Oct 29, 2015 | Energy & Climate
Interview with Naoko Ishii, CEO and Chairperson of the Global Environment Facility (GEF), an independent organization that provides grants for projects working towards sustainability. IIASA, the GEF, and the United Nations Industrial Development Organization (UNIDO) have recently partnered on a new project to explore integrated solutions for water, energy, and land.
Naoko Ishii ©Global Environment Facility
Q What is sustainable development and why is it important?
A As Brundtland put it, sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs.
If we do not achieve sustainable development, we will fail to provide even the barest essentials of life—food, water, and shelter—for the growing population. The extra two billion people that will inhabit the world in 2050 can only be accommodated if we are serious about sustainable development.
On a personal level I care about sustainable development because I care about the future, I care about young people, and I care about humanity. Achieving sustainable development is, in my opinion, the single most important issue we face today. Without it, all life on Earth is in jeopardy.
The Global Environment Facility (GEF) was created on the eve of the 1992 Earth Summit in Rio to assist in the protection of the global environment and promote sustainable development. The benefits of such an endeavor have only become clearer over time. It is no coincidence that in 2015 all nations of the world will adopt a set of sustainable development goals which place a strong emphasis on the “global commons,” and that in parallel we have a new global agreement on climate change within reach.
How do you see the world in 2050? What are your most optimistic and pessimistic visions?
I am an optimistic person so I will say that, by 2050, every government, every business, and every individual will take the environment into consideration in all their actions. By 2050, we will all be caring for the Earth, taking responsibility for the use of our planet’s resources, and building economies which will leave no one without dignity or necessary subsistence. We will live within safe planetary boundaries. Pessimism is not an option for me.
How can science help the world achieve sustainable development?
Science plays a critical role. We need it to monitor the state of our resources, the impacts of our activities, and the progress being made. Science can also help identify solutions. It can help encourage businesses to make smart decisions, for example, about saving money though energy efficiency, risk mitigation, and new revenue opportunities driven by innovation and new business models.
Sustainable development is a truly cross-cutting endeavor: it spans many sectors, from agriculture to economics, and transcends national boundaries. Science can play an important role by producing research that is integrated, cross-sectoral and international. In this way, synergies, co-benefits, and trade-offs can be explored in order to identify the smartest paths to achieving multiple sustainable development goals at the same time
“Sustainable development is a truly cross-cutting endeavor: it spans many sectors, from agriculture to economics, and transcends national boundaries.” ©The GEF
How do you see the role of Global Environment Facility in implementing the Sustainable Development Goals?
The GEF is uniquely placed to support the global commons—the planet’s finite environmental resources that provide the stable conditions required for a sustainable, prosperous future for all. Our new strategy—GEF2020—lays out an ambitious vision for the GEF, aimed at addressing the underlying drivers of environmental degradation and delivering integrated, holistic, solutions. We are building on more than 20 years of experience providing support to over 165 countries. By working with national governments, local communities, the private sector, civil society organizations and indigenous peoples, we help find and implement integrated solutions to global challenges.
What are the advantages of a cross-sectoral and cross-border approach to identifying paths to sustainable development?
Many environmental challenges and threats to sustainable development do not respect borders. Moreover, they are often interdependent, or share common drivers. For example, biodiversity loss and climate change is partly driven by unsustainable forest management, which is in turn connected to production of globally traded commodities like palm oil or soy. Problems like this require an integrated, cross-cutting approach.
Given the importance of cross-sectoral interventions, at the GEF we will be implementing a program of integrated approach pilot projects. We believe that these will help countries and the global community in tackling underlying drivers of environmental degradation. I am also very excited about a research program we have recently launched in partnership with IIASA and the United Nations Industrial Development Organization, focusing on development and implementation of integrated solutions to tackle the water-food-energy nexus.
Note: This article gives the views of the interviewee, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.
Sep 22, 2015 | Energy & Climate
By Nebojsa Nakicenovic, Deputy Director General, International Institute for Applied Systems Analysis (IIASA), Austria (Originally published on the World Economic Forum Agenda Blog.)
Nebojsa Nakicenovic
Goal 7 of the Sustainable Development Goals is ambitious: Ensure access to affordable, reliable, sustainable and modern energy for all. This must be accomplished without compromising Goal 13: climate. This is achievable.
In spite of ups-and-downs and outright shocks in the global economy, some quite recent, the economic success stories of the industrialized countries are role models for the countries that are still developing. This puts the entire global community in the dichotomous position of needing to fire up the engine of growth, without producing the greenhouse gases it has been emitting since the beginning of the Industrial Revolution. What is the answer?
Very few questions in the complex area of energy and climate change can have a simplistic answer, but I am going to attempt one here: decarbonization, namely, drastic reduction of carbon dioxide and other greenhouse gas emissions per unit of economic activity.
Back in 1993, I wrote this:
“The possibility of less carbon-intensive and even carbon-free energy as major sources of energy during the next century is consistent with the long-term dynamic transformation and structural change of the energy system.”
My view in 2015 is the same; however, the scientific community 22 years later has a much better understanding of “the decarbonization challenge” and how it can be addressed. I will sketch out a 10-step approach to the removal of carbon from the global economy, but first I’d like to paint in a bit of the background.
Carbon dioxide is the main greenhouse gas and contributor to climate change. The largest source is our use of fossil fuels to drive development. Carbon dioxide emissions have increased exponentially since 1850 at about 2% per year, while decarbonization of the global economy is only around 0.3% per year.
The 2012 Global Energy Assessment, in which IIASA played a leading role, puts the current decarbonization rate at approximately six times too low to offset the increase in global energy use of about 2% per year. To meet the goal of the 2009 climate agreement (the Copenhagen Accord), namely, “the scientific view that the increase in global temperature should be below 2 degrees Celsius” to prevent dangerous anthropogenic interference with the climate system, global net emissions of carbon dioxide and other greenhouse gases will need to approach zero by the second half of this century, implying deep, deep decarbonization rates.
“Carbon dioxide is the main greenhouse gas and contributor to climate change. The largest source is our use of fossil fuels to drive development.” © Kokhanchikov | Dollar Photo Club
But we need deep decarbonization while energy needs are increasing to meet the demand of the developing world, including the three billion without access today to sustainable energy. All scenarios in the academic literature that lead to further economic development in the world, universal access to sustainable energy, and the stabilization of climate change to less than 2 degrees Celsius, anticipate deep and urgent decarbonization. Here’s my 10-point plan for doing that.
- Change attitudes
Attitudes to energy use are based on many factors, from cultural norms to overall infrastructure design. We need much greater political will to affect a change in attitudes: it is critical that policy interventions should communicate to citizens the ethical notion of improved well-being and health now and for future generations of a zero-carbon economy. .
- Transform governance
The transformation needed this century is more fundamental than previous transformations, like the replacement of coal by oil, because of the significantly shorter time needed to achieve it. Thus, government policies are essential, and are needed particularly in changing buildings codes, fuel efficiency standards for transportation, mandates for the introduction of renewables, and carbon pricing.
- Improve energy efficiency
More efficient provision of energy services, or doing more with less, and radical improvements in energy efficiency, especially in end use, will reduce the amount of primary energy required and represents a cost-effective, near-term option for reducing carbon dioxide emissions, as well as having multiple benefits in different areas of life.
- Ramp up renewable use
We can show that the share of renewable non-fossil energy from solar, wind, rain, tides, waves, and geothermal sources in global primary energy could increase from the current 17% to between 30% and 75%. In some regions it could exceed 90% by 2050, provided that public attitudes change and efficiency increases.
- Reduce global energy intensity
The energy intensity in the industrial sector in different countries is steadily declining due to improvements in energy efficiency and a change in the structure of the industrial output. Far greater reductions are feasible by combining these improvements with adoption of the best-achievable technology.
- Use known technologies
Carbon dioxide capture and storage (CCS), now being piloted, is a pathway that leads to decarbonization with continued use of fossil energy. It requires: reducing costs, supporting scale-up, assuring carbon storage integrity and environmental capability, and securing approval of storage sites. Nuclear energy could make a significant contribution in some parts of the world, or it could be phased out as, for instance, in Germany.
- Improve buildings
Retrofitting buildings can reduce heating and cooling energy requirements by 50–90%; new buildings can be designed and built using close to zero energy for heating and cooling. Passive energy houses and those that produce energy onsite are another great opportunity to achieve vigorous decarbonization. In conjunction with compatible lifestyles oriented toward rational energy use, efficient buildings are an important decarbonization option.
- Cut transport carbon
A major transformation of transportation is possible over the next 30–40 years and will require improving vehicle designs, infrastructure, fuels and behavior. Electrically powered transportation reduces final energy use by more than a factor of three over gasoline-powered vehicles. A shift toward collective mobility is an essential option. This also implies behavioral changes and new business models like car-sharing, and self-driving cars to replace individual mobility.
- Clean industrial processes
Overall, global industry efficiency is only 30%. Improved energy efficiency in industry results in significant energy productivity gains and, in turn, improved productivity boosts employment and corporate competitiveness. A shift toward low to zero emission energy sources in industry is another important and much-needed change. For example, with an aggressive renewables strategy, near-zero growth in GHG emissions in the industrial sector would be possible. Finally, decarbonization would also involve changes of industrial processes, for example, from high to low temperatures.
- Stranded assets and ‘derisking’ renewables.
The flow of investment needs to be changed away from fossil fuels and toward efficiency, renewables, decarbonization of fossil energy sources, and especially efficient end-use in buildings, transport, and industry. Sustainable energy futures require relatively high up-front investments with the benefit of low long-term costs. They are attractive in the long run, but the up-front investments need derisking and other forms of support, such as feed-in tariffs.
Note: This article gives the views of the author, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.
May 11, 2015 | Demography
IIASA demographer Erich Striessnig talks about new research linking population change with climate change scenarios.
What does your research say about population and climate?
In our recent review article published in the journal Population Studies, we give a summary of much of the work that has been carried out over the past few years both at IIASA and at the Wittgenstein Centre for Demography and Global Human Capital (IIASA, VID/ÖAW; WU) on the contribution of changes in population size and structures to greenhouse gas emissions, as well as societies’ capacity to adapt to climate change. Similar to Mia Landauer in last week’s blog entry, we emphasize the importance of addressing challenges to mitigation and adaptation jointly.
What’s new or unexpected in this study?
The main novelty behind our approach is the explicit inclusion of the full population detail by age, sex, and educational attainment in assessments of societies’ future adaptive and mitigation potential. This is exemplified in the context of IPCC-related climate change modelling which until recently has included only very limited information on the future of population. The new Shared Socioeconomic Pathways (SSPs), which were developed with a huge contribution by IIASA, are an important step to overcoming this situation and to make models of both future greenhouse gas emissions, as well as vulnerability and adaptive capacity with respect to climate change far more realistic.
Population characteristics – not just numbers – make a major impact on greenhouse gas emissions as well as people’s ability to adapt to a changing climate. ©Chris Ford via Flickr
Why is it important to consider the composition of population in regards to future climate change issues?
When thinking about the challenges of the future, it is important also to think about the capabilities that future societies will have to face them. I don’t mean that we should simply lean back and wait for science-fictional future technologies to solve all the problems of humanity, but a look at the changing future composition of populations around the world gives reason for optimism that future societies will be better at preparing, coping, and dealing with the consequences of yet unavoidable climate change than we are today.
What are the links between education and climate change?
Particularly in the developing world, education leads to reduced poverty. But economic growth and the resulting greater affluence, and consumption, also increases global CO2 emissions. So on a first look, education appears to worsen climate change. This has made some environmental activists skeptical about the value of education in the context of mitigation. But to avoid playing poverty eradication and well-being against climate change mitigation, it is necessary to look at behavioral differences at given levels of income. In fact, better education has been shown to be related to more eco-friendly consumption behavior, especially when it comes to home energy use and transportation, two of the main drivers of climate change. In addition to that, education has also been a major driver of technological advancements in the transition to cleaner energy sources.
Research shows that people’s education levels also play a role in how adaptable they are to potential climate-related impacts such as storms and floods. ©Aldrich Lim via Flickr
How do the new SSPs bring demography into the study of climate change?
Population growth is undoubtedly one of the main drivers of greenhouse gas emissions and thus climate change. What’s far less acknowledged is the importance of differential climate impact depending on demographic characteristics. Groundbreaking work by researchers from IIASA and the National Center for Atmospheric Research (NCAR) featured in the article has shown that people have different footprints when they are young than when they are old and that household consumption differs between rural and urban dwellers. Providing different scenarios for the future composition of populations by age, sex, and educational attainment, the new SSPs for the first time allow researchers from different fields to study the dynamics between population and climate change within a common reference frame.
References
Lutz W, Striessnig E (2015) Demographic aspects of climate change mitigation and adaptation. Population Studies: A Journal of Demography, 69(S1):S69-S76 (April 2015). doi: 10.1080/00324728.2014.969929
O’Neill, Brian C., Michael Dalton, Regina Fuchs, Leiwen Jiang, Shonali Pachauri, and Katarina Zigova. “Global Demographic Trends and Future Carbon Emissions.” Proceedings of the National Academy of Sciences 107 (October 2010): 17521–26. doi:10.1073/pnas.1004581107.
Note: This article gives the views of the interviewee, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.
Jan 19, 2015 | Energy & Climate
By Armon Rezai, Vienna University of Economics and Business Administration and IIASA,
and Rick van der Ploeg, University of Oxford, U.K., University Amsterdam and CEPR
The biggest externality on the planet is the failure of markets to price carbon emissions appropriately (Stern, 2007). This leads to excessive fossil fuel use which induces global warming and all the economic costs that go with it. Governments should cease the moment of plummeting oil prices and set a price of carbon equal to the optimal social cost of carbon (SCC), where the SCC is the present discounted value of all future production losses from the global warming induced by emitting one extra ton of carbon (e.g., Foley et al., 2013; Nordhaus, 2014). Our calculations suggest a price of $15 per ton of emitted CO2 or 13 cents per gallon gasoline. This price can be either implemented with a global tax on carbon emissions or with competitive markets for tradable emission rights and, in the absence of second-best issues, must be the same throughout the globe.
The most prominent integrated assessment model of climate and the economy is DICE (Nordhaus, 2008; 2014). Such models can be used to calculate the optimal level and time path for the price of carbon. Alas, most people including policy makers and economists view these integrated assessment models as a “black box” and consequently the resulting prescriptions for the carbon price are hard to understand and communicate to policymakers.
© Cta88 | Dreamstime.com
New rule for the global carbon price
This is why we propose a simple rule for the global carbon price, which can be calculated on the back of the envelope and approximates the correct optimal carbon price very accurately. Furthermore, this rule is robust, transparent, and easy to understand and implement. The rule depends on geophysical factors, such as dissipation rates of atmospheric carbon into oceanic sinks, and economic parameters, such as the long-run growth rate of productivity and the societal rates of time impatience and intergenerational inequality aversion. Our rule is based on the following premises.
- First, the carbon cycle dynamics are much more sluggish than the process of growth convergence. This allows us to base our calculations on trend growth rates.
- Second, a fifth of carbon emission stays permanently in the atmosphere and of the remainder 60 percent is absorbed by the oceans and the earth’s surface within a year and the rest has a half-time of three hundred years. After 3 decades half of carbon has left the atmosphere. Emitting one ton of carbon thus implies that is left in the atmosphere after t years.
- Third, marginal climate damages are roughly 2.38 percent of world GDP per trillion tons of extra carbon in the atmosphere. These figures come from Golosov et al. (2014) and are based on DICE. It assumes that doubling the stock of atmospheric carbon yields a rise in global mean temperature of 3 degrees Celsius. Hence, the within-period damage of one ton of carbon after t years is
- Fourth, the SCC is the discounted sum of all future within-period damages. The interest rate to discount these damages r follows from the Keyes-Ramsey rule as the rate of time impatience r plus the coefficient of relative intergenerational inequality aversion (IIA) times the per-capita growth rate in living standards g. Growth in living standards thus leads to wealthier future generations that require a higher interest rate, especially if IIA is large, because current generations are then less prepared to sacrifice current consumption.
- Fifth, it takes a long time to warm up the earth. We suppose that the average lag between global mean temperature and the stock of atmospheric carbon is 40 years.
We thus get the following back-of-the-envelope rule for the optimal SCC and price of carbon:
where r = ρ+ (IIA-1)x g. Here the term in the first set of round brackets is the present discounted value of all future within-period damages resulting from emitting one ton of carbon and the term in the second set of round brackets is the attenuation in the SCC due to the lag between the change in temperature and the change in the stock of atmospheric carbon.
Policy insights from the new rule
This rule gives the following policy insights:
- The global price of carbon is high if welfare of future generations is not discounted much.
- Higher growth in living standards g boosts the interest rate and thus depresses the optimal global carbon price if IIA > 1. As future generations are better off, current generations are less prepared to make sacrifices to combat global warming. However, with IIA < 1, growth in living standards boosts the price of carbon.
- Higher IIA implies that current generations are less prepared to temper future climate damages if there is growth in living standards and thus the optimal global price of carbon is lower.
- The lag between temperature and atmospheric carbon and decay of atmospheric carbon depresses the price of carbon (the term in the second pair of brackets).
- The optimal price of carbon rises in proportion with world GDP which in 2014 totalled 76 trillion USD.
The rule is easy to extend to allow for marginal damages reacting less than proportionally to world GDP (Rezai and van der Ploeg, 2014). For example, additive instead of multiplicative damages resulting from global warming gives a lower initial price of carbon, especially if economic growth is high, and a completely flat time path for the price of carbon. In general, the lower elasticity of climate damages with respect to GDP, the flatter the time path of the carbon price.
Calculating the optimal price of carbon following the new rule
Our benchmark set of parameters for our rule is to suppose trend growth in living standards of 2 percent per annum and a degree of intergenerational aversion of 2, and to not discount the welfare of future generations at all (g = 2%, IIA = 2, r = 0). This gives an optimal price of carbon of $55 per ton of emitted carbon, $15 per ton of emitted CO2, or 13 cents per gallon gasoline, which subsequently rises in line with world GDP at a rate of 2 percent per annum.
Leaving ethical issues aside, our rule shows that discounting the welfare of future generations at 2 percent per annum (keeping g = 2% and IIA = 2) implies that the optimal global carbon price falls to $20 per ton of emitted carbon, $5.5 per ton of emitted CO2, or 5 cents per gallon gasoline.
If society were to be more concerned with intergenerational inequality aversion and uses a higher IIA of 4 (keeping g = 2%, r = 0), current generations should sacrifice less current consumption to improve climate decades and centuries ahead. This is why our rule then indicates that the initial optimal carbon price falls to $10 per ton of carbon. Taking a lower IIA of one and a discount rate of 1.5% per annum as in Golosov et al. (2014) pushes up the initial price of carbon to $81 per ton emitted carbon.
A more pessimistic forecast of growth in living standards of 1 instead of 2 percent per annum (keeping IIA = 2, r = 0) boosts the initial price of carbon to $132 per ton of carbon, which subsequently grows at the rate of 1 percent per annum. To illustrate how accurate our back-of-the-envelope rule is, we road-test it in a sophisticated integrated assessment model of growth, savings, investment and climate change with endogenous transitions between fossil fuel and renewable energy and forward-looking dynamics associated with scarce fossil fuel (for details see Rezai and van der Ploeg, 2014). The figure below shows that our rule approximates optimal policy very well.
The table below also confirms that our rule also predicts the optimal timing of energy transitions and the optimal amount of fossil fuel to be left unexploited in the earth very accurately. Business as usual leads to unacceptable degrees of global warming (4 degrees Celsius), since much more carbon is burnt (1640 Giga tons of carbon) than in the first best (955 GtC) or under our simple rule (960 GtC). Our rule also accurately predicts by how much the transition to the carbon-free era is brought forward (by about 18 years). No wonder our rule yields almost the same welfare gain as the first best while business as usual leads to significant welfare losses (3% of world GDP).
Transition times and carbon budget
|
|
Fossil fuel Only |
Renewable Only |
Carbon used |
maximum temperature |
Welfare loss |
| IIA=2 |
First best |
2010-2060 |
2061 – |
955 GtC |
3.1 °C |
0% |
| Business as usual |
2010-2078 |
2079 – |
1640 GtC |
4.0 °C |
– 3% |
| Simple rule |
2010-2061 |
2062 – |
960 GtC |
3.1 °C |
– 0.001% |
Recent findings in the IPCC’s fifth assessment report support our findings. While it is not possible to translate their estimates of the social cost of carbon into our model in a straight-forward manner, scenarios with similar levels of global warming yield similar time profiles for the price of carbon.
Our rule for the global price of carbon is easy to extend for growth damages of global warming (Dell et al., 2012). This pushes up the carbon tax and brings forward the carbon-free era to 2044, curbs the total carbon budget (to 452 GtC) and the maximum temperature (to 2.3 degrees Celsius). Allowing for prudence in face of growth uncertainty also induces a marginally more ambitious climate policy, but rather less so. On the other hand, additive damages leads to a laxer climate policy with a much bigger carbon budget (1600 GtC) and abandoning fossil fuel much later (2077).
In sum, our back-of-the-envelope rule for the optimal global price of carbon and gives an accurate prediction of the optimal carbon tax. It highlights the importance of economic primitives, such as the trend growth rate of GDP, for climate policy. We hope that as the rule is easy to understand and communicate, it might also be easier to implement.
References
Dell, Melissa, Jones, B. and B. Olken (2012). Temperature shocks and economic growth: Evidence from the last half century, American Economic Journal: Macroeconomics 4, 66-95.
Foley, Duncan, Rezai, A. and L. Taylor (2013). The social cost of carbon emissions. Economics Letters 121, 90-97.
Golosov, M., J. Hassler, P. Krusell and (2014). Optimal taxes on fossil fuel in general equilibrium, Econometrica, 82, 1, 41-88.
Nordhaus, William (2008). A Question of Balance: Economic Models of Climate Change, Yale University Press, New Haven, Connecticut.
Nordhaus, William (2014). Estimates of the social cost of carbon: concepts and results from the DICE-2013R model and alternative approaches, Journal of the Association of Environmental and Resource Economists, 1, 273-312.
Rezai, Armon and Frederick van der Ploeg (2014). Intergenerational Inequality Aversion, Growth and the Role of Damages: Occam’s Rule for the Global Carbon Tax, Discussion Paper 10292, CEPR, London.
Stern, Nicholas (2007). The Economics of Climate Change: The Stern Review, Cambridge University Press, Cambridge.
Note: This article gives the views of the authors, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.
Dec 5, 2014 | Energy & Climate, Risk and resilience
By Reinhard Mechler & Thomas Schinko (IIASA) with Swenja Surminski (LSE)
(updated 17 December 2014)
As participants in the 20th Conference of the Parties to the Climate Convention (COP 20) in Lima strived to prepare the grounds for a comprehensive climate agreement expected for COP 21 in Paris, negotiators faced key questions that revolve around responsibility and burden sharing.
These questions are not new and have played a key role in the policy and academic discourse on climate change since the beginning of the UNFCCC process.
On the mitigation of emissions, the debate has circled around burden sharing: How should emission reductions be distributed among countries and what are the distributional consequences? On climate impacts and adaptation, the debate has centered on the question of who should pay for adaption and impacts in the global South, given that the global North has been responsible for the bulk of historic anthropogenic greenhouse gas emissions and that the global South will be facing the most severe risks from climate change.
The 20th Conference of the Parties to the Climate Convention (COP 20) opened in Lima on December 1st with big fanfare. It is considered the key milestone event on the road to a comprehensive global deal on climate change that many hope will be struck in Paris in a year’s time. Photo Credit: UN Climate Change
As a partial response, the Green Climate Fund (CGF) was established at COP 16 in Copenhagen to assist developing economies in addressing climate change adaptation and mitigation. The GCF is currently being capitalized by industrialized and emerging economies with the aim of raising 100 billion USD by 2020. At the UN climate talks in Lima the CGF has achieved – thanks to last-minute pledges by several countries – its short term target of mobilizing at least 10 billion USD for the next four years.
Negotiations covering impacts and adaptation have further proceeded, among others, under the umbrella of the Warsaw Loss and Damage Mechanism (WIM), accepted at COP 19 in Warsaw after strong debate as to its meaning and nature- some suggest this mechanism should be part of adaptation, others want it to focus on residual risks that remain after adaptation efforts have been taken.
As a contribution to the WIM discourse, we recently suggested an approach organized around climate risk management, involving the principle of risk layering. We propose that the WIM can build on this principle to distinguish between risk layers to be managed and residual risk layers ‘beyond adaptation,’ thus involving both equity and efficiency aspects: (i) Equity in terms of financially supporting countries particularly vulnerable to climate change in their efforts to manage risks and deal with the burdens ‘beyond adaptation’; (ii) Efficiency in terms of helping to identify best practice for managing risk through well-designed risk prevention, preparedness and financing measures that address high and low frequency climate-related events.
We argue that the risk layering perspective may contribute to taking the WIM discourse over the apparent red negotiation lines if financial support is coupled with well-targeted risk management efforts – such as coordinated nationally through national platforms for disaster risk reduction,
Notions of risk management have been fundamental for the WIM. In Lima the parties discuss whether to accept a two-year work plan, which was put together with input from policy, science and practice. The work plan would give a strong role to risk management and, among others, would seek advice on “enhanced understanding of how comprehensive risk management can contribute to transformational approaches.”
Inauguration ceremony of COP20 in Lima. Credit: Ministerio de Relaciones Exteriores, Peru
Transformational risk management approaches have been promoted by the disaster risk management community over the last few years in seeking a better balance between pre-event risk management and post-event relief and reconstruction (currently 15% of overseas development assistance goes into pre-event efforts vs. 85% into post-event). As a case in point, regional risk pools (mostly covering climate-related risks) have been springing up in the Caribbean, Pacific, and Africa. These efforts are first and foremost focussed on mutually financing risk, but can also be seen as a first step to a comprehensive approach for reducing and financing risks.
For example, the African Risk Capacity (ARC) pool provides quick finance to provide relief after drought events, and has aimed at linking these efforts to improvements in response planning and early warning. Innovatively, the ARC, initially capitalized by donor support and country contributions, currently explores to set up an Extreme Climate Facility for raising funding for any losses that can be related to climate change and may endanger the solvency of the ARC.
The idea is to monitor variability in a composite index of weather indicators over time and understand whether this variability can be attributed to climate change, which would then lead to a pay-out to the fund from this facility. While promising, the link to attribution is a key scientific challenge, and a number of principled and implementation-related questions for this particular facility as well as for the WIM in general remain open. These open questions will need further attention by science, policy, practice and civil society in the coming months in order to help achieve progress on the Loss and Damage Mechanism.
Reference
Reinhard Mechler, Laurens M. Bouwer, Joanne Linnerooth-Bayer, Stefan Hochrainer-Stigler, Jeroen C. J. H. Aerts, Swenja Surminski & Keith Williges. 2014. Managing unnatural disaster risk from climate extremes. Nature Climate Change. March 26, 2014. http://www.nature.com/nclimate/journal/v4/n4/full/nclimate2137.html
Note: This article gives the views of the authors, and not the position of the Nexus blog, nor of the International Institute for Applied Systems Analysis.
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