At the COP23 climate negotiations in Bonn this month, a key question was financing– that is, who should pay for the impacts of climate change. For many countries, climate change is already very real, and economic and social losses are skyrocketing. During climate negotiations in 2009 developed countries promised to deliver £100 billion a year by 2020 for mitigation and adaptation. Funding for loss and damage (impacts that can’t be mitigated or adapted to), is needed in addition to this figure. As this year was the first COP hosted by a small island developing state (Fiji - albeit the event was in Bonn), it was hoped that funding for loss and damage would be forthcoming. Spoiler alert: it wasn’t.
One financial instrument which that has gained prominence however is climate risk insurance. Last week, for example, saw the launch of the G20’s 'InsuResilience Global Partnership' (which builds on the G7 InsuResilince Initiaitve). The Partnership arose from this year’s G20 meeting, when members welcomed the creation of “Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions”. The Partnership is also a response to a relevant call from the Vulnerable Twenty Group (V20) to this effect.
The central objective of the Partnership is to enable more timely and reliable disaster response and to support governments better prepare for climate and disaster risk through the use of climate and disaster risk finance and insurance solutions. The Partnership was launched with much fanfare and the German Government pledged $125m USD towards it.
The Partnership is a step in the right direction but there remain four key issues, that must be addressed. Governments must:
- ensure that these initiatives embed CRI in a wider risk financing approach,
- embed a set of core pro-poor principles,
- incorporate strong impact focused monitoring and evaluation systems, and
- ensure good governance (emphasising the importance of civil society involvement).
Furthermore, next year, when governments convene an “expert dialogue” on funding for loss and damage, new sources of finance must be identified and an innovative funding mechanism must be established. The poorest and most vulnerable don’t have time for further delay, their lives and livelihoods are literally hanging in the balance.