Mauritius will need to mobilise US$5.6 billion over the next 25 years to confront mounting climate risks while sustaining economic growth, the World Bank said in a report published on February 18.
The Climate and Development Report estimates that US$4.2 billion will be required for mitigation and adaptation measures, with a further US$1.4 billion earmarked for structural economic reforms aimed at strengthening resilience.
The multilateral lender said the investment would amount to 2.3 percent of gross domestic product annually through 2030, before easing to around 0.9 percent per year over the following two decades.
“The cost of inaction would be higher,” the bank warned, estimating that climate-related damages could shave up to four percent off GDP by 2050 if urgent measures are not taken.
Although Mauritius contributes just 0.01 percent of global greenhouse gas emissions, it is among the small island states most exposed to climate shocks. Rising sea levels, intensifying cyclones, prolonged droughts and more frequent heatwaves pose direct threats to communities and key economic sectors.
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Roughly one-third of the population lives along the coast, where critical infrastructure, housing and tourism facilities are concentrated. The island’s economy depends heavily on tourism and fishing, leaving it particularly vulnerable to coastal erosion, coral reef degradation and extreme weather events.
The report argues that targeted investment in resilience could both protect livelihoods and unlock new growth opportunities, particularly in sustainable tourism, renewable energy and the so-called blue economy.
Water crisis looming
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One of the most pressing concerns identified in the report is water security. Mauritius currently captures only about eight percent of its annual rainfall, according to the bank. Of that, an estimated 61 percent is lost before reaching consumers due to aging and inefficient infrastructure, categorised as non-revenue water.
As a result, only around three percent of total precipitation is effectively used.
Without major reforms, Mauritius is projected to move from a state of water stress to outright water scarcity by 2030, the report warned. The bank called for urgent upgrades to water storage and distribution systems, alongside policies to improve efficiency and conservation.
Beyond water management, the bank recommended structural reforms to reduce vulnerability. These include strengthening coastal protection, investing in disaster risk reduction systems, expanding social protection schemes to shield the most vulnerable, and modernising infrastructure to withstand climate shocks.
Energy transition challenge
Mauritius has set a target of generating 60 percent of its electricity from renewable sources by 2035. However, the report estimates that nearly $373 million in additional investment will be needed by 2030 alone to stay on track.
With public debt standing at 88.5 percent of GDP as of June 2025, fiscal space is limited. The bank said the government would need to rely more heavily on private sector participation to finance the transition.
An annual financing gap of about $213 million remains, the report said. Public funds should be used strategically to de-risk projects and crowd in private capital, it added.
Local financial institutions — including banks, insurers and pension funds — could play a larger role in climate financing. Mechanisms such as payments for ecosystem services and blended finance structures could also help bridge the gap, provided regulatory and policy frameworks are strengthened.
The report urged authorities to prioritise high-impact sectors, including sustainable tourism with greater inland diversification, support for sustainable fisheries under the blue economy strategy, and scaling up renewable energy deployment.
For Mauritius, the bank said, climate action is not only an environmental imperative but also an economic necessity.
“Investing in resilience today will cost less than rebuilding tomorrow,” the report concluded, framing climate spending as a pathway to safeguard long-term growth and protect one of the Indian Ocean’s most climate-exposed economies.
