1. The document discusses resource dependence and volatility challenges facing Caribbean coastal economies. These economies rely heavily on tourism and natural resources, leading to underdiversification and vulnerability to economic and climate shocks. 2. Major shocks can rapidly transmit across multiple sectors, negatively impacting production, infrastructure, and social services. This stresses government finances and increases poverty and inequality. 3. Caribbean SIDS face unique difficulties managing this volatility due to small size, openness, and concentration on external markets. Climate change impacts exacerbate existing vulnerabilities.

1. Managing resource-dependence amidst
opportunities and challenges: Defining a new
Sustainability Narrative for Caribbean Coastal
Economies
Planet Under Pressure Conference
Session: Response of Small Island Development States
(SIDS) to the Impacts of Global Environmental Change
27 March 2012
Presenter: Leisa Perch, Policy Specialist/Team Leader -
Rural and Sustainable Development
International Policy Centre for Inclusive Growth (IPC-IG)

2. INTRODUCTION TO IPC-IG
 IPC-IG is a partnership of the Government of Brazil and
UNDP based in Brasilia, Brazil.
 Focus of our research is international; specifically focused
on the South and on South-South Cooperation and
Learning.
 Themes for IPC’s applied policy research: Macro-Economic
Policy, Rural and Sustainable Development, Social
Protection, Development Innovations.
 In Rural and Sustainable Development, the focus in on 3
key areas:
• Inclusive Green Economy
• Sustainable Rural Growth
• Social and Political Innovations for Sustainable
Development
*See more on our webpage: www.ipc-undp.org

3. OUR RESEARCH AND THIS PAPER
Our Focus on SIDS and Sustainable Development, in the context of
the Green Economy, is to better understand and define the
interdependencies between growth, sustainability and equity. Given
the specific challenges SIDS face, to (i) better communicate current
and future dilemmas including political economy realities, (ii)
highlight the need for SIDS to attend to social as well as
environmental challenges and (iii) identify strategic areas where
SIDs can tackle all three pillars of SD at the same time. Our
emerging niche area is in the socio-environmental policy interface.
This paper builds on research initiated last year for the CARICOM
Secretariat in which a background paper was presented to A
Regional on SD for Rio +20:
http://pressroom.ipc-undp.org/2011/steps-for-a-new-green-growth-policy-in-
* Some of the conceptual thinking is based on more recent work on
Inclusive and Green Growth in the SADC region which includes 3
SIDS:
http://cdkn.org/project/a-green-guide-to-align-political-and-social-contexts-f
; www.ipc-undp.org/pressroom/files/ipc671.pdf

4. CONTEXT AND PURPOSE OF THE
RESEARCH
 The paper does not attempt to speak to all of the
issues affecting SIDS. Instead:
 it explores the context, shape and scope of
resource-dependence as a driver of volatility in
Caribbean SIDS.
 Seeks to define how resource dependence in SIDS is
the same and different from other contexts; and
 positions the SIDS reality within the international
policy discourse and the specific nature of how green
growth and sustainability would need to be tackled.

5. APPROACH
 Systems theory – the interconnectedness of the
pieces and potential escalation of disequilibrium
from one small element being out of sync
 Where SIDS fit within the framework of resource
dependence
 Literature Review to understand the pattern of
events and crisis over the last 5-10 years and the
impact on economy, society and environment and
the dynamics of those impacts
 What this means for the “how” of sustainability
as well as the “what”

6. DEFINING RESOURCE-
DEPENDENCE
 “When the development and economy of countries rich in
resources becomes largely dependent on those resources,
these countries often risk being affected by the so-called
“resource curse” or “paradox of the plenty” (Karl, 1997)
 The economy of such countries usually concentrates on
the exploitation of the resources available and focuses all
capital and labour investments there, often leading to a
lack of diversification of the economy and high
dependence on resource-extractive sectors, and resulting
in financial problems and unemployment.
Other references include Gelb and associates (1988), Sachs and Warner (1995), Ross
(1999) and Auty (2001). Important pieces put forward by NGOs include Global Witness
(1999), Christian Aid (2003) and Gary and Karl (2003). For a full listing, see: Bagattini
(2011).

7. 1. CHARACTERIZING RESOURCE
DEPENDENCE IN CARIBBEAN
SIDS – GENERAL FEATURES
 15 member of CARICOM - small, open and
largely mono-cultural economies heavily
dependent on expansive coastal and marine
resources. Rich in natural resources
 Tourism – dominant sector for many of them,
with a concentration of capital and labour there
 Outliers - Trinidad and Tobago, Belize, Guyana
more dependent on mineral extraction; Jamaica
(both)
 Limited diversification of the economy and
options. External risk exposure significant (as
compared to Mineral-dependent economies)

8. RESOURCE DEPENDENCE –
PUBLIC INVESTMENT IN
RESOURCE INTENSIVE
GROWTH
 Natural Capital
 Government
investment in travel
and tourism high (Top
5 in the WTTF
analysis for 2011).
 Economic Capital
 4 X more dependent
than any other region
in 2001
 Human Capital
 Highly invested in
public health and in
education

9. 1. CHARACTERISING
CONTINUED – PATTERN OF
VOLATILITY
 The Development Ecosystem of the Caribbean
Coastal Economy:
- economic growth and human development is
inextricably tied to the quantity and quality of
natural resources
- Dependent on food and fossil imports – with high
external volatility
- sustainability of that growth and development is
defined by the capacity to sustain resources, balance
revenue and expenditure and smooth impact of
economic and environmental shocks
- Cyclical uncertainty: climate variability and change
potentially put Caribbean SIDS on a continuous cycle
of “build, repair and recover” where as much as 20%
of GDP may go to coping with climate change

10. 1. CHARACTERIZING RESOURCE
DEPENDENCE – INTERSECTIONS
BETWEEN ECONOMY, SOCIETY AND
ENVIRONMENT

11. 1. CHARACTERIZING
RESOURCE DEPENDENCE –
WHERE CARIBBEAN SIDS FIT
 SIMILAR:
 Reliance on non-renewable
or not easily regenerated The larger the proportion of government
 Inequality revenue that is dependent on the
 Opacity of extractive resource, the higher the volatility it can
revenues experience (one element of the resource
 Consumption intensity curse)
 DIFFERENT
Overall, of the key characteristics
 Less of a trade-off between
capital intensity and labor
shared by resource-dependent/mineral-
intensity dependent economies, Caribbean SIDS
 Dependent on external experience 3 acutely: economic
markets just not financial volatility, high dependence on a single
ones export product with limited
 Generally more democratic diversification of the economy and
and inclusive significant environmental damage

12. 2. MANAGEMENT CHALLENGES IN THE
CONTEXT OF INTENSE VOLATILITY:
RAPID TRANSMISSION OF RISK ACROSS
SECTORS
Table 1. Sectoral Impacts of Disasters in 2005 ( Source: Table 1. Patterns of working poverty across Caribbean countries in 2006
Kambon, 2005)
Working poverty - working poor
as percentage of all workers: Female/male composition of
Country Impa Impact Impact Impact Total Country
ct on on on of social Socio- Impact national poverty line (in %, year working poor: national poverty line
Prod Infrastr sector economi of 2006) (in %, year 2006)
uctiv ucture social as % of c Disast
e sectors total impact er as % Bahamas 2.44 1.15/1.29
in US$M socio- of GDP
Secto in
economi US$M Barbados 3.74 2.02/1.72
rs in US$M
US$M
c Dominica 21.5 7.32/14.18
impact
Grenada 20.26 n.a.
Guyana 29.42 n.a.
Cayman Jamaica 16.8 7.95/8.85
St. Kitts and
Islands 1117.7 488.4 1810.3 0.53 3416.4 138.0
Nevis 11.99 6.47/5.52
Grenad Trinidad and
a 539.2 262.4 1588 0.66 2389.6 212.0 Tobago 15.35 3.69/11.66
Source: Statistical Report on Working Poverty in the Caribbean,
Jamaica 215.7 112.7 220.7 0.40 549.1 8.0 ILO Subregional Office for the Caribbean(2006) -
http://www.ilocarib.org.tt/cef/background%20papers/Working%20Poor.pdf
Haiti 83.3 33.9 125.8 0.52 243.0 4.5

13. 2. MANAGEMENT CHALLENGES IN THE
CONTEXT OF INTENSE VOLATILITY:
RAPID TRANSMISSION OF RISK ACROSS
SECTORS
Table 1. Sectoral Impacts of Disasters in 2005 ( Source: Table 1. Patterns ofWorking poverty in the Caribbean
Table 2. working poverty across Caribbean countries in 2006
Kambon, 2005)
Working poverty - working poor
as percentage of all workers: Female/male composition of
Country Impa Impact Impact Impact Total Country
ct on on on of social Socio- Impact national poverty line (in %, year working poor: national poverty line
Prod Infrastr sector economi of 2006) (in %, year 2006)
uctiv ucture social as % of c Disast
e sectors total impact er as % Bahamas 2.44 1.15/1.29
in US$M socio- of GDP
Secto in
economi US$M Barbados 3.74 2.02/1.72
rs in US$M
US$M
c Dominica 21.5 7.32/14.18
impact
Grenada 20.26 n.a.
Guyana 29.42 n.a.
Cayman Jamaica 16.8 7.95/8.85
St. Kitts and
Islands 1117.7 488.4 1810.3 0.53 3416.4 138.0
Nevis 11.99 6.47/5.52
Grenad Trinidad and
a 539.2 262.4 1588 0.66 2389.6 212.0 Tobago 15.35 3.69/11.66
Source: Statistical Report on Working Poverty in the Caribbean,
Jamaica 215.7 112.7 220.7 0.40 549.1 8.0 ILO Subregional Office for the Caribbean(2006) -
http://www.ilocarib.org.tt/cef/background%20papers/Working%20Poor.pdf
Haiti 83.3 33.9 125.8 0.52 243.0 4.5

14. CHALLENGES FOR
CARIBBEAN SIDS -
AMPLIFIERS
Figure 1. Selected data from Grenada Figure 2. Intersections between social and economic
CWIQ, 2005. Highlighting the immediate impacts in Caribbean SIDS during the GEC. Sourced
impacts of the hurricane on employment from UNDP 2010c based on that author's calculations
for Caribbean PSIA studies.

15. 3. MANAGEMENT CONT’D –
CYCLICAL VOLATILITY AT THE
MACRO LEVEL
 In the case of Antigua and Barbuda, success
between 2004 and 2008 in reducing the public
debt-to-GDP ratio from 120% to about 90%, was
undermined by the global financial crisis. By the
end of 2010, the national debt had again
surpassed 100% and was even higher than it has
been in 2004, reaching 130%. In 2010, services
contributed more than 60% of the country’s GDP
(CIA, 2011).
 In Barbados, a sharp decline in tourism in 2009
was immediately felt fiscally with the public debt
to GDP ratio, increasing sharply.

16. 2. MANAGEMENT CHALLENGES IN
THE CONTEXT OF INTENSE
VOLATILITY- MULTIPLIERS
Source: Burke et. al, 2011: 24)

17. 2. MANAGEMENT CHALLENGES
FOR CARIBBEAN SIDS IN THE
CONTEXT OF INTENSE
VOLATILITY (CONTD.)
 Structural factors of complexity – openness of
ecosystem:
 Many governments, from Barbados to the UW Virgin
Islands, are now seeking to contain the impacts of
growing numbers of Pacific Lionfish.
 Investments in managing the Lionfish (native to the
Pacific region) demonstrates other more subtle effects of
both economic and environmental realities of managing
global environmental change in a Caribbean context.
 One of the key elements of the management strategy
relies on a heavily fished species in the region – one of
the few natural predators of the invasive Lionfish.

18. 3. MANAGEMENT CHALLENGES
CONT’D: THE POLICY
ENVIRONMENT
 In the context of stringency, the Table 3. Environmental Policy Framework for Travel and
Tourism in Caribbean SIDS
numbers are also notable with
Barbados the highest at 50 (most T&T Regulatory Framework
stringent) and Trinidad at 102 (less
so). Country/Economy
 On the effectiveness of government Policy Rules and Environmental Prioritization of Travel
Regulations Sustainability and Tourism
efforts to be sustainable, the ratings
are more favourable with Barbados Overall Rank Overall Rank
ranking 6th, Jamaica 40th, Guyana
Barbados 75 30 3
72nd and Trinidad 101st of 139
countries, though particulate Guyana 99 34 86
matters seems to be a problems for
Jamaica 11 116 4
all countries generally; and
 In the area of ratification of
environmental treaties, Trinidad Trinidad and Tobago 42 137 103
and Tobago ranks highest with
20/24; Jamaica -18/24; Barbados
-17/24, Guyana – 17/24. Source: Blanke and Cheia (2011: 27, 28).

19. 3. MANAGEMENT CHALLENGES FOR
CARIBBEAN SIDS IN THE CONTEXT OF
INTENSE VOLATILITY (CONTD.) –
INCLUSIVENESS OF GROWTH?
 Labour Market Volatility Table 4: Change in HDI for selected CARICOM states when
adjusted for inequality
is a Key Transmission
Point of Social Risk, Country HDI 2011 Inequality-Adjusted HDI
Social and Economic Bahamas 0.771 0.655
Exclusion: Guyana 0.663 0.493
 Knock on effects on Haiti 0.454 0.278
Crime and Insecurity Jamaica 0.727 0.610
(see UNODC/World Trinidad and Tobago 0.760 0.655
Bank 2007; new
Source: Human Development Report, 2011
Caribbean HDR,
2012)
• Furthermore, the average intensity of poverty, based on the Multidimensional Poverty
Index is 39.5% in Guyana, with child mortality contributing significantly to overall poverty.
Additionally, 2.1% of the population seem to be deprived in more than 60% of the
indicators.
• In spite of a high HDI ranking and GDP per capita, Trinidad and Tobago has a similar
intensity of deprivation- observed at 35.1%.
• In Haiti, the intensity is the highest in the region at neatly 60%.

20. 3. MANAGEMENT CHALLENGES
FOR CARIBBEAN SIDS IN THE
CONTEXT OF INTENSE
VOLATILITY (CONTD.)

21. RESOURCE-DEPENDENT GREEN
ECONOMY – TACKLING SOCIAL
EQUITY AND ECONOMIC
GOVERNANCE
 Social inequity is a source of pressure for and on
resource intensive growth. Muting the effects
requires:
- Changing the cycle - environmental quality has a
direct impact on the employment generation
capacity of resource-dependent sectors
- Enhancing pro-poor productivity - poverty has
implications for the environment (coping
mechanisms rely on free/accessible public goods)
- Accelerating productive inclusion – Prioritizing
youth employment, access to finance and
innovation; reduce underemployment and
enhance women’s access to decent work

22. RESOURCE-DEPENDENT GREEN
ECONOMY – TACKLING SOCIAL
EQUITY AND ECONOMIC
GOVERNANCE? (CONTD.)
 Inclusive and green finance:
- Targeting decent green pro-poor employment
- Incentivizing private sector investment in
sustainability (e.g. Reserve Bank of Fiji’s
Agriculture and Renewable Energy Loans Ratio for
commercial bank operations – 2% of deposits and
liabilities must go to loans to renewable sector)
- Anticipating Sustainability Opportunities: bolster
innovation and reduce the inconsistency of
innovation (stagnation of solar?)……Fiji and Samoa
started in the 70s and 80s and now have a share of
renewables at 54 and 43% respectively

23. RESOURCE-DEPENDENT GREEN
ECONOMY – FINANCE AND
POLICY
 Finance Opportunities:  Policy Reform
 New GEF-funded project Opportunities (Seychelles):
coming on board focused  A recent report noted its fast
on sustainable marine growing economy and a
ecosystem management world-class environmental
for the Eastern Caribbean record (Spencer, 2012:1),
highlighting that policy can
to the tune of USD 8.7
deliver across economy and
million environment in SIDS
 Barbados having a USD  The three pillar approach
30 million dollar loan with employed by the government,
the IBD on coastal defined in a “Strategy 2017,
conservation part of a comprises tourism, fisheries
larger package exceeding and financial services, taking
in mind the risks, volatilities
USD 170 million and
and vulnerabilities of all
another USD 7.1 million three sectors.
in technical grants.

24. 4. SUSTAINABLE GROWTH IN A
RESOURCE-DEPENDENT GREEN
ECONOMY – ROLES FOR SOCIAL
EQUITY AND ECONOMIC
GOVERNANCE? (CONTD.)
o ‘Smart’ Tourism i.e. inclusive and green – specific
strategies:
o Green and ethical tourism with less macro debt and
more growth – (Seychelles Model)
o Maximizing sizeable WTP opportunities in the
Caribbean (according to WRI, 2011) – fishing,
whaling, coral reefs, heritage etc.
o More local ownership: engaging private citizens in
tourism investment – equity stakes (Duncan, 2011)

25. 4. SUSTAINABLE GROWTH IN A
RESOURCE-DEPENDENT GREEN
ECONOMY – ROLES FOR SOCIAL
EQUITY AND ECONOMIC
GOVERNANCE? (CONTD.)
 ‘Smart’ Development :
- Strengthened and effective regulatory frameworks –
prioritize environmental sustainability concerns in
regulatory frameworks (Maldives’s Low Carbon
Strategy and Commitment)
- Cooperative approach to coastal management – with
clear responsibilities and accountabilities (building on
Barbados’s CZM approach)
- a sustainable infrastructure model – the earthquake in
Haiti is a clear example of the nexus between poverty,
environment and the macro-economy ( Example:
Government of Tonga’s DRR+CC Strategy)

26. 5. NEW SUSTAINABILITY
NARRATIVE
 Beyond Vulnerability: coping with resource-
dependence and volatility
 Understanding, anticipating, mitigating dynamics
of nature, power and poverty
 3 strand response:
- increasing natural resilience – given increasing climate
variability and threats
- greening of sectors rather than the “de-browning” of
environmental externalities
- tying “green transformation” to areas which can also
deliver more stability, more labour market
opportunities and increasing wage stability – social
resilience

27. 5. NEW NARRATIVE CONT’D -
ANTICIPATORY GOVERNANCE
FOR SUSTAINING CHANGE
 Commoner (1971) noted that “the amount of stress
which an ecosystem can absorb before it is driven to
collapse is also a result of its various
interconnections and their relative speeds of
response. The more complex the ecosystem, the more
successfully it can resist a stress …Most ecosystems
are so complex that the cycles are not simple circular
paths, but are crisscrossed with branches to form a
network….”.
 For Caribbean SIDS - it is complicated but not necessarily very
complex – speed to impact is fast and the speed of response often slow;
crisis often hits at the heart of the system
 New economic governance framework must be anticipatory – well
informed, able to cope with uncertainty, prepared, flexible and

28. 5. NEW SUSTAINABILITY
NARRATIVE - WHERE AND HOW
COULD THE PIECES FIT
Development Drivers: Resource Wealth,
Resource Quality, Open Economies,
Climate Vulnerability and Change, Economic
Volatility, Social Inequity
Inputs: Ecological Diversity, Strategic
Public Policy, Partnerships, Finance and
Investment
Enablers: Adaptive Policymaking,
Anticipatory Governance, Co-benefits
Strategies, Innovation, Technology
Conditions for Sustainability: Decent
Work, Systems Resilience, Adaptive
Capacity, Economic & Environmental
Governance

29. THANK YOU FOR YOUR ATTENTION!
LEISA PERCH