Euromoney magazine, September 2017
Pacific island states like Kiribati, the Cook Islands and Palau are among the most exposed in the world to climate change. It is not just rising sea levels that threaten to obliterate them, but also more extreme storms and tides, the acidification of the seas that provide their livelihood, and drought. Worse, their relative obscurity makes it hard for them to state their case, they lack the institutional capacity to approach multilateral funding sources and many of them are flat broke anyway. What can they do?
Read the whole article in Euromoney here
This is part of a sequence of articles on climate change finance in Euromoney's September 2017 edition. Read more here, here, here, here and here
This is the highest point in Tarawa!” says Tetiria Kireua. “Three metres!”
We are on a scarcely noticeable hump on the country’s only sealed road, right next to the sea: everything is next to the sea here, in every direction, and you could jump into it from this high point with a well-judged leap. But this is as high as it gets on Tarawa, the atoll where the majority of the Pacific island nation of Kiribati’s 115,000 people live.
Tetiria works for a local NGO called KiriCAN, whose missions vary from teaching a doubting and poor local population about the realities of climate change, to planting mangroves to shore up the diminishing beaches, to driving around the occasional inquisitive foreign journalist.
She has spent the morning showing Euromoney evidence of last year’s king tide, the worst in memory, which flooded the country’s only maternity hospital to knee height, and left ships stranded high on the beaches next to villages where people live in dwellings made from chicken wire and bits of corrugated iron, their wells now salty from the inundation of the water table.
Kiribati’s average elevation above sea level is just below two metres, among the lowest in the world; that is, for the sake of comparison, an entire nation that is, on average, the altitude of a single David Hasselhoff. Projections on sea level rises vary, but a metre by the end of the century is a common one, and the University of Massachusetts reckons double that. In either scenario, Kiribati would be finished as a habitable nation.
In truth, although the image of a country disappearing beneath the waves is potent, it is other things that would do for Kiribati: storm surges from elevated tides and worsening weather, and – the clincher – the inability to extract drinking water combined with worsening droughts, a cruel irony in a place that fights back water all the time.
It was with this apocalyptic vision in mind that the country’s previous president, Anote Tong, sanctioned the purchase of a chunk of Fiji for his people to move to if the worst happens. “For us climate change is not an event in the future,” he once said. “It’s an event that we’re dealing with now. Our entire survival is at stake.”
This is the sharp end of climate change. The Pacific Islands, now saddled with a development acronym (Sids, for small island developing states, a term that also embraces many Caribbean and other island nations), face particular challenges from climate change. Some, like Kiribati, Tuvalu and the Marshall Islands, face a genuine threat of disappearance. Others are imperilled by the warming and acidification of the seas that wrecks the coral that protects their coasts and forms a vital part of their fishing ecosystem and, therefore, their food supply and their livelihoods.
Some, like the Solomon Islands, Vanuatu, Fiji and Tonga, face the fact that cyclones are getting worse. Cyclone Winston in February 2016 was the strongest ever recorded in the southern hemisphere and cost Fiji one fifth of its annual GDP, while Cyclone Pam in 2015 impacted 70% of Vanuatu’s population. Some face droughts, worsening consistently with changing rainfall patterns, and increasing problems with their soil. The whole lot is combined with population growth.
And on top of this, they face a different challenge: they feel like they are too inconsequential to be heard and, even when people are listening, they lack the institutional strength to fit their message and their needs into the sometimes inflexible and always daunting norms of international finance.
“It is often the case that the billions of dollars required to meet the challenges in Asia overwhelm the millions required to meet the challenges of Pacific island countries,” says Mark Brown, minister of finance of the Cook Islands. “We fly under the radar.”
It is not for lack of effort. Kiribati has ambitious mitigation targets for renewable energy and energy efficiency all over the country, from its schools to its hospitals to its ice plants. It is trialling coconut-oil based bio-fuel. It has set up the Kiribati Solar Energy Company to provide solar lighting on rural islands. But the truth is nothing Kiribati does is going to make any difference to rising sea levels. In 2014, it emitted 63,000 tonnes of carbon dioxide. That is 0.0002% of global emissions: one part in 500,000.
Despite this inherent injustice, or perhaps because of it, Kiribati was among the first truly vulnerable nations to campaign globally about its plight, and former president Tong remains among the most famed and affecting speakers on climate change.
The country embarked on a big initiative to reduce its vulnerability to climate change, climate variability and sea level rises back in 2003, financed through grants from the World Bank, the Australian and Japanese governments, the Global Environment Facility and several other groups, plus a contribution from Kiribati’s own government.
Called the Kiribati Adaptation Programme (KAP), it is nearing a milestone. In February 2018, the third and final instalment, KAP III, will reach formal close, its job done.
One day in late August, Euromoney joins a World Bank and government team on a boat from South Tarawa to the far less developed north for an inspection of water projects. Improving water supply management is one of several prongs to the KAP fork, among them sea walls and other coastal management protection such as mangrove replantation, population settlement planning and the strengthening of environmental laws.
The timeframe involved in KAP – 15 years from formal start to completion – is the sort of thing that makes outsiders tear their hair out about the glacial pace of development and multilateral involvement. It took two years to complete the preparation phase. But visiting a project like this gives a different perspective to the challenges involved with development finance and climate change.
There is, first, remoteness. Kiribati is tough to get to at the best of times, with only four international flights a week, from Fiji and Nauru. Even then, that airport only serves the island of Tarawa and the road only covers the southern part. The nation’s 33 atolls are spread over 3.5 million square kilometres, which is bigger than India’s land mass. The Line Islands in the country’s east are about as far from Tarawa as the US east coast is from the west. Kiribati’s vast eastern reach into the Pacific is the reason the International Date Line takes that crazy diversion near the Equator; before that, half the country was a day ahead of the other.
Even reaching North Tarawa, as we are doing today, requires a boat crossing and then a wade in to the shore because there is no quay. When we depart at low tide, that wade is half a mile.
Coming in, we pass a barge that a contractor for the World Bank, a walrus-moustached Australian in a bright yellow Jackeroo workshirt, who gets from site to site on a motorbike, is using to try to get supplies and machinery to the water projects there, but with mixed success, he explains.
One of the water gallery digs has hit unexpected rock and he needs a better digger to get through it, but while he has established that there is one on the island somewhere, it is, he has been told, “somewhere else,” and will be difficult to move up here if he finds it.
“Logistics are very difficult,” says Manikaoti Timeon, the programme manager of KAP III for the government. “We need a lead time of two to three months to get the materials ordered from overseas. Then the disbursement of the islands is a challenge. Once we get the material to South Tarawa, we have to ship it to the outer islands.”
Once there, transport is on dirt tracks on one of a couple of trucks that have made it this far, and here we encounter one of the friendlier challenges development faces: endless talking.
During the day we end up hosted by the mayor and then on two separate occasions in communal village meeting structures called maneaba, the basis of village life and administration, where people sit cross-legged on the floor in a strict hierarchical arrangement to discuss the issues of the community.
KAP III has brought water to thousands up here and there are a lot of speeches of gratitude and respect. We are presented with flower crowns, roasted breadfruit, precious imported biscuits and corned beef; but it is hard to get a lot done. It absolutely cannot be side-stepped or rushed: the need to understand local communities and get them onside cannot be underestimated.
Richard Croad, the principal of Gillrich Consulting and a long-term consultant for the World Bank, has been involved in KAP since the start, involved in the engineering design of everything from sea walls to rooftop rainwater collection techniques. Half-joking, he says he is also the bad cop, the man who has to keep projects running to time.
“We learned the lesson that community engagement and awareness, and the complexities of getting land consent agreements and the like, is very complicated,” explains Croad. “It’s time-consuming; you have to put in a lot of resources, a lot of time, and you’ve got to bring competent people on board to manage that effectively.”
Every part of what he says refers to some deeper challenge that can take years to resolve. “Competent people” only become competent when given proper training, by groups like the World Bank and its contractors on the ground, and they are hard to find in a country with modest education.
Negotiating land access is complicated by the fact that the government typically leases land from private owners. The land itself is customarily owned, which means held by particular families who each own and run specific strips of the island, planting pandanus and fruit trees on them to form a small economy.
Ownership or leases can be changed between people informally and in some cases even orally, leaving no records and creating a problem of people claiming they own things that they do not.
“We have faced that problem in the project,” says Timeon. “On this project, we took one or two years to resolve all the land issues before we could proceed.”
The leases, typically 99 years at a time, place an enormous financial burden on the government, impeding its ability to fund projects like this; consequently the KAP III model is to have the projects owned directly by the villages.
“So you see a lot of talk, a lot of negotiation, a lot of maneaba meetings, sitting cross-legged,” says Croad. “But unless you get that absolutely right then it will fail, because the communities then don’t own the scheme or they don’t feel accountable or responsible for what is built to maintain it.”
And building the thing is only the start, because if it is not used or maintained once completed, the World Bank and donors might as well have not bothered. Kiribati is littered with projects that started with good intentions but no longer operate, either because they broke, they ran out of money or they just were not administered properly.
During our trip, we visit an almost completed water gallery system, just waiting to be connected for distribution to taps in the villages: a proud moment. Again we have been greeted with big smiles from local leaders and some speeches are made.
But a question comes from one. “They are concerned about how long they are going to look after it,” comes the translation.
“Well, the answer is, for ever,” says Croad. “It’s theirs for ever.”
He tells them: “The real test is, will it still be working when I’m in a box in the ground? Will your grandchildren be using it?”
In this case, the long-term running of the water system will mean local villages establishing committees to be responsible for maintaining it and in many cases charging a modest levy to the people who use it so there is a fund for that maintenance.
This is a key understanding that needs to be translated to villages: that even if something is given for free, it will take money to run, and that must come from a modest local tax of one form or another. Negotiations in dirt-poor villages about finding money to pay for clean water can be delicate.
Communities also have to set their own social guidelines and rules for the use of the water. One village we visit has done this, with a large sign above the pump with six rules in the local language, all of them decided by the community. At the top of the list is: ‘Don’t use this water to make Kava,’ the local booze.
Another issue for multilateral and donor developers is that island atolls just cannot help behaving like island atolls. That is, they change shape.
One of the country’s main causeways is being rebuilt by Japanese funding and many sea walls are being built or repaired, spurred by last year’s devastating king tide. However, previous attempts to make sea walls have not always been successful.
“You’re playing off two things,” says Croad. “Do I defend, because I’ve got a rather important road right behind it? Or do I move the road?”
There is such scant room in South Tarawa – where it is often easy to throw a stone from the lagoon on one side of the country to the ocean on the other, and where sections of the single-carriageway road are the width of the country – that there is no possibility to put the road anywhere else. Hence they must fight nature, resisting the natural urge of tides to take material from one side and deposit it somewhere else.
There is widespread expectation that vulnerable countries must do their bit to ensure local communities change their own behaviour to fight climate change, and they try to through NGOs like KiriCAN. But they are fighting widespread doubt that climate change exists at all.
Tetiria says this is particularly acute in a highly religious Christian community such as Kiribati, where it is commonplace to hear the view that whatever happens is God’s plan and therefore not to be resisted; and that God would not give them these islands and then take them again unless as punishment for something they had done.
The finest buildings here are the churches, smartly painted and towering. The last thing to be swallowed by the rising seas, if the time comes, will be their well-constructed roofs.
Everywhere on Kiribati is evidence of aid: schools built by Australia, or the rebuilding of a tide-wrecked causeway by Japan. It is hard to see where the private sector will fit in a climate role.
“All the major projects are now being funded by big donors like the World Bank and the Asian Development Bank,” says Timeon. “The private sector here is not as developed as in other countries.”
There is some hope that foreign investors could get involved in desalination on commercial terms, but it seems very distant today.
“If you’re a Boot [build–own–operate–transfer] operator, what assurance are you going to have that you’re going to get the income necessary to cover your capital investment?” says Croad.
The country itself has no money; few in this part of the world do.
“Many Pacific Island countries face significant fiscal challenges,” says the Stockholm Environment Institute in a study of climate finance in the Pacific released in April this year. “Several have high and potentially unsustainable debt levels.”
They tend too to have high volatility in government revenue, expenditure and aid flows.
Kiribati is not short of friends. It has a history of bilateral donors that have included Australia, Japan, New Zealand, Taiwan, the US, the UAE and even Papua New Guinea. But from 2016 Kiribati set a priority of seeking multilateral sources of climate finance. It has long-standing relationships with the World Bank and Asian Development Bank (ADB), both of which have given grants (large loans are not really practical as the tiny economy’s capacity to repay is so limited), and has since set about gaining access to the Green Climate Fund (GCF), Adaptation Fund and Climate Investment Fund.
This has not been easy.
“Kiribati continues to face difficulties in accessing multilateral sources of climate financing,” says Kiribati’s minister of finance and economic development, Teuea Toatu. “Compared to bilateral funds, which are much easier to access, multilateral finances come with common challenges,” chiefly stringent access requirements and complex procedures “which stretch our already thin capacity within government.”
This is a message that comes through consistently in small countries and a visit to one illustrates the problem clearly.
Most of Kiribati’s ministries sit in a line of breezeblock structures in varying stages of dilapidation, with much more use of pen and paper and endless stamped receipts than of computers. It is clear that the manpower needed to get through the necessarily arduous due diligence of a Green Climate Fund request is beyond them and needs to be hired in, expensively.
“Kiribati’s experience with multilateral funds has been difficult,” says Toatu. In 2015, Kiribati’s cabinet approved three priorities for engagement with the Green Climate Fund. But the accredited agencies the government approached were not able to turn these priorities into proposals for the GCF.
“A key lesson learned,” says Toatu, “is that Kiribati needs to take leadership on the GCF, as there were many development partners suggesting priorities.”
Having realized this, Toatu’s ministry is setting up a climate finance unit “to focus on increasing access to multilateral sources of climate financing.”
It will have four staff members, he says, “and will begin the process of institutionalizing climate finance for Kiribati.”
It is an illustratively circular outcome that in December 2016, Kiribati did finally manage to get a proposal approved by the Green Climate Fund, worth $585,935 – but that is a readiness grant, to assist Kiribati in engaging with the GCF in the first place. So the first grant the country has received from these bilateral mechanisms is not to help it build a sea wall but to develop the ability to deal with these multilaterals at all.
Kiribati has in mind not only the Green Climate Fund, but also the Adaptation Fund, Climate Investment Fund, Global Environment Facility and any other multilateral fund it can find.
“Once we have developed our strategic framework and country programme, we will convene a roundtable meeting,” Toatu says, where they will invite accredited entities in the region, development partners and so on “to present our priorities for these funds and to seek support in working with us to turn our priorities into proposals for these funds.”
All of this, then, is just to get to the start line. Years of development and spending will have taken place just to learn how to ask for money in the correct fashion.
That is just the way the GCF works: most of what it has dispersed so far is in this readiness programme, helping countries understand what a good climate project looks like and how to pitch it. It is perhaps a necessary outcome of the shift to country-led climate projects and will resolve itself in due course. But as Kiribati’s politicians step out of their parliament, built on reclaimed land, and look at the steadily higher tides, they can be forgiven for some frustration.
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