How Can the World Bank Better Support Climate-Vulnerable Lower-Income Small States? An IDA Policy Agenda for Small States

The World Bank’s concessional lending arm, the International Development Association (IDA), provides significant assistance to small states for fostering long-term development and responding to climate change. Around half of all small states have access to IDA. While only 3 percent of IDA’s resources go to small states, these countries comprise nearly a third of IDA-eligible countries. IDA plays a large role in the external financing of these countries, making up a third of official development assistance. The IDA Small States Exception plays a critical function in providing these countries access to IDA, and we argue accounts for the climate vulnerability faced by small states compared to alternative proposals being explored. We show that small states use IDA for adaptation to a greater extent than non-small states and, given large unmet financing needs, discuss how IDA might scale up its adaptation finance to these countries. We evaluate recent World Bank initiatives to scale up disaster finance and conclude with a discussion of key aspects for small states within the World Bank’s SimplifIDA reforms.