Mid-Point, Poznań: Risky Business

Amanda Chiu reports from the 14th Conference of Parties (COP 14) of the United Nations Framework Convention on Climate Change (UNFCCC) in Poznań, Poland.

Polar bear demonstratorOn Day 4 of the international climate change negotiations, discussions continued to move briskly. Highlights included a workshop that examined climate change risk and vulnerabilities.

The Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA) hosted the workshop on strategies for risk management and risk reduction, which include risk sharing and transfer mechanisms such as insurance. This may sound like a peculiar way to consider climate change, but risk analysis, management, and reduction provides Parties with a quantitative way to consider the magnitude of necessary mitigation actions.  

Because governments are nearly always working with limited resources, it can be very helpful to consider climate change's impacts in terms of the likelihood that change will occur as well as the potential damage (or benefit) it causes. Factors to consider include the perception of the risk as well as some quantitative value of the impact of that risk, whether positive or negative. Generally, that value is measured monetarily, because we understand the value of money pretty clearly. Understanding risk is a valuable way to make optimal and rational decisions.

The general structure for workshops begins with an opening statement by the chairperson, presentations from either Party delegates or outside experts, discussion among the Parties and sometimes presenters, and concluding remarks by the chairperson. At this workshop, experts from the UN International Strategy for Disaster Reduction, the Informal Task Force on Climate Change of the Inter-Agency Standing Committee, and Munich Climate Insurance Initiative presented the delegates with ways to take effective adaptation and disaster-response measures.

Climate change can exacerbate and increase the number of large-scale disaster events, such as hurricanes and floods, as well as lead to progressive problems like sea-level rise. International disaster support varies depending on the type and prominence of the disaster. Delegates from Bangladesh offered an interesting comparison: international support for the December 2006 Indian Ocean tsunami received on average $7,000 per victim, whereas the Bangladesh flood in 1998, which inundated two-thirds of the country, received only $3 per person in international aid.  

Many countries spoke in support of climate change insurance and additional measures to help regions adapt and improve their disaster response. Interestingly, disasters occur when a natural hazard (i.e., earthquake, flood, tsunami, hurricane, tornado, forest fire, etc.) overwhelms human abilities to cope or contain the impacts. Obviously, timely and effective disaster response is crucial in disaster-prone regions of the world, the majority of which tend to be in developing countries. Worldwatch discusses many of these challenges in its 2007 report, Beyond Disasters.

Developing-country delegates highlighted their nations' vulnerabilities to natural hazards and noted that their lack of capacity to respond effectively worsens the effects. Suggestions for risk and disaster reduction measures included an early warning system that could have saved hundreds of thousands of lives during the 2006 tsunami, more coherent and orderly disaster response and management plans, and better outreach efforts to educate people about natural disasters.

Insurance, meanwhile, can help a disaster-affected region get back on its feet. "Reinsurance" is essentially insurance for the insurance companies, and it is becoming increasingly connected with climate change as extreme weather events become more frequent. Having a safety net such as insurance has been linked to additional moral hazard as well (i.e., that people with insurance may take greater risks than they would otherwise because they know they are protected). But as Koko Warner of the Munich Climate Insurance Initiative said, "Insurance is not appropriate for every risk," depending on local and national circumstances as well as the nature of the risk.

Many Parties proposed using the Framework for Action from the 2005 World Conference on Disaster Reduction in Hyogo, Japan, to complement the UNFCCC in building resilience to disasters. Resilience in the face of climate change is also the focus of a chapter in Worldwatch's State of the World 2009: Into a Warming World, coming out in January.

In their responses during the workshop, participants placed a big emphasis on capacity building, particularly for least-developed countries and small island developing states. Among the lingering issues was the question of what role national banks, insurance companies, and reinsurance companies can and will play in our uncertain future. Insurance can be present from the local level all the way to the international level. And joint programs on international and regional coordination would add value to the partnership.

In other conference news, contact groups have begun meeting, which means that negotiations are now going on behind closed doors. More to come...

Amanda Chiu is the MAP Sustainable Energy Fellow at the Worldwatch Institute.