Caribbean small island developing states (SIDS) bear little responsibility for causing the climate crisis but are among those most at risk from its impacts. Repeated economic setbacks from one extreme weather event after another are pushing these already highly indebted nations into a downward debt spiral.

This report highlights the cyclical relationship between climate-induced loss and damage and growing fiscal debt levels in Caribbean SIDS. Climate disasters force these countries to borrow to fund emergency responses. This further drives up their fiscal debt, which in turn hampers their ability to invest in climate adaptation, resilience building, and long-term development.

A key challenge concerns the ability of Caribbean SIDS to accurately quantify loss and damage, especially non-economic losses, such as the loss of cultural heritage or mental health impacts. Current methodologies are often insufficient, and there are substantial data gaps that hinder effective policy and financial responses.

Innovative financial solutions, such as debt-for-climate swaps, catastrophe bonds, and parametric insurance, can provide rapid financial relief without exacerbating debt burdens, offering a more sustainable path towards recovery and resilience building.

Local communities and civil society organisations should also play an important role in designing, implementing, and overseeing loss and damage funds. Empowering vulnerable groups through participatory governance approaches is essential to ensuring that funds are used effectively and equitably.

Crucially, financial mechanisms must be based on principles of climate justice and should not exacerbate the region’s debt burden. Financial support should prioritise the needs of the most vulnerable in society and be just, equitable, accessible, and inclusive, particularly for marginalised groups and communities.

To address the interconnected debt and climate crisis, the region needs better access both to data on loss and damage and innovative finance. By sharing knowledge, pooling resources, and jointly applying for international climate finance, Caribbean SIDS can work together to address many of these challenges.

For Caribbean SIDS to break the cycle of debt and climate vulnerability, the global community must come together to progress much needed reform of the international financial architecture, support regional collaboration, ensure that climate injustices and multidimensional inequalities are not propagated, and ramp up near and long-term climate action for a 1.5ºC aligned future.

The report outlines the following policy recommendations:

Strengthen loss and damage data and measurement for comprehensive understanding
Accurate, consistent, and holistic data form the bedrock for effective loss and damage policy, advocacy, and financial allocation, helping move beyond underreporting and data inconsistencies.
Enhance equitable access to and design of loss and damage finance
Ensuring efficient, debt-free, and just access to dedicated loss and damage finance, particularly from the recently operationalised Fund for Responding to Loss and Damage (FRLD), is critical.
Promote debt sustainability through innovative financing solutions
To break the detrimental cycle of escalating loss and damage and increasing debt burdens, the strategic deployment of innovative, non-debt-increasing financing mechanisms that support long-term resilience building is essential.
Foster climate justice and community-led action
Ensuring that innovative financing mechanisms directly empower and benefit local communities and vulnerable groups while upholding human rights and climate justice principles is paramount.
Strengthen regional and international collaboration and systemic reform
A concerted, collaborative approach across all levels is essential for long-term success, advocating for systemic changes in the global financial architecture

Article 6.4 progress update: work of the Supervisory Body on the Paris Agreement Crediting Mechanism

The Article 6.4 mechanism, now known as the Paris Agreement Crediting Mechanism, allows countries to trade reductions in carbon emissions in a manner that goes beyond zero-sum offsetting, to achieve their commitments under the Paris Agreement. This briefing aims to update Small Island Developing States and Least Developed Countries on the standards and procedures that have been adopted by the supervising body (Article 6.4) to inform the design of projects.

A review of loss and damage in the Caribbean (1994 to 2024)

Loss and damage from climate change has been the lived reality of Caribbean small island developing states (SIDS) for decades. Despite efforts to adapt, it is reversing development gains, leaving lasting financial stress, and causing irreparable damage, including the loss of cultural heritage. This report is the first to provide a systematic overview of how Caribbean countries are framing and reporting on loss and damage.

The 1.5°C limit and risks of overshoot

This briefing looks at what the 1.5°C limit means in terms of adaptation and loss and damage for the most vulnerable countries and regions. It finds that slowing down warming is critical to buy us time to adapt and also to avoid irreversible loss and damage. Even if warming rises above 1.5°C (overshoot) we can bring it down again with ambitious emissions reductions.

Le seuil de +1,5°C et le risque de dépassement de ce seuil

Ce rapport examine ce que la limite de 1,5 °C signifie en termes d'adaptation et de pertes et dommages pour les pays et régions les plus vulnérables. Il constate qu'il est essentiel de ralentir le réchauffement pour nous donner le temps de nous adapter et pour éviter des pertes et des dommages irréversibles. Même si le réchauffement dépasse 1,5 °C, nous pouvons le faire baisser à nouveau en réduisant les émissions de manière ambitieuse.

About us

Decarbonisation targets and 1.5℃ pathways

Comment

Loss and damage financing and debt sustainability: advancing justice and equity in the Caribbean

Publications

A Practical Guide to Understanding and Establishing Climate Finance Units

Calculating the loss and damage finance gap: a scoping and feasibility exercise

Economic and non-economic loss and damage: a harmful dichotomy?

How can event attribution science underpin financial decisions on Loss and Damage?

Using existing databases to report on loss and damage in Biennial Transparency Reports under the UNFCCC

Article 6.4 progress update: work of the Supervisory Body on the Paris Agreement Crediting Mechanism

A review of loss and damage in the Caribbean (1994 to 2024)

The impacts of multiple tropical cyclone events and associated precipitation on household income and expenditures

What good looks like: G7 climate policy 2024 update

The 1.5°C limit and risks of overshoot

Le seuil de +1,5°C et le risque de dépassement de ce seuil

Climate justice: loss and damage and the right to development