Small island nations have unveiled a plan to turn the money their emigrants send home into a permanent fund for climate protection, aiming to raise around $3 billion a year for projects that shield their countries from rising seas and extreme weather.

The proposal was presented at the COP31 climate talks in Antalya, Turkey, where representatives of the Small Island Developing States, known as SIDS, said they could no longer wait for the slow-moving international debate over climate finance to deliver the help they need.

Antigua and Barbuda's ambassador to the United Nations, Walton Webson, said the islands needed funding they could rely on. "We decided that there had to be a way that we can guarantee more reliable sources of funding for the islands," he said. "We cannot rely solely on development assistance again. What we are now trying to do is create our own."

A fund built on money already flowing home

The plan would place a charge on remittances, the money sent back by islanders living and working overseas. The SIDS group says those flows totalled around $22 billion and grew at an average rate of 7% a year between 2010 and 2023. The platform aims to capture about a third of that total by its tenth year of operation.

Senders would be charged 3% per transaction, below the average cost of around 5% to 9% across the markets studied. The commercial sector currently charges up to $1.3 billion a year in transfer fees and foreign exchange margins, according to a SIDS document seen by Reuters, while multilateral climate funds approved just $202 million for small island states in 2023.

After costs, between 2 and 2.5 percentage points of each transaction would go into the fund, where it would be held as an endowment and invested. The base-case scenario assumes returns of 6.5%, with 85% of the returns spent on resilience measures and the remainder held as a disaster reserve.

What the money could deliver

By year ten, the endowment is estimated to reach $2.59 billion in the base-case scenario. Matching grants and other income streams, such as tourism levies, could take the total to $5.53 billion and generate $306 million a year in distributable surplus. The use of tools such as guarantees could help mobilise up to $3.13 billion a year.

That scale would exceed the roughly $2 billion in international public adaptation finance the islands received in 2021-2022, according to a 2025 study by the non-profit research group the Climate Policy Initiative.

The plan was drafted with the help of the International Institute for Environment and Development. A first phase would draw on remittances to the Dominican Republic, Haiti, Jamaica and Guyana in year one. Fiji, Samoa and Tonga would be added in year two, and Comoros, Cabo Verde and Mauritius in year three.

Caribbean states at the centre of the plan

The Caribbean features heavily in the first phase, with three of the four starting countries in the region. The SIDS grouping brings together island nations in the Pacific, the Caribbean and the Atlantic, Indian Ocean and South China Sea that are particularly exposed to rising sea levels. Many of them also carry large amounts of national debt, which limits their ability to pay for defences such as measures to halt coastal erosion.

Palau's President Surangel Whipps Jr said the proposal reversed the logic under which small islands that did little to cause the climate crisis are expected to borrow more money to cope with it than those that did. "This proposal turns that logic around. It takes money that is already ours, already flowing home across the Pacific, the Caribbean and beyond, and puts it to work for our own resilience," he said.

Webson said preliminary discussions had already taken place with several development banks, and a broader meeting with the banks and SIDS leaders was planned for January to try to make progress by COP32 in 2027.

Delegates in Antalya are meeting until the end of next week to try to agree ways to increase funding for adaptation to a warming world. For the small island states, the remittance platform would be the first to use earnings sent by the overseas diaspora, rather than international development aid, to build a permanent endowment for climate resilience.

Source: Reuters