In 2015, the Sasakawa Peace Foundation (SPF) launched an initiative to promote environmentally sustainable tourism in Palau, where rapid growth in inbound tourism had begun to pose significant social and environmental challenges. The project introduced tourism carrying capacity assessments and community-based ecotourism models aimed at balancing local economic benefits with the preservation of Palau’s natural and cultural heritage. In collaboration with the International Cooperation and Development Fund (TaiwanICDF), which implemented a circular agriculture project, the initiative also supported capacity building through workshops and training programs. Amid the socio-economic vulnerabilities exposed by the COVID-19 pandemic, particularly in small island developing states (SIDS), this initiative offers an ecotourism model for enhancing resilience. By promoting sustainable tourism diversification alongside the conservation of cultural and natural resources, the project contributes to the development of more adaptive and resilient island societies.