Abstract
Antigua and Barbuda is experiencing the physical adverse impacts of climate change. Future impacts are likely to include physical changes such as the increased severity and frequency of weather events including: hurricanes, flooding, severe drought, freshwater scarcity and rising sea levels. Policy changes as a result of climate change are also anticipated, including the pursuit of the country’s ambitions towards net zero emissions by 2050 and a transition from fossil fuel to renewable energy generation in the energy and transport sectors. These physical climate risks and impacts of the transition will adversely affect the structure and actors in the real economy and the financial sector. Physical risks erode collateral and asset values in financial institutions, with a negative impact on insurance liabilities. Transition risks can lead to value reassessments by financial market participants as policies, technological advances or changes in public opinion occur, decreasing asset prices.
Antigua and Barbuda must work to adapt to these adverse impacts that are set to intensify. Despite the fact that country has only contributed to a very limited extent to the causes of climate change, it has high ambitions to serve as an early implementer of the longterm goals of the Paris Agreement. Antigua and Barbuda has articulated strong climate targets in its first NDC and intends to spur innovation and international action while showcasing the national development benefits of a strong climate action agenda.
The costs of not acting to adapt to climate change are likely to be high. It is worth recalling that immediate post-disaster estimates put physical asset destruction as a result of Hurricanes Irma and Maria in 2017 at XCD 367.5 million (USD 136.1 million).1 Yet, meeting the financing needs of climate action in Antigua and Barbuda is challenging. There are many competing development and economic growth priorities, and spending for adaptation, mitigation and loss and damage response to climate change will be constrained by the country’s high debt and recent graduation to high income status. While developed countries have an obligation, based on historical responsibility, under the UNFCCC to support climate action in developing countries, in particular SIDS such as Antigua and Barbuda, international grant and concessional public finance is insufficient to meet global needs. The scale and pace of the transition to low-emission, climate-resilient pathways requires substantial private investment and a shift in the way that domestic finance is spent. To this end, Antigua and Barbuda is committed to making all finance flows consistent with a pathway towards low-emission, climate-resilient development pathways. This is the third long-term goal of the Paris Agreement, without which adaptation and mitigation goals cannot be achieved.
This report aims to provide an assessment and overview of Antigua and Barbuda’s public and private finance flows relevant to climate change. In doing so, it identifies climate-related finance within budget spending and international climate finance receipts. It considers how private actors have engaged with, or are affected by, climate change and surveys the tools available to the Government to make all finance flows more consistent with climate actions. It is supported by the Needs-based Finance Project of the UNFCCC secretariat, which aims to support developing country Parties in achieving their goals and commitments in the context of the Paris Agreement. This report acts as a springboard for Antigua and Barbuda, and ongoing projects will continue to refine the methods within, and complement the results of, this report.