Excellencies, Madam Mutale Nalumango, Vice-President of Zambia,
Excellencies, distinguished participants, ladies and gentlemen,
Greetings from Bangkok, Thailand,
It is my pleasure to join you today at the High-Level Dialogue on Accelerating financing for risk prevention.
I think we can all agree that we live in a richer but riskier world. No one knows what extreme event will be next and we need to make significant efforts to anticipate what lies ahead.
Within the framework of the Secretary General’s report “Our Common Agenda” at the global level, ESCAP’s common agenda and its associated Ministerial Declaration is a renewed common resolve among ESCAP’s members and associate members to jointly address and adapt to the increasing vulnerability to shocks including climate change and climate-induced disasters.
We expect the Ministerial Declaration will be adopted this afternoon at the closing of our Commission session.
Excellencies, ladies and gentlemen,
With climate change worsening the impacts of disasters on peoples and economies, raising financial resources to reduce disaster risks must be a common priority for the Asia-Pacific region.
Drawing from the findings of the our flagship Asia-Pacific Disaster Report 2021 let me share three messages.
First, under the worst-case climate change scenario, annual economic losses could rise to $1.3 trillion, or 4.2 per cent of the region’s GDP.
Second, annual adaptation costs under the same worst-case climate scenario could amount to $270 billion, equivalent to 0.85 per cent of regional GDP, significantly less than the estimated annual economic losses of 4.2 per cent of regional GDP.
Third, the increasing climate related disasters will have multiple impacts on the economic health of countries and their most vulnerable populations. For example, damage to assets will trigger the need for large post-disaster public finance investments that will increase governments’ fiscal risk due to higher contingent liabilities.
Food prices are expected to continue to rise as extreme weather events damage crops and reduce agricultural productivity, impacting the health and nutrition of people.
Additionally, a decrease in productivity due to the uncertainty about future losses will lead to high precautionary savings and a potential loss of livelihoods.
To lessen these impacts, allow me to suggest a few innovative financial solutions.
One, investing in key adaptation measures such as early warning systems, water resources management, infrastructure resilience and nature-based solutions that improve dryland agriculture crop production will provide the highest cost-benefit ratio.
Here, I am pleased to inform you that ESCAP’s Risk and Resilience Portal is an innovative web-based platform that can support sectoral prioritization of financing for climate adaptation.
Two, while donors, governments and multilateral development banks have gradually scaled up financial assistance for disaster risk reduction and climate adaptation, additional funding is needed.
Increasingly, countries are raising funds through thematic bonds that include catastrophe bonds. Likewise, it is important to link Nationally Determined Contributions to financing mechanisms such as debt-for-climate swaps.
Innovations in catastrophe risk modelling and the creation of parametric insurance instruments for risk transfer present further examples of the expanding and promising array of risk financing instruments available.
Last, there is scope to strengthen regional cooperation. In this regard, the proposal for a new ASEAN+3 initiative on Disaster Risk Financing that builds on the existing regional initiatives such as the ASEAN Disaster Risk Financing and Insurance (ADRFI) and the Southeast Asia Disaster Risk Insurance Facility (SEADRIF) is a step in the right direction.
Financing for adaptation and resilience pathways is key to being prepared for what lies ahead.
Towards this end, we look forward to working in partnership with UNDRR as well as all stakeholders.
Thank you very much.