Climate change poses an existential threat to small island developing states, particularly atoll nations like the Republic of the Marshall Islands (RMI). This study examines the economic and financial challenges of implementing climate change adaptation measures in these vulnerable countries. Through a comprehensive literature review and a case study of the RMI, the costs and feasibility of various adaptation strategies, including coastal protection, land raising, and migration, were analyzed. Findings reveal that the financial requirements for effective adaptation far exceed the economic capacities of the RMI. Even basic protective measures require investments multiple times the country’s gross domestic product. The benefit-cost ratios of adaptation projects fall below 1 when evaluated solely on disaster risk reduction, highlighting the need for a paradigm shift in assessing adaptation investments in highly vulnerable nations. This study underscores the critical importance of international climate finance and support. While the RMI has received significant climate development finance, the scale of required adaptation measures far surpasses this level of assistance. The key challenges included not only debt sustainability concerns but also traditional land tenure systems, ecological impacts, and the limitations of conventional cost-benefit analyses in the context of national survival. This study offers valuable insights for policymakers, international organizations, and researchers working on climate resilience in vulnerable coastal nations.

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