Today the International Panel on Climate Change (IPCC) released its firstspecial report on “Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation”. The report concludes that anthropogenic activities are increasing the frequency of extreme weather events and thus we can expect heat waves, droughts and storms to hit more often and more intensely and rainfall patterns to change.
Communities fleeing the floods in Pakistan in 2010 photo taken by Oxfam
These eventual outcomes have severe implications for the worlds poorest and highlight the urgent need to accelerate progress towards a low-carbon economy. They also incite a re-look at climate adaptation policy and how the EU is helping vulnerable countries to prepare.
At the Copenhagen summit, rich countries pledged to spend $100 billion a year, helping developing countries to deal with climate change. New research indicates that the delivery of this funding is actually more positive than expected. The Climate Policy Initiative estimate that some $97 billion has been transferred annually through public and private investment, around $93 of which has been spent on renewable energy.
Nevertheless, many NGOs point out that this money is not ‘additional’ to conventional development funding that would have been spent anyway. What’s more, the focus on energy projects, although important, ignores the more basic needs of poor and rural communities, such as switching to more resilient crop species, water management, and indeed, resilience to disasters, such as cyclones, flooding and drought.
Microfinance offers an important part of the solution to this problem. In regions hit by natural disaster, a strong microfinance presence has been proven to greatly assist recovery by helping people to rebuild their homes, crops and businesses. By providing access to finance, as opposed to say food aid, microfinance also ensures that local farmers are not cut out of the market by an influx of free produce. Aid organisations receiving a sudden surge of disaster related donations are now more often turning to local MFIs to assist in the assessment of needs and delivery of support by scaling up their activities at the local level.
In addition to disaster responsiveness, research also indicates that microfinance organisations are naturally promoting disaster preparedness by assisting the process of development and improvements in infrastructure. A recent OECD review found that some 43% of current microfinance activities in Bangladesh were also enhancing resilience to climate change. Some MFIs have also started to develop a more specific focus on financing activities to reduce long-term vulnerability to climate risk, including the provision of loans for flood-proof housing, crop diversification and irrigation.
Embedded within communities, microfinance organisations are well positioned to understand the needs of communities and react to them. If the finalisation of the Climate Fund is one of the most anticipated outcomes of the Durban process, there ought to be a stronger consideration of how these funds can actually be delivered on a sub-national level to help vulnerable communities to prepare for disasters. Up-scaling support to microfinance organisations and tapping into their extraordinary network of local capacity would then be one sensible course of action.
