The Economics of Climate-Resilient Development

The Economics of Climate-Resilient Development

Edited by Sam Fankhauser and Thomas K.J. McDermott

Some climate change is now inevitable and strategies to adapt to these changes are quickly developing. The question is particularly paramount for low-income countries, which are likely to be most affected. This timely and unique book takes an integrated look at the twin challenges of climate change and development. The book treats adaptation to climate change as an issue of climate-resilient development, rather than as a bespoke set of activities (flood defences, drought plans, and so on), combining climate and development challenges into a single strategy. It asks how the standard approaches to development need to change, and what socio-economic trends and urbanisation mean for the vulnerability of developing countries to climate risks. Combining conceptual thinking with practical policy prescriptions and experience the contributors argue that, to address these questions, climate risk has to be embedded fully into wider development strategies

Chapter 10: Insurance instruments for climate-resilient development

Swenja Surminski

Subjects: economics and finance, development economics, environmental economics, environment, climate change, environmental economics

Extract

Swenja Surminski 10.1 INSURANCE AND CLIMATE-RESILIENT DEVELOPMENT An important aspect of climate-esilient development is managing the r risks from growing climatic extremes, which pose a threat to both short- term economic stability and long-erm sustainable development (Benson t and Twigg, 2007). From 1995 to 2010,1 natural disasters affected 3.6 billion people and created $900 billion in damages in non- rganisation for O Economic Co- peration and Development (OECD) member countries. o Damages are rising further due to high population growth, an increase in assets in risk areas as well as the influence of climate change (World Bank, 2013). In its Fifth Assessment Report, the Intergovernmental Panel on Climate Change (IPCC) finds growing evidence of climate change as a ‘threat multiplier’, which together with a significant adaptation deficit in both developing and developed countries means that the magnitude of impacts and consequences of climate change is expected to increase s ignificantly (IPCC, 2014). An important example of how climate change and other risk drivers interact is population growth. About 800 million people are currently living in flood- rone areas, of which on average about 70 million people p are experiencing floods each year (UNISDR, 2011). Even without any climatic changes, the exposure of flood risk is expected to increase with population growth. A World Bank study into impacts of sea-evel risk l and storm surges for 393 cities in 31 developing countries found high asymmetries in projected impacts, when taking into account population growth and economic development: ‘Our results suggest...

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