Small state innovations to strengthen financial resilience in an era of accelerating climate change

Abstract

Despite severely limited human resources, Small Islands Developing States (SIDS) are crafting state-of-the-art strategies to reduce the impacts of extreme weather and other external shocks on their economies, and the livelihoods and wellbeing of their populations. This paper demonstrates how SIDS are challenging the outdated international financial system and aid architecture. They are at the forefront of developing and trialling innovative financial instruments that can be used to reduce, retain, and transfer climate risks. In doing so, they are championing reform of international financial system and helping donors and international financial institutions to develop better products and services for highly indebted, climate vulnerable nations.