ANNUAL expected losses from wind, storm surge and inland flooding already amount to up to six per cent of Gross Domestic Product (GDP) in some Caribbean countries and, in a worst case scenario, climate change has the potential to increase these expected losses by 1 to 3 percentage points of GDP by 2030. That is according to the preliminary results of a study on the Economics Of Climate Adaptation (ECA) In The Caribbean, sponsored by the Caribbean Catastrophe Risk Insurance Facility (CCRIF).CCRIF chairman Milo Pearson said the results would “enable countries in the region to develop fact-based adaptation strategies that can be incorporated into national development plans to increase resilience against climate hazards”. The results for eight pilot countries – Anguilla, Antigua and Barbuda, Barbados, Bermuda, the Cayman Islands, Dominica, Jamaica, and St Lucia – are presented in a short brochure entitled Enhancing The Climate Risk And Adaptation Fact Base For The Caribbean (Preliminary Results). The study, launched in February this year, was conducted by CCRIF, with Caribbean Risk Managers acting on behalf of the facility, and supported by regional partners, the Caribbean Community Climate Change Centre (5Cs), the UN Economic Commission for Latin America and the Caribbean and others.
Risk management
CCRIF said it had been welcomed by Caribbean countries which realised that climate change had the potential to greatly exacerbate their risks from hurricanes and storms. CARICOM Secretary General Edwin Carrington said the study “makes an important contribution to developing the capacity to address the climate change challenges facing the Caribbean . . . [and] will be of immense value to both Caribbean policymakers and the business sector, in their efforts to develop and implement sound adaptation strategies and plans”.Decision makers can select both risk mitigation, for example, constructing sea walls and enforcing building codes, and risk transfer initiatives, for example, insurance, to address current climate hazards and respond to the growing threat of climate change. Depending on a country’s characteristics, the preliminary results suggest that risk mitigation initiatives can cost-effectively avert up to 90 per cent of the expected loss in 2030 under a high climate change scenario. Risk transfer measures play a key role in addressing the financial consequences of low-frequency, high-severity weather events such as once-in-100-year catastrophes by limiting the financial impact of these events.
Multiple factors
The expected loss that can be averted cost-effectively is driven by various factors, for example, the value of buildings and the share of expected loss caused by coastal flooding/storm surge.The best approach for each country is determined specifically by its topography, exposure to hurricanes, and value and vulnerability of assets.The results presented in the brochure were generated from the input of regional stakeholders and experts, as well as several country representatives.As a next step, CCRIF said it would welcome the opportunity to further engage with countries via workshops to obtain feedback on the initial results and to determine potential areas for more detailed work.Following consultation with the countries and subsequent refinement of results for the eight pilot countries, the team will work closely with interested countries and regional institutional and funding partners to enable application of the methodology on an ongoing basis throughout the Caribbean. CCRIF said the study provides a sound economic fact base that countries can use to further develop their national climate adaptation and disaster management strategies. Given the current and future financial situation of many developed and developing countries, access to funding will be enhanced by a country’s ability to support effective business cases with sound quantitative data. This study provides a relevant toolkit to aid Caribbean countries to do this. (AB)
