The highest land point on the Maldives is only 2.4 metres above sea level. Photograph: Corbis/Craig Tuttle

The Maldives will begin to divert a portion of the country's billion-dollar annual tourist revenue into buying a new homeland - as an insurance policy against climate change that threatens to turn the 300,000 islanders into environmental refugees, the country's first democratically elected president has told the Guardian.

Mohamed Nasheed, who takes power officially tomorrow in the island's capital, Male, said the chain of 1,200 island and coral atolls dotted 500 miles from the tip of India is likely to disappear under the waves if the current pace of climate change continues to raise sea levels.

The UN forecasts that the seas are likely to rise by up to 59cm by 2100, due to global warming. Most parts of the Maldives are just 1.5m above water. The president said even a "small rise" in sea levels would inundate large parts of the archipelago.

"We can do nothing to stop climate change on our own and so we have to buy land elsewhere. It's an insurance policy for the worst possible outcome. After all, the Israelis [began by buying] land in Palestine," said Nasheed, also known as Anni.

The president, a human rights activist who swept to power in elections last month after ousting Maumoon Abdul Gayoom, the man who once imprisoned him, said he had already broached the idea with a number of countries and found them to be "receptive".

He said Sri Lanka and India were targets because they had similar cultures, cuisines and climates. Australia was also being considered because of the amount of unoccupied land available.

"We do not want to leave the Maldives, but we also do not want to be climate refugees living in tents for decades," he said.

Environmentalists say the issue raises the question of what rights citizens have if their homeland no longer exists. "It's an unprecedented wake-up call," said Tom Picken, head of international climate change at Friends of the Earth. "The Maldives is left to fend for itself. It is a victim of climate change caused by rich countries."

Nasheed said he intended to create a "sovereign wealth fund" from the dollars generated by "importing tourists", in the way that Arab states have done by "exporting oil". "Kuwait might invest in companies; we will invest in land."

The 41-year-old is a rising star in Asia, where he has been compared to Nelson Mandela. Before taking office the new president asked Maldivians to move forward without rancour or retribution - an astonishing call, given that Nasheed had gone to jail 23 times, been tortured and spent 18 months in solitary confinement.

"We have the latitude to remove anyone from government and prosecute them. But I have forgiven my jailers, the torturers. They were following orders ... I ask people to follow my example and leave Gayoom to grow old here," he said.

The Maldives is one of the few Muslim nations to make a relatively peaceful transition from autocracy to democracy. The Gayoom "sultanate" was an iron-fisted regime that ran the police, army and courts, and which banned rival parties.

Public flogging, banishment to island gulags and torture were routinely used to suppress dissent and the fledging pro-democracy movement. Gayoom was "elected" president six times in 30 years - but never faced an opponent. However, public pressure grew and last year he conceded that democracy was inevitable.

Upmarket tourism had become a prop for the dictatorial regime. Gayoom's Maldives became the richest country in South Asia, with average incomes reaching $4,600 a year. But the wealth created was skimmed off by cronies - leaving a yawning gap between rich and poor. Speedboats and yachts of local multimillionaires bob in the lagoon of the capital's harbour, while official figures show almost half of Maldivians earn less than a dollar a day.

Male is the world's most densely populated town: 100,000 people cram into two square kilometres. "We have unemployment at 20%. Heroin has become a serious social issue, with crime rising," Nasheed said, adding that the extra social spending he pledged would cost an immediate $243m. He said that without an emergency bailout from the international community, the future of the Maldives as a democracy would be in doubt.

To raise cash, his government will sell off state assets, reduce the cabinet and turn the presidential palace into the country's first university.

"It's desperate. We are a 100% Islamic country and democracy came from within. Do you want to lose that because we were denied the money to deal with the poverty created by the dictatorship?" he said.

At a glance

• The highest land point in the Maldives is 2.4 metres above sea level, on Wilingili island in the Addu Atoll

• The Intergovernmental Panel on Climate Change predicts that sea levels could rise by 25-58cm by 2100

• The country comprises 1,192 islands grouped around 26 Indian Ocean atolls. Only 250 islands are inhabited. The population is 380,000

• The main income is from tourism, with 467,154 people visiting in 2006