Study: climate change threatens Caribbean development
A study released by the Caribbean
Catastrophe Risk Insurance Facility and reinsurer Swiss Re predicts that the
costs resulting from hurricanes and other extreme weather events could double
in some Caribbean countries over the next 20 years.
The warming climate has already
affected the Caribbean, Edwin Carrington, the secretary general of CARICOM, noted
in the foreword to the report ‘Enhancing the climate risk and adaptation fact
base for the Caribbean’.
“Temperatures in the Caribbean have
increased by about 1°C during the last century, while sea level rise has
reached about 2-3mm per year since 1980,” he wrote. “These conditions were
compounded by significant changes in precipitation patterns in the region,
thereby increasing the economic and social vulnerability of the entire region.”
Risk rises for Cayman
The study found that wind, storm
surge and inland flooding damage account for up to 6 per cent of some nations’
GDP, with costs expected to rise by 1-3 per cent by 2030. For Cayman, the study
expects the losses from climate risks to rise from 5 per cent of GDP today to 7
per cent of GDP by 2030. Only Jamaica faces proportionally higher costs from
climate change, potentially rising to 9 per cent of GDP 20 years from now,
according to the report.
The study considered the potential
damage caused by hurricane winds and costal flooding and storm surges. In the
Cayman Islands, coastal flooding and storm surges account for 45 per cent of
the damage, in contrast to other Caribbean countries where overall 90 per cent
of the damage is the result of hurricane winds.
The research investigated the
impact of climate change on Anguilla, Antigua and Barbuda, Barbados, Bermuda,
the Cayman Islands, Dominica, Jamaica and St. Lucia. It aimed to identify the
most cost-effective means of managing the challenges resulting from climate
“The CCRIF study on the economics
of adaptation exemplifies how climate adaptation works in practice,” said Swiss
Re’s Senior Climate Change Adviser Andreas Spiegel. “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,”
The CCRIF is a risk pooling
facility designed to limit the financial impact of natural catastrophes on
Caribbean member countries.
The CCRIF study distinguished
between numerous risk mitigation and risk transfer measures. Risk mitigation
could include investment into infrastructure such as hurricane shutters or
seawalls and the strict enforcement of building codes. Risk transfer entails
traditional insurance-based solutions as well as alternative risk transfer
instruments such as cat bonds.
“As a global reinsurer, we are
already exposed to the effects of climate change. Projected climate patterns
are likely to heighten the risks,” said Swiss Re’s Head of Sustainability David
Bresch. “This is why climate adaptation is a core part of our business.”
In Cayman, up to 90 per cent of the
expected loss in 2030 could be averted cost-effectively using risk mitigation
measures, the report said. It stated that the potential for cost-effective risk
mitigation was highest in Cayman among all analysed countries. This is due to
comparatively high value of properties, which warrants additional investment into
damage mitigating construction techniques or building fittings.
The relatively high exposure to
flood risk in Cayman also makes mitigation efforts, for example seawalls, more
cost-effective than in the other analysed countries, the report explained.