By Kees van der Geest, Michael Zissener, and Koko Warner, United Nations University Institute for Environment and Human Security (UNU-EHS). (Southasiadisasters.net issue No. 109, April 2014)

Loss and Damage refers to adverse effects of climate variability and climate change that occur despite global mitigation and local adaptation efforts. In 2012-2013, UNU-EHS coordinated nine case studies that assessed loss and damage in vulnerable communities. This was the first-ever multi-country study of its kind, and included three South Asian case studies (Bangladesh, Bhutan and Nepal, see www.lossanddamage.net). The project yielded important insights in local communities’ efforts to avoid climate-related losses and damages, and it showed how and why people’s coping and adaptation measures fall short (see Warner and van der Geest, 2013). Below, findings from Bangladesh are summarized. Across the region, micro-insurance could play an important role in making rural households less vulnerable to loss and damage. Timely payouts after hazards strike can prevent people from entering a vicious circle of poverty and increased vulnerability.

Satkhira is a coastal district in Bangladesh. It faces the double threat of sea level rise and cyclones. Both result in saltwater intrusion, which has severe impacts on rice cultivation, the mainstay of the local economy and the principal source of food for the majority of the population. Salinity in soils has increased sharply. Eighty-one per cent of the survey respondents reported high salinity levels in their soils, compared to just two per cent 20 years ago. To adapt to higher salinity, farmers planted new, saline tolerant-rice varieties. This strategy worked reasonably well until 2009, when cyclone Aila hit the area and caused a sudden and drastic increase of salt content in the soil. Almost all farmers in the area lost their complete harvest that year. In the two subsequent years, salinity levels were still too high and rice yields were extremely low (more details in Rabbani et al., 2013). Complete harvest losses and poor yields in three consecutive years were clearly beyond people’s capacity to absorb, and this pushed them deeper into poverty, making their livelihoods even more vulnerable than they already were.

Rural households in Nepal experienced similar losses due to flooding (Bauer, 2013), and in Bhutan, farmers were affected by changing monsoon patterns that reduced water availability for rice cultivation (Kusters and Wangdi, 2013). If farmers in these vulnerable communities had access to affordable insurance solutions, some of the most erosive effects on livelihood sustainability could be avoided.

The Munich Climate Insurance Initiative (MCII), hosted at UNU-EHS, studies the potential of micro-insurance to prevent people from falling into extreme poverty when they are hit by climate hazards. MCII initiated a project in the Caribbean piloting insurance solutions for low-income households against excess rainfall and high wind speed. Recently, MCII extended its activities to Pakistan, where it collaborates with the Pakistan National Disaster Risk Authority and the Climate and Development Knowledge Network (CDKN) to explore design options for a disaster risk insurance framework for vulnerable communities (http://www.climate-insurance.org).

Insurance can help manage loss and damage from weather extremes in ways that bolster efforts to achieve climate resilient development. Risk assessment, which is at the core of any insurance solution, can help identify climate stressors, exposures and thresholds and strengthen preparedness. Prudently employing a combination of insurance approaches with risk reduction measures, such as early warning, education, disaster-proof infrastructure and investment in more sustainable livelihoods, reduces societal disruption when extreme weather events happen. Approaches that manage impacts of unexpected extremes can help developing countries and communities create necessary buffers, for example by providing financial liquidity through fast payouts immediately after an event. Further, such approaches can help the international community better plan financial needs for adaptation and managing loss and damage (Warner et al., 2012).

References (all open access):

1. Bauer K. (2013). Are preventive and coping measures enough to avoid loss and damage from flooding in Udayapur District, Nepal? Int. J Global Warming, Vol. 5, No. 4, pp. 433-451.
2. Kusters, K. and Wangdi, N. (2013). The costs of adaptation: changes in water availability and farmers’ responses in Punakha district, Bhutan. International Journal of Global Warming Vol. 5, No. 4, pp. 387-399.
3. Rabbani, G., Rahman, A. and Mainuddin, K. (2013). Salinity induced loss and damage to farming households in coastal Bangladesh. International Journal of Global Warming Vol. 5, No. 4, pp. 400-415.
4. Warner, K. and van der Geest, K. (2013). Loss and damage from climate change: Local-level evidence from nine vulnerable countries. International Journal of Global Warming Vol. 5, No. 4, pp. 367-386.
5. Warner, K. et al. (2012). Insurance solutions in the context of climate change-related loss and damage: Needs, gaps, and roles of the Convention in addressing loss and damage. Policy Brief No. 6. Bonn: UNU-EHS.

Disclaimer: The views expressed in this piece are those of the author/s and do not necessarily reflect the views or policies of AIDMI.