UNDP SIDS Bulletin | Year in Review

Special Edition | 2021 In Review

Image: UNDP Papua New Guinea

This year in climate has been marked by the UN Climate Conference (COP26) taking place in Glasgow from 31 October – 12 November 2021.  The conference was the first fully multilateral negotiation since the onset of COVID-19.  Over 120 Heads of State and Government attended, alongside the UN Secretary-General, business leaders, activists, researchers, and the media.

Going nearly a day overtime, COP26 concluded with the adoption of the Glasgow Climate Pact. Delegations had worked around the clock for two intense weeks, hashing out key issues for reducing emissions, increasing resilience to climate impacts, finance, technology, inclusivity, forests, agriculture, gender, and capacity building. 

Concerns and questions remain on major, longstanding issues for developing countries, especially loss and damage and scaling-up of climate finance. There remains a climate finance gap, which has eroded trust between developed and developing countries. Balance between mitigation and adaptation finance, as requested by developing countries and the UN Secretary-General, and a finance mechanism for loss and damage also have yet to be realized. UNDP will have a key role to play as these discussions evolve.

Regarding momentum achieved during the COP, Scotland announced it will partner with the Climate Justice Resilience Fund to “address loss and damage” caused by climate change and pledged £2 million towards helping the world’s most vulnerable communities repair and rebuild after climate disasters. This is the first time a developed country government has put forth funds specifically to address loss and damage.  Read more about the outcomes of COP26 for SIDS in issue 51 of UNDP’s SIDS Bulletin.

Loss and damage is an issue central to SIDS’ climate adaptation and mitigation efforts. To SIDS this is a matter of equity, equality, and survival. SIDS are at the junction of the climate crisis and external economic shocks; both often interplay resulting in sudden large losses due to extreme weather events. Recovery and rebuilding efforts often increase external debt which often cripples access to finance and thus SIDS continue to suffer from actual and perceived “high risk” status to investors from the private sector. Youth and future generations of SIDS inherit a complex and unfair situation.

In reflection, it is more apparent than ever that crises have a compounding effect on SIDS – even more reason to no longer think in silos and work on interconnected solutions. Using digital tools to conserve the environment, adapting to and mitigating the impacts of climate change – leading to preserved livelihoods as the natural capital of SIDS represents a large percentage of their economies.

Image: Unsplash

The resilience of small islanders is renowned and the demand to adapt quickly has seldom been greater. SIDS are currently faced with at least 3 major and concurrent interconnected transformations. The COVID-19 pandemic has disrupted tourism with severe impacts on SIDS economies, with tourism accounting for more than 30% to 80% of total exports in most SIDS in the Caribbean and Pacific, and an overall 2020 decline in GDP of 6.9% (compared to 4.8% in other developing countries). However, the rapid digitalization that has accompanied the pandemic is a second transformation that has opened new markets is helping to diversify the economy, and emerging technologies like blockchain, artificial intelligence and the internet of things are transforming capacities to monitor, assess and adapt, while social media is transforming democracy and eroding public trust. Meanwhile, the climate crisis continues to threaten SIDS with more severe weather systems, rising sea levels and the acidification of oceans.

The question is: how are SIDS adapting to this triple transformation and how is the fourth industrial revolution creating opportunities for climate resilience and broader innovation in diversifying the economy? We see SIDS tackling tourism shortages with emerging new markets of remote workers, tracking coral reefs and invasive species in Barbados with underwater robots, and using drones in Cape Verde as a cost-effective way to take climate action, spreading seeds and fertilizers to drive reforestation and soil restoration. Vanuatu’s graduation from LDC status has been attributed in part to the government’s leadership and efforts to embrace digital technology as a development enabler.
 
UNDP has supported advances such as digitizing health-care services to reach marginalized and remote communities in Lusophone SIDS. Both Cape Verde and São Tomé and Príncipe have implemented open-source district health information systems (DHIS2) to better extend health-care services to vulnerable groups. The Pacific Financial Inclusion Programme has been at the forefront in driving uptake and innovation in digital financial services in the region. Supporting seven SIDS—Fiji, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga, and Vanuatu—this joint initiative in partnership with UNCDF was launched in 2008, and since then has supported 2 million low-income Pacific Islanders to gain access to formal financial services and financial education.

Image: UNDP

Digital payments are a fast-growing pillar of the digital revolution, with the global digital payments market at USD 5.44 trillion in 2020 and projected to be worth USD 11.29 trillion by 2026. SIDS have been pioneers leading innovation along this digital frontier in digital central bank currencies. The Bahamas was the first government in the world to launch fully a digital central bank currency, with the Eastern Caribbean central bank close behind, rolling out its DCash in March 2021 in St. Kitts and Nevis, Antigua and Barbuda, St. Lucia and Grenada. With the technology proven and piloted in smaller markets, the Barbados company behind DCash, has rapidly scaled up as the technical provider for the eNaira the digital central bank currency of Nigeria a country with over 200 million people.

We have recognized digital technology as a fundamental driver of change, reshaping economies, government, and civil society. Already featured as a core pillar in the UNDP SIDS Offer Rising Up for SIDS, digitalization and strategic innovation have been identified, along with development financing, as the key enablers to maximize development impact in UNDP’s new Strategic Plan 2022-25.

Moreover, we have rapidly expanded capacity to support digital transformation in SIDS in 2021, with a focus on a whole-of-government assessment and support to strategic visioning and national agendas to embrace the emerging opportunities of the digital age. Dominica was the first country to pilot the Digital Readiness Assessment (DRA) tool, as a first step towards developing a national digital transformation strategy in collaboration with UNDP. In 2021 we rolled out the DRA in all regions, with country assessments completed or underway in 10 SIDS.

We introduced a new network of digital advocates spearheading digital skills and capacity for country offices personnel and digital-by-default approach to programming and we added capacity to the Accelerator Labs, now will 11 labs covering SIDS in total or 6 of the latest 30 to be added to the network, covering 75% of SIDS countries. UNDP collaborates with the Government of Singapore, a leader among SIDS in advancing digital transformation, on the Global Centre for Technology, Innovation and Sustainable Development, which has been providing direct support to SIDS governments and country offices in areas of digital agriculture, digital health, smart islands and digital readiness assessments.

Image: UNDP Timor-Leste

While SIDS have first conceptualized the Blue Economy concept at the international level during the Rio+20 conference, the use of the ocean for economic growth in SIDS is not new. There are several established Blue Economy sectors like fishing, maritime transport and coastal tourism, that play important roles in the economies of SIDS.

There are also emerging Blue Economy sectors including sustainable aquaculture, marine renewable energies, and marine biotechnology that are receiving a growing interest from SIDS. What is new with the concept of sustainable Blue Economy is the recognition of the importance of ocean health for the sustainable socio-economic development. In fact, the rush to harness this potential exacerbates the risks on marine ecosystems and the people who depend upon them. The annual socio-economic costs of unsustainable ocean use now approaching US$ 1 trillion per year (UNDP estimate) including losses estimated at US$ 83 billion/year for overfishing, US$ 200-790 billion/year due to coastal hypoxia and eutrophication, and US$ 100 billion/year loss caused by invasive species. These losses are even more pronounced in SIDS where the increased effects of climate change exacerbate the problem. Unlocking the full potential of the sustainable Blue Economy can not only assist countries in achieving SDG 14, but also contributes to the achievement of other goals including SDGs 1 (Poverty), 2 (Hunger), and 13 (Climate). 

The synergies between climate action, digital transformation, and the blue economy, with innovative development finance as an enabler, currently serve as the framework for UNDP’s SIDS offer to achieve sustainable development across all of the world’s SIDS. Because of their limited land sizes and huge ocean territories, SIDS possess real potential to become incubators for new Blue Economy innovations. During the last two years, SIDS have continued to exemplify the sustainable blue economy concept on the ground by innovating in climate action, digital technologies, and innovative finance toward achieving balance between economic growth, social wellbeing, and ocean ecosystem sustainability.

Image: GEF SGP Belize

Nature-based solutions are one of the most versatile ways to engage in climate action. Mangroves, seagrasses and tidal wetlands are significant carbon sinks, holding 4.8 gigatons of carbon globally. By restoring mangroves and coral reefs, SIDS can not only preserve biodiversity but will also increase resilience to climate impacts such as sea-level rise and coastal erosion. Restoration efforts using innovative technologies to map coral reefs have been undertaken in Mauritius and Seychelles. In Fiji, nature-based seawalls, an integrated solution involving a hybrid of “grey-green” infrastructure, is being used to build resilience for coastal communities to climate‑impacts with the ambition to incline towards nature-based solutions in the years ahead. A policy review of governance frameworks is being undertaken in Fiji, Jamaica, and Mauritius to identify and disseminate best practices in mangrove sustainable use, conservation, and restoration.

Fisheries is a key sector in most SIDS as it provides food, livelihoods and generates opportunities in goods and services provision. In SIDS, its average share in GDP is about 3 per cent, but can be as high as the 80 per cent recorded in Kiribati. The use of digital tools to improve the sustainability and profitability of this sector have been gaining momentum in SIDS: Vessel Monitoring System (VMS), a satellite-based system that monitors the position, speed and direction of registered fishing vessels, is being used by the Pacific Islands Forum Fisheries Agency (FFA) members to track and monitor Tuna fishing activities across the region. In Micronesia, large-scale tests of electronic monitoring of fish catches, using high resolution digital video cameras, confirmed that the upscaling such tools could inform improved fisheries management. Blockchain technology is now being used in Pacific and Caribbean SIDS to improve seafood traceability. Smartphone apps are shortening the seafood value chain and improving sales for fishermen in Barbados.

Improving access to finance, through innovative financing methods and traditional financing sources is a prerequisite to ensure the establishment of vibrant Blue Economies. In this space, SIDS have continued to play the role of incubators in the development, replication, and scaling up of innovative models. In Papua New Guinea and Fiji, new insurance and financial products, designed to protect fishing communities against the growing threat of climate change-related ecosystem, human, and economic losses are being established. Cape Verde is launching Blue-X, the first global platform exclusively dedicated to sustainable financing to capitalize on the blue economy at domestic level, but also in the sub-region with the aim of serving other SIDS. The government of Fiji has recently announced its intention to launch its sovereign Blue Bond, the first in the Pacific, to resource a steady course towards a sustainable blue economy and a decarbonized shipping sector.

To support SIDS’ Sustainable Blue Economy transformation during the coming years, UNDP has intensified its resource mobilization efforts in 2021 through the development and submission of two PIFs (Project Identification Forms) to the GEF. First, the US$ 15 million PROCARIBE+ proposal, which concept has been approved by the GEF in May 2021, will contribute to the protection and restoration the Ocean’s natural Capital, and support Investments for sustainable Blue socio-economic development in the Caribbean region including 10 SIDS. In addition, a second concept, with a grant value of US$ 9 million, has been approved by the GEF last November and will support all 7 Atlantic and Indian SIDS in their sustainable and inclusive Blue Economy efforts.

Image:  Montserrat/Wikiwand

Data has played a key role in 2021 to support the structural, financial, and technological transformation necessary for SIDS to meet their climate pledges and respond to the 2030 Agenda. Data plays a key role to help amplify SIDS voices as well as demonstrate their vulnerabilities and opportunities for transformative development. To develop effective policy, there is a necessity to have access to qualitative and quantitative data, which require policymakers having access to leading digital tools designed with their specific needs in mind.

SIDS are great testbeds for innovations because of a strong political willingness and political commitment to sustainable recovery. As an example of holistically integrating data and digital technologies into SIDS, ITU has launched the Smart Islands programme to support a whole-of-government approach, built on four pillars to improve broadband connectivity, making broadband affordable, enhance digital skills, and provide digital services built into local knowledge systems.

Moreover, country-level indicators play a key role in vulnerability assessments, accountability and transparency, and monitoring development progress through the development of multidimensional indices. For example, in an index of climate vulnerability for marine fisheries, seven out of the ten most vulnerable countries were found to be SIDS. This study also identified a strong negative correlation between this vulnerability and per capita carbon emissions as well as growing inequality in development groups, demonstrating the need for effective climate finance, capacity building, and transfer of marine technologies to lower barriers to adaptation. The Ocean Health Index is an example of a statistical index that embraces the large ocean states approach by analyzing the EEZs of each country related to goals in coastal protection, fisheries, tourism, biodiversity, and other pillars of the blue economy. Other indices that are helping identify vulnerabilities and opportunities in SIDS include the Notre Dame Global Adaptation Index, the Environmental Performance Index, the Sustainable Society Index, the Readiness for Frontier Technologies Index, and the many indices offered within the Human Development Report. However, one key constraint in statistical development of SIDS is the limited capacity of national statistical offices which restricts them from integrating data into their development agendas. Since small islands rarely could achieve economies of scale, data science and automation tools can be powerful assets in enhancing local capabilities.

In regard to the use of metrics and classification access to finance and the relationship of International Financial Institutions and private capital to SIDS, it is important to reflect back on the discussions that took place around the creation of a multidimensional vulnerability index, as a response to the call of member states through the UN General Assembly SIDS resolution passed in December 2020.  Read the Secretary General’s report on MVI, compiled by UNDESA and OHRLLS for further details.

Image: Kiribati/ESA

One of the defining features of SIDS is their small land area, but SIDS are often better considered as large ocean states since their vast exclusive economic zones (EEZs). Because of their size and remoteness, the SIDS also face challenges in topographic and thematic invisibility, which will require innovative solutions and significant local capacity-building and data collection efforts to address.

Multiple SIDS have also launched open data portals including Jamaica and the Dominican Republic, which typically host government data contributed to by a wide range of sources including state and federal agencies and private sector. These unified portals not only present and visualize data to drive decision-making but also highlight essential data gaps. These open data initiatives have become symbols of good governance and transparency to enable the data revolution. Another recent example is the Pacific Ocean Accounting Portal launched through a partnership between ESRI and ESCAP to use geospatial data to analyze ocean ecosystem services including fishing, tourism, and shipping. To build national strategies and increase transparency of climate mitigation efforts, it is necessary to develop monitoring, reporting, and verification (MRV) systems for data collection and management to identify emissions sources and design optimized mitigation strategies. Grenada has established the Caribbean Cooperative Monitoring, Reporting and Verification Hub to help Caribbean nations with their NDC tracking mechanisms by sharing data and raising climate ambition.

Ecosystem and resource mapping is entering a golden era where the technologies are well in place to create reliable global models essential to decision-making. One recent innovation is the Allen Coral Atlas which has used two million Planet images, ground data, and machine learning techniques to create the first-ever, high-resolution spatial and thematic global mapping of tropical shallow coral reefs. The Blue Bot project has taken another approach to use semi-autonomous underwater robotics to map Caribbean coral reefs using computer vision techniques. These monitoring systems are key to identifying methods for addressing vulnerability and resilience. 

Many new innovations in the use of geospatial intelligence and machine learning for marine spatial data have evolved in SIDS in the last year. In Fiji, the Commonsensing Project is using satellite data to analyze and evaluate baseline conditions and to measure climate-related changes over time in aspects, such as deforestation, sea-level rise, flooding, land degradation, fisheries, coastal protection, and food security. Neural networks and multivariate statistical techniques are also used to forecast Effective Drought Index in Fiji. Machine learning techniques such as fully convolutional neural networks, logistic regression, linear support vector machine and Naïve Bayes have all been adopted in analyzing satellite images to identify deforestation in the Caribbean.  Another example is the implementation of a national flood forecasting system in Guyana which autonomously collects available rainfall observations and feeds into a machine learning hydrologic model to forecast floods. Machine learning also plays a key role towards monitoring progress towards meeting the SDGs and the SAMOA Pathway in SIDS by using satellite and street-level images alongside machine learning techniques to predict poverty, examining child mortality rate, women’s health, education, clean water, sanitation, and classification of land cover and so on. The innovations in SIDS from the last year have proven yet again that they are leading the world in action and advocacy.