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The Role of Financial Services in Climate Adaption in Developing Countries

Listed author(s):
  • Holger Hoff
  • Koko Warner
  • Laurens M. Bouwer

Finance and insurance industry ("financial services") can play a key role in climate adaptation, by reducing and transferring risks. However, financial services are largely absent from developing countries with their highly vulnerable economies and livelihoods. The financial services sector claims in particular a lack of business opportunities for that. We provide examples of innovative financial tools such as micro-credits, index-based insurance, government supported insurance pools, international re-insurance and adaptation and new partnerships between private sector, governments, civil society and international organisations, that support pro-active adaptation to climate change and disaster reduction, and thus reduce the costs of climate change. In some cases these tools have been introduced successfully in developing countries. Through partnerships with the financial services sector, currently fragmented adaptation activities can be integrated and mainstreamed with development goals and natural resource management. Science can support these partnerships e.g. with climate scenarios and assessments of future risks and hotspots for intervention. Der Finanz- und Versicherungssektor (im folgenden Finanzsektor genannt) kann Klimarisiken mindern und damit eine zentrale Rolle bei der Anpassung an den Klimawandel spielen. Allerdings ist der Finanzsektor gerade in den Entwicklungsländern mit besonders hohen Klimarisiken und hoher Klimavulnerabilität kaum präsent, wofür insbesondere das Fehlen von Geschäftsmöglichkeiten verantwortlich gemacht wird. Wir stellen eine Reihe von innovativen Finanzsektorwerkzeugen wie Mikrokredite, indexbasierte Versicherungen, Versicherungspools und internationale Rückversicherungen und Anpassungsfonds sowie neue Partnerschaften zwischen Privatsektor, Regierungen, Zivilgesellschaft und internationalen Organisationen vor, die pro-aktiv die Anpassung an den Klimawandel und gleichzeitig den Katastrophenschutz unterstützen und damit die Kosten des Klimawandels vermindern können. In einzelnen Fällen sind solche Werkzeuge bereits erfolgreich in Entwicklungsländern eingeführt worden. Durch geeignete Partnerschaften mit dem Finanzsektor können bislang noch fragmentierte Anpassungsaktivitäten zusammengeführt werden. Dabei ist Klimaanpassung mit Entwicklungszielen, Katastrophenschutz und natürlichem Ressourcenmanagement zu integrieren. Die Wissenschaft kann solche Partnerschaften z.B. durch Klimaszenarien sowie Abschätzungen von zukünftigen Klimarisiken und kritischen Hotspots unterstützen.

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Article provided by DIW Berlin, German Institute for Economic Research in its journal Vierteljahrshefte zur Wirtschaftsforschung.

Volume (Year): 74 (2005)
Issue (Month): 2 ()
Pages: 196-207

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Handle: RePEc:diw:diwvjh:74-2-7
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  1. Arrow, Kenneth J & Lind, Robert C, 1970. "Uncertainty and the Evaluation of Public Investment Decisions," American Economic Review, American Economic Association, vol. 60(3), pages 364-378, June.
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