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More Finance For Climate-Induced Impacts

Department of Sustainable Development

CLIMATE Finance remains a difficult and sensitive issue in the climate change talks. “The question of finance and the wider question of means of implementation for countries such as ours has largely been about access and delivery, in consideration of our capacity constraints, but at the same time, our urgent need to undertake largely adaptation action in the face of existential threats that climate change poses. The response from the climate change process has been slow and in some cases palliative.”(Felson, 2017).

At this twenty-third Conference of the Parties (COP), there were a number of key decisions specific to finance, including on the Standing Committee on Finance, Review of the Financial Mechanism, Budget for the Biennium 2016-2017 and 2017-2018, the Green Climate Fund (GCF), the Global Environment Facility (GEF) and the Adaptation Fund (AF), some of which have special provisions for developing countries in general or Small Island Developing States (SIDS), in particular, pertaining to simplified approval processes, capacity building for SIDS, consultations with SIDS on needs and priorities, grants and concessional funding and improved access.

Note that under the Paris Agreement, the Financial Mechanism comprises the GCF and the GEF. Through the negotiation process, the Adaptation Fund (AF) progressed from “may” serve the Paris Agreement in 2015, to “should” serve in 2016 to, finally, in 2017, to “shall” serve the Paris Agreement, a positive development towards helping to meet the goals of the Paris Agreement.

On the local front, the necessary architecture must be put in place in order to access funding. While Saint Lucia is already engaged with regionally accredited entities (RIE) under the GCF, such as the Caribbean Development Bank (CDB) and the Caribbean Community Climate Change Centre (CCCCC), we look to the Ministry with responsibility for Economic Planning and National Development to make every effort as the National Designated Authority (NDA), to become accredited as a National Implementing Entity (NIE) under the GCF. In this regard, Saint Lucia, through the NDA, has the ability to access $1 million per country, per year for NDA strengthening; Strategic frameworks; or Support for direct access entities. Saint Lucia, through the NDA, can also access up to $3 million for national adaptation planning processes.

However, despite the strides made in making funding accessible to SIDS under the UNFCCC rubric, the UNFCCC process does not facilitate the immediate release of emergency funds in response to the current and urgent needs of SIDS. In the words of Saint Lucia’s Prime Minister, Allen Chastanet, during the High Level Segment at COP 23, “…this process is far too slow for us…I call on developed countries to help SIDS help themselves. We cannot wait till 2020 to see finance to deal with the emergency situations, build resilience in our countries as far as possible, and address the loss and damage that is already occurring…”

In terms of emergency recovery funds, the newest initiative is a German-led effort called Insuresilience that aims to reach 400 million more climate-vulnerable people with disaster risk insurance by 2020. Under the Insuresilience global partnership, innovative finance and insurance solutions for individual countries, which are tailored to the specific needs and challenges of poor members of the population in particular, are to be developed and implemented. The Caribbean Catastrophe Risk insurance Facility (CCRIF), for example, is being supported with the help of Insuresilience. The most recent example of support was in September 2017, when more than US$55 million was paid out to ten Caribbean countries within just 14 days after hurricanes Irma and Maria had wreaked disaster on the islands.

Readers may also recall the Livelihood Protection Policy (LPP), a weather index-based insurance policy designed specifically to help vulnerable, low-income individuals recover from the damage caused by strong winds and/or heavy rainfall during hurricanes and tropical storms, by providing swift non-bureaucratic cash payouts following extreme weather events (i.e. high wind speed and heavy rainfall). The insurance policies, developed by researchers at the Munich Climate Insurance Initiative (MCII) at the U.N. University’s Institute for Environment and Human Security, and sold by local insurance companies, are designed to provide a grassroots supplement to national-level insurance policies that have taken root in the increasingly storm-hit Caribbean. The participating countries are Jamaica, Saint Lucia and Grenada, with policies being sold to farmers, fishers, construction workers, etc. In 2014, the company had a handful of policies in Saint Lucia; today it has 248, and 700 across the wider Caribbean region.

In sure silience and other such insurance schemes will certainly assist in addressing adaptation needs, by building resilience at the country level. With respect to loss and damage, we are not there yet. There are still no measures under the UNFCCC process to address the permanent and irreversible impacts SIDS experience as a result of the cumulative greenhouse gas emissions of others – what we call in the negotiating process “loss and damage”. No insurance scheme to date has been designed that addresses the range of impacts we are seeing and will only worsen. These include: the escalating costs associated with more intense extreme weather events, and the permanent and irreversible impacts of slow onset events, such as sea-level rise and ocean acidification which is destroying our coral reefs. Insurance schemes will help address one part of the puzzle and for this we certainly commend the proponents of these initiative

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