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The simple answer is to only to do what they can afford which is exactly what people in the real world have to do. The other thing that should be done is to use more local firms so that local industry is supported it is no good spending on capital projects if the money ends up outside the island. Also chose to prioritise those capital projects that can bring in a source of income for the island, maybe more public/private joint ventures to bring investment in. One of the elephants in the room is land reclamation, with rising tides and the cost of land it really is a no brainer in the long run. Some people are going to hate losing their lovely views but it's that or end up under water at some point .
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