World Bank economist: ‘Better climate risk management could save the poor billions each year’

Stéphane Hallegatte [Aline Robert]

Natural disasters plunge 26 million people into poverty every year, according to a new report by the World Bank. The organisation believes the efficiency of aid could be improved by targeting climate risk management efforts on the most vulnerable, Stéphane Hallegatte told EURACTIV France.

Stéphane Hallegatte is an economist at the World Bank and one of the authors of the report. He spoke to Aline Robert, the editor-in-chief of EURACTIV France.

What can we do for the poorest populations exposed to natural disasters?

The World Bank’s mandate is to reduce poverty. But natural disasters, which are becoming increasingly common with climate change, create poverty. That is why we have to manage this risk in advance. Building dykes and bridges is part of the answer of course, but there is more. We also have to put in place fast response mechanisms for crises and social protection systems, even modest ones. The important thing is to ensure they can be activated at the right moment.

Morocco is a country with rampant inequality, where many farmers are extremely poor, for example…

Yes, Morocco is quite symptomatic: it is a country with cities and industries with large energy needs, so it has problems reducing its CO2 emissions. At the same time, certain cities, such as Casablanca, are exposed to flooding and rural zones can be very poor and disconnected from the rest of the country. We are currently working with the Moroccan parliament to establish a risk management fund. This is a very good example of the action we can take against poverty when poor populations are exposed to climate change.

Why do the poorest people face the greatest risks from natural disasters?

Our models show that the poorest populations suffer losses two or three times greater than others due to climate hazards, because they are the most exposed. Close to one quarter of the world’s poorest populations live in very fragile buildings that will not stand up to flooding. It is a vicious circle: they are vulnerable because they are poor, and at the same time their poverty entrenches their vulnerability.

How do we measure the impact of natural disasters on people’s way of life?

If there were no natural disasters for a whole year, the population living below the poverty line would fall by 26 million, from a total of 700 million people currently. That shows there is a big crossover between poverty reduction and risk reduction. And the relative impact of disasters can be more or less severe. Cyclone Matthew, which hit Haiti a month ago, caused $2 billion of damage in Haiti and $7bn in the United States. But these figures measured by insurers are meaningless: the situation in Haiti is worse. This shows that we need to come up with a different set of measuring tools.

The Paris Agreement gave a clear target for the reduction of emissions, aiming to limit the global temperature rise to 1.5°C. But the climate adaptation objectives are less clear.

Better risk management policies could save us $100bn per year: we insist on the fact that we must concentrate these policies on the poorest. These may not be the most creditworthy investments, but the cumulative losses from a lack of adaptation represent $520bn in lost consumption. That is an enormous amount. Losses to consumption are 60% higher than material losses. And the poor are the most affected. If there is a severe blow in Ethiopia, for example, the farmers confronted by drought will sell their animals. But the fact that all the animals are being sold at the same time causes the price to drop.

What solutions could be used to reduce the risk?

The crucial factor is speed. Budgets have to be ready to be deployed at the start of a drought, for example, which is what happened in Kenya this year. Or in the Philippines, where some of the international aid was distributed directly by the social aid ministry. If the channels exist and the most vulnerable people are already identified, the management will be better. We also recommend the establishment of a risk fund and the wider use of bank accounts so that people’s possessions are less affected.

The poorest countries are the most affected by climate change, as your report highlights. But CO2 emissions have historically been produced by northern countries. Does that mean that the countries of the North should pay the bill for risk management in the South?

The World Bank is not a political organisation, we cannot get involved in this kind of debate. But we can propose solutions based on cooperation or the sharing of data, which can have a strong impact. For example, where climate data exists, it should be available to those who would gain the most from it. It could be useful, for example, in infrastructure projects in the Global South: if data on maximum water flow exists somewhere, it should be used when building bridges.


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