In the Pacific, economic losses from a single cyclone can reach 30–50% of GDP. By contrast, Australia’s Black Summer bushfires in 2020 cost an estimated $100 billion AUD, or 4.92% of GDP that year.
That means a single cyclone in the Pacific can represent the economic equivalent of weathering six Black Summer bushfires, a staggering burden for small island economies.
Take Vanuatu, for example: it is hit by 2–3 cyclones that make landfall each year.
On top of this, Pacific nations are spending 15% or more of their government revenue on debt servicing, which is the total paid annually to cover both principal and interest on loans. That’s money that could otherwise go to health, education, or climate resilience.
A new report, ‘Rising Tides, Rising Debt’, released at COP30 by Caritas Australia, Caritas Oceania, and Caritas Latin America & the Caribbean, reveals this is not an isolated experience. It is a shared crisis across the Global South, where climate vulnerability and sovereign debt reinforce one another in a destructive loop.
“The brutal truth is that countries on the frontlines of climate change are paying twice for damage they did not cause,” said Kirsten Sayers, CEO of Caritas Australia.
“First, they pay to respond to disasters by rebuilding homes, repairing infrastructure, and providing emergency relief. Then they pay again through the debt they take on to fund that response. This deepens their vulnerability and leaves them even less prepared for the next shock.”
The relatively weak financial position of many small island nations means they often borrow at high interest rates or under tough conditions. In turn, investment into climate adaptation, which is meant to reduce vulnerability, becomes itself a source of economic fragility.
This climate debt trap means debt-to-GDP ratios exceed 60% in many Pacific countries and routinely sit at or above 70% in Latin America, compared to just 31.7% in Australia.
The report calls for urgent reforms: grant-based climate finance instead of loans, debt cancellation, and recognition of the ecological debt owed by high-emitting nations to those most affected.
In his foreword to ‘Rising Tides, Rising Debt’, Cardinal Soane Mafi, President of Caritas Oceania, reminds us of the moral and ecological stakes: “Our regions hold the two great lungs of the earth – the Ocean and the Amazon forest… They give life to the earth, and we are called to share in that life-giving process.”
Read the report at: https://www.caritas.org.au/advocacy-reports
Comparable Australian figures for reference:
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In 2020, Australian GDP was $1.326 trillion USD or $2.031 trillion AUD; the Black Summer bushfires cost $100 billion AUD, or 4.92% of GDP.
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Australia’s debt-to-GDP ratio in FY 2023–24 was 31.7%, roughly half that of many Pacific nations.
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Specific figures for Australia’s debt servicing costs are not readily available.
Media contact: Tara Harvey 0484 002 021 tara.harvey@caritas.org.au or caritasmedia@caritas.org.au
