Confronting climate change: Adaptation vs. migration in Small Island Developing States

• Published in: Resource and energy economics 2022-08, Vol.69, p.101301, Article 101301
• Main Authors: Cassin, Lesly, Melindi-Ghidi, Paolo, Prieur, Fabien
• Format: Article
• Language: English
• Subjects: Adaptation; Climate change; Economics and Finance; Humanities and Social Sciences; Migration; Natural capital; Optimal policy-mix; SIDS
• ISSN: 0928-7655; 1873-0221
• DOI: 10.1016/j.reseneeco.2022.101301

This paper examines the adaptation policy of Small Island Developing States (SIDS) facing climate change. We consider a dynamic economy with the following ingredients: (i) natural capital is an input in local production that is degraded as a result of climate change; (ii) the government has two instruments to cope with climate-related damages: it can adjust the population size thanks to migration policies and/or it can undertake adaptation measures in order to slow the degradation of natural assets; (iii) expatriates send remittances back home. We identify two critical conditions on the fundamentals of the economy that helps understand the features of the optimal policy. We especially show that in most situations, the migration policy is a valuable instrument. Calibrating the model for Caribbean SIDS, we find that the optimal policy of the Caribbean region displays heterogeneity, that is explained by the different degradation rate, population size, and endowment in natural capital. We also highlight that the higher the climate damages, the higher the incentives to conduct an active adaptation policy, combining conventional adaptation actions and migration. •Small Island States are vulnerable to climate change with no option but to adapt.•We study the interplay between adaptation and migration to cope with climate change.•Analysis reveals that in most situations, the optimal policy features migration.•Calibration shows how the heterogeneity in climate-related damages shapes the policy.•It also highlights how the policy varies with the climate scenario.