Island Economies Case Studies

Case Study 1: Tourism in Palau 

Challenge Statement: How might we help Palau’s tourism recover more quickly from COVID?


Geographic Scope

  • Palau is an archipelago of over 500 islands, part of the Micronesia region in the western Pacific Ocean.  
  • Koror Island is home to the former capital, also named Koror, and is the islands’ commercial centre. 
  • The largest island, Babeldoaob, has the capitol at Ngerulmud, mountains, and sandy beaches on its east coast. In the north, ancient basalt monoliths known as Badrulchau lie in grassy fields surrounded by palm trees.  



  • Earliest settlers nearly 3,000 years ago.
  • Matriarchal Society. 
  • Western and traditional subsistence lifestyle.
  • 14,000 Palauans & 7,000 foreigners in Palau.
  • Occupied over 100 years by Germany, Japan and the USA.
  • Independent democracy since 1987.


Current communications technologies

  • New Fiber Optic since 2018 opened Palau to the world.
  • Satellite technology was unreliable when it rained (it rains a lot) 150 Mbps, still used to provide service to remote island communities (e.g. SW Islands).
  • 500 Gbps available but Palau currently utilises 10 Gbps.
  • DSL available, Cost around USD $100 per month, 15 Mbps down, 1 Mbps up (i.e. asymmetrical technology).
  • 4G Mobile available, in Koror 50 Mbps data up and down (i.e. symmetrical).
  • 3G Mobile is available in most villages.



(Ngeremlengui Cable Landing Station, in service Dec 7 2017)


Living in Palau

  • Fishing and farming for family or village consumption is a common practice in Palau
  • Palau’s economy is based mainly on tourism, with some localised subsistence agriculture and fishing
  • Hospitals, schools, government and gross national product (GNP) assisted from foreign aid.
  • Some skills are hard to find; for example, there is only one architect in Palau. 
  • Education and employment opportunities are limited for locals
  • Many students leave for school or work and settle abroad
  • There is no University. The Palau Community College offers two-year degree level courses.


  • 130,000 +/- visitors a year: Diving, touring, rock islands, WWII
  • The economy is primarily driven by tourism. 
  • Tourism employed 29.4% of workers (15.2% in accommodation and food services, and 14.2% in wholesale and retail trade) (ADB and ILO, 2017). 
  • There is potential to expand the domestic share of the tourism value chain, including marketing, services and food production to meet tourism demand. 
  • Palau has deliberately preserved its environment (Pristine Palau). It has no commercial logging or fishing and has the world’s largest shark sanctuary.
  • Tourism is crucial for Palau; it represents around 40% of GDP and employs a significant proportion of people in formal employment. It is the main export of Palau (86%). A decrease in the flow of Asian travellers could result in the loss of millions of dollars.
  • Palau’s economy has been severely impacted due to COVID.



  • Small Island Developing States (SIDS) face constraints and challenges in the sustainable development process as a result of their social, economic and environmental vulnerabilities.  
  • The issues faced by the Republic of Palau range from cultural inundation by outside influences (both through the close association with the United States, as well as its proximity to Asia) to geographic isolation and small population size. The latter two create diseconomies of scale, which in many ways, impact the nation’s economic development potential.  
  • Environmental vulnerability in Palau is high due to diverse but limited natural resources and fragile ecosystems that must withstand the pressures of a rapidly growing population, booming tourism industry and the expected rapid and large-scale development of Palau’s largest island, Babeldaob. 
  • The large island of Babeldaob has poor infrastructure.  
  • Complex government structure can make it difficult to move forward. A population of only 20,000 has an executive and legislature, 16 states and both a tribal chiefdom and elected legislature in each state.
  • There is no local capability for maintenance, repair or proper disposal of most machines, equipment, technology and supplies.


COVID-19 in Palau

  • During what was supposed to be a record recovery year for tourism, the market quickly collapsed in a matter of weeks; flights were ceased with some tourists stranded, and unemployment spiked.
  • Palau’s limited hospital / medical resources would be quickly overwhelmed if the pandemic was to take hold, so extreme caution is being taken for arrivals.
  • In 2021 visitors are expected to be less than 10% of normal. A slow recovery in 2022. Devastating to the economy.
  • Global fear of travelling to the Asia region, fear of being stranded, unknown policies and procedures to deal with COVID-19.
  • Palau remains COVID-19 free.

COVID-19 Impacts

  • 90% decrease in tourism.
  • 26.7% of unemployment.
  • Negative GDP (-22.3%).
  • Return to 2019 levels not expected until the year 2024.
  • Investors are leaving the country.
  • Positive: Natural environment in a full rebound for future guests.
  • Positive: Opportunity to reboot the tourism industry for future growth. 

Helpful information

SDG 8: Decent work and economic growth 


Sustained and inclusive economic growth can drive progress, create decent jobs for all and improve living standards.


In April 2020, the United Nations released a framework for the immediate socio-economic response to COVID-19, as a roadmap to support countries’ path to social and economic recovery.

  1. Ensuring that essential health services are still available and protecting health systems; 
  2. Helping people cope with adversity, through social protection and essential services; 
  3. Protecting jobs, supporting small and medium-sized enterprises, and informal sector workers through economic response and recovery programmes; 
  4. Guiding the necessary surge in fiscal and financial stimulus to make macroeconomic policies work for the most vulnerable and strengthening multilateral and regional responses; and 
  5. Promoting social cohesion and investing in community-led resilience and response systems.


These five streams are connected by strong environmental sustainability and gender equality imperative to build back better.


Beyond the immediate crisis response, the pandemic should be the impetus to sustain the gains and accelerate the implementation of long-overdue measures to set the world on a more sustainable development path and make the global economy more resilient to future shocks.


Case study 2: Communication Challenges in Papua New Guinea & the Pacific 


Challenge Statement: 

The need for effective communication between:

  1. a) Humanitarians (humanitarian to humanitarian)
  2. b) Humanitarian to crisis-affected communities
  3. c) And where possible, within and between communities


Geographic Scope


  • The Pacific is one of the world’s most remote and most dispersed regions on Earth. It is a region comprised of some 9,000 islands spread across a vast ocean, where governments and businesses deal with some of the highest transaction costs in the world. 
  • The Highlands (region) of Papua New Guinea is an east-west zone of mountains with elevations over 13,000 feet (4,000 metres). 


7.5 Earthquake response 


On 26 February 2018, at 3:44 am local time, an earthquake measuring M7.5 hit the Highlands region of Papua New Guinea (PNG), with its epicentre located 30 km south of Tari town, Hela Province. 


The Government of Papua New Guinea declared a state of emergency. It established Forward Operating Bases in Mt. Hagen and Moro, as well as Emergency Operations Centres in Mendi and Tari. The Government, private companies, bilateral and humanitarian partners focused relief efforts on communities in the worst-hit areas. 


The earthquake affected significantly children, women and girls, young people, persons living with disability and other vulnerable people.  


The response focused on life-saving assistance while slowly transitioning to life-supporting and early recovery efforts. This relief-to-recovery transition is critical to empower those affected to rebuild their lives with dignity quickly. 


Humanitarian Response and communication challenges  

  • The Pacific is one of the world’s most remote and most dispersed regions on Earth. It is a region comprised of some 9,000 islands spread across a vast ocean, where governments and businesses deal with some of the highest transaction costs in the world. 
  • The highlands are surrounded by mountains which make it harder to access to reliable communications. 
  • 87% of residents are not connected to the national electric grid, but 67.5% of citizens find themselves within the nation’s mobile network. 
  • With 67% of the population within reach of mobile coverage, a large proportion of PNG’s population remains unconnected, mainly due to the complexity of extending mobile networks in remote and mountainous areas with low population density. 
  • Mobile internet penetration continues to grow, reaching up to one million unique subscribers and with 4G representing 21% of all connections.
  • Nevertheless, mobile broadband availability and network quality, affordability of devices and services, and limited digital literacy skills are barriers to adoption and use. 
  • Response Teams (Humanitarians) are all equipped with a phone, a computer, a mobile VHS radio and two-way radio satellite phones.  


Humanitarian response and structure

  • The National Disaster Centre (NDC) coordinates relief operations. On 1 March 2018, the Government appointed an Emergency Controller to lead the National Emergency Disaster Restoration Team (NEDRT), overseeing relief and recovery efforts.  
  • Two forward operating bases, in Mt Hagen and Moro, as well as Emergency Operations Centres in the capitals of Hela and Southern Highlands provinces, support coordination at the field level. 
  • The joint inter-agency Disaster Management Team has convened to coordinate relief efforts of humanitarian partners and private companies. 
  • Seven informal clusters (WASH, Shelter, Food Security, Health, Protection, Education, Nutrition) and the Logistics and Communicating with Communities Working Groups support the work of the Disaster Management Team. 
  • All clusters will have regular meetings, and each cluster will have a weekly meeting. 
  • For urgent matters, the Teams will communicate via email or phone calls. If humanitarians are in remote areas, they wouldn’t be able to be contacted.  
  • In the epicentre of the earthquake, there was limited internet and mobile connection. Work was hindered because of that. 


Helpful Information 


Economy and infrastructure 


SDG 9: Industries, Innovation and Infrastructure 


Inclusive and sustainable industrialisation, together with innovation and infrastructure, can unleash dynamic and competitive economic forces that generate employment and income. They play a key role in introducing and promoting new technologies, facilitating international trade and enabling the efficient use of resources. 

In terms of communications infrastructure, more than half of the world’s population is now online, and almost the entire world population lives in an area covered by a mobile network. It is estimated that in 2019, 96.5 per cent were covered by at least a 2G network.     

  • 3.8 billion people do not have access to the internet, representing 80% of the population in the least developed countries 
  • 90% of people live within range of a 3G or Higher quality mobile network (2018). But not all can afford to use it. 

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