Small islands face outsized climate impacts and require US$12 billion a year in climate finance to cope
Rotterdam, Oct. 07, 2025 (GLOBE NEWSWIRE) -- The Global Center on Adaptation (GCA) today launched State and Trends in Adaptation 2025: Small Island Developing States (SIDS), the most comprehensive assessment to date of climate risks, macro-economic impacts and practical solutions for the world’s 39 island economies. The report shows that, without accelerated adaptation, cumulative climate damages across SIDS could reach as high as US$476 billion by 2050—equivalent to several years of national output in some countries—yet current international public adaptation finance to SIDS averages just over US$2 billion a year, or 0.2% of global climate finance. GCA calls for a step-change to at least US$12 billion annually, a level SIDS themselves identify in their National Adaptation Plans (NAPs) and Nationally Determined Contributions (NDCs), noting this represents only around 1.2% of global climate finance and about 4% of global Overseas Development Assistance (ODA).
The report distils practical, scalable lessons from Africa’s adaptation experience that other SIDS and coastal nations worldwide can adapt and adopt—drawing on work with African small island states and the African Adaptation Acceleration Program (AAAP).
Launching the report, H.E. Hilda Heine, President of the Republic of the Marshall Islands, said: “We face rising seas, threats to food and water security, and we are running out of time. Adaptation remains our most urgent priority. It is our first line of defence. Today, I am therefore honored to join you to launch the new GCA State and Trends in Adaptation Report on Small Island Developing States. Its findings are sobering.” She added: “What SIDS actually need is modest, particularly when you compare it to the cost of inaction. Still, we make up just a fraction of global flows. The barriers are clear. Climate finance mechanisms were not designed with SIDS in mind. Long processes, eligibility rules, and risk standards
exclude us. We are left locked out of the very support we most need. But the report also brings hope: Adaptation in SIDS is highly cost-effective.”
Macky Sall, 4th President of Senegal and Honorary Chair of the Global Center on Adaptation, said: “Small island nations, whether in Africa, Asia-Pacific or the Caribbean, have done nothing to cause climate change but face far outsized impacts. This report is a call to conscience and to common sense. SIDS need roughly US$12 billion a year to adapt the growing impacts of climate change —financing that is achievable if we match ambition with solidarity. Shifting from loans to grants, widening access to concessional windows, and deploying innovative instruments like debt-for-resilience swaps and blue and green bonds can turn vulnerability into resilience and growth.”
The analysis confirms adaptation is a high-return investment. Across modeled economies, each dollar invested can yield up to US$6.50 in avoided damages and new growth, with feasible investment programs cutting climate damages by more than half by mid-century. Benefits are particularly strong for distributed clean energy, resilient transport links, climate-smart agriculture and water-system efficiency, all of which reduce economic losses, lower import bills and improve health and productivity.
Professor Patrick V. Verkooijen, President and CEO of the Global Center on Adaptation, said: “Small islands should be a first line of defense against the climate crisis, not a point of failure. Adaptation is the best value proposition in climate action today. The numbers are unequivocal: invest now and unlock resilience dividends in every sector—energy systems that keep the lights on after cyclones, ports and roads that remain open for trade, water networks that waste less and serve more, and food systems that withstand heat and drought. This report provides a practical roadmap for SIDS and for partners ready to finance solutions at speed and scale. It is also a call to scale up support for this highly vulnerable group of nations that is nevertheless prepared to act.”
The report finds 44% of public international adaptation finance to SIDS arrives as debt, exacerbating already strained balance sheets; nearly two-thirds of tracked flows originate from multilateral development finance institutions, while grants from bilateral donors and climate funds remain far below potential. Funding is highly concentrated too: just ten SIDS receive 67% of tracked adaptation finance, with no significant correlation to climate vulnerability. GCA urges a re-balancing toward grant-based, vulnerability-aware allocations and faster, simpler access.
In a joint statement, Jamal Saghir and Ede Ijjasz-Vásquez, Co-Directors of the Report, said: “The SIDS finance gap is small in global terms but existential for island economies. The priorities are clear: close the grant deficit; mainstream adaptation into national budgets; scale de-risking and blended finance to crowd in private capital; and relieve debt burdens through instruments that exchange fiscal space for resilience outcomes. With these steps, SIDS can convert risk into investment and opportunity.”
Beyond finance, the report sets out a concrete agenda to hard-wire resilience into the blue and real economies. Tourism and fisheries—cornerstones of SIDS prosperity—are threatened by coastal erosion, coral bleaching and extreme weather. Nature-based solutions such as mangrove and reef restoration protect shorelines, cut disaster losses and support livelihoods, with geospatial “opportunity scans” in Fiji alone identifying tens of thousands of hectares where restoration could reduce flood damage by over US$47 million annually by 2050, delivering benefits more than five times costs.
Systems that save lives and safeguard growth must also be scaled. Only 39% of SIDS report multi-hazard early-warning systems, and basic weather and climate observations remain critically under-resourced—less than 10% of required surface observations are shared globally. The report highlights the UN’s Early Warnings for All initiative and the Systematic Observations Financing Facility as immediate pathways to close these gaps and strengthen climate services across agriculture, water, health and disaster management.
Governance readiness is advancing but uneven. All SIDS have submitted NDCs and around 60% now have a “good or better” enabling environment for adaptation investments, yet many have not fully costed sectoral needs, and monitoring and evaluation systems remain under-developed. The report urges a “community-to-cabinet” approach that elevates local knowledge, strengthens institutions and integrates adaptation across transport, energy, water and food systems.
Alexandra Gee Global Center on Adaptation +447887804594 alex.gee@gca.org
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