From Vulnerability to Vitality: Climate Change as a Catalyst for Economic Transformation in Small Island Developing States

Abstract

As climate change intensifies, its associated risks become increasingly important to societal well-being, with small island developing states (SIDS) being particularly susceptible. The challenges faced by these nations transcend the impacts of their greenhouse gas emissions and cannot be mitigated by emission reduction alone. This paper establishes an innovative, interpretable machine learning model for the first time using import and export data from 1970 to 2020 for nine economically advanced Small Island Developing States, to investigate how economic transformation in small islands occurs against specific climatic contexts and to analyse the impact of these climatic challenges in the process of economic transformation. The study finds that when the average annual temperature exceeds 26 °C over the past two years, or when the sea level rises more than 30mm, certain islands rapidly complete their economic structural transformation. This indicates that climate change is significantly reshaping the developmental trajectories of these small island economies. To confront these challenges, these states are continuously shifting their developmental focus, reconfiguring their economic structures and growth models to address the ongoing challenges posed by climate change.