Planned relocation, the process of moving a community from one area of residence to a new one in response to an environmental risk or threat, is an important option for climate change adaptation. Given the acute climate and environmental risks facing them, small island developing states (SIDS) have taken a leading role in developing policies and processes for planned relocation in response to these risks. This policy brief will look at how planned relocation works as an adaptation strategy in informal urban settlements and will examine the role of social cohesion in planned relocation processes. Fiji has become a regional leader in planned relocation policy, with the Human Mobility in Climate Change Contexts (HMCCC) project serving as a magnifier of Fiji’s existing expertise in planned relocation. Since 2017, the Fijian government and civil society in cooperation with the German and New Zealand governments have developed planned relocation standard operating procedures (SOPs) for helping villages in high-risk areas navigate the physical, cultural, social and economic costs of relocating to higher ground or a safer location. These SOPs have become a “gold standard” for other countries to learn from and emulate in their own planned relocation policies.
The next step that the government is starting to undertake involves adapting the SOPs to informal urban settlements that are facing climate and environmental risks. Fiji’s informal urban settlements have faced a number of social, political and economic challenges over the years. These include serious issues with crime, land insecurity and historical political exclusion. Thus, along with the threats that come with climate change, particularly sea-level rise and flooding, any planned relocation policy for informal urban settlements has to simultaneously address trust in institutions, cooperation for the common good, and inclusive identity. The historical case of the Bainiose being relocated from central Suva to a suburb of Suva in the late 1990s offers guidance on how this can be done.
Key policy messages
Dr Anawaite Matadradra is a Lecturer at the University of the South Pacific.
Dr Sevanaia Sakai is a Senior Lecturer at the University of the South Pacific.
Unaisi Raileqe is a Project Officer at the Pacific Centre for Peacebuilding.
Dr Timothy Fadgen is a Senior Lecturer at the University of Auckland.
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This paper examines how additional private financial resources can be mobilised through the use of multilateral development bank (MDB) funds. It focuses on identifying the leverage potential of different financing instruments, improving their mobilisation efficiency, and examining how greater leverage can promote development outcomes while safeguarding the financial sustainability of MDBs. Its contribution is a comparative synthesis that brings together mobilisation mechanisms, differences in the public resources and risks underlying leverage ratios, and development impact. The analysis covers six categories: debt instruments, equity instruments, risk-transfer instruments, guarantees, advisory services and policy-based lending. It compares their characteristics, including the level of intervention, mobilisation mechanisms, constraints addressed and time horizons. It also distinguishes transaction-level private direct and indirect mobilisation from broader catalytic effects arising through market development, institutional strengthening and policy reforms.
The comparison shows why instruments cannot be assessed by a single leverage ratio. MDB lending, guarantee exposure and expenditure on advisory services represent different commitments of public resources and risk. Similarly, private finance linked to a transaction cannot be measured in the same way as subsequent investment enabled by policy reform. Available evidence therefore indicates differences in mobilisation potential rather than an established empirical ranking of instruments. The paper argues that leveraging efficiency can be increased by moving to more powerful approaches and by better targeting instruments to binding investment constraints. It examines how this can enhance the development impact and financial viability of MDB/DFI portfolios through two channels: a financial/portfolio efficiency channel and a development/catalytic channel. However, a high leverage ratio does not necessarily indicate superior performance. It may reflect investment in easier markets, weak additionality or an understatement of public risk. Conversely, a lower ratio may be consistent with greater additionality in a fragile market or pioneering sector. These findings highlight the importance of assessing leverage alongside additionality, development impact and financial sustainability. Using concessional funds through blended finance instruments can be costly and can reduce the resources available for other development priorities.
Therefore, the development finance institutions (DFIs) must strictly apply the additionality principle and further operationalise the principle of using minimum concessionality. If interpreted too generously, there is a risk of creating leverage without sufficient development impact. The paper provides specific recommendations for refining the use of financing instruments and integrating transaction-level support into a broader market-shaping approach that draws on the strengths of policy-based lending and technical assistance. Higher leverage should not be pursued as an end in itself; its value depends on its contribution to additional development impact.
Dr Jürgen Karl Zattler is a distinguished non-resident fellow at the Center for Global Development in Washington, DC and a non-resident research fellow at the German Institute of Development and Sustainability (IDOS) in Bonn. Until October 2023, he was Director General at the German Ministry for Economic Cooperation and Development (BMZ). Prior to that, he served as the Executive Director representing Germany at the World Bank.
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