Ahead of the 2015 United Nations Climate Change Conference in Paris in December, twenty climate-vulnerable nations urged governments to scale-up finance needed for climate action and to help countries to become more resilient to the worsening impacts of the climate change.
Finance ministers from the so-called Vulnerable Twenty (V20) group of countries spanning from Africa, the Caribbean, Latin America, Asia and the Pacific, met for the first time in Lima, Peru on October 8 scrambling to strengthen and promote economic and financial cooperation and action to address climate change risks and opportunities, with the aim to facilitate the transition to a low carbon, resilient global economy.
World leaders from 195 countries will convene in Paris, France to hash out their countries’ carbon reduction pledges.
Representing over 500 million people and are highly vulnerable to climate change, the 20 countries led by the Philippines, unite to “foster a significant increase” of public and private finance for climate action from wide-ranging sources, including international, regional and domestic mobilization.
Philippines Finance Minister Cesar Purisima said that climate change has already held back global development by close to 1% of the world GDP emphasizing that the additional economic costs from climate change amounted to USD 44.9 Billion in total for the V20 countries.
“ Inaction is set to cost us even more,” Purisima said in his speech during the meeting in Lima, adding that the cost is set to multiply almost 10 fold by 2030, amounting to USD 418 billion given this rate of climate degradation.
“In the absence of an effective global response, annual economic losses due to climate change are projected to exceed US$400 billion by 2030 for the V20, with impacts far surpassing our local or regional capabilities,” Purisima stressed.
The V20 was born out of the Climate Vulnerable Forum (CVF) composed of vulnerable nations, specifically the Costa Rica Action Plan, which emphasized Finance as a main tool to combat Climate Change.
“ We understand the power of finance as a mobilizer in climate action. Together, we will strive for pioneering innovative solutions to finance climate action. It is our responsibility to our constituents to be financially and economically prepared to minimize the long-term disruption of climate change,” Purisima said.
Money talks in fight vs climate change
Purisima noted that a 2014 United Nations report counts that climate change displaced 22 million people, 19 million of whom come from Asia, 1.4 million of whom was displaced by Typhoon Haiyan alone.
The World Bank said that in the last four decades, climate and weather related disasters were reported to have increased nearly five-fold, with economic losses increasing from about $150 billion in the 1970s to $850 billion in the last decade. Without decisive and concerted action, this can only get worse.
The Inter-governmental Panel on Climate Change (IPCC) has predicted that so-called ’20-year storms’ will become more frequent, and rising sea levels will put thousands of communities at greater risk of storm surges and flooding.
“ As we look forward to COP21 Paris, we target strong policies to combat climate change. I hope this meeting injects inspiration and renewed energy for our climate initiatives and proves to be a fruitful avenue for our efforts,” Purisima said.
Internationally there has been steady progress towards the goal of mobilizing $100billion a year in public and private finance for climate action in developing countries, and the Green Climate Fund has been established with pledges of around $10 billion for its initial implementation period. Historical climate finance flows however have been weighted towards mitigation actions (over 90%) highlighting a critical imbalance in the face of vulnerable countries’ exposure to large-scale climate shocks.
But according to the newly released study by the Organization for Economic Cooperation and Development (OECD) and the Climate Policy Initiative, developed countries mobilized climate finance in 2014 of about USD 62 billion or almost two-thirds of the finance goal.
Nevertheless the V20, and other developing countries stressed that they are already taking pioneering action across a wide range of climate finance solutions. These include, among other things: green bonds, catastrophe bonds and other risk sharing and insurance mechanisms, concessional guarantees, debt swaps, non-financial de-risking programs, fiscal coding initiatives, and feed-in tariffs.
“Our goal is the same as yours – an accord of high ambition and commitments backed by strong political will. We must have an agreement and follow through that results in low-carbon growth and much greater resilience to stronger storms, more intense droughts and higher sea-levels,” said World Bank Group President Jim Yong Kim in a statement. “ By joining together, you’re creating a powerful coalition to force international action in response to climate change and other natural threats. Your advocacy will play a critical part in helping us achieve our twin goals of ending extreme poverty by 2030 and boosting shared prosperity.”
Climate action is possible
The V20 cries out to the Paris climate talks that ambitious climate action is possible, said Renato Redentor Constantino, executive director of the Institute for Climate and Sustainable Cities (iCSC), who was also present at the Lima meeting.
” Here we have ministers of finance themselves looking at practical ways to make the resources needed for climate action a reality. Of course, international support is critical, but the ambition to overcome the finance challenges could not be more concrete,” Constantino said. ” They’re going to build on innovative responses already in place in many of these 20 countries. If the vulnerable can greatly increase investment in climate action, we should be able to have greater confidence in the abilities of major economies and the UNFCCC to deliver.”
Constantino added that the finance ministers are focused on investments and actions that responds to climate change while contributing to helping mitigate its worst impacts.
” It’s about time the voice of finance ministers hold greater sway on the climate debate as it is the treasuries of vulnerable countries that ultimately take on the brunt of climate crisis,” he said, adding that it is particularly elating that the Philippines has played an important leadership role in elevating the work of the V20.
“This is not a typical group of major economies. Instead we represent countries put at high risk by the economic failures to address climate change,” said Jose Francisco Pacheco, Vice Minister of Finance of Costa Rica, calling the event today in Lima “historic”.
Dr. Atiur Rahman, Governor of the Bangladesh Bank said,: “We want to the world to know that we will not overlook the perils that our economies have been placed at due to the shortcomings, particularly of action by major economies. The world also needs to know that working together our vulnerable countries are doing everything in our power to bring the climate crisis under control, and we won’t relent until we’ve succeeded in our ambition.”
In Lima, Finance Ministers agreed to establish a sovereign V20 Climate Risk Pooling mechanism to distribute economic and financial risks, enabling participating economies to improve recovery from climate-induced extreme weather events and disasters and to ensure enhanced security for jobs, livelihoods, businesses and investors. Modeled on similar regional facilities, the trans-regional mechanism would increase access to dependable and cost-efficient insurance while incentivizing scaled-up adaptation measures.
The V20 countries committed to develop or improve their financial accounting models and methodologies to enhance accounting of climate change costs, risks and response co-benefits in all their forms, while seeking a new international partnership to help realize the group’s aims.