Palau is in the midst of rapid social, economic, and environmental change. These changes are having profound impacts on people in Palau and cause many individuals to feel like they are caught between two worlds. Incomes have not kept pace with the cost of living, and changing aspirations are resulting in a growing sense of personal frustration.
Palaun children enjoy 12 years of free public education, there are several public elementary schools and one high school. There are also several private church-run schools. Palau has virtually achieved universal elementary education. Though the dropout rate from high school remains far too high, these rates appear to be declining as more children and parents recognize that education is vital in the modern world. Most high school graduates go on to post-secondary education either locally or overseas, made possible with subsidies in the form of public loans or scholarships.
The health of Palauans seems to have improved in the last few decades, with health indicators revealing an increased life expectancy at birth and a decreased under-five mortality rate. Water and sanitation has also improved, with the entire population now having access to waste disposal facilities. Modern lifestyle-related diseases such as diabetes, circulatory diseases and cancer remain at the top of the list of major causes of death. Tuberculosis and leprosy also remain a problem.
Palau is renowned for its pristine natural environment and supports tourism, fishing, the extractive industries and the lifestyle of its residents. Much of Palau's fragile natural environment remains free of environmental degradation. However, there are still several areas of concern such as illegal fishing, inadequate facilities for disposal of solid waste in Koror, and extensive sand and coral dredging in the Palau lagoon.
Like the other Pacific island nations, a major environmental problem is global warming and the rising sea level. Water coverage of low-lying areas is a threat to coastal vegetation, agriculture, and the purity of the nation's water supply.