The primary objective of this report is to present solid empirical evidence of hardship, vulnerability to shocks, and risk management in the Pacific region. The report is primarily a stocktaking exercise that brings together existing evidence and new analysis of available data using a consistent framework. The report takes a “micro-” perspective—that of the individual and household—but accounts for the important role of communities, the state, and international partners. As such, it is a complement to the studies that analyze the macroeconomic context of the Pacific or that analyze rich subnational data. The purpose of building this solid evidentiary base is to catalyze needed future work, including new data collection, rather than to provide the final answer to any of the important questions addressed in the report.

In many Pacific island countries, meeting non-food basic needs is a growing challenge and further complicated by substantial economic and environmental risks. Hardship and vulnerability are increasingly prominent concerns in Pacific island countries, but the knowledge base to guide policymaking is limited. Family and community networks are central to life in most Pacific island countries, providing critical support to members in need and acting as safety nets when individuals or households experience losses from shocks. The primary objective of this report is to present solid empirical evidence of hardship, vulnerability to shocks, and risk management in the Pacific region. The report is primarily a stocktaking exercise that brings together existing evidence and new analysis of available data using a consistent framework. The report takes a "micro" perspective that of the individual and household but accounts for the important role of communities, the state, and international partners. This report focuses on risks, but accounts for the role of opportunities when possible. While remaining supportive of viable economic growth sectors, given the limited means of most Pacific governments, expenditure should be carefully focused on investments with high expected economic returns and relatively low risks. Development partners can play a role in financing these investments and in sharing experiences on what works from other parts of the world.

Pacific island countries are highly vulnerable to various natural disasters which are destructive, unpredictable and occur frequently. The frequency and scale of these shocks heightens the importance of medium-term economic and fiscal planning to minimize the adverse impact of disasters on economic development. This paper identifies the intensity of natural disasters for each country in the Pacific based on the distribution of damage and population affected by disasters, and estimates the impact of disasters on economic growth and international trade using a panel regression. The results show that “severe” disasters have a significant and negative impact on economic growth and lead to a deterioration of the fiscal and trade balance. We also find that the negative impact on growth is stronger for more intense disasters. Going further this paper proposes a simple and consistent method to adjust IMF staff’s economic projections and debt sustainability analysis for disaster shocks for the Pacific islands. Better incorporating the economic impact of natural disasters in the medium- and long-term economic planning would help policy makers improve fiscal policy decisions and to be better adapted and prepared for natural disasters.

Pacific island countries need to build their fiscal and economic resilience to climate change and natural disasters as these have lasting consequences on their livelihoods, economies, and fiscal balances. Climate change and natural disasters can have lasting consequences on livelihoods, economies, and fiscal balances-spanning immediate reconstruction costs and fiscal shocks to long-term halts in tourism and agriculture economies. Globally, the most exposed to these impacts are the Pacific island countries. The Asian Development Bank is working closely with its Pacific developing member countries to prepare for and respond to the effects of climate change and natural hazards. This publication examines the often-overlooked dimension of resilience planning-how to brace economies for shocks caused by climate change and hazard events. It analyzes the exposure and vulnerability of Pacific economies to disaster events and outlines key resources for building fiscal and economic resilience.

The recent economic slowdown, the preceding period episode of high food and oil prices, and the ever-present risk of natural disasters have highlighted that Pacific island countries and their people are very vulnerable to economic and natural forces beyond their control. Informal support provided by extended families and communities to those in need have been coming under increasing strain and no longer offer sufficient protection to those facing temporary hardship. This policy brief provides an overview of the role of social safety nets in protecting vulnerable groups during times of stress, and outlines key factors that should be considered in the design of such programs. The key response should be to plan ahead and have appropriate policies and programs in place to protect the vulnerable before a crisis hits.

This timely and ambitious volume - a product of close research collaboration with the United Nations Multi-Country Office for Micronesia - is conceived as a holistic “journey” across various domains of progress in a region that, despite fundamental common traits, remains vast and diverse. Pacific island countries and territories (PICTs) have (too) often been identified with elements of vulnerability, whether these be social, economic, or environmental in nature. While these factors cannot be overlooked, this volume aims to showcase not only the long-standing and emerging challenges but, perhaps more importantly, the opportunities, the resilience, the resourcefulness, and the ambition that local socioeconomic development patterns in the Pacific already encompass. Beyond PICTs themselves, we hope that the analyses collected in this book will contribute to highlighting the global significance of the human–nature nexus in the current Anthropocene. Often captured in the concept of “small islands, big oceans”, the importance of the region and its islands and peoples transcends the geographical remoteness and small size of many PICTs.