NASSAU, BAHAMAS – The Bahamas faces significant climate risks, with rising sea levels and hurricanes potentially reducing economic output by 11 percent by 2100, but investing in climate resilience could boost economic output by 9 percent over the next three-quarters of a century, according to the International Monetary Fund (IMF).
A recent IMF report also noted that modernizing electricity grids and increasing the share of solar energy and liquefied natural gas (LNG) in electricity production could yield major macroeconomic benefits for The Bahamas. These transformations, over the medium term, could reduce fossil fuel imports, decrease the country’s vulnerability to volatile global fuel prices, significantly lower CO2 emissions, and substantially boost national output, eventually increasing long-term growth potential from 1.5 percent to 2 percent. The Washington-based fund pointed out that the government announced plans in June 2024 to partner with the private sector to invest in modern electricity transmission and distribution infrastructure and increase the share of renewable energy in its electricity generation mix. Specifically, the government aims to harness the abundant solar energy available year-round in The Bahamas, targeting a 30 percent share of solar energy by 2030. This move also minimizes the environmental and logistical challenges posed by other forms of energy. While a small portion of electricity will still be produced using diesel, much of it will be replaced with cleaner LNG.
“Unfortunately, even with these investments, the threat of climate change is here to stay. IMF analysis suggests that rising sea levels could place up to 41 percent of the land in The Bahamas and 22 percent of its population below sea level by the end of this century. Moreover, the country is positioned within the Atlantic hurricane belt, leaving it at high risk of hurricane damage. Left unaddressed, more severe natural disasters and slow-moving impacts from climate change could reduce The Bahamas’ national output by up to 11 percent by 2100, with larger losses in islands whose economies rely most on hospitality and real estate,” the IMF noted.
The IMF further highlighted that, given these risks, investing in The Bahamas’ capacity to adapt to climate change and preserve its natural capital could increase national output by up to 9 percent over the long term, including through sustainable tourism. Building resilience would require diversifying away from vulnerable activities and making investments to protect physical assets and natural capital, such as breakwater construction, coral reef and mangrove protection, and beach nourishment programs.
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