Financing connotations to tackle climate change disasters

Published : 29 Aug 2023 07:22 PM

Extreme, deadly heat waves, fire and heavy rain have seen residents in North West Canada, parts of the mainland United States around Texas, Maui, an island in Hawaii, parts of Spain, parts of Africa, South Asia including Bangladesh grappling with severe climate crisis and consequent disasters. This scenario has led to a few hundred deaths, devastated homes and massive destruction of infrastructures.

Climate change has also impacted the Middle East and North Africa where summer this year has been very hot. Many in Iraq, Syria, Tunisia and Saudi Arabia have been severely affected. In Iraq, the middle of August has seen temperatures going above 50 degrees Celsius (equivalent to about 122 Fahrenheit) on a regular basis. The United Nations has said that Iraq is one of the five countries in this region most impacted by effects of climate change. The population there is now enduring its fourth consecutive year of drought.

 In Texas in early July, while residents were already having to cope with dangerous heat waves, severe storms severely affected that State’s northern territory. A month earlier, flash flooding had devastated homes and had led the Texas governor to declare that they were facing a disaster. In this context one has to recall what happened in Texas in 2017 when Hurricane Harvey and massive flooding resulted in the complete destruction of more than 15,000 homes and nearly US Dollar 125 billion in damage.

In early July, the state of Vermont was also affected by serious flooding, which resulted in battered bridges and roads. Environmentalists observed that nearly 10 inches of rain came down in one day in some areas of the State after tempests dumped up to two months of water in a matter of days. The flooding reached such devastating levels that led US President Joe Biden to declare an emergency.

Careful scrutiny has indicated that warming in Asia, particularly in the mountainous regions of northern India has almost doubled over the last 30 years. In addition, there has been inappropriate human activity like deforestation, road cutting, terracing and changes in the agriculture arena where crops are being grown which require more water. To this equation is also being included concrete infrastructures, including water-front hotels and homestays which are encroaching on sea beaches, mountain sides, riverbanks and basins. This has become true not only in India but also in Bangladesh- particularly in the south-eastern region. Since the last week of July and the beginning of August we have seen massive rainfall in different parts of India and Bangladesh and this has resulted not only in unfortunate deaths, destruction of roads but massive impact on connectivity and infrastructures.

It would be appropriate to refer here to observations made by environmental scientists that the climate shift is intensifying the water cycle and will continue to intensify as the planet warms. A number of factors are intensifying the water cycle, but one of the most important is that warming temperatures raise the upper limit on the amount of moisture in the air. That increases the potential for more rain.

Environmental analyst Manipadma Jena has observed that the Himachal Pradesh State in India received 250 millimeters or ten inches of rain in just four days, between 7 to 11 July, which accounted for almost 30 percent of the total monsoon rainfall in a year. This sent mountain rivers spilling over their banks into villages and towns and caused widespread flash flooding, mud, and landslides. Over the whole month of July, the State received 71 percent excess of 438 mm actual rainfall against 255.9 mm normal rainfall. This was the second highest amount of rainfall in that sub-region in 43 years, since 1980, according to the government’s meteorological department. This has apparently created its own unfortunate dynamic.

Himachal Pradesh has witnessed a six-time increase in major landslides in the past two years, with 117 occurring in 2022 as compared to 16 in 2020. This year until now, the state has witnessed 79 landslides and 53 flash flood incidents, with the monsoon only halfway, arriving in late June, as per the developing data. There have been 223 deaths from these disasters to date.

The local population as in the case of the hilly Districts in south eastern Bangladesh has also greatly suffered as a consequence- specially children. The worst floods in living memory in Chattogram, Cox’s Bazar and the three Hill Tracts Districts have caused damage to crops on 17,745 hectares of land worth about Taka 7 billion according to agriculture officials and also roads, educational institutions and houses. Bandar ban has suffered the most. There is also a shortage of drinking water.

There is one least common denominator that is emerging due to the effect of climate change. It is becoming clearer that there are not only two dimensions- adaptation and mitigation- but also the question of reconstruction with the help of financial assistance. The governments in question are trying their best but they are facing financial difficulties in completing necessary action as hoped for by the affected populations.

Financial analysts and economists have been monitoring the evolving drama with great care along with environmentalists and climatologists. 

In this context JK Sundaram and KW Yang have referred to the need for the World Bank to respond and help in mitigating the crisis. They have indicated that the World Bank plans to use public funds to subsidize private finance, ostensibly to mobilize more capital to address the climate crisis. However, the effort in this regard appears to be less of a solution than what it is meant to be.

It needs to be remembered here that rich nations have contributed most to the current climate crisis. They are primarily responsible for the historical emissions and greenhouse gas (GHG) accumulation of the last two centuries. Developing countries, especially in the tropics and sub-tropics, on the other hand have been victims of the current global warming. Such LDCs and other lower income developing countries need finance and other means to build resilience and to develop their efforts to move forward despite the evolving climate crisis. However, as has been revealed in the recent international conferences on climate change the participation of the richer countries has been less than desired. In most cases developing nations have been left to better cope with the crisis through their own efforts.

Analysts related to climate finance have drawn attention to the scenario where climate finance appears to have become increasingly commercial, not concessional. Instead of being able to effectively address the crisis, the required measures to enhance climate justice are being left behind. This unfortunate scenario does not suggest that rich nations are trying to achieve the promise made in the 2009 Copenhagen climate conference that there would be efforts to have an annual finance commitment of around US Dollar 100 billion. Environmentalists had expected this figure would be reached by 2020 and also subsequently increased further. Unfortunately, French President Macron’s recent summit has not indicated progress in the right direction. Instead of helping developing countries cope with more funds for adaptation, most available resources have been earmarked for mitigation. Official Development Assistance (ODA) has also fallen short of the promise of 0.7% of rich nations’ national incomes made more than four decades ago.

Meanwhile, the USA, the dominant World Bank (WB) shareholder, has blocked increasing WB capitalization, to circumvent China gaining more influence with a greater capital share.

Growing unhappiness with the scenario appears to have persuaded the World Bank to reveal a new plan in early 2023 for the global South- “Evolving the World Bank Group’s Mission, Operations, and Resources”.  It has been studied carefully but does not appear to have addressed the continuing contradictions in its operations.

It is unfortunate but notwithstanding being among the world’s largest public lenders, the WB has been slow to provide climate finance, and is already years behind schedule. It is not even aligned with the non-binding 2015 Paris Agreement goals, with new operations only scheduled to become aligned from mid-2023. In addition, analysts have pointed out that WB subsidiaries – the International Finance Corporation and the Multilateral Investment Guarantee Agency – will only become aligned from mid-2025, a decade after Paris. Also, its climate finance definition, data and corporate strategy has continued as contentious as before. Despite concern, the WB’s problematic 2017 Maximizing Finance for Development continues to promote commercial finance as the main source of development and climate funding. This has been interpreted as the World Bank wanting greater development and fighting of climate impacts from private commercial finance.

For obvious reasons developing country leaders and the civil society have indicated their disagreement with such a format. They have denoted that such an initiative is likely to worsen the problem of obtaining required funds even further for tackling losses and damages.

It might be difficult for the World Bank to take the desired measures because of its own internal regulatory legal format but if it is difficult for them to come forward by themselves- they could consider an alternative measure. The WB might seriously consider alternative measures whereby they could help the United Nations design and implement a comprehensive monitoring and reporting framework for all development and climate finance, including private finance.

By recognizing the international and intergenerational inequities of global warming, the World Bank according to JK Sundaram and KW Yang could become far more equitable by ensuring all nations develop sustainably while addressing the climate crisis. Such an initiative might face difficulty in the United Nations Security Council but it will help to underline that polluters need to pay based on common, but differentiated responsibilities principles, enshrined in international climate agreements. This is what is required as a model for climate reparations. especially for Africa, the least developed countries and small island developing states.

Such liquidity support will help medium-term recovery prospects.

Muhammad Zamir, a former Ambassador, is an analyst specialized in foreign affairs, right to information and good governance