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POLICY BRIEF: Climate data and projections: Supporting evidence-based decision-making in the Caribbean

Photo Credit: NASA Goddard Space Flight Center

Download POLICY BRIEF: Climate data and projections: Supporting evidence-based decision-making in the Caribbean
No. of pages: 12
Author(s): Will Bugler, Olivia Palin and Dr Ben Rabb
Organisation(s): Acclimatise 
Format: pdf
File size: 620.51 KB

Governments in the Caribbean recognise climate variability and change to be the most significant threat to sustainable development in the region. Policies and strategies such as the regional framework for achieving development resilient to climate change and its implementation plan acknowledge the scale of the threat and provide a plan that aspires to safeguard regional prosperity and meet development goals. To do this, decision-makers need effective tools and methods to help integrate climate change considerations into their planning and investment processes. To build resilience, decision-makers can benefit from access to appropriate climate change data that are specific to their geographical location and relevant to their planning horizons.

The CARibbean Weather Impacts Group (CARIWIG) project, funded by the Climate and Development Knowledge Network (CDKN), gives access to climate data that have been downscaled, making them relevant for use in the Caribbean region. The project also provides tools that allow decision-makers to better understand the potential impacts of drought, tropical storms, rainfall and temperature changes. Caribbean decision-makers, researchers and scientists can access this data freely, through the CARIWIG website.

While these data are a useful aid for decision-making, they do not provide certainty about the scale or timing of climate impacts. The process of downscaling data makes them relevant to decisions taken at the national level in the Caribbean, but also increases the uncertainty. The data should therefore be used to inform decisions, but should not form the sole basis for action. Instead, decisions-makers should aspire to take adaptation measures that perform well over a wide range of conditions.

This policy brief provides an overview of CARIWIG data and information and how they can be used, pointing to illustrative examples of how they have been applied in several Caribbean countries. It also provides decision-makers with the tools necessary to make effective climate decisions in the face of uncertainty.

Key messages

  • Climate data and projections that are relevant to the Caribbean region are available through the online CARIWIG portal.
  • Historical climate data and future projections are available for a range of climate variables.
  • A suite of simulation tools, including a weather generator, a tropical storm model and a regional drought analysis tool are also freely available.
  • These resources are useful for decision makers. When combined with other data and information, they can help to build a picture of potential impacts to key economic sectors in the Caribbean.
  • A series of case studies shows how these resources have been applied to real-world situations in Caribbean countries.
  • The Caribbean Community Climate Change Centre (CCCCC) is providing training and support on how to use CARIWIG outputs.
  • CDKN-funded projects provide methods and tools for decision makers to take proactive action to build climate resilience, despite the uncertainty that comes with future
Credit: Climate & Development Knowledge Network (CDKN)

Office of Climate Change spearheads ‘green’ agenda sessions in Schools-Regions 4, 5, 6 and 10 to benefit in first quarter of 2017

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The Office of Climate Change (OCC), which falls under the purview of the Ministry of the Presidency, in collaboration with the Caribbean Youth Environment Network (CYEN), yesterday, visited three schools in East Berbice-Corentyne (Region Six) to continue its countrywide Climate Change sessions, which are aimed at educating students on the effects of the global phenomenon and Guyana’s pursuit of a ‘green’ agenda.

The team, comprised of staff from the Office of Climate Change and volunteers from the CYEN, delivered 90-minute sessions the All Saints Primary, the New Amsterdam Multilateral and the Manchester Secondary Schools.

During the course of each session, short videos detailing the effects of rising sea levels, importance of water management, the impact of Climate Change on the Caribbean region and Guyana, among other related areas, were shown to the students, after which they were given measures and steps they can take in the home and at school to combat the effects. It was followed by a reinforcement session in which the students were quizzed and given prizes.

Ms. Yasmin Bowman, Communications Specialist at the OCC, in an invited comment, said that the outreach to the region is one in a series of outreaches, which have been planned by Department for the first quarter of 2017. A total of 20 schools were targeted and thus far, 14 have been completed.

“What we have been doing is engaging a lot of the schools in Regions 4, 5, 6 and next week we are going to Region 10. The purpose of this awareness session is exactly what I said, to bring awareness to the students on Climate Change. From the interactions, we have had over the last few weeks, we have noticed that a number of schools and children are not familiar with Climate Change in general or what Climate Change is. Some of them have never even heard about the Office of Climate Change and so we are hoping that once we come to the school, we can bring awareness to the children,” she explained.

Ms. Bowman added that the sessions, however, are also aimed at promoting behaviour change with regard to the treatment of the environment especially at a time when Guyana has embarked on a ‘green’ development plan.

In addition to Primary and Secondary School students, “we would also be engaging nursery level students but their awareness sessions will be done in the form of puppeteering as against the format we used for the Secondary and Primary School children, where we have videos and a reinforcement session and power-point to ensure they grasp as much as possible. What we did not want to do is to use one paint brush to cover everything so we did the awareness in a format where the child could have an appreciation for what is happening,” she said.

Ms. Elon McCurdie, National Coordinator for CYEN, said that the organisation wants to focus primarily on climate change and its impacts and to identify actions that youths can take within the communities, schools and homes so that they can help in the process.

“With them being children now and them taking on actions, whether it is at school or at home, they are now heading into a more sustainable lifestyle so that as they get older, these are things that they can use to help Guyana and themselves,” she said.

Ms. McCurdie is hopeful that the programme can also be taken to the Hinterland regions and not just the Coastland, to ensure that a concerted effort is taken to combat Climate Change and global warming and to raise support for the path, which Guyana has chosen to go.

Meanwhile, Head Master of the All Saints Primary, Mr. Bassant Jagdeo, who sat in the session facilitated at his school, said that the initiative is commendable and must be taken across the country so that behaviour changes can be achieved for the good of the environment and the country as a whole.

“I really appreciate this and not only on my behalf but the entire school population. The kids are the ones that we have to target and the ones who need to become more aware. I know that a lot of the adults are neglectful in their actions and saving our earth but if we can start with the youths, then we are going to have a positive reward in years to come. This is a very great initiative and we should not only target schools but homes too need to be apart. Parents need to be involved because this starts from the home,” he said.

The school has been promoting its own little project in its compound, which sees plants being grown and the students having responsibility to take care of them. Mr. Jagdeo said that this is aimed at inculcating responsibility for the environment in the child so that they can be conscious in their actions.

CDB provides funds for poverty reduction in 8 Caribbean countries

The Barbados-based Caribbean Development Bank (CDB) says it is providing US$40 million in funding for poverty reduction in eight Caribbean through the Basic Needs Trust Fund (BNTF).

It said the resources will support improved access to quality education; water and sanitation; basic community access and drainage; livelihoods enhancement and human resource development services in low-income and vulnerable communities under the ninth phase of BNTF (BNTF 9).

The countries that will benefit from the initiative are Belize, Dominica, Grenada, Guyana, Jamaica, St Lucia, St Vincent and the Grenadines, and Suriname.

“The participating countries share many common characteristics and face a number of challenges inherent to small, open economies. BNTF 9 will respond to the development needs of these countries, which face challenges associated with limited diversity in production and extreme vulnerability to natural hazards, which is  now exacerbated by climate change and other external shocks,” said Daniel Best, director of projects at the CDB.

Initiatives under BNTF 9 will be implemented during the period March 2017 to December 2020.

The CDB said that the governments of the eight participating countries will provide total counterpart funding of US$6.4 million.

BNTF has implemented more than 2,750 sub-projects over the past 37 years, directly impacting the lives of more than three million beneficiaries in poor communities,” the CDB said, adding that the programme is its main vehicle for tackling poverty in the region, through the provision of basic infrastructure and skills training towards improving the livelihoods of beneficiaries in participating countries.

Credit: Jamaica Observer

Message from the Caribbean Community Secretariat to Commemorate International Women’s Day, 8 March, 2017

International Women's Day 2017

Photo Credit: CCCCC, International Women's Day 2017

The Caribbean Community joins with the global community in celebrating International Women’s Day 2017. The theme for this Forty-Second observance is #BeBoldForChange; a clarion call for all citizens of our Region and the world to play their part in forging more gender inclusive, just societies.

Over the past four decades, Member States of our Community have made legally binding commitments through various conventions and agreements to fulfill obligations related to human rights, gender equality and the empowerment of women. These include the 1979 Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) and the 1995 Beijing Declaration and Platform for Action. The 2030 Agenda for Sustainable Development (SDGs) recognises in profound ways that the achievement of gender equality and the empowerment of women and girls is crucial for targeted world progress towards poverty eradication and indeed represents a call for the world to #BeBoldForChange.

The recent 20 year Review of the Beijing Platform for Action in 2015, highlighted some areas of progress related to gender equality and empowerment of women in the Caribbean region. These include new legislation to address gender based violence; women’s increased participation and achievement at secondary and tertiary levels of education; increased representation of women in governments, particularly in the public service and reduced maternal mortality and the spread of HIV.  However, persistent challenges in enforcing the principles of equality and non-discrimination were highlighted in several areas important to the development of our region, including:

  • women’s full participation in paid employment as wage discrimination persists with women earning on average 19 percent less than men;
  • governance remains tilted in favour of male leadership in the public and private sectors; and
  • gender-based violence continues with great intensity and impacts on the health, social and economic well-being of families, particularly women and children.

Many countries in CARICOM have taken ‘bold steps’  to enact legislation to promote the rights of women in conformance with the CEDAW Convention and based on CARICOM Model Legislation in eight areas, namely citizenship, domestic violence, equality for women in employment, equal pay, sexual harassment and sexual offences, inheritance, maintenance and maintenance orders. Several countries have also introduced national gender policies to guide the work of the national gender machineries and mainstream gender across the work of government.

The World Economic Forum has reported in the Global Gender Gap Index, 2016 that some CARICOM Member States, namely Barbados, The Bahamas, Jamaica and Trinidad and Tobago have made progress towards closing the gender gap by between 72 – 74%. The Index is based on four key areas – health, education, the economy and politics. The overall global forecast is that the gender gap won’t be closed completely until 2186, some 169 years from now! This signals that there is much more work to be done.

Being ‘Bold for Change’ signals the need for deliberate steps by all to realise gender equality. As a Community, let us redouble our efforts: men and women, boys and girls, to embrace that bolder and more transformative agenda with strong partnerships among government, the private sector and civil society.  The time for your advocacy and activism, is now!

Today, let us salute the women in our Caribbean Community and all over the world as we celebrate International Women’s Day 2017!

Credit: CARICOM Secretariat

Global conference renews call to reduce greenhouse gas

(Photo: AP)

The fifth Regional Platform for disaster risk reduction in the Americas began in Canada today with the United Nations (UN) reiterating a call for the reduction of greenhouse gases that it has labelled “the single most urgent global disaster risk treatment”.

Head of the United Nations Office for Disaster Risk Reduction, Robert Glasser told a gathering of more than 1,000 delegates from 50 countries, including the Caribbean, that climate change remains inextricably linked to the challenges of disaster risk reduction (DRR).

“We also recognise that reducing greenhouse gas emissions is arguably the single most urgent global disaster risk treatment, because without those efforts our other efforts to reduce many hazards and the risks those pose to communities would be overwhelmed over the longer term,” Glasser said.

“The regional plan of action you will adopt this week will help and guide national and local governments in their efforts to strengthen the links between the 2030 agenda Climate Change Adaptation and Disaster Risk Reduction as national and local DRR strategies are developed and further refined in line with the Sendai Framework priorities over the next four years.”

The March 7-9 conference, hosted by the Canadian government in cooperation with the United Nations Office for Disaster Risk Reduction (UNISDR), marks the first opportunity for governments and stakeholders of the Americas to discuss and agree on a Regional Action Plan to support the implementation of the Sendai Framework for DRR 2015-2030.

The Sendai Framework recognises Global and Regional Platforms for DRR as key mediums for its implementation, building on the pivotal role that they have already played in supporting the implementation of the Hyogo Framework for Action 2005 – 2015.

It also underscores the need for the Global Platform and the Regional Platforms to function as a coherent system of mechanisms in order to fully leverage on the potential of collaboration across all stakeholders and sectors to provide guidance and support in its implementation.

The main focus of the conference will be to discuss how governments, ministers, civil society leaders, technical and scientific institutions, private sector, media could drive the implementation and measurement of the expected outcomes of the Sendai Framework in the Americas.

Glasser said the work of adopting and implementing the Sendai Framework is “important for the rapid urbanisation taking place across the region which brings with it new challenges for risk governance and disaster risk management.”

He said Latin America and the Caribbean is the most urbanised region of the world as over 80 per cent of its population live in urban areas and that it could increase to 90 per cent within a few decades.

The conference is being held under the theme “Resilience for All”.

In his welcome remarks, Canada’s Minister for Public Safety Ralph Goodale told the gathering they need to make good use of their time together to move forward on a robust regional action plan that can increase the open exchange of research and technology that can save lives worldwide.

“A plan that is grounded in the Sendai Framework’s guiding principles that can help strengthen and organise, prepare, budget and govern; and how we engage critical partners…and a plan that can let us use our collective influence to increase the number of countries and territories and organizations that do have strategies in place to reduce the risks of disasters.”

Among the topics to be discussed over the next three days include “Understanding the risks in the Americas, Empowerment of women and girls and gender Equality in Disaster Risk Reduction and High Risk Populations as Agents of Change for Disaster Risk Reduction”.

Credit: Jamaica Observer

Cuba Seeks To Revitalize Association Of Caribbean States

CubaCuba is seeking to revitalize Association of Caribbean States (ACS) as ACS’ First Cooperation Conference to be held today, March 8, Cuba’s foreign ministry announced on Tuesday.

At a press conference, Carlos Zamora, director of Latin America and the Caribbean of the Cuban Foreign Ministry, said this meeting seeks to evaluate the state of implementation of the cooperation programs developed within the ACS.

Furthermore, Caribbean nations will discuss air and maritime connectivity and the ACS agenda for tackling climate change.

“Within the process of revitalizing the association, we have been looking at how to strengthen the issue of cooperation, both internal and external, in order for the ACS to play a vital role in the economic development of the Caribbean. This conference is aimed at that,” explained Zamora.

Cuba took over the presidency of the ACS in January 2016 and for more than a year has presented projects to strengthen its cooperation system, confronting the effects of climate change and natural disasters, as well as solidarity initiatives with Haiti.

In addition, the 22nd Ordinary Meeting of the ACS Council of Ministers will be held on March 10 in Havana.

“A few governments have changed in the region, as well as economic and political circumstances have been transformed, and of course this council of ministers will be in the midst of those circumstances,” said the high official.

The event will have a wide participation of the 25 foreign ministers of the member states and eight associates, as well as special organizations that have accompanied the ACS since its creation in July 1994 in Cartagena de Indias, Colombia.

Credit: Curacao Chronicle

Building climate resilience is integral to continued prosperity in the Caribbean

Photo Credit: Carlos Octavio Uranga

The escalating cost of climate change to the Caribbean region makes a compelling argument for taking early action for adapting to climate change. An analysis of ten years of climate change research in the Caribbean found that sectors that are vital to regional economic and social development, including agriculture and tourism, are especially vulnerable to climate change and its impacts. The findings suggest that well-targeted measures to adapt will be essential to protect the development gains made by the region in recent decades.

The findings come from a new synthesis of climate research that has been compiled and released by the Climate and Development Knowledge Network (CDKN). The package draws on three CDKN-funded projects that have studied climate change in the Caribbean region over the past decade. The new analysis provides fresh insight into the nature of the climate threat to key sectors in the Caribbean, and draws together practical tools and methods that decision makers in the region can use to help them adapt.

The newly released ‘knowledge package’ draws on the CDKN-funded research to identify cross-cutting lessons. This, the second in a series of four knowledge package releases, focusses on making the case for climate resilient investment, identifying the risks and potential adaptation options.

The research, tools and other resources that have been used to formulate the knowledge package have been compiled and can be accessed via the CDKN website: cdkn.org/2017/02/climate-risk-caribbean-prosperity.

Key findings from the research include:

  1. Climate variability and change are already having severe impacts on key sectors including agriculture and tourism.
  2. These impacts are reversing economic growth, exacerbating poverty and undermining the future prosperity of Caribbean countries.
  3. CDKN research has provided locally appropriate climate change projections that give fresh insight into the vulnerability of key sectors.
  4. Adaptation investment in the agriculture sector is needed to account for projected changes in rainfall and growing seasons, and occurrence of extreme events, especially drought.
  5. Adaptation investment in the tourism sector is also needed to build resilience to rising seas, bleached coral reefs, water scarcity and gradual temperature increase.
  6. There are many potential adaptation measures that can be applied by governments, businesses, individuals and development partners.
  7. Financial support is needed to support adaptation action as high up-front costs are a barrier to local adaptation efforts.
  8. Effectively prioritising adaptation options can maximise their value and lead to positive co-benefits for individuals, businesses and society.

An information brief, video and infographic have been produced which identify the most important findings from the research. To access these and to find out more about the research on which they were based visit: cdkn.org/2017/02/climate-risk-caribbean-prosperity

Credit: Climate and Development Knowledge Network (CDKN)

Caribbean | Early Warning System to Help Caribbean Fishermen Deal With ClimateFishermen who depend on fishing for a living need an early warning system Change

Fishermen who depend on fishing for a living need an early warning system

Fishermen who depend on fishing for a living need an early warning system

The challenges of climate change and variability faced by fishermen and women in four Caribbean countries are to be addressed through early warning and emergency response tools being developed under the Caribbean Regional Track of the Pilot Programme for Climate Resilience (PPCR).

The information, communication and technology (ICT) solution, which is being developed by the ICT4Fisheries Consortium in collaboration with the Caribbean Regional Fisheries Mechanism (CRFM), will work to reduce risks to fishers’ lives and livelihoods posed by climate change and climate variability. The ICT4Fisheries Consortium is a multidisciplinary team comprising members from The University of the West Indies (UWI), the University of Cape Town and the Caribbean Network of Fisherfolk Organizations.

Possible impacts of long term climate change trends and short term extreme weather events on Caribbean fisheries include damage to fishing and aquaculture community infrastructure, including roads, harbours, farms and houses caused by sea level rise and stronger storms, as well as unsafe fishing conditions and loss of life at sea as a result of strong storms and hurricanes, according to a 2015 study published by the Food and Agricultural Organisation (FAO).

Other hazards influenced by climate, such as sargassum seaweed, are also of deep concern to fishers.

The ICT-based early warning system is expected to reduce fisher folks’ vulnerability to the impacts of climate change. Using an application for mobile phones, fishers will be able to receive early warnings of risky weather and sea conditions.

The mobile application will also be used to encourage fishers to share their local knowledge to support and improve climate-smart fisheries planning, management and decision-making. The system will be integrated within existing national disaster risk management and emergency response frameworks, and its main focus will be on communications.

The new system will be tested in St. Vincent and the Grenadines, Grenada, Dominica and St. Lucia and it will take into account the specific situations of target countries.

“ICT4Fisheries will not only develop and deploy the tools but will also provide training in their use and administration to country and regional level stakeholders.  The system should be in place by 2018,” according to an official statement issued here.

The Caribbean PPCR is a regional programme that consists of six individual country pilots in Dominica, Grenada, Haiti, Jamaica, St Lucia and St Vincent and the Grenadines, and a regional track of activities which supports resilience building in these countries and, will also provide benefits to the wider Caribbean.

Credit: Wired JA Online News

CARICOM prepares positions on imminent UN oceans agreement

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Senior environment officials from the Caribbean Community (CARICOM) met recently in Belize as CARICOM rationalises its position on the United Nations (UN) process to establish an international legally binding agreement on sustainable use of marine resources.

The two-day workshop held 20-22 February 2017, in Belize City, Belize, was titled, ‘CARICOM Regional Workshop on the Conservation and Sustainable Use of Marine Biological Diversity beyond Areas of National Jurisdiction’.

Foreign Minister of Belize, the Hon. Wilfred Elrington, addressing the opening, said that CARICOM Member States had championed the negotiation and adoption of the 1982 UN Convention on the Law of the Seas (UNCLOS), which was opened for signature in Jamaica. He also reminded that when the International Tribunal for the Law of the Sea was constituted, two CARICOM citizens – Edward Laing of Belize and Dolliver Nelson of Grenada, joined the ranks of the first 21 Members of the Tribunal.

“Judge Laing and Judge Nelson are no longer with us, but they, together with other key jurists from our Region, including the sitting Judge Anthony Amos Lucky of Trinidad and Tobago, have left a legacy on the international stage that is definitive of our Region’s commitment to uphold the law of the sea.

“We have now been called upon to address an area of the law of the sea that has not been adequately provided for in the UNCLOS, whether for want of scientific knowledge, implementation, or as a result of governance and legal gaps,” he said.

For CARICOM, he noted, the implementation of this agreement was the only feasible option to ensure that developing countries and Small Island Developing States (SIDS) in particular, benefited equitably from the conservation, sustainable use and exploitation of areas beyond national jurisdiction.

Critically, he said, the agreement presented an opportunity to strengthen the Convention and to help States with the implementation of provisions of UNCLOS relating to resources which would not have been contemplated to be the exclusive domain of any State, however large and industrialised.

Minister Elrington told the gathering of regional experts in the legal field, in fisheries, environment and international relations that it was critical for the meeting to identify the essential elements for a new implementing agreement, taking into account regional interests, the Community’s contributions to the conservation and sustainable use of marine resources and potential benefits to be secured in such an agreement.

The Hon. Dr. Omar Figueroa, Minister of State in the Ministry of Agriculture, Fisheries, Forestry, the Environment, Sustainable Development and Climate Change, also addressed the meeting noting that the wide range of expertise gathered at the meeting reflected the complexity of marine biological diversity of areas beyond national jurisdiction.

This multi-sectoral approach was necessary, he said, to address the complexities of the issue. He urged the participants to use the platform for knowledge-building, sharing and networking, and to establish a solid foundation upon which the CARICOM could formulate well-informed positions.

The meeting engaged in technical discussions on the proposed Implementing Agreement under the United Nations Law of the Sea on Biodiversity beyond National Jurisdiction. It identified areas for further study and research for the Region to enhance its participation in the preparatory process. It also identified key actions to be taken at the national and regional level ahead of the next Preparatory meeting of the United Nations scheduled for March 27th to 7th April 2017.

Credit: CARICOM Today

Public-Private Insurance Partnerships Bolster Latin American/Caribbean Resilience

Globally, three of the ten most costly natural disaster events in the last 35 years occurred in total or in part in the Latin America/Caribbean (LAC) region; losses from Hurricane Matthew in the Caribbean are still being assessed.

Today, 80 percent of the LAC population lives in urban areas, second only to North America (82 percent) and well above the global average of 54 percent. The region’s 198 large cities (>200,000 residents) contribute over 60 percent of gross domestic product (GDP), and its 10 largest cities produce 50 percent of that total. As the region’s population, swelling middle class, urbanization and GDP concentration continue to grow, the effects of climate volatility will likely increase the impact of natural perils losses on these economies.

Damage from these losses as a proportion of GDP tends to be much higher than in developed economies (see tables 1 and 2). If the LAC region is to build on the economic and social gains of recent years, its governments must align with the private sector through public–private partnerships to improve risk management and disaster preparedness strategies.

The ultimate cost of catastrophe-event responses puts particular strain on the public balance sheets of emerging markets, increasing public debt and ultimately burdening taxpayers. Adding to the problem is the lack of insurance coverage in developing countries. Average property insurance penetration in developing countries was only 0.21 percent in 2014, compared to 0.77 percent in industrialized countries. Another estimate indicates only 3 percent of potential loss is currently insured in developing countries versus 45 percent in developed countries. Mature economies can also often fall back on fiscal safety nets to cover insurance shortfalls. The $83 billion budget appropriation approved by the U.S. Congress after Hurricane Katrina hardly registered on the U.S. budget, but most developing economies cannot afford such amounts. For example, a year after Hurricane Ivan hit Grenada in 2004, the country defaulted on its foreign debt.

The Maule, Chile earthquake of 2010 burdened the country with $32 million in economic losses, or 15.1 percent of GDP. Despite the high level of insurance coverage in Chile—even by developed world standards—75 percent of the costs were ultimately assumed by the government, leaving significant opportunity for the private sector to reduce the state’s financial burden.

Many recent catastrophe events in the Latin America/Caribbean region provide examples of the protection gap: Only 5 percent of the $8 billion economic loss from Haiti’s 2010 earthquake was insured; and the insured portion of the $2-3 billion economic loss caused by the April 2016 earthquake in Manta, Ecuador, is expected to reach no more than 15 percent. The 2016 earthquake has deeply impacted the local economy and government finances as unemployment increased by approximately 50 percent and the government was compelled to increase sales taxes by two percent to fund national reparation and recovery costs. In general, emerging markets face a much larger protection gap than developed economies:

Given the overall impact of catastrophes on public-sector finances, governments in Latin America are transitioning from an over-reliance on post-event disaster financing to a pre-event approach to disaster risk mitigation. Societies are realizing that transferring risk to the private sector provides efficient and cost-effective solutions that relieve already strained public-sector budgets.

The insurance industry also empowers the mechanisms and innovation needed to “build back better.” This concept relies on three key ideas—risk reduction, community recovery and implementation—to increase community resiliency. By improving building codes and land-use planning, cities can reduce the future vulnerability of their physical infrastructure. At the same time, social and economic recovery is supported through market-based incentives and subsidies to finance aid and reconstruction efforts. Finally, stakeholder education, legislation, regulation, community consultation and monitoring and evaluation must all be used to ensure compliance with appropriate and culturally sensitive standards and targets.

“Building back better” institutionalizes disaster assessment and recovery frameworks at the national, municipal and community levels as well as in the private sector, academia and civil organizations, improving coordination and risk governance. Sharing regional and global best practices and establishing international aid standards further supports sustainable recovery and reconstruction.

A Lesson in Resilience from Mexico

The Mexican federal government’s risk management strategy exemplifies a modern, resilient disaster preparedness plan, including pre- and post-event approaches and public–private partnerships. Following the 1985 Mexico City earthquake, the Mexican National Civil Protection System (SINAPROC) was created, establishing a multi-level system to integrate stakeholders from the three levels of government, the private and social sectors, academia and scientific organizations. Its purpose was to provide an institutional framework for the improved coordination of emergency response. Its capacities in the areas of risk assessment, early warning, preparedness and disaster risk financing were developed. As SINAPROC evolved, it added risk reduction practices to shift from a reactive to a preventative, holistic and integrated risk management plan.

Recognizing that risk comes from multiple factors—politics, land-use planning, cultural norms, and more—SINAPROC mainstreamed the plan throughout government, private and social sectors. Through the Secretariat of the Interior, it coordinates civil protection with other key policies, such as urban development, housing, climate change and education, by clearly identifying responsibilities. SINAPROC works with the Secretariat of National Defense and the Secretariat of the Navy to implement emergency preparedness, communication and relief and recovery plans in addition to creating institutions to set policies and budgets, develop best practices, coordinate government, promote social and private-sector agreements and research scientific and technological improvements in risk management. It also aligns with the Ministry of Foreign Affairs to oversee international compliance and assistance and establishes provisions for government accountability.

SINAPROC also created the General Risk Management Directorate to oversee financial risk management instruments in conjunction with private-sector stakeholders. One such instrument was developed in 1996 to respond to a continued need for post-event budget allocations. The Fund for Natural Disasters (FONDEN) is a transparent financial vehicle by which the federal government provides pre-event funding from tax revenues for post-disaster response and reconstruction. Its resources are allocated by law, and distributions are made by the state-owned development bank from sub-accounts dedicated to specific reconstruction programs.

Through FONDEN, the Mexican government established relationships with international capital and reinsurance markets that have proven critical in accessing risk transfer schemes. In 2006 it purchased Mexico’s first catastrophe bond, Cat Mex. In 2009, it replaced Cat Mex with the MultiCat Mexico bond, expanding earthquake coverage and adding hurricane coverage. The bond was renewed again in 2012 before making a $50 million payment to the Mexican government for losses from 2015’s Hurricane Patricia. SINAPROC further mitigated the storm’s impact by using its early warning system to evacuate most of the affected population, resulting in only a handful of casualties despite the fact that Patricia was the second-most intense tropical cyclone on record.

In 2011, FONDEN also placed a traditional insurance program covering 100 percent of the federal government’s assets. To incentivize prevention, it covers up to 50 percent of provincial assets if municipalities implement formal risk transfer strategies. The program renewed in 2012 with over 40 international reinsurers and demonstrated considerable buying power by convincing the market to accept its own damage assessment and adjustment procedures.

Mexico’s risk management strategy has earned a strong reputation in the international community. The World Bank said it is “at the vanguard of initiatives aimed at the development of an integrated disaster risk management framework, including the effective use of risk financing and insurance mechanisms to manage the fiscal risk derived from disasters,” highlighting it as an example for other governments to follow.

Another market leader in public–private partnerships, CCRIF SPC(formerly the Caribbean Catastrophe Risk Insurance Facility) is the world’s first multi-country-risk-pool-utilizing parametric insurance backed by both traditional insurers and capital markets. Created in 2007 with the support of the World Bank, the government of Japan, and other donors, CCRIF provides protection against earthquakes, hurricanes, and excessive rainfall to 17 Caribbean and Central American countries. Leveraging its diverse portfolio, the facility provides affordable reinsurance for members through catastrophe swaps with the reinsurance market. In 2014 it accessed catastrophe bond markets for the first time with a three-year, USD 30 million bond covering hurricanes and earthquakes, providing CCRIF multi-year access to reinsurance at a fixed price.

The risk pool mitigates cash flow problems faced by its members after major natural disasters by providing rapid, transparent payouts to assist with initial disaster responses. It has made 22 payouts to 10 members for a total of $69 million, all within 14 days. CCRIF was the first to pay claims associated with the 2010 Haiti earthquake and has paid out more than $29 million in response to 2016’s Hurricane Matthew.

Microinsurance Helping Close Insurance Gap

Not to be outdone, the private sector has demonstrated its commitment to bringing insurance solutions to emerging economies through the industry consortium and venture incubator Blue Marble Microinsurance. Blue Marble’s founding consortium has committed to launching 10 microinsurance ventures in the next 10 years to deliver risk management solutions to the underserved. Through collaboration with strategic partners, including government and quasi-government entities and innovative technology-enabled platforms, Blue Marble seeks to improve sustainability by expanding the role of insurance in society. These ventures will consider unique distribution methods, local partnerships, product development and impact services.

Blue Marble is currently working to close the protection gap in the risk that climate change poses to smallholder farmers in Latin America with the intention to launch pilots in 2017. Blue Marble understands the value of public sector–private sector partnerships in achieving its mission; it is coordinating its initiatives to bolster agricultural production and the management of associated risks with local government officials, including Ministers of Agriculture.

Given the recent slowdown in global demand for commodities and the persistent social inequalities and corruption in some nations, it is more important than ever for governments in the Latin America/Caribbean region not only to protect the economic and social gains made in the last decade, but provide the systems and institutions to promote further sustainable growth. Partnering with the private sector ensures the best practices, innovations and risk reduction and management techniques of the insurance industry are combined with the risk knowledge of regional governments, thereby ensuring resilient cities and communities are poised for strong future growth.

Insurance Natural Disasters Risk Mitigation

Aidan Pope

CEO for Latin America and the Caribbean at Guy Carpenter

Aidan Pope is the CEO for Latin America and the Caribbean at Guy Carpenter. He has more than 30 years of experience in the LAC treaty reinsurance business. Prior to joining the firm, he established offices in Mexico and Brazil for his previous employer.

Credit: Brink News
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