Research showcase: Climate adaptation in small island states
7 Dec 2026
12:30 -14:00
Times shown in local time
Open to: All
Room W2.01 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG
United Kingdom
Join our Energy Policy Research Group seminar
Speaker: Mehmet Murat Çobanoğlu and Teddy Carmichael, University of Cambridge
About the seminar topics
Fixed contracts, stochastic capacity: climate-related disaster repayment-capacity shocks and sovereign debt dynamics in SIDS (Mehmet Murat Çobanoğlu, University of Cambridge)
Sovereign debt contracts are fixed. The capacity to service them is not. When a hurricane or a drought knocks out output in a small island state, the debt ratio can climb even if the government barely borrows – because the denominator falls.
This paper asks why similar disasters produce such different debt paths. It uses extreme value theory to characterise GDP-contraction shocks across 23 small island developing states, then state-dependent local projections on a 16-country panel to trace what happens to public debt afterwards. The sovereign’s position before the storm turns out to shape most of what follows: high-debt sovereigns see debt-ratio increases around 4.5 percentage points larger than low-debt ones, both at impact and a year on. And the deterioration runs mainly through lost output rather than new borrowing – a pattern consistent with a liquidity wall, where financing tightens exactly when it is needed most.
Carbon stocks and conservation funding in the Cayman Islands: a case study in the political economy of climate adaptation in high-income, low-elevation small island states (Teddy Carmichael, University of Cambridge)
The pricing of carbon stored in ecosystems and the associated ‘payment-for-maintenance’ mechanisms through voluntary carbon markets are championed by many conservationists as a central element of global climate change mitigation. However, structural and institutional shortcomings stand in the way of this method gaining necessary traction on the global stage to achieve such mitigation.
This project uses the Cayman Islands as a case study. It estimates the Central Mangrove Wetland to hold ~8.35 million tonnes of CO₂, a figure that would deliver significant payments for maintained storage, but goes on to present significant structural barriers to monetization at scale. These include much larger monetary returns on investment from alternative uses, ineffective governance and punitive measures for mangrove destruction and a significant vulnerability to sea level rise.
These findings reveal the more fundamental and potentially insurmountable barriers that face high-income, low-elevation small island states in pursuing nature-based climate adaptation of any kind. This calls for new policy responses aimed at addressing these issues.
Register
No registration required. If you have any questions about this seminar, please email Henning Zschietzshmann.