Climate Risk Insurance for Resilience: A Systematic Review
Abstract
This study developed and conducted a systematic mixed-methods grey literature methodology to characterise and identify climate risk insurance initiative in building resilience in developing countries. The study found that climate risk insurance can help developing countries build resilience against extreme weather events. However, there are barriers to the initiative. This is because of the issue of lack of climate data instruments. The collaboration between the public and private sectors is one way to overcome the challenges of implementing climate risk insurance. This systematic review methodology presents crucial insights on the state-of-the-art knowledge on climate risk insurance and resilience in developing countries.
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Introduction
According to the Munich Re’s NaCatService, climate change impacts have quadrupled since 1992 (Schaefer & Waters, 2016). Climate change, harsh conditions like weather-related disasters, as well as slow-onset change like rising sea levels, undermine sustainable development and resilience, hinder socio-economic development and fortify cycles of poverty across the world(GIZ & BMZ, 2015).
Going by the 5th Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), the risks associated with harsh weather conditions will further increase with rising temperatures (Schaefer & Waters, 2016). This will lead to increasing poverty, especially in developing countries where they have a weak adaptive capacity and most of their citizens are engaged in commercial and subsistence farming for their livelihoods(Barrett et al., 2007).
The poorest in the world, especially the women bear a disproportionate burden of climate stress, despite the fact that they contribute less to the harming of the environment(Schaefer & Waters, 2016). Harsh weather conditions are reinforcing poverty cycles and the immediate-future predictions affirm that climate change will extremely increase the number of poverty-stricken people in developing countries (Hallegatte et al., 2016). As a result, there is growing need to support the most vulnerable people and poor countries in establishing effective strategies to manage risks and unexpected shocks and build resilience to climate change impacts (Schaefer & Waters, 2016). One feasible strategy to support the poor is through the climate risk insurance initiative (Lashley, 2012). Climate risk insurance is an instrument that provides security against loss of assets, livelihoods and lives arising from harsh weather conditions by providing effective and expeditious post-disaster relief on individuals, communities, national and regional levels(Schaefer & Waters, 2016). To understand the connection between climate risk insurance and resilience, four key questions were asked: 1) Can climate risk insurance help developing countries reduce climate risk today? 2) What are the multiple factors driving climate risk insurance initiative? 3) What are the impacts?4) What constitute barriers to climate risk insurance? To answer these research questions, a systematic review of grey literature was undertaken. Certainly new in climate change research, systematic reviews present encouraging method to identify, analyse and synthesise a huge volume of literature (Porter et al., 2014). Contrary to conventional literature reviews, where search or selection criteria are often ambiguous and hardly favored, systematic reviews are more clear, understandable and reproducible (Porter et al., 2014).
The aim of this paper is to frame major issues and summarize the current state of knowledge about climate risk insurance as it relates to helping the poor to manage risks and unexpected shocks and build resilience to climate change impacts. The remainder of this paper is structured as follows: Section 2 demonstrates the methodology employs. Section 3 presents the results. Section 4 discusses the results and section 5 presents the conclusions.
Conclusion
Systematic review formed the methodology of this study which examines the current state of knowledge of climate risk insurance in building resilience in developing countries. The study focused on grey literature for data collection because most studies on climate risk insurance were reports, documents and projects of organizations that are stakeholders in the climate risk insurance initiative.
The findings from the systematic reviewed showed that climate risk insurance can help individuals, communities and poor countries build resilience against extreme weather events. In addition, climate risk insurance is motivated by the impacts of climate change and evidence from this study has shown that some farmers have benefited from the initiative. Despite the importance of climate risk insurance, there are still barriers to the imitative in some developing countries. If developing countries need to embrace the climate risk insurance initiative, the governments should be fully involved because no one is immune when extreme weather events occur. Building public-private partnership will go along way in making climate risk insurance a successful apparatus for resilience in developing countries.
