Catastrophic droughts, floods and heatwaves: climate change is making environmental disasters increasingly common. Environment Minister Barbara Hendricks wants the G7 to look at insurance policies as an alternative to traditional development aid. EURACTIV Germany reports.
2015 is a fateful year for the international community’s development and climate goals. In September, the United Nations will agree on the new Sustainable Development Goals (SDGs). In December, delegates at the Paris climate conference will attempt to reach a binding agreement to limit greenhouse gas emissions post-2020, and keep global warming below the critical limit of +2°C.
But as the World Bank has warned for some time, even if governments manage to cut emissions quickly, some of the effects of climate change will not be stopped. Sea levels will continue to rise over the coming centuries, and further global temperature increases will bring more heatwaves and climate disruption.
The poor are worst hit
The effects of climate change will hit the world’s poorest populations hardest. For years, the international community has discussed possible solutions for insuring developing countries against the rising risks.
Supporters of the idea say such insurance policies present a sustainable alternative to traditional aid funds, as they would shift the emphasis from cleaning up after natural disasters, towards preventing them from occurring.
Berlin is making its move. Barbara Hendricks plans to use Germany’s G7 presidency to pave the way for the entry of climate change insurance into mainstream environmental and development policy, and climate protection is high on the agenda for the June G7 summit in Ellmau, Bavaria.
Pilot projects with the World Bank
On Monday, in preparation for the summit, the Environment Ministry published a paper proposing that the seven leading industrialised countries contribute by ensuring that more people in vulnerable developing countries are insured against the risks of climate change. Their aim should be to double or treble the number of people insured.
Barbara Hendricks hopes to implement pilot projects with the participation of the World Bank, building on existing regional insurance systems, and using private and public funds to generate the premiums needed. The Ministry has revealed that the German reinsurance company Munich Re is also involved in the project.
The concept of insuring developing and emerging countries against the risks of climate change in itself is nothing new, and has been the subject of discussion for some time.
The 2007 Bali Action Plan called for the development of “risk management and risk reduction strategies, including risk sharing and transfer mechanisms such as insurance” to cover losses and damage in developing countries particularly affected by climate change. The signatories of the UN Framework Convention on Climate Change (UNFCCC) explicitly agreed in Cancún to promote insurance and other strategies to limit the impact of environmental disasters.
Report: climate change affects poorest populations
A report by the Potsdam Institute for Climate Impact Research (PIK), published by the World Bank last year, showed just how urgent the need is to implement preventative measures. The report warned of the devastating consequences of global warming for the populations of the world’s poorest regions.
According to the researchers, the effects of global warming will be felt most keenly in the tropics. The report also highlighted the increasing threat posed by climate change to the development process and said it could “undermine the fight against extreme poverty”. Hans Joachim Schnellnhuber from the PIK said that the effects of global warming over the coming decades would probably “affect above all those that have contributed the least to the increase in greenhouse gas emissions: the poor”.