Chapter 5 | PROJECTS CONTRIBUTING TO THE OPEC FUND’S CLIMATE FINANCE
The Maldives is also vulnerable to the impacts of other nat- ural hazards, including geophysical risks such as tsunamis. According to the Ministry of Climate Change, Environment and Energy, over 90 percent of the islands report flooding annually, 97 percent are reporting shoreline erosion and 64 percent of the islands experience severe erosion. 44 The climate and environmental impacts described above will most negatively impact critical economic sectors such as tourism and the fishing industry. The large economic dam- age is partly due to the country’s dependence on the tour- ism sector, which represented 27 percent of GDP in 2021. 45 Tourism will likely be adversely impacted by climate change in several ways. Sea level rise and coastal flooding will dam- age most of the sector’s critical infrastructure (e.g. harbors, airports and resorts), which is usually located close to the coastline, and the marine biodiversity.
the Maldives’ broader adaptation strategies to address the impacts of climate change such as saltwater intrusion and pollutant contamination, which have been exacerbated by events like the 2004 Indian Ocean tsunami. By improving water resource management, prioritizing safe water and san- itation and strengthening sectoral capacity, the loan will not only help reduce the Maldives’ dependency on costly desal- ination but also support the country’s decarbonization tar- gets, aiming to reduce 26 percent of national GHG emissions by 2030 and potentially achieving net-zero emissions with adequate international support.
Expected Outcomes
As is common for many Small Island Developing States, the Maldives face severe freshwater scarcity, exacerbated by the impacts of climate change such as unreliable rain and inade- quate groundwater sources. The loan is expected to enhance water security and resilience by improving the reliability of freshwater resources through efficient water management practices and technologies, thereby reducing the depend- ence on expensive desalination mechanisms. Additionally, increased access to safe and clean drinking water, particu- larly in areas affected by saltwater intrusion and pollutant contamination, will lead to better public health outcomes. Strengthened sanitation services will be achieved by up- grading infrastructure to become resilient against climate impacts such as flooding and sea-level rise, ensuring con- tinuous and safe sanitation services. Enhanced wastewater treatment processes will prevent contamination of water sources and promote the safe reuse of treated water, con- tributing to environmental sustainability.
Purpose of the Loan
The purpose of the loan is to support the Maldives in achiev- ing its ambitious climate goals as outlined in the updated NDC. The loan will fund the implementation of critical infra- structure projects, including water supply networks, sew- erage systems and harbor reconstruction across several is- lands. These projects aim to provide sustainable access to safe water supply, sanitation services and improved harbor infrastructure, directly contributing to the Maldives’ efforts to climate-proof the infrastructure and support coastal ad- aptation planning as outlined in the NDC.
The loan’s focus is on enhancing public health, boosting connectivity and stimulating economic growth. It aligns with
44 IMF (2021). No higher ground. 45 ADB (2014). Assessing the costs of climate change and adaptation in South Asia.
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