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Sea-Level Rise andClimate Adaptation in Emanuele Massetti SIP/2025/157 IMF Selected Issues Papers are prepared by IMF staff asbackground documentation for periodic consultations withmember countries.It is based on the information available atthe time it was completed onNovember 5, 2025. This paper is 2025DEC IMFSelected IssuesPaper Western Hemisphere Department Sea-Level Rise and Climate Adaptation in ArubaPrepared byEmanuele Massetti* Authorized for distribution by Christoph Duenwald IMF Selected Issues Papersare prepared by IMF staff as background documentation for periodicconsultations with member countries.It is based on the information available at the time it was ABSTRACT:Sea-level rise presents long-term risks in Aruba that can lead to sizable permanent costs withpotentially large macroeconomic and fiscal consequences. Aruba cannot control global sea-level, but it canmanage how it affects the country by adapting. Using the state-of-the-art model CIAM, IMF Staff estimatesfinds that planned coastline protection—in the form of dykes, revetment, floodgates, costal dunes, etc.—can RECOMMENDED CITATION:Massetti, Emanuele. 2025. Sea-Level Rise and Climate Adaptation in Aruba.IMF Selected Issues Paper SIP/2025/157. International Monetary Fund, Washington, D.C. SELECTED ISSUESPAPERS Sea-Level Rise and Climate Kingdom of the Netherlands—Aruba Prepared byEmanuele Massetti CONTENTS Sea-Level Rise and Climate Adaptation in Aruba........................................................................2 A. Introduction...............................................................................................................................2B. Climate Trends and Projections................................................................................................3C. Sea-Level Rise Impacts and Adaptation..................................................................................8D. Lessons for Efficient Adaptation Spending.............................................................................12 BOXES 1. Sea-Level Rise: Drivers and Projections...................................................................................72. Estimating the Cost of Sea-Level Rise and Adaptation..........................................................11 FIGURES 1. Climate Characteristics.............................................................................................................42. Historical Temperature and Precipitations................................................................................53. Historical Time Series of Selected Indicators of Extreme Weather...........................................54. Historical and Simulated Annual Average Temperature and Total Annual Precipitations........6 REFERENCES References..................................................................................................................................14 ANNEXES I. Appendix..................................................................................................................................16 SEA-LEVEL RISE AND CLIMATE ADAPTION IN Sea-level rise presents long-term risks in Aruba that can lead to sizable permanent costs with potentially largemacroeconomic and fiscal consequences. Aruba cannot control global sea-level, but it can manage how itaffects the country by adapting. Using the state-of-the-art model CIAM, IMF Staff estimates finds that plannedcoastline protection—in the form of dykes, revetment, floodgates, costal dunes, etc.—can reduce losses by I.Introduction 1.Aruba faces growing climate change risks that adversely affect its macroeconomic outlook. Higher temperatures are associated with reduced outdoor labor productivity, increased electricity consumptionfor cooling, and higher morbidity and mortality rates. Aruba’s rapidly aging population is particularly vulnerableto heat-related risks (Peterson, 2024). Projections of declining and more erratic precipitations indicateadditional stress on the island’s limited water resources and increased flood-related costs. Tourism isespecially vulnerable to climate change, and even modest negative impacts can have significant balance of 2.Sealevel rise (SLR) poses significant long-term challenges to Aruba’s economy and population.Sealevelwill continue to rise slowly but steadily for thousands of years, even with strong globalmitigation efforts (Box 1). Without adaptation, rising seas will gradually threaten most of the country’sinfrastructure, capital, and population, which are all concentrated along an environmentally fragile coastline. 3.Climate change impacts can be contained with the right mix of policies and long-term planning.Aruba has already successfully adapted to a dry climate through investments in desalination. Over the years,its coastline has been modified to support tourism and accommodate critical infrastructure. However, this estimates of SLR costs under different adaptation strategies, a