Building resilience to natural disasters and climate change in the Marshall Islands: Republic of the Marshall Islands

This study aims to evaluate how alternative infrastructure investment and financing strategies can mitigate the macroeconomic effects of sea level rise and one-off natural disasters, and their implications for long-term growth for the Republic of Marshall Islands. The analysis aligns with the first phase of the 2023 NAP, which covers the period from 2024 to 2040.

This paper shows that resilient infrastructure investments and effective public investment management can significantly reduce GDP contraction following rapid onset and slow-moving natural disaster shocks. Tax reform, featured by a permanent increase in the VAT rate, helps facilitate infrastructure restoration against persistent sealevel rise and boost private investment and long-term growth despite dampened consumption. To address substantial financing needs for climate-resilient infrastructure, maximizing climate funding is essential, which includes improving domestic revenue collection and mobilizing external resources from the renewed Compact and development partners.