Comprehensive Risk Management Promising pathways to avert, minimise and address Loss and Damage

Impacts of – a growing challenge Averting, minimising and addressing Loss & for sustainable development Damage – international policy discourse Impacts of climate change can already be felt today. Recent The topic of growing risks from climate change is reflected in climate projections anticipate a significant increase in the fre- the international policy agendas of the Sendai Framework, as quency and/or magnitude of events such as part of the United Nations International Strategy for ­Disaster storms and floods as well as slow-onset changes, for instance Reduction (UNISDR) and the United Nations Framework and desertification. These trends pose a growing Convention on Climate Change (UNFCCC). Under the ­UNFCCC, risk in all countries to achieve the sustainable development the topic of L&D has gained growing attention, which led to goals, particularly for poor and vulnerable people in develop- the establishment of the Warsaw International Mechanism ing countries. They affect livelihoods, ecosystems, economic for Loss and Damage (WIM) in 2013. In 2015, the Paris Agree- performance, key assets and jeopardise poverty eradication ment emphasised its importance by introducing L&D as achievements. standalone article.

Irrespective of ongoing climate policy efforts, some degree “Parties recognize the importance of of residual risk of climate change remains in all countries for averting, minimizing and addressing loss all plausible scenarios. They affect human and natural systems and damage associated with the adverse and may result in economic and non-economic losses and damages. To effectively respond to the entire spectrum of risks, effects of climate change….” the diverse set of adaptation approaches needs to be under- ARTICLE 8 OF THE stood as complementary pieces of a puzzle, linking existing with more innovative tools in a more comprehensive way. This would allow managing these growing risks effectively to avert, minimise and address loss and damage.

Under all assessed scenarios for mitigation and adaptation, risk from residual damage is unavoidable (very high confidence). IPCC 2014

Published by: Averting, minimising and addressing L&D – To avert L&D, mitigating greenhouse gases and sustainable a risk-based approach development at global level remain paramount. To minimise L&D, it combines a smart mix of instruments that are already GIZ advocates a risk-based approach to manage L&D. By applied in climate change adaptation and disaster risk reduc- analysing risks and identifying suitable solutions on a technical tion. These tools are complemented by more innovative level, this approach supports decision makers from the public adaptation tools, such as risk finance and transformational and private sector in forward-looking planning. approaches to address L&D. These tools include risk insurance, social protection, human mobility, flexibility in decision making Comprehensive Management (CRM) is an and adaptive management. approach that aims to manage risk along the entire risk continuum, from short-term extreme weather events such as CRM implies that all sectors factor risks into plans, including storms and floods to long-term gradual changes such as sea considering how risks may affect action across sectors. At pre- level rise and desertification. Instead of applying individual sent, existing approaches to include CRM and L&D in national and standalone measures, it involves a combination of proven policy rely on their strong linkage to and possible integration and innovative instruments that enlarges our understand- into current processes such as National Adaptation Planning ing of adaptation as integrated, participatory and iterative (NAP), development planning, existing Disaster Risk Reduction approach to manage climate-related risk. and Management (DRR/DRM) policy, as well as the (re)orienta- tion of national policies towards sustainable development. Institutional integration is crucial for mainstreaming CRM and L&D considerations into new and existing development plan- ning and budgeting processes, within all relevant institutions, sectors, and levels.

© e) G ag I Z am / G D lo nd ba a l P ss ro Lo gr e ( am ng m ha e o e C n R at isk Clim Asse n to ssmen ptatio t and Management for Ada DECISION MAKING & IMPLEMENTATION CLIMATE RISK ASSESSMENT Based on the identified CRM measures and related costs, Climate risk assessment builds the foundation for ­successful CRM. ­decision makers from the public and private sector are enabled­ By identifying risk, assessing the magnitude of impacts on people, to better prioritise, fund and implement options assets and ecosystems CRM shows ­possible options for action and (How will we respond?). answers the question: How could we respond?

Monitoring and evaluating the implemented measures­ leads The assessment shows how climate change and extreme weather to continuous learning that feeds into the CRM cycle and events interact with socio-economic factors. The interaction informs future decisions. of these factors determines the overall risk for the affected population. The assessment includes evaluating the magnitude of the expected impacts and identifying the costs and benefits of the most promising risk management options. Opportunity costs show that anticipatory planning pays off. This integrated evaluation demonstrates effective measures for dealing with risks and forms the basis for the integration of climate policy measures into public budgets and national policies.

© e) G ag I Z am / G D lo nd ba a l P ss ro Lo gr e ( am ng m ha e o e C n R at isk Clim Asse n to ssmen ptatio t and Management for Ada

CLIMATE RISK MANAGEMENT MEASURES To identify the smartest mix of instruments, it is crucial to and marginalised populations on top of the cost-benefit-ratio of understand the organisational and economic ability of countries, ­measures. Uncertainty regarding future climate change implies communities and the private sector to adapt and respond to risk. that measures of incremental­ nature will not always be sufficient. These factors play an important role for identifying the right In addition, measures that have transformational character and measures ensuring climate-resilient development pathways. Due involve fundamental changes need to be considered to appropri- to the partly subjective nature of risk assessment, it is not pos- ately manage current and future climate-related risk. sible to identify appropriate CRM measures solely through cost benefit analysis. Many important aspects cannot be quantified Comprehensive climate risk management builds on the strong and/or monetized but might have a significant impact especially participation of stakeholders from different sectors and scales. It on poor people. Identifying appropriate measures is context-spe- proposes a set of instruments that enables stakeholders to take cific and needs to consider the following factors: a suitable com- timely action for enhancing preparedness to climate-related bination of different measures, measures that foster sustainable extreme events and for strengthening overall resilience, including development and stakeholder participation to include affected slow-onset events: Averting L&D – mitigation and sustainable development at global level The magnitude of adverse impacts by climate change depends largely on the global emissions pathway in the coming years and decades. To keep climate change manageable, climate change mitigation is paramount. Hence, taking action to keep global warming well below 2° C compared to pre-industrial levels, as agreed to in the Paris Agreement, and to even limit it to 1,5° C, is an important step for managing climate-related risk.

Sustainable development at all levels includes using or switching to low-carbon transportation and lifestyles. Sustainable development paths offer multiple co-benefits­ such as better air quality and energy access. Adaptation measures like afforestation of mangroves and agroforestry entail similar co-benefits.

Minimising L&D – smart combination of proven tools already applied in adaptation Main definitions according to the IPCCC and disaster risk reduction Impacts Instruments that are already applied in the field of climate change “[…] Impacts generally refer to effects on lives, livelihoods, adaptation (e.g. “-resistant crops”, “climate-proof cities health, ecosystems, economies, societies, cultures, services, and infrastructure”, ecosystem-based adaptation) are combined and infrastructure due to the interaction of climate changes with tools of disaster risk reduction (e.g. contingency planning, or hazardous climate events occurring within a specific early warning systems). time period and the vulnerability of an exposed society or system. […]”

Incremental Adaptation “Adaptation actions where the central aim is to maintain the Addressing L&D – innovative adaptation essence and integrity of a system or process at a given scale.” instruments, e.g. risk finance and insurance as well as transformational­ approaches Transformational adaptation “Adaptation that changes the fundamental attributes of a © e) G ag Addressing L&D is another critical pillar of adaptation and I Z am system in response to climate and its effects.” / G D ­comprehensive CRM. lo nd ba a l P ss ro Lo gr e ( Risk am ng Risk finance mechanisms such as climate risk insurance, contin- m ha e o e C n R at gency funds and social protection schemes can foster resilience “The potential for consequences (= impacts) where something isk Clim Asse n to ssmen ptatio to climate change by spreading risks across different actors, of value is at stake and where the outcome is uncertain […]. t and Management for Ada geography and time. These mechanisms also gain importance for Risk results from the interaction of vulnerability, exposure, and addressing residual risks. To continuously ­manage remaining risks, hazard […].” two options exist: risk transfer or re-entry of residual risk into the risk management cycle. Source: IPCC WG II AR5 Glossary 2014 Instruments for addressing L&D are not only of incremental ­character. In addition, transformational approaches such as diver- sification of livelihoods, flexibility in decision-making and adaptive management approaches are needed in order to adapt to change and to reduce the risk of loss and damage. In addition, human mobility has been and will be an important part of development – with or without climate change. Migration can be an important adaptation strategy. It is already widely used in regions experienc- ing climate variability, e.g. seasonal labour migration. Migration and planned relocation, as a last resort, can reduce the risk of loss and damage. FACTS & FIGURES

The impacts of climate change from e.g. rising sea levels and soil salinisation (slow onset events) or tropical storms, From the 1980s to 2013, floods and heatwaves the average number of (extreme weather events) are natural catastrophes increasing. has nearly doubled. 95 % Munich Re, NatCatService of agriculture in Sub-Saharan Africa is rain-fed, thus exposed to changed rainfall Over 70 % of patterns. total economic IWMI, 2009 damage Extreme weather events from disasters alone caused a damage of The impacts on are weather 100 Billion USD public health, and climate related. in 2014. culture and World Bank, 2017 ecosystems 60 % of that damage are particularly affecting developing countries. Munich Re, NatCatService serious.

Meteorogical events

Hydrological events

Climatological events

Geographical overview of relevant weather-related loss events worldwide 1980 – 2016 Source: Munich Re Main recommendations to foster a comprehensive approach to climate risk management KEY MESSAGES 1. Foster dialogue and raise awareness on comprehensive ➔ The adverse impacts of climate change are already CRM approaches and L&D e.g. through ­programmes offer- visible today: over 70 per cent of total economic ing capacity development and dialogue facilitation, involv- damage from disasters are weather and climate ing relevant institutions at national and sub-national levels. related (World Bank, 2017). Effects on public health, culture and ecosystems are particularly serious. 2. Support a holistic and adaptive approach that links communities, local authorities, and national action. ➔ The topic of growing risks from climate change is reflected in international policy agendas, particu- 3. Improve existing approaches and methodologies larly under the United Nations Framework Conven- to assess actual and future climate-related risk based on tion on Climate Change (UNFCCC): In 2013 the existing methodologies from the field of climate change Warsaw International Mechanism for Loss and adaptation and disaster risk management (such as risk Damage (WIM) was established and in 2015 L&D assessments and post disaster needs assessments). Be was introduced as standalone article in the Paris aware that CRM is context-specific and there is no universal Agreement. solution. ➔ Comprehensive Climate Risk Management (CRM) is 4. Identify gaps and expand the set of effective CRM an approach to assess and manage climate-related measures to address risks e.g. on approaches on how to risks along the entire risk continuum, from short- better deal with L&D from slow onset changes, tools to term extreme weather events to long-term gradual deal with non-economic L&D or innovative instruments to changes such as sea level rise and desertification. finance CRM-measures. ➔ To avert L&D, mitigating climate change glob- 5. Generate experience and good practices by concrete ally remains paramount. To minimise L&D, CRM demonstration of activities and projects. combines a smart mix of instruments that are already applied in climate change adaptation and disaster risk reduction. These tools are comple- mented by more innovative adaptation tools such as risk finance and insurance as well as transforma- tional approaches.

Published by Deutsche Gesellschaft für On behalf of Federal Ministry for Economic Internationale Zusammenarbeit (GIZ) GmbH Cooperation and Development (BMZ) Registered offices: Division Special Unit Climate Bonn and Eschborn, Germany Addresses of BMZ Bonn BMZ Berlin Global Programme on Risk Assessment and Management the BMZ offices Dahlmannstraße 4 Stresemannstraße 94 for Adaptation to Climate Change 53113 Bonn, Germany 10963 Berlin, Germany T +49 (0)228 99 535-0 T +49 (0)30 18 535-0 Dag-Hammarskjöld-Weg 1-5 | 65760 Eschborn, Germany F +49 (0)228 99 535-3500 F +49 (0)30 18 535-2501 T +49 6196 79-4218 | F + 49 6196 7980-4218 www.giz.de [email protected] www.bmz.de As at February 2019 Photo credits Title photos: © Flickr / Australian Department of Foreign GIZ is responsible for the content of this publication. Affairs and Trade; © GIZ / Horst Vogel; © GIZ / Michael Siebert Contact Dr. Michael Siebert | E [email protected] Inner pages: © Pixabay Last page: © GIZ / Ala Kheir