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Climate change, structural economic transformation and innovation governance in Small Island Developing States

Written by Keith Nurse

Image credit:Aerial View of Marovo Lagoon, Solomon Islands. UN Photo/Eskinder Debebe Image license:CC BY-NC-ND 2.0

This triple threat of ecological, economic and industrial decline speaks not only to the convergence of crises, but it also points to the complexities of climate action as the world transitions to a low-carbon economy.

From this perspective, the global community must create frameworks that support Small Island Developing States (SIDS) avoid catastrophic climate change and achieve structural economic transformation.

Small Island Developing States (SIDS) are not major emitters of green house gases, yet they are estimated to be one of the groups of countries to be most impacted by the ecological challenges associated with climate change, particularly in terms of sea level rise, temperature rises, rainfall changes, and coral bleaching.

SIDS are also among the highest trade and tourism-dependent economies in the world and are therefore highly vulnerable to the indirect policy impact from carbon border measures that would affect international trade and particularly industries like international travel and tourism.

Smart policy to deal with the climate emergency doesn’t only stop bad things happening, it leads to increased efficiency, drives new technology, and lowers risk. These benefits in turn stimulate investment, generating jobs, creating healthier economies, and boosting the livelihoods and well-being of citizens.

Climate change trajectories signal that SIDS need to move with even greater urgency to transform and reinvent their economies.

Achieving many of the targets associated with climate action will require not just technological solutions but broad changes in institutional arrangements, and lifestyles. Innovation governance in climate-friendly technologies, particularly those that supply and distribute renewable forms of energy, are generally faced with structural forms of resistance. This is so because often the short-term costs of transition are high relative to the benefits and as such the old techno-economic paradigms can only be replaced once the necessary institutional changes (government regulation, organisational changes, changes in people’s life-style habits, etc.).

This suggests that the problem or solution isn’t only a matter of financing, even though this remains a critical starting point. SIDS also require increased facilitation through the transfer of clean energy and climate technologies. It is also propitious for SIDS to invest in their own research and development and technology adoption and diffusion which would facilitate more rapid adaptation responses. This position was advocated by the Alliance of Small Island States (AOSIS) when it called for relevant linkages to be made between science and climate change in order to empower SIDS to design and implement policies appropriately.

Caribbean countries should pursue the liberalisation of trade in energy efficient goods in areas where there is no competitive local production. Such trade policy measures can, therefore, include tax incentives or zero-tariff measures for environmentally friendly products. As such, Caribbean countries should closely examine the gains to be had from the WTO Environmental Goods Agreement that aims to complement pre-existing efforts towards environmental sustainability.

These areas include renewable energy, improving energy and resource efficiency, managing waste and the monitoring of the quality of the environment. If implemented in areas such as renewable energy, the appropriate policies can boost low carbon competitiveness in the tourism sector. For example, investments in the hotel and accommodation sector in solar technologies, rainwater capture and waste-to-energy systems, to name but a few, may catalyze a process of technological change and green jobs in an otherwise stagnant economic context.

The promotion of a climate change agenda that prioritises adaptation and innovation governance can reduce the impact of economic volatility associated with the triple threat of climate change. This approach to dealing with climate change also allows for SIDS to move up the global value chain and increase income, exports and boost economic resilience. From this perspective, the climate change scenario needs to be viewed as a key driver for production transformation and structural economic transformation in view of the global imperative to secure decarbonisation.