No one on the planet will be untouched by the damaging effects of global warming, according to the latest report from the Inter-governmental Panel on Climate Change (IPCC). One of the areas hit hardest by changing global weather patterns is the agricultural economy, particularly in developing nations who are believed to be the ones most exposed and vulnerable to the effects of climate change.
With these issues in mind, Willis hosted a gathering of food security experts, climate scientists, business leaders and international development agencies on April 3, to discuss urgent priorities and how to take action in response to the IPCC’s findings.
The publication of the IPCC’s assessment provides another warning about the escalating threat of global warming and increasing incidents of extreme weather. But – even more importantly – the effects of climate change are already evident in several regions of the world.
Agriculture is highly sensitive to climate variability and weather extremes. Food prices have spiked on a number of occasions following climate extremes in recent times, driven in particular by poor wheat and maize yields.
The IPCC anticipates with ‘high confidence’ that “projected changes in the frequency and severity of extreme climate events will have more serious consequences for food and forestry production, and food insecurity” in the future.
Furthermore, recent research by the Institute of Development Studies (IDS) published at the launch of Oxfam’s Growing a Better Future (GROW) campaign suggested a strong upward trend in world market prices of the main traded staple crops over the next 20 years, with a significant portion of the increase caused by climate change.
It is thought that the effects of climate change, including increased drought, reduced surface and ground water and poorer soil quality, will exacerbate threats to food supply in already food insecure areas – such as sub-Saharan Africa and South East Asia. The vulnerability of poor or developing regions also limits their ability to adapt to these extremes.
Speaking at the event in London, Rowan Douglas, CEO of Willis’ Capital, Science and Policy division, summed up the consensus view:
There is no single actor who can address the issues facing the global agricultural sector today. It will be the result of a concerted effort involving key players and institutions in capital, science, and public policy.
“All farmers operate in a system and there is a need to change the rules of the game,” continued Douglas. “This is not to say that insurance should become compulsory for all farmers, but that the risks faced by farmers around the world should be accounted for within the financial system.”
The actions discussed to help tackle these growing problems ranged from new technology, to better farming practices and increased investment in developing countries. One common theme was the strength that the private sector – particularly the financial sector – could bring to bear for the benefit of exposed populations.
Better Risk Management Required
Participants at the event were unanimous in the belief that a greater focus on climate risk management is required.
There are reasons to be optimistic rorecasting is improving. Only recently the UK’s Met Office claimed that extreme winters will be able to be predicted with greater reliability as a result of the “best long-term weather forecast model” developed by scientists. This breakthrough could well have a noticeable impact on the economy, allowing councils and airports to anticipate the amount of grit and anti-freeze that will be required, for example.
Insurance was also highlighted as a tool that helps businesses, communities and governments adapt and build resilience to climate risks. Innovations within the insurance space can also assist. New types of cover, such as this risk-transfer solution placed by Willis last year, employ ‘parametric triggers’ based on physical features such as wind speed or rainfall volume, and allow for a quick pay-out time.
Furthermore, in January, the United Nations Office for Disaster Risk Reduction (UNISDR) announced that they had teamed up with the global insurance industry to propose a major new approach to catastrophe risk financing for the Philippines in advance of this year’s typhoon season as the country continues to deal with the economic fall-out of $13 billion in losses from Typhoon Haiyan/Yolanda.
Announcing the initiative the Head of UNISDR, Margareta Wahlström, said:
The Philippines is hit by over 20 typhoons every year. What is needed is a simple scheme which will provide valuable protection to people and municipalities before the next typhoon season. In order to be successful it will require mandatory take-up by local government units but it will make them masters of their own destiny when it comes to responding to relief and recovery needs in the wake of a major disaster event.
Guest blogger Sophie Abraham is Policy Analyst for the Capital, Science & Policy Practice at Willis, working closely with the United Nations Office for Disaster Risk Reduction (UNISDR) and the wider financial and private sectors on developing and incorporating the business elements to the design and implementation of the Hyogo Framework for Action, a global framework for disaster risk reduction adopted by the Member States of the United Nations. Its overarching goal is to build the resilience of nations and communities to disasters by achieving substantive reduction of disaster losses.