Micronesia

The Federated States of Micronesia demonstrates source-sink economics at the extreme—a $404 million GDP nation spanning 607 islands across a million-square-mile exclusive economic zone, funded primarily by US Compact transfers. The 2023 Compact renewal locked in $140 million annually through 2043, with $500 million additionally flowing into trust funds ($1.8 billion Compact Trust, $540 million FSM Trust by 2025). Foreign fishing fleets pay $20+ million annually for tuna access—30% of budget revenue—making FSM's 71,000 residents stewards of waters that supply 55% of western Pacific tuna (via the Nauru Agreement). Yet the population fell 31% between 2010 and 2023 as Micronesians exercised Compact rights to live and work in the United States, creating an emigration paradox: the transfers that sustain sovereignty also enable departure. Only 65 of 607 islands are inhabited; climate vulnerability threatens even these. The economic model resembles mutualism with asymmetric benefits: the US gains Pacific strategic presence and fishing access; FSM gains fiscal stability but hemorrhages human capital. By 2043, when current Compact terms expire, trust fund returns are meant to replace direct grants—betting that $2.3 billion in accumulated assets can generate the $140 million annually that American taxpayers currently provide. The demographic math suggests FSM may have fewer residents to serve by then.