The Costs of Climate Adaptation: What I Learned in Tuvalu

Tuvalu is one of the most climate-vulnerable countries in the world, where climate adaptation is no longer just an idea, but a matter of survival. Launched in 2017, the Tuvalu Coastal Adaption Project (TCAP) is the first of its kind to protect the country’s coastline from rising sea-levels, erosion, and saltwater intrusion. Despite negligible contributions to global emissions, small island states in the Pacific like Tuvalu face disproportionate impacts from negative externalities like climate change.

The voice of the state of Tuvalu is highly relevant to the conversation of climate adaptation as it expected to be one of the first, if not the first, countries in the world to become uninhabitable due to climate change induced sea-level rise. With an average land elevation of 1.9 metres above sea-level, at high tide, 40 percent of the capital of Tuvalu, Funafuti, is submerged and is forecasted to be entirely submerged by 2100.

With Tuvalu’s highest point being barely two metres above sea level, small increases in sea level worsens their situation. To address this, Tuvalu launched TCAP in partnership with the UN Development Programme (UNDP), supported mainly by the Government of Tuvalu (US$2.9 million, Green Climate Fund (US$36 million), Australia’s Department of Foreign Affairs ($1.34 million) and the Republic of China -Taiwan (AUD$3 million). Due to the relatively small economy with a forecasted budget of AUD$114.1 million, Tuvalu’s capacity to finance this project alone is limited. Therefore, the ability to finance future adaptation is constrained by dependence on international support in the form of grants rather than loans.

There are multiple sites that TCAP has been started on, with TCAP 1A due to be late 2025 costing around US$19.5 million. Work has also begun on phase two of TCAP with Hall Pacific, a marine civil works company active in the Pacific, being tendered again to work on another TCAP site. With specialisation in dredging, land reclamation, coastal protection, and other marine-based engineering work they are an important component of implementing TCAP into reality.

The budget is allocated across various factors including labor and complex equipment and materials that need to be shipped from other countries like Fiji and Australia due to Tuvalu’s remote location. While Hall Pacific employs foreign contractors from other countries like Australia and New Zealand, they also employ local Pacific Islanders, including a number of Tuvaluans, to work on TCAP generating employment and training. Due to the requirement of importing materials and foreign contractors, there are leaks overseas from capital and therefore, limits on the local multiplier effect in the domestic economy.

It is estimated that 62% of the population of Tuvalu will benefit from TCAP directly and indirectly. The economic analysis by UNDP also points to that TCAP may potentially reduce annual losses (including statistical value of life) worth up to up to $667,000 over 40-year time period. However, this figure is modest in comparison to the amount of investment in the project. Despite this, it considers the non-market outcomes and the benefits of cultural preservation, national identity and preventing land loss which traditional economic models often fail to capture.

The project is only being implemented on just three of Tuvalu’s nine islands (Funafuti, Nanumea and Nanumaga) leaving already vulnerable outer island communities unprotected.

Outside Tuvalu, it is estimated that projects to adapt or manage the effects of climate change induced sea level rise across atoll or small island nations in the Pacific could cost nearly USD$10 billion in total.

Adaptation may buy time but cannot eliminate all risk. Even with TCAP, rising seas will continue to demand more spending over time and there is a concern that each additional metre of coastline protected becomes more expensive as risks increase. As the first of its kind, there are questions about the lifetime of the project materials, settlement of the TCAP land reclamation to safely build and long-term sustainability of these investments. TCAP, while important, is only a partial solution to protect all vulnerable coastlines and small island developing nations like Tuvalu.

TCAP highlights how adaptation in small island economies is not just an environmental challenge but an economic one.