The bank’s new chief Ajay Banga unveiled the measure at a global leaders’ summit in Paris as part of a raft of tools to help nations dealing with a crisis.

He said this will allow countries to “focus on what matters to their leaders when a crisis hits and stop worrying about the bill that’s going to come”.

Many countries at the forefront of the climate crisis already have some of the highest levels of debt distress, meaning they are unable to meet financial obligations.

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Today’s announcement marks an important victory for Barbados prime minister Mia Mottley and her Bridgetown agenda, as her campaign to reform global finance for the climate era is known.

Step forward

Speaking at the gathering she helped convene with French President Emmanuel Macron, Mottley hailed recent progress. “Nine months ago, no one was speaking about natural disaster clauses,” she said. “Now, we have people wanting to recognise the wisdom of it because countries do need to pause debt payments if they’re going to house and feed people who are victims of a climate crisis”.

In a press release, the World Bank said it would initially trial the clause with its most vulnerable borrowers, hoping to expand it to all clients in the future. It also announced other measures including options for countries to redirect a portion of their funds for emergency response and the provision of new types of insurance. 

About three-quarters of developing countries’ debt is to the private sector. About a quarter is to multilateral development banks like the World Bank and less than a fifth is owed to governments, mainly China and the big developed nations.

Dileimy Orozco, senior policy advisor at E3G, told Climate Home News that debt suspension “is not the holy grail, but it is a step forward as it will give countries some breathing space in case of disaster”.

Separately, the United Kingdom, the United States and France have announced plans to offer similar debt relief measures to certain borrowers.

The UK’s export credit agency is in discussion with twelve countries in Africa and the Caribbean to allow them to defer debt repayments if they are hit by climate catastrophe, the government said today.

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The US plans to begin incorporating disaster-related debt clauses in the bilateral lending done through its export credit agency by the end of the year. The measure will be applied “on a transaction-by-transaction basis, looking at where they are most needed”, Patricia Pollard, a US Treasury official, told a panel discussion in Paris.

France is also working towards integrating debt suspension clauses in the concessional loans disbursed by its development agency, the country’s development minister Chrysoula Zacharopoulou announced on Thursday.

Debt traps

Most countries facing a high risk of climate disasters are already “drowning in debt”, according to an analysis by the campaigning group ActionAid. Debt distress is affecting, for example, Mozambique and Malawi, where the passage of Cyclone Freddy killed thousands of people and caused $1.5 billion in damages earlier this year.

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Without relief measures, natural disasters can easily push vulnerable countries into a costly debt spiral, the report said, as they have to keep paying back their existing loans while taking on even more debt by borrowing the money needed to respond to the crisis.

Debt piles can rise quickly. Covering the costs of catastrophe is expensive for countries that have to pay more to borrow money because of the perceived risk of lending to them. The average cost of borrowing for a group of 58 climate-vulnerable nations is 11%, according to a study by the Boston University Global Development Center. This is much higher than borrowing costs for developed countries.

Breathing space

Pakistan has been particularly vocal about the risks of a climate “debt trap”. The South Asian country was pushed to the brink of default last year. While flooding affected nearly a third of its territory last year, it owed billions of dollars in debt repayments.

Its former climate minister Malik Amin told Climate Home the World Bank initiative “could help Pakistan in creating badly needed fiscal space when it’s needed the most to deal with the ever-increasing climate impacts it is facing such as super floods, glacial bursts and unliveable heat waves”” 

After today’s announcement, the World Bank will now need to put the scheme into practice. This means establishing which countries could qualify and setting criteria for when a debt suspension would be triggered.

Barbados’ template

Mia Mottley’s Barbados could come again to the fore as a model of how to implement a natural disaster clause. The island nation was among the first to insert payment suspension measures when it restructured its existing debt in 2019. In the case of a catastrophe, the clause will allow Barbados to free up an estimated $700 million, or almost 15% of its economy, in debt repayment for emergency response, rebuilding and recovery.

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E3G’s Orozco says the clause will also send an important signal to credit agencies, which affect borrowing costs with their assessments. “It will tell the market that debt can be caused by these external shocks, not bad economic management,” she added.

Some vulnerable countries and campaigners would like to see the World Bank – and other major lenders – go further and offer debt cancellations in case of disasters.

While these clauses can work well for climate disasters that happen suddenly, like the storms Barbados suffers from, Mottley said they may not be as suitable for disasters like droughts which happen at a slower pace. “We need to perfect it”, she said.

The article was updated after publication to include debt suspension measures announced by the United States and France.

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In UN jargon it is known as Long Term Finance.

What it really means is the money that will be used from 2012 onwards, when the current package expires, to fund cuts in global greenhouse gases and projects to help countries adapt to the new challenges thrown out by climate change. It is targeting a tally of $100bn annually by 2020.

It sounds fairly straightforward, just fundraising on a massive scale.

The Bangkok monsoon floods in 2011 cost $46bn, but should an intense monsoon season attract climate finance? (Source: UN/Mark Garten)

But when you start to look closer, the complexity is enormous. How much money is needed? Does damage from an intense storm season qualify for funding? Who should distribute it, governments, development banks, the UN?

Most importantly, who should pay for what and where will the money come from? New taxes? A carbon price? Diverted fossil fuel subsidies?

Through the UN climate talks, nations have set the target of raising $100bn annually for the Green Climate Fund (GCF). Negotiations on how to get the GCF up and running in time for 2020 are picking up pace with the first workshop on Long Term Finance taking place in Bonn this week

Just opened first long-term #climatechange finance workshop. Looking fwd to seeing new ideas & solutions flow! Join in with hashtag #LTFchat

— Christiana Figueres (@CFigueres) July 9, 2012

Well known development economist and advisor to UN Secretary General Ban Ki-moon, Jeffrey Sachs kicked off today’s proceedings.

He called for a strong price on carbon, which would mean big polluting industries paying a set figure for each ton of carbon that they emit.

“The world will need to find a way to overcome the US and a few other countries resistance to carbon pricing,” said Sachs adding that that price needed to be between $30-50 per ton. The price on the EU-wide carbon trading scheme is around $10.

@JeffDSachs People are terrified by what is happening to climate. If politicians lead, will find that public already ahead of them#LTFchat

— UNFCCC (@UN_ClimateTalks) July 9, 2012

Manuel Montes from the developing world think tank the South Centre ran through some of the estimates of how much money is needed. Two things became clear, the figures involved are mind-boggling and the estimates disparate.

Looking through a number of reports from academics and institutions such as the IEA and the World Bank, a “ball-park” figure of $1.6 trillion emerges.

In figures:

$46 billion: The cost of the Thailand floods in 2011. There is debate as to whether extreme weather events should be counted as climate finance

100,000: The number of people that would need to be relocated in the Caribbean is sea level rises 1m

$1.6 trillion: The rough estimate for the annual cost of adapting to climate change

1800%: The growth in investment in renewable energy in Africa in the last seven years

$3.4 billion: The amount of money for climate change mitigation and adaptation distributed by the Global Environmental Facility since 1992

Critics

The response from delegates to the morning session was varied with numerous concerns raised.

Surya Sethi, a former Indian climate change negotiator, said he was concerned with the responsibility for climate finance being entrusted to the markets – not a new sentiment but one that has gained traction in UNFCCC talks given the series of banking disasters over the past five years.

“The banks have shown that they cannot stably supply mortgages. They can manipulate the Libor rate with an exchange of emails. We must be mad, or smoking something we shouldn’t be to turn to the markets,” he said.

Another Indian delegate said she did not believe that carbon trading was a fair response for the international climate change talks to pursue, calling requests for developing countries to contribute to climate finance as “a double blow”.

Salman from Saudi Arabia (which despite sitting on the world’s second largest oil reserves is classed as a developing country) gave a telling indication of the global south’s intentions and desires:

#LTFchat #SaudiArabia“We are here to learn from developed countries how they plan to mobilise 100 billion a year by 2020”

— Alix Mazounie (@ClimatAlix) July 9, 2012

A Ugandan audience member described how concerned he was that climate finance was being viewed as a business opportunity.

“For us this is not about chasing a few percent of profit. This is about our livelihoods, our survival and social development.”

Sticking to the script

Ultimately, those with an attachment to a country delegation have stuck to the same lines that we see at the negotiations. Developing nations called for assistance to adapt, both in terms of cash and technology. Developed countries meanwhile, have been championing the role of the private sector.

The sensitive subject of Common But Differentiated Responsibilities (CBDR), which is written into the UNFCCC’s guiding principles, is at the heart of finance debates. With the current funding mechanism ending next year, the inescapable issue of the rich/poor divide will have to be overcome or the costs could be borne by all.

Tomorrow the focus is on Sources of Climate Finance – be it development banks, new policies or more involvement from the private sector. It is the key issue in this vital debate.

You can follow what is discussed on our live blog and also via a UNFCCC webcast.

The post Who pays for climate change: What we learnt after day one of the UNFCCC finance workshop appeared first on Climate Home News.

The 2010 floods in Pakistan displaced 14 million people, 60% were children. (Source: UN/UNICEF/ZAK)

Children have a key role to play in climate change adaptation and disaster relief work, according to a new study.

As one of the groups of society most severely affected by disasters and the consequences of climate change, the report calls for children to be placed front and centre in both policy making and in community projects on the ground.

The paper by the Institute of Development Studies stresses however that this work must be done under the right conditions.

“We have to start putting children at the heart of disaster risk reduction and climate change adaptation work,” Tom Tanner, IDS Research Fellow and co-author of the report.

“Programmes need to recognise that children are especially vulnerable to disasters and need protection. But more than that, children themselves have a critical role to play in tackling extreme events and climate change. They have the right to participate in decision-making, as citizens and active agents of change,” said Tanner.

The paper reviews two case studies in the Philippines and El Salvador.

In the Philippines a youth group took part in a mangrove re-planting exercise in conjunction with an NGO. The children combined knowledge gained at school with additional skills learned from the project. The mangroves improved biodiversity, provided storm protection, boosted fishing and sequestered carbon dioxide.

“Our research has shown the variety of ways that children can be involved – whether through designing and implementing projects, analysing risk, or mobilising others to take action,” said Tanner.

“At a local level, these include facilitating youth groups, identifying community champions and creating safe spaces to build trust.”

Projects such as those detailed in the IDS paper are in sharp contrast to climate change attitudes in parts of the developed world.

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The post Children key to community climate change action appeared first on Climate Home News.

Vietnamese child in Thai refugee camp (source: UN/John Isaac)

Over 100 million children and young people are affected by disasters every year, according to the UN International Strategy for Disaster Reduction.

Children are also often most vulnerable to disasters finding it harder to cope with the unexpected interruptions to their lives.

But, children and young people can make a significant contribution to disaster reduction as well, creating a positive change for the future.

A report ‘Enabling Child Centred Agency in Disaster Risk Reduction’ (DDR) produced by Children in a Changing Climate said: “When children learn and practice DDR from a young age, behaviour change becomes embedded in their lives at such an early stage that it will be passed on to subsequent generations when they become adults.”

The group – a joint initiative by UNICEF, Plan International, World Vision and Save the Children – also produced the Children’s Charter, aimed at raising awareness of the both protect and engage children in DRR.

The charter aims to be “for children by children” and involved consultation with 600 children in 21 countries in Africa, Asia and Latin America

Disaster Reduction through schools

ActionAid also believes that by working with children in schools, DRR reaches the hub of the community. Nearly every town or village has a school, so provides an opportunity to reach not only to children but parents, teachers, community elders and local and national authorities.

Their five year ‘Disaster Risk Reduction through schools’ project saw DDR embedded into the national curriculum in Nepal, while in other countries the lessons the children learnt made them agents of change.

John Abuya, from ActionAid said: “Children act as excellent messengers of a culture of prevention – spreading the word amongst parents and the wider community about the need to prepare for disasters.

“They need to understand why disasters happen, when they will happen and what they can do when it happens, and how to live in a way that makes disasters less likely to happen.”

For example when in November 2007, Cyclone Sidr hit Bangladesh; ten-year-old Lamia Akter was able to get her family to safety. She said: “When Sidr came we went to many houses. When I first told my parents they did not want to come. I was crying and very afraid. I said to mum and dad, if you don’t come then let me go. Then my parent said okay let’s go.”

The programme also works to secure schools and local buildings, creating shelters for the community and ensuring education is not disrupted by disasters.

A five-year project, funded by the Department for International Development in the UK and the Greek government, it worked with communities across nine countries – including India, Haiti, Kenya and Ghana.

ActionAid is currently working to give climate change adaptation a central role in DRR.

Opportunities in Adaptation

Climate change adaptation is not only about disasters though, and a new project from the UN aims to open up new opportunities, teach new skills and supply a regular income to the young unemployed.

Under the Climate Change Adaptation and Development Initiative (CC DARE) – a joint project by the UN Environment Programme and the UN development Programme – adaptation is combined with creating opportunities in sub-Saharan Africa and Small Island Developing States.

For 25-year-old Haleka Shisay, from the Tigray region of Ethiopia this opportunity came in the shape of beehives. The CC DARE programme aimed to not only give opportunities to the young and help tackle climate change but also address the food crisis in Ethiopia.

The drought which hit the Horn of Africa hit Ethiopia – where 85 per cent of people depend on agriculture.

Beekeeping has historically been an important income generating activity in the region, and the new project aims to teach young people about keeping bees.

The project has also seen over 1,000 trees and shrubs critical to bees planted, which will help to reduce climate risks associated with loss of water resources.

The post Putting children at the heart of climate change risk reduction appeared first on Climate Home News.