The risk of hurricanes and tropical storms in the Caribbean could be greatly increased by climate change, threatening future development in the region, according to a new study from the Caribbean Catastrophe Risk Insurance Facility (CCRIF), a risk pooling facility, owned, operated and registered in the Caribbean for Caribbean governments.
Damage from storm surge, wind and inland flooding already stands at 6% of GDP in some Caribbean countries, but under a high climate change scenario annual expected losses could rise by another 1% to 3% of GDP by 2030, according to the study’s preliminary results.
The study covers eight countries in the region – Anguilla, Antigua and Barbuda, Barbados, Bermuda, the Cayman Islands, Dominica, Jamaica and St. Lucia. It was commissioned by the CCRIF to assess the rising risks climate change poses to the region’s economies and to identify cost-effective ways to manage them.
Analytical support to the project has been provided by a number of public and private entities, including global reinsurer Swiss Re, which contributed expertise in natural catastrophe modelling and risk assessment to quantify climate risks and estimate their potential local impact. “Developing countries can reduce local climate risks by combining prevention and risk transfer measures. CCRIF shows how climate risks can be transferred away from public budgets to the commercial insurance market, thus pre-financing disaster recovery efforts,” said Andreas Spiegel, Senior Climate Change Adviser at Swiss Re.
According to the study many affordable adaptation measures are available to decision-makers to address climate change effects. The Cayman Islands for example could cost-effectively avoid up to 90% of expected losses by implementing risk mitigation initiatives such as enforcing building codes and constructing sea walls.
Risk transfer also plays a key role in helping communities deal with the financial consequences of severe weather events and natural disasters. In Dominica for instance, the study indicated that only 2% of the calculated loss can be averted cost-effectively using risk mitigation measures. In order to address the remaining risk it is economically more effective to buy insurance rather than build physical defences.
For more information, visit the CCRIF website.