SHARM EL SHEIKH, (Egypt): A program to provide rapid financial support to communities affected by climate disasters was launched on Monday by a group of wealthy and developing countries at the UN COP27 summit in Egypt.
The ‘Global Climate Risk Shield’ comes as many of the most vulnerable countries are also demanding wider compensation for the ‘loss and damage’ they have already suffered from a warming planet.
The initiative, backed by the G7 and launched with initial funding of more than $200 million, aims to provide “prearranged financial support designed to be deployed rapidly in the event of a climate disaster”.
The Global Shield project “is long overdue,” said Ken Ofori-Atta, Ghana’s finance minister and chair of the V20 group of nations most vulnerable to the effects of climate change.
“It was never about who pays for loss and damage, because we pay it,” he said in recorded remarks at the summit in the Egyptian resort town of Sharm el-Sheikh.
“Our economies pay it in lost growth prospects, our businesses pay it in business interruption and our communities pay it in lost lives and livelihoods.”
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He said he hoped the project would help the most vulnerable communities, but also help to better understand the challenges facing emerging economies as they are hammered by floods, heat waves or droughts induced by the climate.
A first group of countries that will benefit from the program includes Bangladesh, Costa Rica, Fiji, Ghana, Pakistan, the Philippines and Senegal.
Nations at COP27 agreed this year for the first time to put the thorny topic of loss and damage on the official agenda, after years of reluctance from wealthier polluters reluctant to create accountability unlimited.
Germany said the Global Shield program, largely in the form of insurance that pays out immediately after — or even before — a climate disaster, would be part of a larger effort to address loss and damage.
Svenja Schulze, Germany’s minister for economic cooperation and development, stressed that the scheme was not “a tactic” to circumvent calls for a specific loss and damage financing mechanism.
“The Global Shield is not the one and only solution for loss and damage, certainly not,” she said, adding that more funding will be needed to cover more countries.
“Those most affected by climate impacts need practical action now.”
The Global Shield is designed to provide a range of financial, social and credit protection and insurance against loss of crops, livestock, property and other assets.
He also promises to support the rapid delivery of funds for humanitarian agencies responding to disasters.
A formal stream of loss and damage funding would likely go further, also covering longer-term climate impacts such as sea level rise and threats to cultural heritage.
Along with $170 million from Germany, the funding includes $20 million from France, $10 million from Ireland, $7 million from Canada and $4.7 million from Denmark.
France later said its total commitment would be $60 million over three years.
The V20 bloc, made up of 58 developing countries, released a study this year that estimates countries have lost some $525 billion from climate impacts since 2000.
Ninety-eight percent of the nearly 1.5 billion people in V20 countries lack financial protection, he said.
“We’re talking about people living below the poverty line, they’re not going to buy insurance,” said Rachel Cleetus, chief climate program economist at the Union of Concerned Scientists.
“Insurance can help you up to a point, but climate change is now creating conditions in many parts of the world that exceed the limits of what is insurable,” she told AFP, referring to sea level rise, desertification and massive population displacement.
Teresa Anderson of ActionAid International said the program showed the global community recognized the need to act on loss and damage, but said it was a “distraction” from negotiations over a mechanism for funding dedicated to climate damage.
“Everyone knows that insurance companies, by their very nature, are either reluctant to provide coverage or reluctant to pay,” she said. “But when it comes to loss and damage, it’s a matter of life and death.”