The Pacific Islands region stands on the frontlines of the global climate crisis. Despite contributing less than 0.03% of global greenhouse gas emissions, Pacific nations are among the most vulnerable to climate change, facing rising sea levels, extreme weather events, biodiversity loss, and economic disruption. Addressing these multifaceted challenges requires urgent and sustained climate finance. However, current funding models are not delivering at the scale or speed required. It is time to explore and adopt new models to accelerate impact.
A Region Under Threat
According to the Intergovernmental Panel on Climate Change (IPCC), sea levels in the Pacific are rising at rates up to four times the global average. The World Bank estimates that climate change could push an additional 1.4 million people in the Pacific into poverty by 2050 due to increased disasters, agricultural losses, and displacement. Cyclone Winston in 2016 caused damages equivalent to 30% of Fiji’s GDP. In 2023 alone, the Pacific experienced over 20 climate-related disasters, disproportionately affecting rural communities and infrastructure.
Yet, despite the urgency, access to climate finance remains a persistent hurdle. Pacific Island Countries (PICs) often lack the technical capacity to navigate complex funding mechanisms. Of the USD $100 billion per year promised by developed countries under the Paris Agreement, only a fraction reaches the Pacific. The Green Climate Fund (GCF), one of the largest multilateral climate financing vehicles, had approved only 10 Pacific-focused projects as of 2023, representing less than 2% of total disbursements globally.
Clearly, new approaches are needed to shift from underfunded promises to transformative action.
Model 1: Blended Finance for Climate Resilience
Blended finance — combining public, private, and philanthropic capital — offers a powerful mechanism to de-risk investments and attract private sector engagement in climate solutions.
In the Pacific, blended finance could support resilient infrastructure, renewable energy, and sustainable agriculture. For example, the Fiji Green Bond, launched in 2017, successfully raised over USD $50 million by combining government backing with investor returns focused on environmental impact. Such models can be replicated across the region, but with enhancements: technical assistance facilities, risk-sharing mechanisms, and impact-linked incentives can encourage more participation from private investors.
Scaling blended finance requires a strong pipeline of bankable projects, local capacity to structure deals, and supportive regulatory environments. Multilateral Development Banks (MDBs) and donor agencies can play a catalytic role by providing first-loss guarantees and concessional lending.
Model 2: Direct Access and Localisation of Climate Funds
Many Pacific countries struggle to access international climate finance due to administrative and fiduciary requirements imposed by global institutions. A promising alternative is the “direct access” model, where accredited national entities can access and manage funds without intermediaries.
The Tuvalu Coastal Adaptation Project (TCAP), implemented through Tuvalu’s Ministry of Finance, is an example of how direct access can empower local institutions. By removing layers of bureaucracy, direct access ensures that funding reaches communities faster and is aligned with local priorities.
To scale this model, greater investment is needed in strengthening the financial, procurement, and environmental safeguards of Pacific national institutions. Regional cooperation can support capacity-building and knowledge-sharing, while donors must simplify application processes and reduce administrative burdens.
Model 3: Climate-Responsive Social Protection Systems
Climate change is not only an environmental crisis but a social one. In the Pacific, many communities rely on subsistence agriculture and informal economies, making them particularly vulnerable to climate shocks. Integrating climate risk into social protection systems — such as cash transfers, insurance schemes, and emergency response funds — can provide a vital safety net.
The Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) is a regional example that offers parametric insurance to countries like Tonga and Vanuatu. Following Cyclone Harold in 2020, PCRAFI enabled rapid payouts to support disaster response. However, such schemes often focus on national-level shocks rather than household resilience.
To accelerate impact, countries should develop climate-responsive social protection that automatically scales up in times of crisis, is linked to early warning systems, and supports climate-smart livelihoods. Digital platforms can enhance delivery, while partnerships with civil society and local governments can ensure inclusivity.
The Pacific’s climate finance challenge is not just about money — it is about access, equity, and effectiveness. Current global financing mechanisms are too slow and rigid to meet the urgency of the climate crisis. New models — like blended finance, direct access, and climate-responsive social protection — can help shift the paradigm, but they require political will, institutional investment, and collaboration.
Key actions to accelerate progress include:
Ultimately, the Pacific does not lack ambition or solutions — it lacks the financial pathways to scale them. Climate justice demands that the global community step up with innovative, flexible, and inclusive financing models that reflect the realities of Pacific nations.
Earth Ventures acknowledges the Traditional Owners of Country throughout Australia. We pay our respects to Aboriginal and Torres Strait Islander Elders past, present, and emerging.
©2024 Earth Ventures