The Private Sector Opportunities for Engaging in Preparing and Implementing the Strategy for Disaster and Climate Resilient Development in the Pacific
Private Sector Perspectives • Climate change is primarily an environmental rather than a development issue; • Climate change is still unproven; • At worst, it is a future rather than current risk, beyond timeframes relevant for investment purposes; • Hence improving climate resilience takes the form of risk avoidance, only generating a return if and when an extreme event occurs; • The political process, including the climate change convention and related negotiations, is notably lacking inputs from the private sector. Source: Biaginia and Miller, 2013
E.g. Avatiu Harbour, Rarotonga. A climate ready port. Private investment largely determines disaster & climate risk E.g. Over water tourist accommodation In a cyclone prone area.
Why Be Involved in Resilient Development? • For your economic interest - many of private sector investments are at significant risk – managing these risks will make these investments and the returns less risky, and more profitable in the longer term; • For your clients’ interest – in addition to the economic argument, there is also the ethical imperative for sustainable investment and business practice; • For the interests of your country(ies) of operation.
The Economic Argument • The total value of the infrastructure, buildings and cash crops in the Pacific islands region that is at risk from tropical cyclones, earthquakes and tsunami is estimated to be over USD 112 billion. • This translates into annual average economic losses being as high as 7% of gross domestic product (GDP), with disaster losses in any single year sometimes exceeding the GDP. Source: World Bank, 2012
Ways the Private Sector is Involved • Developing and marketing products and services that will reduce the costs and impacts of climate change and natural hazards; • Awareness raising, including potential risks and response measures; • Capacity building to train private entities how to manage climate and disaster risks: • Changing regulations, policies and institutional arrangements; • Developing and marketing insurance products; • Public-private partnerships and efforts that promote private sector responses; • Entrepreneurship development/encouragement that opens new private sector opportunities for increasing the resilience of development outcomes.
Pillars of Disaster and Climate Resilient Development Capacity for Implementation Managementof New and Emerging Issues Low Carbon Development Strengthened Disaster Preparedness, Response and Recovery Strengthened Risk Management
Approaches to Resilient Development Capacity for Implementation Reduce Exposure Transfer and Share Risks Increase Resilience to Ongoing Risks Capacity for Implementation Prepare, Respond and Recover Low Carbon Development Reduce Vulnerability
Relevance to the Private Sector Reduce Exposure Exposure - the presence of assets in potentially damaging settings.
Relevance to the Private Sector Increase Resilience Resilience - the ability of a system and its component parts to anticipate, absorb, accommodate, or recover from the effects of a potentially adverse conditions.
Relevance to the Private Sector Low Carbon Development Low carbon development – emphasises development that increases energy efficiency and conservation, fuel substitution through development of renewable energy, and ecosystem conservation such as the sustainable management of forests and the enhancement of forest carbon stocks.
Relevance to the Private Sector Reduce Vulnerability • Vulnerability – the propensity of exposed assets to be harmed when impacted by adverse conditions. Avatiu Harbour, Rarotonga. A climate ready port.
Relevance to the Private Sector Prepare, Respond & Recover Disaster management - lessens the impact of disasters through preparedness, response and recovery initiatives
Relevance to the Private Sector Transfer and Share Risks Transfer and Share Risks – pooling resources via taxation, insurance or investment in order to reduce individual exposure to risk.
Discussion How can the private sector contribute to resilient development: • through strengthened risk management; • low carbon development; • strengthened preparedness, response and recovery; • clarification and management of emerging issues?