After Hurricane Melissa devastated Jamaica this week on its way across the Caribbean, expert analysis suggests the island nation is in line for hundreds of millions of dollars in payouts from innovative forms of insurance policies like catastrophe bonds to help it recover.
Jamaica’s finance minister Fayval Williams said in June that the country had disaster financing coverage worth 130.6 billion Jamaican dollars (US$820 million). The country has insurance with the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and a $150-million catastrophe bond, which experts say is likely to pay out in full.
Finance and climate researchers praised the Jamaican government’s foresight in arranging cover, which is likely to bring much-needed and relatively fast funds to help the country cope and rebuild. Sara Ahmed, advisor to the Climate Vulnerable Forum, commended Jamaica for “its leadership in deploying a mix of risk financing tools as climate change intensifies tropical storms and hurricanes”.
The executive director of the UN’s Green Climate Fund (GCF) Mafalda Duarte told Climate Home News on Thursday that, while the GCF currently has limited involvement in insurance, it is exploring more such investments. “A lot more needs to be done in this area,” she said.
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But, while praising Jamaica’s government, other climate and finance analysts warned that the scale of the payouts is unlikely to come close to covering the losses from the hurricane and argued it is an injustice that small-island taxpayers who contributed little to the climate crisis are the ones who pay the insurance premiums – which are now likely to rise after this week’s disaster.
Catastrophe bonds
Catastrophe bonds originated in the US in the 1990s as a way to get investors – rather than insurance companies – to cover the risk of events like hurricanes and earthquakes deemed rare but severe. The World Bank has since promoted their roll-out to developing countries like Jamaica.
Earlier this year, finance minister Williams told Bloomberg: “We are situated in the hurricane belt and when the hurricane hits us, it can hit us very hard and damage roads, infrastructure – it takes us out for a while.”
She said Jamaica had issued catastrophe bonds because “the day the [meteorological] office tells us that a very severe hurricane is on the way towards us – it’s too late to do the planning; so you plan well ahead of the eventuality of that catastrophe.”
The scale of the economic damage from Hurricane Melissa is still unclear but is likely to run into tens of billions of dollars, according to preliminary estimates. Pepukaye Bardouille, special adviser on resilience to the government of Barbados, told a press briefing on Friday that a $150-million payout was a “drop in the ocean” but useful as part of a stack of solutions.
Connor Meenan, a disaster risk specialist from the UK-based Centre for Disaster Protection, told Climate Home News that “the real value” of insurance is that “on day one, they’ve got certainty about a significant amount of money that they can call on in the near term so they can focus on directing that where it needs to be spent”.
“It’s certainly put them in a better position than it would have been had they not made all these efforts to put their finances in place ahead of time,” he said.
Unsustainable and unfair?
Ritu Bharadwaj, IIED’s director of climate resilience and loss and damage, warned that as the Earth’s climate heats up and catastrophes become more frequent, investors become less willing to bet against them happening, demanding higher premiums to do so. “It will become uninvestable,” she said.
Critics also raised climate justice concerns. Jamaica is in line for payouts because its government has been paying insurance premiums, which have to be large enough to entice investors to take on the risk of a disastrous hurricane occurring. Many countries whose governments are paying catastrophe bond premiums do not suffer catastrophes and so lose their money.
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Bharadwaj said it was “unfair” that taxpayers in countries like Jamaica are having to pay to insure against climate disasters they only played a small part in creating. Jamaica’s per-person emissions are about half the world average.
Conditions on when bonds pay out can also be strict, based on triggers like agreed wind speeds and central air pressure, with exact criteria varying in different parts of a country depending on historic precedents.
Last year, Jamaica missed out on a payment because, despite Hurricane Beryl causing about $1 billion of damage to the island, these triggers were not met.
Fending for themselves
Bharadwaj added that financial support from wealthy countries – like that in the UN’s new Fund for Responding to Loss and Damage (FRLD) – is insufficient to meet countries’ needs. The FRLD has $407 million in its bank account, which she said is likely far less than the losses suffered by Jamaica, let alone all the other countries in need of funding after climate-driven disasters.
Because of this “failure” of developed countries, multilateral development banks and the private sector to offer adequate funding, developing countries have to “fend for themselves”, she said.
As well as catastrophe bonds, she said governments should issue bonds – as Fiji has done – to raise money to invest in resilience measures. This can include dedicated resilience projects like flood defences and sea walls or making infrastructure like coastal hotels in Jamaica better able to withstand extreme weather, she said.
This spending, she said, should be seen as “not just doing good, not just impact investing [but] an investment that will yield benefit in the future” by preventing loss and damage.
Avinash Persaud, climate adviser to the president of the Inter-American Development Bank, argued in a recent article for Climate Home News that developing countries should have some of their debt written off if they invest in resilience.
Persaud’s native Barbados launched the world’s first of these debt-for-resilience swaps last year and a “multi-guarantor debt for resilience facility” is expected to be launched by international development banks at COP30 this month to make such swaps available to more countries.
Persaud and Bardouille have also argued for more lenders to introduce clauses saying that debt repayments will be paused when a disaster like a hurricane strikes.
The post Jamaica set for post-Melissa payout but experts warn of limits to hurricane insurance appeared first on Climate Home News.
Jamaica set for post-Melissa payout but experts warn of limits to hurricane insurance
As an extreme El Niño breaks marine temperature records, COP31 is set to boost the profile of the ocean’s role in solving climate change, but finance and clear conservation measures will be needed for it to move the needle, experts said.
The Turkish presidency has announced plans for an Antalya Ocean Declaration that recognises the centrality of the global ocean – the world’s largest carbon sink – in regulating the climate and minimising the now unavoidable overshoot of global temperatures above 1.5C over pre-industrial levels.
Meanwhile, as part of the formal UN negotiations, Australia has announced plans to land a cover decision in Antalya, which, according to veteran former US negotiator Sue Biniaz, would be the only section of the formal negotiations where the role of oceans could be included.
She added that an outcome at COP31 seems likely, given the initiative from both presidencies and a push from over 100 countries – including Brazil, the EU and the African Group of countries – calling for the UN negotiations to deliver a plan for implementing ocean measures.
Governments will arrive in Antalya with a “super El Niño” adding stress to marine ecosystems and expected to continue to intensify until December 2026, with parts of the Pacific averaging almost 30C (86F) – over 3C more than normal – in October, according to monthly EU sea temperature data.
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Needs for ocean conservation and funding
While elevating the ocean agenda is “critical”, it must lead to funding for ocean conservation and a clear plan for reaching the global target – set at UN biodiversity talks in 2022 – of protecting 30% of the global ocean by 2030, said Pradeep Singh, senior ocean governance expert at Oceano Azul Foundation.
The ocean is precisely where governments are farthest off track from meeting this target – informally known as the 30×30 goal. Even if countries meet all their nature conservation plans, only about 12% of the global ocean would be protected, the UN says.
“Acknowledgment of marine protected areas and the 30×30 target as climate infrastructures will certainly boost efforts and funding for science and management,” Singh told Climate Home News.
Shamini Selvaratnam, director of international climate and clean energy at Ocean Conservancy, said an ocean commitment that makes a difference in coastal communities “takes funding, local capacity and support that countries can actually access”.
An analysis by climate think tank Zero Carbon Analytics shows that investment in the blue economy – through activities like sustainable fisheries or cleaner shipping – is only at about 2% of the needs, which are estimated at $550 billion per year.
Following-through on commitments
Selvaratnam added that countries must also establish mechanisms to follow through on these measures, which currently only exists in the form of a non-binding dialogue that is not expected to produce any negotiated agreements.
She said that countries at COP31 must find ways for their ocean commitments to inform the next global stocktake, the UN’s five-yearly review of progress on climate action. Some countries – including African countries, Latin American nations, small island states and the European Union – have backed a process that culminates in the next global stocktake.
At climate negotiations, countries are not mandated to include ocean conservation measures in their climate plans. But a group of countries led by France and Brazil is pushing them to do so voluntarily through an initiative called Blue NDC Challenge. Seventeen countries have joined the initiative so far.
In its list of COP31 priorities, the EU has called for the “critical role” of oceans to be recognised, but falls short of calling for any specific actions to feature marine action more prominently in climate plans.
As part of their demands, ocean campaign groups have called for the establishment of an “Antalya Ocean Compact”, a platform where countries can coordinate efforts across different environmental treaties, including the UN climate, biodiversity and high seas negotiations.
Ultimately, Selvaratnam said a strong deal “must accelerate emissions cuts, clean energy, and a transition away from fossil fuels, including offshore oil and gas”.
Ilana Seid, chair of the AOSIS group of small island states and permanent representative of Palau to the UN, said during a press briefing last week that “meaningful progress” on emissions reduction is “the best way” to alleviate stress on the ocean.
The post ‘Blue COP31’ set to spotlight need for ocean protections amid record heat appeared first on Climate Home News.
‘Blue COP31’ set to spotlight need for ocean protections amid record heat
In the wake of its recent glacial flooding disaster, Nepal and the kingdom of Bhutan have proposed a new agenda item on mountains and climate change for the COP31 summit which opens on Monday in the Turkish city of Antalya.
In a submission addressed to the COP31 presidency and the head of the UN climate secretariat (UNFCCC), Nepal said the agenda item, entitled “1.5°C Warming in Mountains”, is an effort to strengthen the response of the international community to the climate risks facing the world’s mountain regions.
The item proposes that mountain issues should become a regular part of the formal UN climate change process, with a focus on scientific assessment of the risks associated with warming overshooting 1.5C, an annual high-level dialogue, a dedicated work programme and improved access to climate finance.
Maheshwar Dhakal, chief of the climate change management division of Nepal’s Ministry of Agriculture, Forests and Environment, told Climate Home News that Himalayan countries face similar problems such as collapsing glaciers and flooding from glacial lakes.
“We are trying to bring all Himalayan countries together under this agenda item,” he said.
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At this year’s UN General Assembly, Nepal’s Prime Minister Balendra Shah called for strong global action to ensure climate justice and proposed creating a Himalayan Climate Resilience Mechanism led by India, China and Nepal. It would share satellite data, monitor glacial slopes and lakes, strengthen early warning systems and coordinate cross-border disaster response.
Nepal has experienced significant infrastructure losses and human casualties from flooding every year since 2020. In late August, the collapse of a glacial slope on the border with Tibet caused a torrent of water and debris to course down the Bhote Koshi River, leaving more than 6,000 people dead or missing.
According to a government needs assessment, the disaster caused an estimated $2.7 billion in physical damage and economic losses, while around $4.8 billion will be required for recovery and reconstruction.
More research needed on threats
Although high mountain regions are known to be fragile ecosystems, especially as global warming accelerates glacier melt, the extent of their vulnerability is still not fully understood. When the devastating Bhote Koshi floods hit, it opened the eyes of the world to the risks.
Dhakal said the Bhote Koshi floods “have proved the impacts of climate change in the Himalayan region”, which were linked to rising temperatures by scientists with the World Weather Attribution group. “Therefore, Nepal wants scientific studies, research and political discussions on mountain climate risks to receive greater attention at international climate conferences,” he added.
Nepal has been making efforts on this front since 2009, when it held a cabinet meeting at