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The Bahamas, Fiji, Jamaica, and the Maldives have been identified as among the most vulnerable small island sovereigns in a report on the credit implications of climate change. The Solomon Islands and St. Vincent and the Grenadines are equally at risk, according to analysts at Moody’s Investors Service.
The assessment is based on a number of factors:
- Fiji, the Solomon Islands, and St. Vincent and the Grenadines are exposed because of their very small economies, heavy reliance on agriculture or sea-based tourism, frequent natural disasters and low income levels.
- The high exposure of the Bahamas and Maldives is partly mitigated by higher income levels.
- Jamaica has very low resilience due to low income levels and the government’s limited fiscal flexibility.
The analysts, led by Christian Fang, make a distinction between two effects of climate change — shocks such as floods and storms, and trends like rising sea levels and global warming.
They say medium-term vulnerabilities are factored into island sovereigns’ credit ratings. This means single climate shocks don’t have credit implications unless they are much more serious than the assessments of exposure and resilience suggest.
“However, the slow, unfolding nature of climate trends and uncertainty over the specific effects and mitigating actions imply that climate change could have credit implications in the longer term,” the analysts wrote in the Dec. 5 report.