Implementing nationally determined contributions under the Paris agreement: an assessment of climate finance in Caribbean small island developing states

Abstract

ABSTRACT This perspective paper explores the potential of climate finance to support Caribbean Small Island Developing States (SIDS) efforts in achieving their Nationally Determined Contributions (NDCs) under the 2015 Paris Climate Agreement. Through a content analysis of sixteen Caribbean countries NDCs, it provides, first, a comprehensive overview of SIDS countries’ perspectives on climate financing needs for mitigation and adaptation activities in meeting their climate targets. Second, the paper examines whether Caribbean SIDS acknowledge a role for domestic financing and international and domestic fiscal policy reform within their NDCs, as a way to address climate change mitigation and adaption. The analysis of Caribbean SIDS NDCs reveals that only eight countries provide clear cost estimates for mitigation activities, five for adaptation and one with a combined cost. This gives a total of US$51.3 billion for the combination of Caribbean countries across their NDCs. The majority of climate change activities identified in the NDCs are conditional on the provision of international climate finance. While some countries discuss domestic sources of finance, few note the need for domestic fiscal policy reform to counteract direct and underlying drivers of greenhouse gas emissions and their reduction. The findings suggest that, while much attention is directed to inadequate quantities of international climate finance, fiscal policy and the use of domestic finances are important for realizing transformative change and yet receive little attention from in-country policymakers. Key policy insights Caribbean SIDS suffer from a significant climate finance gap. Caribbean countries cannot remain dependent on international climate finance and must pursue more innovation and diversified options to achieve climate goals. Caribbean countries struggle to use domestic policy and investment options to align finance and incentives to promote their climate goals. The region faces challenges inherent in aligning domestic fiscal policies and other economic and regulatory incentives, as well as private sector investment, to complement and augment international climate finance objectives.