Putting disaster risk at the heart of climate finance

by Richard Pyle, G7 Strategic Lead, Centre for Disaster Protection

One of the big debates at this week’s pivotal UN climate summit in Glasgow will be the size and shape of the package of finance to help low income countries adapt to the devastating effects of climate change.

One area of particular concern is whether money is making its way to the least developed group of countries (LDCs) and those places that are particularly vulnerable to climate shocks. 91% of deaths from climate hazards occur in lower-income countries yet the LDCs have received less than 3% of the funds they need to adapt to climate change. 

A task force led by the UK and Fiji to tackle this problem is expected to publish their recommendations imminently, and while the focus of this work is finance for climate mitigation and adaptation, there are similar concerns about international finance used to prepare for and respond to climate-related disasters.

This funding has not been traditionally viewed as ‘climate finance’, but it is an important piece of the climate finance puzzle. With some climate change already ‘locked in’ to our future, regardless of mitigation efforts, it is imperative that the system we use to finance disasters is shaped to operate in a warmer world with greater risk.

The international crisis financing system has been in full flight since the pandemic, and while covid-19 and climate change are very different crises and difficult to compare, they are both global in nature and will involve many of the same actors. So it is concerning that funding for covid-19 has not prioritised the countries with the biggest expected increases in poverty. Centre research into the flows of finance in the first year of the crisis showed that countries that are expected to see the largest increases in extreme poverty have received US$41 per capita, compared to US$108 per capita in countries with minimal increases in extreme poverty. 

As the Crisis Lookout coalition has identified, the current system the world uses to pay for disasters is characterised by mismatched allocations, delays in getting resources to the frontline, and a lack of predictability that leaves vulnerable countries unable to finance their long-term resilience plans. There are a complex set of drivers of this dysfunction, but at the heart of the problem lies the discretionary nature of how crisis finance is deployed. Decisions on how much, in what form, when, and to whom finance is allocated are based not on a systematic understanding of vulnerability to disaster risk, but on a patchwork of competing and often arbitrary qualifications including the media worthiness of the disasters - the so-called CNN effect.

What is missing from the system is a comprehensive analysis of disaster risk, including hazards linked to climate change, that could lead to more agreement about what the greatest threats are to life and livelihoods at the local, regional and global levels. By better engaging with risk, the international system could arrange most funding ahead of a crisis, according to the risk profile of a country or region and the likely costs to frontline communities, that could then be released the moment disaster strikes, meaning a faster and more focused response.

We already have the tools to predict most disasters, and the knowledge and expertise to arrange funding ahead of time to be released the moment trouble arises - or even before. Yet we still wait until after a disaster has occured before we find the money to help. 

At a time of ever-increasing risk, COP26 could mark the beginning of the end of the begging bowl system the world uses to pay for climate disasters. World leaders could come together to choose a new system where funds for climate crises find their way to those whose lives and livelihoods truly hang in the balance.

If you’d like to show your support for the Crisis Lookout coalition and help build a truly global coalition that provides innovative solutions, then please see how others have got involved and get in touch if you’d like further information.