure containment, including improved spending allocation and efficiency. Policy measures will also need to be framed within a defined fiscal framework to signal credible medium‑term fiscal plans. The OECS countries could also benefit from harmonizing fiscal policies at the regional level to enhance revenue from the tourism sector, encourage private sector participation to fund climate investments, and incentivize the shift to a low‑carbon development path. OECS governments should seek opportunities to reduce potential fiscal outlays in the event of a natural disaster through risk transfer instruments and a layered approach to disaster risk financing. The Ministry of Finance plays a leading role in developing and implementing effective disaster risk finance policies, in collaboration with line ministries and disaster risk management agencies. Recognizing that a certain amount of residual risk remains, the OECS countries are working on strengthening regional resilience to natural hazards and climate change. With World Bank support, the OECS countries of focus in this report are exploring how they can further strengthen and increase their financial protection against disasters. The following three risk transfer options are being explored: (i) a catastrophe swap that uses a derivative contract to secure reinsurance; (ii) a catastrophe bond which utilizes the capital markets; and (iii) additional cover from Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC). Despite efforts to create fiscal space, the OECS countries will not be able to finance the cost of climate adaptation and maintain fiscal and debt sustainability without additional concessional financing from the international community. The IMF estimates that for Grenada, even after considering domestic resource mobilization in line with its Disaster Resilience Strategy (DRS), the country would still require additional external grant financing of about 2.5 percent of GDP annually through 2030, while Dominica would require an additional 8 to 11 percent of GDP per year through 2035. These amounts cover full infrastructure investment needs and not just what would be required for resilience. Even though the ability of the OECS countries to maintain debt sustainability while funding resilience critically depends on donor support, grant financing for these countries is limited and has been declining. Although the four OECS countries under review are eligible for concessional International Development Association (IDA) financing for development objectives, country allocations are limited and need to be supplemented with other concessional climate financing, as well as the leveraging of resources from the private sector. Leveraging the private sector for climate action will require interventions to improve risk management in the financial sector as it facilitates the economic transition to a greener economy. There are two interrelated challenges that will need to be overcome to effectively leverage private sector investment: (i) the management of climate and environmental risks to the financial sector and (ii) the mobilization of financial capital for mitigation and adaptation investments. On the first point, de‑risking instruments in combination with public‑private partnerships (PPPs) can be particularly effective in incentivizing private investment in climate‑resilient infrastructure, as they can de‑risk projects by combining support from the state and IFIs (through guarantees, grants, and concessional finance) with long‑term contracts. On the second point, the sustainable finance market in the OECS is nascent, even compared to the wider LAC region, where it has taken off in recent years. All climate‑related financial flows in the Eastern Caribbean region have been executed using a limited range of financial instruments: grants accounted for 61 percent of the total, while debt instruments accounted for 38 percent. Options for shifting this trajectory include the exploration of instruments such as labeled bonds (green/blue or sustainable) or green/blue loans. Attracting private climate finance in a sustained way requires additional reforms that improve the enabling environment for private investments, including foreign direct investment (FDI), to take place. The main task of governments is to create an enabling environment that allows private financiers and investors to operate under acceptable levels of financial, commercial, political, contractual, legal, and regulatory risk. IFIs can provide critical support in crowding‑in private investment in the short term by providing blended finance instruments and by absorbing risks that other financiers are unable to bear. In the long term, creating an adequate framework upstream would require reforms and institutional capacity to enable the management of private operators' participation in development. xvi Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines The road to strengthened resilience requires large investments, but prioritizing key investments as well as actions to strengthen knowledge and information can increase the efficiency of every dollar spent The analysis in this report provides a series of diverse actions across several sectors that are needed to support these four OECS countries in moving toward a resilient and low‑carbon development pathway. The recommendations highlighted in this report fall into three thematic categories: (i) building the knowledge base for action through strong information and information systems; (ii) investing in strengthening resilience; and (iii) establishing and strengthening efficient, effective institutions. These three categories have been deliberately chosen to underscore that while the needed investments to support enhanced resilient growth are indeed large, just as important are the significant knowledge and institutional changes that will be needed to complement, facilitate, and increase the efficiency of the recommended investments. Table E1 summarizes the priorities that need to start in the short term (within 5 years). A full set of recommendation including for the short and long term is provided in Chapter 6, and assessed along four criteria: (i) potential climate mitigation and adaptation benefits; (ii) other co‑benefits (iii) urgency, defined as critical in the next five years; and (iv) potential barriers to implementation, namely missing policy and institutional frameworks, political economy challenges, and inadequate financing. xvii Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines TABLE ES.1. Priority actions to build climate resilience in OECS countries Knowledge Investments Institutions Increasing the knowledge to manage The sequencing of investments Building the necessary institutions for risks, produce and disseminate needs to be informed by the specific a resilient transformation may take early warnings, and incentivize hazard vulnerabilities and the time, but starting now is important. favorable behavior changes can trade‑off between cost and benefits, Without needed institutional changes, have benefit‑to‑cost ratios of 1 to 9.10 considering both retrofit and the inefficient allocation of resources Leveraging regional institutions build‑back‑better options. may drive up costs. and training efforts can help bring savings through economies of scale. Country level actions Generate empirical evidence on the Build a resilient core through Establish a comprehensive legislative impacts of climate change on human infrastructure resilience investments framework for climate change mobility. in energy, transport, waste, water, supported by integrated strategies and Implement integrated, health, and education. This report plans coordinated across agencies. interoperable, and risk‑informed SP highlights floods as causing the Build capacities for emergency information systems. most expected damages, especially preparedness and response systems to airports. —at the national level and in Develop solar and wind resource maps. Scale up investments in renewable operations of sub‑national entities energy and pilot energy efficiency such as ports (for example by Attract private sector participation investments to build markets. determining acceptable levels of risk, in the development of digital Explore the use of PPPs in creating emergency management and logistics platforms to support trade. combination with blended finance recovery plans and promoting staff Pursue opportunities for green to mobilize private investment for awareness). bonds and other sustainable finance critical infrastructure in strategic Support integrated solid waste vehicles to increase access to sectors. management with an improved finance for climate action. authorizing environment. Promote the use of fintech, Reform public investment management including digital payments and the systems to reduce costs and ensure development of the regional credit efficiency of public spending on bureau, to improve the access to adaptation needs within the context credit and climate finance for SMEs. of a fiscal responsibility framework especially in the face of shocks. Regional Build the knowledge base on carbon Invest in building resilience in Coordinate on the development emissions from marine systems, the fisheries and coastal tourism of e‑mobility (including ferries and blue carbon potential, and the sectors against shocks and lingering on‑shore powering of cruise ships) to impacts of climate on agriculture. effects of the global poly‑crisis to develop interconnection standards Establish an OECS sargassum improve food security and economic and inter‑island transport networks. (and sea moss) response platform resilience. Develop specific provisions within to tackle the offshore collection Address economy of scale barriers the existing regional free movement of sargassum and utilization for for RE and EE investments arrangements for climate‑induced commercial products. (including bulk procurement) by human mobility to manage Explore opportunities for a regional developing equipment standards, intra‑regional displacement and waste management strategy regional supply chains and exploring migration flows. including treatment, disposal, and financing mechanisms to bring in sector‑related policies. private capital. Accelerate workforce readiness to support the green transition, pooling regional demand for skills to develop needed expertise in areas such as waste management and green energy development. 10 Global Commission on Adaptation. 2019. "Adapt Now: A Global Call for Leadership on Climate Resilience." The Hague, The Netherlands: Global Commission on Adaptation. xviii Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Introduction This CCDR focuses on four member countries of the Organization of Eastern Caribbean States (OECS):11 Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines. While the OECS includes eleven countries in the Eastern Caribbean, this report focuses only on these four, which are eligible for concessional International Development Association (IDA) financing for development objectives. This OECS Country Climate and Development Report identifies opportunities for these OECS countries to achieve both their development goals and respond to the challenges posed by climate change to increase resilience, while also allowing them to achieve their climate commitments through a coherent set of policies. It lays out a combination of sectoral and economywide policy reforms and targeted investments in near‑ and medium‑term adaptation measures designed to achieve more rapid, more inclusive, and greener development, while also identifying opportunities to reduce emissions. The CCDR is structured in six chapters: » Chapter 1: Focuses on the OECS development context, including highlighting the challenges they face as small island countries, their development priorities, main economic challenges, the risks that climate change, disasters, and national and global decarbonization efforts create, and the opportunities that the climate transition opens. The chapter also summarizes, in the context of development priorities and challenges, the climate‑related risks (physical climate change impacts and those brough by global decarbonization) faced by the OECS countries. » Chapter 2: Discusses the alignment and readiness of the OECS governance and institutional frameworks to cope with the impacts of climate change and reduce emissions. The chapter identifies gaps in the legal, regulatory, and institutional frameworks for climate change in these countries. It also highlights the challenges faced in the integration of climate resilience and adaptation objectives into the budgeting process and how constraints to the private sector may exacerbate the challenges posed by climate change. » Chapter 3: Discusses the importance of defining resilience goals, illustrating investment needs for a set of resilient core investments, and assessing the benefits such investments would bring. The chapter further discusses opportunities for lower cost nature‑based solutions that may entail high cost‑benefit ratios, and points to synergistic actions that can help bring long term resilience while also contributing to lower emissions. » Chapter 4: Discusses human capital challenges as they intersect with climate change risks. It analyses the health, well‑being, and learning impacts of climate shocks and discusses their effects on human capital accumulation. The chapter puts forward key actions that can help mitigate the impact of climate shocks through effective response during an emergency while also building long‑term resilience and improving prevention mechanisms. » Chapter 5: Explores the macroeconomic implications of climate risks, focusing on the medium‑term impacts of adaptation investment needs. It discusses the challenges in a constrained macro‑fiscal environment and offers ptions to enhance fiscal capacity to fund the climate transition. It further assesses the current development model and proposes critical structural reforms and actions that would be required to strengthen OECS countries' ability to build resilience to climate change. Finally, it proposes avenues for financing the transition. » Chapter 6: Concludes with an effort to prioritize the policy and investments needed in the next five to ten years to take advantage of opportunities, minimize the risks of climate, and enact climate change policies that will contribute to achieving the countries' development goals. The CCDR was informed by existing and new analyses of development and climate action in OECS countries conducted by the World Bank, its development partners, research institutions, and nongovernmental organizations. The OECS comprises six independent full member states: Antigua and Barbuda, St. Kitts and Nevis in addition to the four IDA countries covered 11 under the CCDR. General references to the OECS apply to all six countries, while references to the four IDA countries are explicitly specified. 1 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 1. The unique characteristics of small island states in the context of climate‑related risks Main messages • The development path of these four OECS countries is highly vulnerable to external shocks, given the structural challenges inherent to small island developing states (SIDS), including small domestic markets and a narrow resource base. • The vulnerability of the OECS is further aggravated by high exposure to natural hazards and climate change, which directly affect a large portion of the land, assets, and population, and also indirectly—but significantly—impact the economy by halting tourism. • OECS governments have limited policy space to stabilize the economy after shocks due to overly expansive fiscal policies during economic booms (leaving little fiscal buffer to cushion the economy during downturns) and high public debt levels. • Despite some improvements, poverty remains high in OECS countries, with official poverty rates of up to 30 percent, thus further increasing vulnerability of the population to shocks. • At the same time, the pandemic exacerbated gaps in human capital development, which could be further negatively impacted by climate change. • Climate change will deepen existing physical, social, and economic vulnerabilities in OECS countries.Development in the small island states of the OECS is often hampered by external shocks 1.1.  Development in the small island states of the OECS is often hampered by external shocks As Small Island Developing States (SIDS), the development paths of Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines are highly vulnerable to external economic shocks. These small island countries have populations that range between just above 72 thousand in Dominica and nearly 180 thousand in Saint Lucia.12 As expected, their economies are also small. Saint Lucia is the largest economy of the four countries, with an estimated GDP of $2.05 billion in 2022.13 Grenada follows with an economy just over half that size. Structurally, as SIDS, their small populations and land areas translate into small domestic markets and a narrow resource base, including limited land, freshwater, and human capital. They also lack economies of scale, are less diversified, and are heavily dependent on tourism, which is their main export and mostly driven by external demand. This highly concentrated economic structure translates into economic and social vulnerabilities. Tourism accounted for 79 percent of total annual exports on average between 2015 and 2018. In addition, three of the four countries import over 96 percent of their total energy supply, while Saint Vincent and the Grenadines imports 86 percent. This exposes the countries to sector‑specific shocks and global business cycles; that exposure is compounded by deep vulnerabilities to natural hazards as further discussed below. For instance, the OECS countries experienced substantial drops in real GDP during both the 2009 worldwide 12 World Bank. 2023. World Development Indicators. 13 World Bank. 2023. World Development Indicators. GDP, current USD. 2 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines economic crisis and the 2020 COVID‑19 pandemic, even larger than the declines experienced in other small states. Real GDP in the OECS contracted by more than 15 percent in 2020, largely due to the fallout from the tourism sector (Figure 1.1). FIGURE 1.1. As small export‑oriented economies, the states of the OECS are exposed to external shocks that can harm output growth Real GDP Growth (2000-2022) 15 10 Percentage Change 5 0 -5 -10 -15 -20 22 18 06 07 08 10 16 17 19 20 21 00 01 02 03 05 11 12 13 15 09 04 14 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Latin America & Caribbean Upper middle income Small states OECS Source: World Development Indicators, World Bank. The vulnerability of the OECS is further aggravated by high exposure to natural hazards, which directly affect a large portion of the land, assets, and population.14 As small island developing open economies, OECS countries face deeper challenges in preparing for and responding to natural disasters, given their high susceptibility to external macroeconomic shocks and constrained institutional capacity and resources. Their small size magnifies the impact of external shocks while limiting the available pool pf resources and returns‑to‑scale in the public sector, which is equipped with fewer staff than is needed for its function but is restricted in adding staff given the geographically constrained supply of human capital. High exposure to natural hazards deepens economic challenges. Eastern Caribbean States have historically been highly exposed to a wide range of climate and non‑climate driven natural hazards, including hurricanes, floods, droughts, landslides, earthquakes, volcanic eruptions, and tsunamis. On average Caribbean states lose 3.6 percent of GDP per year to hurricanes, far greater than the average across emerging market and developing economies. However, losses from specific events can be much larger. For example, costs from Hurricane Maria for Dominica were over 220 percent of the country's economic output in 2017. Similarly, costs of Hurricane Ivan represented 150 percent of Grenada's GDP in 2004.15 In Saint Lucia, severe flooding in 2013 resulted in losses of about 8 percent of its GDP.16 In addition to hurricanes, other hazards already pose significant challenges to the OECS. Almost all bridges in Saint Lucia and Saint Vincent and the Grenadines are in landslide susceptible areas, while in Dominica and Grenada, almost all road segments are exposed to high winds from hurricanes. Relative to other Caribbean nations, OECS countries are particularly exposed in urban areas, with Dominica and Saint Vincent showing the highest exposure in urban areas. Exposure in agricultural lands is also slightly higher than other countries in the Caribbean.17 Studies of the Eastern Caribbean Currency Union, of which Dominica, Grenada, Saint Lucia, and Saint Vincent are members, suggest that impacts of natural hazards, specifically storms, can trigger a persistent increase in public debt‑to‑GDP ratios by up to 5 percent out to eight years after an event.18 14 Scott, D., et al. 2020. The Impact of Extreme Weather, Infectious Disease Outbreaks, and Economic Recession on Caribbean Tourism. University of Waterloo. (Cited in "Resilience of the Caribbean Tourism Industry," background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). 15 The estimates for Hurricane Ivan are from Sebastian Acevedo, "Gone with the Wind: Estimating Hurricane and Climate Change Costs in the Caribbean," International Monetary Fund Working Paper No. WP/16/199, October 2016. The estimate for Hurricane Maria is from Commonwealth of Dominica, "Post‑Disaster Needs Assessment: Hurricane Maria, September 18, 2017," November 2017. 16 Government of Saint Lucia and World Bank. 2014. "Saint Lucia Flood Event of December 24–25, 2013: Joint Rapid Damage and Needs Assessment." Rozenberg, J., et al. 2021. 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. Washington, DC: The 17 World Bank. 18 Acevedo, S. 2014. "Debt, Growth and Natural Disasters: A Caribbean Trilogy." International Monetary Fund Working Paper No. WP/14/125. 3 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines High debt and limited ability to address external shocks translate into high economic volatility. Output volatility has important negative implications for long‑term growth, inclusion, and sustainability. Fiscal policies in most OECS countries have tended to exacerbate output volatility. This challenge became prominent after the global financial crisis and worsened with the COVID‑19 pandemic (Figure 1.2). Governments have generally taken an expansionary fiscal stance during economic booms, which has made it challenging to accumulate fiscal buffers that could cushion the economy during downturns. In addition, high public debt levels related to the post‑global financial crisis recovery, and more recently the pandemic, further handcuff the policy space to stabilize the economy after shocks. Debt ratios in the Caribbean continue to be higher than in other SIDS and are the highest in the LAC region. FIGURE 1.2. Output volatility and public debt in the OECS has increased since the global financial crisis GDP per capita in constant 2015 $S Public debt across regions (standarddeviation from 5-year moving average) 12 120 (Standard deviation) 10 100 (In percent of GDP) 8 80 6 60 4 40 2 20 0 0 00 02 04 06 08 10 12 14 16 18 20 OECS LAC Small States World 20 20 20 20 20 20 20 20 20 20 20 OECS LAC Small States UMIC 2010 2019 2021 Source: World Development Indicators, World Bank. Source: World Economic Outlook (April 2022), IMF. Despite some improvements, poverty remains high in OECS countries, with official poverty rates of up to 30 percent, thus further increasing vulnerability of the population to shocks.19 The lack of up‑to‑date socioeconomic data limits the ability to assess the poverty and distributional impact of the pandemic and recent increases in food and fuel prices. Only Grenada and Saint Lucia have relatively recent poverty and inequality data available, which still date from 2018 and 2016, respectively. Grenada, which previously had the highest level of poverty in the OECS, managed to reduce its poverty rate from 38 to 25 percent between 2008 and 2018,20 in line with its significant growth in per capita income. In Saint Lucia, poverty declined from 29 percent to 25 percent between 2005 and 2016. The most recent poverty indicators for Dominica and Saint Vincent and the Grenadines are over a decade old, and show poverty rates between 18 and 30 percent of the population (see Figure 1.3).21 Inequality in OECS countries has been moderate to high, with Gini index values between 0.37 and 0.48 (see Figure 1.4).22 Given that poor people in OECS countries have limited access to buffers such as savings, access to financial services, or social protection to absorb shocks, their high level of poverty further increases the vulnerability of the population to shocks.23 Limited social protection coverage across the islands also hinders resilient responses to climate impacts. Today, cash transfer programs reach only between 15 and 35 percent of the poor, and there is a lack of automatic stabilizers (e.g., unemployment insurance).24 19 Most recent values, at national poverty lines. 20 Note: Due to changes in the consumption module of the questionnaire from diary (2008) to recall method (2018), the results are not strictly comparable. 21 Although Saint Vincent and the Grenadines conducted a household living conditions survey in 2018, the results and data have yet to be released. 22 Most recent value, outdated in many countries. Note: The consumption‑based measures of inequality used in the Eastern Caribbean countries tend to be lower than income‑based measures of inequality. 23 Hallegatte, S., et al. 2018. Building Back Better: Achieving Resilience through Stronger, Faster, and More Inclusive Post‑Disaster Reconstruction. World Bank. 24 Beazley, R. and Williams, A. 2021. Adaptive Social Protection in the Caribbean: Building Human Capital for Resilience. World Bank. (Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. 2021. World Bank.) 4 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE 1.3. Official Poverty Rates in the OECS FIGURE 1.4. Inequality in the OECS 38 48 % of population 29 29 30 43 43 44 25 40 Gini index 23 Dominica Grenada Saint Lucia St. Vincent Dominica Grenada Saint Lucia St. Vincent (2008) (2008- 2018) (2005- 2016) and the (2008) (2008- 2018) (2005- 2016) and the Grenadines Grenadines (2007) (2007) circa 2005-2008 circa 2016-2018 circa 2005-2008 circa 2016-2018 Source: CDB country poverty assessment reports. WB and National Source: CDB country poverty assessment reports. WB and National Statistical Office for Grenada 2018. Statistical Office for Grenada 2018. The pandemic and recent spikes in inflation are estimated to have aggravated poverty in the region and affected food security with more severe impacts on the population at the bottom of the income distribution. Data from phone‑based household surveys and labor force surveys suggest that poverty increased during the pandemic. Estimates suggest that poverty declined to pre‑pandemic levels in Saint Lucia by 2023, in line with strong economic recovery, while for Grenada, this is expected for 2025 only.25 Labor market participation in the Caribbean returned to pre‑pandemic levels in late 2022. Forecasts from the ILO still put the unemployment rate above pre‑pandemic levels for the region's Small States in the region. At the same time, increases in inflation driven by recent food and fuel price shocks have raised living costs and affected food security, with more severe impacts on the population at the bottom of the income distribution.26 The CARICOM Food Security & Livelihoods Survey estimates that in August 2023, 3.7 million people in the English and Dutch‑speaking Caribbean (over 55 percent of the population) were either moderately or severely food insecure. Over 80 percent of respondents to the most recent WFP Food Security and Livelihoods Survey in the four OECS countries reported changing their shopping habits to buy cheaper and less food, while 35 to 45 percent reported skipping at least one meal in the prior week.27 While it is estimated that food insecurity remained relatively constant in 2021 and early 2022 (after increasing sharply with the pandemic in 2020), the data suggest an additional spike in food insecurity beginning in 2022, caused in large part by increases in the price of food and other household inputs.28 1.2.  Climate change will deepen existing physical, social and economic vulnerabilities in OECS countries Climate change is expected to lead to the intensification and increased frequency of natural hazards, increased coastal flooding, higher temperatures, and ocean acidification. Eastern Caribbean States have historically been highly exposed to natural hazards, which will increase in intensity and frequency with climate change. These hazards include hurricanes, floods, droughts, landslides, earthquakes, volcanic eruptions, and tsunamis. Additional factors are expected to increase the severity of already frequent natural hazards; for example, sea level rise (SLR) will bring storm surges further inland, while increased precipitation extremes can trigger certain types of landslides. Table 1.1 below highlights some of the key expected impacts of climate change in the four countries studied in this report. 25 World Bank. 2023. Macro Poverty Outlook. 26 The World Bank – UNDP LAC High Frequency Phone Survey showed a sharp increase in selected food insecurity indicators in Caribbean Small States from before the pandemic (based on recall) to the end of 2021. Between 33–45 percent of households had run out of food due to a lack of money or other resources at the end of 2021. Proportions were even higher for households possessing the least assets, a proxy for poverty. This is in line with food price increases usually hitting the poor and vulnerable the hardest since they devote a higher share of their consumption to food expenditures. 27 World Bank and UN Development Programme. 2021. High‑Frequency Phone Surveys. 28 World Food Programme. 2023. Caribbean Food Security and Livelihoods Survey. 5 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines TABLE 1.1. Hazards and Impacts under SSP2‑45 St. Vincent and Dominica Grenada St. Lucia the Grenadines % Sandy Beach Lost Due to Sea 0% 0% 34% 41% Level Rise by 2050 (i) % Hotel Revenue Affected by Sea 0% 0% 29% 1% Level Rise by 2050 (i) # of Additional Days with Heat <1 9 14 7 Index > 35 °C by 2050 (ii) Future Return period of 100‑year 94 88 82 79 Hurricane (2050 pessimistic) (iii) Future Return period of 50 Year 20 19 16 16 Rainfall event (2050 10th pct.) (iv) Note: (i) Source: Spencer, N., Strobl, E., and Campbell, A. (2022). Sea level rise under climate change: Implications for beach tourism in the Caribbean. Ocean & Coastal Management, 225, 106207. Total beach loss relative to current extent. (ii) Source: World Bank staff calculation from Climate Change Knowledge Portal CMIP6 data. Relative to historical. (iii) Source: World Bank staff calculation from Climate Change Knowledge Portal CMIP6 data. Relative to historical. (iv) Source: World Bank staff calculation from Climate Change Knowledge Portal CMIP6 data. Relative to historical. Current and expected future damages are large across islands, subject to significant uncertainty, and unevenly dispersed across hazard and infrastructure asset type.29 In Dominica, average annual loss (AAL) estimates of infrastructure damage for all hazards (range between $40 and $150 million per year (6.5 to 24 percent of 2022 GDP). Flood impacts drive the most significant damages, particularly for ports and airports, which are also the most significantly impacted asset types. In Grenada the expected annual damages across hazard types are between $2 and $17 million (0.1 to 1.3 percent of 2022 GDP).30 Cyclone winds and pluvial flooding impacts on airports, roads and ports are the most significant drivers of damage. Economic damages in Saint Lucia are highest of all the islands, between $26 and $245 million in annual expected damages (1.2 to 11.8 percent of GDP), concentrated on ports, airports, and education facilities and due to cyclone winds and pluvial flooding.31 Finally, in Saint Vincent, between $9 to $52 million of damage (0.9 to 5.4 percent of GDP) is anticipated annually, with ports, airports, and energy assets most affected. Cyclone winds and pluvial flooding are again the most significant drivers of damage.32 Climate change also brings slower‑onset impacts, such as SLR, land loss, salinization of groundwater, ocean acidification, beach erosion, rising temperatures, and reduced rainfall. These processes can erode the productive capacity of the OECS economies by affecting key drivers of economic growth. For example, rising sea levels and beach erosion may impact tourism revenues, through the joint impact of climate change and increased coastal development.33 With 1 in 5 workers in Saint Lucia being employed in the tourism sector, the highest share within a group of Caribbean and comparator countries, employment is vulnerable to these impacts.34 Given that between 2 and 25 percent of the islands' coastlines are sandy beaches, the states of the OECS are particularly exposed to the specific impacts of SLR on these beaches. More generally, SLR is expected to increase the percentage of the population exposed to coastal flooding. Precipitation is broadly expected to decline during the summer and fall months across all four islands by 2100, with around 150 millimeters (316 millimeters) less rain per year under an RCP 4.5 (RCP 8.5) 29 Analysis of impacts based on modelling done by Oxford Infrastructure Analytics, 2023. Assets and hazards considered include cyclone wind, pluvial and fluvial flooding, coastal sea level rise, and landslide. Sectors for which asset damages are estimated include transport, energy, water and wastewater, education, and hospitals, See Chapter 3 and Box 3.1 for methodological description. 30 Oxford Infrastructure Analytics, 2023. Estimating Investment Needs for Climate Adaptation in the Eastern Caribbean. https://openknowledge.worldbank.org/bitstreams/3485bb90-6527-431f-a6cf-3bb1970f7c0a/download 31 Ibid. 32 Oxford Infrastructure Analytics, 2023. Estimating Investment Needs for Climate Adaptation in the Eastern Caribbean. https://openknowledge.worldbank.org/bitstreams/3485bb90-6527-431f-a6cf-3bb1970f7c0a/download 33 GFDRR. Forthcoming. "Nature‑based solutions for coastal resilience." Background Note for the OECS CCDR. 34 World Bank staff calculations based on 2016 SLC‑HBS. Comparator countries are Barbados, Dominican Republic, Grenada, Costa Rica and Vanuatu. In Grenada, the share is 10.1 percent. 6 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines scenario representing a 12 percent decline (28 percent decline).35, 36 These precipitation declines increase the risk of drought in the region. Turning to rising temperatures, by 2050, the heat impact on labor and agricultural productivity will increase. Modelling conducted for the Dominican Republic found that under a range of climate scenarios, impacts by 2050 on labor productivity range between -3 and -9 percent on average. The largest impacts are anticipated in the agriculture sector, which experiences shocks of up to almost 13 percent.37 Agricultural productivity is affected differently depending upon the crop and which warming scenario is considered, but can vary between a 5 percent increase, and a 35 percent decrease in yield out to 2050.38 As future temperature changes are likely to be observed throughout the region, these impacts provide some insight into potential effects on the islands of the OECS. Negative impacts on agricultural productivity and outputs will disproportionately affect the poorer and vulnerable population. In Saint Lucia, agricultural income accounts for a higher share of the total labor income of households in the two bottom quintiles of the welfare distribution (14–15 percent, compared to 8–10 percent for quintiles 3 to 5).39 Changes in hazard occurrence will have significant economic and social impacts on the islands due to their existing exposure and vulnerability. Relative to other Caribbean nations, OECS countries are particularly exposed in urban areas and agricultural lands, with specific islands exposed to impacts on a variety of infrastructure assets that will affect a broad range of economic sectors. The existing macroeconomic vulnerabilities described above make these countries particularly susceptible to the impacts of both current hazard events, and future climate impacts through slow and rapid onset effects. Infrastructure, tourism, water, and agriculture are key channels through which these impacts are and will be transmitted, with their ultimate effects visible in financial, macroeconomic, and poverty impacts. Gaps in human capital development were exacerbated by the pandemic and could be further negatively impacted by climate change. Climate change poses significant risks to human capital development, including through its direct impacts on human health; disruption of health and education services; and as a potential driver of the increased emigration of skilled labor. The high frequency of natural hazards and the recent pandemic have also disrupted education and learning. The Human Capital Index for the four OECS countries averages 0.56, which means that a child born today will be only 56 percent as productive as she would have been had she enjoyed full health and education. The Covid pandemic, other epidemics (such as Zika), and natural disasters have negatively affected human capital and the delivery of essential social services. Weaknesses in health systems and high rates of noncommunicable disease contributed to excess mortality and morbidity from Covid‑19, as well as declines in coverage of essential health services, while increased temperatures are already contributing to outbreaks of mosquito‑born illnesses (such as Zika) and other communicable diseases. The pandemic and natural disasters have disrupted education and learning. Chapter 4 further discusses the importance of supporting human capital through more resilient health and education systems. 1.2.1.  Key transmission channels for climate impacts in the OECS Infrastructure assets will suffer costly damages as climate change increases the severity and frequency of natural hazards. A large proportion of the region's assets is exposed to hurricane winds and landslides, and a smaller but significant share is also exposed to floods and earthquakes.40 The absence of construction standards and maintenance—and the often‑advanced age of assets—suggests high vulnerability of assets to climate shocks. A review of historical damage caused by tropical storms, hurricanes, earthquakes, and 35 World Bank. 2022. Climate Change Knowledge Portal. 36 A slight increase in precipitation is also expected during winter months. Almazroui, M., Islam, M.N., Saeed, F., et al. 2021. "Projected Changes in Temperature and Precipitation Over the United States, Central America, and the Caribbean in CMIP6 GCMs." Earth Systems and Environment 5, 1–24 (2021). 37 World Bank. 2023. Dominican Republic Country Climate and Development Report. 38 World Bank. 2023. Dominican Republic Country Climate and Development Report. 39 World Bank staff calculations based on Saint Lucia Survey of Living Conditions and Household Budgets 2016. 40 Schweikert, A., L'her, G., Nield L., Kerber, S., Flanagan, R., and Deinert, M. 2021. "Resilience in the Caribbean: Natural Hazards Exposure Assessment and Areas for Future Work." World Bank. (Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. 2021. World Bank.) 7 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines floods shows that, in terms of assets, the housing and infrastructure sectors are by far the most impacted (they represented between 71 and 81 percent of total damages in Dominica from Tropical Storm Erika and Hurricane Maria; and 87 percent in Saint Lucia and 96 percent in Saint Vincent and the Grenadines from floods in 2013). The same assessment of historical damage suggests that within the infrastructure sector, transport assets often suffer the costliest damage (between 66 and 84 percent of infrastructure damage in Dominica, 97 percent in Saint Lucia, and 89 percent in Saint Vincent and the Grenadines). Network effects multiply the impact of asset damages when users cannot find alternative routes. Two of the OECS countries, Dominica, and Saint Vincent, are particularly vulnerable to these impacts. More than 8 percent of the links in their road networks lack redundancy, suggesting that if damaged, communities dependent on those links would be left isolated.41 For comparison, only 1.2 percent of the road network links in Grenada and 0.2 percent of the road network links in the Dominican Republic would bring the same risk of isolating population. Energy generation and transmission is also a source of costly damages. After Hurricane Ivan hit Grenada in 2004, the cost to rebuild the electrical grid was about $42 million (6 percent of GDP). In 2015, during Tropical Storm Erika, Dominica experienced wide power outages amid heavy rainfall and strong winds, which lasted about two days in most areas. The associated direct damage was estimated at $2.19 million (0.4 percent of GDP), while the revenue losses to the power company due to unserved energy was assessed at $0.33 million. Total damages amounted to over $482 million, representing 90 percent of GDP.42 The housing sector is consistently among the most affected in terms of financial impact after major adverse natural events. The housing sector suffered direct damages of $910 million due to hurricanes Irma and Maria in 2017.43 In Dominica and Antigua & Barbuda alone, the housing reconstruction needs exceeded $600 million. In Dominica for instance, housing represented 38 percent of the total recovery needs following Hurricane Maria, with the dwellings of the most vulnerable bearing the brunt of the storm.44 Across the Caribbean and particularly in the OECS countries, many factors contribute to the high vulnerability in the housing sector, including a lack of affordability, constrained land markets, the growth of informal settlements, limited housing insurance coverage, poor condition of existing housing stock, and the increasing vulnerability of certain social groups. Developable land is often scarce, and this scarcity is compounded by poor land management and planning practices that lead to skewed land ownership patterns and encourage speculative behavior. Because of these challenges, many households are forced to resort to squatting in low‑quality structures to meet their housing needs. This informal housing is particularly vulnerable to natural events and disasters such as landslides, flooding, and storm surge due to its substandard construction and often precarious location. In Saint Lucia, almost 1 in 5 households (17 percent) in 2016 lived in dwelling units constructed with precarious material, such as makeshift or thatch roofing and/or plywood or makeshift walls.45 Moreover, among households affected by a natural hazard between 2011 and 2016, 3 in 4 had experienced damage to household assets, with damages to roofs and furniture being most common (27 percent of households).46 Disruptions of infrastructure services result in revenue losses for firms, and these increase with the duration of the outage. Firms are also affected by shutdowns and loss of revenue due to climate and disaster impacts, with negative effects on wages and income. Following Hurricane Maria, firms were shut for an average of 86 days, while following Matthew, shutdowns lasted an average of 10 days. It takes time for firms' revenues to return to their pre‑event levels. The same survey found that it took 65 days on average for revenue to recover from Maria, and 131 to recover from Irma. Flood events cause shorter shutdowns—an average of 11 days for firms' revenue recovery.47 Firms cope by investing in backup infrastructure, such as 41 Country profiles for Dominica and St. Vincent and the Grenadines developed from data for the 360 Resilience Report, using analysis published as Koks, E., Rozenberg, J., Tariverdi, M., Dickens, B., Fox, C., van Ginkel, K., & Hallegatte, S. 2023. "A global assessment of national road network vulnerability." Environmental Research: Infrastructure and Sustainability, 3(2), 025008. 42 Government of the Commonwealth of Dominica. 2015. "Rapid Damage and Impact Assessment: Tropical Storm Erika – August 27, 2015." 43 ACAPS, OCHA, and UNDP. 2017. "Regional Overview: Impact of Hurricanes Irma and Maria, Conference Supporting Document." 44 Commonwealth of Dominica. 2017. "Dominica Post Disaster Needs Assessment: Hurricane Maria – September 18, 2017." 45 World Bank staff calculations based on Saint Lucia Survey of Living Conditions and Household Budgets 2016. 46 World Bank staff calculations based on Saint Lucia Survey of Living Conditions and Household Budgets 2016. In addition, 25 percent of households experienced other damages to the dwelling unit than damages to the roof or walls, 23 percent experienced damages to the walls, and the proportion of households who experienced a loss of electronic equipment was also 23 percent. Loss of income generating assets and loss or damage to vehicles was less frequent (14 and 2 percent of households, respectively). 47 Erman, A. et al. 2021. "Resilience of the Caribbean Tourism Industry." World Bank. (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). 8 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines water tanks and power generators. A survey in the Caribbean region found that, if power infrastructure is disrupted for one day, 45 percent of firms would experience a drop in daily revenue of 50 percent or more, and only 26 percent would be able to maintain sales. For power disruptions lasting more than a week, 89 percent of firms would experience a 50 percent drop or more in daily revenue. For longer outages of any service they depend on, very few firms can maintain daily revenue. But while many can maintain sales (albeit lower) with extended phone, internet, and boat transportation disruptions, between 4 and 61 percent would have to shut down completely in case of water and road disruptions. Results indicate that an average firm in the Caribbean loses about 3 percent of its yearly sales to water disruptions and 1.1 percent to power outages.48 Increased temperatures and frequency of severe heat waves will directly impact health and productivity. Climate change will both increase average temperatures and contribute to more frequent severe heat waves. First, more frequent and severe heat waves, combined with high rates of obesity and noncommunicable disease, can increase mortality and morbidity. Second, higher temperatures will further increase the spread of communicable diseases and increase the likelihood of new pandemics. This will in turn decrease economic productivity and contribute to increased poverty. Third, more frequent severe weather events can lead to both direct loss of life and injuries, as well as increased spread of disease through flooding and disruptions to health, water, and sanitation systems.49 Coastal flood damages are expected to increase out to 2050 due to a combination of SLR, socioeconomic development, and ecosystem degradation. Current average annual damages from coastal floods in Saint Lucia are $4 million, in Grenada $2 million, in Dominica $3 million, and in Saint Vincent $1 million.50 Due to SLR, by 2050 these amounts are estimated to increase by between 3 and 20 percent. In Saint Lucia, the cost of inaction on coastal flooding has been estimated at 25 percent of GDP by 2050.51 Socioeconomic growth increases the number of people and assets exposed to rising sea levels, and further exacerbates flood risks by between 3 and 125 percent by 2050. Future coastal damages due to climate change and socio‑economic growth are estimated to increase by $4.5 million in Saint Lucia, $3.1 million in Grenada, $0.2 million in Dominica, and $0.7 million in Saint Vincent and the Grenadines. Ecosystem degradation between 2020 and 2050 contributes even further to flood damages (beyond those due to SLR and increased exposure from socioeconomic growth), to the tune of between $0.3 and $2.7 million between 2020 and 2050, if ecosystems continue to degrade at the present rates.52 Disruption in basic services also brings high costs through negative impacts to human capital accumulation. Natural disasters and pandemics can severely disrupt service delivery and damage schools, health facilities, and water and sanitation systems. School closures due to the Covid pandemic contributed to an estimated loss of 1.4 years of schooling. Limited access to water and electricity can have important negative effects on health and productivity. Significant costs can also arise from indirect impacts through the diversion of health systems away from routine health services (e.g., immunizations, maternal care, and cancer screenings), negatively impacting population health and productivity. Following Hurricane Ivan, it took a month to restore health services in Grenada.53 Food insecurity, reduced access to health care and other services, and loss of access to infrastructure resulting from disasters can severely and permanently affect children's accumulation of human capital.54 In the Caribbean, storm impacts have a negative effect on 48 Erman, A. et al. 2021. "Resilience of the Caribbean Tourism Industry." World Bank. (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). 49 Rise, N., Oura, C., and Drewry, J. 2022. "Climate Change and Health in the Caribbean: A Review Highlighting Research Gaps and Priorities." The Journal of Climate Change and Health 8: 100126. 50 GFDRR. Forthcoming. "Nature‑based solutions for coastal resilience." Background Note for the OECS CCDR. Government of Saint Lucia. 2021. "Saint Lucia's Updated Nationally Determined Contribution." Saint Lucia: Department of Sustainable 51 Development of the Ministry of Education, Innovation, Gender Relations and Sustainable Development. 52 These estimated damages do not include impacts on tourism or other socioeconomic impacts beyond flood damages. They focus on additional infrastructure and asset damages that result from ecosystem degradation and may therefore underestimate the effects of ecosystem degradation. 53 PAHO. 2004. "Press Release: Health services in Grenada almost fully restored with PAHO support." 54 Baez, J., et al. 2010. "Do Natural Disasters Affect Human Capital? An Assessment Based on Existing Empirical Evidence." Institute for the Study of Labor (IZA), IZA Discussion Papers, IZA DP No. 5164. 9 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines schooling throughout the year, and in some cases have required displacement of students to neighboring islands. The total economic value of these losses for some OECS countries is more than $100,000 per cohort impacted by an event.55 Rapid onset disasters, most notably flooding and storms, will have a significant impact on the tourism sector in the OECS countries. Tourism infrastructure is exposed to hurricanes and coastal inundation throughout the Caribbean region, with about 95 percent of accommodation facilities and 80 percent of tourist attractions located at sea level along the coast, and the OECS is no exception. The World Travel and Tourism Council (WTTC)'s multi‑storm analysis estimated that the 2017 hurricane season, which most severely impacted Dominica, caused a loss of 2.5 percent of expected visitors, with the region's GDP experiencing a loss of over $292 million.56 It also estimated that recovery in some destinations would take up to four years, during which time the tourism sector would "miss out" on an additional $3 billion in tourist spending due to damage to resorts, beaches, attractions, and other infrastructure.57 In addition, recent work suggests a strong positive link between increased ocean temperatures and sargassum growth rates, with important effects on Caribbean countries. There is increasing evidence that coastal sargassum negatively affects tourism revenue,58 coastal economies, beaches, and marine biodiversity. Emerging evidence also suggests potentially negative effects in the form of heavy metal accumulation and deposition, carriage of exotic species and pathogens, and release of toxic gases.59 Discussion about appropriate measures to address sargassum focus on mitigation at source, removal, and potential for use, though there remains a lack of consensus about best practices to manage the phenomenon or the scale and feasibility of potential opportunities. Establishing a regional sargassum response platform in the OECS to tackle the offshore collection of sargassum and utilization of the collected sargassum could help create economies of scale for commercial production of innovative products, along with the commercial production of sea moss. Additionally, the degradation of natural assets such as coral reefs, and the reduction in available surface water due to changes in rainfall and longer droughts, are significant threats to tourism. Beach degradation is a particular risk to hotel infrastructure in some of these islands. SLR projections suggest that Saint Lucia's shorelines will retreat between 22 and 27 meters by 2050, and 51 and 78 meters by the end of the century, depending on the emissions pathway (RCP4.5 or 8.5). This will impact settlements and assets along the coast if not protected by infrastructure or beach nourishment. By 2050 Saint Lucia will have experienced a 34(50) percent sandy beach loss under the RCP 4.5(RCP 8.5).60 Moreover, 57(61) percent of Saint Lucia's present hotel accommodation will no longer be near a sandy beach by 2100 under the RCP4.5 (RCP8.5) emission pathway. Saint Vincent will lose similar shares of sandy beaches, but this will have less of an impact on tourist infrastructure, as it is less frequently located near sandy beaches. Although Grenada will lose very little of its sandy beaches due to SLR by mid‑century (<1 percent) and a smaller share than Saint Lucia by end of century (9–13 percent), that impact will be heavily felt by hotels as 25–37 percent of hotel infrastructure in Grenada will no longer be located near a sandy beach by the end of the century. Water is a particular concern for the islands of the Eastern Caribbean, via both drought and water stress,61 as water resources have been declining across the region; this trend is expected to continue. The region suffers from a severe and worsening water crisis. The 2013–2016 pan‑Caribbean drought, which placed 2 million people in the region at risk of food insecurity, was exacerbated by climate change, which is estimated to have increased the severity of the drought by 15–17 percent and accounted for 7 percent of 55 Spencer, N., et al. 2016. "How Do Hurricanes Affect Achievement in School? A Caribbean Perspective." Institute for the Study of Labor (IZA), IZA Discussion Papers, IZA DP No. 10169. 56 WTTC. 2018. "Caribbean Resilience and Recovery: Minimising the Impact of the 2017 Hurricane Season on the Caribbean's Tourism Sector." 57 WTTC. 2018. "Caribbean Resilience and Recovery: Minimising the Impact of the 2017 Hurricane Season on the Caribbean's Tourism Sector." 58 Example: Chávez, V., et al. 2020. "Massive Influx of Pelagic Sargassum spp. on the Coasts of the Mexican Caribbean 2014–2020: Challenges and Opportunities." Water 12, 2908 (2020). Rodriguez, R. 2023. "Turning sargassum into an opportunity." Wider Caribbean — UE Regional Conference on Sargassum, Santo 59 Domingo, Dominican Republic, 15 June 2023. 60 Spencer, N., Strobl, E., and Campbell, A. 2022. "Sea level rise under climate change: Implications for beach tourism in the Caribbean." Ocean & Coastal Management, 225, 106207. 61 When a territory withdraws 25 percent or more of its renewable freshwater resources it is said to be "water‑stressed" (UN‑Water. 2021. "Water Scarcity." Informational webpage. https://www.unwater.org/water-facts/water-scarcity#). 10 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines the geographic extent of the event.62 Saint Vincent and the Grenadines is considered water scarce, having less than 1,000 m3/capita/year of freshwater availability, while Saint Lucia is considered water stressed and Grenada is near the water stressed threshold.63 In May 2020, the government of Saint Lucia declared a water emergency for the island's approximately 180,000 residents. Agriculture in the region is primarily rainfed, making these countries vulnerable to droughts. The combination of saltwater intrusion, decreased rainfall, and increased evaporation due to rising temperatures will affect water security, further exacerbating food security challenges. Droughts also constrain utilities from delivering water in needed volumes to customers, and in rural areas that rely on harvested rainwater, low rainfall can curtail household water availability.64 Conservation measures enacted in response to drought can lead to impacts ranging from restrictions on usage to service interruptions. In addition to systemic effects, drought can negatively impact individual system components, requiring maintenance or repair and damaging system efficiency. Major water‑related events attributable to climate change disproportionately hurt poor people. For example, the 2009–2010 drought, the worst in over 40 years, led to Dominica's banana production falling by 43 percent, reducing exports and foreign exchange. In Saint Vincent and the Grenadines, agricultural yields fell 20 percent, affecting key crops like onions and tomatoes. The drought also diminished hydro‑power output, with Saint Vincent and the Grenadines experiencing a notable decrease in hydro‑power's contribution to total electricity production.65 Climate change is also anticipated to have significant impacts on agriculture in the region through both fast‑ and slow‑moving channels like droughts, storms, and temperature increases. To give one example, in 2009–2010 severe drought combined with decreased forest coverage after hurricanes Ivan in 2004 and Emily in 2005 led to a 65 percent increase in bushfires, which severely affected small farmers in Grenada.66 The short‑term impact of these fires was a reduced crop harvest. The long‑term impacts were the loss of a wide variety of tree crops including nutmeg, cocoa, and citrus, as well as the destruction of significant swaths of agricultural fields. In 2007, Hurricane Dean destroyed 90 percent of Dominica's banana production. Consequently, the livelihoods and food security of many rural working poor, who largely rely on agricultural production as their main source of income and subsistence, are expected to be negatively impacted by future climate events. Rural farmers in Dominica, for instance, indicate that inconsistent rainfall patterns in the country, including reduced rainfall and prolonged dry spells followed by heavy rains, have negatively impacted crop production through decreased water availability and soil quality.67 Moreover, among households affected by a natural hazard between 2011 and 2016 in Saint Lucia, almost 1 in 3 reported a decline in food production.68 The solid waste management (SWM) infrastructure and services in the Caribbean region are extremely vulnerable to climate change risks. These include exposure to temperature changes and intense precipitation, as well as drought, SLR, and hurricanes. These cause damage to, and hinder, the operation of an efficient and functional SWM system, both directly and indirectly. From the siting of facilities and use of equipment to policymaking and planning, OECS countries have gaps in their climate resilience and disaster risk management preparedness for the waste sector. For example, increasing temperatures may require more frequent waste collection to avoid odors and increased pest activity, and may also lead to the overheating of collection vehicles and waste processing equipment, decreasing their operational life. More rain may lead to flooding in and around the landfills and increased leachate (which will then need to be collected and treated). Droughts increase the potential risk of landfill fires, and extreme winds and storms impact SWM services by directly damaging infrastructure. 62 Herrera, D. A., et al. 2018. "Exacerbation of the 2013–2016 Pan‑Caribbean Drought by Anthropogenic Warming." Geophysical Research Letters, 45, 10,619– 10,626. 63 Food and Agriculture Organization (FAO). 2021. Aquastat – FAO's Global Information System on Water and Agriculture. Rome: Food and Agriculture Organization of the United Nations. 64 Medina, D., et al. 2021. "Revisiting Resilience in the Caribbean: Water Supply and Sanitation." World Bank. (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). 65 FAO. 2016. "Drought characteristics and management in the Caribbean." Rome: Food and Agriculture Organization of the United Nations. 66 Peters, E. J. 2015. "The 2009/2010 Caribbean drought: A case study." Disasters, 39: 738–761. 67 See background note for this report: Adaawen, Stephen. "Climate Change and Human Mobility in the Eastern Caribbean: A Case Study in Dominica." https://openknowledge.worldbank.org/bitstreams/6480de75-0e06-4faa-bef1-4e598f68de36/download. 68 World Bank staff calculations based on Saint Lucia Survey of Living Conditions and Household Budgets 2016. 11 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Waste and wastewater management is also a source of marine pollution and can pose serious risks to ecosystems and health. Eastern Caribbean countries lack policy measures linked to wastewater treatment. Low levels of wastewater management lead to pollution impacts in coastal areas and bays, in addition to affecting people living in low‑served and flood‑prone areas. Limited access to improved sanitation also increases health risks due to floods. Pathogens in the water pose significant hazards to the health of local people and visitors. During flooding events, untreated sewage from unsafely managed toilets and the overflow of sewers can spread contaminants and induce waterborne diseases. Excess nutrients discharged into the marine environment through sewage can also interact with increasing, climate‑driven ocean CO2 concentrations, causing human exposure to toxins associated with the resulting algae blooms.69 Moreover, sewage pollution poses serious threats to marine biodiversity, in particular coral reef ecosystems, which are already threatened by changes to ocean chemistry and increasing temperatures. The wastewater collection and treatment methods used in the Eastern Caribbean region are often insufficient, if not altogether absent. Primary treatment is the predominant method; secondary or tertiary treatment is less common. Primary treatment removes suspended solids and a certain amount of organic material. This reduces the frequency of waterway blockage and health impacts while providing some environmental co‑benefits such as mitigating decreased oxygen availability for ecosystems. However, wastewater that is treated at only the primary level retains the ability to do harm when large amounts of this treated wastewater are discharged into waterways leading to the ocean or directly into the marine environment. Comprehensive sewage collection and tertiary treatment, required to maintain healthy coral reef ecosystems (which deliver storm surge and flood risk protection benefits), is rarely used in the region. The impacts of extreme weather events have also triggered human mobility and displacement. Despite their small populations, Dominica and Saint Vincent and the Grenadines registered the fifth and sixth highest (absolute) numbers of new disaster displacements in the Caribbean in the period between 2012 and 2022 (35,875 and 25,950 respectively),70 a grim indicator of the islands' vulnerability to hurricanes and tropical storms. Small island states in the region are disproportionately affected relative to their population size.71 Hurricane Maria resulted in the displacement of more than 35,000 people in Dominica, representing nearly half of the island's total population.72 A qualitative study73 carried out in the country revealed that the loss of homes and properties and lack of electricity compelled families to evacuate and relocate from their communities. Human mobility flows—evacuations, relocations, displacement, and migration—are likely to intensify with projected increases in the frequency and severity of rapid‑ and slow‑onset events. As small islands with highly exposed low‑lying coastal populations, the effects of rising sea levels or large‑scale weather disasters threaten their habitability74 and may prevent people from seeking refuge in their own country.75 In the Caribbean, individuals with tertiary education have emigration rates 30 times higher than less educated groups.76 The Caribbean already has some of the highest migration rates in the world, with nearly half of immigrants having some postsecondary training. Increased migration from climate change could therefore further erode human capital accumulation and affect economic growth. To proactively 69 Gobler, C., 2019. "Climate Change and Harmful Algal Blooms: Insights and perspective." Harmful Algae, Volume 91 (2020). 70 IOM Regional Data Hub. 2023. Data Report: Trends in Caribbean Migration and Mobility. San José, Costa Rica: Regional Office of the International Organization for Migration (IOM). 71 Cissé, G., et al. 2022. "Health, Wellbeing, and the Changing Structure of Communities." In: Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.‑O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 1041–1170, doi:10.1017/9781009325844.009. 72 Internal Displacement Monitoring Centre (iDMC) and Norwegian Refugee Council (NRC). 2018. Global Report on Internal Displacement (GRID 2018). 73 See background note for this report: Adaawen, Stephen. "Climate Change and Human Mobility in the Eastern Caribbean: A Case Study in Dominica." https://openknowledge.worldbank.org/bitstreams/6480de75-0e06-4faa-bef1-4e598f68de36/download 74 Mycoo, M.,et al. 2022. "Small Islands." In: Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.‑O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 2043–2121, doi:10.1017/9781009325844.017. 75 IOM. 2017. "Migration in the Caribbean: Current Trends, Opportunities and Challenges." Working Paper 1, Working Papers on Migration. San Jose, Costa Rica: International Organization for Migration (IOM). 76 Pekkala Kerr, S., Kerr, W., Özden, Ç., and Parsons, C. 2017. "High‑Skilled Migration and Agglomeration." Annual Review of Economics 9 (1): 201–34 (2017). 12 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines manage temporary flows, the OECS and CARICOM have established free movement agreements that grant protection to Caribbean nationals displaced by catastrophic hurricanes, including a right of entry to other islands, a waiver of work permit requirements, and a mutual recognition of skills.77 1.2.2.  Impacts on the macroeconomy, financial sector, and poverty The existing macroeconomic vulnerabilities described above make these countries particularly susceptible to the impacts of both current hazard events and future climate impacts. Infrastructure damage and loss of service, productivity declines in human capital, tourism, and agriculture are key channels through which these impacts are and will be transmitted, with their ultimate effects visible in macroeconomic, financial, and poverty impacts. To quantify the macroeconomic impact of climate change on the OECS economies through these selected channels, this CCDR uses a customized version of the World Bank's macrostructural model (Macro‑Fiscal Model with Climate Change or MFMod‑CC; see Macro Modeling Annex) for each of the four countries. Specifically, a baseline was derived for each country with projections up to 2050. The baseline assumed the economies' structure and total factor productivity growth remained consistent with historical averages from 2014–19. It also assumed no additional climate change impacts beyond those already been experienced up to 2022. This baseline is used to compare outcomes from current hazard events and future climate impacts. The selected climate‑related events described in Table 1.2 were introduced into the macro‑fiscal model and simulated under different climate future scenarios (Historical, SSP2‑RCP4.5, and SSP5‑RCP8.5 for flooding and hurricanes; and Optimistic and Pessimistic for heat and agriculture).78,79 Note that localized impacts, such as increased flooding in urban areas or impacts of temperature on mortality and morbidity are not included in the macrosimulations because they affect a subset of the population and are better studied at the household level. Impacts on infrastructure assets include losses to both public and private residential capital stock. TABLE 1.2. Selected climate change impacts included in the macrostructural model (MFMod) Climate change impact channel Expected impacts on output Infrastructure (affected by Direct reductions through damage to the capital stock (infrastructure) and hurricanes and floods) temporary productivity loss. Human capital (labor productivity Direct and indirect losses in terms of hours worked and productivity across affected by heat) sectors from the impact of higher temperatures on labor productivity. Agriculture (crop yields) Direct reductions in aggregate value added of agriculture and agroindustry productivity through reduced crop yields due to changes in rainfall patterns and extreme heat. Tourism* Indirect losses through domestic price increases (due to a reduction in potential output from damage to capital stock). When domestic price increases and the rest of world's prices stay the same, tourism demand falls. * The model does not include separate tourism shocks but rather introduces a special equation for tourism demand whereby when there are climate shocks, domestic prices increase relative to the rest of the world, prompting the tourism quantity demanded to fall. 77 World Bank. 2023. World Development Report 2023: Migrants, Refugees, and Societies. Washington, DC: World Bank. 78 A set of future climate scenarios were considered. For flood and hurricanes channels, the three future cases are Historical, SSP2‑RCP4.5, and SSP5‑RCP8.5. The historical scenario corresponds to current climate conditions already happening in the countries and simulates the impact of future climate shocks if climate conditions remain in line with historical patterns. The RCP scenarios capture the uncertainty of possible climate futures in an increasingly warming world. For Heat and Agriculture, two sets of future climate scenarios were considered: optimistic and pessimistic. The optimistic and pessimistic scenarios for the effect of extreme heat and variable rainfall on labor productivity and crop yields were adopted from the Dominican Republican case study (DR CCDR 2023) developed from IEc inputs based on future climate scenarios that produced channel‑specific worst and best outcomes for the Dominican Republic. 79 The climate future scenarios are a combination of Shared Socioeconomic Pathways (SSPs) and Representative Concentration Pathways (RCPs), which are used in climate change research to project the potential future impacts of climate change based on different assumptions about socioeconomic development and greenhouse gas (GHG) emissions. The SSP2‑4.5 scenario combines SSP2 and RCP4.5. It assumes GHG emissions hover around current levels before starting to fall mid‑century, but do not reach net‑zero by 2100. Socioeconomic factors follow their historic trends, with no notable shifts. Temperatures rise 2.7 °C by the end of the century. The SSP5‑8.5 scenario, combination of SSP5 and RCP 8.5, assumes GHG emissions continue to grow unmitigated and roughly double by 2050. The global economy grows quickly, but this growth is fueled by exploiting fossil fuels and energy‑intensive lifestyles. Average global temperatures rise by 4.4 °C by 2100 (IPCC 2021). 13 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines The infrastructure channel, impacted by hurricanes and floods, is expected to present the most severe economic losses. Stochastic shocks80 for hurricanes and floods were applied to each scenario under the infrastructure channel. The simulations show that annual GDP losses from hurricanes occurring at historical frequencies and intensities could reach 4.5 to 23 percent, depending on the country (Figure 1.5). While median annual losses from hurricanes reflect little variation, the range of annual losses across different return periods varies widely (within the 95 percent confidence interval). Projected economic losses to 2050 are highest for Dominica, in part due to its high rates of capital exposure. The potential economic impact on Saint Vincent is also sizable (13 percent lower than baseline GDP by 2050) while impacts for Grenada and Saint Lucia are relatively more modest but still significant at 4.0 and 5.5 percent lower than baseline GDP in 2050. Losses are expected to worsen going forward because of climate change. Simulations under the optimistic and pessimistic climate scenarios produce similar median results81 but show increases in the lower bounds in most cases. This is because as temperatures rise, hazards are expected to become more frequent and more intense. For example, a high‑intensity hurricane with a 250 year return period (RP250) in the historical scenario would have a lower return period of 241 years (RP241) in the SSP2‑4.5 scenario.82 While not much change is seen for Dominica, which already displays very extreme impacts in the historical scenario, the extent of potential economic losses increases by 2–3 percentage points for the other three OECS countries in the SSP2‑4.5 scenario. For floods, even though the potential magnitudes of GDP losses are smaller, relative to hurricanes, the median impacts are larger and intensify at a faster rate over time (Figure 1.5). By 2050, median annual GDP impacts from floods under the historical scenario range from ‑1.2 percent in Saint Lucia to ‑9.0 percent in Dominica. These losses increase by between 1 and 4 percentage points in the SSP2‑4.5 case, and by 0.4 and 2.8 percentage points in the SSP5‑8.5 case. Lower bound GDP losses from floods range from 2.2 to 20 percent in 2050, with Dominica again potentially experiencing the most severe losses (Figure 1.6). FIGURE 1.5. GDP impact of natural disasters (hurricanes and floods) (percent deviation from baseline GDP under the historical scenario) Hurricanes DMA GDP Impact from Hur under RCP HIST GRD GDP Impact from Hur under RCP HIST with No Reconstruction with no Adaptation with No Reconstruction with no Adaptation 5 1 % deviation from baseline % deviation from baseline 0 0 -1 -5 -2 -10 -3 -15 -4 -20 -5 -25 -6 -30 -7 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 LCA GDP Impact from Hur under RCP HIST VCT GDP Impact from Hur under RCP HIST with No Reconstruction with no Adaptation with No Reconstruction with no Adaptation 2 5 % deviation from baseline % deviation from baseline 0 0 -5 -2 -10 -4 -15 -6 -20 -8 -25 -10 -30 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 continued on next page 80 100 shocks were randomly drawn from a known distribution function for each scenario such that the median corresponded to the average annual loss (AAL). 81 For Saint Vincent, median losses worsen more substantially from 0.7 percent in the historical scenario to 1.8 percent and 2.5 percent in the optimistic and pessimistic climate scenarios, respectively. 82 In some instances, GDP impacts are indistinguishable or less severe in SSP5‑8.5 compared to SSP2‑4.5 in the pessimistic cases presented here. This is because hazard impacts are a function of the intersection of temperature and precipitation trends. While temperatures in these islands are higher under 5.85 than under RCP 2.45, the impacts on precipitation show increases in variability, and a stronger drying trend under RCP 5.85 compared to RCP 2.45 (Data from World Bank Climate Change Knowledge Portal). Less severe impacts of flood impact are driven by this drying trend, which provides the shift factor for flooding. Impacts on hurricanes are more uncertain and may be due to changes in the interaction of heat and humidity affecting the initiation, intensity, trajectory of storms. See (https://sciencecouncil.noaa.gov/wp-content/uploads/2023/05/1.1_SOS_Atlantic_Hurricanes_Climate.pdf for a review). 14 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE 1.5. GDP impact of natural disasters (hurricanes and floods) (percent deviation from baseline GDP under the historical scenario) (continued) Floods DMA GDP Impact from Flood under RCP HIST GRD GDP Impact from Flood under RCP HIST with No Reconstruction with no Adaptation with No Reconstruction with no Adaptation 4 0.5 % deviation from baseline % deviation from baseline 0.0 0 -0.5 -4 -1.0 -8 -1.5 -2.0 -12 -2.5 -16 -3.0 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 LCA GDP Impact from Flood under RCP HIST VCT GDP Impact from Flood under RCP HIST with No Reconstruction with no Adaptation with No Reconstruction with no Adaptation 0.5 1 % deviation from baseline % deviation from baseline 0.0 0 -0.5 -1 -1.0 -2 -1.5 -3 -2.0 -4 -2.5 -5 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Source: World Bank staff calculations of GDP losses (relative to the baseline) from stochastic hurricane and flooding hazards, with endogenous tourism response, under the historical scenario. Median (blue line), 65 percent confidence interval (CI) (dark orange), 90 percent CI (medium orange), and 95 percent CI (light orange) are shown. Due to data limitations, there are high levels of uncertainty around the damages associated with flood events (based on extreme rainfall including rain associated with tropical cyclones) and results here should be considered illustrative rather than comprehensive of future potential impacts. FIGURE 1.6. Comparison of potential GDP losses in 2050 from selected climate impacts 30.0 25.0 from baseline GDP 20.0 % deviation 15.0 10.0 5.0 0.0 DMA GRD LCA VCT Hurricane Flood Crop yield Heat Source: World Bank staff calculations of GDP losses (relative to the baseline) under the SSP5‑8.5 scenario (hurricanes and floods) and pessimistic scenario (crops and heat). Through the heat and labor productivity channel, high temperatures will lead to more heat stress, reducing the productivity of outdoor labor. In the pessimistic scenario, additional output losses of around 4 percent of GDP are expected in 2050 for all four countries due to productivity losses from increased heat.83 Crop yields will be affected by changes in rainfall patterns and by extreme heat as temperatures rise. Lower crop yields are projected to reduce agriculture value added, reducing GDP by up to 3.5 percent in the case of Dominica and for the other countries as follows: Saint Lucia (0.4 percent), Grenada (1.4 percent), and Saint Vincent (2.0 percent). Chapter 5 elaborates on how these economic loss estimates could change if appropriate investments for climate adaptation are made and policies to build more resilient, diversified economies are enacted. 83 Agricultural impacts reflect long term changes in temperature and not specific drought events that could amplify the estimated impacts on agricultural productivity. 15 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Other external shocks create added uncertainty and could magnify the costs of adaptation investments. As small open economies, the OECS countries are highly vulnerable to a myriad of shocks, including shocks to the GDP of main trading partners, commodity price shocks affecting the terms of trade, sudden and persistent changes to interest rates, and unforeseen events forcing a change to the fixed exchange rate policy. Expectations of future losses due to climate change could have a chilling effect on private investment, making it more difficult to achieve development goals, even in the absence of disaster events. When these kinds of shocks are considered alongside potential climate events, the resulting macroeconomic impacts can be devastating for small open economies like those of the OECS. The financial sector impacts of climate change vary across islands due to a combination of differences in hazard exposure and sectoral composition of lending. In the Eastern Caribbean Currency Union (ECCU), which includes all four of this CCDR's focal states, financial sector assets represented 209 percent of regional GDP in 2021. In absolute terms, the Eastern Caribbean financial sector accounted for almost $15 billion of the region's economy in 2021, dominated by commercial banks, although though islands such as Dominica and Grenada also have a significant credit union presence.84 Personal loans (including real estate‑related loans) accounted for almost 40 percent of all commercial bank loans, highlighting the importance of household health for bank asset quality.85 The hotel and restaurant sector receives on average 7.2 percent of total loans extended by domestic banks. Notably, many large hotels are part of multinational corporations and do not rely on Caribbean financial institutions. An index‑based analysis of vulnerability to storms86 found that the financial sectors of Grenada and Saint Lucia were among the top 33 percent most vulnerable in the Caribbean, while those of Saint Vincent and the Grenadines and Dominica were among the least vulnerable (Figure 1.7). In fact, Grenada has the highest financial sector vulnerability index in the region. FIGURE 1.7. Financial sector vulnerability to storms index in Caribbean countries 5 4 3 Index 2 1 0 Grenada Trinidad Anguila St. Lucia Jamaica Haiti St. Kitts Antigua Montserrat St. Vincent Dominica and Tobago and Nevis and and the Barbuda Grenadines Source: Rozenberg et al. (2021) based on Masetti (2021). Notes: The index reflects the sectoral composition of a country's financial loan portfolio relative to the average vulnerability of each sector to storms. Red, yellow and blue bars indicate respectively a high, medium or low financial sector vulnerability index, compared to peers. Nevertheless, despite the high vulnerability of the Eastern Caribbean, historical analysis of the impact of Hurricanes Irma and Maria did not find significant effects of these events on the portfolio quality of banks. Regression results showed that affected countries' bank stock of credit and stock of non‑performing loans (NPLs) post hurricane did not significantly differ from the counterfactual—member states that were not directly hit by the hurricanes. While part of these results could be attributed to the use of insurance or to the banks limiting exposure to vulnerable economic sectors such as agriculture, other factors such as relief efforts from local governments and multilateral organizations, and even bank regulatory forbearance have limited the visibility of physical risk materialization of climate events on local banks. High exposure to climate shocks and disasters across the OECS countries presents a challenge for sustained poverty reduction. In the Caribbean, disasters pose an elevated risk to well‑being due to frequency, broad exposure, geographical isolation, and undiversified economies.87 They often result in 84 In 2021, credit unions represented 27 percent and 18 percent of financial sector assets in Dominica and Grenada, respectively. 85 Massetti, et al. 2021. These shares are volatile, and the relative importance of real estate loans and private household loans varies each year. 86 This relates the sectoral composition of a country's financial loan portfolio to the average vulnerability of each sector to storms. 87 Hallegatte, S., et al. 2017. Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters. Washington, DC: World Bank. 16 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines significant losses of livelihoods and incomes, thereby increasing poverty. The report, Unbreakable: Building the Resilience of the Poor in the Face of Disaster,88 showed that the well‑being impacts of disasters can far exceed asset losses in the region because high poverty levels and limited access to coping strategies lead to prolonged deprivation. The risk to well‑being in Dominica is relatively high compared to other countries in the region, while the risks in Saint Lucia, and Saint Vincent and the Grenadines are more in line with other countries in the region (Figure 1.8). In Dominica, these well‑being losses are 3 times larger than asset losses, suggesting a relatively low level of resilience given the country's per capita income compared to other countries in the region (the ratio in Saint Vincent, with a similar level of per capita income, is for example <2). FIGURE 1.8. Risk to well‑being and assets in Caribbean countries from disasters 10 25 9 8 20 Risk to well-being (% of GDP) 7 Risk to assets (% of GDP) 6 15 5 4 10 3 Dominica Dominica 2 St. Lucia 5 1 St. Vincent and the Grenadines St. Lucia St. Vincent and the Grenadines 0 0 0 10,000 20,000 30,000 40,000 50,000 0 10,000 20,000 30,000 40,000 50,000 GDP pc (USD) GDP pc (USD) Source: Hallegatte, Rentschler, and Walsh (2018). These well‑being losses are transmitted through lost income, workdays, and savings, and affect different subpopulations in distinct ways. For example, a post‑disaster needs assessment conducted in Dominica after Hurricane Maria estimated a total loss of almost EC$100 million in income and 3.1 million workdays.89 Critical employment sectors such as agriculture and tourism were expected to take up to 12 months to resume regular operations, together implying a 14 percentage point increase in poverty in the absence of mitigation measures to address resulting consumption losses.90 Climate change impacts are expected to lead to increases in poverty headcount rates of up to 1.9 percentage points between 2030 and 2050 in Grenada and Saint Lucia.91 Poverty impacts are expected to result from the effects of climate change on infrastructure, agriculture, and productivity, through the impacts of floods and hurricanes, and from lower crop yields and higher heat. The smallest impacts are found for flood shocks (Figure 1.9), with an impact of nearly zero in Grenada and 0.1 percentage points in Saint Lucia over the 2030–2050 period, with minimal variation over the three different climate future scenarios (Historical, SSP2‑RCP4.5, and SSP5‑RCP8.5). For the other climate channels, the impacts on poverty are generally higher in Grenada than in Saint Lucia. Hurricane shocks in Grenada result in increases in poverty rates of between 1.6 and 1.9 percentage points on average over the 2030–2050 period. For Saint Lucia, deviations from 2030 to 2050 average 0.3 percentage points, with little variation across the different climate future scenarios. The average impact on poverty through the labor productivity channel is estimated at 0.6 percentage points for Saint Lucia, ranging from 0.4 to 0.8 percentage points over the two climate future scenarios. 88 Hallegatte, S., et al. 2017. Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters. Washington, DC: World Bank. 89 Commonwealth of Dominica. 2017. "Dominica Post Disaster Needs Assessment: Hurricane Maria – September 18, 2017." 90 Commonwealth of Dominica. 2017. "Dominica Post Disaster Needs Assessment: Hurricane Maria – September 18, 2017." 91 The poverty and distributional impacts of climate change‑related shocks were assessed by using the MFMod‑CC lower‑bound (95 CI) outputs for the baseline and climate future scenarios to perform micro‑simulations using the latest household survey data for Grenada (2018) and Saint Lucia (2015). The latest available household survey data for Dominica and Saint Vincent and the Grenadines is more than 15 years old and was therefore not used. 17 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE 1.9. Average deviations in poverty headcount rates over 2030–2050 from selected climate impacts, percentage points Grenada Saint Lucia 2.0 2.0 1.8 1.8 1.6 1.6 1.4 1.4 1.2 1.2 1.0 1.0 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0.0 0.0 Floods Hurricanes Crop yields Heat Floods Hurricanes Crop yields Heat Source: World Bank staff calculations (relative to the baseline) under the historic, SSP2‑4.5, and SSP5‑8.5 scenario for hurricanes and floods and under the optimistic and pessimistic scenario for crops and heat using lower bound (95 percent CI) inputs from MFMod‑CC. Poverty is measured at the $6.85 a day poverty line in 2017 Purchasing Power Parity. 1.3.  A move toward a low‑carbon path can contribute to increased resilience Emissions in all four islands remain coupled with GDP growth, with the greatest contributors being the electricity, transport, and waste sectors.92 Absolute emissions have been rising since 2000 in Saint Lucia and Grenada, while in Saint Vincent and Dominica, emissions have plateaued (albeit with volatility) since 2010. Across all four islands per capita emissions have also plateaued,93 and energy—including both electricity generation and transportation—is a significant contributor to emissions (in Saint Lucia and Dominica, energy is the largest contributor to emissions). See Figure 1.10 below for a breakdown of emissions by sector and country. High reliance on imported fossil fuels to meet energy needs deepens vulnerabilities by increasing economic volatility, affecting affordability and limiting competitiveness. All four countries are highly reliant on fossil fuel imports to satisfy their energy needs. While imports represent 86 percent of the energy supply in Saint Vincent and the Grenadines, in the other three countries imports represent over 96 percent of energy supply.94 Overall, renewable energy represents less than 10 percent of the energy mix in OECS countries.95 This is a source of economic vulnerability. Direct electricity subsidies are limited, in keeping with best practices, but utility companies in the region are allowed to pass fuel cost volatility to consumers through a flexible tariff structure, resulting in high and volatile electricity prices that put affordability at risk.96 Commercial consumers (hotels and tourist establishments) are the most intensive energy users, consuming around 41 percent of electricity on average in the Caribbean; they, together with residential consumers, bear the brunt of price volatility.97 In addition, electricity generation relies heavily on medium‑speed/low‑speed generators running on diesel or heavy fuel oil, which contribute to high levels of particulate matter levels.98 In Saint Vincent in 2019, PM2.5 reached levels nearly twice as high as those recommended by WHO.99 On the positive side, considering that the four largest emitting sectors are not large recipients of financing, risks to the financial sector from the transition to a low‑carbon economy are not large. Only 4.5 percent of domestic credit in OECS member countries is directed to high emission sectors. The asset structure of the OECS members' banking sector is focused on loans with small direct equity and bond exposure to the private sector, hence transition risks lie primarily in the credit portfolio. 92 World Bank. 2024. World Bank Data Bank. Washington, DC: World Bank. https://databank.worldbank/org/. CO2 emissions (kg per 2017 PPP $ of GDP). 93 Global Carbon Project. 2022. 94 IRENA, 2023, "Statistical Profiles." Abu Dhabi. UAE: IRENA 95 IRENA. 2023. "Energy Profile: Saint Lucia." Abu Dhabi, UAE: International Renewable Energy Agency (IRENA). 96 McIntyre, A., et al. 2016. Caribbean Energy: Macro‑related challenges. IMF Working Paper WP/16/53. IMF: Washington, DC. 97 McIntyre, A., et al. 2016. Caribbean Energy: Macro‑related challenges. IMF Working Paper WP/16/53. IMF: Washington, DC. 98 McIntyre, A., et al. 2016. Caribbean Energy: Macro‑related challenges. IMF Working Paper WP/16/53. IMF: Washington, DC. 99 IRENA. 2023. "Energy Profile: Saint Vincent and the Grenadines." Abu Dhabi, UAE: IRENA. 18 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines The transport sector is an important contributor to emissions in the four countries, representing between 5 and 41 percent of total emissions.100 In addition, transportation represents a large percentage of emissions from the energy sector. In Saint Lucia, transportation accounts for 31 percent of emissions from the energy sector according to the country's third National Communication to the United Nations Framework Convention on Climate Change (UNFCCC). To give an example of trajectories in transport emissions, in Saint Lucia emissions from transport have risen steadily since 2000 and are comprised primarily of passenger vehicles.101 FIGURE 1.10. Emissions over time by Sector for OECS Countries Dominica Grenada 800 800 700 700 600 600 GHG Emissions 500 500 (KtCO2e) 400 400 300 300 200 200 100 100 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 St. Lucia St. Vincent and the Grenadines 800 800 700 700 600 600 GHG Emissions 500 500 (KtCO2e) 400 400 300 300 200 200 100 100 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Energy Industrial Processes and Product Use Waste Other Agriculture Source: Gutschow, J., Gunther, A., Pfluger, M. 2021. "The PRIMAP‑hist national historical emissions time series (1750–2019)." V2.3.1. Zenodo, based on Gutschow, et al. (2016). Municipal solid waste management is a significant contributor to emissions and especially methane generation, posing important environmental and health risks. Waste emissions represent an important share of some OECS emissions, and reducing these will be necessary to meet the countries' NDC commitments. In 2020, the waste sector was the second biggest emitter for Grenada (6 percent of total emissions), Saint Lucia (13 percent) and Saint Vincent and the Grenadines (25 percent), and the third biggest for Dominica (13 percent).102 In its latest submissions to the UNFCCC, Grenada reported that 100 percent of its methane generation is driven by the waste sector, while for the other countries the percentages were as follows: Saint Lucia (78 percent), Saint Vincent and the Grenadines (82 percent), and Dominica (25 percent). Saint Lucia is estimated to have generated the most municipal waste per capita in 2020 (1.28 kg/capita/day), above the regional average of 1.01 kg/capita/day. Grenada and Saint Vincent and the Grenadines remain below the regional average but above the global average of 0.79 kg/capita/day, while Dominica generates half the regional average.103 100 Climate Watch. 2022. Washington, DC: World Resources Institute. https://climatewatchdata.org 101 Government of Saint Lucia. 2017. Third National Communication on Climate Change for St. Lucia. 102 Staff Calculations from Gutschow et al. 2021. Kaza, S., et al. 2018. What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050. (Urban Development Series). 103 Washington, DC: World Bank. 19 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines OECS countries have high waste collection rates but inadequate disposal practices, resulting in significant emissions due to mismanagement of waste. Total waste volumes are expected to increase by more than 50 percent across these four countries by 2050, raising the risk of increasing emissions.104 The negative impacts of the current system include degradation of local ecosystems, lower quality of life for locals and visitors, and exacerbation of flooding. Much of the debris reaches the ocean from landfills due to storms and coastal flooding, or due to open dumping at roadsides and in creeks, rivers, storm drains and sewers. Other key challenges across all four countries include, but are not limited to, lack of universal collection (including the absence of source separation and collection of recyclables), open dumpsites, engineered landfills operated as dumpsites due to resource constraints, lack of effective cost‑recovery mechanisms, and the need for an improved regulatory environment.105 Efforts to address these emissions drivers can deliver significant domestic health and resilience benefits, independent of emissions reductions. Analyses of energy system transformation possibilities suggest cost saving and price stabilization benefits from a reduced reliance on imported fuel. Reductions in the reliance on internal combustion engines in transport could deliver health benefits through reduced air pollution exposure, which, while not as bad as in other regions, is still above WHO recommended limits. Improvements in solid waste management could improve marine ecosystem health and deliver economic benefits. 104 Kaza, S., et al. 2021. More Growth, Less Garbage. (Urban Development Series). Washington, DC: World Bank. World Bank. 2021. Waste management sector including marine plastics debris sources deep dive study for selected Eastern Caribbean 105 Countries. Report No.1: Rapid Waste Sector Assessments. Washington, DC: World Bank. 20 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 2. Country climate commitments, policies, and capacities Main messages • The four focus countries have all prioritized climate resilience and adaptation in their national climate and sustainable development objectives, but their legal, regulatory, and institutional frameworks for climate change remain incipient. • Specific gaps across all four countries include a comprehensive climate change framework law, a long‑term strategy out to 2050, coordination, stakeholder consultation, and independent advisory mechanisms for climate action. • Agriculture (including fisheries), coastal ecosystems, and health are the region's most common priority sectors for adaptation and building climate resilience. • Together, the four OECS countries of focus contribute less than 0.004% percent of global GHG emissions, and all have set GHG emission reduction targets in their Nationally Determined Contributions (NDCs). • All four focus countries need better systems to estimate the financing needed to meet adaptation and mitigation targets and to estimate climate shock response costs; Grenada is the most advanced of the four OECS countries in integrating climate resilience into budgeting. • Human and technical capacity constraints hinder mainstreaming and scale up of climate action. • The domestic and foreign private sectors will have a crucial role to play in the provision of resources for climate action in the OECS. • To catalyze that role, the four focus countries will need to address the private sector's limited access to finance, the slow adoption of digitalization, and an overall challenging business environment. 2.1.  Countries' global commitments for climate action are anchored in their national development strategies All four countries have prioritized climate resilience and adaptation among their national climate and sustainable development objectives, and most have also reflected this in their NDCs. Dominica, Saint Lucia, and Saint Vincent and the Grenadines have included their adaptation, resilience, and loss and damage priorities in the NDCs (see Table 2.1). Dominica aims to embed climate change measures across all levels of activity, aligning with its National Resilience Development Strategy and other strategic plans to become the first climate‑resilient nation. Saint Lucia's NDC highlights its National Adaptation Plan (2018–2028) and sector‑specific strategies, supporting its broader Climate Change Adaptation Policy. Saint Vincent and the Grenadines' NDC ties adaptation to its National Economic and Social Development Plan 2013–2025, with updated guidance expected from its forthcoming National Adaptation Plan (NAP). While Grenada's NDC focuses on mitigation, its adaptation goals are woven into the National Climate Strategy and the National Sustainable Development Plan 2020–2035. Agriculture, including fisheries, coastal ecosystems, and health have emerged as the priority sectors for adaptation and resilience building across the region. The national climate policy, strategies, and planning instruments and most NDCs also emphasize enhancing disaster risk reduction and management, social protection and gender integration, and addressing loss and damage related to climate change (see Table 2.1). Furthermore, a few NDCs and NAPs call attention to human mobility aspects in the context of climate change but do so in a limited way. For instance, it is either addressed only briefly (Grenada and Saint Vincent and the 21 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines TABLE 2.1. Summary of key NDC commitments DMA GRD LCA VCT NDC Commitment 2022 2020 2021 2015 Mitigation 45% reduction in 40% reduction in 7% GHG emissions 22% reduction gross GHG emissions CO2e below 2010 reduction in the compared to BAU below 2014 levels by levels by 2030. energy sector by 2025. 2030; HFCs reduction relative to 2010 by 10% by 2030. by 2030. Targets and gases Carbon dioxide, Carbon Dioxide, Carbon Dioxide, Carbon dioxide, Methane, nitrous Methane, gases. Methane, and Methane, Nitrous oxide, non‑methane Nitrous Oxide. oxide, and HFCs. volatile organic compounds, sulfur dioxide, HFCs. Priority sectors Energy industries; Energy, including Electricity generation Geothermal Transport (incl. transport, Waste, and transportation; electricity shipping); agriculture, Forestry, and REDD+ in the future. generation; manufacturing, Industrial Processes energy efficiency; and construction; and Product transport; emissions commercial, Use (IPPU). from waste. residential, fishing; solid waste. Adaptation Climate‑smart Adaptation is not Tourism, Water, Increase public Priorities agriculture, prominent in the Agriculture; awareness; build sustainable climate NDC, which is Fisheries; resilience of risk and disaster mitigation focused. Infrastructure settlement and risk management The National and spatial infrastructure; mechanisms, and Climate Policy (2017) planning; Resilient coastal zone and the establishment prioritizes building Ecosystems; marine ecosystems; of climate‑smart resilience in water Education; agriculture and ecosystems, supply and sewage and Health. human health. communities, and management; cities. The resilience agriculture, component includes agri‑business a detailed list of and food security targets and initiatives biodiversity and and associated ecosystems; human financial needs. health and coastal zone management. Other targets Become the World's Leveraging Geothermal first resilient nation. mitigation electricity generation 100% renewable usage co‑benefits of for over 50% of the by 2030. adaptation actions. electricity needs by 2030. Carbon sequestration of ~100 Gg in 2020–2030. Increase in agroforestry farming by 50%. Scale‑up geothermal energy. Increase in Additional sectoral Due to changing Has moved towards Revised NDC is ambition in the targets added for circumstances an absolute emission under development. revised ndc agriculture, shipping, the 2030 target reduction target and a more ambitious is deemed to in the energy target for transport represent a more sector from a BAU overall. Net targets significant effort target in the initial for HFC emissions, than when initially submission and has and renewable proposed. Inclusion increased the level of energy usage. of F‑gases, social envisioned emission inclusion, disaster reductions. risk reduction, health, and loss and damage. Sources: The Commonwealth of Dominica: Updated Nationally Determined Contribution (2022); Grenada Second Nationally Determined Contribution (2020) and The National Climate Change Policy (2017); Saint Lucia's Updated Nationally Determined Contribution (2021); Saint Vincent and the Grenadines First Nationally Determined Contribution (2016). 22 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Grenadines), confined to a sector (Dominica; relocation is mentioned as part of a resilient housing scheme), or viewed as a negative outcome (Saint Lucia).106 Recent research107 shows that effectively integrating human mobility in NDCs and NAPs may lead to concrete actions that can pro‑actively manage migration and mobility as adaptation strategies. While the OECS countries together contribute less than 0.0036 percent of global GHG emissions, they have all set targets for GHG emission reductions in their NDCs under the Paris Agreement (see Table 2.1). Dominica and Grenada have set absolute economy‑wide emission reduction targets, Saint Lucia has adopted an absolute emission reduction target only for the energy sector, and Saint Vincent and the Grenadines has an economy‑wide emission reduction target relative to BAU. Dominica and Saint Lucia have increased their initial ambition on mitigation in the updated NDCs by introducing additional sectoral targets and moving to an absolute emission reduction target, respectively. Grenada expects its initial mitigation target to be harder to achieve than initially expected and included F‑gases in its revised NDCs. All countries identified energy and transportation as the priority mitigation sectors. Dominica and Saint Vincent and the Grenadines have specific targets for increasing geothermal energy generation. Countries emphasize mitigation co‑benefits of adaptation actions as a key focus area. The implementation of the NDCs is conditional on external funding in Dominica, Grenada, and Saint Lucia and unconditional in Saint Vincent and the Grenadines, the only country that is yet to submit its updated NDC to the UNFCCC. However, Saint Vincent and the Grenadines acknowledges its financial limitations and expects progress towards achieving its mitigation commitment will leverage international finance, technology transfer, and capacity building support to further reduce emissions. Saint Lucia has taken proactive steps toward reporting on mitigation progress, becoming the first of the four countries to submit a Biennial Update Report (BUR) to the UNFCCC. 2.2.  Enhanced climate change governance will require bridging the gap between strategy and implementation All four countries have made significant progress in developing climate change strategies and integrating climate objectives into the development strategies. However, considerable governance challenges persist in turning these strategies into policies, raising finance, and for implementation. All countries lack a long‑term strategy (LTS) on climate change to 2050. The legal, regulatory, and institutional frameworks for climate change need to be stronger. Furthermore, planning for a coordinated response to climate change and disaster risk reduction activities needs improvement (see Table 2.2 for an overview of the legal and regulatory framework for climate change). FIGURE 2.2. Legal, regulatory, and institutional framework for climate change Climate Change Governance Function DMA GRD LCA VCT Climate Change Framework Law P N P N LTS or 2050 Climate Change Plan N N N N Coordination mechanism P P P P Stakeholder consultation mechanisms P P P P Independent Advisory Mechanisms on Climate Change N N N N N No Y Yes P/UP Partial/Under Preparation Sources: Author's elaboration. 106 Saint Lucia's NAP explicitly states that the country does not view migration as an "acceptable adaptation strategy" but "may wish to give consideration […] on proactive and con specific measures to avert, minimize and address displacement and planned migration of vulnerable communities" given the limits to adaptation (p. 133). Mombauer D., et al. 2023. "Addressing climate‑related human mobility through NDCs and NAPs: State of play, good practices, and the 107 ways forward." Frontiers in Climate, Volume 5–2023. 23 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Most OECS countries operate without a unified climate change law, relying instead on various executive strategies and plans from different agencies, which can create a complex regulatory environment. Dominica stands out with its Climate Resilience Act 2018, which outlines goals and structures for becoming a climate‑resilient nation. Additionally, Dominica's Climate Change, Environment, and Natural Resource Management Bill 2020, still in the legislative process, is set to provide a comprehensive legal framework for low‑carbon, climate‑resilient development. It suggests expanding government departments with climate‑related responsibilities and establishing a Climate Change Committee to function as a cross‑institutional coordinating body. Conversely, Grenada, Saint Lucia, and Saint Vincent and the Grenadines have yet to enact overarching climate legislation. Saint Lucia has submitted its climate bill to parliament, while Saint Vincent and the Grenadines plans to develop environmental management laws and systems to address and lessen climate change impacts, as stated in its NDC. OECS countries are advancing in climate policy development with national institutions, yet coordination across ministries remains a challenge. While focal points and new governance have been established, the absence of comprehensive legal frameworks and clear mandates, as well as human capacity constraints, complicates effective collaboration. National Climate Change Committees (NCCCs) in Dominica, Grenada, and Saint Lucia, along with Saint Vincent and the Grenadines' Technical Advisory Committee, are working towards better coordination and climate response, but these entities still require fortification. The commitment of the OECS countries to the Escazu agreement on Access to Information, Public Participation, and Justice in Environmental Matters in Latin America and the Caribbean has been reflected in strengthening stakeholder consultation processes. A diverse group of stakeholders has been involved in developing the NDCs and key national strategies and plans on climate change. For example, Saint Lucia's NCCC is mandated to provide advice and support to national climate change‑related programs and processes. It comprises public, statutory, academic, and private sector bodies whose work is related to climate change. However, to play a decisive role in facilitating implementation, it needs to be strengthened. Overall, stakeholder involvement is often ad hoc, underscoring the need for established, regular consultation processes for meaningful public participation in policy formation and execution. Further improvements can be made in transparency and access to climate policy information for the broader public and stakeholders who may not be represented by the established constituencies. Countries would benefit from stronger engagements with communities and citizens and the establishment of dedicated websites containing key information on national climate change strategies, plans and regulations, and ongoing and upcoming consultations. Existing regional free movement arrangements (FMAs) have supported human mobility in the context of climate change. The FMAs within the OECS Economic Union and the CARICOM Single Market and Economy have facilitated intra‑regional migration by providing a legal basis to right of entry to member states' nationals affected by disasters.108 In the case of Hurricane Maria, entry conditions to other member states were loosened for displaced Dominicans. These institutional frameworks may be harnessed to support migration as a viable climate adaptation strategy. However, there is limited timely and reliable data in the Eastern Caribbean to help address climate‑related migration effectively.109 While ample data exists on displacement due to rapid‑onset events, there is insufficient information about the human mobility implications of slow‑onset events, particularly SLR and others impacting agriculture and tourism livelihoods. OECS countries face similar hurdles in climate governance, such as ensuring policy alignment across various agendas, filling data gaps on climate risks, and evaluating progress towards climate goals. The absence of independent advisory bodies on climate change limits objective guidance for governments. Given the challenges and human capacity constraints common to all of these small island developing states, a regional independent advisory body on climate change could be beneficial. Additionally, the urgency of responding to COVID‑19 and frequent severe weather events has impeded the establishment and execution of governance structures. Francis, A. 2019. Free Movement Agreements & Climate‑Induced Migration: A Caribbean Case Study. Sabine Center for Climate Change 108 Law, Columbia Law School. Andreola Serraglio, D., Adaawen S., and Schraven, B. 2021. Migration, Environment, Disaster and Climate Change Data in the Eastern 109 Caribbean: Regional Overview. International Organization for Migration Global Migration Data Analysis Centre (IOM GMDAC). Berlin. 24 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 2.3.  Public climate financing would benefit from stronger institutional arrangements and adoption of climate‑informed tools Countries need better systems to estimate the financing needed to meet adaptation and mitigation targets and to estimate climate shock response costs. While most NDCs in the region, except Grenada's, do not contain figures on overall financial needs, efforts are underway to quantify these and to develop and implement finance strategies. Saint Lucia has developed an Implementation Plan and a Financing Strategy for its NDC, while Dominica's NDC lists several climate change resilience initiatives and the financial support required to implement them. It also reports indicative cumulative investment costs to achieve its mitigation targets by 2030 and has developed an implementation plan and a financing strategy for the NDC. Grenada's Climate Change Policy and National Adaptation Plan (NAP) both provide detailed costed plans for adaptation and resilience building. Countries have access to publicly available models that estimate climate shock response costs but have varying degrees of internal capacity to undertake valuation assessments for target climate risk quantification. OECS countries have taken steps to identify priority areas for domestic climate financing and improve climate risk financing practices. They rely on various financial instruments, such as budget contingency funds, budget reallocations, disaster emergency funds, and others. Dominica established the Vulnerability, Risk, and Resilience Fund (VRRF) as a public finance mechanism to address disaster impacts. As a top layer of protection for severe events, OECS countries can access a suite of parametric insurance products under the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC)110 and all have ministerial departments that manage traditional indemnity insurance of public assets, as well as some innovative private sector insurance products like the Flexible Hurricane Protection product in Dominica. As a second layer of protection, countries also have access to contingent lines of credit (Cat DDO) and Contingent Emergency Response Components in World Bank investment projects. Financing strategies exist in all four countries, with approved action plans at different stages of implementation. Since 2017, each country has an approved a national disaster risk financing strategy, starting with Saint Lucia in 2018, followed by Grenada, Dominica and Saint Vincent and the Grenadines in 2019, 2021 and 2022 respectively. Each strategy is based on an approach of (i) quantifying contingent liabilities associated with natural hazards of various frequencies and severities; (ii) building a risk‑layering strategy of financial instruments to cost‑effectively address actualization of these contingent liabilities to minimize economic shocks; (iii) undertaking public financial management (PFM) reforms to ensure that instruments are used efficiently and effectively with accountability and transparency; and (iv) deepening the capacity and regulatory environments of the domestic insurance sector to support government, homeowners, businesses, and vulnerable populations in accessing affordable and appropriate catastrophe insurance coverage and other innovative financial products. OECS countries, like many other countries worldwide, have started considering climate‑informed PFM tools111 as a part of their budgetary policy‑making processes, building from the areas identified in each country's national disaster risk financing strategy as needing improvement in PFM of disaster and climate risk. Despite the limited fiscal space, there is room for expanding the application of budgeting tools to address climate change goals. Legal frameworks for public finance in these countries did not envision considerations of climate change in budgeting processes. However, public finance acts in Grenada and Saint Lucia acknowledge the need for expedited public finance procedures during disasters. The use of PFM tools to integrate climate change considerations in budget planning and execution is presented in Figure 2.3. CCRIF SPC is a segregated portfolio company, owned, operated and registered in the Caribbean. It limits the financial impact of 110 catastrophic hurricanes, earthquakes and excess rainfall events to Caribbean and Central American governments by quickly providing short‑term liquidity when a parametric insurance policy is triggered. PFM refers to principles and institutions that governments use to plan, budget, execute, oversee, and evaluate the use of public 111 resources. Countries use climate‑informed PFM as a budgetary policy tool to offer policymakers and citizens enhanced insight into the environmental and climate consequences of budgeting decisions. This approach systematically consolidates evidence, aiding in well‑informed decision‑making. Ultimately, the goal is to ensure that national and international climate change obligations are met. 25 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE 2.3. PFM tools for advancing the climate change agenda. Climate Change Governance Function DMA GRD LCA VCT Climate‑Informed Fiscal Risk Statements N P N N Climate‑Informed Budget Guidelines N Y N N Climate Expenditures in Budget or Tracked N P N N Climate‑Informed Public Infrastructure Project Screening P P P N Green Public Procurement in Plans and Strategies N P N P N No Y Yes P/UP Partial/Under Preparation Source: Author's elaboration. Grenada is the most advanced of the four OECS countries in integrating climate resilience into budgeting. However, the country's capacity to implement these plans is constrained by fiscal limitations and obligations under the 2015 Fiscal Responsibility Law. While Grenada stands out for preparing a climate change fiscal risk statement and publicly tagging climate‑related capital expenditures,112 this practice needs to be broadened to encompass all expenditures across sectors to fully align with NDC and NAP goals. Despite Grenada's progress, citizen engagement in climate change discussions remains limited, even with a strong civil society presence in budget planning activities. A comprehensive climate‑informed asset registry is partially complete across the four countries. The OECS Building Code (2016) and The Caribbean Uniform Building Code (CUBIC, 1985) emphasize the development of building standards that prevent or mitigate the impacts of natural hazards, including, among others, especially detailed and conservative guidelines for managing wind and earthquake loads. However, national building regulations to implement the codes are at various stages of maturity and enforcement in OECS countries, having made marked improvements in past decades but leaving room for improvement. Dominica has taken the critical step of passing, in 2022, the Building Code Regulations 2021 to improve the resilience of the built environment and has undertaken ongoing capacity building efforts to strengthen code implementation and enforcement in the public and private sectors. Governments can also make improvements in climate‑aware maintenance and operation planning and spending. Saint Lucia has taken the lead by developing a Public Asset Management Policy, which incorporates climate change impacts in public asset lifecycle management, and they have also developed a Risk‑Based Asset Management approach that factors climate and seismic risk factors into investments in asset maintenance and operations. Saint Lucia has also started developing Public Asset Management Regulations to provide the legal framework for integrating climate change and gender equality into the management of public assets. Dominica's and Grenada's Public Sector Investment Program (PSIP) frameworks require ministries to consider climate and disaster implications in the development of new public investment proposals. There is scope to further use public investment to make headway on climate goals, but Grenada and Saint Vincent and the Grenadines have taken some important steps. Grenada's Sustainable Public Procurement Policy targets 25 percent of annual public procurement contracts to include sustainability requirements, but it needs to be fully implemented. There is some progress in the use of sustainable materials in construction projects. Grenada has also been innovating with communication tools to involve the private sector in sustainable procurement practices, and the government has prepared an Environmental Climate change budget tagging is a government‑led process of identification, measurement, and monitoring of climate‑relevant 112 public expenditures. Climate tagging helps governments understand if their budget allocations for climate change align with their policy objectives. 26 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines and Social Management Framework (ESMF) that includes screening checklists, mitigation measures, and a Grievance Redress Mechanism (GRM) to minimize potential activities with adverse impacts. Dominica and Saint Lucia have not yet considered using public procurement to address climate change. The incorporation of climate change considerations within the public financial management systems of OECS countries has emerged relatively recently. Nevertheless, their progress aligns comparably with that of other small island states and certain Latin American and Caribbean (LAC) nations. While several LAC countries have recently adopted climate change budget tagging, this practice remains less prevalent within the OECS, barring Grenada. Moreover, within the Pacific region, only a select few nations have made initial attempts to identify budgetary expenditures relevant to climate initiatives. In parallel, OECS countries and their Caribbean counterparts share similar experiences in integrating climate change assessments into the screening of public investment projects and fostering eco‑friendly practices in public procurement. Despite these efforts, both regions lag Latin American countries in this aspect, indicating a common trend of slower advancement. 2.4.  Support for private sector growth contributes to building climate resilience The domestic and foreign private sectors will have a crucial role to play in the provision of resources for climate action in the OECS. Given the limited fiscal space to step up public investment spending, mitigation and adaptation will require increasing participation of the private sector. The public sector can contribute as a catalyst, but first, the relevant cross‑cutting constraints for private sector growth need to be addressed. 1The recently published WB/IFC Caribbean Regional Private Sector Diagnostic (RPSD) analyzes some of these constraints in detail. Limited access to finance, alongside a slow adoption of digitalization and a challenging business environment, are limiting private sector growth and hindering diversification. The vast majority of OECS firms are micro, small, and medium enterprises (MSMEs). These MSMEs are largely concentrated in the low‑skilled services sector—especially tourism—which is highly exposed to extreme weather events and SLR. Some of the other predominant economic sectors in the OECS, such as mining and agriculture, also contract heavily in response to extreme weather events, increasing the vulnerability of the underlying MSME sector to climate shocks. The OECS needs to create incentives for businesses to diversify the economy away from vulnerable sectors. Key critical obstacles are the challenging business environment, which makes it difficult for entrepreneurs to start new businesses, as well as the slow adoption of the digital economy and limited access to finance.113 By addressing these constraints, the OECS can create a more dynamic business environment that allows firms and households to manage risks and capture opportunities that can foster diversification and resilience. Building climate resilience through the enhancement of trade performance. The OECS suffers from frictions that raise trade costs and hamper competitiveness. In a region highly dependent on trade, enhancing trade performance is critical for economic growth. Better trade conditions also facilitate diversification, making the economy more resilient to climate shocks. The region could greatly enhance trade by streamlining regulation, supporting digitalization, providing better access to information, and investing in better connectivity and logistics. The private sector can and should play an active role on improving trade performance in the OECS through the provision of digital platforms for better logistics and connectivity and the expansion and improvement of transportation networks for goods and people. IFC, 2023. "Regional Private Sector Diagnostic (RPSD): Promoting Private Sector‑led Growth to Foster Recovery and Resilience in the 113 Caribbean." Washington, DC: International Finance Corporation 27 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 3. Building resilience in a high vulnerability context Main messages • Given the significant scale of climate change‑driven damages both now and in the future, establishing resilience goals that can drive policy making and financing is key to minimizing economic losses and protecting people. • While making all services and infrastructure 100 percent resilient would be ideal, it is not possible given existing budget constraints and important tradeoffs with a large set of development needs. • A smaller set of resilient core investments could provide significant benefits in the short term in the context of domestic fiscal constraints. • Investments under a resilient core scenario can provide significant benefits by reducing losses from current hazards and mitigating the risks posed by climate change, • The majority of investment needs are to retrofit existing infrastructure rather than to develop new infrastructure, with the twin goals of establishing a resilient core and enhancing service provision to meet the SDG goals. • Areas of focus include housing, disaster preparedness and response planning, nature‑based solutions to mitigate coastal flooding, the transition to renewable energy, and waste management. • The domestic and foreign private sectors can contribute to mitigating the region's vulnerability to disasters and climate change by supporting the development of resilient transport and logistics infrastructure, the transition to greener power systems, and improved waste management systems. 3.1.  Investments in infrastructure and nature‑based solutions are the foundations for a core level of resilience Given the significant scale of climate change‑driven damage both now and in the future, establishing resilience goals that can drive policy making and financing is key to minimizing economic losses and protecting people. As stressed in Chapter 1, potential losses are significant. Strengthening the resilience of infrastructure and services can help minimize impacts and reduce vulnerability. While making all services and infrastructure fully resilient would be ideal, it is not possible given existing budget constraints and important tradeoffs with a large set of development needs. Given that maximum resilience is not an attainable goal, this section instead offers an analysis of the costs of a variety of resilience scenarios to help policymakers assess the tradeoffs inherent among them. The estimates provided are conservative and likely represent a lower bound of needed adaptation investments. They do not include adaptation needs for heat, for example, and present an illustrative threshold or resilience, so they are intended as a starting point for policymakers, who are then free, of course, to opt for higher resilience standards than those presented here. To illustrate the kinds of decisions policymakers will have to make regarding the tradeoffs inherent in strengthening resilience, this report defines a resilient core scenario using goals set by Dominica, as an exemplar. Final decisions on resilience targets for each country should follow a consultative process anchored in a strong analytical basis. In this report, we provide such an analytical basis and use resilience goals defined 28 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines by Dominica to define a resilient core scenario.114 Box 3.1 provides additional details on the modeling used to estimate impacts in terms of four metrics: asset losses, disruptions to services (e.g. number of customers or, trips on transportation infrastructure), damage and service resilience (the capacity of the system to avoid damage or to continue providing services despite damage), and investments in resilience needed to maintain a certain level of service, or avoid a certain level of physical damage. Box 3.1. Modelling hazard impacts on infrastructure Modelling for this report used spatially explicit data on hazards, infrastructure assets, and services provided by those assets to estimate direct damages according to the following metrics: asset losses, disruptions in services (e.g. customers, trips), service resilience (the capacity of the system to avoid damage or continue providing service), and investments needed in resilience to maintain a certain level of service, or to avoid a certain level of physical damage. Key sources of uncertainty accounted for in the modelling include climate impacts and hazards, uncertainties in asset damages and service disruption, and adaptation uncertainties in terms of risk reduction and cost. Five types of hazards are modelled: tropical cyclone, pluvial flooding, fluvial flooding, coastal sea level rise, and landslide. All islands have a complete set of hazard data except for Saint Vincent, where data on fluvial flood was lacking. The four metrics above are calculated for each of these hazards across up to nine different asset types: ports, airports, roads, electricity generation, electricity transmission, electricity distribution, water and wastewater treatment, schools, and hospitals. Coverage of asset infrastructure layers varies by island, with electricity transmission/distribution and water and wastewater treatment having the most gaps. The analysis considers two development scenarios, a BAU scenario in which service provision levels remain the same in the future, keeping pace with any population increases, and an SDG scenario in which service provision improves to meet the SDG goals in the future even as population increases. The SDG scenario is the focus of the analysis discussed in this CCDR. Several investment scenarios are also considered. Initially, a maximum resilience scenario where investments are made to preserve as close to 100 percent continuity of key services in the event of a 100‑year return period event was modelled and deemed infeasible. Therefore, the team modelled two variants of a resilient core scenario, in which investments are made to try and achieve the resilience targets laid out in the Dominica CRRP. The first variant implements needed investments over 15 years as retrofits to existing infrastructure, reflecting completion by 2040. The second variant implements investments over a 25‑year period, reflecting the turnover of capital and implementing investments as new capital is constructed to replace old—the build back better scenario. Variation in the investment needs is driven by the two core assumptions required for the modelling, detailed below. • Relative stability in the locations of infrastructure. Due to the geography of the islands, much of the future planned infrastructure will inevitably be located on or near the footprints of current infrastructure. Definitions of resilience in Dominica do not clarify the definition of resilience, so the analysis assumed resilience was interpreted as 114 service provision resilience unless asset damage was specified. Adopting resilient service metrics in addition to asset damages can provide a fuller picture of potential investment needs as service provision may not change in proportion to physical damages, and more accurately characterizes the impacts of disasters on key government functions and thus the lives of people depending on these services. 29 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines • Variability of investment needs across RP and RCP is predominantly a function of (i) the granularity of hazard data, (ii) the range of variation in the changes observed under climate change, and (iii) limitations of the underlying available resilience investment benefit data—which vary by increasing exposure rather than increasing severity of hazard. As a result, coarsely modelled hazards (e.g. landslide, hurricane) show little variation in investment needs as exposure remains uniform across scenarios. Finely modelled hazards (flooding) show much more variation. As a result of these factors, variation in investment needs across RCPs is limited. More granular data on resilience benefits related to hazard intensity and exposure to hazards under future scenarios could significantly influence estimates of investment needs under different climate scenarios. To account for these issues, the analysis included a stress test of the results for the two largest damage contributors (flooding and cyclones), considering how the modelled investments might change if the more extreme ends of the hazard distribution are experienced. The modelling initially considered only physical infrastructure but was expanded to include all capital stock (residential and commercial building stock) by assuming damages and retrofitting costs proportionate to public infrastructure. The analysis assessed the cost of both retrofitting existing capital stock and completing resilience building activities as capital stock turns over, which creates opportunities for cost savings of 30 percent over retrofitting. These cost savings are estimated through a comparison of costs needed to retrofit buildings against floods, hurricanes, and landslides in the Caribbean, versus the costs of installing the same measures when new construction occurs (Rozenberg et al. 2021 (R360), Nicholas et al. 2019). Retrofitting investments were also assumed to occur over a shorter time horizon (15 years), versus occurring at the pace of capital replacement (~25 years). Resilience investments are assumed to reduce the depreciation rate of capital stock as they increase the quality of construction. They reduce the costs of back‑up power generation and improve infrastructure reliability even in the absence of a disaster, supporting increased productivity. Commercial and residential capital stock was not modelled separately but estimated for inclusion in the macro modelling exercise by applying the costs derived from other physical infrastructure to the overall capital stock estimates used in the macro model. Sources: Rozenberg, Julie; De Vries Robbé, Sophie; Kappes, Melanie; Lee, Woori; Prasad, Abha. 2021. 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. World Bank, Washington, DC. Nicolas, Claire; Hallegatte, Stephane; Fox, Charles; Rozenberg, Julie; Rentschler, Jun. 2019. Strengthening New Infrastructure Assets: A Cost‑Benefit Analysis. Policy Research Working Paper;No. 8896. World Bank, Washington, DC. All countries in the OECS have established National Adaptation Plans, reflecting a vision for future resilience; the specificity of adaptation targets and costs varies across countries. Dominica has estimated its physical infrastructure needs to be between $2.1 and $2.6 billion total over the next 20 years.115 This estimate is derived from Dominica's Climate Resilience and Recovery Plan (CRRP), within which the implementation of the Resilient Dominica Physical Plan is estimated to cost $641 million out to 2040.116 Dominica's recent Public Sector Investment Plan contains significant investments of $171 million between 2020 and 2026 in planned and current public works and infrastructure funded through loans, grants, and government expenditure. In Grenada, investments in infrastructure and land total $112.9 million, International Monetary Fund (IMF). 2021. Dominica: Disaster Resilience Strategy. ; Government of the Commonwealth of Dominica. 115 2020. Dominica Climate Resilience and Recovery Plan (CRRP). Climate Resilience Executing Agency of Dominica and the Ministry of Economic Affairs, Planning, Resilience, Sustainable Development, Telecommunications and Broadcasting, Commonwealth of Dominica. 116 Dominica CRRP, 2020. 30 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines around 17 percent of the total adaptation investments (USD 639 million).117, 118 Saint Lucia's National Infrastructure Assessment (NIA) included a detailed assessment of future planning and investments for infrastructure. It included an adaptation assessment that considered exposure of assets to a range of hazards but did not quantify expected losses under climate change. This analysis uses the NIA as the starting point, but goes beyond the scope of the NIA by quantifying expected damages.119 The analysis conducted here is intended to complement national estimates by applying a consistent methodology and forward‑looking analysis to consider the macroeconomic impacts of adaptation. It is not intended as a replacement for country and project level cost assessments. Dominica is the only country among the countries discussed in this report that has established a comprehensive vision for future resilience across multiple hazards and sectors including quantitative targets for both damage and service loss reductions. Other countries are still in the process of defining resilience and corresponding measurement metrics.120 The modelled resilience targets are described in Table 3.1 below. TABLE 3.1. Resilience targets in Dominica by 2030 Sector Resilience target Source Energy Power supply is 90% resilient Transport Damage to ports [and airports] from natural disasters reduced by 50% Percent loss to road sector by natural National Resilient Development disasters reduced by 50% Strategy 2030, Climate Resilience Water Water supply and wastewater management is at least 75% resilient and Recovery Plan 2020–2030 Hospitals 100% resilient health centers achieved Schools Schools are 100% resilient Source: Government of the Commonwealth of Dominica. 2020. Dominica Climate Resilience and Recovery Plan 2020–2030. Climate Resilience Executing Agency of Dominica and the Ministry of Economic Affairs, Planning, Resilience, Sustainable Development, Telecommunications and Broadcasting, Commonwealth of Dominica. Analysis done for this report suggests that every OECS country requires significant investments to build resilience to extreme hazards. As mentioned above, this analysis considers the implications of achieving the resilience targets established by Dominica in its CRRP across all four countries, although many other potential resilience goals could be considered.121 The total cost of implementing this limited core set of investments for physical infrastructure (including both infrastructure and building stock) as retrofits over a 15‑year time horizon would cost between $794 and $1,070 million USD, undiscounted, in Dominica,122 $736–1080 million in Grenada,123 $916–1,510 million in Saint Lucia,124 and $735–1,144 million in Saint Vincent and the Grenadines.125 A long‑term perspective that ensures resilient investments are implemented as new capital is built over a 25‑year time horizon to coincide with the rate of capital stock depreciation enables the achievement of significant costs savings as compared to more rapid implementation. However, considering this long‑term horizon would also mean that residual risks 117 IMF. 2022. Grenada: Disaster Resilience Strategy. 118 Government of the Commonwealth of Dominica. 2023. 2023/2024 Estimates of the Commonwealth of Dominica (Public Sector Investment Plan). Ministry of Finance, Commonwealth of Dominica. 119 Government of Saint Lucia. 2020. Saint Lucia: National Infrastructure Assessment. Government of Saint Lucia. Government of the Commonwealth of Dominica. 2020. Dominica Climate Resilience and Recovery Plan (CRRP). Climate Resilience 120 Executing Agency of Dominica and the Ministry of Economic Affairs, Planning, Resilience, Sustainable Development, Telecommunications and Broadcasting, Commonwealth of Dominica. 121 A resilience scenario that would have maximized provision of infrastructure services would have cost between $1.8 and 2.8 billion per island in discounted dollars if implemented over a 15‑year time frame. 122 Between $545 million and 734 million in discounted dollars, with a mean of $642 million (8% of discounted GDP). See table 3.2. 123 Between $505 million and 741 million in discounted dollars, with a mean of $627 million (2% of discounted GDP). See table 3.2. 124 Between $629 million and 1036 million in discounted dollars, with a mean of $834 million (2% of discounted GDP). See table 3.2 125 Between $504 million and 785 million in discounted dollars, with a mean of $647 million (4% of discounted GDP). See table 3.2 31 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines remain elevated for longer. Under this long‑term approach, the estimated investment needs to improve resilience would be lower; approximately $556–749 million in Dominica,126 $515–756 million in Grenada,127 $641–1057 million in Saint Lucia,128 and $515–801 million in Saint Vincent and the Grenadines.129 Infrastructure resilience costs are an important component of the total needed investments outlined above because they enable the continuing provision of public services during a disaster. Improving the resilience of the physical infrastructure sectors in the 15 year retrofitting scenario (transport, energy, water, and public buildings), a subset of the total costs estimated above, would cost approximately $177–251 million in Dominica130 (undiscounted), $181–242 million in Grenada,131 $530–804 million in Saint Lucia,132 and $290–438 million for Saint Vincent and the Grenadines.133, 134 In most islands the transport sector (including, ports, airports, and roads) makes up the largest share of needed investments, followed by social institutions (hospitals and schools). In addition to estimating the additional costs for infrastructure systems, there is also the need to address resilience to any additional capital stock not explicitly included in the modelled infrastructure systems, specifically residential and commercial property (the other component of the total presented above).135 Estimates find that Dominica's cost for addressing these investment needs on the 15‑year retrofitting scenario timeline could be between $569 and 754 million, undiscounted.136 This estimate is higher than estimates of $308–392 million derived by multiplying the residential building stock (28,000 homes) by the average cost of a resilient home ($11,000–14,000). However, this difference is not surprising as the later estimate does not include commercial capital stock.137 For Grenada, the cost is estimated to be $538–813 million,138 in Saint Lucia the additional cost is $351–648 million,139 and in Saint Vincent and the Grenadines the cost is estimated at $423–672 million140 (again, all of these cost estimates are for both residential and commercial property). Table 3.2 below summarizes the results. Faster implementation increases resilience more quickly but requires more aggressive annual spending commitments. Implementation over a 15‑year time horizon would require 3 to 11 percent of GDP spent on hazard resilience per year on average, exclusive of other adaptation investments. By contrast, spreading investments out over the longer, 25‑year time horizon would cost 1 to 4 percent of GDP per year on average. These spending needs create tradeoffs between enhancing resilience on a rapid time frame and allowing fiscal space for other spending in the islands, a topic that will be discussed in detail in Chapter 5. 126 Between $ 301 million and 406 million in discounted dollars, with a mean of $355 million (4% of discounted GDP). See table 3.2. 127 Between $270 million and 410 million in discounted dollars, with a mean of 346 million (1% of discounted GDP). See table 3.2. 128 Between $347 million and 573 million in discounted dollars, with a mean of $461 million (1% of discounted GDP). See table 3.2. 129 Between $279 million and 434 million in discounted dollars, with a mean of $358 million (2% of discounted GDP). See table 3.2. Oxford Infrastructure Analytics, 2023. Estimating Investment Needs for Climate Adaptation in the Eastern Caribbean. https://openknowledge. worldbank.org/bitstreams/3485bb90-6527-431f-a6cf-3bb1970f7c0a/download. 130 A discounted mean of $146 million (2% of discounted GDP). 131 A discounted mean of $144 million (1% of discounted GDP). 132 A discounted mean of $457 million (1% of discounted GDP). 133 A discounted mean of $249 million (2% of discounted GDP). Oxford Infrastructure Analytics, 2023. Estimating Investment Needs for Climate Adaptation in the Eastern Caribbean. https://openknowledge. 134 worldbank.org/bitstreams/3485bb90-6527-431f-a6cf-3bb1970f7c0a/download. The analysis estimated this from a top down perspective, considering the total capital stock of the country and then removing the 135 share already estimated from the bottom up perspective. Average costs for resilience measures were applied to the residual capital stock estimate to arrive at an estimate of resilience cost. 136 A discounted mean of $494 million (6% of discounted GDP). 137 World Bank Staff estimate. 138 A discounted mean of $482 million (2% of discounted GDP). 139 A discounted mean of $376 million (1% of discounted GDP). 140 A discounted mean of $397 million (3% of discounted GDP). 32 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines TABLE 3.2. Cumulative investment needs for resilient core in physical infrastructure and additional capital stock (Total needed by 2050, Million 2020 $, Undiscounted) Resilient Core — Implemented with Retrofitting over 15 years (Undiscounted) Additional Total Capital   Infrastructure Stock Total Total Energy Transport Water Social Investments Investments Investments Investments (Undisc.) (Undisc.) (Undisc.) (Undisc.) (Undisc.) (Undisc.) (Undisc.) (Discounted) Dominica 19 117 78 214 721 935 642 [16, 22] [90, 144] — [71, 85] [177, 251] [569, 754] [794, 1070] [545,734] 45 58 1.7 108 211 703 914 627 Grenada [38, 51] [44, 72] [1.6,1.8] [97, 118] [181, 242] [538, 813] [736, 1080] [505,741] St. Lucia 43 325 19 279 667 549 1216 835 [36, 50] [224, 427] [18, 20] [253, 306] [530, 804] [351, 648] [916, 1510] [629,1036] St. Vincent and 126 135 103 364 579 943 647 Grenadines — [100, 153] [97, 172] [93, 113] [290, 438] [423, 672] [735, 1144] [504,785] Resilient Core — Implemented with Depreciation over 25 years (Undiscounted) Total Additional Infrastructure Capital Total Investments Stock Total Investments Energy Transport Water Social (Undisc.) Investments Investments (Discounted) Dominica 13 82 55 150 505 655 355 — [11, 15] [63, 101] [50, 60] [124, 176] [398, 528] [556, 749] [301, 406] Grenada 32 41 1 76 148 492 640 347 [27, 36] [31, 50] [1, 1] [68, 83] [127, 169] [377, 569] [515, 756] [279,410] St. Lucia 30 228 13 195 467 384 851 461 [25, 35] [157, 299] [13, 14] [177, 214] [371, 563] [246, 454] [641, 1057] [347, 573] St. Vincent and 88 95 72 255 405 660 358 Grenadines — [70, 107] [68, 120] [65, 79] [203, 307] [296, 470] [515, 801] [279,434] Source: Staff calculations based on Oxford Infrastructure Analytics, 2023. Estimating Investment Needs for Climate Adaptation in the Eastern Caribbean. https://openknowledge.worldbank.org/bitstreams/3485bb90-6527-431f-a6cf-3bb1970f7c0a/download. Note: Values in brackets are minimum and maximum estimates. SDG goal investments are the additional infrastructure investments beyond BAU required to meet SDG goals. Investments represent capital expenditure and a 1 percent cost uplift for maintenance. Energy sector investments include generation, transmission, and in some countries distribution assets. Transport assets include ports, airports, roads, and bridges. Water assets include water and wastewater treatment plants. Social investments include hospitals and schools. Note that these estimates exclude measures for structural resilience in private housing stock, focusing only on public infrastructure assets. Coverage of different infrastructure assets varies by island; coverage is greatest in Saint Lucia and Saint Vincent and the Grenadines, and lowest in Dominica and Grenada, which had only partial data on energy and water/wastewater assets. For the depreciation scenario, the cost to reconstruct transport assets to implement resilience is removed relative to the retrofitting scenario. Investments for resilience against landslide events are considered separately to identify a limited set of high‑impact interventions given the spatial specificity of impacts and the high cost of interventions. Investments under any resilient core scenario can provide significant benefits by reducing losses from current hazards and mitigating the risks posed by climate change. The modelled investment standards reduce the damages from a 100‑year return period hurricane windspeed event by between 84 and 88 percent, and those from a 50‑year flood event by 100 percent. Literature on the additional benefits of implementing these investments suggests that several important co‑benefits of resilience should also be considered because of their contributions to enhanced productivity, including these examples: (i) proper maintenance schedules, a key component of resilient infrastructure investments, support decreased depreciation and extend the life of capital stock; (ii) infrastructure systems with improved resilience experience less downtime and service utilization losses, and less need for investments in back‑up power generation and water storage; and (iii) finally, resilience improvements may help reduce the risk premium for investments on these islands, helping to preserve access to capital.141 Fernández Corugedo, E., Gonzalez, A., and Guerson, A. The Macroeconomic Returns of Investment in Resilience to Natural Disasters 141 under Climate Change: A DSGE Approach. Washington, DC: IMF. 33 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines However, high investment needs point at the importance of complementary actions to enhance the effectiveness and efficiency of investment decisions. Under both variants of the resilient core scenario, the majority of investment needs are to enhance existing infrastructure rather than to develop new infrastructure to meet the SDGs.142 In the context of growing populations, the analysis considered the additional infrastructure to enhance service provision that would be needed to meet the SDG goals. Across all islands, this additional infrastructure is a relatively small driver of the cost of the investments, which are mostly accrued from adapting existing infrastructure. Given the cost of retrofitting existing infrastructure, it is necessary to plan investments as efficiently as possible, by pairing them with complementary efforts like increasing the energy efficiency of buildings, ensuring road maintenance and restoration, and coordinating post‑disaster recovery. As the need for the rehabilitation (and even replacement) of infrastructure often arises from deferred and under‑budgeted maintenance, robust asset management systems that inform regular maintenance and repair can contribute significantly to the efficiency of investments in resilient infrastructure. All four states will need to address the challenge of ensuring resilient housing (including resilient access to basic household services, such as water, sanitation, and electricity) in the face of growing climate and disaster risks. This will require a multifaceted approach that considers policy and planning measures, as well as physical damage preventive and adaptive measures. First, improving land management and land use planning is crucial. This involves identifying and designating suitable land for housing development, ensuring equitable land distribution, and implementing smart growth principles such as denser and more compact developments. Second, promoting affordable housing initiatives is essential. This can include the development of supply‑ or demand‑based housing subsidy programs and public‑private partnerships that prioritize affordable housing options for low‑income households. Additionally, investing in resilient housing (i.e., using hurricane‑resistant designs and materials), strengthening building codes and regulations, and ensuring that the provision of basic services for these households, particularly water, sanitation, and electricity, is also resilient, can help mitigate the impacts of natural events. Last, enhancing access to financing options for housing, such as microfinance programs or mortgage assistance, can improve housing conditions for low‑ and middle‑income households. Planning for housing reconstruction before a natural disaster hits, assessing capacity of the construction market to absorb new construction at scale, and leveraging regional mechanisms for skills, capacity and procurement can help strengthen resilience of the housing sector. The Dominica Housing Recovery Project, launched in the wake of Hurricane Maria in 2017, offers valuable lessons to policymakers seeking to prioritize resilient housing. After the Project's establishment, construction of the first houses did not begin for more than 18 months. The main drivers of this lag were delays in: (i) beneficiary selection and confirmation of land ownership; (ii) development of house designs; (iii) hiring the design and supervision consultants; and (iv) approval of plans by the physical planning department. These factors highlight how crucial it is for governments to prepare in advance for housing reconstruction, starting with a thorough assessment of the recovery and reconstruction capacity. This assessment should include consideration of institutional and implementation capacities, availability of designs, issues related to land ownership and approaches to resolve them, capacity of the construction market, and arrangements for construction supervision and quality assurance, etc. A regional approach can help fill countries' capacity and skills gaps while providing economies of scale in procuring materials. A key limitation in Dominica has been the availability of qualified contractors and their capacity. In addition, the availability and cost of construction materials have negatively affected project implementation. Availability of qualified and experienced project staff in contract management, construction supervision, monitoring and evaluation, communications, etc., has also been a major challenge in project implementation. Based on the results of these assessments, regions could consider establishing regional qualification and procurement systems to enable bulk purchasing and provision of common materials. Strong preparedness and response systems are a critical capacity for the four OECS countries that are the focus of this report, given their vulnerability and exposure to various hazards. Governments, with support from non‑governmental organizations and MDBs, can strengthen their emergency preparedness and Oxford Infrastructure Analytics, 2023. Estimating Investment Needs for Climate Adaptation in the Eastern Caribbean. https://openknowledge. 142 worldbank.org/bitstreams/3485bb90-6527-431f-a6cf-3bb1970f7c0a/download 34 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines response systems by investing in the different components of highly functioning emergency preparedness and response systems. In the OECS, the World Bank recently completed a comprehensive study to identify critical gaps that hinder the development and functionality of emergency preparedness architectures and response systems, informing identification of investment needs.143 At a country level, building governments' capacities to systematically respond to emergencies by establishing legal and institutional frameworks for clear mandates and accountabilities, and investing in personnel, facilities, equipment, and information technology to enhance emergency preparedness and response systems, can significantly increase government capacity to respond to disasters. Regional capacity and coordination mechanisms for emergency preparedness, response, and recovery could be strengthened by investing in emergency preparedness and response systems (legal and institutional frameworks, personnel, facilities, equipment, and information technology) that foster collaboration and resource‑sharing among neighboring countries and lead to more efficient and coordinated disaster responses that enhance the ability of the region to respond effectively to emergencies and minimize their impact on lives, infrastructure, and economic stability. Given all four states' status as SIDS, the economies of scale that can be achieved through this kind of regional approach could significantly contribute to each country's emergency preparedness, response, and recovery. Finally, strategic investments in financial preparedness and innovative fiscal planning mechanisms linked with risk reduction, adaptation, and crisis preparedness can mainstream risk reduction, climate change adaptation, and resilient investments as central elements of disaster risk management strategies. These measures, linked with systematic investments in financial preparedness, significantly reduce post‑disaster response costs. Cost‑effective measures to manage the water‑related challenges that are a key concern in the OECS include strengthening institutions and increasing the efficiency of investments. Building resilience by reducing the impacts of floods and droughts on people and assets will require a focus on strengthening institutions and information and improving the efficiency of investments for integrated water resource management. This includes the development of a roadmap on different water needs and the water sources required to support sustainable development in the near‑ and long‑term future. The roadmap should (i) consider the quantity and quality of surface and groundwater resources, (ii) outline needed measures to secure and better utilize such resources, for example through improved storage and better supporting aquifer recharges, (iii) explore additional water sources such as rainwater harvesting and wastewater reuse and the implementation of demand management actions, such as efficient irrigation and non‑revenue water management.144 Finally, NBS can also support restoring wetlands for water filtration and restoring natural riverbanks to prevent erosion and sedimentation, which contribute to better water security. Expanding and reinforcing hydrological real‑time monitoring, weather and climate forecasts, and early warning systems is another, cost‑effective way to build resilience. Increased climate resilience through flood and drought risk reduction will require putting in place contingency/emergency planning and longer‑term investment planning (drought preparedness and response plans, flood evacuation plans, storage operations plans, integrated water master plans), and investments needed to build climate resilience, including reoperating, rehabilitating, and building new water storage facilities. This also includes risk layering and financing mechanisms adapted to key sectors (drought and flood risk financing strategy development), and drought and flood risk insurance products that target multiple levels of decision making, including water service providers. Hydroclimatic information in general is useful for water resource management as an ex‑ante measure for risk preparedness. Given that the Eastern Caribbean region is heavily exposed to extreme weather events, strengthening and expanding early warning systems is critical for reducing the risk of damage to property and loss of life from disasters. The implementation of such systems must go hand‑in‑hand with a series of measures: addressing gaps in early warning communications that hinder their broadest possible dissemination; engagement across all stakeholders; and the consolidation of the entire range of threats into these systems.145 The economic value of investments in improved hydrometeorological monitoring and early warning systems is significant: one dollar of investment can yield between $4 and $35 of benefits. World Bank and Global Facility for Disaster Reduction and Recovery (GFDRR). 2023. Multi‑hazard Impact‑based Early Warning Systems 143 and Services in the Caribbean. Washington, DC: World Bank. 144 World Bank. 2023. Dominican Republic Country Climate and Development Report. Shaw, S. and King, D. 2016. "Economic Impact of E‑Mobility Transition in St. Vincent and the Grenadines." UNDP. https://info.undp.org/ 145 docs/pdc/Documents/VCT/Final%20Report_Economic%20Impact%20of%20emobility%20transition.pdf. 35 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 3.1.1.  Nature‑based solutions can complement other investments for coastal resilience and provide significant co‑benefits Investments in nature‑based solutions can substantially mitigate the impacts of increases in sea level rise and coastal flooding and provide important co‑benefits. Nature‑based solutions (NBS) is an umbrella term referring to "actions to protect, sustainably manage, and restore natural or modified ecosystems that address societal challenges effectively and adaptively, simultaneously providing human well‑being and biodiversity benefits."146 One type of NBS is ecosystem enhancement (improving the present status of ecosystems and restoring ecosystems that show signs of degradation), which can help mitigate the effect of sea level rise by between 32 and 100 percent, and the combined effects of sea level rise, additional asset exposure due to coastal development, and ecosystem degradation by between 10 and 37 percent. Beach, mangrove, and coral restoration are among the key NBS available in this context, but their costs and benefits vary across the four focus OECS countries. Of the three NBS options, given the geographical prevalence of sandy beaches across the four islands, the possibilities for cost‑effective beach restoration are the most promising (see Figure 3.1).147 For beaches, benefit‑to‑cost ratios (BCRs) are mostly greater than 1 across all four islands profiled in the report, driven primarily by benefits to tourism rather than flood mitigation. Turning to mangrove restoration, in those places where mangroves are ecologically viable, they bring significant benefits (BCRs in the range of 4–5), particularly due to the benefits of enhanced carbon storage. Coral restoration, on the other hand, often delivers BCRs of less than 1, given that (i) the costs of coral restoration are very high, (ii) the flood mitigation benefits are highly spatially variable and in many locations are not present at all, and (iii) the co‑benefits of coral restoration are high but do not justify the costs by themselves. However, where flood mitigation benefits from corals are present, the returns on coral restoration as an NBS can be substantial and BCRs are very high. This highlights the need for spatial prioritization of NBS investments to target corals that provide protection against flooding. Additionally, protection of existing coral systems to prevent degradation and loss is an important measure for preserving the benefits of these ecosystems across the region. FIGURE 3.1. Effect of Nature‑based Solutions (NBS) on expected average annual damages (EAAD) due to coastal flooding (a) Dominica (b) Grenada 3,8 7 6 3,6 5 EAAD (mill $) EAAD (mill $) 3,4 4 3,2 3 3,0 2 2,8 1 2,6 0 2010 2050 No NBS 2050 NBS 2050 2010 2050 No NBS 2050 NBS 2050 (c) Saint Lucia (d) Saint Vincent 14 2,0 12 1,6 10 EAAD (mill $) EAAD (mill $) 8 1,2 Total risk 2050 6 with NBS 0,8 4 0,4 2 0 0,0 2010 2050 No NBS 2050 NBS 2050 2010 2050 No NBS 2050 NBS 2050 Present risk Climate change Socio-economic growth Ecosystem degradation Risk reduction Source: GFDRR. "Nature‑based solutions for coastal resilience." Background Note for the OECS CCDR. https://openknowledge.worldbank.org/ bitstreams/ed18dd98-1033-4ea6-b8e7-a45bd1c6902a/download. Notes: The baseline risk of 2020 (including the effect of existing ecosystems) is shown in light blue. This risk increases by 2050 due to climate change (rising sea levels, in dark blue) and socio‑economic growth (which increases the value of the assets exposed to flooding, in light gray). Ecosystem degradation reduces flood‑mitigation capacity of NBS and creates additional damages (in red). Such damages can be reduced by preserving and enhancing NBS (the risk reduction by NBS is shown in light yellow, and the total risk with NBS by 2050 in blue). 146 Cohen‑Shacham, E., Walters, G., Janzen, C., and Maginnis, S. (eds.) 2016. Nature‑based Solutions to address global societal challenges. Gland, Switzerland: IUCN. xiii + 97pp. 147 GFDRR. Forthcoming. "Nature based solutions for coastal resilience." Background note for the OECS CCDR. 36 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Country‑specific opportunities for NBS vary across the region. In Dominica, suitability mapping indicates that 768 ha of reefs, 63 ha of beaches and 22 ha of mangroves could be enhanced, based on ecosystem presence and ecological and physical conditions (see Figure 3.2). Implementing these opportunities could reduce annual average damages from floods by $0.4 million in 2050. High‑risk areas that could be prioritized for NBS include Portsmouth and Roseau. Benefit‑to‑cost ratios exceed 1 in most cases, with beaches and mangroves delivering mean BCRs of 3 and 5, respectively. Corals have more spatial variability in their results, but BCRs up to 3 are possible in high‑risk areas. In Grenada, suitability mapping indicates that 1,052 ha of reefs, 44 ha of beaches, and 339 ha of mangroves could be enhanced. NBS could reduce flood risks by $1.3 million in 2050, and BCRs exceed 1 in most cases. Beaches and mangroves both have mean BCRs of 5. As in Dominica, corals have more spatial variability, but BCRs of up to 15 are possible in high‑risk areas. Suitability mapping for Saint Lucia indicates 2,812 ha of reefs, 65 ha of beaches, and 190 ha of mangroves that could be enhanced, based on ecosystem presence and ecological and physical conditions, reducing coastal flood risk by $4 million in 2050. NBS for beaches in Saint Lucia have the highest mean BCRs in the region, with beaches and mangroves delivering mean BCRs of 10 and 5, respectively. As with the other islands, corals have more spatial variability in their results, but BCRs are up to 25 in high‑risk areas. In Saint Vincent and the Grenadines, suitability mapping identifies a smaller area for enhancement, 202 ha of reefs, 59 ha of beaches, and 57 ha of mangroves, with potential flood risk reduction of $0.2 million in 2050. BCRs for beaches, mangroves, and corals are 3, 5, and 6 (in high‑risk areas), respectively. Nature‑based solutions are cost‑efficient and provide multiple co‑benefits but require additional incentives and close coordination across multiple actors to mobilize private sector participation. The evidence shows that the benefits of nature‑based solutions can overcome implementation and maintenance costs in many contexts.148, 149 However, nature‑based solutions are at a disadvantage when projects are evaluated using conventional investment indicators, because they typically do not generate income based on cash flows in the traditional sense. Improving the methods and approaches to assess the costs and benefits of nature‑based solutions would help to ensure that their real benefits are well articulated and included in assessments. Strategic partnerships with academia, government, and non‑governmental organizations are essential for building capacity and scaling up the projects. From the perspective of the financial sector, pilot projects are low‑risk opportunities to engage in nature‑based solutions financing, while building internal capacity to adopt international standards and better assess the risks and opportunities behind these projects. Establishing partnerships among multiple financiers willing to take on different levels of risk can help to mobilize private financing. Governments, IFIs, and international donors can partner up to provide de‑risking mechanisms to attract private investment, including grants, concessional finance, equity, and PPPs. Incentives can be further strengthened with tax incentives and social responsibility requirements.150 Nature‑based solutions, coupled with other interventions, can also contribute to reducing the impacts of extreme heat. Investments will be needed to reduce heat impacts on labor productivity in the agriculture, service, and industrial sectors. Interventions like park expansion, green roofs, and enhanced tree cover can help mitigate the urban heat‑island effect. Heat impacts on outdoor labor could be mitigated by changes to labor practices, such as adjusting when tasks are scheduled during the day and ensuring access to appropriate clothing, adequate hydration, and places to cool down during the workday.151 For indoor cooling, the priorities should be improvements to the energy efficiency of buildings and expansion of active and passive cooling (e.g., improved ventilation, fans, or air‑conditioning). Recent World Bank work for the Dominican Republic suggests 148 Narayan, S., et al. 2016. "The Effectiveness, Costs and Coastal Protection Benefits of Natural and Nature‑Based Defences." PLoS ONE 11(5): e0154735. 149 World Bank. 2020. Mobilizing Private Finance for Nature. Washington, DC: World Bank. 150 A good example is the "biodiversity net gain" mandate. In England, under the Environment Act 2021, developers must deliver a "biodiversity net gain" of 10%. This means a development will result in more or better quality natural habitat than there was before development. Biodiversity net gain makes sure development has a measurably positive impact (‘net gain') on biodiversity, compared to what was there before development. For the purposes of the law, biodiversity is measured using standardized biodiversity units, based on a statutory biodiversity metric. For additional information see https://www.gov.uk/government/collections/biodiversity-net-gain. 151 Zheng, Y., Keeffe, G., and Mariotti, J. 2023. "Nature‑Based Solutions for Cooling in High‑Density Neighbourhoods in Shenzhen: A Case Study of Baishizhou." Sustainability, 15(6):5509. World Bank. 2023. Dominican Republic Country Climate and Development Report. 37 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE 3.2. Spatial distribution of NBS Benefit‑to‑Cost ratios for corals (i), mangroves (ii), and beaches (iii) St. Vincent Dominica Grenada St. Lucia and the Grenadines (i) Corals a b c d BCR < 0,9 BCR < 0,9-2 BCR < 2-5 BCR < 5-11 BCR < 11-42 (ii) Mangroves a b c d BCR < 9 BCR < 9-9,7 BCR < 9,7-10,3 BCR < 10,3-11,7 BCR < 11,7-11,3 (iii) Corals a b c d BCR < 1 BCR < 1-7 BCR < 7-11 BCR < 11-23 BCR < 23-46 Source: GFDRR, (2023) Nature based solutions for coastal resilience. Note: Spatial distribution of NBS Benefit-to-Cost ratios for corals (i), mangroves (ii), and beaches (iii) (r = 6%) for (a) Dominica, (b) Saint Lucia, (c) Saint Vincent and the Grenadines, and (d) Grenada. 38 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines that such interventions can have a significant positive impact on labor productivity (specifically through the expansion of active and passive cooling measures),152 reducing the negative labor productivity impacts of increased heat by between 45 and 70 percent. 3.1.2.  Investments in agriculture and the blue economy are critical for food security and resilience The blue economy contributes significantly to the economies of OECS countries and offers opportunities for sustainable economic development, based on tourism, sustainable fisheries management, and blue carbon potential.153 Beyond the NBS investments highlighted above, additional measures on institutions and information can help support protection of natural assets and help create opportunities to leverage their economic value. Important investments in information include baseline mapping of the vegetated coastal ecosystems in each country to ascertain the blue carbon potential at the national and subregional level. This mapping could inform a future blue carbon credit market and support primary research (to build the knowledge base) on carbon emissions from these vegetated coastal ecosystems due to sea surface temperature (SST) change, marine heatwaves, and other climate and development impacts. Investments in building resilience in the fisheries and coastal tourism sectors against shocks and lingering effects of the global poly‑crisis to improve food security and economic resilience will also help enable resilient growth based around marine ecosystems. "Blue Tourism" focuses on activities that generate low environmental impacts, conserve natural resources, and support local communities. Blue Tourism can generate significant value to countries and support marine and coastal conservation and resilience. For example, in 2019, high‑value marine ecosystem‑based tourism contributed an estimated 30 percent of Saint Lucia's and Grenada's total GDP, and 23 percent of that of Saint Vincent and the Grenadines.154 Studies from Fiji show that investments in marine protected areas boosted tourism income through additional spending by visitors, increasing aggregate household income by $3,171 and creating 34,000 new local tourism jobs.155 In addition, aquaculture has considerable potential to generate new blue economy jobs in OECS countries, while addressing climate change impacts on wild fish stocks and diversifying local economies away from tourism and traditional capture fisheries. Three important developments in OECS countries can expand aquaculture: (i) new technological options for growing a wider range of species that are being piloted in, and for, small islands, (ii) higher export of seafood products such as sea moss, and (iii) greater demand for farmed seafood in local markets. Transboundary considerations in the key blue economy sectors of tourism, fisheries, and aquaculture are critical to ensure climate resilience and sustained progress over the long term. Many fish species harvested by Caribbean states are highly migratory and transboundary in their distribution. The close proximity of Caribbean states to one another, coupled with a combined Exclusive Economic Zone (EEZ) of 2,060,721 km2, means that many of the fish resources come from shared stocks. For that reason, cohesive management approaches are needed, and realistic assessment and effective management of the stocks are only possible through regionally coordinated efforts. Similarly, the countries share ocean currents, which bring litter and sargassum to beaches of the different countries. Investments in circular economy solutions for sargassum and regional approaches to sargassum monitoring that allow for collecting, composting, and converting sargassum into added‑value byproducts such as soil fertilizer that has commercial demand are two options for addressing this challenge. There are potential climate benefits, as well, given sargassum's role in mitigating storm surges and reducing GHG emissions from agriculture (as it is a low‑carbon alternative to synthetic fertilizers). Institutions at both the national and—critically, given the small island developing states context— regional level will require strengthening to ensure the economic opportunities provided by natural assets can still be leveraged in a context of increased impacts of climate change. Protection of coastal habitats will require strengthening of regulations and monitoring and enforcement at the national level. Enforcement and Due to the impact that active cooling measures can have on electricity demand, increased efficiency in these systems and increased 152 adoption of passive measures are important complimentary measures. 153 Key blue economy sectors include tourism, fisheries, ports and shipping. 154 World Bank. "OECS Blue Economy Tourism analytics". Unpublished. 155 World Bank. Forthcoming. "Assessing the Economic Impact of Protected Areas on Local Economies in Fiji." Washington, DC: World Bank. 39 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines monitoring is another area where regional coordination can help reduce costs and increase effectiveness. A focus on sustainability and resilience to climate shocks would need to be mainstreamed into existing regional and national tourism policies. Special attention to the transboundary effects of any policy impacting coastal ecosystems (e.g. tourism, fisheries, and aquaculture among others) will be important. A regional approach could also help strengthen resilience to climate change and enhance sustainability of ecosystems. The common regional ocean policy and its strategic action plan are important steps toward regional integration in protecting ecosystems, but additional harmonization of policies and strengthening of the regional regulatory framework is still needed. For example, the OECS Regional Fisheries Policy is outdated and does not include specific avenues to address climate change. In addition, common operating standards for beaches, marinas, and boat operators could be developed to account for climate change impacts through sea level rise. Additionally, the incorporation of climate‑smart technology in agri‑food systems can increase adaptation and improve resilience of the sector. For example, providing new technologies, appropriate tools, and relevant training to smallholder farmers and agri‑processors would create efficiencies. Training and capacity building in agricultural engineering, irrigation and water management, digital agriculture, and extension services can support the achievement of "triple wins" namely, economic gains, climate resilience, and lower GHG emissions. 3.2.  Moving away from fossil fuels and improving waste management can strengthen resilience, reduce economic vulnerabilities, and support the achievement of climate commitments The four OECS countries that are the focus of this CCDR have the renewable resources to shift away from fossil fuel power generation toward a greener and more energy‑independent development path.  Across the countries, modern renewables account for 5 percent or less of total final energy consumption (TFEC) (SDG 7.2, 2019); this share has remained relatively constant across the past decade. In electricity generation specifically, the renewable energy (RE) share varies more significantly as compared to TFEC for the four focus countries—from 2 percent in Grenada and 3 percent in Saint Lucia, to 15 percent in Saint Vincent and the Grenadines and 20 percent in Dominica (see Figure 3.3). In the latter two countries, the share has also varied more significantly over time, increasing in Saint Vincent and the Grenadines following a reduction in generation from fossil fuels, and decreasing in Dominica given a decrease in hydro generation and an increase in fossil fuel generation. The four countries, however, possess excellent RE resources, particularly for solar PV, which boasts the technical potential to far exceed electricity demand.156 FIGURE 3.3. RE capacity potential and 2030 generation ambitions Generation capacity and potential Targets for generation   100% 100% Total RE Potential 2030 Target Projected installed RE installed Peak demand demand capacity capacity (MW) 2021 RE share of generation 2020 (MW)  2030 (MW)  2020 (MW)  – excl. rooftop 60% Dominica  14  29  7  92  Grenada  33    3  80  35% St. Lucia  62  82  5  757  20% 15% VCT 21  33  9  1,954  2% 3% Dominica Grenada Saint Lucia VCT Source: Internal WB analyses and IRENA. 2023. Statistical Profiles: Source: IRENA. 2023. Statistical Profiles: Energy (website). Abu Dhabi, Energy (website). Abu Dhabi, UAE: IRENA. https://www.irena.org/ UAE: IRENA. https://www.irena.org/Data/Energy-Profiles. Data/Energy-Profiles.; CCREEE. 2024. Energy Report Cards (website). Bridgetown, Barbados: Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE). https://www.ccreee.org/erc/).; Torbert, R., et al. 2017. Saint Lucia National Energy Transition Strategy and Integrated Resource Plan. Boulder, CO: Rocky Mountain Institute. 156 IRENA. 2022. Country Profiles: Renewable Energy Balances by Country (website). Abu Dhabi, UAE: IRENA. https://www.irena.org/Data/ View-data-by-topic/Renewable-Energy-Balances/Country-Profiles. 40 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines A transition away from fossil fuels, coupled with efforts to modernize generation and grid assets, could help increase resilience to climate impacts. Compared to imported fossil fuels, domestic renewables insulate economies from global fuel price shocks and are not as reliant on extensive infrastructure supply chains for fuels (ocean freight, ports, T&D). Geothermal power, where available (as in Dominica), is rightfully being pursued for clean and stable generation. Variable renewable energy (VRE) from solar and wind carry challenges related to variable power supply. However, battery storage, Demand Side Management (DSM) —encompassing energy efficiency (EE), demand response (DR) and distributed generation and storage— and smart grids not only help integrate VRE but can provide support for grid stability and frequency control. These measures also provide redundancy for critical electricity demand (i.e., from hospitals) in the case of grid failure.157 Renewable energy infrastructure is of course also exposed to hazards, and must be planned, designed, and built considering the trade‑off between higher investment costs and increased resilience. The necessary massive scale‑up of RE will require a supportive environment for VRE development. A necessary first step is the publication of detailed solar and wind resource maps. Existing examples of work in this vein include locational studies for PV being conducted in Dominica, as well as rooftop PV potential assessments in Grenada.158 Second, both utility‑scale and distributed RE should be recognized as part of the solution. The former brings down costs but requires more land (for solar and onshore wind) and can entail project scale challenges given the small size of some of the power grids. For example, project developers may be interested in a minimum size that could be hard for the four islands' current power systems to absorb. Finally, significant improvements in the regulatory framework for RE, particularly to improve grid access and dispatch, would help bring in much needed capital through Independent Power Projects (IPPs)159 and foreign direct investment. Investments in energy efficiency for buildings and for water and wastewater systems160 can be a near‑term, low‑cost approach to curbing growth in energy demand. Often the cost of avoiding an additional unit of EE generation through EE investments is lower than that of generating an additional unit. In OECS countries, this is especially relevant given the high cost of electricity generation. For example, in Saint Lucia the cost of saving a unit of electricity generation through energy efficiency investments was found to be between EC$0.14 and EC$0.19, well below the cost of new power generation. Targeted EE investments have the potential to reduce energy consumption in Saint Lucia by 10 percent from the baseline by 2035.161 There, as in other OECS countries, EE investments in buildings (i.e., energy efficient lighting, cooling, and refrigeration) and in water and wastewater systems (i.e., pump optimization, enhanced O&M practices, installation of variable speed drivers) offer high returns. To reap these benefits, barriers to investments must be addressed; these include (i) underdeveloped regional and national EE equipment supply markets, (ii) low awareness of the benefits of EE measures, and (iii) lack of harmonized frameworks to benefit from economies of scale. As power supply and demand become more variable, due to increasing renewable penetration, electrification, and climate impacts, there will be greater economic value in shifting or reducing loads through DR (demand response). In the absence of cross‑border electricity trade and energy storage, DR can help shift and shed loads to provide grid stability and reduce new generation requirements. However, the immediate need for DR mechanisms to shift power loads, e.g., from peak to off‑peak times through congestion pricing, is currently tempered by low VRE integration levels and the absence of an electric vehicle (EV) economy. Moreover, DR often entails upgrading and modernizing the grid as a prerequisite, e.g., with smart meters and digital managements systems. For these reasons, DSM through EE should be prioritized and later complemented by DR investments. United Nations Economic Commission for Latin America and the Caribbean. 2022. "Building a climate‑resilient power sector in the 157 context of the Caribbean small island developing States' energy transition." Policy Brief LC/CAR/2022/6. 158 Fang, F., Bedrosyan, D., and Ivanescu, C. 2022. Assessment of Technical Rooftop Solar Energy Potential in Select Cities ‑ Global Report (English). Washington, D.C.: World Bank Group. 159 Energy Sector Management Assistance Program, World Bank. 2023. "Regulatory Indicators for Sustainable Energy". https://rise.emsap.org Global data shows that electricity costs for water production, distribution, and treatment range from 33 to 82 percent of non‑labor 160 operating costs. 161 Bunker, K., et al. 2017. Saint Lucia National Energy Transition Strategy. Rocky Mountain Institute. 41 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Investments in battery storage can contribute to improving the flexibility of the grid and enhancing resilience to climate, while reducing emissions and vulnerability to external price shocks. Battery storage can displace oil with flexible generation to allow deeper VRE penetration. In Saint Lucia, simulations found that 15 MWh of battery storage (without new renewable or other generation resources), could already save LUCELEC EC$660,000 in fuel savings.162 In Saint Vincent and the Grenadines, simulations to achieve the target of 60 percent RE penetration by 2030 show battery storage increasing in proportion to installed PV capacity, with roughly 36 MW PV capacity supplemented by 40 MWh battery storage.163 However, remuneration systems need to be adjusted to reward generators for flexible generation and ancillary services since current remuneration mechanisms only cover payments for energy and capacity provision during peak load hours. In addition to gas, battery storage will also be part of the solution; unlike gas, the degree to which it is deployed does scale up with decarbonization. Small‑size distributed renewable energy generation projects have high potential in the OECS in the short term, but small utility‑scale systems can be viable in future with sufficient risk mitigation. Distributed renewable generation offers more opportunities in the short term than utility‑scale renewable energy due to the OECS' constraints around scale and the limited availability of land (see Table 3.3 below). Nevertheless, in specific places, small solar and wind utility‑scale projects (capacity below 1 MW) can make a big difference. The region also has proven geothermal resources. Utility‑scale projects could be brought forward using private sector investment, including foreign direct investment (FDI), but they need support through affordable financial risk mitigation instruments, such as drill risk insurance for geothermal. MDBs are well positioned to offer these types of de‑risking instruments in the short term, while supporting the development of local financial sector capability in the long term. A transition to renewables can also generate jobs, particularly in distributed solar energy generation. In the OECS, job creation would most likely be in construction (and thus temporary) or in maintenance. For construction jobs, large installations of offshore wind or solar PV can generate between 3 and 27 construction job‑years per megawatt of capacity,164 and between 0.1 and 1.1 jobs per megawatt of capacity in operations and maintenance.165 Distributed solar systems may provide higher job gains in maintenance than utility scale systems.166 In the OECS, assuming all renewable energy installation was utility scale, the transition could generate between 937 and 42,000 job‑years across all four islands and between 24 and 4,000 operations and maintenance jobs, depending on whether capacity is installed to meet domestic demand, or to maximum potential, and assumptions about how many jobs are created per megawatt installed capacity.167 If a portion of that installation was distributed energy, the job impact could be slightly higher and more lasting due to the higher share of operations and maintenance jobs. The high cost of imported fuels makes it attractive to invest in cheaper and cleaner local energy resources. Fuel prices and electricity tariffs in the region are many times those of other countries. Unlike Trinidad and Tobago and the Dominican Republic, the OECS countries have largely avoided the trap of subsidizing energy. This imposes a high cost on consumer budgets but also represents an opportunity because it means that clean energy investments are more attractive. The avoidance of subsidies has also helped the financial viability of the energy sector, but more needs to be done to bring in the necessary capital. For example, the countries' high debt‑to‑GDP ratios have an impact on utility credit ratings, and therefore on utilities' ability to both position themselves as reliable purchasers of power for IPPs and to attract the much‑needed external financing and FDI. Specific credit enhancement mechanisms to help attract domestic and foreign private investment include partial risk guarantees, political risk insurance, concessional finance, and first‑loss facilities. The region will need to overcome a range of technical, financial, and economic barriers to realize investments. The World Bank's Caribbean Regional Private Sector Diagnostic168 identified barriers to renewable energy expansion in the OECS (see Table 3.3 for details). Some of them are related to the size and geography of 162 Bunker, K., et al. 2017. Saint Lucia National Energy Transition Strategy. Rocky Mountain Institute. HATCH Consulting Group. 2022. "Mainstream Resilience in Power System Planning in the Caribbean ‑ VINLEC." Report delivered by 163 HATCH consulting group for the World Bank in July 2022. Construction and installation jobs are presented as job years due to the temporary nature of these roles, while operations and 164 maintenance jobs are expressed as jobs/MW to reflect the more permanent character of the positions. 165 Hanna, R., et al. 2024. "Job creation in a low carbon transition to renewables and energy efficiency: a review of international evidence." Sustainability Science 19, 125–150 (2024). Grottera, C. 2022. "Reducing emissions from the energy sector for a more resilient and low‑carbon post‑pandemic recovery in Latin 166 America and the Caribbean." UN Economic Commission for Latin America and the Caribbean (ECLAC). 167 Authors' calculations based on estimates of demand by 2030, RE capacity, and job creation multipliers from Hanna, et al (2021). IFC, 2023. "Regional Private Sector Diagnostic (RPSD): Promoting Private Sector‑led Growth to Foster Recovery and Resilience in the 168 Caribbean." Washington, DC: International Finance Corporation. 42 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines the islands. For example, limited space for the installation of larger solar arrays or the fact that weather patterns do not vary much across the islands, which leads to more volatility from VRE generation. The implication is that the unique context of SIDS must be considered when determining the appropriate level of RE penetration, and that this level‑setting should be complemented by active network management tools. Policy barriers include gaps in long‑term system planning and lack of independent regulatory bodies. Financing challenges such as a lack of access to capital and the need to create incentives for utilities all impede current operations and the transition to a new system. Moreover, these islands lack trained personnel to both make the necessary infrastructure investments and manage RE procurement. High transaction costs and the absence of economies of scale are significant barriers, but regional solutions exist. On the knowledge front, regional training programs could create the demand to teach the necessary specialized skills. At an institutional level, regional collaboration to enable the use of standardized documentation and processes, and the bundling of investments, could help attract additional private capital, Finally, in terms of investments, the rationale for regional interconnection can be explored for the medium to long run, This would likely rest on the ability of centralized generation to push down generation costs, the endowment of RE resources, and the ability to develop them (for example, because of land constraints). Regional interconnection also has the potential to create additional grid benefits in terms of greening and stability . It is for these reasons that analysis to date has focused on the possibility of Dominica developing excess geothermal power for export to Martinique and Guadeloupe.169 TABLE 3.3. Barriers to renewable energy uptake in the OECS (adapted from the Caribbean RPSD) Saint Vincent and the Barriers Dominica Grenada Saint Lucia Grenadines Technical and physical Economies of scale         Land availability         Long‑term system planning         System losses and grid reliability         Technical capacity of workforce         Commercial Contractual services         Financing         Offtaker creditworthiness         Policy and regulatory Independent regulator         Legal or regulatory frameworks         Licenses and permits         Procurements         Unrealistic/ineffective RE targets         Institutional Political will/government action         Technical capacity for RE procurement,         structuring, and development Major barriers Medium barriers Minor barriers Source: Author's elaboration. Hansen,Megan Veronica; Nexant. Caribbean regional electricity generation, interconnection, and fuels supply strategy (English). 169 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/440751468238476576/Caribbean-regional-electricity- generation-interconnection-and-fuels-supply-strategy. 43 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 3.2.1.  An increased focus on renewable energy could facilitate the adoption of cleaner transport alternatives Transport emissions represent an important share of the emissions profiles in the four focus countries. Reducing transport emissions can create significant co‑benefits. For the existing fleet of internal combustion engines, motorization management can help reduce emissions while improving road safety.170 Transitioning to electric mobility would bring further benefits in terms of reduced local pollution and the potential for GHG emissions reductions through the greening of the grid. A 2016 study in Saint Vincent and the Grenadines estimated that the benefits of an e‑mobility transition outweigh the costs, although they also lead to an increase in energy demand by ~10 percent by 2050 relative to baseline.171 Such a transition also generated positive economic benefits through reduced fuel expenses and greater disposable income for consumers, although there was a short‑term deterioration of the balance of payments at a national level due to additional imports of new vehicles. Across the four focus countries, there are efforts to define emission reduction targets in the transport sector, with a focus on increasing the share of electric/hybrid vehicles (cars and buses). This is the case for Dominica (20 percent transport emission reduction target by 2030) and Saint Vincent and the Grenadines (10 percent by 2025). Benefits beyond emission reduction include lower fuel imports. Several countries are considering or putting in place measures to reduce import duties and excise taxes for battery‑powered vehicles. Analysis of the case of Saint Vincent and the Grenadines suggests that a rapid transition to EVs on the island could be financed via a $9 per visitor fee that would be used to incentivize adoption through subsidy payments.172 There are technical, social, and economic barriers to scaling up this sector, but some countries in the region are including ambitious EV roll‑out estimates in their planning. Grenada's IRRP, for example, assumes two EV penetration rates equal to either 50 percent or 100 percent by 2035, with a trajectory that corresponds to penetration rates either half of or equivalent to those forecast in the EU. This goal is ambitious relative to other countries in the region. In the Dominican Republic CCDR, the ambitious scenario assumed a 70 percent EV penetration rate by 2050.173 Furthermore, without due consideration and planning, increasing the penetration of electric vehicles in small island states can have negative impacts on grid stability as electricity consumption patterns evolve given increased EV usage.174 Policies that could be deployed to reduce peak demand include peak and off‑peak pricing, on‑site charging infrastructure, congestion charging, etc. At the same time, with controlled charging and discharging, EVs can also be a grid asset by helping maintain a stable electrical frequency and providing power during peak consumption windows. In Saint Lucia, for example, a high renewables scenario could meet half of the country's electricity storage needs with only 5 percent of EVs providing services to the grid (assuming a 30 percent EV penetration rate).175 Policy reform and investments can incentivize EV adoption while supporting the resilience of the energy system. Governments in the region have a menu of options to choose from, each of which can contribute to resilience. A regulatory framework for the implementation of vehicle‑to‑grid storage and supply technology could help improve demand management. A well‑designed transportation information management system would provide crucial data to inform transportation and energy policy and strategy, particularly with regard to tracking emissions and environmental impacts. Tax incentives to auto dealerships to train mechanics in the maintenance and repair of clean vehicles could help bridge the gap in human capital to enable adoption, while the elimination of duties and VAT for EVs could encourage scheduled adoption. Finally, a network of Gorham,Roger; Bose,Dipan; Dos Anjos Ribeiro Cordeiro,Maria Joao; Darido,Georges Bianco; John Koupal; Krishnan,Raman V.; 170 Neki,Kazuyuki; Qiu,Yin. Motorization Management for Development: An Integrated Approach to Improving Vehicles for Sustainable Mobility (English). Mobility and Transport Connectivity Series Washington, D.C.: World Bank Group. http://documents.worldbank.org/ curated/en/099645006172219760/P1731880a0ad070ff0a6cf01b424e24ed04. 171 Shaw, S. and King, D. 2016. "Economic Impact of E‑Mobility Transition in St. Vincent and the Grenadines." UNDP. 172 Shaw, S. and King, D. 2016. "Economic Impact of E‑Mobility Transition in St. Vincent and the Grenadines." UNDP. O'Neill‑Carrillo, E., Lave, M., and Haines, T. 2021. "Systemwide Considerations for Electrification of Transportation in Islands and 173 Remote Locations" Vehicles 3, no. 3: 498–511.; Shah, K. 2021. "Can Electric Vehicles Drive the Transport Revolution in Small Island States?" Small islands Policy Lab, Policy Brief #3, University of Delaware. 174 Bunker, K., et al. 2017. Saint Lucia National Energy Transition Strategy. Rocky Mountain Institute. 175 Ibid 44 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines mobile charging stations to support adoption of EVs will be necessary. Public support will be needed in the early stages, in the form of investment in strategically accessible chargers and incentives for EV owners to install charging points at home. As the demand for EVs grows and the market risks decline, the incentives for private investment in charging infrastructure will increase, facilitating the potential integration of charging stations with traditional gas station infrastructure.  Electrification of transport could extend to ocean and eventually air transport. Technological innovations that offer improved services as well as reduced environmental impact are slowly coming into view and should be considered for the medium to long term. In maritime transport, one promising area is the on‑shore powering of cruise ships that currently use fuel oil to keep engines running. Such an initiative would require not only the necessary infrastructure and RE development, but also load management to balance the energy requirements of such vessels with domestic demand. In domestic maritime transport, the electrification of ferry services and water taxis is an attractive area for electrification due to the shorter routes traveled. Though the ferry market in the Caribbean is still quite limited, Saint Lucia and Dominica connect to Martinique and Guadeloupe, and Saint Vincent and the Grenadines has ferry services between its islands. Similarly, most of the early innovations in battery technology for aviation are in smaller aircraft that are suitable for shorter intra‑regional routes. Assessments of the criticality of roads can prioritize investments in road infrastructure. A recent analysis on the impact of closing one road at a time showed that three of the OECS countries (all except Grenada) are especially vulnerable to road disruptions. In Dominica, over 8 percent of roads, when impassible, would remove the only available access route to certain destinations. Simulating more destructive hazards, the same study found that removing 20 percent of the road network on average eliminated 90 percent of consumer surplus for road travel in Saint Vincent and the Grenadines and 76 percent in Dominica. This type of analysis can help identify key investment areas in road infrastructure, especially when coupled with information on users and critical infrastructure destinations such as hospitals and schools. Ports and airports are integral to economic livelihood and their continued functioning requires embedding resilience into all operations. Tourism accounts for a large and growing share of GDP in Caribbean countries, making airports a strategic asset. At the same time, the expected damage to airport infrastructure due to hazards, especially floods, is estimated is estimated to incur the highest costs. Seaports are also vital for providing the island nations with the goods on which their economies depend, including liquid fuels for transport and power. With each country only having one to a few airports or seaports, there is little redundancy in this infrastructure to limit the negative consequences of disruptions. To mitigate this risk, building resilience not only involves making specific investments to counter the risks of identified hazards but also embedding resilience into port operations. That means making resilience integral in governance and management, determining acceptable levels of risk, creating emergency management and recovery plans, promoting wide awareness among staff, and providing training for staff on disaster management procedures, etc.176 3.2.2.  Improved waste and wastewater management can reduce methane emissions while protecting people, the environment, and the economy Mismanagement of waste in the four OECS countries that are the focus of this report leads to high methane emissions. Methane from waste is primarily generated from the handling of organic waste. In most Caribbean countries, organic waste from households and commercial enterprises is not separately collected, transported, and treated; instead, it is co‑mingled with the other waste streams and disposed of in landfills. Organic waste comprises 44 percent of the total waste among the four countries, while paper and cardboard represent 14 percent and plastic 12 percent.177 Improperly disposed waste undermines resilience 176 An extensive list was developed for Saint Lucia by UNCTAD, available here https://sidsport-climateadapt.unctad.org/wp-content/ uploads/2022/06/ADAPTATION-GUIDELINES-OPTIONS-AND-MEASURES-IN-SUPPORT-OF-CLIMATE-RESILIENT-PORTS-GUIDELINES- IN-SUPPORT-OF-CLIMATE-RESILIENT-PORTS_UNCTAD.pdf. World Bank. 2021. Waste management sector including marine plastics debris sources deep dive study for selected Eastern Caribbean 177 Countries. Report No.1: Rapid Waste Sector Assessments. Washington, DC: World Bank. 45 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines to climate change and is a significant contributor to emissions (especially methane) in these small islands. To illustrate the connection, plastic pollution blocks drainage systems and worsens the severity of floods as water builds up behind blockages and spills over as flooding.178 As another example, intense rainfall can exacerbate the leakage of solid waste into the ocean, negatively impacting ecosystems, human health, and the livelihoods that depend on oceans.179 In addition to solid waste management, efficient wastewater management is essential for mitigating methane emissions and safeguarding communities, ecosystems, and economies. Proper handling of wastewater not only reduces environmental contamination but also minimizes the methane production associated with organic waste decomposition. Implementing comprehensive wastewater treatment systems, including the separation and treatment of organic waste, can significantly curtail methane emissions while preserving water quality and the health of marine ecosystems. Moreover, investing in climate‑resilient infrastructure for wastewater systems is crucial to protect the population against the spread of water‑borne diseases. Many landfills on these islands are directly vulnerable to impacts of climate change and will require changes in design and operation to support enhanced resilience. Landfills close to the ocean will require protective infrastructure, elevation, or relocation to enable operations to continue in most situations. Higher temperatures affect waste decomposition, increase dumpsite/landfill fire risk, and can increase risks to landfill personnel. To reduce these risks, operators can increase the use of soil cover, enhance their capacity to treat leachate, elevate infrastructure (i.e., weighbridges), and manage landfill gas. Changes to rainfall patterns will also need to be accounted for in leachate treatment and compaction/soil cover operations.180 The systemic transformation of solid waste management in the OECS will require numerous interventions. From a technical perspective, landfills with landfill gas management will drastically improve both mitigation and resilience for the sector and will be necessary for residual waste regardless of other management methods. Improved separation of recyclables and organic waste from the waste stream and treatment of both would minimize emissions, prevent leakage of waste, and reduce landfill space required in the long term. Diverting organic waste to composting or anaerobic digestion can reduce methane emissions. Once safe treatment and disposal options are established, informal or uncontrolled disposal sites would need to be closed to prevent further use. In parallel to technical solutions to identified challenges, an improved authorizing environment is necessary to ensure sufficient technical capacity, sustainable financing, and a regulatory environment and institutions that are aligned with integrated solid waste management. For example, technologies that could impact the environment should be adequately regulated (i.e., air quality control standards for incineration and, for landfills, the monitoring of water bodies, soil, and air), and policies that protect both the government and private sector providers and allow for fulfillment of public‑private contracts should be in place. A mix of regional and local management of solid waste services can help achieve cost effectiveness. Economies of scale are difficult for the OECS states to achieve given their small island characteristics, one of which is low waste volumes.181 This means that capital and operational costs are high—but regional cooperation could support cost efficiency in the sector. A regional waste management strategy could support a more sustainable system with a mix of local and regional treatment and disposal methods. The currently limited recycling could benefit from regional recycling processing to reduce plastic waste, a key source of debris, and make recycling more attractive with higher, consolidated volumes. At the same time, organics could be diverted and managed locally to reduce the volume of waste requiring regional management. A regional approach could also support pooled technical expertise for landfill operations 178 Tan, A., Worden, R. C., Hornig, C. and Sitara, A. 2022. SWM Guidebook for senior policy makers in OECS countries on DRM and climate resilience SWM.; Fontes de Meira, L. and Phillips, W. 2019. "An economic analysis of flooding in the Caribbean: the case of Jamaica and Trinidad and Tobago." Studies and Perspectives series‑ECLAC subregional headquarters for the Caribbean, No. 78 (LC/TS.2019/55‑LC/ CAR/TS.2019/1), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC). 179 Tan, et al. 2022. 180 Tan, et al 2022. World Bank. 2021. Waste management sector including marine plastics debris sources deep dive study for selected Eastern Caribbean 181 Countries. Report No.1: Rapid Waste Sector Assessments. Washington, DC: World Bank. 46 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines and contract management, enabling all islands to benefit rather than requiring each to seek those specific skillsets. Grenada is investigating a pilot to reduce methane emissions by capturing landfill gas. A technology needs assessment described in Grenada's second NDC confirmed an intent to develop a landfill with landfill gas management that would reduce methane emissions from waste by 90 percent.182 A prior study had found that while this could significantly reduce emissions, there were significant financial challenges due to lack of economies of scale.183 Table 3.4 summarizes a set of country‑specific measures and costed interventions to improve the treatment of waste across the islands, from a World Bank study conducted in 2020 and 2021. The estimates are conservative and should be assumed to be at least $5–10 million higher if including landfill‑ and dumpsite‑related interventions (due to higher volumes of waste and less available space since the analysis was completed), as well as inflated costs resulting from pandemic and island‑related challenges. TABLE 3.4. SWM Costs and Key Short and Medium‑Term Actions SWM Measure Costs (Million USD) Key Short‑ and Medium‑Term Actions Dominica 0.5 • Institutional strengthening of Dominica Solid Waste Management Corporation • Waste composition study • Collection and cleaning services • Equipment upgrade • Fleet monitoring system Grenada 16.9 • Capacity building of relevant institutions • Construction of an "Ecocentre" for non‑curbside recyclables • Introduction of gate fees and enforcement of anti‑littering laws • Develop composting alternatives for organic waste • Upgrade of Carriacou Landfill St. Lucia 6.45 • Development of a National Solid Waste Strategy • Financial Framework for Cost Recovery • Public awareness and educational program design • Rehabilitation of Deglos Landfill • Closure of Vieux Fort disposal site • Pilot of organic waste diversion • Collection system optimization study • Recycling study St. Vincent and 2.05 • Upgrade of landfills to meet standards the Grenadines • Closure of small landfill on Union Island and creation of new sanitary landfill Source: World Bank, 2021. Waste management sector including marine plastics debris sources deep dive study for selected Eastern Caribbean Countries. Report No.1: Rapid Waste Sector Assessments. 182 UN Environment, gef, and UNEP DTU Partnership. 2019. Grenada Technology Needs Assessment: Mitigation Report. Elgie, A. R., Singh, S. J., Telesford, J. N. 2021. "You can't manage what you can't measure: The potential for circularity in Grenada's waste 183 management system." Resources, Conservation and Recycling, 164 (2021). ; World Bank. 2021. Waste management sector including marine plastics debris sources deep dive study for selected Eastern Caribbean Countries. Report No.1: Rapid Waste Sector Assessments. Washington, DC: World Bank. 47 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 4. Supporting Resilient Human Development Main messages • Human capital and climate change are a two‑way street: climate change poses a significant threat to human capital development, whereas strong human capital is essential to adapt to and mitigate climate change. • Rising temperatures and more frequent and severe weather events pose direct threats to health and well‑being, including through increased deaths and illness due to heat (in a context of high rates of obesity and noncommunicable diseases); increased spread of communicable diseases; and the impact of disasters on mental health, well‑being, and learning. • Climate shocks can also disrupt delivery of essential health, education, water and sanitation services and damage social infrastructure, which in turn negatively affects health and learning. • Climate change could also lead to increased migration and brain drain from the OECS, further reducing available human capital. • Protecting and strengthening human capital will be essential to build resilience, adapt to climate change, and support an economic transformation toward a lower carbon path. • This will require establishing adaptive social protection programs that can be rapidly expanded in the case of disasters to protect human capital; strengthening the resilience of health and education systems and service delivery, including in response to emergencies; and strengthening prevention and response systems, both for communicable and noncommunicable diseases. Human capital and climate change are a two‑way street: climate change poses a significant threat to human capital development, whereas strong human capital is essential to adapt to and mitigate climate change. Interconnected hazards such as extreme weather events and disease outbreaks exacerbated by climate change erode human development gains. Policy reforms and investments will be critical to build the resilience of health, education, and social protection services, and to contribute to the resilience of households. Investing in people, including through development of new skills and jobs for the green and blue economy, and for adapting to the energy transition and climate change, is a priority. This will also help mitigate the potential negative impacts of migration and brain drain. 4.1.  Enhancing resilience and protecting human capital require strengthening health and education systems Rising temperatures and more frequent and severe weather events will directly affect health and well‑being, including through increased heat‑related deaths, spread of communicable diseases, and negative impacts on mental health. There are both direct effects on health, nutrition, and wellbeing, as well as indirect effects stemming from damages to infrastructure, changes to the economic structure, and changes in markets.184 First, more severe and frequent heat waves, together with high rates of noncommunicable diseases and obesity, will contribute to premature deaths and productivity losses.185 184 Caruso, G., de Marcos, I. & Noy, I. Climate Changes Affect Human Capital. EconDisCliCha 8, 157–196 (2024). https://doi.org/10.1007/ s41885-023-00140-2. Rise, N., Oura, C., and Drewry, J. 2022. "Climate Change and Health in the Caribbean: A Review Highlighting Research Gaps and Priorities." 185 The Journal of Climate Change and Health 8: 100126. 48 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines For the four countries that are the focus of this report, mortality and morbidity from noncommunicable diseases (NCDs) is among the highest in the Caribbean region, as well as globally when compared to other Small Island Developing States (SIDS). For example, in Saint Lucia 40 percent of adults have hypertension, and 18 percent of females and 14 percent of males (18–69 years) are diabetic. In Dominica, 60 percent of the population is overweight or obese. Food insecurity, reduced access to health care and other services, and loss of access to infrastructure resulting from disasters can severely and permanently affect children's accumulation of human capital.186 Second, rising temperatures and increased frequency of hurricanes and heavy rainfall will contribute to the spread of communicable diseases, including mosquito born illnesses such as Zika. Hurricanes often produce significant flooding, which increases the threat from vector‑borne diseases. Third, natural disasters can increase the prevalence of mental health conditions. Psychological distress was experienced by most populations who were exposed to Hurricanes Maria and Irma in 2017 and that exposure predicted an increase in the onset of post‑traumatic stress disorder and depression.187 In Dominica, qualitative interviews found mental health to be one of the most frequently cited health concerns following Maria, and in Grenada, PTSD symptoms in children could be predicted by exposure to both physical (lives or property) and emotional (sense of safety) losses caused by the event.188 Climate change disrupts health services, which in turn undermines health and wellness. First, pandemics and severe weather events can disrupt service delivery and divert health systems away from routine health services (e.g., immunizations and cancer screenings), as seen during recent hurricanes and the COVID‑19 pandemic. Second, health facilities are vulnerable to climate change disasters, which for the OECS region are projected to include higher temperatures, changing rainfall patterns, rises in sea level, and increased intensity and frequency of natural disasters.189 Assessments conducted by the Pan‑American Health Organization (PAHO) since 2015 under its Smart Health Facilities Initiative,190 designed to ensure that health facilities are environmentally friendly and resilient to disasters (mainly extreme weather events), found that in some countries more than 75 percent of health facilities scored in the Category C range, indicating they would no longer be operational after a disaster. A review examining the health impacts on SIDS of the 2017 Atlantic Basin hurricane season (spanning beyond the Caribbean) noted significant disruptions to health services driven by damaged facilities, power outages, and fuel shortages.191 These shocks can exacerbate chronic health problems, and populations also experience unrelieved heat exposure and the inability to refrigerate medications and vaccines, among other negative health‑related impacts. Despite some progress, OECS health systems face significant gaps in health system resilience and climate change adaptation, including preparedness and response capacity. Extreme weather events, such as Hurricanes Irma and Maria (2017), and disease outbreaks, such as COVID‑19 and the 2016 Zika outbreak, among others, highlighted the consequences of weaknesses in public health emergency preparedness. The region's health system resilience (HSR) capacities have been improving, but significant gaps remain, and capacities vary significantly across countries. When it comes to basic health services, gaps are present even under normal operating conditions. These will only be exacerbated by climate change. Turning to specific metrics of resilience, the region falls short of global means. According to the WHO State Parties Self‑Assessment Annual Reporting Tool (SPAR), all four of the focus countries for this report lag both regional and global averages for international health regulation implementation.192 And while these countries have been proactive in expanding the number of certified epidemiologists and laboratory technicians, for 186 Baez, et al. 2010. 187 Shultz, J., et al. 2018. "Risks, Health Consequences, and Response Challenges for Small‑Island‑Based Populations: Observations From the 2017 Atlantic Hurricane Season," Disaster Medicine and Public Health Preparedness 13 (6 April 2018): 1–13. 188 Cloos, P., Belloiseau, M., McPherson, N., Harris‑Glenville, F., Joseph, D. D., Zinszer, K. 2023. "Discussing linkages between climate change, human mobility and health in the Caribbean: The case of Dominica. A qualitative study." The Journal of Climate Change and Health, 11, May‑June 2023, 100237.; Joseph, L. 2006. The effects of mass trauma on children of different developmental stages: examining PTSD in children affected by Hurricane Ivan and Hurricane Katrina. Doctoral Dissertation Pacific Graduate School of Psychology, Palo Alto, CA.; Navarro, J., Pulido, R., Berger, C., Arteaga, M., Osofsky, H. J., Martinez, M., ... & Hansel, T. C. 2016. "Children's disaster experiences and psychological symptoms: An international comparison between the Chilean earthquake and tsunami and Hurricane Katrina." International Social Work, 59(4), 545–558. 189 Cloos, P., et al. 2023.; Joseph, L. 2006.; Navarro, J. 2016. The PAHO Smart Health Facilities Initiative is co‑financed by the United Kingdom's Department of International Development (DFID) to 190 support the retrofitting of selected health facilities in the Caribbean region. This project will complement current investments to fill critical gaps. Shultz, J., et al. 2018. "Risks, Health Consequences, and Response Challenges for Small‑Island‑Based Populations: Observations From 191 the 2017 Atlantic Hurricane Season," Disaster Medicine and Public Health Preparedness 13 (6 April 2018): 1–13. WHO. 2022. Electronic IHR States Parties Self‑Assessment Annual Reporting Tool (e‑SPAR). Geneva, Switzerland: World Health 192 Organization. https://extranet.who.int/e-spar#:~:text=The%20e%2DSPAR%20is%20a,between%20States%20Parties%20towards%20global. 49 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines example, absolute numbers are still very small. While emergency management plans are continuously being updated, many do not yet reflect lessons learned from the COVID‑19 pandemic and the 2021 volcanic eruption in La Soufrière (Saint Vincent and the Grenadines).193 Weaknesses in aspects of financing, service delivery, health workforce, and the supply chain in Eastern Caribbean health systems may increase the systems' vulnerability to climate impacts. Health service delivery will also be challenged by the impacts of climate change. Going forward, climate change is expected to lead to rising temperatures, changes in rainfall patterns, and an amplification of extreme weather events, with implications for increasing the incidence of water‑borne and vector‑borne diseases.194 For example, in Grenada only 59 percent of those receiving hypertension treatment had their blood pressure under control, and only 55 percent of diabetic patients experienced glucose control. Shortages in and poor distribution of health workers undermine service delivery and mean that adequate personnel may not be available in the event of a disaster.195 Currently, the physician shortage is most acute in Dominica and Saint Vincent, while that of nurses and midwives is largest in Saint Lucia and Grenada.196 These challenges will persist, with medical staff among the most common category of professionals migrating, and an increase of migrants from the Caribbean to United States after climate disasters, according to the Bank's recent World Development Report on Migration.197 Based on these preexisting strengths and vulnerabilities, the four islands should focus on the following priority areas to strengthen the resilience of their health systems to the impacts of climate change. » Flexible and resilient health financing. Health financing systems in the OECS are mostly based on rigid line‑item historical budgets, an approach that limits the ability to incentivize improved performance or to reallocate resources following a health emergency.198 During shocks, countries depend heavily on external donations to provide emergency health care, but these donations are also often the only funds available to make longer‑term investments to adapt and transform health service delivery.199 Such voluntary donations are not guaranteed, and countries should therefore establish contingent financing arrangements for the health sector prior to shocks to improve continuity and ensure ongoing improvement. » Resilient health, water, and sanitation infrastructure. Disruptions in health services due to damaged infrastructure following a disaster are a key challenge in these islands. Resilient water and sanitation infrastructure can also help prevent disease from spreading during a disaster. While there have been "building back better" efforts following disasters, governments should also focus on improving existing infrastructure before a disaster occurs.200 Implementation of the OECS Regional Health Project, which uses the Smart Hospital/Health Facilities Tool Kit developed by PAHO, is a key step toward improving the resilience of the infrastructure needed to provide health services.201 A facility's PAHO Smart score is the combined value of its Hospital Safety Index (HSI), which reflects the ability of health care facility to withstand the impact of a disaster and remain functioning, and its Green Score, which captures the degree to which the facility is equipped with energy‑ and water‑efficient features. The score gives 193 Rozenberg, J., et al. 2021. 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks.Washington, DC: World Bank. World Bank. 2018. Global Crisis Risk Platform (English). Washington, D.C.: World Bank Group. http://documents.worldbank.org/curated/ 194 en/762621532535411008/Global-Crisis-Risk-Platform. Khan, A. and Harnam, N. "Health Systems Resilience in the Caribbean." (Background paper to 360° Resilience: A Guide to Prepare the 195 Caribbean for a New Generation of Shocks). Washington, D.C.: World Bank. 196 GBD 2019 Human Resources for Health Collaborators. 2022. "Measuring the availability of human resources for health and its relationship to universal health coverage for 204 countries and territories from 1990 to 2019: a systematic analysis for the Global Burden of Disease Study 2019." The Lancet, Volume 399, Issue 10341, 4–10 June 2022, pp2129–2154. 197 World Bank. 2023. World Development Report 2023: Migrants, Refugees, and Societies. Washington, DC: World Bank. WHO. 2022. Electronic IHR States Parties Self‑Assessment Annual Reporting Tool (e‑SPAR). Geneva, Switzerland: World Health 198 Organization. https://extranet.who.int/e-spar#:~:text=The%20e%2DSPAR%20is%20a,between%20States%20Parties%20towards%20global. 199 Khan, A. and Harnam, N. "Health Systems Resilience in the Caribbean." Washington, D.C.: World Bank. Background Paper for 360 Resilience Study. (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). Khan, A. and Harnam, N. "Health Systems Resilience in the Caribbean." Washington, D.C.: World Bank. Background Paper for 360 200 Resilience Study. (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). 201 World Bank. 2023. "How to Protect, Build, and Use Human Capital to Address Climate Change." Washington, DC: World Bank. 50 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines policymakers and administrators a clear idea of the investments needed to improve the resilience of health services infrastructure.202 This is also a critical step toward reducing high energy costs in the Caribbean through energy‑efficient health facility construction.203 » Enhanced surveillance and response capacity for pandemics and public health emergencies. Strengthening laboratory, surveillance, and research capacities in these islands will help build the evidence base for interventions and bolster country and regional capacity to rapidly identify and respond to health emergency and emerging disease threats. » Improved healthcare supplies procurement. Countries' reliance on imports from outside the region for many health products contributes to their vulnerability to supply disruptions. The OECS Pharmaceutical Procurement Service (PPS), which procures medicines and allied health equipment on behalf of member states, is a regional approach to addressing this challenge. The OECS PPS procures roughly 840 items, including a diverse range of pharmaceutical and non‑pharmaceutical items, such as medical supplies, contraceptives, and radiological supplies. The PPS has consistently achieved annual cost savings of approximately $4 million, reinforcing the PPS as an excellent cost‑benefit model for Member States.204 Based on experience with recent hurricanes, the PPS established a Disaster Fund which provides XCD$300,000 ($110,000 equivalent), which is allocated on the basis of need. Nevertheless, a shock that affects multiple countries simultaneously could still strain regional mechanisms. Considering ways to build on the current strengths of the PPS while also building stronger mechanisms for regional resilience would be important. More frequent disasters, in the absence of mitigating measures, can lead to more frequent school closures and the consequent loss of learning, particularly for the most vulnerable. In the Caribbean, storm impacts have a negative effect on schooling during the year. Most recently, the COVID‑19 crisis demonstrated the potentially devastating effect that school closures can have in the absence of effective mitigation measures. As an example, losses in lifetime‑average annual earnings at present value were estimated to be $8,700 (2017 PPP) per person in Dominica. An assessment of the resilience of school systems in the OECS countries found that most resilience measures are nascent or emerging (Table 4.1 below). Each country has specific areas of strength, suggesting that regional experiences could be shared to improve systems. A notable recent effort is the development of a Caribbean roadmap for school safety by the Caribbean Disaster emergency Management Agency (CDEMA). Strengthening the resilience of human capital will require enhancing the resilience and energy efficiency of education infrastructure and systems, and supporting the development of the skills needed for the economic transition to a low‑carbon path.205 Measures include doing more to provide disadvantaged households with the tools needed for children to participate in remote learning and preparing and supporting teachers to better maintain learning during and after a disaster through a hybrid/distance learning strategy. The above‑mentioned investments in strengthening infrastructure during a disaster and the development of training modules for teachers and students on climate adaptation and mitigation are also critical. In terms of developing human capital to support economic growth and transformation, all countries could benefit from establishing pathways to develop the technical and behavioral skillsets needed to support the move toward a low‑carbon path. Regional cooperation could be reinforced to improve and accelerate access and reduce skill gaps. PAHO. Undated website. UK‑FCDO – Smart Hospitals in the Caribbean. Regional Office for the Americas of the World Health 202 Organization (WHO). https://www.paho.org/en/partnerships/uk-fcdo-smart-hospitals-caribbean. 203 World Bank. 2023. "How to Protect, Build, and Use Human Capital to Address Climate Change." Washington, DC: World Bank. 204 Organization of Eastern Caribbean States. 2020. Informational webpage: "Our Work > Human and Social > Pharmaceuticals." Saint Lucia: OECS. https://www.oecs.org/en/our-work/human-and-social/pharmaceuticals#:~:text=Pharmaceuticals&text=The%20 Pharmaceutical%20Procurement%20Service%20(PPS,on%20behalf%20of%20Member%20States. 205 World Bank. 2023. "How to Protect, Build, and Use Human Capital to Address Climate Change." Washington, DC: World Bank. 51 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines TABLE 4.1. Assessment of Education System Resilience in the Four Focus OECS Countries St. Vincent and the   Dominica Grenada St. Lucia Grenadines Enabling environment for school structural safety         Availability of and alignment with plans and guidelines         to enable a safe learning environment Monitoring and evaluation framework for safe schools         Education facility maintenance plan         Operational standards for alternative uses for schools during emergencies         Education continuity plans         Existence of remote learning content/materials         Monitoring and evaluation of the effectiveness of distance education         Resources (e.g. technology) to enable remote learning         Comprehensive, integrated education management information system         Teacher training (technical and pedagogical skills for remote instruction)       Note: Green indicates capability is established, yellow that it is emerging, and red that it is nascent. Grey indicates that not enough information was available to make an assessment. Source: Rozenberg, J., et al. 2021. 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. World Bank. 4.2.  Critical gaps remain in the region's emerging social protection systems The selected OECS countries recognize the importance of social protection (SP) systems and have been making progress in the last decade. Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines have rich social protection programs across the three main SP pillars: social assistance, social insurance, and labor market interventions.206 The offerings of these programs have continued to expand in recent years.207 Public spending on social assistance in the four countries is, on average, higher than the Caribbean, Latin America and Caribbean (LAC), and world averages.208, 209 The governments of these countries clearly recognize the importance of SP for poverty reduction, human capital development, and resilience building. Moreover, countries have been making efforts to increase and improve their implementation capacity in SP. For instance, at least for the main cash transfer program, data collection in all four countries is carried out electronically, beneficiary selection follows objective targeting (except in Dominica), and three out of four countries maintain some degree of a management information system (only Saint Lucia currently lacks one, but work is underway to design and develop such a system). All four countries have cash transfer programs, school feeding programs, public works programs, skills training program, contributory 206 pensions, and other social insurance interventions. Some of these countries also have other social protection interventions, such as emergency or relief grants, unemployment insurance, and utility subsidies, among others. 207 Dominica introduced a non‑contributory pension in 2016 and Grenada introduced unemployment insurance in 2023. 208 Tesliuc, C., et al. 2024. "Caribbean Social Protection Reponses to Surging Inflation." Washington, DC: World Bank. 209 Beazley, R. and Williams, A. 2021. Adaptive Social Protection in the Caribbean: Building Human Capital for Resilience. World Bank. (Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. 2021. World Bank). 52 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines SP has increasingly become a key response to shocks, including those related to climate. At least since the first decade of the 2000s, several SP responses to systemic shocks have been documented in the four focus countries. For example, in 2004, Grenada used its national insurance scheme to provide an emergency unemployment benefit in response to Hurricane Ivan and followed a similar approach during the COVID‑19 pandemic. In 2008, in response to the global financial crisis, Dominica, Saint Lucia, and Saint Vincent and the Grenadines used their SP systems to provide support to the most affected populations. In 2017, Dominica, supported by the WFP and UNICEF, expanded its Public Assistance Programme in response to Hurricane Maria.210 Concurrently, Saint Lucia extended support to displaced people from Dominica including through their cash transfer program, facilitating the enrollment of school‑age children and providing access to the school feeding program, among others.211 In the 2020–2022 period, Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines provided SP support in response to the pandemic and the inflationary shock, making use of interventions across all three SP pillars. However, structural gaps in SP remain, hindering a full contribution to resilience building. The first gap is in the supply of SP interventions. For example, only Grenada offers unemployment insurance, through a program only established in 2023.212 Saint Vincent and the Grenadines has employment services to help the unemployed find work, but Saint Lucia and Dominica do not. Grenada is ramping up a small employment service targeting unemployment insurance beneficiaries only. Similarly, social pensions are present in Dominica and Saint Vincent and the Grenadines, but missing in Grenada and Saint Lucia, despite the large coverage gap for contributory pensions in all four countries. The second issue is that coverage gaps for existing SP interventions are limiting their effectiveness. For instance, anti‑poverty cash transfer programs in the four countries reach less than half of the poor.213 Other SP programs in these countries remain small, which means there are multiple opportunity areas, such as for active labor market programs (including training programs). The coverage gap for social insurance is also notable. In Saint Lucia and Saint Vincent and the Grenadines, it stands at over 25 percent, as measured by the share of workers in non‑wage and non‑salaried jobs.214 This gap is much larger for the poorest quintile (e.g., for Saint Lucia it is estimated to be over 80 percent).215 Finally, all four countries have low institutional capacity in SP. This is seen in the outdated and ambiguous business processes used for several SP interventions, generally inadequate human resources, limited information technologies capabilities, and a lack of coordination. OECS SP systems also face significant challenges in their climate change adaptation capacity, including preparedness and shock‑responsive capabilities. The overarching trend in the region is the reactive, ad hoc utilization of SP programs to respond to shocks, rarely accompanied by proactive planning or preparation for future crises. While the OECS countries increasingly recognize the important role of SP in preparedness for and responsiveness to shocks, key dimensions of an effective SP framework are at different levels of maturity across the four countries. These dimensions include programs and delivery systems, data and information, institutional arrangements, and financing mechanisms. Beazley, R. and Williams, A. 2021. Adaptive Social Protection in the Caribbean: Building Human Capital for Resilience. World Bank. 210 (Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. 2021. World Bank). Beazley, R., et al. 2020. "Shock‑Responsive Social Protection in the Caribbean Synthesis Report." Rome, Italy: World Food Program (WFP) 211 and Oxford, United Kingdom: Oxford Policy Management (OPM). 212 Moreover, while public works exist in all four countries and could play a role when there are systemic shocks (especially for low‑skill and vulnerable workers), recent adaptive social protection assessments in several Caribbean countries found that these programs do not systematically engage participants in activities related to climate adaptation or post‑disaster recovery. This is a missed opportunity of an existing tool in the supply of social protection programs. These programs can be particularly useful if they are adequately designed and contribute to supporting climate adaptation investments. For example, these programs may include activities related to shock‑proofing public infrastructure. 213 Even if the main cash transfer program's targeting was perfect i.e., reaching exclusively poor households, the coverage rate would still be less than half of the poor in all four countries. Since targeting is imperfect, coverage gaps are even larger. The coverage rate of the main cash transfer program in each country is: Grenada – SEED (48.2%), Dominica – PAP (32%), Saint Lucia – PAP (20.2%), and St. Vincent and the Grenadines (18%). The coverage of the cash transfer programs was calculated as the number of individuals covered as a percentage of the total population below the poverty line. 214 ILO. 2021. ILOSTAT (ILO modelled estimates database). Geneva, Switzerland: International Labour Organization (ILO). https://ilostat.ilo.org/. Information not available for Grenada and Dominica. Beazley, R. and Williams, A. 2021. Adaptive Social Protection in the Caribbean: Building Human Capital for Resilience. World Bank. 215 (Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. 2021. World Bank). 53 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Investing in building adaptative safety nets can help strengthen resilience to climate change impacts. While each of the four countries has its own specific challenges related to social protection, all four also need make headway in building adaptive safety nets that are flexible, can help countries build resilience ex‑ante, and have the capacity to expand rapidly in the event of climate shocks, ensuring that the most vulnerable populations receive timely and adequate support. This will require actions along several lines, including building the needed programs and delivery systems, supporting availability and integration of high quality data and information, and ensuring the needed institutions, partnerships and financing are available.216, 217, 218, 219 Key areas for action along these lines are included below. » Programs and delivery systems. While a small subset of the existing SP programs in the four focus countries feature effective business processes, such as objective needs assessment procedures, many interventions and their associated processes are hampered by critical limitations, including outdated procedures and a lack of adaptations for responding to shocks. While some countries in the Caribbean have developed advanced SP payment systems, with most payments deposited directly into beneficiaries' accounts, most of the selected OECS countries still make most payments in cash, except for Saint Lucia. These countries have some capacity to scale up delivery in case of shocks, but challenges can delay the response and reduce the programs' effectiveness and efficiency. » Data and information. Ideally, SP information systems would be integrated, featuring multiple programs and both social and beneficiary registries, and covering the full delivery chain. None of the four focus countries currently meets this standard. Dominica and Grenada have single‑program social and beneficiary registries, while Saint Vincent and the Grenadines has a multi‑program beneficiary registry, but no social registry. At the same time, Disaster Risk Management (DRM) early warning systems (EWS) in the OECS region are heterogenous across countries, with some EWS in place but with limitations in terms of functionality and data quality. The challenges of these SP information systems, combined with low institutional capacity and underdeveloped DRM systems, limits interoperability, the overall potential to combine information on exposure to risks and vulnerability, and the ability to cope and recover for policy and operational disaster response purposes. » Policy and institutional framework. Existing DRM legislation and policy frameworks typically include few provisions for SP institutions, usually restricted to disaster relief. Articulated interventions beyond this function are quite limited. Coordination at different levels is minimal, partially explained by the low institutional capacity.220 4.3.  Maintaining and expanding access to good jobs within resilient firms will help buffer economic development from climate change Building resilient societies requires equipping them with the right skillsets to cope with shocks, manage continuity, and improve and accelerate. This includes seizing opportunities to make education more inclusive, effective, and resilient than it was before the shock. Investing in human capital is integral to advancing disaster risk reduction, resilience, and adaptation to climate change, thereby sustaining economic growth. External shocks disrupt economic and social well‑being. They also redefine jobs and the commensurate skills required, forcing countries to generate short‑term employment and rethink the future of work and the structure of their economies. Beazley, R. and Williams, A. 2021. Adaptive Social Protection in the Caribbean: Building Human Capital for Resilience. World Bank. 216 (Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. 2021. World Bank). 217 Tesliuc, C., Paffhausen, and Avila‑Parra, 2023. Caribbean Social Protection Reponses to Surging Inflation. World Bank. 218 Tisei, F. 2023. Social protection stress testing (Dominica, Grenada, and Saint Lucia). Draft October 2023. Preliminary versions. World Food Programme, 2019. Report of the Regional Symposium "Shock‑Responsive Social Protection in the Caribbean." Rome: World 219 Food Programme (WFP). Saint Lucia just recently approved the updated National Social Protection Strategy, recognizing the role of adaptive social protection in 220 DRM. https://openknowledge.worldbank.org/entities/publication/25b7a734-4a23-5988-8a10-42b0d7a710de. 54 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Supporting the transition to a low‑carbon economy will require skill building across sectors. The need for the four OECS countries of focus to substantially re‑invigorate their education systems has long been recognized.221 Building on their current economic structure, existing skills could be transferred to higher‑value‑added sectors, contributing to the diversification of economic activities and thereby strengthening the economic structure for these small island states.222 For example, ensuring growth in the blue economy, such as through eco‑tourism jobs related to preservation and protection of coral reefs or commercial production of sea moss, will require investments to develop related skills.223 Analysis of renewable energy transition and digital economy capabilities indicates the growth potential of these sectors in the Latin American and Caribbean region.224 Further, the transition to a green economy will require skills building across industries, occupations, and different skill levels (not restricted to high‑skill jobs). For instance, it is not only engineers with specialized knowledge in green technologies who would be in demand, but also technicians that can install, maintain, and repair solar panels and energy storage systems. The OECS countries need to accelerate workforce readiness to support the green transition and take advantage of the opportunities ahead, identifying the skills gaps, ensuring that the skills training programs meet the current and future labor demand, and facilitating the reskilling and upskilling of the workforce. Blom, A. and Hobbs, C. 2008. "School and Work in the Eastern Caribbean: Does the Education System Adequately Prepare Youth for the 221 Global Economy?. World Bank Country Study." Washington, DC: World Bank. https://unctad.org/system/files/official-document/ciiem6d2_en.pdf 222 UNCTAD. 2022. "Revisiting development strategies for small island developing States in the post‑pandemic competitive landscape." Item 3 on the provisional agenda of the Expert Meeting on Revisiting Development Strategies for Small Island Developing States in the Post‑Pandemic Competitive Landscape, Geneva, 24 October 2022. Geneva: United Nations Conference on Trade and Development. March, A. L. A., Failler, P., and Bennett, M. 2023. "Caribbean fishery and aquaculture financing needs in the blue economy: identifying 223 opportunities and constraints in Barbados, Grenada, and St. Vincent and the Grenadines." Journal of Sustainability Research. 224 Hwang, Y. K. 2023. "The synergy effect through combination of the digital economy and transition to renewable energy on green economic growth: Empirical study of 18 Latin American and Caribbean countries." Journal of Cleaner Production, Volume 418, 15 September 2023, 138146. 55 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 5. Tradeoffs and opportunities on the path to resilient development Main messages • Adaptation investments have the potential to significantly reduce expected economic losses from even the most extreme events, with the largest benefits accruing over the long term. • The benefits of adaptation investments come at a high financing cost, implying a difficult balance between building resilience and ensuring debt sustainability. • Given existing high debt burdens, the OECS countries will need to reorient revenue and expenditure policy toward creating fiscal space to fund climate resilience investments, increasing the efficiency and quality of spending. • The role of the private sector and the international community will be key to ensure that resilience is attained while fiscal sustainability and debt stability are maintained. • To ensure increased private sector participation in improving resilience and facilitating the move toward a lower carbon development path, the enabling environment will have to be strengthened so that private financiers and operators can assume financial and commercial risk. • Creating an adequate framework upstream would require reforms and an increased institutional capacity to be able to manage the participation of private operators in development. • Building resilience and getting to a low‑carbon development pathway can be facilitated by accelerating the pace of structural transformation. 5.1.  Adaptation investments can significantly reduce climate impacts, but high costs imply trade offs Investment in resilient infrastructure can limit capital damage and service interruption, avoiding substantial economic losses from climate events. As shown in Chapter 3, strengthening the resilience of infrastructure and services can help minimize climate impacts and reduce volatility. The economic returns from adaptation investments can outweigh the costs, not only due to lower rehabilitation and reconstruction needs after natural disasters, but also because they reduce private sector expected losses, which in turn, increases investment and employment.225 This chapter presents the potential economic losses avoided by making capital assets more resilient to hurricanes and floods through the incorporation of the adaptation interventions outlined in Chapter 3 into the macroeconomic model.226 As discussed in Chapter 3, these adaptation investment needs include both current and future investment needs in infrastructure to preserve services and meet SDG goals through economic growth, as well as investments needed to strengthen the resilience of additional capital stock categories, in particular residential and commercial properties (see Table 3.2). Due to data and modeling limitations, only adaptation interventions made through the infrastructure impact channel are analyzed. The results therefore reflect partial adaptation interventions. Scenarios consider post‑disaster reconstruction with and without adaptation interventions to capital assets. Two adaptation scenarios are modelled: (i) a "retrofit" scenario in which a share of the current capital assets are retrofitted to make them resilient to a 100‑year return period event for hurricanes and a 50‑year return 225 IMF. 2021. Dominica Disaster Resilience Strategy IMF Country Report No. 21/182. Washington, DC: International Monetary Fund (IMF). 226 The Macro Modeling Annex details how these adaptation investments are incorporated into the MFMod‑CC model. https://openknowledge.worldbank.org/bitstreams/26b37089-d017-4ec9-9419-1c1c19aa41f9/download 56 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines period event for flooding;227 and (ii) a "build‑back‑better" scenario in which there is no retrofitting but new investments for depreciated or destroyed capital are designed in accordance with the improved resilience standards.228 Both scenarios assume that new investments are designed in accordance with improved resilience standards. A key difference between the two scenarios is that for existing assets, the "retrofit" scenario assumes full resilience of the capital stock within the 15‑year time frame. By comparison, in the "build‑back‑better" scenario full resilience of the capital stock will only be achieved in 25 years, as new capital stock is built with resilient standards and existing assets with an assumed lifetime of 25 years fully depreciate and are therefore replaced. Even without adaptation investments, the economic impacts from natural disaster shocks can be attenuated by the economic activity generated during reconstruction. Modeling results for the four countries (Figure 5.1) show that with timely reconstruction, the most severe annual GDP losses in 2050 would range between 2.5 percent in Grenada to 9 percent in Dominica, which is 1.5 to 16 percentage points lower than the scenario without reconstruction. The overall GDP and growth impacts will depend on the speed and completeness of reconstruction and recovery. This underscores the importance of having a well‑defined disaster risk management strategy in place, with an appropriate disaster risk financing framework that includes readily available financing sources identified ex ante. Assuming that reconstruction is debt‑financed, the associated fiscal impact (measured by the increase in the debt‑to‑GDP ratio) could be as much as 12 percentage points in 2050 for Dominica and 3.5 percentage points for Saint Vincent (Figure 5.2). For Grenada and Saint Lucia, the economic activity generated from reconstruction has the potential to offset debt accumulation over the long run. Boosting the resilience of capital assets to hurricanes through select adaptation interventions opens the possibility of minimizing and even reversing economic losses over the long run (Figure 5.1). In the retrofitting scenario, after an initial period of investment during which GDP dips below the baseline level, economic benefits are evident for all countries, even surpassing baseline GDP for results in the 95th percentile in some countries. Avoided economic losses are greatest for Dominica over the long run as the spread of potential GDP impacts narrows and could even boost GDP by some 10 percentage points above baseline by 2050. In all cases with adaptation investments, potential avoided economic losses increase over time as investments are completed. In the build‑back‑better scenario, where adaptation interventions are incorporated only when replacing depreciated or destroyed capital assets, avoided economic losses are slightly lower as adaptation investments take a longer time to be realized. GDP results for adaptation interventions for capital stock exposed to floods follow a similar pattern, with avoided median annual economic losses in 2050 averaging about 1.4 percent in the retrofitting scenario and 1 percent in the build‑back‑better scenario. The benefits of adaptation investments come at a high cost and could put fiscal sustainability at risk if interventions are not selective and strategically funded. While investments in adaptation can significantly reduce and even reverse potential economic losses, the fiscal costs of the interventions are substantial even for adaptation investments limited to a resilient core, implying the need for selectivity and prioritization. Comparing the fiscal costs of retrofitting versus building back better (Figure 5.2) to the potential economic losses avoided (Figure 5.1) demonstrates this need for selectivity. Assuming that the public portion of adaptation investment is totally financed by new public debt, the additional increase in the debt‑to‑GDP ratio for retrofitting may not justify the costs relative to a strategy of replacing worn out or destroyed infrastructure with more resilient, technologically improved versions at the time of replacement. 227 New investments for depreciated or destroyed capital are rebuilt in accordance with the improved resilience standards. 228 The retrofit scenario assumes that adaptation investments are spread over 15 years; while the build‑back‑better scenario spreads investments over 25 years. 57 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE 5.1. GDP impact of hurricane shock post‑reconstruction, with and without adaptation interventions Reconstruction without adaptation interventions in capital assets against hurricanes DMA GDP Impact from Hur under RCP 245 GRD GDP Impact from Hur under RCP 245 with Yes Reconstruction with No Adaptation with Yes Reconstruction with No Adaptation 2 1 % deviation from baseline % deviation from baseline 0 0 -2 -1 -4 -2 -6 -8 -3 -10 -4 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 LCA GDP Impact from Hur under RCP 245 VCT GDP Impact from Hur under RCP 245 with Yes Reconstruction with No Adaptation with Yes Reconstruction with No Adaptation 0.4 1 % deviation from baseline % deviation from baseline 0.0 0 -0.4 -0.8 -1 -1.2 -2 -1.6 -2.0 -3 -2.4 -4 -2.8 -5 -3.2 -3.6 -6 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Reconstruction with adaptation interventions (retrofitting) DMA GDP Impact from Hur under RCP 245 GRD GDP Impact from Hur under RCP 245 with Yes Reconstruction with Yes Adaptation with Yes Reconstruction with Yes Adaptation 12.5 1.6 % deviation from baseline % deviation from baseline 10.0 1.2 7.5 0.8 5.0 0.4 2.5 0.0 0.0 -2.5 -0.4 -5.0 -0.8 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 LCA GDP Impact from Hur under RCP 245 VCT GDP Impact from Hur under RCP 245 with Yes Reconstruction with Yes Adaptation with Yes Reconstruction with Yes Adaptation 2.0 3 % deviation from baseline % deviation from baseline 1.5 2 1.0 1 0.5 0 0.0 -0.5 -1 -1.0 -2 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Reconstruction with adaptation interventions (building back better) DMA GDP Impact from Hur under RCP 245 GRD GDP Impact from Hur under RCP 245 with Yes Reconstruction with Yes Adaptation with Yes Reconstruction with Yes Adaptation 10 1.5 % deviation from baseline % deviation from baseline 8 1.0 6 0.5 4 0.0 2 -0.5 0 -1.0 -2 -1.5 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 LCA GDP Impact from Hur under RCP 245 VCT GDP Impact from Hur under RCP 245 with Yes Reconstruction with Yes Adaptation with Yes Reconstruction with Yes Adaptation 1.6 3 % deviation from baseline % deviation from baseline 1.2 2 0.8 1 0.4 0 0.0 -1 -0.4 -0.8 -2 -1.2 -3 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Source: World Bank staff calculations of deviations from baseline GDP from stochastic hurricane shocks, with endogenous tourism response, under an optimistic climate future (SSP2‑4.5). Scenarios model post‑reconstruction activity, with and without adaptation interventions. Median (blue line), 65% confidence interval (CI) (dark orange), 90% CI (medium orange), and 95% CI (light orange) are shown. 58 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines FIGURE 5.2. Fiscal impact of debt‑financed core adaptation investment (Debt share of GDP) Reconstruction without adaptation interventions in capital assets against hurricanes DMA Debt/GDP Impact from Hur under RCP 245 GRD Debt/GDP Impact from Hur under RCP 245 with Yes Reconstruction No Adaptation with Yes Reconstruction No Adaptation Absolute deviation from baseline Absolute deviationfrom baseline 14 0.2 12 0.0 10 8 -0.2 6 4 -0.4 2 -0.6 0 -2 -0.8 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 LCA Debt/GDP Impact from Hur under RCP 245 VCT Debt/GDP Impact from Hur under RCP 245 with Yes Reconstruction No Adaptation with Yes Reconstruction No Adaptation Absolute deviation from baseline Absolute deviation from baseline 4 5 2 4 0 -2 3 -4 2 -6 1 -8 -10 0 -12 -1 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Reconstruction with adaptation interventions (retrofitting) DMA Debt/GDP Impact from Hur under RCP 245 GRD Debt/GDP Impact from Hur under RCP 245 with Yes Reconstruction Yes Adaptation with Yes Reconstruction Yes Adaptation Absolute deviation from baseline Absolute deviation from baseline 100 3.0 80 2.5 60 2.0 1.5 40 1.0 20 0.5 0 0.0 -20 -0.5 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 LCA Debt/GDP Impact from Hur under RCP 245 VCT Debt/GDP Impact from Hur under RCP 245 with Yes Reconstruction Yes Adaptation with Yes Reconstruction Yes Adaptation Absolute deviation from baseline Absolute deviation from baseline 10 20 8 16 6 12 4 8 2 4 0 0 -2 -4 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Reconstruction with adaptation interventions (building back better) DMA GDP Impact from Hur under RCP 245 GRD GDP Impact from Hur under RCP 245 with Yes Reconstruction with Yes Adaptation with Yes Reconstruction with Yes Adaptation Absolute deviation from baseline Absolute deviation from baseline 50 2.0 40 1.6 30 1.2 20 0.8 10 0.4 0 0.0 -10 -0.4 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 LCA GDP Impact from Hur under RCP 245 VCT GDP Impact from Hur under RCP 245 with Yes Reconstruction with Yes Adaptation with Yes Reconstruction with Yes Adaptation Absolute deviation from baseline Absolute deviation from baseline 7 12 6 10 5 8 4 6 3 4 2 1 2 0 0 -1 -2 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Source: World Bank staff calculations of deviations in the public debt to GDP ratio from the baseline due to reconstruction activity after stochastic hurricane shocks, with and without adaptation interventions, under an optimistic climate future (SSP2‑4.5). Median (blue line), 65% confidence interval (CI) (dark red), 90% CI (medium red), and 95% CI (light red) are shown. 59 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Exclusively financing adaptation investments through public debt is fiscally unsustainable, meaning that complementary fiscal measures are required. Modeling results show that financing adaptation investments by increasing indirect taxes will have a temporary negative impact on GDP in the short run, but over time could boost the GDP level by similar magnitudes as debt financing, and with a more modest increase in the debt‑to‑GDP ratio (Figure 5.3). Funding adaptive investments by reallocating existing public expenditures also has the potential to keep debt increases modest, but at a greater expense to long‑run GDP, particularly if adaptation investments are funded by reallocating existing capital expenditure. Options to reallocate current expenditure are limited as OECS budgets are rigid. To create fiscal space for investments through higher expenditure, governments will need to improve the efficiency and quality of public spending by strengthening public financial management, including developing frameworks for climate resilient public investment management and green public procurement. FIGURE 5.3. Alternatives to debt‑financed adaptation investment GDP (% differences from baseline) DMA GRD 15.0% 2.0% 10.0% 1.5% 1.0% 5.0% 0.5% 0.0% 0.0% -5.0% -0.5% -10.0% -1.0% 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 2.0% 3.0% LCA 1.5% 2020 2025 2030 2035 2040 2045 2050 2.0% 2020 2025 2030 VCT 2035 2040 2045 2050 1.0% 1.0% 2.0% 3.0% 0.5% 1.5% 0.0% 2.0% 0.0% 1.0% -1.0% 1.0% -0.5% 0.5% -2.0% -1.0% 0.0% 0.0% -1.5% -3.0% -1.0% -0.5% -1.0% -2.0% -1.5% -3.0% 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Debt (default) Indirect Tax Public Investment Debt to GDP ratio (percentage points change from baseline) DMA GRD 100 5 80 4 60 3 2 40 1 20 0 0 -1 -20 -2 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 12 20 LCA 10 2020 2025 2030 2035 2040 2045 2050 152020 2025 2030 VCT 2035 2040 2045 2050 8 126 20 10 104 8 15 2 5 60 10 4 0 -2 2 5 -4 -5 0 2020 2025 2030 2035 2040 2045 2050 0 2020 2025 2030 2035 2040 2045 2050 -2 Debt (default) Indirect Tax Public Investment -4 -5 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 Debt (default) Indirect Tax Public Investment Source: World Bank staff calculations of median annual deviations in GDP and the public debt‑to‑GDP ratio from the baseline under alternative financing sources of adaptation investments for hurricane shocks under an optimistic climate future (SSP2‑4.5). Adaptation costs spread over 15 years. Domestic efforts to mobilize additional resources and create fiscal space are useful but are not enough to close the funding gap. This means that additional climate financing on grant and concessional terms, as well as options for private finance, will be needed. A layered disaster risk financing strategy, access to highly concessional/grant‑based external financing, and private partnerships are necessary options to supplement adaptation investment needs considered in the next section. 60 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Investments in resilience can also attenuate the impact of climate change on poverty and inequality and the ability of vulnerable groups to cope during extreme events. Based on the macroeconomic simulations for post‑disaster reconstruction after hurricanes and floods, which show reductions and even reversals in economic losses over the long run, it is expected that such reconstruction efforts would likewise attenuate the increases in poverty simulated from these two hazards. It is important to note, however, that simulations of poverty impacts based on MFMod‑CC are only able to partially capture the impacts of floods and hurricanes on the population. Moreover, they cannot account fully for heterogeneous vulnerability of households and responses to different hazards. Therefore, consideration of further resilience‑building measures that protect households vulnerable to climate change is required to limit the impacts of climate change on poverty. Following the asset‑based framework to income generation of households,229 resilience‑building measures that allow the population to accumulate assets and protect, maintain, or increase the returns on these assets and the intensity at which households can use them, are expected to reduce the anticipated impacts of climate change on poverty. As such, the resilience building measures proposed in Chapter 4 are expected to counteract the effects of climate change on poverty and inequality if adequately designed and targeted. 5.2.  Funding the transition to a resilient core development path will require exploring a variety of policy and funding options 5.2.1.  Pivoting fiscal policy to face the climate and development challenge Fiscal policy can be reoriented to make countries more resilient to the effects of climate change and natural disasters and to contribute to climate change mitigation. Given existing high debt burdens, the OECS countries will need to reorient revenue and expenditure policy toward the creation of fiscal space to fund additional climate investments. This can be done by improving efforts at domestic resource mobilization, including revenue enhancement measures, and through expenditure containment, including through improved spending allocation and efficiency. Policy measures will also need to be framed within a defined fiscal framework to signal credible medium‑term fiscal plans. The OECS countries could benefit from tax policy measures to enhance revenue to fund climate investments and/or incentivize the shift to a low‑carbon development path. Procyclical fiscal policies, persistently large fiscal deficits, and contingent liabilities have led to a heavy buildup of public debt and an erosion of fiscal space in the OECS.230 With the economies almost recovered from the recent COVID‑19 shock, priority must now shift toward creating fiscal space to support resilient infrastructure and adaptive social investments, and to rebuild fiscal buffers against future shocks, including natural disasters. Tax revenues fare well compared to peers, exceeding 20 percent of GDP, except for in Saint Lucia (see Table 5.1). However, there is scope to make tax systems in the four OECS countries more efficient and equitable. Potential measures include:231 (i) broadening the tax base and increasing rates on specific taxes (such as the VAT in Saint Lucia, select excise taxes, and the property tax); (ii) strengthening revenue administration and collection (including strategically employing risk‑based audits and reducing arrears); and (iii) streamlining tax incentives and exemptions, particularly for the tourism sector. This includes for example, taking advantage of the global minimum corporate income tax to harmonize tax treatment of the tourism sector across the subregion, and placing an annual cap on discretionary concessions. Additionally, increasing the excise rate on fuel would not only enhance revenue but also help achieve carbon emission targets. Broadening the tax base and increasing specific taxes can, however, have distributional implications that need to be carefully assessed. The impacts of changes to the tax system will depend on the consumption patterns and income sources of the population, for which information usually comes from household survey data. Currently, such data is, however, rare in the Eastern Caribbean, and often outdated. More frequent collection and use of household survey data will be important to design equitable revenue‑enhancing tax policy measures and, where needed, revenue recycling measures to counteract any adverse distributional effects. Lopez‑Calva,Luis‑Felipe;Rodriguez Castelan,Carlos.2016. Pro‑growth equity: a policy framework for the twin goals. Washington, D.C.: 229 World Bank Group. World Bank. 2018. "Organization of Eastern Caribbean States Systematic Regional Diagnostic." Report Number: 127046‑LAC. 230 Washington, DC: World Bank. 231 Measures are from recent IMF Article IV Consultations for the four countries. 61 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Improving the quality of public expenditure within a clear fiscal framework can generate fiscal space for climate investments. Expenditure containment measures to create fiscal space could include curtailing growth in public sector wages and other current spending; reprioritizing ambitious public investment programs to balance the needs of a resilient recovery and preserving debt sustainability; increasing public sector efficiency and rationalizing spending on wasteful items; and undertaking comprehensive pension reform. Fiscal measures should be developed in a clear rules‑based fiscal responsibility framework (FRF) to signal the direction and objectives of fiscal policy, especially in the face of shocks, and thus help support access to financing at better terms. In reinstating fiscal rules in Dominica and Saint Vincent, attention will need to be paid to recalibrating and fully operationalizing the FRFs. In Saint Lucia, where discussions around an FRF are at an early stage, emphasis should be on the design of an appropriate framework that would allow room for resilient investments, maintaining the commitment to build fiscal buffers and mitigate fiscal risk. Grenada, which had built up substantial fiscal cushion under its FRF implemented in 2015, is exploring options to revise operational targets to allow higher investment in resilient infrastructure (see Box 5.1 on fiscal rules for climate resilience). TABLE 5.1. Selected economic indicators 2019–2023 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 (percent of GDP unless indicated otherwise) Dominica  Grenada Real GDP growth (%) ‑16.6 6.9 5.9 4.9 4.6 0.7 ‑13.8 4.7 6.4 3.9 Inflation (%) 1.5 ‑0.7 1.5 7.8 5.5 0.1 ‑0.8 1.9 2.9 3.0 Revenue 41.0 53.3 62.1 51.3 47.5 26.6 28.1 32.1 33.7 30.4 Taxes 26.3 23.5 22.8 21.1 22.3 22.5 22.8 21.5 22.7 22.8 Grants 1.9 2.4 5.4 2.4 2.4 2.9 3.7 7.7 6.9 2.0 Expenditures 56.1 56.8 68.6 58.8 48.7 21.6 32.7 31.7 32.7 28.3 Current 31.4 47.1 40.6 32.6 34.4 19.0 23.1 23.0 22.2 30.4 Interest 2.1 2.6 2.3 2.5 3.2 1.9 2.0 1.9 1.7 1.7 Capital 24.7 9.7 28.0 26.2 14.3 2.6 9.6 8.7 10.5 ‑2.1 Fiscal Balance ‑15.1 ‑3.6 ‑6.4 ‑7.6 ‑1.2 5.0 ‑4.5 0.3 1.0 2.1 Primary Balance ‑13.0 ‑1.0 ‑4.2 ‑5.0 2.0 6.8 ‑2.6 2.2 2.7 3.8 Public Debt 78.0 109.1 109.2 104.3 97.0 58.5 71.4 71.0 64.6 63.9 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 (percent of GDP unless indicated otherwise) St. Lucia St. Vincent Real GDP growth (%) ‑0.7 ‑24.4 12.2 15.9 3.6 0.7 ‑3.7 0.8 4.9 6.0 Inflation (%) 0.5 ‑1.8 2.4 6.5 4.3 0.9 ‑0.6 1.6 5.7 3.6 Revenue 21.0 22.4 22.6 21.9 22.6 27.7 30.5 32.9 28.7 29.5 Taxes 18.7 19.6 18.9 18.1 18.5 22.5 23.9 26.8 24.9 25.7 Grants 0.7 1.1 1.6 1.6 1.6 3.0 2.7 2.6 1.9 2.4 Expenditures 24.4 34.7 28.4 23.2 24.1 30.9 36.4 39.3 35.8 35.7 Current 20.8 28.1 23.8 20.1 19.6 24.4 27.4 29.5 26.3 25.5 Interest 3.0 4.0 3.4 3.0 3.2 2.3 2.3 2.6 2.4 2.5 Capital 3.6 6.5 4.6 3.0 4.5 6.5 9.0 9.8 9.5 10.3 Fiscal Balance ‑3.4 ‑12.2 ‑5.8 ‑1.3 ‑1.5 ‑3.3 ‑5.9 ‑6.4 ‑7.1 ‑6.2 Primary Balance ‑0.4 ‑8.2 ‑2.4 1.7 1.7 ‑0.9 ‑3.6 ‑3.8 ‑4.6 ‑3.8 Public Debt 62.1 94.6 83.3 74.4 73.9 67.9 81.2 89.9 87.8 86.3 Source: ECCB, WB Macro Poverty Outlook, WEO, IMF Article IV reports. 62 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Box 5.1. Fiscal Rules for Climate Resilience Fiscal rules impose numerical limits on broad fiscal aggregates to help countries strengthen debt sustainability and smooth output volatility across economic cycles. Well‑crafted fiscal rules can counter the risks of climate change by providing a framework for responsible spending and investment in climate adaptation, which in turn can enhance GDP growth and debt management. For Small Island Developing States (SIDS), disaster‑resilient fiscal rules are crucial. Such rules—focused on recurring expenditures relative to non‑resource revenues— integrate expectations of disaster shocks into the planning of government debt and budget balances. The three most important elements of these rules are: (i) operational feasibility for small developing states; (ii) incorporation of natural disasters and climate change; and (iii) strong interconnectedness between fiscal targets and rules as well as among budgetary items. Adopting conservative fiscal strategies, such as lower debt ceilings, can mitigate the economic shocks of natural disasters. Fiscal targets should be tailored to each country's specific disaster risk profile, balancing immediate fiscal needs with long‑term debt sustainability. In high‑risk regions with high existing debt like the OECS, prioritizing primary balance targets over expenditure caps has been shown to be more effective. As SIDS navigate the climate‑change‑affected landscape, evolving fiscal rules that emphasize adaptability and resilience will be key to maintaining economic and fiscal stability. Balancing flexibility with fiscal discipline is essential. This involves incorporating mechanisms like escape clauses to adjust to shocks while still upholding fiscal responsibility. Tailoring these rules to the capacity and resources of vulnerable economies is essential, as is integrating climate and disaster considerations into budgetary planning. The rules offer a practical framework, but their effective adoption requires flexible design to accommodate climate adaptation spending, regular evaluation of climate investments, and international support. Source: Brownbridge , Martin and Canagarajah , Sudharshan (2024). Climate Change Vulnerability, Adaptation and Public Debt Sustainability in Small Island Developing States. World Bank Policy Research Working Papers 10787 Increased uncertainty amplified by climate change means that OECS governments should seek opportunities to reduce potential fiscal outlays in the event of a natural disaster through risk transfer instruments and a layered approach to disaster risk financing. OECS countries are at different stages of adoption of disaster risk financing strategies and use a suite of financial products to manage the financial risks associated with disasters. For example, Dominica, Grenada, and Saint Lucia have disaster risk financing strategies in place, while Saint Vincent and the Grenadines has only a draft in place. A disaster risk financing strategy sets out in advance the policies, protocols, and instruments to quickly mobilize the resources required to respond to an emergency. Such strategies detail how different financial instruments will be used to mobilize finance in a timely and cost‑efficient way to reduce impacts on the public budget and avoid diverting resources away from key development projects. It is based upon an understanding of the risks to be managed and a definition by the government on who to protect, when, and through what systems. The Ministry of Finance plays a leading role in developing and implementing effective disaster risk finance policies, in collaboration with line ministries and disaster risk management agencies. 63 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines The Caribbean has been proactive in disaster risk financing and was an early adopter of risk transfer solutions with the establishment of the CCRIF SPC in 2007.232 All the OECS countries are members of CCRIF SPC and have purchased at least one parametric insurance policy against hurricanes, earthquakes, or excess rainfall (Table 5.2). In addition, Saint Lucia and Grenada participate in COAST, a parametric insurance cover designed to provide a small and targeted amount of financial support to fisherfolk after a disaster. The government of Saint Vincent and the Grenadines is also in the process of joining this insurance program with the hope that they will have COAST cover for the next insurance season of 2024/25. To date, Dominica, Saint Lucia, and Saint Vincent and the Grenadines have received payouts from CCRIF SPC worth approximately $23 million, $9 million, and $2 million, respectively. Grenada has yet to receive a payout. Table 5.3 below provides additional details on gross premiums and the coverage limits per country. TABLE 5.2. Country Elements of Layered Disaster Risk Financing Strategy CCRIF SPC Parametric Cover Contingent Country DRFI Strategy Disaster Reserve Fund Credit XSR TC EQ COAST Dominica Yes Partial: Y Y Y Y N Contingency Fund & Budget Reserve Grenada Yes Partial: Y Y Y Y Y National Transformation Fund ‑ Contingency Reserves St. Lucia Yes Partial: Under Y Y Y Y Emergency Disaster Fund ‑ preparation not operational Contingency Reserves St. Vincent & Under Partial: New line Y Y Y Under Grenadines Preparation Contingency fund ‑ not under Develop‑ earmarked preparation ment Source: CCRIF SPC; World Bank Staff. Notes: XSR: Excess Rainfall TC: Tropical Cyclone EQ: Earthquake. TABLE 5.3. CCRIF SPC Gross Premiums and Coverage Limits Country Sum of Gross Premium ($) Sum of Coverage Limit ($) Dominica 2,512,986 64,213,923 Grenada 1,400,000 50,856,915 St. Lucia 3,073,040 65,387,211 St. Vincent and the Grenadines 752,055 24,495,608 Grand Total 7,738,081 204,953,657 Source: CCRIF SPC. Contingent credit lines that can be activated in the event of a qualifying disaster are in place in Dominica and Grenada, and are being prepared in Saint Vincent and Saint Lucia. Two WB contingent credit lines (Cat DDOs) of $20 million were approved for Grenada and Dominica in January 2020 and June 2022, respectively. Saint Vincent also benefitted from a WB Cat DDO of $20 million, approved in June 2020 and fully disbursed in April 2021 in response to the La Soufrière Volcano eruption. New Cat DDOs, valued at $20 million each, are under preparation for Saint Vincent and Saint Lucia, with a target approval of FY2025. Recognizing that a certain amount of residual risk remains, the OECS countries are working on strengthening regional resilience to natural hazards and climate change. With World Bank support,233 the OECS countries of focus in this report are exploring how they can further strengthen and increase 232 CCRIF SPC provides parametric insurance cover against hurricane or Tropical Cyclone (TC), Earthquake (EQ) and more recently Excess Rainfall (XSR). The CCRIF SPC has made 54 payouts totaling just under $245 million in payouts to its member countries. 233 World Bank. 2023. Enhancing Financial Resilience to Natural Disasters and Climate Change (P180867). https://documents1.worldbank. org/curated/en/099040523162025237/P180867047affa070aaea06871368ddc84.doc. 64 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines their financial protection against disasters. The following three risk transfer options are being explored; (i) a catastrophe swap that uses a derivative contract to secure reinsurance; (ii) a catastrophe bond which utilizes the capital markets; and (iii) additional cover from CCRIF SPC.234 The inclusion of climate resilient debt clauses235 in new loan contracts is also being explored. 5.2.2.  Making the most of concessional financing Despite efforts to create fiscal space, the OECS countries will not be able to finance the cost of climate adaptation and maintain fiscal and debt sustainability without additional concessional financing from the international community. The IMF estimates that for Grenada, even after considering domestic resource mobilization in line with its Disaster Resilience Strategy (DRS), the country would still require additional external grant financing of about 2.5 percent of GDP annually,236 while Dominica would require an additional 8 to 11 percent of GDP per year.237 These amounts cover full infrastructure investment needs and not just what would be required for resilience. If we focus on just the incremental costs to fortify public capital assets against hurricanes and floods through a subset of the interventions analyzed in Chapter 3, the average annual financing costs range from 0.9 percent of GDP in Saint Lucia to 12 percent in Dominica, under the retrofitting scenario, spread over 15 years; and 0.3 percent to 5 percent under the build‑back‑better scenario, spread over 25 years. While the ability of the OECS countries to attain resilience with fiscal and debt stability critically depends on donor support, grant financing for these countries is limited and declining (see Table 5.1). Although there have been frequent transitory spikes in receipts of official development assistance (ODA) —typically following natural disasters238—the four OECS countries under review are eligible for concessional International Development Association (IDA) financing for development objectives. IDA country allocations are limited, however, and need to be supplemented with other concessional climate financing, as well as the leveraging of resources from the private sector. In addition to supply constraints, OECS countries suffer from a lack of technical human resources (skills and people) as well as limited institutional capacity to support access to and disbursement of climate finance. Procedures and processes vary across funders, making access an arduous task. Moreover, even if concessional financing is available, there must be a viable project pipeline to finance. Limited staff resources and institutional capacity to develop and implement a pipeline of bankable projects is a key challenge in the small island developing states of the OECS. By improving coordination and enhancing local capacity through knowledge and data sharing, the region can increase its concessional finance absorption capacity.239 The OECS countries have managed to secure some concessional climate financing, including through the Green Climate Fund (GCF) and the Global Environment Facility (GEF). Grenada provides a good case study among the group of a small island developing state trying to access grants from climate funds. It has managed to secure a $48 million (4 percent of GDP) grant from the GCF for a sustainable water project.240 Grenada has also leveraged the credibility gained from having a fiscal responsibility framework in place to attract loans on highly concessional terms from other IFIs. Saint Lucia has received some climate‑related grant co‑financing for two projects in the transport and energy sectors and has developed a concept note for 234 The WB is also working with the four countries through an FCI‑led technical assistance under the CDRF Value for Money Framework to better quantify financing gaps in the DRF strategy by conducting: (i) assessment of the risk facing the countries and the associated contingent liability; (ii) assessment of the funding gap under different scenarios; (iii) analysis of the cost of different risk layering strategies to inform the most effective combination of instruments to meet government objectives. 235 Climate Resilient Debt Clauses are a new World Bank tool providing Small States the option to temporarily defer principal payments on IBRD/IDA loans if a severe natural disaster, meeting pre‑established trigger thresholds, were to occur. 236 IMF. 2022. Grenada Disaster Resilience Strategy IMF Country Report No. 22/080. Washington, DC: International Monetary Fund (IMF). 237 IMF. 2021. Dominica Disaster Resilience Strategy IMF Country Report No. 21/182. Washington, DC: International Monetary Fund (IMF). World Bank. 2018. "Organization of Eastern Caribbean States Systematic Regional Diagnostic." Report Number: 127046‑LAC. 238 Washington, DC: World Bank. 239 UNFCCC. 2023. "Needs‑based Climate Finance Project: OECS Climate Finance Access and Mobilization Strategy 2023–2030." 240 IMF. 2022. Grenada Disaster Resilience Strategy IMF Country Report No. 22/080. Washington, DC: International Monetary Fund (IMF). 65 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines submission to the GCF to secure funding for climate resilience in the health sector.241 All four countries have potential to access the IMF's Resilience and Sustainability Trust (RST), provided an IMF program (financing or non‑financing) is in place.242 The new Loss and Damage (L&D) Fund announced during COP28243 can provide opportunities for OECS countries to access concessional financing. The purpose of the Fund is to assist developing countries that are particularly vulnerable to the adverse effects of climate change in responding to associated economic and noneconomic loss and damage, including from extreme weather and slowonset events. Current pledges amount to over $660 million.244,245 Many details related to Fund eligibility, scope, and modalities were yet to be resolved as of the publication date of this CCDR and are therefore not covered in this report. 5.2.3.  Building financial resilience and leveraging private finance for climate action The financial system needs to manage risks as it facilitates the economic transition to a greener economy. The two primary challenges are interrelated: (i) the management of climate and environmental risks to the financial sector; and (ii) the mobilization of financial capital for mitigation and adaptation investments. Climate‑related shocks to the financial system can impact the appetite for investments, including green.246 The development of green finance (the financing of investments that provide environmental benefits and support the achievement of climate goals) requires strengthening other factors that would more broadly support financial development by prompting deeper, more efficient, and more accessible financial sectors. These factors include the development of preconditions for access to long‑term financing—a critical hurdle as several green investments have longer horizons—as well as the introduction of innovative financial instruments which can help share, reduce, or mitigate the risks of green investments.247 De‑risking instruments and public‑private partnerships (PPPs) can incentivize private investment in climate‑resilient infrastructure. Chapter 3 presented some of the challenges that OECS members need to address to create the right environment for renewable energy projects. On top of the technical, regulatory, and institutional considerations, it is essential to put in place financial safeguards that can minimize the risks of investing in long‑term, low‑carbon infrastructure in the Caribbean. Key aspects to consider are the liquidity and creditworthiness of the off taker, adequate insurance/guarantee coverage (not only for assets, but also for contractor risks, business interruptions, and the potential loss of income), and the existence of long‑term contracts (public purchasing agreements or PPAs). Public‑private partnerships can be particularly effective in providing the right conditions for private investment, as they can de‑risk projects by combining support from the state and IFIs (through guarantees, grants, and concessional finance) with long‑term contracts. PPPs with well‑designed key performance indicators (KPIs) can help the private sector to bring in their financing and technical expertise for developing low‑carbon projects, while ensuring the long‑term performance of the new infrastructure being built. Private sector participation schemes can support public utilities by bringing new expertise, financial resources, and a commercial orientation. PAHO. 2023. "Saint Lucia To Seek Funding to Strengthen Climate Resilience in the Health Sector." https://www.paho.org/en/news/11-10- 241 2023-saint-lucia-seek-funding-strengthen-climate-resilience-health-sector 242 The RST provides affordable long‑term financing to countries undertaking reforms to reduce risks to prospective balance of payments stability, including those related to climate change and pandemic preparedness. https://www.cop28.com/en/news/2023/11/COP28- Presidency-unites-the-world-on-Loss-and-Damage. 243 COP28 UAE. 2023. "COP28 Presidency unites the world on Loss and Damage." https://www.cop28.com/en/news/2023/11/COP28- Presidency-unites-the-world-on-Loss-and-Damage. 244 UNFCCC. Undated webpage. "Pledges to the Loss and Damage Fund." https://unfccc.int/process-and-meetings/bodies/funds-and- financial-entities/loss-and-damage-fund-joint-interim-secretariat/pledges-to-the-loss-and-damage-fund. 245 A landmark Decision at COP28 was to operationalize a fund for responding to loss and damage. Following approval by its Board of Executive Directors, the World Bank confirmed to the COP28 Presidency in June 2024 that it is willing and able to meet the stipulated conditions. In August 2024, it submitted relevant FIF documentation, including a hosting agreement, to the Fund’s Board (https://www.worldbank.org/en/programs/ funding-for-loss-and-damage). 246 There is a feedback loop between climate change and the financial system, which can be represented under the concept of double materiality. On the one hand, climate change can affect firms' investment and financial institutions' financing decisions by introducing new risks. On the other hand, financial institutions' investment decisions affect the realization of climate scenarios, through adjustments in risk assessment, potentially increasing the risks they are exposed to. Source: Gourdel, R., et al. "The double materiality of climate physical and transition risks in the Euro Area." European Central Bank (ECB) Working Paper Series No 2665 (May 2022). Prasad, N., et al. 2022. "Mobilizing Private Climate Financing in Emerging Market and Developing Economies." IMF Staff Climate Note 247 2022/007. Washington, DC: IMF. 66 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Concessional finance can support the creation of economies of scale, incentivizing private investment in strategic sectors. Given the small size of the local markets, economies of scale need to be created in the OECS to incentivize private investment. There are several measures that can be taken in this direction. First, international support can be directed toward strategic infrastructure projects, such as long‑term Power Purchase Agreements (PPAs) based on renewable energy. Building local capacity for structuring PPAs can open the door for independent power producers to provide domestic clean energy to large consumers (including state‑owned enterprises, hotels, and industries). At an early stage, given the limitations in terms of local capacity and regulatory framework, help from international donors and IFIs through technical assistance and concessional finance for PPAs will be crucial. These can be complemented with additional credit enhancement mechanisms, such as partial risk guarantees, political risk insurance, and first‑loss facilities, as a way to attract domestic private investment and FDI. Second, grants and concessional finance can also be used for implementing transitory financial incentives for the import of inputs in strategic low‑carbon sectors (e.g., EVs, charging stations, batteries, energy efficient appliances) to accelerate their adoption. These incentives can be combined with a gradual implementation of energy efficiency standards for appliances and standards for the construction and transport sectors. As these are adopted, the low‑carbon sectors will grow, opening opportunities for local companies to provide goods and services. Third, the support for training and certification programs for workers in low‑carbon sectors across the OECS can help standardize services and build local capacity. Local companies will benefit from having access to and can help enable the creation of a certified labor force in areas such as renewable energy (installation of equipment, operation and maintenance, etc.), energy efficiency (construction, retrofitting, sale and installation of appliances), and others. Regional standardization favors multi‑country operation, which increases the economies of scale. Finally, the regional harmonization of investment codes, which has been supported by CARICOM but has had slow progress to date, would help foster economies of scale and attract FDI.248 Financial support for businesses needs to take into consideration the fact that firms and projects require access to different types of instruments, based on their stage of development. Financial instruments fall along a spectrum that reflects both their degree of concessionality and their appropriateness for businesses at different points of maturity. At one end, grants and seed capital are useful for early‑stage business development, especially for incubation and for providing technical assistance. In the OECS, this type of funding could be particularly useful for supporting early‑stage pilots, including nature‑based solutions for coastal protection. Less immature but still early‑stage businesses and projects can benefit from equity investments and highly concessional loans. These instruments are often used when the perceived risks are high, due either to technological uncertainty or immature markets. In these cases, MDBs providing risk reduction mechanisms or guarantees are particularly relevant. These types of instruments could be particularly useful to support the electrification of transport and other economic sectors in the OECS. Finally, at the other end of the spectrum, venture capital, commercial loans and capital markets are required for late‑stage businesses, when solutions are commercially viable and scaling is of the essence. This is the case with renewable energy. Financial instruments can also be used in combination, allowing the drawbacks of one instrument to be compensated for by the advantages of another. The sustainable finance market in the OECS is nascent, even compared to the wider LAC region, where the sustainable finance market has taken off in recent years. In 2019, Chile became the first Latin American country to issue a sovereign green bond, followed by Colombia in 2021 (the first to do so in local currency). More recently, Uruguay issued a sustainability‑linked bond in 2022. Meanwhile, in the Caribbean, in 2021 Jamaica issued a catastrophe bond (CAT bond) through the World Bank to protect against major hurricanes, a first in the region and the first island state in the world to do so. Nearby, in 2022 Belize raised a $364 million Blue Loan to finance the repurchase of its debt, at a 45 percent discount. This showcases how climate finance can free up fiscal resources via a debt‑for‑nature swap, so that governments can improve resilience without triggering unsustainable debt levels or sacrificing spending on other development priorities. All climate financial flows in the Eastern Caribbean region have been executed using a limited range of financial instruments; grants have accounted for 61 percent of the total, while debt instruments have accounted IFC (2023). "Regional Private Sector Diagnostic (RPSD): Promoting Private Sector‑led Growth to Foster Recovery and Resilience in the 248 Caribbean." Washington, DC: International Finance Corporation 67 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines for 38 percent.249 It is anticipated that financial vehicle diversification will be adopted and encouraged as the region's financial system grows. The implementation of instruments such as labeled bonds (green or sustainable) or green loans could be explored. Attracting private climate finance in a sustained way requires additional reforms that improve the enabling environment for private investments, including FDI, to take place, noting that climate change itself may be a disincentive to invest due to higher physical risk. The main task of governments is to create an enabling environment that reduces certain types of risk, such as political, contractual, legal, and regulatory, so that private financiers and operators can assume financial and commercial risk. Creating an adequate framework upstream would require reforms and institutional capacity to enable the management of private operators' participation in development.250 5.2.4.  Addressing structural constraints to growth Building resilience and getting to a low‑carbon development pathway can be facilitated by accelerating the pace of structural reforms to spur growth. Recent diagnostics251, 252 on the OECS countries point to opportunities for accelerating growth and reducing poverty by leveraging natural capital and human endowment and creating an environment to stimulate private sector growth. In addition, the natural capital of the blue economy (marine and coastal resources) has been identified as a potential source of comparative advantage for the OECS. Harnessing this natural capital can contribute to jobs and incomes in major sectors, such as tourism and recreation, agriculture, fishing and aquaculture, and transport. The diagnostics identify several priority areas for achieving a high‑growth trajectory in an inclusive and sustainable manner: » Building resilience to external shocks from a 360‑degree perspectiveby taking a broad and comprehensive view of resilience that includes not only climate resilience but also builds on the traditional disaster risk‑management agenda and encompasses fiscal risks, financial sector resilience, and the preservation of human and natural capital. » Embedding growth in the blue economy by building on comparative advantage from the natural assets of the blue economy as a key engine for growth. This will involve investing in sustainable management of coastal and ocean natural assets to fully leverage their economic potential. » Strengthening and harnessing human capital. Human capital is key to inclusive growth, but skills mismatches and limited employment opportunities, especially among youth, cause high unemployment rates and migration of skilled workers. It is crucial to invest in human capital to upskill the workforce to take advantage of emerging growth sectors. Addressing skills gaps through improvements to secondary education, technical and vocational education and training (TVET), and active labor market programs (ALMPs) could reduce skills mismatches and persistent youth unemployment. » Developing a strategic approach for managing human climate mobility in the region. Investments in generating empirical evidence on the impacts of climate change on human mobility will help improve understanding of the implications of weather events on people's forced displacement or migration decision‑making, including for slow‑onset and gradual environmental degradation. It will also be necessary to integrate human mobility dimensions into the National Adaptation Plans (NAPs) and Nationally Determined Contributions (NDCs) to address the linkages between climate change and human mobility in the planning and policy processes that are targeted at increasing resilience and adaptation capacity, including migration as an adaptation strategy. The region can also consider 249 UNFCCC. 2022. "Needs‑based Climate Finance Project: Technical Assessment of Climate Finance in Eastern Caribbean States." Annex to the Organization of Eastern Caribbean States Climate Finance Access and Mobilization Strategy. 250 World Bank. 2018. "Mobilizing Private Finance for Development in Latin America and the Caribbean." Washington, DC: World Bank. World Bank. 2018. "Organization of Eastern Caribbean States Systematic Regional Diagnostic." Report Number: 127046‑LAC. 251 Washington, DC: World Bank. IFC. 2023. "Regional Private Sector Diagnostic (RPSD): Promoting Private Sector‑led Growth to Foster Recovery and Resilience in the 252 Caribbean." Washington, DC: International Finance Corporation. 68 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines developing specific provisions within the existing regional free movement arrangements to address human mobility in the context of climate and environmental change to help facilitate and more effectively manage cross‑border and intra‑regional displacement and migration flows. » Embracing new technologies to transform productivity. The availability of disruptive technologies, such as new digital and financial technologies, enables small states to reduce costs and circumvent the normal dependence on economies of scale. Many "disruptive" technologies, such as social media or "sharing economy" platforms, are eroding advantages previously enjoyed by advanced economies and major firms. New digital technologies provide opportunities to diversify to digitally enabled services, in particular finance and business processing services, that are not constrained by scale.253 Embracing these can help transform private‑sector productivity and government effectiveness. » Strengthening regional integration and connectivity. The small size of OECS countries is at the heart of many capacity constraints in both the public and private sectors. Increasing connectivity between islands, harmonizing regulations and government procedures, and boosting regional cooperation are some of the many ways to achieve economies of scale in the region. For example, the regional harmonization of investment codes would help foster investment and attract FDI, while regional cooperation on tax incentive regimes would prevent a race to the bottom and help to improve revenue generation. The countries could also benefit from joint action to address cross‑country issues such as ocean governance or externalities from the low‑carbon transition. » Addressing cross‑cutting constraints to private sector trade, investment and growth. Gaps in trade policy, limited trade facilitation, and limited access to finance are among the key constraints to private sector development in the Caribbean.254 Reducing trade costs (including non‑tariff barriers) and logistics frictions could spur trade‑led growth. Financial technology, such as digital payments and mobile banking, and the development of a regional credit bureau could help promote financial inclusion and access to credit. IFC. 2023. "Regional Private Sector Diagnostic (RPSD): Promoting Private Sector‑led Growth to Foster Recovery and Resilience in the 253 Caribbean." Washington, DC: International Finance Corporation. IFC. 2023. "Regional Private Sector Diagnostic (RPSD): Promoting Private Sector‑led Growth to Foster Recovery and Resilience in the 254 Caribbean." Washington, DC: International Finance Corporation. 69 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 6. Conclusion: Prioritized actions The analysis in the chapters above describes diverse actions that could support the four countries of focus in moving toward a resilient and low‑carbon development pathway. Recommendations highlighted in the report are grouped into three thematic categories: (i) building the knowledge base for action; (ii) establishing and strengthening efficient, effective institutions; and (iii) investing in the transition. These three categories have been deliberately chosen to underscore an important point: the needed investments to support enhanced resilient growth are large. But just as important are the significant knowledge and institutional changes that will be needed to complement, facilitate, and increase the efficiency of the recommended investments. The important additional investments and policy initiatives presented in this report will need to be balanced with the resources available for other sectoral and national priorities, and will need to consider the unique constraints faced by these countries as small island developing states, from both a fiscal space and human capital perspective. They will also need to be complemented by strategic and efficient use of concessional finance opportunities. Sequencing the proposed activities will be important for developing a strategic approach to enhancing climate action while at the same time meeting traditional development needs. In addition to country‑level recommendations, this CCDR also highlights areas for regional collaboration, where cooperation could generate economies of scale, reduce the costs of action across islands, or address bottlenecks due to capacity constraints at the national level. Again, the SIDS context is key, as an effective regional approach has the potential to enable these countries to achieve far more than they could alone. Regional and international actions can also play an important role by easing the capacity constraints that make climate action challenging in these small island states. Regional organizations like the OECS can provide support in the form of technical assistance, the developing of a roster of skilled staff who can provide technical assistance, and the enablement of action in areas that would otherwise be challenging. Recommendations have been assessed using four criteria:(i) potential climate mitigation and adaptation benefits; (ii) urgency, defined as critical in the next five years in order to allow the OECS islands to transition to a low‑carbon, resilient future; (iii) other developmental benefits, such as human capital, economic growth, and natural capital conservation; and (iv) potential barriers to implementation, namely missing policy and institutional frameworks, political economy challenges, and inadequate financing. The results are reported below in Table 6.1. In this table, (i) indicates urgent actions (1–2 years), indicates actions to be completed 3–5 years, and indicates actions that could be implemented beyond the 5‑year time horizon but ideally by 2050); (ii) one red star indicates little development or climate benefits, two yellow stars medium benefits and three green stars considerable benefits; and (iii) one red star indicates considerable implementation barriers, two yellow stars some barriers, and three green stars no or few implementation barriers. The table also indicates the sectoral delineation of each action. The table does not prioritize among categories and subcategories given that all actions are relevant, and any prioritization decision should be taken on a case‑by‑case basis. This report serves as an entry point for dialogue on the multiple challenges these four OECS countries need to address to ensure that a climate‑resilient development trajectory is possible. The challenges of implementing policies that will support these objectives should not be underestimated, but making progress would yield economic benefits, improve productivity, and conserve the OECS countries' natural capital. Tackling them effectively will require a strong strategic vision, close policy coordination, and the building of governmental and regional capacities, with support from the international community. The states of the Eastern Caribbean face significant capacity constraints, both human and economic, but they have exceptional natural resources and a wealth of creativity and resilience among their peoples that can reinforce and accelerate their efforts to move toward a resilient development trajectory. 70 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines TABLE 6.1. Priority actions for resilient, low‑carbon development in the Eastern Caribbean   Urgency Knowledge Benefits/Barriers Regional: Develop baseline mapping of the vegetated coastal ecosystems in each country to ascertain the blue Climate Mitigation ★★★ carbon potential at the national and subregional level to Benefits Adaptation ★★★ inform a future blue carbon credit market. and Natural Resources Agriculture, Marine Regional: Build the knowledge base on carbon emissions Human Capital ★★☆ from these vegetated coastal ecosystems due to SST Other Growth ★★★ change, marine heatwaves, and other climate and Benefits development impacts. Conservation ★★★ Regional: Establish a regional sargassum response platform in the OECS to tackle the offshore collection of sargassum and utilization for commercial products (also Policy & institutions ★☆☆ includes sea moss). Barriers Political Economy ★★☆ Regional: Improve data collection and M&E on the Financing ★☆☆ impacts of climate change/weather patterns on agricultural production. Regional: Develop training centers at the regional Climate Mitigation ★★★ Energy, Transport, Waste level to create the necessary scale for specialized skills Benefits Adaptation ★★☆ for renewable energy and energy efficiency scale up. Complementary legal and financial capacities are also Human Capital ★★☆ relevant, including local capacity for structuring PPAs and Other Growth ★★☆ for implementing standards in the energy, transport, and Benefits construction sectors. Conservation ★★☆ Regional: Develop or explore opportunities for a regional waste management strategy including treatment, Policy & institutions ★☆☆ disposal, and sector‑related policies, and develop a pool Barriers Political Economy ★★☆ of technical and contract management expertise at the Financing ★☆☆ regional level. Build governments' capacities to systematically respond Climate Mitigation ★☆☆ to emergencies by establishing legal and institutional Benefits Adaptation ★★★ frameworks for clear mandates and accountabilities and investing in personnel, facilities, equipment, Human Capital ★★☆ Other Physical Resilience and information technology to enhance emergency Growth ★★★ Benefits preparedness and response systems. Conservation ★☆☆ DMA: Comprehensive disaster management law draft for approval255 GRD: No comprehensive disaster management law256. Policy & institutions ★★☆ LCA: Comprehensive disaster management law adopted, Barriers Political Economy★★★ remaining challenges moving from reactive to proactive Financing ★☆☆ investment, monitoring and planning.257 VCT: Current disaster management law does not have a comprehensive or community resilience perspective.258 Climate Mitigation ★☆☆ Invest in generating empirical evidence on the impacts Benefits Adaptation ★★☆ Social Inclusion and Resilience of climate change on human mobility—beyond reporting Human Capital ★★☆ displacement statistics from sudden‑onset events Other Growth ★★☆ to include slow‑onset and gradual environmental Benefits Conservation ★★☆ degradation—to better understand the implications of weather events on people's forced displacement or their Policy & institutions ★★★ migration decision‑making. Barriers Political Economy★★★ Financing★★★ Legend Short term (1–2 years) ★☆☆ Little development/benefits/Considerable barriers Medium term (3–5 years) ★★☆ Medium development/benefits/Some barriers Long term (5+ years) ★★★ Considerable development/benefits/No barriers 255 https://disasterlaw.ifrc.org/sites/default/files/media/disaster_law/2024-02/Dominica%20Country%20Profile.pdf. 256 https://disasterlaw.ifrc.org/sites/default/files/media/disaster_law/2020-09/Grenada-IDRL-Report-LR.pdf. 257 https://www.climatelinks.org/sites/default/files/asset/document/2021-09/StLucia.MAY_.2021.Final_.pdf. https://disasterlaw.ifrc.org/sites/default/files/media/disaster_law/2020-09/St%20Vincent%20%20The%20Grenadines%20IDRL%20 258 Report%20LR%20Web%20viewing.pdf 71 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines   Urgency Knowledge Benefits/Barriers Climate Mitigation★★☆ Explore opportunities for green bonds and other Benefits Adaptation ★★☆ sustainable finance vehicles to increase access to finance Private Sector Mobilization for climate action. Human Capital ★☆☆ Other Growth★★☆ Benefits Design and implement PPP models to mobilize private Conservation ★★☆ investment for critical infrastructure in strategic sectors, such as energy, transport, telecommunications, waste, Policy & institutions ★☆☆ water, and health. Barriers Political Economy ★★★ Financing ★☆☆ Regional: Accelerate workforce readiness to support the Macroeconomic Management, Finance, and Competitiveness green transition and take advantage of the opportunities ahead, identifying the skills gaps, ensuring that the skills Climate Mitigation ★☆☆ training programs meet the current and future labor Benefits Adaptation ★★☆ demand, and facilitating the reskilling and upskilling of the workforce. Human Capital ★★☆ Other Growth ★★★ Embrace new and digital technologies to transform Benefits Conservation ★☆☆ productivity by reducing costs and subverting dependence on economies of scale to drive growth. Policy & institutions ★★☆ Barriers Political Economy ★★★ Financing ★★☆ Urgency Investments Benefits/Barriers Regional: Invest in building resilience in the fisheries Agriculture, Water, Marine and coastal tourism sectors against shocks and lingering Climate Mitigation ★★☆ and Natural Resources effects of the global poly‑crisis to improve food security Benefits Adaptation ★★★ and economic resilience. Incorporate climate‑smart technology into agri‑food Human Capital ★★★ Other systems to support MSMEs growth in agro‑industries and Growth ★★★ Benefits food processing. Conservation ★★★ Policy & institutions ★★☆ Invest in wastewater treatment and water storage to Barriers Political Economy ★★★ improve resilience to drought and reduce water pollution. Financing ★☆☆ Invest in power system development that enhances the flexibility of the grid through demand response mechanisms, battery storage (including potential integration of EV batteries), remuneration systems to reward flexible generation / ancillary services, and integration of distributed generation. Climate Mitigation ★★★ Scale up investments in renewable energy and Benefits Adaptation ★★☆ increase familiarity with energy efficiency investments, Energy, Transport, Waste e.g., through pilots for public buildings. Support private investment in digital platforms for logistics and expansion of transport connectivity. Regional: Reduce barriers to the adoption of energy efficiency measures by piloting public building EE investments, developing national and preferably regional Human Capital ★☆☆ EE equipment supply markets and harmonized regional Other Growth ★★★ frameworks, spreading awareness of the benefits of Benefits EE measures, and exploring financing mechanisms to Conservation ★☆☆ improve private supply of and demand for resilient and energy efficient buildings. Develop safe treatment and disposal options for solid waste, including landfill gas management and separation Policy & institutions ★☆☆ of organics to compost or anaerobic digestion, and close Barriers Political Economy ★★☆ informal and uncontrolled disposal sites in order to Financing ★☆☆ reduce methane emissions and vulnerability to flooding. Legend Short term (1–2 years) ★☆☆ Little development/benefits/Considerable barriers Medium term (3–5 years) ★★☆ Medium development/benefits/Some barriers Long term (5+ years) ★★★ Considerable development/benefits/No barriers 72 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Urgency Investments Benefits/Barriers Invest up front in critical public infrastructure to ensure that roads, ports, airports, water, wastewater, energy, educational, and health facilities and networks are resilient to the impacts of expected future hazards and can recover quickly to minimize disruptions. Climate Mitigation ★☆☆ Benefits Adaptation ★★★ General status: Progress has been made regionally on roads, but water and power remain a challenge and health and education consequently as a result. Physical Resilience Invest in financial preparedness and innovative fiscal Human Capital ★★☆ Other planning mechanisms linked with risk reduction, Growth ★★☆ Benefits adaptation, and crisis preparedness. The objective is to Conservation ★☆☆ emphasize risk reduction, climate change adaptation, and resilient investments as central elements of disaster risk management strategies. These measures, linked with systematic investments in financial preparedness, significantly reduce post‑disaster response costs. DMA: DRFI strategy and contingent credit in place, partial Policy & institutions ★★★ reserve fund. Barriers Political Economy ★★★ GRD: DRFI strategy and contingent credit in place, partial Financing ★★☆ reserve fund. LCA: DRFI strategy in place, contingent credit under development, and partial reserve fund (not operational). VCT: DRFI strategy and contingent credit under preparation, partial (not earmarked) Implement integrated, interoperable, and risk‑informed SP information systems featuring multiple programs. These systems should encompass the entire delivery chain, including intake and registration, needs assessments, enrollment, and payments, among other Mitigation★☆☆ Climate processes. Additionally, these systems should include Benefits Adaptation ★★☆ both social and beneficiary registries, covering potential and actual beneficiaries, including vulnerable and at‑risk households in regions with recurrent shocks. This approach will enable and facilitate rapid expansion of SP coverage in the event of a shock. Social Inclusion and Resilience Improve existing health infrastructure before a disaster Human Capital★★☆ occurs by assessing the capacity of the health system Other Growth ★☆☆ to provide services in the event of a disaster and Benefits incorporating water‑ and energy‑efficiency features. Conservation ★☆☆ Support the development of disaster‑resilient education systems by enabling disadvantaged households to participate in remote learning, preparing and supporting school administrators and teachers to better maintain learning during and after a disaster, and developing climate adaptation and mitigation learning modules for teachers and students. DMA: At least partial presence of continuity plans, Policy & institutions ★★☆ remote learning content and technology, comprehensive Barriers Political Economy ★★☆ integrated education management, training, and Financing★☆☆ evaluation. GRD: Lacks comprehensive education management system. LCA: Lacks comprehensive education management system and evaluation of remote/distance learning. VCT: Lacks continuity plans, remote learning technology, comprehensive integrated education management, and evaluation of distance learning. Climate Mitigation ★☆☆ Benefits Adaptation ★★☆ Private Sector Mobilization Human Capital ★★☆ Promote financial inclusion and access to credit through Other Growth ★★★ financial technology, such as digital payments, mobile Benefits banking, and development of the regional credit bureau. Conservation ★☆☆ Policy & institutions ★★☆ Barriers Political Economy ★★☆ Financing ★☆☆ Legend Short term (1–2 years) ★☆☆ Little development/benefits/Considerable barriers Medium term (3–5 years) ★★☆ Medium development/benefits/Some barriers Long term (5+ years) ★★★ Considerable development/benefits/No barriers 73 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Urgency Institutions Benefits/Barriers Develop an LTS to support long‑term vision and Climate Mitigation ★★☆ coordinated action on climate. Benefits Adaptation ★★☆ Governance and Institutions Establish a comprehensive legislative framework for climate change supported by integrated strategies and plans coordinated across agencies. Human Capital ★☆☆ Other Growth ★☆☆ DMA: Partial Climate Change Framework Law in place Benefits Conservation ★☆☆ GRD: No Climate Change Framework Law in place LCA: Climate Change Framework Law under preparation VCT: No Climate Change Framework Law in place Policy & institutions ★★☆ Strengthen and institutionalize participation processes Barriers Political Economy ★★★ for climate change planning. Financing ★★★ Regional: Pursue regional coordination on the Climate Mitigation ★★★ development of e‑mobility (including vehicles, ferries, Benefits Adaptation ★★☆ cruise ships) to foster economies of scale in supply chains Energy, Transport, Waste and develop interconnection standards and coordination Human Capital ★☆☆ Other on inter‑island transport networks (reduce transaction Growth★☆☆ Benefits costs). Conservation ★★☆ Improve the authorizing environment to ensure sufficient technical capacity, sustainable financing, and a regulatory environment and institutions to implement integrated solid waste management. Policy & institutions ★☆☆ Barriers Political Economy★★☆ DMA: No NWMS in place. Financing ★★☆ GRD: NWMS under development LCA: No NWMS in place. VCT: National Development Plan 2013–2025 in place. Regional: Strengthen regional capacities and Climate Mitigation ★★☆ coordination mechanisms for emergency preparedness Benefits Adaptation ★★★ Physical Resilience and response by investing in systems (legal and institutional frameworks, personnel, facilities, equipment, Human Capital ★★☆ Other and information technology) that foster collaboration and Growth ★★★ Benefits resource‑sharing among neighboring countries and lead Conservation ★☆☆ to more efficient and coordinated disaster responses that enhance the ability of the region to respond effectively Policy & institutions ★★☆ to emergencies and minimize their impact on lives, Barriers Political Economy ★★☆ infrastructure, and economic stability. Financing ★★☆ Integrate human mobility dimensions into the National Adaptation Plans (NAPs) and Nationally Determined Contributions (NDCs) to address the linkages between climate change and human mobility in planning and policy processes targeted at increasing resilience and adaptation capacity, including migration as an adaptation Climate Mitigation ★☆☆ Social Inclusion and Resilience strategy. Benefits Adaptation ★★☆ DMA: Mentioned in sectoral planning. GRD: Brief mention. LCA: Only mentioned as a negative outcome. VCT: Brief mention. Regional: Consider developing specific provisions within the existing regional free movement arrangements Human Capital ★★★ to address human mobility in the context of climate Other Growth ★★★ and environmental change to help facilitate and more Benefits Conservation ★☆☆ effectively manage cross‑border and intra‑regional displacement and migration flows. Address skills gaps through improvements to secondary education, technical and vocational education and Policy & institutions ★★★ training (TVET), and active labor market programs Barriers Political Economy ★★☆ (ALMPs) to reduce skills mismatches and persistent Financing ★★☆ employment gaps (particularly among women and youth). Legend Short term (1–2 years) ★☆☆ Little development/benefits/Considerable barriers Medium term (3–5 years) ★★☆ Medium development/benefits/Some barriers Long term (5+ years) ★★★ Considerable development/benefits/No barriers 74 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Urgency Institutions Benefits/Barriers Create enabling conditions for private business to diversify away from vulnerable sectors by easing Climate Mitigation ★★☆ Private Sector Mobilization impediments to starting a business, enabling digital Benefits Adaptation ★★★ uptake, and supporting improved access to finance. Address cross‑cutting constraints to private sector trade, Human Capital ★★☆ Other investment, and growth by eliminating gaps in trade Growth ★★★ Benefits policy, and physical and digital connectivity; in all cases, Conservation ★☆☆ leverage PPPs where possible. Leverage technical assistance and concessional finance from IFIs and complement it with additional Policy & institutions ★★☆ credit enhancement mechanisms, such as partial Barriers Political Economy ★★☆ risk guarantees, political risk insurance, and first‑loss Financing ★★★ facilities, as a way to attract domestic private investment and FDI. Reform public investment management systems to reduce costs and ensure efficiency of public spending on adaptation needs. DMA: Public infrastructure project screening – Partially climate informed; no green public procurement in plans/ strategies. GRD: Public infrastructure project screening; public Climate Mitigation ★☆☆ procurement in plans/strategies – Partially climate Benefits Adaptation ★★★ informed. LCA: Public infrastructure project screening – Partially Macroeconomic management, Finance, and Competitiveness climate informed; no green public procurement in plans/ strategies. VCT: Public infrastructure project screening – Not climate informed; Public procurement in plans/strategies – partially implemented. Make tax systems more efficient and equitable by broadening the tax base, increasing specific taxes (e.g., excise tax on fuel), strengthening revenue administration and collection, streamlining tax incentives and Human Capital ★☆☆ exemptions (particularly for tourism by harmonizing Other Growth ★★★ the global minimum tax), and placing an annual cap on Benefits Conservation ★☆☆ discretionary concessions. Regional harmonization of investment codes would help foster investment and attract FDI while regional cooperation on tax incentive regimes would help to improve revenue generation. Establish a clear rules‑based fiscal responsibility framework (FRF) to signal the direction and objectives of fiscal policy, especially in the face of shocks, and thus help support access to financing at better terms. DMA: Established. Need to recalibrate and fully operationalize. GRD: Established and operationalized. Opportunity to revise targets to enable resilient investment. Policy & institutions ★★☆ LCA: In process. Opportunity to design framework to Barriers Political Economy ★☆☆ allow for resilient investment. Financing ★★★ VCT: Established. Need to recalibrate and fully operationalize. Create fiscal space through expenditure containment measures such as curtailing public sector wage growth, increasing public sector efficiency, rationalizing spending on wasteful items, and undertaking comprehensive pension reform. Legend Short term (1–2 years) ★☆☆ Little development/benefits/Considerable barriers Medium term (3–5 years) ★★☆ Medium development/benefits/Some barriers Long term (5+ years) ★★★ Considerable development/benefits/No barriers 75 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines References ACAPS, OCHA, and UNDP. 2017. "Regional Overview: Impact of Hurricanes Irma and Maria, Conference Supporting Document." https://www.acaps.org/fileadmin/Data_Product/Main_media/acaps_caribbean_ response_regional_overview_conference_supporting_document.pdf Acevedo, S. 2016. "Gone with the Wind: Estimating Hurricane and Climate Change Costs in the Caribbean." International Monetary Fund. Working Paper No. WP/16/199. https://www.imf.org/en/Publications/ WP/Issues/2016/12/31/Gone-with-the-Wind-Estimating-Hurricane-and-Climate-Change-Costs-in-the- Caribbean-44333 Acevedo, S. 2014. "Debt, Growth and Natural Disasters: A Caribbean Trilogy." International Monetary Fund Working Paper No. WP/14/125. https://www.imf.org/external/pubs/ft/wp/2014/wp14125.pdf Almazroui, M., Islam, M.N., Saeed, F., et al. 2021. "Projected Changes in Temperature and Precipitation Over the United States, Central America, and the Caribbean in CMIP6 GCMs." Earth Systems and Environment 5, 1–24 (2021). https://doi.org/10.1007/s41748-021-00199-5 Andreola Serraglio, D., Adaawen S., and Schraven, B. 2021. Migration, Environment, Disaster and Climate Change Data in the Eastern Caribbean: Regional Overview. International Organization for Migration Global Migration Data Analysis Centre (IOM GMDAC). Berlin. https://publications.iom.int/books/migration- environment-disaster-and-climate-change-data-eastern-caribbean-regional-overview Baez, J., de la Fuente, A., and Santos, I. 2010. "Do Natural Disasters Affect Human Capital? An Assessment Based on Existing Empirical Evidence." Institute for the Study of Labor (IZA), IZA Discussion Papers, IZA DP No. 5164. https://www.iza.org/publications/dp/5164/do-natural-disasters-affect-human-capital-an- assessment-based-on-existing-empirical-evidence Beazley, R., Ciardi F., and Bailey, S. 2020. "Shock‑Responsive Social Protection in the Caribbean Synthesis Report." Rome, Italy: World Food Program (WFP) and Oxford, United Kingdom: Oxford Policy Management (OPM). https://docs.wfp.org/api/documents/WFP-0000122075/download/?_ ga=2.17516977.964152977.1713455461-1651798742.1713455461 Beazley, R. and Williams, A. 2021. Adaptive Social Protection in the Caribbean: Building Human Capital for Resilience. (Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks.) Washington, DC: World Bank. https://elibrary.worldbank.org/doi/abs/10.1596/36418 Blom, A. and Hobbs, C. 2008. "School and Work in the Eastern Caribbean: Does the Education System Adequately Prepare Youth for the Global Economy?. World Bank Country Study." Washington, DC: World Bank. https://hdl.handle.net/10986/6375 Brownbridge , Martin and Canagarajah , Sudharshan (2024). Climate Change Vulnerability, Adaptation and Public Debt Sustainability in Small Island Developing States. World Bank Policy Research Working Papers 10787 Bunker, K., Doig, S., Locke, J., Mushegan, S., Teelucksingh, S., Torbert, R. 2017. Saint Lucia National Energy Transition Strategy. Rocky Mountain Institute. https://www.rmi.org/insights/reports/saint_lucia_NETS/ Caruso, G., de Marcos, I. & Noy, I. Climate Changes Affect Human Capital. EconDisCliCha 8, 157–196 (2024). https://doi.org/10.1007/s41885-023-00140-2 CCREEE. 2024. Energy Report Cards (website). Bridgetown, Barbados: Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE). https://www.ccreee.org/erc/. Chávez, V., Uribe‑Martínez, A., Cuevas, E., Rodríguez‑Martínez, R.E., van Tussenbroek, B.I., Francisco, V., Estévez, M., Celis, L.B., Monroy‑Velázquez, L.V., Leal‑Bautista, R., et al. 2020. "Massive Influx of Pelagic Sargassum spp. on the Coasts of the Mexican Caribbean 2014–2020: Challenges and Opportunities." Water 12, 2908 (2020). https://doi.org/10.3390/w12102908 Cissé, G., R. McLeman, H. Adams, P. Aldunce, K. Bowen, D. Campbell‑Lendrum, S. Clayton, K.L. Ebi, J. Hess, C. Huang, Q. Liu, G. McGregor, J. Semenza, and M.C. Tirado. 2022. "Health, Wellbeing, and the Changing Structure of Communities." In: Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.‑O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, 76 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 1041–1170, doi:10.1017/9781009325844.009. https://www.ipcc.ch/report/ar6/wg2/downloads/ report/IPCC_AR6_WGII_Chapter07.pdf Climate Watch. 2022. Washington, DC: World Resources Institute. https://www.climatewatchdata.org Cloos, P., Belloiseau, M., McPherson, N., Harris‑Glenville, F., Joseph, D. D., Zinszer, K. 2023. "Discussing linkages between climate change, human mobility and health in the Caribbean: The case of Dominica. A qualitative study." The Journal of Climate Change and Health, 11, May‑June 2023, 100237. https://www.sciencedirect.com/science/article/pii/S2667278223000378 Cohen‑Shacham, E., Walters, G., Janzen, C., and Maginnis, S. (eds.) 2016. Nature‑based Solutions to address global societal challenges. Gland, Switzerland: IUCN (International Union for Conservation of Nature and Natural Resources). xiii + 97pp. https://portals.iucn.org/library/sites/library/files/documents/2016-036.pdf COP28 UAE. 2023. "COP28 Presidency unites the world on Loss and Damage." https://www.cop28.com/en/ news/2023/11/COP28-Presidency-unites-the-world-on-Loss-and-Damage ECLAC. 2022. "Building a climate‑resilient power sector in the context of the Caribbean small island developing States' energy transition," Policy Brief LC/CAR/2022/6. Santiago, Chile: United Nations Economic Commission for Latin America and the Caribbean (ECLAC). https://repositorio.cepal.org/server/api/core/ bitstreams/67f80664-b848-4d50-b274-e53524acc746/content Elgie, A. R., Singh, S. J., Telesford, J. N. 2021. "You can't manage what you can't measure: The potential for circularity in Grenada's waste management system." Resources, Conservation and Recycling, 164 (2021). https://www.sciencedirect.com/science/article/abs/pii/S0921344920304870 Erman, A., De Vries Robbe, S., Browne, N., and Solis Uehara, C. 2021. "Resilience of the Caribbean Tourism Industry." (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). Washington, DC: World Bank. https://documents1.worldbank.org/curated/ en/599401635337080916/text/360-Resilience-A-Guide-to-Prepare-the-Caribbean-for-a-New-Generation- of-Shocks-Resilience-of-the-Caribbean-Tourism-Industry.txt Fang, F., Bedrosyan, D., and Ivanescu, C. 2022. Assessment of Technical Rooftop Solar Energy Potential in Select Cities ‑ Global Report (English). Washington, D.C.: World Bank. https:// documents.worldbank.org/en/publication/documents-reports/documentdetail/099010524112511373/ p1739311dbe21f00a1929f11ddc4a43e6b3 FAO. 2021. Aquastat – FAO's Global Information System on Water and Agriculture. Rome: Food and Agriculture Organization (FAO) of the United Nations. https://www.fao.org/aquastat/en/overview/ FAO. 2016. "Drought characteristics and management in the Caribbean." Rome: Food and Agriculture Organization (FAO) of the United Nations. https://www.fao.org/3/i5695e/i5695e.pdf Fernández Corugedo, E., Gonzalez, A., and Guerson, A. The Macroeconomic Returns of Investment in Resilience to Natural Disasters under Climate Change: A DSGE Approach. Washington, DC: IMF. https://www.elibrary.imf.org/view/journals/001/2023/138/article-A001-en.xml Fontes de Meira, L. and Phillips, W. 2019. "An economic analysis of flooding in the Caribbean: the case of Jamaica and Trinidad and Tobago." Studies and Perspectives series ‑ ECLAC subregional headquarters for the Caribbean, No. 78 (LC/TS.2019/55‑LC/CAR/TS.2019/1). Santiago: Economic Commission for Latin America and the Caribbean (ECLAC). https://repositorio.cepal.org/server/api/core/bitstreams/f7a40c91- 9ef5-4c93-92e1-45167632cff8/content Francis, A. 2019. Free Movement Agreements & Climate‑Induced Migration: A Caribbean Case Study. Sabine Center for Climate Change Law, Columbia Law School. https://scholarship.law.columbia.edu/sabin_ climate_change/62/ GBD 2019 Human Resources for Health Collaborators. 2022. "Measuring the availability of human resources for health and its relationship to universal health coverage for 204 countries and territories from 1990 to 2019: a systematic analysis for the Global Burden of Disease Study 2019." The Lancet, Volume 399, Issue 10341, 4–10 June 2022, pp2129–2154. https://www.sciencedirect.com/science/article/pii/ S0140673622005323?via%3Dihub#fig2 77 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines GFDRR. (2024). "Nature‑based solutions for coastal resilience." Background Note for the OECS CCDR. https:// openknowledge.worldbank.org/bitstreams/ed18dd98-1033-4ea6-b8e7-a45bd1c6902a/download Global Carbon Project. 2022. https://www.globalcarbonproject.org/index.htm Global Commission on Adaptation. 2019. "Adapt Now: A Global Call for Leadership on Climate Resilience." The Hague, The Netherlands: Global Commission on Adaptation. https://gca.org/reports/adapt-now-a-global- call-for-leadership-on-climate-resilience/ Gobler, C., 2020. "Climate Change and Harmful Algal Blooms: Insights and perspective." Harmful Algae, Volume 91 (2020). https://pubmed.ncbi.nlm.nih.gov/32057341/ Gourdel, R., Monasterolo, I., Dunz, N., Mazzocchetti, A., Parisi, L. 2022. "The double materiality of climate physical and transition risks in the Euro Area." European Central Bank (ECB) Working Paper Series No 2665 (May 2022). https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2665~622858d454.en.pdf Government of the Commonwealth of Dominica. 2023. 2023/2024 Estimates of the Commonwealth of Dominica (Public Sector Investment Plan). Ministry of Finance, Commonwealth of Dominica. https:// finance.gov.dm/images/documents/estimates/Estimates_2023-2024_compressed.pdf Government of the Commonwealth of Dominica. 2022. Updated Nationally Determined Contribution (for the period 2020 to 2030). https://unfccc.int/sites/default/files/2022-07/The%20Commonwealth%20of%20 Dominica%20updated%20NDC%20July%204%20%2C.pdf Government of the Commonwealth of Dominica. 2020. Dominica Climate Resilience and Recovery Plan 2020–2030. Climate Resilience Executing Agency of Dominica and the Ministry of Economic Affairs, Planning, Resilience, Sustainable Development, Telecommunications and Broadcasting, Commonwealth of Dominica. https://odm.gov.dm/wp-content/uploads/2022/02/CRRP-Final-042020.pdf Government of the Commonwealth of Dominica. 2017. "Post‑Disaster Needs Assessment: Hurricane Maria, September 18, 2017." https://reliefweb.int/report/dominica/post-disaster-needs-assessment-hurricane- maria-september-18-2017 Government of the Commonwealth of Dominica. 2015. "Rapid Damage and Impact Assessment: Tropical Storm Erika – August 27, 2015." https://reliefweb.int/report/dominica/rapid-damage-and-impact-assessment- tropical-storm-erika-august-27-2015 Government of Grenada. 2020. "Second Nationally Determined Contribution." https://unfccc.int/sites/default/ files/NDC/2022-06/GrenadaSecondNDC2020%20-%2001-12-20.pdf Government of Grenada. 2017. "National Climate Change Policy for Grenada, Carriacou and Petite Martinique (2017–2021)." https://faolex.fao.org/docs/pdf/grn181101.pdf Government of Saint Lucia. 2021. "Saint Lucia's Updated Nationally Determined Contribution." Saint Lucia: Department of Sustainable Development of the Ministry of Education, Innovation, Gender Relations and Sustainable Development. https://unfccc.int/sites/default/files/NDC/2022-06/Saint%20Lucia%20 First%20NDC%20%28Updated%20submission%29.pdf Government of Saint Lucia. 2018. Saint Lucia's National Adaptation Plan (NAP): 2018–2028. Department of Sustainable Development, Ministry of Education, Innovation, Gender Relations and Sustainable Development. https://www4.unfccc.int/sites/NAPC/Documents/Parties/SLU-NAP-May-2018.pdf Government of Sain. Lucia. 2017. Third National Communication on Climate Change for St. Lucia. https://unfccc.int/sites/default/files/resource/THIRD%20NATIONAL%20COMMUNICATION%20_%20 SAINT%20LUCIA%202017.pdf Government of Saint Lucia and World Bank. 2014. "Saint Lucia Flood Event of December 24–25, 2013: Joint Rapid Damage and Needs Assessment." https://www.gfdrr.org/sites/default/files/publication/pda-2014- saint-lucia.pdf Government of Saint Vincent and the Grenadines. 2016. "St. Vincent and the Grenadines Intended Nationally Determined Contribution." https://unfccc.int/sites/default/files/NDC/2022-06/Saint%20Vincent%20and %20the%20Grenadines_NDC.pdf 78 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Grottera, C. 2022. "Reducing emissions from the energy sector for a more resilient and low‑carbon post‑pandemic recovery in Latin America and the Caribbean." UN Economic Commission for Latin America and the Caribbean (ECLAC). https://repositorio.cepal.org/server/api/core/bitstreams/55f4e544-5070- 4933-9301-ac32b8ef1675/content Gutschow, J., Gunther, A., Pfluger, M. 2021. "The PRIMAP‑hist national historical emissions time series (1750–2019)." V2.3.1. zenodo. https://www.pik-potsdam.de/paris-reality-check/primap-hist/PRIMAP-hist_ v2.3.1_data-description.pdf Hallegatte, S., Rentschler, J., Walsh, B. 2018. Building Back Better: Achieving Resilience through Stronger, Faster, and More Inclusive Post‑Disaster Reconstruction. World Bank. https://documents.worldbank.org/ en/publication/documents-reports/documentdetail/420321528985115831/building-back-better-achieving- resilience-through-stronger-faster-and-more-inclusive-post-disaster-reconstruction Hallegatte, S., Vogt‑Schilb, A., Rozenberg, J., and Bangalore, M. 2017. Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters. Washington, DC: World Bank. https://openknowledge.worldbank. org/handle/10986/25335 Hanna, R., Heptonstall, P. and Gross, R. 2024. "Job creation in a low carbon transition to renewables and energy efficiency: a review of international evidence."  Sustainability Science 19, 125–150 (2024). https://doi. org/10.1007/s11625-023-01440-y HATCH. 2022. "Mainstream Resilience in Power System Planning in the Caribbean ‑ VINLEC." Report delivered by HATCH consulting group for the World Bank in July 2022. Herrera, D. A., Ault, T. R., Fasullo, J. T., Coats, S. J., Carrillo, C. M., Cook, B. I., and Williams, A. P. 2018. "Exacerbation of the 2013–2016 Pan‑Caribbean Drought by Anthropogenic Warming." Geophysical Research Letters, 45, 10,619–10,626. https://doi.org/10.1029/2018GL079408 Hwang, Y. K. 2023. "The synergy effect through combination of the digital economy and transition to renewable energy on green economic growth: Empirical study of 18 Latin American and Caribbean countries." Journal of Cleaner Production, Volume 418, 15 September 2023, 138146. https://doi.org/10.1016/j.jclepro.2023.138146 IFC. 2023. "Regional Private Sector Diagnostic (RPSD): Promoting Private Sector‑led Growth to Foster Recovery and Resilience in the Caribbean." Washington, DC: International Finance Corporation (IFC). https://www.ifc.org/en/insights-reports/2023/caribbean-regional-private-sector-diagnostic IFRC. 2023. "Legal Frameworks in Disaster Risk Reduction and Climate Change Adaptation: Commonwealth of Dominica Country Profile." Geneva, Switzerland: International Federation of Red Cross and Red Crescent Societies (IFRC) Disaster Law. https://disasterlaw.ifrc.org/sites/default/files/media/disaster_law/2024-02/ Dominica%20Country%20Profile.pdf IFRC. 2018. "International Disaster Response Law (IDRL) in Grenada: A Desk Review on Legal Preparedness for International Disaster Response." Geneva, Switzerland: International Federation of Red Cross and Red Crescent Societies (IFRC). https://disasterlaw.ifrc.org/sites/default/files/media/disaster_law/2020-09/ Grenada-IDRL-Report-LR.pdf IFRC. 2017. "International Disaster Response Law (IDRL) in St. Vincent & The Grenadines: A Desk Review on Legal Preparedness for International Disaster Response." Geneva, Switzerland: International Federation of Red Cross and Red Crescent Societies (IFRC). https://disasterlaw.ifrc.org/sites/default/files/media/ disaster_law/2020-09/St%20Vincent%20%20The%20Grenadines%20IDRL%20Report%20LR%20 Web%20viewing.pdf ILO. 2021. ILOSTAT (ILO modelled estimates database). Geneva, Switzerland: International Labour Organization (ILO). https://ilostat.ilo.org/ IMF. 2022. Grenada Disaster Resilience Strategy IMF Country Report No. 22/080. Washington, DC: International Monetary Fund. (IMF). https://www.imf.org/en/Publications/CR/Issues/2022/03/16/Grenada- Disaster-Resilience-Strategy-515246 IMF. 2022. World Economic Outlook (April 2022). Washington, DC: International Monetary Fund (IMF). https:// www.imf.org/en/Publications/WEO IMF. 2021. Dominica Disaster Resilience Strategy IMF Country Report No. 21/182. Washington, DC: International Monetary Fund (IMF). 79 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines https://www.imf.org/en/Publications/CR/Issues/2021/08/11/Dominica-Disaster-Resilience-Strategy-463663 IMO, 2023. Guidelines for Setting Up a Maritime Single Window. International Maritime Organization. https://wwwcdn.imo.org/localresources/en/OurWork/Facilitation/FAL%20related%20nonmandatory%20 documents/FAL.5-Circ.42-Rev.3.pdf Internal Displacement Monitoring Centre (iDMC) and Norwegian Refugee Council (NRC). 2018. Global Report on Internal Displacement (GRID 2018). https://www.internal-displacement.org/global-report/grid2018/ IOM Regional Data Hub. 2023. Data Report: Trends in Caribbean Migration and Mobility. San José, Costa Rica: Regional Office of the International Organization for Migration (IOM). https://rosanjose.iom.int/sites/g/ files/tmzbdl1446/files/documents/2023-07/data-report-trends-in-caribbean-migration-and-mobility.pdf IOM. 2017. "Migration in the Caribbean: Current Trends, Opportunities and Challenges." Working Paper 1, Working Papers on Migration. San José, Costa Rica: International Organization for Migration (IOM). https://reliefweb.int/report/haiti/migration-caribbean-current-trends-opportunities-and-challenges IRENA. 2023. Statistical Profiles: Energy (website). Abu Dhabi, UAE: International Renewable Energy Agency (IRENA). https://www.irena.org/Data/Energy-Profiles IRENA. 2023. "Energy Profile: Saint Lucia." Abu Dhabi, UAE: IRENA. https://www.irena.org/-/media/Files/ IRENA/Agency/Statistics/Statistical_Profiles/Central-America-and-the-Caribbean/Saint-Lucia_Central- America-and-the-Caribbean_RE_SP.pdf?rev=d4212904b9314e28ad107e7ce5b799c8 IRENA. 2023. "Energy Profile: Saint Vincent and the Grenadines." Abu Dhabi, UAE: IRENA. https://www.irena.org/-/media/Files/IRENA/Agency/Statistics/Statistical_Profiles/Central-America- and-the-Caribbean/Saint-Vincent-and-the-Grenadines_Central-America-and-the-Caribbean_RE_ SP.pdf?rev=16ccf756d2604a9caf388b750f69a234 IRENA. 2022. Country Profiles: Renewable Energy Balances by Country (website). Abu Dhabi, UAE: IRENA. https://www.irena.org/Data/View-data-by-topic/Renewable-Energy-Balances/Country-Profiles Joseph, L. 2006. The effects of mass trauma on children of different developmental stages: examining PTSD in children affected by Hurricane Ivan and Hurricane Katrina. Doctoral Dissertation Pacific Graduate School of Psychology, Palo Alto, CA. Kairi Consultants Ltd. 2016. Saint Lucia Survey of Living Conditions and Household Budgets. Report commissioned by the Government of Saint Lucia. https://stats.gov.lc/wp-content/uploads/2019/01/ Summary-Report-Saint-Lucia-2016-National-Report-of-Living-Conditions_December-2018.pdf Kaza, S., Shrikanth, S., Chaudhary, S. 2021. More Growth, Less Garbage. (Urban Development Series). Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/35998 Kaza, S., Yao, L. C., Bhada‑Tata, P., Van Woerden, 2018. What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050. (Urban Development Series). Washington, DC: World Bank. https://datatopics. worldbank.org/what-a-waste/ Khan, A. and Harnam, N. "Health Systems Resilience in the Caribbean." (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). Washington, D.C.: World Bank. https://doi.org/10.1596/36416 Koks, E., Rozenberg, J., Tariverdi, M., Dickens, B., Fox, C., van Ginkel, K., & Hallegatte, S. 2023. "A global assessment of national road network vulnerability." Environmental Research: Infrastructure and Sustainability, 3(2), 025008. https://iopscience.iop.org/article/10.1088/2634-4505/acd1aa/meta March, A. L. A., Failler, P., and Bennett, M. 2023. "Caribbean fishery and aquaculture financing needs in the blue economy: identifying opportunities and constraints in Barbados, Grenada, and St. Vincent and the Grenadines." Journal of Sustainability Research. https://doi.org/10.20900/jsr20230004 Masetti, O. 2021. "Private and Financial Sector Resilience in the Caribbean." (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). Washington, DC: World Bank. McIntyre, A., El‑Ashram, A., Ronci, M., Reynaud, J., Che, N., Wang, K., Acevedo, S., Lutz, M., Strodel, F., Osueke, A., and Yun, H. 2016. Caribbean Energy: Macro‑related challenges. IMF Working Paper WP/16/53. IMF: Washington, DC. https://www.imf.org/external/pubs/ft/wp/2016/wp1653.pdf 80 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Medina, D., Kullmann, C., and Felter, G. 2021. "Revisiting Resilience in the Caribbean: Water Supply and Sanitation." (Background paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). Washington, DC: World Bank. https://openknowledge.worldbank.org/entities/publication/ fd1f5a03-5862-5de7-a87b-1e39c0957d06 . Mombauer D., Link A‑C., and van der Geest, K. 2023. "Addressing climate‑related human mobility through NDCs and NAPs: State of play, good practices, and the ways forward." Frontiers in Climate, Volume 5‑2023. https://www.frontiersin.org/articles/10.3389/fclim.2023.1125936/full Mycoo, M., Wairiu, M., Campbell D., Duvat V., Golbuu, Y., Maharaj, S., Nalau, J., Nunn, P., Pinnegar, J., and Warrick, O. 2022. "Small Islands." In: Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [H.‑O. Pörtner, D.C. Roberts, M. Tignor, E.S. Poloczanska, K. Mintenbeck, A. Alegría, M. Craig, S. Langsdorf, S. Löschke, V. Möller, A. Okem, B. Rama (eds.)]. Cambridge University Press, Cambridge, UK and New York, NY, USA, pp. 2043–2121, doi:10.1017/9781009325844.017. https://www.ipcc. ch/report/ar6/wg2/chapter/chapter-15/ Narayan, S., Beck, M. W., Reguero, B.G., Losada, I.J., van Wesenbeeck, B., Pontee, N., et al. 2016. "The Effectiveness, Costs and Coastal Protection Benefits of Natural and Nature‑Based Defences." PLoS ONE 11(5): e0154735. https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0154735 Navarro, J., Pulido, R., Berger, C., Arteaga, M., Osofsky, H. J., Martinez, M., ... & Hansel, T. C. 2016. "Children's disaster experiences and psychological symptoms: An international comparison between the Chilean earthquake and tsunami and Hurricane Katrina." International Social Work, 59(4), 545–558. https://doi.org/10.1177/0020872814537850 O'Neill‑Carrillo, E., Lave, M., and Haines, T. 2021. "Systemwide Considerations for Electrification of Transportation in Islands and Remote Locations" Vehicles 3, no. 3: 498–511. https://www.mdpi.com/2624- 8921/3/3/30 OECS. 2020. Informational webpage: "Our Work > Human and Social > Pharmaceuticals." Saint Lucia: Organization of Eastern Caribbean States (OECS). https://www.oecs.org/en/our-work/human-and- social/pharmaceuticals#:~:text=Pharmaceuticals&text=The%20Pharmaceutical%20Procurement%20 Service%20(PPS,on%20behalf%20of%20Member%20States Oxford Infrastructure Analytics, 2023. Estimating Investment Needs for Climate Adaptation in the Eastern Caribbean. https://openknowledge.worldbank.org/bitstreams/3485bb90-6527-431f-a6cf-3bb1970f7c0a/ download PAHO. 2023. "Saint Lucia To Seek Funding to Strengthen Climate Resilience in the Health Sector." https://www.paho.org/en/news/11-10-2023-saint-lucia-seek-funding-strengthen-climate-resilience-health- sector PAHO. 2004. "Press Release: Health services in Grenada almost fully restored with PAHO support." https://reliefweb.int/report/grenada/health-services-grenada-almost-fully-restored-paho-support PAHO. Undated website. UK‑FCDO – Smart Hospitals in the Caribbean. Regional Office for the Americas of the World Health Organization (WHO). https://www.paho.org/en/partnerships/uk-fcdo-smart-hospitals- caribbean Pekkala Kerr, S., Kerr, W., Özden, Ç., and Parsons, C. 2017. "High‑Skilled Migration and Agglomeration." Annual Review of Economics 9 (1): 201–34 (2017). https://www.annualreviews.org/content/journals/10.1146/ annurev-economics-063016-103705 Peters, E. J. 2015. "The 2009/2010 Caribbean drought: A case study." Disasters, 39: 738‑761. https://onlinelibrary.wiley.com/doi/10.1111/disa.12123 Prasad, N., Loukoianova, E., Xiaochen Feng, A., Oman, W. "Mobilizing Private Climate Financing in Emerging Market and Developing Economies." IMF Staff Climate Note 2022/007. Washington, DC: IMF. https://www. imf.org/en/Publications/staff-climate-notes/Issues/2022/07/26/Mobilizing-Private-Climate-Financing-in- Emerging-Market-and-Developing-Economies-520585 Rise, N., Oura, C., and Drewry, J. 2022. "Climate Change and Health in the Caribbean: A Review Highlighting Research Gaps and Priorities." The Journal of Climate Change and Health 8: 100126. https://www.sciencedirect.com/science/article/pii/S2667278222000153 81 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines Rodriguez, R. 2023. "Turning sargassum into an opportunity." Wider Caribbean ‑ UE Regional Conference on Sargassum, Santo Domingo, Dominican Republic, 15 June 2023. https://sargassumhub.org/the-wider- caribbean-eu-regional-conference-on-sargassumconverting-sargassum-converting-sargassum-into-an- opportunity/ Rozenberg, J., Browne, N., De Vries Robbé, S., Kappes, M., Lee, W., and Prasad, A. 2021. 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks. World Bank. https://openknowledge. worldbank.org/entities/publication/461682e5-5f6d-5654-950a-cdc7ff25bd6d Schweikert, A., L'her, G., Nield L., Kerber, S., Flanagan, R., and Deinert, M. 2021. "Resilience in the Caribbean: Natural Hazards Exposure Assessment and Areas for Future Work." (Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). Washington, DC: World Bank. https:// elibrary.worldbank.org/doi/abs/10.1596/36408 Scott, D., Moreno‑Cruz, J., Rutty, M., and Mistry, J. 2020. The Impact of Extreme Weather, Infectious Disease Outbreaks, and Economic Recession on Caribbean Tourism. University of Waterloo. (Cited in "Resilience of the Caribbean Tourism Industry," Background Paper to 360° Resilience: A Guide to Prepare the Caribbean for a New Generation of Shocks). Shah, K. 2021. "Can Electric Vehicles Drive the Transport Revolution in Small Island States?" Small islands Policy Lab, Policy Brief #3, University of Delaware. http://dx.doi.org/10.2139/ssrn.3951032 Shaw, S. and King, D. 2016. "Economic Impact of E‑Mobility Transition in St. Vincent and the Grenadines." UNDP. https://info.undp.org/docs/pdc/Documents/VCT/Final%20Report_Economic%20Impact%20of%20 emobility%20transition.pdf Shultz, J., et al. 2018. "Risks, Health Consequences, and Response Challenges for Small‑Island‑Based Populations: Observations From the 2017 Atlantic Hurricane Season," Disaster Medicine and Public Health Preparedness 13 (6 April 2018): 1–13. https://doi.org/10.1017/dmp.2018.28 Spencer, N., Polachek, S., and Strobl, E. 2016. "How Do Hurricanes Affect Achievement in School? A Caribbean Perspective." Institute for the Study of Labor (IZA), IZA Discussion Papers, IZA DP No. 10169. https://docs. iza.org/dp10169.pdf Spencer, N., Strobl, E., and Campbell, A. 2022. "Sea level rise under climate change: Implications for beach tourism in the Caribbean." Ocean & Coastal Management, 225, 106207. https://www.sciencedirect.com/ science/article/abs/pii/S0964569122001843 Tan, A., Worden, R. C., Hornig, C. and Sitara, A. 2022. SWM Guidebook for senior policy makers in OECS countries on DRM and climate resilience SWM. Tesliuc, C., Paffhausen, A. L., and Avila‑Parra, C. 2024. "Caribbean Social Protection Responses to Surging Inflation." Washington, DC: World Bank. https://openknowledge.worldbank.org/entities/ publication/15a42059-d6f4-481e-a0bf-17547f5cb5c4 Torbert, R., Bunker, K., Doig, S., Locke, J., Mushegan, S., Teelucksingh, S. 2017. Saint Lucia National Energy Transition Strategy and Integrated Resource Plan. Boulder, CO: Rocky Mountain Institute. https://www. govt.lc/media.govt.lc/www/pressroom/news/attachments/saint-lucia-nets-executive-summary-final.pdf UNCTAD. 2022. "Revisiting development strategies for small island developing States in the post‑pandemic competitive landscape." Item 3 on the provisional agenda of the Expert Meeting on Revisiting Development Strategies for Small Island Developing States in the Post‑Pandemic Competitive Landscape, Geneva, 24 October 2022. Geneva: United Nations Conference on Trade and Development. https://unctad.org/ system/files/official-document/ciiem6d2_en.pdf UN Environment, gef, and UNEP DTU Partnership. 2019. Grenada Technology Needs Assessment: Mitigation Report. https://tech-action.unepccc.org/wp-content/uploads/sites/2/2019/03/tna-mitigation-grenada- final-150518.pdf UNFCCC. 2023. "Needs‑based Climate Finance Project: OECS Climate Finance Access and Mobilization Strategy 2023‑2030." https://unfccc.int/sites/default/files/resource/UNFCCC_NBF_SD_OECS_final.pdf UNFCCC. 2022. "Needs‑based Climate Finance Project: Technical Assessment of Climate Finance in Eastern Caribbean States." Annex to the Organization of Eastern Caribbean States Climate Finance Access and Mobilization Strategy. https://unfccc.int/sites/default/files/resource/UNFCCC_NBF_TA_OECS_final.pdf 82 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines UNFCCC. Undated webpage. "Pledges to the Loss and Damage Fund." https://unfccc.int/process-and- meetings/bodies/funds-and-financial-entities/loss-and-damage-fund-joint-interim-secretariat/pledges-to- the-loss-and-damage-fund UN‑Water. 2021. Water Scarcity (website). https://www.unwater.org/water-facts/water-scarcity# USAID. 2021. "Saint Lucia Resilience Profile." Washington, DC: United States Agency for International Development (USAID). https://www.climatelinks.org/sites/default/files/asset/document/2021-09/StLucia. MAY_.2021.Final_.pdf WFP. 2023. Caribbean Food Security and Livelihoods Survey. Rome: World Food Programme (WFP). https://www.wfp.org/publications/caribbean-food-security-and-livelihoods-survey WFP. 2019. Report of the Regional Symposium "Shock‑Responsive Social Protection in the Caribbean." Rome: World Food Programme (WFP). https://docs.wfp.org/api/documents/WFP-0000110880/download/ WHO. 2022. Electronic IHR States Parties Self‑Assessment Annual Reporting Tool (e‑SPAR). Geneva, Switzerland: World Health Organization (WHO). https://extranet.who.int/e-spar#:~:text=The%20 e%2DSPAR%20is%20a,between%20States%20Parties%20towards%20global World Bank. 2019‑2024. OECS Regional Health Project. https://projects.worldbank.org/en/projects- operations/project-detail/P168539 World Bank. 2024. World Bank Data Bank. Washington, DC: World Bank. https://databank.worldbank.org/ World Bank. 2023a. Dominican Republic Country Climate and Development Report. https://openknowledge. worldbank.org/entities/publication/92ff46b2-650d-4395-b1d4-9c51dcdc6448 World Bank. 2023b. Enhancing Financial Resilience to Natural Disasters and Climate Change (P180867). https:// documents1.worldbank.org/curated/en/099040523162025237/P180867047affa070aaea06871368ddc84.docx World Bank. 2023c. "How to Protect, Build, and Use Human Capital to Address Climate Change." Washington, DC: World Bank. https://thedocs.worldbank.org/en/doc/cc99b238fa9a0f266579d49dc591b2d4-0140062023/ original/HCP-Climate-Policy-Brief.pdf World Bank. 2023d. Macro Poverty Outlook. https://www.worldbank.org/en/publication/macro-poverty-outlook World Bank. 2023e. World Development Indicators. https://databank.worldbank.org/source/world- development-indicators World Bank. 2023f. World Development Report 2023: Migrants, Refugees, and Societies. Washington, DC: World Bank. https://www.worldbank.org/en/publication/wdr2023 World Bank and Global Facility for Disaster Reduction and Recovery (GFDRR). 2023. Multi‑hazard Impact‑based Early Warning Systems and Services in the Caribbean. Washington, DC: World Bank. https://elibrary. worldbank.org/doi/abs/10.1596/40058 World Bank. 2022. Climate Change Knowledge Portal. https://climateknowledgeportal.worldbank.org/ World Bank. 2021. World Bank Climate Change Knowledge Portal. Washington, DC: World Bank. https:// climateknowledgeportal.worldbank.org/ World Bank. 2021. Waste management sector including marine plastics debris sources deep dive study for selected Eastern Caribbean Countries. Report No.1: Rapid Waste Sector Assessments. Washington, DC: World Bank. World Bank and UN Development Programme. 2021. High‑Frequency Phone Surveys. https://www.undp.org/ latin-america/high-frequency-phone-surveys World Bank. 2020. Mobilizing Private Finance for Nature. Washington, DC: World Bank. https://thedocs. worldbank.org/en/doc/916781601304630850-0120022020/original/FinanceforNature28Sepwebversion.pdf World Bank. 2018. Global Crisis Risk Platform (English). Washington, D.C.: World Bank Group. http:// documents.worldbank.org/curated/en/762621532535411008/Global-Crisis-Risk-Platform World Bank. 2018. "Mobilizing Private Finance for Development in Latin America and the Caribbean." Washington, DC: World Bank. https://openknowledge.worldbank.org/server/api/core/bitstreams/32680863-9c6f-572e- 80ce-18a5fa237cdf/content 83 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines World Bank. 2018. "Organization of Eastern Caribbean States Systematic Regional Diagnostic." Report Number: 127046‑LAC. Washington, DC: World Bank. https://documents1.worldbank.org/curated/ en/300861530819875538/pdf/OECS-Systematic-Regional-Diagnostic-P165001-1.pdf World Bank. "OECS Blue Economy Tourism analytics". World Bank. Forthcoming. "Assessing the Economic Impact of Protected Areas on Local Economies in Fiji." Washington, DC: World Bank. WTTC. 2018. "Caribbean Resilience and Recovery: Minimising the Impact of the 2017 Hurricane Season on the Caribbean's Tourism Sector." London: World Travel and Tourism Council (WTTC). https://wttc.org/ Portals/0/Documents/Reports/2018/Caribbean%20Recovery%20Report%20-%20Full%20Report%20 -%20Apr%202018.pdf?ver=2021-02-25-182520-540 Zheng, Y., Keeffe, G., and Mariotti, J. 2023. "Nature‑Based Solutions for Cooling in High‑Density Neighbourhoods in Shenzhen: A Case Study of Baishizhou." Sustainability, 15(6):5509. https://pure.qub. ac.uk/en/publications/nature-based-solutions-for-cooling-in-high-density-neighbourhoods 84 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines 85 Country Climate and Development Report: Dominica, Grenada, Saint Lucia, and Saint Vincent and the Grenadines