Impact of climate change on Caribbean economies

Authored by: Masaō I. Ashtine

Handbook of Caribbean Economies

Print publication date:  November  2020
Online publication date:  November  2020

Print ISBN: 9780367210489
eBook ISBN: 9780429265105
Adobe ISBN:




Weaving through the compounded and often daunting complexities of climate change quickly leaves many policymakers and development strategists feeling defeated. One aspect of the current weather extremes and shifting climatologies that is clear, however, is the existence of specific vulnerabilities faced by small island developing states (SIDS). The United Nations lists 16 Caribbean member countries out of the 38 defined as SIDS. This chapter will examine the challenges faced by many Caribbean SIDS as they attempt to secure their futures against climate change. Acting as a review of research carried out over the past 20 years, these findings will comprehensively address the current and future vulnerabilities of Caribbean economies to climatological extremes and shifting modalities. Beginning with the awakening of climate research in the region, this work will carefully navigate through the historical impact of changing weather patterns on the region, culminating in today’s worsening prospects. It will demonstrate how governments and international financiers are vying to increase resilience in a region that is already grappling with economic reform and energy transformations. Who pays? Will tourism survive the coming storms? Can an energy revolution secure the region’s future on the world stage? This chapter will shed light on these pertinent questions, drawing on leading research to give an equal sense of hope and warning.

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Impact of climate change on Caribbean economies

Introducing a rapidly changing region

‘Sun, sand, sea’. This is the slogan upon which the Caribbean has come to rely and from which it has profited in recent decades. Pristine coastlines have drawn millions of people to the region and many of the 25 political island entities benefit from a stable, and most importantly, predictable climate. However, climate change is throwing all measures of advanced warning out of the window and the Caribbean is facing everything but an easily forecasted future. Many islands are pushing for change at uncomfortable speeds, but first we need to understand why, who’s doing the pushing, and who’s waiting at the finish line.

The region covers a vast area. It spans over 1 million square miles and therefore experiences the opposite of a uniform climate. The north-western islands (the Bahamas archipelago, Cuba, Jamaica, etc.) enjoy a drier, tropical maritime climate for most of the year with temperatures resembling those found in mountainous regions (snow has been recorded on the peaks of Pico Duarte in the Dominican Republic, where temperatures can fall as low as 0°C in the winter months). 1 Their southern neighbours, which are only 10–15 degrees in latitude apart, can expect a wetter and heat-driven climate all the year round. To the average citizen, Barbados usually seems dry, whereas Trinidad and Tobago is often humid, with each country sharing variants of seasons and climate regimes. During the hurricane season (officially June–November), the Caribbean becomes more homogeneous in its weather patterns with many of the islands keeping a watchful eye on these systems which begin their journey off the sub-Saharan western coast of Africa. The 1981–2010 median for Atlantic storms (12.0) is regarded as a climatological standard; the 2017 season with its 17 named storms was an extreme. 2 This season will be forever in the minds of the inhabitants of Caribbean countries and many are scrambling to recalibrate their expectations for hurricane systems in a changing climate.

Meteorologists will stop at this point to clarify a common misconception in the climate sciences: weather is not climate, and vice versa. When a climate is said to have an annual high of 32°C and a low of 22°C, one should not be alarmed if temperatures average 38°C for a week, or if the wet season occasionally experiences a low of 15°C. Climate change does not refer to these diurnal/short-term variations in atmospheric conditions. Such changes are assigned under the term ‘weather’ and our lives are greatly influenced by it. Meteorologists sit and stare perplexedly at their computer monitors when weather wedges extreme outliers in that persist over time, shifting the overall climatology of a region. In 2019, record-breaking extreme weather was experienced all around the globe, and the Caribbean was no different. 3 , 4 Droughts, heat waves and flash flooding are becoming more frequent in the region, and the many anecdotal tales that are told about the Caribbean’s climate will soon have to change. Extreme weather events have crippled an already sluggish economic zone, although some research has been conducted that shows that reinvested capital resulting from disasters can lead to short-term boosts in the gross domestic product (GDP) of low-income islands. 5 The Caribbean is no stranger to weather extremes, however. Between 2013 and 2016 droughts scorched the islands for an extended period, pushing over 2 million people into a state of food insecurity (for example Haiti lost almost 50% of its crop yield). 6 , 7 Floods destroyed thousands of hectares of arable land and uprooted hundreds of homes with ease following intense rainfall in Trinidad in 2018, thereby affecting over 150,000 people, or almost 11% of the population. 8

Weather extremes differ from their climatological cousins through statistical contextualization. These upper tails of weather events are becoming more intense and more frequent suggesting underlying climate changes in the region. Tornadoes have been recorded in recent times but if such events still fall within their ‘1 in 100-year’ category of frequency, then they can be treated as an expected weather phenomenon. But what happens when predictions fail us, and the unprecedented changes taking place in the Caribbean push island economies into uncomfortable territory? While farmers might once have expected rain to fall during a particular month, now they see high pressure systems bringing clear skies. 9 Tourists may not complain about blue skies and bright sunshine, but marine parks that have long recorded an abundance of diversity are now seeing extreme die-offs that confuse the most seasoned of fishermen. 10 Environmental stresses faced by the region’s forests ripple these negative feedbacks along complex ecosystem webs that in turn support its agricultural and logging industries, and equally, if not more importantly, its water systems. 11 , 12

The economies of the Caribbean islands are supported by a historically constrained backbone, with each vertebra representing unique attributes such as ‘diverse’, ‘vulnerable’, ‘strained’ and ‘exploited’. Weakened by an ageing infrastructure, declining levels of environmental protection and political ineptitude, the Caribbean economic giants have, however, made impressive progress in an unfavourable post-colonial system. Yet they remain vulnerable at this stage of their infancy, particularly to climate change which threatens to derail the predictable weather patterns around which the region has built its economies. This vulnerability is exacerbated by Caribbean economies that have failed to diversify, remaining loyal to tourism which in 2018 accounted for over US $62 billion and 15% of the Caribbean’s GDP. 13 With the arrival of 29.9 million foreigners into the region in 2018, bringing in over $38.3 billion in revenue, climate change is eroding the very reasons why tourists have flocked to the Caribbean for many decades.

Every race separates the winners and the losers, even those that have pushed beyond the limits of their endurance to finish alongside the leaders. Climate change comes with prejudice and lesser developing countries will feel the brunt of its impact causing small island developing states (SIDS) and Caribbean nations to wake up to the reality of a more insecure future. Jamaica is leading in the region with its daunting renewable energy (RE) targets, installed capacities and investments, while in the wake of the devastation inflicted by Hurricane María, Dominica is picking up the pieces and gluing them back together with climate resilience at the core of its recovery model. 14 However, Trinidad and Tobago lags behind, riding on the coat-tails of its economic powerhouse – oil. Sheer political absenteeism in recent decades on the twin-island state has left the economy largely dependent on fossil fuels (accounting for approximately 45% of GDP). 15 Oil-drenched politics are difficult to change, however, and shifting an energy sector to employ more RE systems is even harder when electricity costs approximately US $0.05 per kWh, almost 83%–88% lower than the regional average. 16 Not only does Trinidad and Tobago suffer from internal inertia, but as the leading exporter of liquified natural gas (LNG) to the USA (in 2018 86% of LNG imports to the USA came from Trinidad and Tobago alone), economic models have international pressures which are further exacerbated by widening gaps created by the Venezuelan crisis (when the country experienced a significant decrease in oil production) and the discovery of oil in Guyana. 17 , 18 , 19

It is easy to sympathize with climate activists and many in the Caribbean often romanticize the prospects for a cleaner, environmentally protected region. However, years of rigid economic models that operate in complicated geopolitical environments and governments that are resistant to change cannot tip the scales that easily in favour of climate action and reform. This chapter will explore how the region is burdened by climate change and looks at those economies that will be the most affected in the near future. Research reviewed here will examine which industries need to innovate the most, and will discuss the current fight for ‘climate reparations’ by SIDS in the Caribbean. It will hint at hope for the region where climate change may actually have its upsides for some, but on the other hand the staggering quantification of loss will demand action in a rapidly changing economic zone.

Which Caribbean nation states are particularly vulnerable?

Trinidad and Tobago is certainly one of the Caribbean’s economic giants. With a GDP per head of almost US $16,800 in 2018, and rich oil reserves that have flooded the country since 1901 through its commercial operations, the twin-island state has enjoyed much higher levels of economic prosperity than its neighbours, despite tourism’s contribution to GDP having fallen to a very low level (approximately 7.6% in 2019). 20 , 21 , 22 Oil prices have seen massive shocks in recent years and in 2016, the price of oil stood at a low of $27.88 per barrel (bbl) on the Brent Crude Oil index, forcing Trinidad and Tobago into a precarious economic situation in an already politically unstable environment. 23 However, the long and complicated dance with oil and gas has remained fairly stable for over 100 years owing to Trinidad and Tobago’s southerly position along the Caribbean archipelago where hurricanes pass over only infrequently, but this is changing. Climate change may act faster than any ‘peaking’ oil stimulus and the country’s climate is going through many record-breaking extremes with recent island-wide flooding, storm surges in Tobago, and increased tropical storm activity. The twin-island nation state that prides itself as being the home of the Caribbean Carnival may see its tourist numbers drop even further if visitors are now expected to masquerade through a flooded capital.

Jamaica’s dependency on tourism is much greater than that of Trinidad and Tobago, with approximately 34% of the country’s GDP being kept afloat by visitor numbers each year, and therefore shifting weather patterns will have a more significant impact on its economy in more immediate timelines. 24 Jamaica’s agriculture sector is of particular importance, and in 2017 it accounted for 3.4% of the country’s GDP, almost twice that of the world average, thus putting its economy even more at the mercy of capricious weather. 25 Given the increased impact of droughts and water scarcity, Jamaica is pushing more drastic measures through government and policy to bolster resilience to a changing climate. Unlike many of its rich neighbours (the Cayman Islands, the Bahamas, etc.), climate change could have a disastrous impact on Jamaica, despite the country’s currently booming economy.

The smaller islands are in a similarly precarious situation that could worsen sooner rather than later. Barbados has recognized the urgent need for reform and Mia Mottley’s Barbados Labour Party government that came to power in 2018 has been swift to draft new plans for energy restructuring and climate resilience. With a bold objective of 100% RE generation by 2030 (it should be emphasized that in 2019 the figure stood at an uncomfortable 3.5%) the government views energy security as a prime objective in the coming decade, a stance that must be applauded and cautiously directed at the same time. 26

GDP per capita statistics are often under- or over-inflated depending on the source, but it has long been recognized that, like Barbados, the Bahamas is one of the richest Caribbean nation states. Standing as an outlier in comparison to Jamaica, the Bahamas’ GDP per capita stood at US $31,800 in 2017, almost twice as much as that of Barbados in the same year. 27 In 2019 tourism accounted for over 50% of the island’s GDP, according to government sources, and depending on to whom you speak, the fact that Hurricane Dorian did not hit the capital of Nassau, spared the Bahamian economy. 28 Yet with so much hinging on the tourism sector, increased hurricane intensity and further variability in hurricane forecasts and tracks, could have disastrous consequences for the powerhouses of the Caribbean. Antigua and Barbuda is still reeling from the horrors of Hurricane Irma in 2017, and the need to rebuild resilient, hurricane-resistant infrastructure should be clearly stated in all policy documents.

The combined effect of the natural and economic destruction inflicted by extreme events in the region has resulted in greater outward migration and an increased number of climate refugees in the region. Perhaps the most existential threat to Caribbean productivity, particularly for the low-lying islands and nations, is that of sea level rise. The mountainous character of many of the islands, among many socio-economic factors, has seen a flourishing of coastal towns and cities in the region pre- and post-colonization. These once idyllic communities are now under constant threat from rising sea levels, storm surges and flooding, with many countries not having the necessary policies and mechanisms in place to adequately address climate-induced migration. 29 Not even the region’s high-earners may be able to survive the imminent threat posed by climate change.

Winds … and rain of change

How are the Caribbean’s long-term weather patterns evolving in the twenty-first century? This is a question that many climatologists in the region are grappling with because there are far-reaching implications. We will never be able to know to an exact degree – not in the near future certainly – in which direction the wind will blow next year or how just much our rivers will rise and fall in two months’ time, but models are becoming increasingly more able to forecast our climate accurately.

The Intergovernmental Panel on Climate Change (IPCC) special report on the impact of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways stirred academics and the private sector alike with its uncomfortable message about the impact of a warming climate and, more specifically, the time frame within which change needs to happen. Caribbean scientists advocated strongly for the report and were integral in provided providing data, pushing for a target of 1.5°C instead of the initial 2°C. 30 There are significant differences for the Caribbean where global warming between 1.5°C and 2°C is concerned, given that higher temperatures are expected to lead to almost year-round warm weather, longer hot and dry spells, greater portions of the region being under drought, increased occurrences of extreme drought conditions, and a transition to drier average conditions for the entire region.

The Paris Agreement, which entered into force in 2016, was signed by all 16 of the Caribbean United Nations (UN) Framework Convention on Climate Change member states, and has played an instrumental role in adapting, mitigating and financing the fight against climate change in the region, but some changes are already underway. Previous studies have shown that the frequency of warm days and nights and extreme high temperatures (heatwaves) have increased with statistical significance between the study period of 1986–2010. 31 Furthermore, the number of cool days and nights within the Caribbean occurs at a lower rate, which has large-scale ramifications for many industries. Cooling the region will come at a high cost, and so too will be controlling the region’s water supply.

The research on future levels of precipitation is less understood as climate models do not show a strong statistical signal in either direction. 32 However, Taylor et al. (2018) have assessed the atmospheric conditions that the Caribbean can expect in the event of an increase in global warming from 1.5°C to 2°C and found that the region risks becoming predominantly drier (a rise of 5%–15% compared to the present day), with a much greater frequency of drought. 33 However, if temperatures remain at a rise of just under 1.5°C, much of the region can expect wetter conditions, thus marking the 1.5°C threshold a tipping point for precipitation. Going forward, they postulate through their research that at 2.5°C warmer global temperatures, there will be an intensification of the changes experienced under a 2°C warming.

Interestingly, the authors’ argument for a shift in rainfall patterns between 1.5°C (wet) and 2°C (dry) for parts of the Caribbean strengthens the point that climate change will have an impact on the islands and their economies in varying ways. Not all of the islands will be affected by drought, so while there might be flooding in Grenada, Jamaica could be more parched than its population can bear. It is not only the intensity of events that concerns scientists, but changes in climate characteristics such as the annual ‘start’ and ‘end’ dates of the rainy season can leave farmers reeling to cope with variable conditions. 34 , 35 These nuances make the effective communication of climate change to Caribbean policymakers challenging, yet extremely important. There is no one easily traceable connection between cause and effect and implications vary across spatial and temporal scales. The Caribbean’s climate is linked to many larger-scale atmospheric systems such as the El Niño phenomenon, adding further complexity in modelling aspects such as the region’s future water resources. 36

Stronger and more consistent winds may strengthen the argument for increasing the development of wind farms in the Caribbean, but other stakeholders in this information see the potential of more extreme weather and associated risk. Wetter regions under a 1.5°C warming scenario may see added advantage for hydropower systems, while bringing reduced and variable solar power output due to more overcast days. Climate change is not esoteric, but equally it is complex, and we quickly need to toss out any cookie-cutter narrative of the changes we can expect in the Caribbean as the research shows a messy transition ahead. Yet, the region is fighting to protect its populations and economies through informed policy decisions. Research tools such as the CARIWIG Portal are helping regional scientists to better understand the region’s risk to flooding, while the Caribbean Assessment Regional DROught tool (CARiDRO) is being implemented to better inform the region’s agricultural sectors of pending drought risk. 37 , 38 In order to have a proper handle on the impact of climate change on the Caribbean’s economies, greater investment and collaboration needs to be injected into these regional projects that aim to better understand our changing systems.

Tourism in 2050?

Yes, tourism will exist in the Caribbean in 2050, but how can we expect this major ‘bread and butter’ industry to change under varying weather patterns? The World Travel and Tourism Council reports that in 2018 tourism accounted for 15.5% of the combined Caribbean island economy, and provided 2.4 million jobs, with an average of US $35.4 billion in visitor spending. 39

However, in the period following the Great Recession (2008–10), global financial shocks greatly reduced tourism in the Caribbean (for example, Saint Kitts (Christopher) and Nevis witnessed a decline of approximately 20% in tourist arrivals in 2009). 40 The economies of many Caribbean islands, particularly the smaller islands that are more dependent on tourism, were negatively affected by the Great Recession, but many have recovered in tandem with increasing GDP indices from the USA, the United Kingdom and Canada, for example. Climate change does not manifest itself in sudden shocks in the same manner as global recessions, but will increasing extremes and hurricane intensity bring the giant economic sector of tourism to its knees? Or will the Caribbean adapt tourism so that it is able to retain its global position as an attractive destination? At present, 15.5% of the region’s GDP is reliant on the islands’ ability to innovate.

Not only was St Kitts and Nevis troubled by the Great Recession, but 2008 also saw the arrival of Hurricane Omar which devastated the island’s hotel industry, thus highlighting the impact of natural and economic factors on Caribbean tourism. 41 This pales in comparison with Hurricane Ivan which struck the island of Grenada in 2004 causing an estimated US $1 billion in damage, one of the most destructive hurricanes ever to hit the Caribbean. 42 Before having sufficient time to recover, Grenada was hit again in 2005 (less than a year after Ivan), this time by Hurricane Emily, resulting in devastation that came with a price tag of approximately $110 million. 43 Thus, increasing hurricane intensity poses one of the largest threats brought about by climate change to the Caribbean, and it is uncertain how tourism-dependent economies will adapt.

Hurricanes have always occurred in the region and despite events such as Hurricane Ivan in 2004 and the tumultuous 2017 hurricane season, tourism in the Caribbean goes on. As seen with the Great Recession in 2008, economic and employment factors in source countries such as the USA and Canada will have a more immediate impact on Caribbean tourism. The more pertinent question, therefore, is not will tourism survive in 2050 based on climate projections, but how will tourism adapt to the Caribbean’s future scenarios? Stressed ecosystems, dwindling water resources and declining agricultural productivity will challenge the economic models that established many Caribbean islands as global leaders in the tourism industry. Increased drought and flooding will cause food price shocks due to heavier imports, and ocean acidification and warming will completely change the ‘sun, sand and sea’ model as coral reefs experience mass die-offs. 44 , 45 , 46 A pesky invasive visitor to many beaches in the region, the Sargassum seaweed, is causing millions of dollars in damage to Caribbean economies as the foul-smelling seaweed incapacitates large resorts that are unable to cope with the quantity washing up on their shores. 47 The impact of climate change on the tourism sector is daunting. Sea level rise, coastline erosion and drought-stricken environments are just a few of the considerations governments must factor into their long-term visions.

Recovery and resilience must be built into the Caribbean model of tourism if it is to encourage positive growth and sustainability in the twenty-first century and beyond. Although climate models lay out a bleak scenario for the Caribbean’s weather and ecosystems as early as 2050, strong efforts to push adaptation and mitigation strategies are key to ensure that tourism, whatever it may look like mid-century, continues to prop up Caribbean economies as they transition to more resilient and sustainable economic models. It is also important to remember that tourism ipso facto often erodes the very foundation of sustainability in the Caribbean through its associated activities. Increasing air traffic and visits are carbon-intensive, cruise ships are notorious polluters of the sea and air, and many tourists and resorts inadvertently stress the Caribbean’s ecosystem through their damaging daily operations. 48 Thus, sustainability and climate resilience need to be carefully threaded into the very fabric of the tourism sector itself.

Intensity and hurricanes

Hurricanes have always been synonymous with the Caribbean. Falling leaves and colder conditions beset the northern latitudes at the same time as the mid- and low-level tropics are frantically preparing for a potential Category 5 hurricane system. Known as typhoons in the Far East and as hurricanes in the Atlantic basin, the latter tropical systems have plagued the Caribbean’s development for centuries. The Great Hurricane of 1780 is still recorded as one of the deadliest hurricanes to have struck the Atlantic basin, wreaking havoc on the Lesser Antilles at a time when the nature and scientific understanding of hurricanes were much more limited. Hurricane María in 2017 devastated the Puerto Rican economy and energy systems, but more than 100 years earlier, the San Ciriaco Hurricane brought the same level of devastation and was recorded as the second longest-lived hurricane in the Atlantic basin. Currently, that title changes hands more regularly with hurricanes such as Irma and Dorian breaking many records in 2017 and 2019, respectively. Although hurricanes have always kept the region in a state of high alert, climate change is making them even more difficult to predict and endure.

The Caribbean is already experiencing more weather extremes. Meteorologists believe that climate change is making hurricanes more frequent and powerful over the Atlantic Ocean. 49 , 50 The uptick in severe weather is costly. According to the United Nations, the 2017 hurricane season cost the Caribbean countries and the United States US $92 billion in damage with Irma, María and José leaving islands like Barbuda, Dominica and Puerto Rico completely incapacitated by their passage. 51 Hurricane Dorian in 2019 saw the Bahamas become the centre of global attention as the hurricane slowly ripped through the island chain as one of the strongest hurricanes on record in the Atlantic basin. Grand Bahama and Abaco were the worst affected with over 50 recorded deaths and approximately 7,000 people listed as being in need of humanitarian assistance. 52

Climate change is a profoundly unpredictable process and that makes it harder for climate models to correctly identify not only the direct cause of increased annual intensities, but the frequency of hurricanes in the Atlantic. 53 Computer models are known to be inherently imperfect predictors and although powerful in the insight they provide Caribbean countries, meteorologists and planners, the region is experiencing unprecedented changes that are often difficult to resolve fully in climate models. Tracking hurricanes is another important process, allowing governments to ramp up measures and resources in advance of their arrival, but this too has been scuttled by a rapidly changing climate, with different warming scenarios having an impact on the intensity and movement of these hurricanes. 54 Increased variability in the tracks of hurricanes is particularly harrowing when viewed in the light that new countries and economies that were once at low risk from such systems (Guyana and Trinidad and Tobago for instance) may become increasingly vulnerable to these weather extremes. With sea level rise seen as one of the most widely recognized climate change induced threats to low-lying island states in the Caribbean, storm surges will have a major economic impact on the region given that in countries such as Trinidad and Tobago, the Bahamas and Guyana, much of the land lies below sea level. 55 , 56 Hurricanes thus work in tandem with other climate extremes to drive the Caribbean further into unknown territory and planning.

It is clear that hurricanes pose a considerable threat to Caribbean economies and their development thereof, but some studies are probing further in order to determine the preparedness of Caribbean economies in post-disaster recovery. 57 In their study, Robinson and Bangwayo-Skeete (2016) looked at the impact of storm systems on the Caribbean Stock Exchanges, concluding that the passage of major hurricanes between 2001–15 had no direct impact on the Bahamian and Eastern Caribbean stock markets. Jamaica, however, experienced stock market shocks which were approximately 10 times worse than initial accounts for economic losses would suggest, making Jamaica one of the most economically vulnerable islands in the region. 58 Although Eastern Caribbean stock markets may provide investor confidence during times of extreme events, another study by the International Monetary Fund (IMF) reports that the debt-to-GDP ratio rises by an average of almost 5 percentage points in the year that a storm strikes. 59 Although Robinson and Bangwayo-Skeete (2016) account for the limitations in stock markets as indices of economic resilience, they highlight the economic disparities in the region that expose some countries to the impact of climate change more than others.

Another IMF report states that advanced economies are better equipped to absorb the cost of disasters such as hurricanes because generally they have access to private insurance, higher domestic savings and more robust market financing. 60 Laframboise and Acevedo (2014) suggest that climate change-related natural disasters can mire a Caribbean country’s economy in debt, using the case of Hurricane Ivan and Grenada to demonstrate this point. With damages totalling 150% of GDP, the Grenadian debt-to-GDP ratio rose by 15 percentage points in just one year, to 95%, a burden that continues to beset the island to this day. Thus, Caribbean islands must quickly build resilience into their economic models and RE systems, and exposing initial economic risk from damage incurred by hurricanes can mitigate delays in recovery from natural disasters. Ageing infrastructure, poor energy systems and limited management of risk through robust fiscal policies leave the Caribbean region in jeopardy to climate change and its impacts such as increased hurricane intensities.

Securing the region’s energy: the rise of renewables

The rise of renewables is synonymous with the decline of fossil fuels, but the Caribbean has not always had an amorous relationship with low-carbon economies. The region is heavily burdened and stressed by the undulations of oil prices that can send Caribbean economies into shock-responsive actions. Many islands in the region spend a large amount of their GDP on oil imports (in 2015 this averaged 8.74% among 13 island countries) and are at the mercy of global politics and oil superpowers as they aim to develop under stable fuel costs. 61 Trinidad and Tobago has escaped this dependence on oil entering its ports, with Trinidadian oil production removing the hindrances of higher energy costs to development, even exporting a significant number of barrels of oil to many other countries (between 1994 and 2019 oil production averaged 108 bbl/D/1K). 62 Although Guyana expected its GDP to increase by 86% in 2020 after Exon struck some of the world’s largest oil reserves off its coasts, many islands have continued to suffer as a result of asphyxiating energy prices. 63 In 2015 Trinidad and Tobago enjoyed (arguably blindly because of expensive government subsidies) an electricity cost of US $0.04 per kWh, while other countries such as Grenada and Dominica saw costs of $0.43 and $0.38/kWh, respectively to power their economies (electricity prices). 64 In the same year, Grenada spent 18% of its GDP on fuel imports. The wide variation in oil prices (the highest costs were recorded in the early 2000s), vulnerability to climate change, and a need for more sustainable and cleaner futures demand a shift from oil and other imported fuels in the region. Caribbean economies depend on improvements in energy security to build resilience and reduce the leverage of global oil prices.

Despite the currently troubled waters, the Caribbean had a much earlier start with RE sources than most regions. Hydropower played an integral role in the development of Britain’s economic island powerhouses during the colonial period, but hydro systems assumed a more important position in energy security once independence swept through the region. 65 , 66 Rising oil prices led to an increase in the use of hydropower as an alternative source of power in the 1960s and 1970s. However, when natural gas became a more affordable alternative in the 1980s around the world and in the Caribbean, there was a ‘dash for gas’ and the region as a whole witnessed a downturn in hydropower development. 67 Some countries scaled up hydropower at an early stage, however, with Belize and Suriname having an installed capacity of 102 MW and 194 MW respectively in 2018, largely owing to a few large utility-scale hydropower plants. 68 Hydropower is but one RE system, however, and the Caribbean has ramped up the other two giants, wind and solar power. The early 1970s also saw the rise of solar water heaters in Barbados, a policy that has been consistently applauded in the region. 69 Smaller projects include the wind turbine installation on the island in the parish of Saint Lucy, with other islands such as Jamaica experimenting with small wind turbine systems, installing the first grid-connected wind turbine (225 kW capacity) at Munro College in 1996. 70

In 2016 a 36-MW wind farm was installed in the parish of Saint Elizabeth, Jamaica, at the time one of the biggest private renewable energy projects in the region. The Caribbean has made significant leaps in utility-scale RE installations over the past 20 years and countries such as Jamaica are leading the way. Jamaica is a strong example of pushing the boundaries on conventional energy generation. The largest wind farm in the English-speaking Caribbean, at Wigton, was commissioned in 2004 and installed in phases, while the largest solar plant in the same category was commissioned in 2019 and produces 51 MW of power, bringing Jamaica’s renewable generation to approximately 20%. The island has not stopped there, bolstering efforts in energy security with the construction of an innovative 24.5 MW flywheel and Li-ion battery system in 2019. 71 Jamaica and Barbados are also building climate resilience through the transport sector, investing heavily in the deployment of electric vehicles (EVs) in both the private and public sectors. 72 , 73 With over 300 EVs on the road in Barbados in 2019 and plans to electrify the Jamaican public transport system, there are clear indications that the region is waking up to the need to build ‘climate-smart’ economies.

It is not just the English-speaking Caribbean that is leading the way. Cuba and the Dominican Republic top the charts in terms of installed capacity of RE systems with 669 MW and 1,017 MW, respectively. 74 The following statistics put these achievements in perspective: the Dominican Republic has the largest installed capacity in the Caribbean, with approximately 33,900% more than Trinidad and Tobago; Cuba comes a close second, having 216% more RE capacity than its five nearest neighbours combined (Turks and Caicos, Haiti, Jamaica, the Cayman Islands and the Bahamas). 75 The Dominican Republic has the largest solar farm (Montecristi Solar) in the Caribbean, accounting for an impressive capacity of 58 MW. The country is not stopping there. In May 2019 the Comisíon Nacional de Energía announced the launch of a further 12 approved projects that were expected to increase the generation of RE by 874 MW through a mix of systems including geothermal, wind and solar. 76

Utility is not the only means through which Caribbean governments are improving energy systems, however. Consumer-based projects and installations are making the Caribbean islands much more resilient and the opening up of markets on islands such as Curaçao with Feed-in-Tariffs for instance (example of early adoption) will foster more decentralized energy generation in the region. 77 The installation of more community and consumer-based RE systems can increase access to energy, improve rural electrification, and add significant robustness to the economy to bounce back after natural disasters and system-wide failures in the national grid, the true definition of ‘resilience’. There are losers in this race, however, both for utility- and local-scale installations, and the region is not as homogenous in the energy transition as many would hope. Diverse funding streams, conflicting national priorities, short-term political visions and differing economies of scale have left many outliers scattered along the way despite the Caribbean’s general trend upwards to increasing energy security through low-carbon alternatives.

Accelerated action

The Caribbean Climate-Smart Accelerator, launched in 2018 by a coalition that included the founder of the Virgin Group, Sir Richard Branson, was one of the first multilateral and co-financed climate change funds in the Caribbean. After Hurricanes Irma and María tore through the Caribbean in 2017, devastating dozens of islands (including Sir Richard’s private Necker Island), Branson called for a ‘Caribbean Marshall Plan’. 78 Branson’s programme initially intended to unite large financiers and world powers to address resilience in the Caribbean, but now comprises 26 countries, more than 40 private sector partners and a host of celebrities who have joined forces in order to stimulate, and as the name states, accelerate a more climate-resilient region.

In a recent AmericasBarometer survey by Vanderbilt University, it was found that 42% of US respondents believed climate change to be a very serious problem, whereas among the 10 Caribbean countries surveyed over 55% of respondents agreed the same; five of those 10 polled above 70% in agreement. 79 The Caribbean people clearly view climate change as a looming threat to their daily lives and economies and the Accelerator aims to restructure the region’s socio-economic underpinnings to become ‘climate-smart’. How exactly does one build intelligence into a region to prepare it for climate change? This is a difficult question, but some countries such as Dominica are leading by example.

In 2016 the tiny island of Dominica generated almost 28% of its electricity from wind, hydropower and other renewable sources, a strong contrast to a meagre 0.3% of electricity produced by Trinidad and Tobago (the Caribbean’s main oil exporter). 80 However, the 2017 hurricane season compelled Dominica to adopt a much more accelerated plan following the devastating passage of Hurricane María. In an effort to diversify its energy sources away from diesel, Dominica’s government secured US $30 million from the international Climate Investment Fund and a further $90 million from the United Kingdom to invest in geothermal energy. Among its many other climate initiatives, the country plans to generate 90% of its electricity needs from renewables by 2029, and has been celebrated internationally for its government’s efforts to become the world’s first climate-resilient country. 81

These policies are clear examples of what Sir Richard Branson and many Caribbean leaders call ‘climate-smart’, and while they prepare countries for extreme weather, they also create jobs and boost key industries. The end goal of the Accelerate programme is to develop Caribbean economies that are custom-built for a future on a warming planet. However, many islands had in fact already embarked on this journey before the ravages of the 2017 hurricane season saw the ushering in of Branson’s ‘Marshall Plan’. Jamaica and Barbados have ambitious RE plans (see above) and many islands were among the first advocates and signatories of the Paris Agreement. However, financing these plans has always been a challenge and gaining access to the plethora of international funding agencies has left many government bodies struggling to meet strict criteria in a saturated and competitive environment. The Accelerator programme aims to speed up this process but many Caribbean economies do not have the luxury of time.

‘Your CO2, your cost’

Colleagues, we are just starting to fully grasp the scale of the adaptation financing needs as climate related events become more frequent and severe. … Last year, when the Secretary-General asked me to partner with President Macron of France in undertaking the political advocacy required to mobilise the sums needed to support the implementation of the Paris Agreement, I thought it was a very tall order. Today, thanks to the increased ambition and commitment shown by countries such as France, Norway, the United Kingdom and Germany, I am filled with hope that we are on the right track.

The Most Honourable Prime Minister of Jamaica, Andrew Holness 82

It hasn’t always sounded this cordial in the press room. Climate change questions have been subject to fierce argument by politicians on both sides of the debate. The developed nations sit firmly on their hands and draw their purse strings tighter. Meanwhile, the developing nations voice their concern that their development cannot be controlled by wealthier and well-matured economies. Stuck in the middle of these heated political battles, ratifications and sanctions are their vulnerable small island counterparts which not only are struggling to bolster their economies but are facing the full force of climate change. With many islands such as Vanuatu, Kiribati and others in the Central and South Pacific already facing the calamitous impact of sea level rise, many low-lying Caribbean islands are quickly waking up to the need to respond to this threat to their very existence. But who will pay to mitigate the effects of climate change?

With climate change stirring many fears about economic security in the region, can the Caribbean afford the bill? Hinkel et al. (2014) purport that without any significant action, sea level rise – just one major impact of a changing climate – could cost the world’s economy up to US $100 trillion per annum by 2100. The estimated gross world product for 2018 was less than $90 trillion. 83 It is not just sea level rise that is of concern. In the event of global warming reaching 4°C, it is predicted that tropical storms and cyclones will cost the Caribbean region up to $350–$550 million per annum by 2100. 84 The combined costs of climate change far surpass the Caribbean countries’ overall economic output and resources, and naturally they will turn to the more advanced economies for help with footing the bill. It is highly likely that the developed nations have caused much of the anthropogenic effects of climate change through industrialization. Economic powerhouses such as the USA and the UK have also heavily profited from the deliberate suppression of the Caribbean region during the colonial era while going on to become some of world’s largest CO2 emitters (in 2017 the USA was the world’s second highest emitter of CO2 with nearly 5.3 billion metric tons of CO2accounting for 15% of total global emissions). 85

The People’s Republic of China has the world’s highest levels of CO2 emissions, but it would surprise many to know which countries come in at first and second for per capita emissions. Trinidad and Tobago firmly holds second position in the world since 2006, behind Qatar, for CO2 emissions per capita (30 metric tons per capita in 2017) and this oil-rich Caribbean nation stands squarely juxtaposed in the climate debate. 86 Developing countries can be now seen as major polluters as more are lifted out of the low-income status and development is on the rise (11 lesser-developed countries were among the top 20 CO2 emitters in 2017). 87 However, can they be expected to equally contribute to the fight against climate change too?

Many observers argue that the Caribbean is inadequately prepared to tackle the economic severity of climate change without the support of accessible financial pipelines and investment funds from developed countries and major financial agencies. Mia Mottley, the Prime Minister of Barbados, rightly stated to the 74th UN Assembly:

We don’t come as a proud people asking for handouts. What we want, what we need, is fiscal and policy space to achieve sustainable development, and be nimble to adapt in ways that allow us to be true and faithful to the task in ways to bring prosperity to our people.” 88

She was right. Caribbean government leaders have made it explicitly clear over the past decade that they will continue to urge funding bodies to help to finance their pathways to achieving the 17 UN Sustainable Development Goals. Many have come willingly to these calls. Leading agencies and international bodies, including the IMF, the World Bank, the Rocky Mountain Institute and even the United Arab Emirates, are all pushing for the region’s development with much less political pressure as seen in previous decades (as with Jamaica’s IMF loans that left the economy burdened for over two decades). Even though the Caribbean is embracing the fresh rush of investors into the region, ‘at arm’s length’ is a term that should not fall on deaf political ears. Controversial programmes such as China’s Belt and Road Initiative may come with very little political interference and seemingly ‘no strings attached loans’ but the strategic push of China globally and within the Caribbean has been well documented. Increasing island connectivity and infrastructure can build resilience to climate change, but as was seen in the case of Jamaica, when that comes with a price tag of 500–1,200 acres of land and a 50-year commission of tolls from the road linking north and south Jamaica known informally as the ‘Beijing Highway’ that was constructed with Chinese aid, has resilience come with reduced economic security? 89 , 90

Let us end this section by noting that often it is not the question of ‘who is going to pay? that bogs down the Caribbean region’s leaders and researchers, but how to make the billions of dollars of international aid more accessible and fairly distributed within the Caribbean (the region is often lumped together with Latin America for instance, which is in itself an iniquitous comparison). The hurdles of bureaucratic proposals and grants often inundate agencies that are already stretched too thinly and are understaffed. The key to ensuring a less vulnerable Caribbean in the near future may lie in streamlining financial aid to the region, reducing the constraining and unnecessary competitiveness, and opening up funding grants to new streams of climate financing. Seychelles, for instance, undertook a ‘debt-for-nature’ financing deal with the Nature Conservancy in 2018, gaining much-needed investment capital and debt restructuring while protecting 30% of its national waters in return, with 15% being listed as ‘no-take’ zones. 91 Will the Caribbean be able to innovate its climate financing in a similar manner in order to overcome decades of constraint?

The economy of the everyday

This chapter has thus far highlighted the vulnerability of the Caribbean economies to climate change and the manifold implications thereof. However, nothing demonstrates the urgent need for economic restructuring and the building of resilience like the nature of the ‘Caribbean everyday’ in 2050 and beyond. It is only when we take these blistering statistics and evidence of political ineptitude and place them in the context of the vulnerability of ‘everyday’ and the ‘not everyone is equally affected’ does the full picture refocus to help us to better understand the issues at hand. The region’s economies are increasingly being shaped by closely interconnected aspects of volatile job security, the possibility of large numbers of climate refugees, and even gender disparities owing to climate change.

Take climate refugees, for instance, who are expected to number hundreds of millions globally by the end of this century. A fragment of a country’s economy can be viewed as being uprooted when a person flees due to the dire economic/environmental state of their region. Equally, mass migration and the overwhelming number of climate refugees can bring complex difficulties to their host countries as they seek a better way of life. Owing to the limitations of space, this section will not examine in-depth the intricacies of climate migration, but it is very important to note that climate migration poses a major threat to the Caribbean economies. Over 50% of the region’s population live within 1.5 km of the coast, and many islands have low-lying coastal regions with mountainous and often protected interiors, therefore the pinching of communities away from the coastlines by rising sea levels will have a dire effect on socio-economic stability. 92 Both inter- and intra-migration will bring many countries which have poor regulations and policies to their proverbial knees as they are overwhelmed by increasing numbers of people seeking ‘climate asylum’ in the Caribbean, accompanied by massive drains on their economies as they inevitably relocate outside of the region completely.

These are not warnings of distant futures. During the 2017 hurricane season some 160,000–175,000 Puerto Rican locals relocated to the USA less than a year after the devastating passage of Hurricane María (the worst recorded for the period 1941–2018). 93 , 94 That same hurricane also displaced one-fifth of Dominica’s population (i.e. 15,000–20,000 inhabitants) within a month of its passage. 95 Some may return to their homes in the short term but given the increasing intensity of these tropical systems, many climate migrants in the Caribbean will become permanently displaced as their communities struggle with Herculean post-disaster recoveries.

Some Caribbean countries may be able to absorb a proportion of these climate migrants temporarily, albeit that these same islands may themselves be victims of climate change with concomitant incapacitated systems and resources. Trinidad and Tobago may be a high-income economy, but its recent affairs in connection with the Venezuelan crisis have left the government controversially handling immigration into the country. The twin-island state has failed to implement effective policy which addresses the sharp increase in migrant workers and people seeking asylum from Venezuela. Tensions will continue to rise throughout the region if Caribbean Community (CARICOM) member states do not tackle crucial migration policies. The increasingly toxic stance of more developed neighbours such as the USA towards migration pose a large threat to economic opportunity in post-disaster environments as Caribbean migrants are not the only ones knocking on their doors. The gradual breakdown of socio-economic relations and human functioning will undermine the very foundation of fragile Caribbean economies, resulting in a proliferation of black markets, rising unemployment, further environmental degradation due to debilitated communities and resources, and the overall slumping of productivity and output within the region.

The cyclical nature of migration will be difficult to break. Farmers selling and abandoning their flooded or parched fields in increasing numbers to seek opportunities abroad will drive food prices up owing to heavier importation bills, thus further weakening the economy and enhancing economic push factors. The arrival of more frequent storms could force many Caribbean islands deeper into debt, rendering them even more vulnerable to the following year’s hurricane season. Worsening weather extremes will cause disruptions to the region’s energy infrastructure, and even the RE systems will need to adapt and become more resilient. 96 The emigration of young professionals and academics abroad (known as a brain drain) due to reduced economic prosperity and job opportunities will have a negative effect upon even the sturdiest of economies. History has provided many examples of the impact of environmental stresses on economic stability, and widespread conflict and unrest can start with barren fields, although caution must be exercised when attributing large-scale socio-economic collapse to anthropogenically induced climate change. 97 Nevertheless, further unrest and greater economic downturns will not only increase emigration from the Caribbean, but equally it will reduce immigration and discourage visits to the region. Fewer tourists will wish to visit recently battered beaches and damaged resorts, they will have less money to spend as inflation and food prices soar, and even fewer still will board planes destined for a region that potentially has been red-flagged by their home countries as ‘socially and economically unstable’.

The vulnerabilities to climate change become more poignant and urgent when viewed in the context of unequal consequences. Unfortunately, climate change and the impact thereof are prejudicial by nature, preying on the most vulnerable communities and those unable to weather its storms. Interestingly, a recent study has rooted this argument in the Caribbean’s colonial past, referencing the impact of Hurricane Dorian on the Bahamas in 2019 whereby residents in the same community were affected in varying ways by the same hurricane depending on access to housing that had been intentionally weather-proofed decades ago. Von Meding et al. (2019) aptly state that ‘Disasters are not “natural events”; they are long-term processes of accumulated risk and impact’, highlighting that these extreme events in the Caribbean become disasters through a differential lack of preparedness. 98 The poor will always face the brunt of climate change owing to the fact that they live in high-risk areas (low-level coastal regions, flood plains, etc.) and to their heightened dependence on ecosystem services for their livelihoods. 99 A growing field in climate studies is the understanding of marginalized communities within climate-related disasters and the impact that they have on people. Women, children, the elderly and differently abled citizens will experience climate-related disasters with more adverse consequences as gender-, age- and ability-insensitive policies fail to recognize their increased vulnerability.

The outlook is not entirely bleak, and the fate of the Caribbean largely lies in the political order of the day. It is clear that climate change will have an irrevocable impact on Caribbean economies if inaction continues, but the region is undergoing considerable change. This chapter has taken the reader through the complexities of the Caribbean both historically and within present-day constraints but has also highlighted low-hanging opportunities for building climate resilience. Islands in the region can become ‘climate-smart’ models through the fortification and overhaul of ageing energy infrastructure, strengthened and accessible financial systems, increased investment in research and policy innovation, and the protection of their most vulnerable communities. Many SIDS across the world are being forced to do the same. With some island states like Kiribati even buying land on other islands as a sort of ‘climate insurance’ policy as their communities are literally being washed away, not all SIDS have the luxury of a period of grace in which to take action. 100 The Caribbean will need to put innovation at its political and financial core if its economies are to survive until the end of the century and beyond intact. Climate change will have an impact on the very nature of what is seen as the ‘everyday’ in the Caribbean, and our anecdotal vision of ‘sun, sand and sea’ will be revised with many islands experiencing ‘sargassum, scorch and swells’. While some in the Caribbean will temporarily benefit from the vagaries of climate change and its uneven distribution of weather-related phenomena, overall, the region risks suffering greatly without urgent and collaborative action. As the region’s islands sink into the sea, innovation will be needed to keep its fragile economies afloat.


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