SELECTED ISSUES This paperontheSolomon Islandswas prepared by a staff team of the InternationalMonetary Fund as background documentation for the periodic consultation with themember country. It is based on the information available at the time it was completed onJune 10, 2026. Copies of this report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202) 623-7201E-mail:publications@imf.org Web:http://www.imf.org International Monetary FundWashington, D.C. SOLOMON ISLANDS SELECTED ISSUES Prepared By Emanuele Massetti and Filippos Tagklis CONTENTS CLIMATE CHANGE, MACROECONOMIC RISKS, AND ADAPTATION IN THESOLOMON ISLANDS _________________________________________________________________ 2 A. Climate Trends and Projections ______________________________________________________2B. Macroeconomic Impacts _____________________________________________________________8C. Effective and Efficient Adaptation Policy ___________________________________________ 16 BOXES 1. The Impact of Climate Change on the Forestry Sector _____________________________ 112. Estimating the Cost of Sea Level Rise ______________________________________________ 153. Policies to Facilitate Private Adaptation ____________________________________________ 17 FIGURES 1. Historical Temperature and Precipitations for Solomon Islands ______________________32. Projected Annual Temperature, Total Annual Precipitations for the Solomon Islands 43. Projected Changes of Extreme Precipitation and Dry Periods ________________________54. Sea-Level Rise Projections Relative to 2000 level (meters)____________________________65. Projected Changes of Exploitable Fish Biomass in the Solomon Islands’ Waters _____76. Impact of Warming Trends on Real GDP, Solomon Islands (percentage) _____________97. Cumulative Density Functions of Population and Economic Variables, at DifferentDistances from the Coastline and Different Elevations________________________________ 138. Cost of Sea-Level Rise (in percentage of GDP), Annual Average 2020-2099 ________ 14 References____________________________________________________________________________ 19 CLIMATE CHANGE, MACROECONOMIC RISKS, ANDADAPTATION IN THE SOLOMON ISLANDS1 This paper examines the evolving risks and adaptation challenges facing the Solomon Islands dueto climate change, with emphasis on rising temperatures, changes in marine ecosystems, and sealevel rise. Utilizing recent scientific data, empirical literature, and sectoral models, it assesses theprojected economic impacts, including potential aggregate GDP losses, vulnerabilities in thefisheries and forestry sectors, and the costs associated with sea-level rise. The analysisunderscores the necessity of robust adaptation strategies and sustainable resource managementto mitigate these risks. It argues that effective adaptation requires strategic government action toprioritize resources, implement cost-efficient policies, and address market barriers that limitprivate adaptive responses. Drawing on macro-fiscal guidance and practical experience, thepaper outlines key principles for designing climate adaptation policies—stressing the significanceof climate-specific interventions and the use of cost-benefit analysis as a consistent evaluationtool. The findings aim to inform policymakers about targeted adaptation strategies to enhanceeconomic resilience in the Solomon Islands. A.Climate Trends and Projections Drawing on recent scientific data and model-based projections, this section provides an overviewof the evolving risks and adaptation challenges posed by a warming climate, changes in marineecosystems, and sea level rise. 1.Solomon Islands has a warm, humid tropical climate shaped by its position in thewestern tropical Pacific.Historically, mean temperatures remained fairly stable until the late 20thcentury, after which a clear warming trend emerged consistently with broader Pacific patterns.During the 1985–2014 baseline period, which serves as a benchmark for future climate scenarios,average annual temperatures were around 26-27 °C—approximately 0.4–0.6 °C above pre-industriallevels—and are estimated to have risen by an additional ~0.5 °C by 2020 (Figure 1).2This gradualbut persistent warming provides the background against which climate-related macroeconomic risksand policy challenges are expected to intensify over time. 2.Solomon Islands experiences high interannual rainfall variability characteristic of thewestern tropical Pacific.The country has a humid equatorial-to-tropical climate with substantial precipitation throughout the year. Data on historical precipitations show a recent positive trend inannual rainfall and reveal pronounced year-to-year fluctuations linked to El Nino SouthernOscillation-(ENSO) (Figure 1). Notes: The solidgray line displays annual mean temperature.The solid black line displays the 30-year movingaverage. The first compl