Climate financing vital for Maldives: World Bank

The World Bank has highlighted the importance for the Maldives to protect its natural capital as the foundation of its economy.

The World Bank's Country Environmental Analysis (CEA) evaluates the environmental and climate challenges hindering the nation's development, offering a set of recommendations for a sustainable and resilient future.

With approximately 50 percent of GDP and employment in Maldives linked to the tourism and fisheries sectors, the nation's economy is significantly dependent on natural capital, such as marine, coral reef, and coastal ecosystems.

Coral reefs contribute significantly to climate resilience, and their deterioration could lead to annual flood damage equivalent to about 8 percent of the country's GDP.

Minister of State for the Ministry of Climate Change, Environment, and Energy, Dr. Muaviyath Mohamed, highlighted the necessity of transitioning to a sustainable blue economy and said that efforts are ongoing to integrate nature-based solutions, improve waste management, expand protected areas, and enhance data generation and monitoring.

Despite notable economic and human development achievements, the report highlights that unsustainable coastal development, pollution, overuse of natural resources, and climate change have exerted significant pressure on the Maldives' natural capital.

Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka, emphasized the critical importance of maintaining healthy marine and coastal ecosystems for economic development.

“To build climate resilience, a sound natural capital accounting policy is vital to explore alternative financing opportunities and access much needed climate finance given the high level of debt distress in Maldives,” Faris said.

One of the crucial concerns highlighted in the CEA report is the lack of nature and climate finance, which currently amounts to USD 12 billion, with only USD 1.6 billion secured since 2015. Closing this gap might require innovative financing methods, such as conservation trust funds or bonds dedicated to achieving environmental outcomes.

The report calls for an improved environmental framework by strengthening monitoring, national planning, and institutional capacity, including recommendations such as the conservation of biodiversity-rich regions, sustainable coastal protection, improved pollution management, and the sustainable utilization of resources in the tourism and fisheries sectors.

He added that reducing the environmental footprint, addressing pollution, and enhancing natural resource management are crucial steps toward fostering a sustainable blue economy.