Loss and Damage at the UN-FCCC, and risk transfer as part of the adaptation toolkit Dr Simon Young CEO, Caribbean Risk Managers Ltd Facility Supervisor, CCRIF

Loss & Damage In UN-FCCC-speak, this refers to the segment of the negotiations focussed on managing the loss and damage which is increasingly occurring due to climate change It includes two main areas, disaster risk reduction and risk transfer (insurance), and one other area, rehabilitation or slow-onset damage It is recognised that while most of the change in the climate is attributable to Annex 1 countries, it is the developing world which will bear the brunt of the economic and social costs of increased loss and damage It is an area of the negotiations in which AOSIS and SIDS have been particularly active due to its recognised importance to the small island states of the world However, one of the sticking points in a global deal on adaptation has been the creation of an international insurance mechanism for climate change impacts, and also the linking of L&D to rehabilitation and compensation

Progress on L&D In a compromise in Cancun, a work programme on L&D was mandated, to report back to CoP-18 with tangible, implementable ideas on how best to include DRR and insurance in an international climate change deal (with rehabilitation likely taking a back seat) Ideas have been collated and will be formulated into a work programme under the Subsidiary Body for Implementation, one of two SBs under the Convention (the other being Advice), to be mandated (hopefully) in Bonn next month Our region has been and will continue to be very active in this area, particularly because CCRIF has been seen and used as an example of how a regional insurance mechanism addressing catastrophe climate risks can actually work in practice

An economic framework for adaptation A national economics of climate adaptation (ECA) assessment provides a quantitative foundation to development of a comprehensive, holistic adaptation strategy ECA can be applied at various levels: –Overview and foundation for formulating the business case for adaptation investment at the country level –Drilling down to inform sectoral and project-specific design and implementation However, the technical nature of the process requires a regional approach to champion the implementation of high- level studies and building of capacity to complete the drill- down work Both CCRIF and ECLAC/CCCCC have been active in this area and CDB should play a coordinating and intermediating role to assist countries and the region to attract adaptation funding

How can ECA help?

An holistic adaptation strategy Risk Management comes first: Disaster risk reduction is the top priority and the most cost-effective way to avert losses by reducing exposure Risk Transfer can help: Risk reduction is only more cost- beneficial than risk transfer up to a point, and some risk, particularly catastrophe risk (which forms a substantial part of the regions risk profile), cannot be adapted to Residual Risk must be recognised and funded: Even with a perfectly executed adaptation strategy, some risk will remain; mainly long-term, slow-onset risk which will require some accumulation of funding to manage at the required time

Strategies to reduce climate risk Increase infrastructure resilience (e.g. enhanced building codes, hardened coastal defences) Develop new infrastructure to support changed lifestyles (e.g. drainage/irrigation networks for agriculture) Enhance environmental protection mechanisms (e.g. coral reef preservation, mangrove restoration) Support lifestyle changes to cope with a changed climate regime (e.g. changing agricultural practices/crops) Include climate change in EIA alongside natural hazard risk assessment (championed by CDB) to help drive more climate-resilient development

Risk transfer as an adaptation tool At the national level, risk transfer complements risk reduction in managing risks which cannot cost- efficiently be reduced It can also provide a secure umbrella beneath which a risk reduction strategy can be fully implemented with lower chance of being negatively impacted by natural disasters At the sub-national level, risk transfer products enhance access to credit for individuals and investors, which drives economic development, which in turn increases climate resilience Index-based weather insurance has the ability to reach the poorest and most vulnerable in a fair and equitable way, something traditional insurance is not able to do

Risk transfer in action CCRIF has paid out over $32 million in 4 years, including $17 million after Tomas, half dispersed within a week and the second half after 2 weeks CCRIF is just about to launch a project funded by the German Environment Ministry, aimed at demonstrating the catalytic abilities of a regional risk pool such as CCRIF in creation of sub- national index insurance mechanisms serving the most vulnerable. One particular focus will be index-based weather insurance for the agricultural sector A public-private partnership has recently been launched, supported by DFID, Swiss Development Agency and CDB (tbc) which offers an innovative insurance product to cover catastrophe risks for micro-finance borrowers Known as MiCRO, the first product is in place and covering almost 50,000 MFI clients in Haiti against rain, wind and earthquake perils