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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 are growing dramatically in frequency and intensity. Coupled with slow onset climate change events, this is causing massive damage each year. It is estimated that the damage caused by climate change has quadrupled since 1992.

In 2017, extreme weather events caused damage of an estimated 320 billion US dollars. 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. And it is almost impossible to gauge the long-term consequences of climate change, for example the destruction of ecosystems, rising sea levels or acidification of the oceans.

Valuable habitats and also the farmland and fishery resources that are so urgently needed to feed the world's growing population are at risk.

The methods and techniques used to calculate and manage climate risks have not so far taken into account this kind of damage and the resulting losses, either economic or non-economic. That is why it is important to develop and use comprehensive methods and measures for assessing and, above all, managing climate risks.

Infographic on the topic of "Climate risk management"
German activities

Towards comprehensive climate risk management

As part of its development cooperation programme, Germany is campaigning worldwide for comprehensive climate risk management that will help alleviate the growing impact of climate change. The BMZ's approach covers the whole spectrum of climate-related risks, looking not only at extreme weather events but also slow-moving changes, such as the rise in sea levels.

Comprehensive climate risk management aims to minimise the impact of climate change by addressing the whole spectrum of risks. These range from short-term extreme weather events to long-term changes such as soil degradation, salinisation or rising sea levels. This approach involves combining existing instruments for reducing greenhouse gas emissions, adapting to climate change and managing disaster risks and supplementing them with innovative adaptation measures, such as climate risk insurance.

The aim is to help decision makers in the public and private sector to achieve greater climate resilience and plan for the future.

Rice fields in Banda Aceh, Indonesia

Prevention

The system is based on a comprehensive and continuous analysis of risks and on identifying measures that will minimise, reduce or transfer risk.

Risk assessment involves looking at sectors that are at particular threat from climate change, such as farming, fisheries and water, and estimating the potential damage to those sectors. Climate risk management also includes preventive disaster risk management measures, such as the introduction of new building regulations or land use regulations that reflect those risks. Or it may involve establishing climate-proof infrastructure, early warning systems or contingency plans.

Climate action itself is also important. What development trajectory is chosen and how high levels of greenhouse gas emissions are will have a decisive impact on gradual changes in the climate and on extreme weather events.

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

Adaptation

Adaptation measures can include, for example, protection and reforestation of mangrove forests. This protects communities and farmland in coastal areas from the negative impacts of climate change. Adaptation measures may also include resettlement of people affected by climate change.

Added to these are innovative measures to provide financial protection from climate risks, for example by means of climate risk insurance. These insurance schemes offer a financial safety net against the negative impacts of such events.

In direct insurance schemes, individuals or small businesses are insured against risks such as harvest loss or the loss of livestock. They then receive immediate assistance when needed. With indirect insurance schemes, a number of countries join together to form risk pools and insure each other. When damage occurs, they quickly receive a pay-out that can then be used to assist those in need.

The BMZ is supporting various partner countries and regions in their efforts to assess and manage climate risk. New methods of assessing risk are being tested and refined. This gives partner countries a better basis on which to decide what measures are required. The BMZ is supporting countries in their adaptation efforts by helping them to develop capacities and providing advisory services.

Opening of the Climate Change Conference COP19 in Warsaw, 2013

International cooperation

Germany is also involved in international processes.

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 the "implementation of approaches to address loss and damage associated with the adverse effects of climate change ... in a comprehensive, integrated and coherent manner".

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.

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.

  • 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.

  • Coastal villages in the Mekong delta are suffering more and more from flooding due to climate change, particularly, where the mangrove forests have disappeared.
    Viet Nam: cooperation in action

    Mangroves: the all-round solution for coastal, climate and environmental protection

    Thanks to their dense tangle of roots, mangrove trees are ideally suited for the protection of tropical coasts.

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.

It is also supporting various regional organisations: the Secretariat of the Pacific Community (SPC), the Secretariat of the Pacific Regional Environment Programme (SPREP) and the Melanesian Spearhead Group (MSG). 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.

Coastal villages in the Mekong delta are suffering more and more from flooding due to climate change, particularly, where the mangrove forests have disappeared.
Viet Nam: cooperation in action

Mangroves: the all-round solution for coastal, climate and environmental protection

Thanks to their dense tangle of roots, mangrove trees are ideally suited for the protection of tropical coasts. A strip of mangroves just 100 metres wide is enough to make a decisive difference in weakening the destructive force of storms or even tsunamis.

Mangroves are "all-rounders". They not only slow down storms, they also slow down the erosion caused by rising sea levels. They can absorb between three and five times as much carbon dioxide from the atmosphere as inland forests and by binding it in their leaves and branches they very effectively reduce the concentrations of greenhouse gases in the atmosphere. In addition, these coastal forests are a nutrient-rich habitat and spawing ground for countless species of fish, crustaceans and many other organisms. Thus, they help conserve biodiversity and serve as an important source of food and income for people living close to them.

At the moment mangrove forests still cover about 15 million hectares of land along the tropical coasts. However, in many regions their continued existence is threatened by logging. Together with the World Wide Fund for Nature (WWF), the International Union for the Conservation of Nature and Natural Resources (IUCN) and various other non-governmental organisations, the BMZ has been supporting a new mangrove protection initiative since 2017. The previously scattered knowledge about these special habitats will be compiled in a central archive, and best practices for the protection, regeneration and further development of mangrove forests will be applied.

In the Mekong Delta the BMZ is supporting the planting of 46,000 hectares of new coastal forest in Viet Nam up to 2020. The results have been so impressive that the Vietnamese authorities and international organisations are now using the same methods to protect other endangered coastlines. A detailed description of the programme (in German) can be found here.

Climate risk management

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