proposals on possible climate risk insurance architecture
emphasise prevention and insurance, but the AOSIS proposal also
had a rehabilitation component. "The AOSIS proposal ... has a
better chance of acceptance," noted Koko Warner, head of
Social Vulnerability and Environmental Migration department at the
UN University Institute for Environment and Human Security Section
(UNU-EHS), who also presented the other big insurance proposal at
the conference on behalf of the Munich Climate Insurance
Initiative (MCII). The
MCII was set up in 2005 by UNU-EHS, Germanwatch, a North-South
watchdog initiative, IIASA, the Munich Re Foundation, the Potsdam
Institute for Climate Impact Research, which researches
ecological, geophysical and socioeconomic aspects of worldwide
climatic change, the European Climate Forum, a platform for joint
science-based climate change studies, the Tyndall Centre, which
researches sustainable responses to climate change, The Energy and
Resources Institute (TERI), focusing on sustainable energy
development, the World Bank and independent experts.
Prevention Pillar of the MCII proposal makes reducing human and
economic losses its top priorities, and includes carefully
designed incentives for preventing or reducing risk. The proposal
calls for comprehensive risk assessments across vulnerable
countries, which could uncover unforeseen possibilities for risk
reduction and help lay the groundwork for risk transfer systems.
Insurance pillar has two tiers: first, a Climate Insurance Pool
that would absorb a pre-defined proportion of high-level risk of
disaster loss among the vulnerable; second, a Climate Insurance
Assistance Facility that would provide technical support and other
forms of assistance, allowing public-private insurance systems to
provide cover for the middle layers of risk in these countries.
AOSIS proposal suggested that rich countries pay for the insurance
from the Adaptation Fund. The Fund, which has yet to become
operational, is expected to raise money from a levy of about two
percent on credits generated by the Clean Development Mechanism (CDM),
set up under the Kyoto Protocol.
mechanism allows industrialised countries to earn and trade
emissions credits by implementing projects in either developed
countries or developing ones, and put the credits towards meeting
their greenhouse gas emission targets.
The UN has said that
$86 billion per year will be needed by 2015 for poor countries to
adapt to climate change, but according to some estimates the
Adaptation Fund will only reach $900 million by 2012.
MCII proposal suggested that vulnerable countries pool their
risks, which would cost them less.
As the conference reached
its last day, there was still dissatisfaction over the Adaptation
Fund: developing countries were unhappy with the management of
disbursement and the amount of money available, while sympathetic
rich countries like Germany said current resources for the
Adaptation Fund were inadequate.