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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

At UN Biodiversity conference, new guidelines for agro-environmental policies in Latin America & Caribbean

Photo: ©FAO/ Camilo Vargas

The guidelines will serve as a template for countries to create their own policies to promote sustainable production and consumption patterns

In an effort to combat the impacts of environmental degradation and promote sustainable agriculture in the face of climate change, FAO this week presented a set of Voluntary guidelines for agro-environmental policies meant to help policy makers in Latin America and the Caribbean in their ongoing work to eradicate hunger and poverty in the region.

The guidelines were introduced at an event on the sidelines of COP 13 – the UN conference on Biodiversity taking place in Cancun, Mexico, December 4-17 – for an audience of ministers and representatives of Latin American and Caribbean countries.

The guidelines will serve as a template for countries to create their own policies to promote sustainable production and consumption patterns, enabling them to transform their agricultural systems, ensure sustainable development and comply with the Paris Climate Agreement.

According to FAO, the transition to a sustainable future requires action on the intersection of economy, society, agriculture and natural ecosystems.

The countries of Latin America and the Caribbean share common environmental challenges, including the need to adapt agriculture to climate change, conserve biodiversity, manage their water resources and soils, and mitigate their greenhouse gas emissions.

Other participants in the event included Mexico’s National Commission for the Knowledge and Use of Biodiversity (CONABIO), the Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Food (SAGARPA), the Secretary of Environment and Natural Resources (SEMARNAT) and the NGO Razonatura.

Protecting the resources that support food security

Thirty-seven percent of the surface area of Latin America and the Caribbean is used for agricultural activities, which presents great challenges for sustainable food production and the care of the environment.

According to FAO, the region is experiencing increasing pressure on the natural resources that underpin food production and food security.

The guidelines presented at the COP13 point out that the impacts of environmental degradation and climate change mainly affect the most vulnerable social sectors.

Family farmers, small scale fishermen, smallholder forest producers, indigenous peoples and traditional communities are among those most directly dependent on natural resources for their subsistence and food security.

In Latin America and the Caribbean, family farmers account for 75 percent of total producers -involving some 60 million people – a number that exceeds 90 percent in some countries. These farmers safeguard the environment and the natural resources on which they depend and their work is key for the sector’s current and future development.

What are the Voluntary guidelines?

The Voluntary guidelines for agro-environmental policies have been prepared through a broad process of consultation between authorities and specialists in the region, with the support of the International Cooperation Program between Brazil and FAO.

The implementation of these guidelines may enhance the potential environmental benefits of agricultural, forestry, fisheries and aquaculture activities, reduce their impacts on ecosystems and improve food availability, as well as food and nutritional security.

The countries of the region, with FAO’s support, will promote these voluntary guidelines as a guide to improving policies under an agro-environmental approach that links society, territory, environment and economy in a more integrated and harmonious way.

Policies emerging from these guidelines will be formulated through interaction with different social actors, and seek to promote rural development with a territorial approach, according to principles of conservation and sustainable management of natural resources.

Precious resources under threat

Latin America and the Caribbean accounts for 15 percent of the world’s total agricultural land, receives almost 30 percent of precipitation and generates 33 percent of global runoff.

However, the rapid exploitation of minerals, gas, forests and pastures is producing dramatic changes in land use: the region currently accounts for 14 percent of global land degradation, a figure that reaches 26 percent for Mesoamerica.

Although deforestation has declined in recent decades, the region still has the second highest rate in the world, and each year more than two million hectares of forest are lost.

In the last three decades water extraction has doubled in the region at a rate well above the world average, most of which is used in agriculture.

Credit: Military Technologies

Dramatic Climate Change Factor for Masses of Sargasso from Texas to Tobago

sargasso in cancun

Beach resorts in Mexico continue to deal with the intrusive Sargasso problem that has left nearly all of its pristine beaches under a thick layer of the brown seaweed.

There has been an estimated 90 tons of sargassum algae washed up on Cancun’s beaches causing some tourists to cancel their sunny beach vacations. Mexican authorities are doing their best to deal with the issue, having recruited hundreds of diggers and machinery to clear the beaches.

The problem is not only along the Mexican coast though.

Since May, the seaweed has hit nearly every part of the Caribbean, causing major headaches from Texas all the way to the island of Tobago in the south Caribbean.

Scientists say that the seaweed is an important part of the coastal eco-system and explain that it plays an important role in beach nourishment. They also say that they have associated the massive quantities of this year’s seaweed in the Caribbean region with higher than normal temperatures and low winds, two elements that influence ocean currents.

sargasso playa del carmen beaches

Sargassum is a floating algae that circulates through the Gulf of Mexico and North Atlantic where it forms the nearly 2 million-square-kilometer Sargasso Sea.

It is common for the seaweed to wash up on beaches in the Gulf, southern US Atlantic coast and northern Caribbean during the spring and summer months.

In 2011, however, the unwanted seaweed began showing up in unprecedented amounts, often in places it had never been seen before.

One example is a three-mile stretch of beach on Galveston Island, Texas where, over a 24-hour period, scientists recorded more than 8,400 tons of it. That occurred in a single day in May 2014.

Jim Franks, a senior research scientist at the University of Southern Mississippi’s Gulf Coast Research Laboratory, reports that the seaweed is showing up in areas where before, it had been seen only rarely or not all. He says that circulation patterns in the equatorial Atlantic even carried mats to Africa for the first time. Satellite data suggest the amount of sargassum in the Gulf of Mexico, Caribbean and Atlantic may hit an all-time high in 2015.

Tobago’s Division of Agriculture, Marine Affairs, Marketing and the Environment began removing sargassum from 16 beaches in early May, but officials admit their efforts were futile as the seaweed simply continued to wash ashore.

There have been many dramatic changes to the environment in recent years. The results of this dramatic climate change appears to be a factor in the reason for the explosion in sargassum. This means the seaweed-covered beaches from Texas to Tobago could be the new norm, a major inconvenience for beachgoers and a potential economic disaster for tourism industries.

Credit: Riviera Maya News

New High Resolution Projections Predict Coral Reef Bleaching in the Caribbean

Scientists have discovered that when early reef fish parents develop at elevated temperatures, they can adjust their offspring's sex through non-genetic and non-behavioral means. (Photo : Flickr/Hamed Saber)

Scientists have discovered that when early reef fish parents develop at elevated temperatures, they can adjust their offspring’s sex through non-genetic and non-behavioral means. (Photo : Flickr/Hamed Saber)

As the climate changes and temperatures warm, corals are becoming more susceptible to bleaching. Now, researchers have looked at bleaching in detail and have discovered when and where bleaching will occur in the coming years.

“Our new local-scale projects will help resource managers better understand and plan for the effects of coral bleaching,” said Ruben van Hooidonk, the lead author of the new study, in a news release. “At some locations, referred to in our study as ‘relative refugia,’ lower rates of temperature increase and fewer extreme events mean reefs have more time to adapt to climate change. Managers may decide to use this information to protect these locations as refuges, or protected areas. Or they may take other actions to reduce stressed cause by human activities.”

Coral bleaching is primarily caused by warming ocean temperatures. This phenomenon is a major threat to coral reef health. When the water is too warm, corals expel the algae living in their tissues; this causes the corals to lose their vibrant colours and turn white. These bleached corals are under more stress and are more likely to die, which can leave reefs barren and lifeless.

In order to project future bleaching occurrences, the researchers used a regional ocean model and an approach called statistical downscaling. This allowed them to calculate the onset of annual severe bleaching at a much higher resolution. The resulting local-scale projects of bleaching conditions may help managers include climate change as a consideration when making conservation decisions.

There are certain regions, of course, that will be more impacted than others. Countries that are projected to experience bleaching conditions 15 or more years later than neighbouring regions include the reefs in Florida, the Bahamas, Cuba, Puerto Rico, the Dominican Republic, the Turks and Caicos and Mexico. These areas could potentially be conservation priorities.

The findings reveal a bit more about bleaching conditions, which could help managers make better decisions in the future.

The findings are published in the journal Global Change Biology.

Caribbean Energy Security Summit Commits to Energy Transition

Twenty-six countries, together with seven regional and international organizations, have released a joint statement in support of the transformation of the energy systems of Caribbean countries. The signatories of the statement, signed during the Caribbean Energy Security Summit, commit to pursuing comprehensive approaches to an energy transition toward “clean sustainable energy for all” and reforms that support the creation of favourable policy and regulatory environments for sustainable energy.

The Summit, which was co-hosted by the US Department of State, the Council of the Americas and the Atlantic Council, brought together finance and private sector leaders from the US and the Caribbean, and representatives of the international community. The event showcased the initiatives under the Caribbean Energy Security Initiative (CESI) in the areas of improved governance, access to finance and donor coordination, and featured discussions by partner countries on comprehensive energy diversification strategies.

During the event, the US Government announced enhanced support for technical assistance and capacity-building programs in the Caribbean, through the Energy and Climate Partnership of the Americas (ECPA) initiative, among others, with the aim of promoting a cleaner and more secure energy future in the region. Caribbean leaders agreed to pursue comprehensive energy diversification programs and facilitate the deployment of clean energy.

Furthermore, presentations and updates were provided by, inter alia: Caribbean leaders on energy sector goals; the World Bank on a proposed Caribbean Energy Investment Network for improved coordination and communication among partners; and the US Overseas Private Investment Corporation (OPIC) on a new focus on clean energy project development in the Caribbean, which includes US$43 million in financing for a 34 MW wind energy project in Jamaica.

Highlighting the role of the Organization of American States (OAS) in supporting the transition to sustainable energy in the Caribbean, OAS Secretary General José Miguel Insulza said the past five years had seen an “unprecedented push” in the Caribbean toward the development of the region’s renewable energy sources, noting this was “doubly impressive” “in a time of low oil prices.”

The Summit, which took place on 26 January 2015, in Washington, DC, US, is part of CESI, launched by US Vice President Joseph Biden in June 2014. The regional and international organizations signing the statement were the Caribbean Community (CARICOM) Secretariat, the Caribbean Development Bank, the EU, the Inter-American Development Bank (IADB), the International Renewable Energy Agency (IRENA), the OAS and the World Bank.

The joint statement was also signed by the Governments of Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Canada, Colombia, Curacao, Dominica, Dominican Republic, France, Germany, Grenada, Guyana, Haiti, Jamaica, Mexico, New Zealand, Spain, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, United Kingdom, and the United States.

Credit: SIDS Policy & Practice IISD

Small islands to sign historic treaty in Samoa

SIDS DOCK

Small islands to sign historic treaty in Samoa, to help finance climate change adaptation

Representatives from 31 small islands and low lying countries that are members of the Alliance of Small Island States (AOSIS) will reaffirm their commitment to the Small Island Developing States (SIDS) Sustainable Energy mechanism – SIDS DOCK – at an Official Ceremony for the Opening of Signature for the Statute Establishing the SIDS DOCK, on 1 September 2014, during the upcoming United Nations (UN) Third International Conference on SIDS, in Apia, Samoa, from 1-4 September. The opening for signature of this historic SIDS-SIDS Treaty is a significant highlight and outcome of the Conference, and a major step toward the treaty’s entry into force.

Representatives scheduled to attend the ceremony confirmed their continuing support for, and preparation to sign the Statute as soon as possible, and reiterated their resolve to continue cooperating to achieve its prompt entry into force and to support the SIDS DOCK goal of 25-50-25 by 2033: Island Energy For Island Life. SIDS need to mobilize and facilitate in excess of USD 20 billion by 2033, about USD 1 billion per year, to help finance the transformation of the SIDS energy sector in order to achieve a 25 percent (from the 2005 baseline) increase in energy efficiency, generation of a minimum of 50 percent of electric power from renewable sources, and a 25 percent decrease in conventional transportation fuel use, in order to significantly increase financial resources to enable climate change adaptation in SIDS.

The Hon. Roosevelt Skerrit, Prime Minister and Minister of Foreign Affairs and Finance, for the Commonwealth of Dominica, and acting in his country’s capacity as Chair of the SIDS DOCK Steering Committee, said that SIDS DOCK represents a significant achievement in solidifying SIDS-SIDS relationships and cooperation and is, “an extraordinary lesson learned of what can happen when a genuine partner takes ‘a chance’ on a new and innovative idea that has the potential to help SIDS adapt and become more resilient to the changing climate and sea level rise.”  Recognising that the lives of more than 20 million people in small islands and low lying states are at high risk, the majority of them young people, the Government of Denmark was the first country to provide support for SIDS DOCK start-up activities with a grant of USD 14.5 million in 2010, during climate talks in Copenhagen, Denmark.  This gesture and demonstration of support was followed by a grant of USD 15 million, over two years in 2011, from the Government of Japan during climate talks in Cancun, Mexico.

In March 2014, in partnership with the United Nations Industrial and Development Organization (UNIDO), the Government of Austria extended support under a Memorandum of Understanding, with a grant of 1 million euros, for start-up activities for Centres for Renewable Energy and Energy Efficiency in the Caribbean (CCREEE), the Pacific (PCREEE), and support to African SIDS through the Economic Community of West African States (ECOWAS) ECREEE in Cabo Verde, and at a later date, support for a centre in the Indian Ocean region (IOCREEE). The new centres will also act as SE4ALL Hubs, assisting SIDS to translate commitments to actions. SIDS DOCK is highly complementary to the work being done under the Sustainable Energy For All (SE4All) Initiative, a personal initiative of the UN Secretary-General, Ban Ki-moon, that has SIDS as the largest group of signatories and with the highest ambitions.

During the Third International Conference on SIDS, the Government of Samoa and its people will host hundreds of representatives from small islands and low lying states, donors, investors and civil society groups, to what is expected to be the most important conference on SIDS to date, and one that is expected to define SIDS in a Post-2015 world, with genuine partnerships at the core of the agenda.  SIDS DOCK is well-positioned to participate in the SIDS Post-2015 Agenda with its partners, the Governments of Denmark, Japan and Austria; the United Nations Development Programme (UNDP) and the United Nations Industrial and Development Organization (UNIDO); The World Bank; and The Clinton Foundation – Clinton Climate Initiative (CCI).

During the Signing Ceremony on September 1, the Dominican Prime Minister will invite other members of the AOSIS to consider joining the organisation.  The Statute will remain open for signature in Apia, Samoa until September 5, and will re-open for signature in Belmopan, Belize, from September 6, 2014 until it enters into force.  Belize is the host country for SIDS DOCK, with Samoa designated as the location for the Pacific regional office.

Banner for Climate Resilient Islands Partnership
Background Note

SMALL ISLAND DEVELOPING STATES (SIDS) SUSTAINABLE ENERGY INITIATIVE – SIDS DOCK

A SIMPLE MESSAGE: SIDS DOCK IS A “CLIMATE CHANGE STORY”

SIDS DOCK[1] is a SIDS–SIDS institutional mechanism established to facilitate the development of a sustainable energy economy within the small islands and low lying developing states. Transforming the energy sector away from petroleum dependency is the pathway for SIDS to generate the significant levels of financial resources that will be needed for adaptation to the impacts of climate change. It is estimated that SIDS consume in excess of 220 million barrels of fuels, annually, and emit some 38 million tons of carbon.

The goals of SIDS DOCK are to mobilize in excess of USD 20 Billion, by 2033, or USD 1 billion per year, to help finance the transformation of the SIDS Energy Sector to achieve a 25 percent (2005 baseline) increase in energy efficiency, generation of a minimum of 50 percent of electric power from renewable sources, and a 25 percent decrease in conventional transportation fuel use, in order to enable climate change adaptation in SIDS. Some SIDS governments have announced more ambitious goals for the reduction of fossil fuel use in order to reduce greenhouse gas (GHG) emissions. By providing SIDS with a dedicated and flexible mechanism to pursue sustainable energy, SIDS DOCK will make it easier for SIDS Development Partners to invest across multiple island States, and to more frequently reach investment scale that can be of interest to commercial global financing. 

SIDS DOCK will serve as a “DOCKing station” to increase SIDS access to international financing, technical expertise and technology, as well as a link to the multi-billion dollar  European and United States carbon markets – within which the potential value of trading avoided GHG emissions is estimated to be between USD 100-400 billion, annually. The funds generated will help countries develop and implement long-term adaptation measures.

SIDS DOCK has four principal functions:

  • Provide a mechanism to help SIDS generate the financial resources to invest in climate change adaptation;
  • Assist SIDS with developing a sustainable energy sector by increasing energy efficiency and developing renewable energy resources that minimizes dependence on imported fuels;
  • Provide a vehicle for mobilizing financial and technical resources to catalyse low carbon economic growth, and;
  • Provide SIDS with a mechanism for connecting with the global financial, technology, and carbon market taking advantage of the resource transfer possibilities that will be afforded.

SIDS DOCK is uniquely placed to work with private sector companies, tertiary institutions and governments to facilitate research across a range of specific environmental settings, technologies and best practices. This will produce a cyclical effect, as the stabilization of clean energy infrastructures will attract increased private sector and foreign investment. With respect to the legal framework, SIDS DOCK will be registered as a trans-regional international organization, vested with the legal personality of an international organization, and with the full rights, privileges, and immunities of an international organization. This Convention will be registered pursuant to Article 102 of the Charter of the United Nations.

Further, SIDS DOCK will also be able to make recommendations to Alliance of Small Island States (AOSIS) Member States on the optimal policy and legal framework necessary to encourage such investment. The associated assessments and research into policies, innovative approaches, and economic incentives will help to standardize and streamline the transition to a low carbon, highly efficient energy economy.  SIDS DOCK will finance its operations through a combination of multi-lateral and bilateral grants, philanthropic support and income generation from selected endeavours.

Financing, Institutionalization and Project Implementation

SIDS DOCK, the Federal Ministry for European and International Affairs of the Republic of Austria, and the United Nations Industrial Development Organization (UNIDO), announced a historic partnership in March 2014, worth millions of Euros, to establish a network of regional Centres for Renewable Energy and Energy Efficiency in SIDS. The Government of Austria, through the Austrian Development Agency (ADA), has committed to fund the establishment and first operational phase for Renewable Energy and Energy Efficiency Centres in the Caribbean (CCREEE), Indian Ocean (IOCREEE), and the Pacific (PCREEE), and to provide support to the African islands at the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREEE).

Twenty-two SIDS have signed historic Memorandum of Understanding (MoU) establishing a long-term partnership with the Clinton Climate Initiative (CCI) that will see the Partners working together to speed up innovative renewable energy projects and solutions that would significantly transform the SIDS energy sector to the benefit the population.  In 2012, President Clinton established a Diesel Replacement Project in small island developing states, a decision that grew from his expressed concerns about the high cost of electricity for imported diesel fuel for small island developing states as well as the adverse impact on climate change from the use of fossil fuels. 

SIDS DOCK was launched in December 2010, in Cancun, Mexico, with four Partners: the Alliance of Small Island States (AOSIS); United Nations Development Programme (UNDP); The World Bank, and the Government of Denmark, which announced a grant of USD14.5 million in start-up contributions. In December 2011, in Durban, South Africa, the Government of Japan joined the SIDS DOCK Partnership with a pledge of USD 15 million, over two years (2012-2014). In 2009, SIDS DOCK Members began the process of establishing the organisation through a Memorandum of Agreement, and on 1 September 2014, the Ceremony for the Opening of the Signing of the Statute Establishing the SIDS DOCK, is scheduled to take place at the UN Third International Conference on SIDS, in Apia, Samoa.

[1] SIDS DOCK Members: Antigua & Barbuda, Barbados, Belize, Bahamas (Commonwealth of the), Dominica (Commonwealth of), Cabo Verde (Republic of), Cook Islands, Dominican Republic, Fiji (Republic of), Grenada, Jamaica, Kiribati (Republic of), Maldives (Republic of the), Marshall Islands (Republic of the), Mauritius (Republic of), Micronesia (Federated States of), Nauru (Republic of), Niue, Palau (Republic of), Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa (Independent State of), São Tomé and Príncipe (Democratic Republic of), Seychelles (Republic of the), Solomon Islands, Suriname (Republic of), Tonga (Kingdom of), Trinidad and Tobago (Republic of), Tuvalu, Vanuatu (Republic of)

Further information on SIDS DOCK participation at Samoa is available at: http://sidsdockforum2014.org/

Contact information:
Dr. Al Binger, Energy Advisor, CARICOM Climate Change Centre, and SIDS DOCK Coordinator, Belize. Email: abinger@sidsdock.org; Telephone: +1 301 873-4522
Mrs. Sheikha Bundhoo, Senior Information Officer, Office of the Prime Minister, Republic of Mauritius, and SIDS DOCK Communications Advisor. Email: jumpy952001@gmail.com; Telephone: +230 5728 0386

12 countries ratify access and benefit-sharing treaty

UN Decade on Biodiversity

The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization will enter into force on 12 October 2014 following its ratification by 51 Parties to the Convention on Biological Diversity (CBD).

In the last weeks, 12 countries have deposited their instruments including Belarus, Burundi, Gambia, Madagascar, Mozambique, Niger, Peru, Sudan, Switzerland, Vanuatu, Uganda, and today, Uruguay. Its entry into force will mean that the first meeting of the Conference of the Parties serving as the meeting of the Parties to the Protocol can now be held from 13 to 17 October 2014, concurrently with the twelfth meeting of the Conference of the Parties to the Convention on Biological Diversity, in Pyeongchang, Republic of Korea.

Ratification of the Nagoya Protocol by 51 Parties to the CBD represents a major step towards achieving Aichi Biodiversity Target 16, which states that, “by 2015, the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization is in force and operational, consistent with national legislation.”

The entry into force of the Nagoya Protocol will provide greater legal certainty and transparency for both providers and users of genetic resources, creating a framework that promotes the use of genetic resources and associated traditional knowledge while strengthening the opportunities for fair and equitable sharing of benefits from their use. Hence, the Protocol will create new incentives to conserve biodiversity, sustainably use its components, and further enhance the contribution of biodiversity to sustainable development and human well-being.

“Practical tools such as the Nagoya Protocol are critical for the sustainable and equitable use of biodiversity. I commend the Member States that have ratified this important international legal instrument. By fulfilling the promise made at the 2002 World Summit on Sustainable Development, they have made a significant contribution to the post-2015 sustainable development agenda,” said Mr. Ban Ki­moon, United Nations Secretary-General.

H.E. Mr. Prakash Javadekar, Minister of State for Environment, Forests & Climate Change of India, said: “The Nagoya Protocol on Access and Benefit Sharing translates and gives practical effect to the equity provisions of the Convention on Biological Diversity. I am happy that this landmark treaty received the requisite number of ratifications during India’s Presidency of the Conference of Parties for its entry into force. I congratulate my counterparts for making this happen. A new era is now ushered in for implementation of CBD that would contribute to achieving sustainable development and a glorious future for all living beings inhabiting our mother Earth.”

Braulio Ferreira de Souza Dias, Executive Secretary for the Convention on Biological Diversity, said, “The Nagoya Protocol is central to unleashing the power of biodiversity for sustainable development by creating incentives for the conservation and sustainable use of biological diversity while guaranteeing equity in the sharing of benefits.”

“Entry into force of the Nagoya Protocol means not only a big step towards achieving Aichi Target 16, but is an important step in mainstreaming biodiversity into sustainable development. I congratulate all Parties who have ratified the Protocol, and I invite others to do so in time to participate in the first meeting of the COP-MOP, in Pyeongchang, Republic of Korea,” he concluded.

The following Parties have now ratified or acceded to the landmark treaty: Albania, Belarus, Benin, Bhutan, Botswana, Burkina Faso, Burundi, Comoros, Côte D’Ivoire, Denmark, Egypt, Ethiopia, European Union, Fiji, Gabon, Gambia, Guatemala, Guinea Bissau, Guyana, Honduras, Hungary, India, Indonesia, Jordan, Kenya, Lao People’s Democratic Republic, Madagascar, Mauritius, Mexico, the Federated States of Micronesia, Mongolia, Mozambique, Myanmar, Namibia, Niger, Norway, Panama, Peru, Rwanda, Samoa, the Seychelles, South Africa, Spain, Sudan, Switzerland, the Syrian Arab Republic, Tajikistan, Uganda, Uruguay, Vanuatu, and Vietnam. While the European Union will be a Party to the Protocol, its approval of the Protocol does not count towards the 50 instruments required for entry into force.

Further information on becoming a Party to the Protocol is available at: http://www.cbd.int/abs/becoming-party/

Information about the Protocol, including Frequently Asked Questions, can be found at:

http://www.cbd.int/abs/about/default.shtml

Notes to Editors

The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization was adopted at the tenth meeting of the Conference of the Parties in 2010, in Nagoya, Japan, and significantly advances the objective of the Convention on the fair and equitable sharing of benefits arising from the utilization of genetic resources by providing greater legal certainty and transparency for both providers and users of genetic resources. By promoting the use of genetic resources and associated traditional knowledge, and by strengthening the opportunities for fair and equitable sharing of benefits from their use, the Protocol will create incentives to conserve biodiversity, sustainably use its components, and further enhance the contribution of biodiversity to sustainable development and human well-being. The full text of the Nagoya Protocol is available at: http://www.cbd.int/abs/doc/protocol/nagoya­protocol-en.pdf.The list of signatories of the Nagoya Protocol is available at: http://www.cbd.int/abs/nagoya­protocol/signatories/.

The Convention on Biological Diversity (CBD)

Opened for signature at the Earth Summit in Rio de Janeiro in 1992, and entering into force in December 1993, the Convention on Biological Diversity is an international treaty for the conservation of biodiversity, the sustainable use of the components of biodiversity and the equitable sharing of the benefits derived from the use of genetic resources. With 194 Parties up to now, the Convention has near universal participation among countries. The Convention seeks to address all threats to biodiversity and ecosystem services, including threats from climate change, through scientific assessments, the development of tools, incentives and processes, the transfer of technologies and good practices and the full and active involvement of relevant stakeholders including indigenous and local communities, youth, NGOs, women and the business community. The Cartagena Protocol on Biosafety is a supplementary agreement to the Convention. It seeks to protect biological diversity from the potential risks posed by living modified organisms resulting from modern biotechnology. To date, 166 countries plus the European Union have ratified the Cartagena Protocol. The Secretariat of the Convention and its Cartagena Protocol is located in Montreal. For more information visit: http://www.cbd.int.

For additional information, please contact: David Ainsworth on +1 514 287 7025 or at david.ainsworth@cbd.int; or Johan Hedlund on +1 514 287 6670 or at johan.hedlund@cbd.int 

Credit: Secretariat of the Convention on Biological Diversity 

Caribbean seeks to take full advantage of new U.N. climate fund

Dr Kenrick Leslie, CBE; Credit: Earl Green

Dr Kenrick Leslie, CBE; Credit: Earl Green

The South Korea-based Green Climate Fund (GCF) is open for business, and Caribbean countries are hoping that it will prove to be much more beneficial than other global initiatives established to deal with the impact of climate change.

“Despite our region’s well-known, high vulnerability and exposure to climate change, Caribbean countries have not accessed or mobilised international climate finance at levels commensurate with our needs,” said Dr. Warren Smith, the president of the Barbados-based Caribbean Development Bank (CDB).

The CDB, which ended its annual board of governors meeting here on Thursday, May 29, had the opportunity for a first-hand dialogue on the operations on the GCF, through its executive director, Hela Cheikhrouhou, who delivered the 15th annual William Demas Memorial lecture.

But even as she addressed the topic “The Green Climate Fund; Great Expectations,” Smith reminded his audience that on a daily basis the Caribbean was becoming more aware of the severe threat posed by climate change.

“Seven Caribbean countries…are among the top 10 countries, which, relative to their GDP, suffered the highest average economic losses from climate-related disasters during the period 1993-2012.

“It is estimated that annual losses could be between five and 30 percent of GDP within the next few decades,” he added.

According to a Tufts University report, published after the 2007 Intergovernmental Panel on Climate Change (IPCC) study and comparing an optimistic rapid stabilisation case with a pessimistic business-as-usual case, the cost of inaction in the Caribbean will have dramatic consequences in three key categories. Namely hurricane damages, loss of tourism revenue and infrastructure damage due to sea-level rise.

The costs of inaction would amount to 22 percent of GDP for the Caribbean as a whole by 2100 and would reach an astonishing 75 percent or more of GDP by 2100 in Dominica, Grenada, Haiti, St. Kitts and Nevis, and Turks and Caicos.

“In the Caribbean, the concern of Small Island Developing States is all too familiar – the devastating effects of hurricanes have been witnessed by many. Although Caribbean nations have contributed little to the release of the greenhouse gases that drive climate change, they will pay a heavy price for global inaction in reducing emissions,” Cheikhrouhou warned.

Executive director of the Belize-based Caribbean Community Climate Change Centre (CCCCC), Dr. Kenrick Leslie told IPS that regional countries were now putting their project proposals together to make sure they could take full advantage of the GCF.

“The CARICOM [Caribbean Community] heads of government, for instance have asked the centre to help in putting together what they consider bankable projects and we are in the process of going to each member state to ensure that we have projects that as soon as the GCF comes on line we would be among the first to be able to present these projects for consideration.”

Leslie said that in the past, Caribbean countries had been faced with various obstacles in order to access funds from the various global initiatives to deal with climate change.

“For instance if we mention the Clean Development Mechanism [CDM], the cost was prohibitive because our programmes were so small that the monies you would need upfront to do it were not attractive to the investors.”

He said the Caribbean also suffered a similar fate from the Adaptation Fund, noting “we have moved to another level where they said we will have greater access, but again the process was much more difficult than we had anticipated.”

The GCF was agreed at the 16th session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) held in Cancun, Mexico.  Its purpose is to make a significant contribution to the global efforts to limit warming to 2°C by providing financial support to developing countries to help limit or reduce their greenhouse gas emissions, and to adapt to the unavoidable impacts of climate change. There are hopes that the fund could top 100 billion dollars per annum by 2020.

“Our vision is to devise new paradigms for climate finance, maximise the impact of public finance in a creative way, and attract new sources of public and private finance to catalyse investment in adaptation and mitigation projects in the developing world,” the Tunisian-born Cheikhrouhou told IPS.

She said that by catalysing public and private funding at the international, regional, and national levels through dedicated programming in climate change mitigation and adaptation, and as a driver of climate resilient development, the GCF is poised to play a relevant and timely role in climate action globally.

Cheikhrohou said that it would be most advisable if Caribbean countries “can think of programmatic approaches to submit proposals that are aggregating a series of projects or a project in a series of countries.”

She said that by adopting such a strategy, it would allow regional countries “to reach the scale that would simplify the transaction costs for each sub activity for the country” and that that she believes the GCF has “built on the lessons learnt from the other mechanisms and institutions in formulating our approach.

“To some extent there is embedded in the way of doing work this idea of following the lead of the countries making sure they are the ones to come forward with their strategic priorities and making sure we have the tools to accompany them through the cycle of activities, projects or programmes starting with the preparatory support for the development of projects,” she told IPS.

Selwin Hart, the climate change finance advisor with the CDB, said the GCF provides an important opportunity for regional countries to not only adapt to climate change but also to mitigate its effects. He is also convinced that it would assist the Caribbean move towards renewable energy and energy efficiency.

“The cost of energy in the Caribbean is the highest in the world. This represents a serious strike on competitiveness, economic growth and job creation and the GCF presents a once in a lifetime opportunity for countries to have a stable source to financing to address the vulnerabilities both as it relates to importing fossil fuels as well as the impacts of climate change,” he said.

Credit: Thomas Reuters Foundation; CMC/pr/ir/2014

Four new ratifications edge landmark genetic resources treaty closer to entering into force

Credit: Google IMages

Credit: Google IMages

With four new ratifications in the last week, the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization has received 66% of the necessary ratifications, with only 17 more ratifications needed for it to enter into force. Ratifications by Guyana, Hungary, Kenya and Vietnam bring to 33 the total number of ratifications to the ground-breaking treaty under the umbrella of the Convention on Biological Diversity (CBD).

“These ratifications by Guyana, Hungary, Kenya and Vietnam suggest the momentum is rapidly building towards entry into force of the Nagoya Protocol in time for the twelfth meeting of the Conference of the Parties (COP 12) to the Convention, to be hosted by the Republic of Korea in October 2014,” said Braulio Ferreira de Souza Dias, CBD Executive Secretary. “It is important that we maintain and quicken this pace of ratifications, as the early entry into force of the Protocol will also mean achieving Aichi Target 16. I encourage all countries that have yet to do so to take the necessary steps needed to ratify the Protocol.”

Guyana becomes the first Caribbean state; Hungary the first European Union member state and second Central and Eastern Europe state; Kenya the second African mega-diverse country and fourteenth African state; and, Vietnam the twelfth Asian country, to ratify the Nagoya Protocol. Their support underlines the global recognition of the importance of this instrument for obtaining access to genetic resources and for sharing benefits arising from their use.

The Nagoya Protocol will enter into force on the 90th day after the date of deposit of the 50th instrument of ratification, acceptance, approval or accession.

Guyana, Hungary, Kenya and Vietnam join Albania, Benin, Bhutan, Botswana, Burkina Faso, Comoros, Côte D’Ivoire, Egypt, Ethiopia, Fiji, Gabon, Guinea Bissau, Honduras, India, Indonesia, Jordan, Lao People’s Democratic Republic, Mauritius, Mexico, the Federated States of Micronesia, Mongolia, Myanmar, Norway, Panama, Rwanda, the Seychelles, South Africa, the Syrian Arab Republic and Tajikistan are the countries that have ratified or acceded to the landmark treaty so far.

United Nations Secretary-General Ban Ki-moon, as part of his message for the 2013 International Day for Biological Diversity called “on all Parties to the Convention on Biological Diversity who have not already done so, to ratify the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization, and therefore help us all to work toward the future we want.” His statement of support follows on his letter to all Heads of State/Government highlighting the valuable contribution that the Protocol can make to sustainable development and urging ratification at the earliest opportunity so that the international community can move to the implementation phase.

In a January 2014 joint letter addressed to all CBD Parties, M. Veerappa Moily, COP 11 President and Minister of Environment and Forests, India, and CBD Executive Secretary Braulio Ferreira de Souza Dias expressed the hope that countries could finalize their internal processes towards the ratification or accession of the Nagoya Protocol as soon as possible but no later than 7 July 2014.

Earlier, a December 2013 United Nations General Assembly resolution (A/RES/68/214) invited Parties to the Convention to ratify or accede to the Nagoya Protocol so as to ensure its early entry into force and implementation.

Further information on how to become a Party to the Protocol is available at: http://www.cbd.int/abs/becomingparty/

The Nagoya Protocol was adopted at the tenth meeting of the Conference of the Parties in 2010, in Nagoya, Japan, and significantly advances the objective of the Convention on the fair and equitable sharing of benefits arising from the utilization of genetic resources by providing greater legal certainty and
 transparency for both providers and users of genetic resources. By promoting the use of genetic resources and associated traditional knowledge, and by strengthening the opportunities for fair and equitable sharing of benefits from their use, the Protocol will create incentives to conserve biodiversity, sustainably use its components, and further enhance the contribution of biodiversity to sustainable development and human well-being.

The full text of the Nagoya Protocol is available at: http://www.cbd.int/abs/doc/protocol/nagoya-protocol-en.pdf

The list of signatories of the Nagoya Protocol is available at: http://www.cbd.int/abs/nagoyaprotocol/signatories/

The Convention on Biological Diversity (CBD)
Opened for signature at the Earth Summit in Rio de Janeiro in 1992, and entering into force in December 1993, the Convention on Biological Diversity is an international treaty for the conservation of biodiversity, the sustainable use of the components of biodiversity and the equitable sharing of the benefits derived from the use of genetic resources. With 193 Parties up to now, the Convention has near universal participation among countries. The Convention seeks to address all threats to biodiversity and ecosystem services, including threats from climate change, through scientific assessments, the development of tools, incentives and processes, the transfer of technologies and good practices and the full and active involvement of relevant stakeholders including indigenous and local communities, youth, NGOs, women and the business community. The Cartagena Protocol on Bio-safety is a subsidiary agreement to the Convention. It seeks to protect biological diversity from the potential risks posed by living modified organisms resulting from modern biotechnology. To date, 166 countries plus the European Union have ratified the Cartagena Protocol. The Secretariat of the Convention and its Cartagena Protocol is located in Montreal. For more information visit: www.cbd.int.

For additional information, please contact: David Ainsworth on +1 514 287 7025 or at
david.ainsworth@cbd.int; or Johan Hedlund on +1 514 287 6670 or at johan.hedlund@cbd.int

Credit: United Nations Decade on Biodiversity

The SIDS-DOCK Digest

SIDS DOCK

About the SIDS Sustainable Energy and Climate Resilient Initiative – SIDS DOCK

SIDS DOCK Institutional Mechanism
  • SIDS DOCK is a SIDS–SIDS institutional mechanism established in 2009 to facilitate the development of a sustainable energy economy within the small island developing states. SIDS DOCK serves as a “docking station” to increase SIDS access to international financing, technical expertise and technology, as well as a link to the multi-billion dollar European and US carbon markets.
SIDS DOCK Goals
  • The goals of SIDS DOCK are to mobilize in excess of USD 10-20 Billion, by 2033, to help finance the transformation of the SIDS Energy Sector to achieve a 25 percent (2005 baseline) increase in energy efficiency, generation of a minimum of 50 percent of electric power from renewable sources, and a 25 percent decrease in conventional transportation fuel use, in order to enable climate change adaptation in SIDS.
SIDS DOCK Mission
  • SIDS DOCK Mission is to catalyze the transformation of the energy sector of SIDS to increase energy security, reduce greenhouse gas emissions (GHG), and generate resources for investment in adaptation to climate. Some SIDS governments have announced more ambitious goals for the reduction of fossil fuel use in order to reduce greenhouse gas (GHG) emissions. By providing SIDS with a dedicated and flexible mechanism to pursue sustainable energy, SIDS DOCK will make it easier for SIDS Development Partners to invest across multiple island States, and to more frequently reach investment scale that can be of interest to commercial global financing.
SIDS DOCK Functions
  • SIDS DOCK has four principal functions:
  1. A mechanism to help SIDS develop low carbon economies that generate the financial resources to invest in climate change adaptation
  2. Assist SIDS transition to a sustainable energy sector, by increasing energy efficiency and conservation, and development of renewable energy;
  3. Providing a vehicle for mobilizing financial and technical resources to catalyse clean economic growth;
  4. Provide SIDS with a mechanism for connecting with the global carbon market (“DOCKing”) and taking advantage of the resource transfer possibilities that will be afforded.
SIDS DOCK Funding
  • In December 2010, in Cancun, Mexico, SIDS DOCK received a one-year grant of USD14.5 million in start-up contributions from the Government of Denmark, followed a grant of USD 15 million over two years (2012-2014) from the Government of Japan in December 2011, in Durban, South Africa.
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