Special Edition | 2023 and Beyond
 22 January 2023

As a new year begins, the possibilities for what we can do when we rise up together as a global community seem bright. The leadership shown by SIDS continues to push the world towards this better future. This momentum will be carried forward as SIDS are concluding 10 years of the SAMOA Pathway and preparing for the 2024 Fourth International Conference on SIDS. In times of increasing global uncertainty caused by planetary pressures, 2023 will be a pivotal year for SIDS to reflect on their progress and identify action areas for the new development pathway, with much to look forward to and opportunities for real change and impact.  

Economies throughout the world, and mostly in SIDS, rely on and impact ocean health, demonstrating the significance of embracing sustainable blue economy pathways. But as sea levels continue to rise and oceans continue to warm, breaking devastating records every year, action will be imperative. Ambassador Peter Thomson, the UN Secretary-General Special Envoy for the Ocean reminded us that 2022 was a “Super Year for agreements to stop the decline in the Ocean’s health” and that it was time for “Member States, NGOs, philanthropies, the scientific community and the private sector to get to work in 2023 implementing these agreements.” On conservation of marine ecosystems, speaking at the World Economic Forum in Davos from the perspective of SIDS Youth, Brooke Hadeed – Global Shaper, Port of Spain Hub – stated that SIDS need assistance in making use of their unique knowledge to address ocean health degradation, given their limited resources. “It’s everybody’s problem."  

But a successful blue economy does not only depend on action to conserve and effectively manage the oceans. It also depends on the development of a sustainable green development trajectory that reduces land-based drivers of ocean degradation through a whole-of-island approach. Crucial sectors for action include food, tourism, and urban, where nature-based solutions can be applied to promote long-term sustainability and security.

Digitalization and financing have been identified as a key area to be prioritized in the new SIDS Pathway during the Wadadli Action Platform organized by the Alliance of Small Island States (AOSIS) in Antigua and Barbuda. Data and digital technologies will continue to be an important enabler by facilitating action through economic diversification and innovation for full utilization of SIDS unique development opportunities. Access to innovative and sustainable financing will also be key to addressing operationalizing these agreements to rebound from COVID-19 and build forward better.  

We hope that our summary below of trends we expect for sustainable development this year in SIDS will serve as a source of motivation and inspiration for the global obstacles yet to be overcome. We also want to emphasize the importance of embracing the whole-of-SIDS strategy that has empowered climate action at the regional and community levels to develop harmonious relationships with our oceans and planet.

Image: Charles Netzler

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Climate Action will show SIDS' leadership in decarbonized and resilient societies in 2023
Image: Solar Energy Research Institute of Singapore

2023 has arrived in the wake of historic levels of international climate engagement, including the decision at COP27 to establish a fund for Loss and Damage and the COP15 biodiversity pledge of the new Kunming-Montreal Global Biodiversity Framework. This year will revolve around implementation - in turning these ambitions into realities. SIDS leadership and innovations in climate action have made their priorities unavoidable by the rest of the world, which must necessarily be supported by the finance mechanisms and partnerships required to help them leverage their unique opportunities. Another valuable advancement at COP15 was the formation of the SIDS Coalition for Nature, co-led by Cabo Verde, Seychelles, and Samoa will be critical to catalyzing the financial and technical support needed for SIDS to respond to biodiversity targets.  

SIDS continue to lead and advance the climate discourse, with several significant decisions expected this year on climate accountability, shaping future agreements, repercussions, and SIDS exposure. For example, Vanuatu, St. Lucia, and Comoros were all recognized by UN’s inaugural World Restoration Flagship initiatives for the nature-based revival of their coastal and inland ecosystems. SIDS have proven their proactive role on the international stage by setting the agenda for climate accountability by championing international legal guidelines, such as the petitioning for the United Nations Convention on the Law of the Sea (UNCLOS) to be applied to the effects of climate change. Integrating the knowledge and leadership of SIDS will also be essential following the results of the two-year stocktaking review at the end of this year on progress towards the Paris Climate Agreement. 

Throughout 2022 the calls to action in SIDS have accelerated global action for our climate and oceans, galvanizing investment and engagement, commitments to reduce emissions, and a focus on biodiversity preservation. However, the key challenge of mobilizing funding continues.  It is predicted that preserving global ocean health requires $175 billion annually in additional financing. Climate action in SIDS is persistently intertwined with underfinancing and debt, limiting their sustainable recovery from climate and Covid-19. To overcome this, SIDS' are calling for reforms of the international financial architecture, requesting a fair, transparent, and multilateral framework for debt crisis resolution. However, it is estimated that $1 trillion per year of financing is necessary for LDCs by 2030 to recover and adapt from climate change, substantiating the need for private sector engagement.  This interconnectedness between the economy and sustainability reinforces the inseparability of private public partnerships in climate action for mobilizing funding and implementing sustainable systems. These mechanisms are starting to mature, with growing private interests and enabling legislation to provide a future financial vehicle for SIDS’ sustainable transformation.  

Lost development gains, weakened national energy, food, and water security, pressure on population living costs, and acceleration of non-renewable energy consumption are all consequences of the global energy crisis that have brought the need for an equitable energy transition to the forefront in SIDS. This makes 2023 a critical year for transitioning from energy promises to implementation. SIDS have pledged to generate 10 gigatons of renewable energy by 2030. To date, they have already generated 7 gigatons. To take advantage of the energy revolution and their expansive EEZs, many SIDS are looking to capitalize on the expanding blue economy by utilizing marine-based renewables such as wave energy, floating solar photovoltaic (PV) arrays, high-capacity offshore wind turbines, and geothermal. In 2023, the Solomon Islands will construct a geothermal energy plant.  By supplying energy to other offshore blue economy businesses like aquaculture, desalination, and cooling, a renewable economy can improve the livelihoods of SIDS and increase their socioeconomic options by eliminating the need to import costly fossil fuel and allowing for the export of excess energy production through Bankable Purchase Power Agreements. Energy transition in SIDS cannot be financed by states alone, highlighting the continued significance of maintaining genuine and long-lasting strategic partnerships that facilitate access to capital, technology, and intellectual property in order to fully realize transformation as a climate and energy solution. 

Digital Transformation will be fundamental for accelerating SIDS' development in 2023
Image: Shutterstock /  Pixabay

As recent years have highlighted, 2023 will not be simple. One thing we can be certain of is that digital has the potential to continue to deliver significant opportunities for development in SIDS, particularly in this final ‘Year of Action’ of the SAMOA Pathway. When applied thoughtfully and inclusively, these tools can transform our ways of living and working – including supporting and safeguarding the most vulnerable in our societies – and shape transformative models of development. Enabling entrepreneurial and youth voices and agendas will be an essential step in amplifying digital’s role in climate action and in driving the Blue Economy. Whilst digital can catalyse government and public services, and deliver new products and services which could continue to support financial and broader inclusion across SIDS.  

All SIDS are exploring the role of digital in their economies and societies, but adopting a whole-of-society approach to digital is crucial in identifying entry-points, policy priorities, and technical interventions to best leverage digital and digital technologies. This approach is particularly important in driving diversification of national economies, ensuring digital can translate into real and sustainable value, and in shaping broader development initiatives. The latter could include regional approaches to key digital priorities, and delivering economies of scale in the context of digital – from shared procurement of digital technologies to regulatory harmonization that catalyses national digital enterprises and entrepreneurs.  

Digital is foundational to tackling climate change and other priority challenges - but it's not just about surviving. SIDS are also well-positioned to thrive in this digital landscape and can even shape the 'rules of the game' - driving the technical standards, governance and policy frameworks, and other foundations, that will define the global benefits of digital for decades to come.  This includes leveraging SIDS’ unique benefits in the context of digital. Smallness can enable agility in exploring new technologies, and drive innovative thinking and practices.  Furthermore, digital can make geographic distance irrelevant, allowing SIDS to incubate and lead global digital efforts. SIDS’ dynamic local economies are also advancing important e-commerce and digital trade efforts – whilst the talents of SIDS youth, discussed in more detail below, could translate into global digital impact.  

At the heart of these priorities is the way in which SIDS are exploring digital to fundamentally reshape their very existence – including moving beyond traditional ‘e-government’ approaches toward defining ‘Digital Nations’. A ‘Digital Nation’ is a wholesale reconceptualisation of a country – from digital-first public services, to creating core digital assets (including canonical data registries, digital ID, and digital payment processes) for a digital economy and society, and building the skills, workflows, and processes to safeguard culture, heritage, and other assets using digital tools, This approach is being explored by a number of countries (including the 'Smart Nation' initiative in Singapore). More recently,  Tuvalu, in response to existential threats from sea-level rise, is exploring a digital representation of itself in the ‘Metaverse’ in an attempt to preserve the country’s physical landmarks and cultural heritage for future generations.  Other SIDS are also considering the potential of this ‘digital twin’ approach, with Caribbean islands initiating discussions on traversing the metaverse and examining the opportunities and risks in such an approach. However, a ‘Digital Nation’ approach is more than transposing offline structures into a digital setting. It is a paradigm shift in development.  

A ’Digital Nation’ initiative also reaffirms the broad relevance of digital for SIDS. With more than 60% of SIDS populations living in an urban setting, ‘smart cities’ can make these environments more liveable, sustainable, inclusive, and people-centred – whilst the potential of data-driven precision agriculture can improve food security in a context of limited land and natural resources. These tools also extend beyond borders. As SIDS transition to a digital economy, a number of countries have begun to prepare their economies for participation in international and regional markets. To promote simpler and more secure payment mechanisms, the Republic of Palau is proactively pursuing a central bank digital currency by establishing a national 'stablecoin' programme. Meanwhile, Cabo Verde sees digital remittances and related financial services as a pathway to important growth. Digital skills and governance are also essential components, with a well-functioning digital economy requiring strong human capital. A blended learning course on the legal implications of e-commerce for SIDS was designed as part of a 2023 distance learning initiative. These skills are particular priorities in relation to leveraging data, as discussed further in the next section of this Bulletin.  

SIDS also need to put the next generation at the centre of their digital efforts. As highlighted in the forthcoming analysis of a UNDP survey of 4,000 young people across SIDS, this important segment of the population sees digital as a key driver of national development. They are building digital businesses, leveraging digital for communication and connection, and developing skills and knowledge about digital – and through using digital tools. The youth of SIDS have proven that they have a crucial perspective and enthusiasm that must also be nurtured through learning programs like the Samoa-Knowledge Society – but also by providing young people with the platforms and support to drive digital development within their societies and economies. Collaboration between SIDS in sharing youth-led innovations is essential for addressing the geographical dispersion and lack of access to youth funding, such as regional networks like the SIDS Youth AIMS Hub. Ultimately, the greatest resource in SIDS is human capital, within a people who hold immense creative and entrepreneurial spirit alongside the ancestral knowledge of oceans. Throughout 2023, digital will continue to unlock this potential for SIDS to develop their own solutions to their greatest challenges. 

Blue Economy will advance from multilateral agreements to implementation in 2023
Image: Fransisco Blaha

The ocean is at the center of our world, providing transport for 90% of global trade and jobs for more than 3 billion people.  For islanders, the ocean plays an especially fundamental role in lives, societies, and economies. It is arguably the most valuable asset for SIDS. However, the health of this resource is being increasingly challenged by the triple planetary crisis of climate change, biodiversity loss, and pollution. This in turn, negatively impacts the ability of the ocean to provide ecosystem services. To ensure an equitable, sustainable, and prosperous future through a sustainable blue economy approach, a transformational policy change, at both the global and national levels, is needed. 

During Davos this week, UN Secretary-General António Guterres cited a Swahili proverb, “Bahari itatufikisha popote”, which translates as “the ocean leads us anywhere”, stressing that the ocean is central to help open new horizons and lead the international community to a more just, sustainable future.We need more science and innovation to propel us into a new chapter of global ocean action” he emphasized, encouraging the private sector to join ocean research and management partnerships and urging Governments to raise their level of ambition. 

At the global level, and as summarized in our previous bulletin, 2022 has been a busy year with a multitude of Multilateral Environmental Agreements (MEAs) with relevance to the ocean taking place. The year has culminated in the adoption of the new Kunming -Montreal Global biodiversity framework (GBF) that, as mentioned by UNDP’s administrator: “means people around the world can hope for real progress to halt biodiversity loss and protect and restore our lands and seas in a way that safeguards our planet and respects the rights of indigenous peoples and local communities.” 

To be successful, these agreements and frameworks need to be translated and implemented at the national levels. More specifically, national carbon footprints should be reduced through increased efficiency and a transition to renewable energy sources to keep the 1.5-degree Celsius target alive. Coastal and marine ecosystems should be managed using integrated, inclusive, cross-sectoral, and ecosystem-based approaches. Marine Protected Areas’ scale, representativeness, connectivity, and management effectiveness should be amplified to achieve the 30 by 30 objective of the post-2020 GBF. The sustainability of the seafood sector should be enhanced through the elimination of harmful fisheries subsidies and better Monitoring, Control, and Surveillance, namely through digital tools. Plastics, and other sources of pollution, should be addressed through reduction, circulation approaches, and improved waste management, including through a better use of innovative data tools

To achieve that, SIDS will need to address the annual ocean-health funding gap that is estimated to be more than USD 174 billion at the global level. Conservation finance, supported by innovative mechanisms, will therefore be vital in 2023 to ensure the proper implementation of MEAs. In 2022, SIDS, like Fiji and Cabo Verde, have shown leadership by introducing such innovative finance mechanisms that can be replicated elsewhere. Looking forward, creating a well-regulated blue carbon market will also help overcome the challenges related to funding conservation, especially in SIDS, where blue carbon ecosystems, like mangroves and seagrass meadows, are abundant. Natural capital accounting could also be leveraged to tackle this funding gap. According to a recent article, published by the International Institute for Sustainable Development, natural capital accounting would not only help reduce the nature financing gap but would also encourage businesses to adopt conservation practices. Fiji, with support from the global ocean accounts partnership, is testing the approach by implementing an ocean accounting pilot focusing on mangroves. The exercise will help understand the contribution of mangrove forests to society and the economy while providing a tool to assess the efficiency of policies and management interventions. Looking forward to 2023, this approach could help more SIDS enrich Blue Economy policy discussions and accelerate a blue recovery. 

Most importantly, the required transformational policy change needs to internalize ocean externalities, as advocated in UNDP’s Ocean Promise. This means that the costs of ocean health degradation should be internalized into the accounts of the industries responsible for these impacts. This was recently highlighted by H.E. Vivian Balakrishnan, Singapore’s Minister of Foreign Affairs, during the last World Ocean Summit Asia-Pacific as an effective way to address both climate change and ocean health degradation. But while such changes will be driven by policy changes, a shift in our consumption patterns as individuals is necessary, so all hands on deck! 

Innovative Finance will be central to all other pillars of SIDS' development in 2023
Image: UNCDF / Fiji

Mobilizing financing for development is at the heart of development in SIDS, and without it SIDS will not be able to take the action they need to address the climate crisis, build sustainable economies from their ocean resources, or take advantage of the digital revolution. This includes pursuing innovative instruments in support of SIDS in addressing the SAMOA Pathway priorities and the 2030 Agenda, as well as creating synergies between climate and economic goals to support SIDS in aligning recovery with the Paris Agreement. Through 2023, four key areas of innovative finance will be priorities for SIDS, including blended finance and risk mitigating solutions; financing for conservation and debt restructuring using blue bonds and resilience bonds; private sector investment in natural and manmade infrastructure through green bonds; and domestic resource mobilization and public investment to leverage other sources of finance for sustainable development.

In 2023, the Multidimensional Vulnerability Index (MVI) will play a vital role in access to concessional financing and better terms for existing debt. SIDS have long advocated for a multidimensional vulnerability index tthat adequately capture the particular vulnerabilities of SIDS to guide programmatic support, viable debt service payment and financing for sustainable. The call for exploration of criteria based on vulnerability was repeated in the Barbados Programme of Action, mentioned in the Mauritius Strategy and re-echoed in the SAMOA Pathway. It is time that the MVI is integrated into for SIDS’ financing so they can receive the support needed for their recovery and building forward better.

Finance opportunities in SIDS are deeply linked to the climate and oceans. Debt-for-nature swaps have attracted significant interest in the Seychelles and Belize, reducing external debt by US$ 21 million and US$ 364 million, respectively, although SIDS will be working to realign subsidies with community ideals and shifting from unsustainable subsidies to natural asset reconstruction. At COP27, Fiji launched the first Sustainable Bond Framework to sustainably leverage Fiji’s ocean-based resources to support its post-pandemic recovery and economic diversification in accordance with its National Ocean Policy, providing an outline for SIDS to access alternative funding and capital markets for growth. SIDS will be moving forward with Blue Economy finance as a primary priority such as the Global Fund for Coral Reefs which supports blended finance initiatives that unlock private investment in commercially viable coral-positive businesses with diversified investment programs.

Green, blue, and thematic bonds are becoming increasingly popular, but due to high levels of indebtedness in SIDS they need to be developed with care. As of December 2022, 14 of the 20 SIDS rated by the World Bank and IMF Debt Sustainability Analysis were either in debt distress or high danger of debt distress. Between 2022 and 2027, SIDS will have to pay US$ 40 billion in debt service. Ensuring SIDS do not default during this critical period of climate action is paramount to achieving SDGs and Paris goals. Heading into 2023, private and sovereign debt need to agree on a mechanism to avoid defaults where possible and use collective action clauses to refinance existing debt, aided by avoiding fragmentation of financiers and independent assessments. Integrated National Financing Frameworks , implementation of a dedicated Debt Service Offering, and performing Development Finance Assessments are all key ways UNDP will continue to support SIDS. One of the goals of debt relief should empower governments to lay the foundational investment for sustainable development by understanding and addressing systemic risks and shifting from a reactionary approach to a holistic and anticipatory approach to achieve a systemic solution.

Through these initiatives and new tools, SIDS are strengthening their ability to recover from vulnerabilities and shocks, building forward stronger and better, and generating sustainable lives for all through strategic private sector partners, strong coordination with development partners, and public-private partnerships. A successful approach to financing SIDS’ recovery is one that will blend different types of financing from different types of partners to cover all different needs and guarantee the success for SIDS’ bluer and greener recovery.

Data will increase in value for SIDS as the 'new gold' in 2023
Image: NASA

The value of data in SIDS continues to accelerate, and SIDS’ agility, innovative thinking, and innate opportunities for development can be reinforced through investing in data and digital infrastructure to leverage and integrate this potential Strengthening data capacity and leveraging its qualities for future digital innovation, financial security, economic diversification, and data-driven policy can secure SIDS’ transformation and recovery from climate change. This process can be elevated by ensuring Data Availability, Literacy, and an infrastructure that prioritizes the sharing and value of data. As data is an unbiased equalizer across societies, its facilitation requires its own sustained pillars to fully utilize the “renewable oil” of the emerging digital economy. Open data, especially as a renewable resource, continues to catalyze the digital economy in SIDS, where open data policy and infrastructure play a critical role in overcoming the economic, technical, and legal barriers that prevent data from becoming more valuable and achieving economies of scale.  

As geospatial data improve in resolution, accuracy, coverage, and access, it has become an increasingly central part of policymaking and the development agenda, further supported by the geospatial capabilities in the SIDS Data Platform. Supporting Marine Spatial Data Infrastructures (MSDIs)  is necessary to empower this integration of geographic information systems into governance in SIDS. National MSDIs support the collection and use of a wide variety of data in SIDS related to bathymetry, geology, Blue Economy infrastructure, marine ecosystems, climate, and oceanography. 

Artificial intelligence (AI) will continue to grow in its breadth and applicability across the sectors of development in SIDS, and it is urgent that we develop systems to make sure the value provided by AI is equitable. Existing infrastructure and industries in SIDS can prepare for a transition towards automation in the workforce and look for opportunities to enhance ocean monitoring, climate response, and digital systems through the scalability and efficiency of AI, especially considering the classic challenges of scaling often faced by SIDS. 

The success of data initiatives in SIDS have demonstrated that successful collaboration requires transparency and a commitment to shared objectives. SIDS’ vast geographic and socioeconomic issues may exacerbate data-driven evaluation issues like underrepresentation or maladaptation. To address this, SIDS' must continue conducting initiatives with participatory approaches to ensure equitable and inclusive benefits

Data built on traditional knowledge of our oceans alongside new monitoring tools can build a stronger foundation for responding to natural disasters and accelerate the technological, policy, economic, and financial advances needed to modernize ocean-related sectors and diversify them long-term. As SIDS continue to push the forefront of integrating collective innovations and data in climate adaptation and mitigation, data becomes crucially influential to SIDS’ resilience and green recovery. 

To overcome their data challenge and support SIDS economies of scale, UNDP has developed the UNDP Data Platform for SIDS, a digital tool for accelerating development in SIDS by providing access to updated, standardized, and comprehensive data. By focusing on the needs of SIDS, this tool has been designed specifically to feature datasets about Digital Transformation, Blue Economy, and Climate Action. The Data Platform also leverages machine learning innovations to support predictive capabilities for filling gaps in missing indicator data and contribute to socioeconomic and environmental analytics. The database of country-level indicators is compiled from 22 databases and research studies and presented alongside analytic tools, country profiles, and through a customizable  Multidimensional Vulnerability Index. The GIS portal features over 80 research studies and databases, with visualization and analytic tools to allow development agents to been able to discover, access, and export this data. 

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