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Climate risk management

Storm damage on the Caribbean island St. Lucia

The impact of climate change can already be clearly felt and is threatening the livelihoods of millions of people. Extreme weather events like cyclones and flooding have been tending to grow in frequency and intensity since the middle of the last century. Every year, they cause considerable damage. Indeed, the United Nations Office for Disaster Risk Reduction (UNISDR) estimates that, in terms of the financial losses incurred, the damage caused by extreme weather events increased by some 150 per cent between 1998 and 2017. In its special report published in 2018, the IPCC also predicts that climate change will have an increasingly severe impact even if global warming is kept to 1.5 degrees.

In 2017, extreme weather events caused an estimated 320 billion US dollars' worth of damage, for example. Developing countries and emerging economies are particularly hard hit by climate change and, at the same time, least equipped to cope with it. Climate change is therefore threatening to reverse their development gains and thwart their opportunities for development in the future.

These figures do not even include impacts that cannot be measured directly in economic terms, such as loss of human life or cultural assets. Furthermore, it is currently hard to predict how the slow-onset effects of climate change will play out, such as a rise in the sea level and the spread of deserts to land currently in use. These changes will have some irreversible impacts, damaging ecosystems and resulting in the acidification of the oceans. Valuable habitats and farmland could be lost forever. This will also pose a threat to the food security of a growing world population; fish stocks could, for example, dwindle due to a loss of habitat.

The methods and techniques used to calculate and manage climate risks have so far not – or not sufficiently – taken into account this kind of damage and the resulting losses, either economic or non-economic. That is why it is important that these costs also be reflected in the future and that they show up in calculations.

Ships on shore near the world's largest mangrove forest (Sundarbans) near the town of Mongla, in the southwest of Bangladesh
German activities

Tackling disaster and climate risk through comprehensive climate risk management

In its development cooperation, Germany supports comprehensive, worldwide climate risk management. This kind of risk management combines strategies and measures aimed at reducing disaster and climate risk. It is a way of coping with the increasing impact of climate change.

The aim is to combine measures that both promote sustainable development and also involve the various stakeholders. The interests of vulnerable and marginalised groups in particular should be taken into account.

In order to minimise the negative consequences of climate change across the whole spectrum of risk, the BMZ's approach is to look at climate risks in the round. It not only addresses extreme weather events such as cyclones and flooding but also slow-onset events like a rise in sea levels and desertification.

Adaptation activities

A comprehensive risk management approach uses a wide range of adaptation activities that vary between different regions and locations. They may include afforestation in mangrove forests, climate risk insurance schemes, social security systems or the establishment of climate-resilient infrastructure and agriculture.

By protecting and reforesting mangrove forests, for example, coastal areas and farmland can be protected from the negative impact of climate change. This helps to preserve biodiversity and improve water quality. The local population also benefit from an improvement in their circumstances. Yet adaptation measures can also include people being resettled in response to climate change.

Existing instruments used for adaptation, reduction of greenhouse gases, disaster risk management and recovery and rehabilitation are combined with each other and innovative adaptation measures are added aimed at cushioning the financial risks. One example is climate risk insurance. These insurance schemes offer a financial safety net for individuals and entire countries against the negative impacts of extreme weather events.

The BMZ is supporting countries in their adaptation efforts by helping them to develop capacities and providing advisory services. One key aim is to help decision-makers in the public and private sector to achieve greater climate resilience and plan for the future.

Comprehensive Climate Risk Management in practice

The climate risk management process

Risk analysis

Climate risk management starts with a continuous and comprehensive risk analysis. The focus is on examining a specific event, such as a cyclone. By identifying risks and assessing their impact on people, assets and ecosystems, it is possible to develop a range of possible responses. These measures are aimed at minimising, reducing or even transferring the risk. In this way, climate risk management helps to answer the question of how decision-makers could possibly respond to such an event.

Risk assessment involves looking at sectors at particular threat from climate change, such as farming, fisheries and water, and estimating the potential damage to those sectors. Some potentially very grave impacts are hard to quantify or express in monetary terms. Weather events of this kind tend to hit poor and particularly vulnerable people hardest. So every assessment needs to take into account the specific context.

Measures implemented as part of comprehensive risk management

Context is also vital when identifying the most effective possible combination of measures. Account needs to be taken of the economic and organisational capacities of countries, communities and the private sector. It is vital to adapt to the individual context and respond to risks. The measures selected should set the countries concerned on a climate-resilient development trajectory and be context-specific.

Comprehensive risk management embraces a broad range of adaptation measures. These include preventive disaster risk management measures, such as community-based participatory risk analysis, appropriate and risk-sensitive building and land use planning and early warning systems with institutionalised emergency plans.

The BMZ is supporting various partner countries and regions in their efforts to assess and manage climate risk. New methods of risk assessment are being tested and refined in order to provide partner countries with a better basis for deciding what measures need to be taken.

Decision-making and implementation

Decision-makers from the public and private sector are able to look at the comprehensive risk management measures identified and consider the related costs. They are then in a better position to weigh them up, finance them and implement them. This makes it easier for them to decide how to react to future climate risks.

Monitoring and evaluating the measures implemented allows a continuous learning process to take place, which can then be drawn on in future decision-making.

Damaged infrastructure in St. Lucia after hurricane Matthew

International cooperation

Germany is also involved in various international processes:

Warsaw mechanism

The BMZ is actively involved in the Warsaw International Mechanism for Loss and Damage Associated with Climate Change Impacts (WIM) and is on its executive committee (ExCom).

The WIM ExCom was established during the 19th global climate conference in Warsaw, Poland. Its aim is to promote approaches to address loss and damage associated with the adverse effects of climate change in a "comprehensive, integrated and coherent manner".

The BMZ is part of a group of experts on comprehensive risk management strategies, where it advocates strongly for better cooperation in order to improve the resilience of vulnerable groups and countries to climate change.

Sendai Framework for Disaster Risk Reduction

The BMZ is also supporting the implementation of the Sendai Framework for Disaster Risk Reduction. It is doing so both at political level and also by means of disaster risk management projects implemented as part of its long-term development cooperation. The aim of the framework is to prevent disasters and minimise existing disaster risk.

NAP Global Network

At the climate conference in Cancún in 2010, the parties to the Framework Convention on Climate Change also agreed on the National Adaptation Plan (NAP) process. The aim is to identify medium-term and long-term adaptation needs so as to make countries and their populations less vulnerable to climate change. Under the NAP process, countries incorporate the issue of adaptation into their national development plans. Often, however, they do not have the necessary structures or know-how to actually implement these adaptation plans.

That is why the BMZ is supporting the NAP Global Network, which coordinates support and facilitates international peer learning and exchange. Many countries have now developed National Adaptation Plans and in some cases have begun implementing them.

Opening of the Climate Change Conference COP19 in Warsaw, 2013
  • A fisherman off the island of Bunaken
    The Pacific Islands: Cooperation in action

    Climate change in the Pacific island region

    Because they are small in size and low-lying, the Pacific island states are particularly vulnerable to the impact of climate change. The region is heavily dependent on its natural resources. Extreme weather events and the rise in sea levels therefore present a threat to its development.

  • Measures for adapting agriculture to climate change in the Lake Chad basin
    Chad: Cooperation in action

    Climate change adaptation in the Lake Chad basin

    Chad is under threat of drought and flooding, which is resulting in food insecurity. An unstable security situation, state fragility and a poor infrastructure are also making it harder for the country to use and distribute the scarce resources available.

A fisherman off the island of Bunaken
The Pacific Islands: Cooperation in action

Climate change in the Pacific island region

Because they are small in size and low-lying, the Pacific island states are particularly vulnerable to the impact of climate change. The region is heavily dependent on its natural resources. Extreme weather events (hurricanes, floods and droughts) and the rise in sea levels therefore present a threat to its development.

Its infrastructure, settlements, farmland and freshwater resources are at particular risk. Rising temperatures and a lack of rainfall are having a direct impact on agricultural yields, public health and biodiversity. This combination of limited adaptation capacities and major climate impacts is threatening sustainable development in the region.

The BMZ has been involved in the region since 2009, providing German experts to advise 15 island states, including Fiji, Kiribati, Papua New Guinea, Samoa, the Solomon Islands, Tuvalu and Vanuatu.

Support is also being provided to various regional organisations: the Secretariat of the Pacific Community, the Secretariat of the Pacific Regional Environment Programme (SPREP) and the Melanesian Spearhead Group. They are being helped to improve the information, advice and training they provide on the topic of climate change. The aim of German development cooperation in this field is to boost capacities in the region so as to enable the countries themselves to address the impact of climate change.

The focus is on climate change adaptation, REDD+ (Reducing Emissions from Deforestation and Forest Degradation), climate and education, sustainable energy, and climate and tourism. The BMZ's activities also include risk assessment and management projects.

This approach being piloted in the Pacific aims to make small island states in the region less vulnerable to damage and loss caused by climate change by practising comprehensive risk management.

Measures for adapting agriculture to climate change in the Lake Chad basin
Chad: Cooperation in action

Climate change adaptation in the Lake Chad basin

Chad is under threat of drought and flooding, which is resulting in food insecurity. An unstable security situation, state fragility and a poor infrastructure are also making it harder for the country to use and distribute the scarce resources available. This is aggravating the potential for conflict.

To improve the resilience of the rural population, support is being provided through German development cooperation for such measures as the establishment of local risk management systems. This includes the forming of local bodies, support for the implementation of risk reduction activities and awareness-raising and the effective gathering and exchange of information on climate change. This is done through decentralised efforts at both local and transboundary level and through projects implemented in cooperation with the Lake Chad Basin Commission. By supporting climate-smart strategies and cultivation techniques, the aim is to enhance the resilience of the local people.

Climate risk management

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