Minister in the Ministry of Economic Affairs and Investment, Marsha Caddle, is calling for a proper loss and damage mechanism to finance climate change related loss and damage.
She made the call on Tuesday, as one of the panelists at the virtual Insurance Development Forum Summit 2021, under the theme: Meeting the Moment: How Leaders Can Build Back a Better Crisis Financing System at this year’s G7 Summit. The session wasmoderated by journalist from the Financial Times, Joy Lo Dico.
The Minister expressed the view that under the Paris Agreement, developed countries were promised a mechanism for loss and damage as a means of garnering support for the Agreement from small countries, but the system never materialised.
She reasoned that the issues affecting the region were ill-served by the current eligibility requirements for concessional financing forged in the 1970s to deal with challenges of that era.
“Seventy-five per cent of the world’s poor live in high and middle-income countries, so a country approach using GDP per capita to determine access to finance is not going to work. Even in a crisis, these countries are not eligible for concessionary finance from the World Bank and bilateral donors under the International Development Association (IDA) rules.”
Minister Caddle continued: “Under IDA rules, the countries eligible for ultra-low interest rate and long repayment periods are those with GDP per capita of less than $1,185. So, the bulk of climate-related finance is not going to countries on the frontline of the climate crisis. What we need is eligibility criteria that are less backward looking, less based on historical GDP and even GNI and more focused on future risk, wipeout risk – the possibility that a country loses entire GDP- and focus on inability to absorb these risks. So, this is what we need to fix the global climate system.”
When asked by the moderator, Ms. Lo Dico, what was needed to reduce the risks to vulnerable countries to climate change, the Minister replied: “The first important thing to recognise is that the impact of climate change is not universal; today, there is a back line and a front line. If we continue along the current path, 75 per cent of the world’s poorest who are in middle income and low-income countries are still not going to benefit. What we need is an appreciation that those on the frontline of disaster caused by climate crisis lie between the Tropics of Cancer and Capricorn and they need greater priority and a share in those resources.”
She added that extreme weather events accounted for $320 billion in losses and damage worldwide in 2017 and cautioned that as sea level and temperatures continue to rise and the drought situation worsens, there will be more intense hurricanes for the region.
Ms. Caddle urged the G7 to close the crisis funding gap between the developed and developing world by adopting Barbados-style Natural Disaster Clauses, which stand to provide $1 trillion in liquidity to deal with the next global crisis.
Also on the panel were Chief Executive Officer of START Network, Christina Bennett; Executive Director of the Centre for Disaster Protection, Daniel Clarke, and Assistant Director, World Food Programme, Ute Klamert.