climate risk management: monitoring, … risk management: monitoring, assessment, early warning and...

African Union Economic Commission for Africa

African Development Bank

Acting on Climate Change for Sustainable Development in Africa

Climate Risk Management: Monitoring, Assessment, Early

Warning and Response

Issues Paper #4

ADF VII • 10 - 15 October 2010 • United Nations Conference Centre • Addis Ababa, Ethiopia

Seventh African Development Forum

Seventh African Development ForumActing on Climate Change for Sustainable Development in Africa

Climate Risk Management: Monitoring, Assessment, Early

Warning and Response

Issues Paper #4

ADF VII • 10 - 15 October 2010 • United Nations Conference Centre • Addis Ababa, Ethiopia

African Union Economic Commission for Africa

African Development Bank


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OverviewI.

1. Therecognitionthatpeople influenceclimate,andthatour future climate depends upon our choices on global development paths,haveresultedinanumberofproposedglobalmitigation strate-gies.However,sciencealsoindicatesthatourclimatewillcontinuetochangesignificantlydespitethemostoptimisticmitigationscenarios.Whileglobalnegotiationsonmitigationcontinue,decisionmak-ersinAfricaandelsewhere,muststrivetodevelopabroad range of adaptation strategiestoaddresscurrentandfutureimpactsofclimatechange.

2. Muchadaptationtoclimatechangeinvolvesmanaging weather and climate riskswithknownandprovendevelopmentinterventions.Protectionfromweatherandclimaterisksisclearlyameasureofdevelopment.Climateriskmanagement(CRM)istheuseofclimateinformationtocopewithpos-sibleimpactsofclimatechangeondevelopmentandresourcemanagement.Itcoversabroadrangeofpotentialactionsincludingearlyresponsesystems,riskspreadingthroughdiversification,dynam-ic resource-allocation rules, financial instruments, infrastructuredesign and capacity-building. CRMseeksto minimize adverse outcomes and maximize opportunitiesinclimate-sensitiveeconomicsectorsthroughimprovedresourcemanagement.Itaddressesadaptationtoclimatechangeanddisasterriskreductioninanyclimatesensitivedevelopmentsectorbyfocusingonactionsthatcanbetakentodaytoimproveoutcomesandpreparedness,andbybetterunderstandingandthenanticipatinginteractionsofeconomic,environmentalandsocialsystemswithpossiblefutureclimates.

3. CRMisanewsciencefordevelopmentandassuch,muchisneededforitseffectiveimplemen-tationinAfrica.Capacity-buildingandsubstantialimprovementsindatasupply,climateservicesandsectoralmanagementpracticesareallessential,althoughitisimportantthatsuchdevelopmentsincor-poratetraditionaldisastercopingstrategies.

Main issues at stakeII.

A. Managing uncertainty in a changing climate

4. Inpractice,therequirementformitigatingandadaptingtoclimatechangehasbecomeanextraburdenformanydecisionmakers,whoareleftstrugglingtounderstandwhattheyshoulddo,giventheperceivedenormityofthechallengeandpaucityofrelevantandreliableinformationuponwhichtoact.Theuncertaintysurroundingfutureclimatemayresultinconfusion,paralysisorthecontinuationofbusinessasusual.However,managersroutinelytakeintoconsiderationuncertaintyassociatedwithrelativelyhighimpactsocio-economicdriversofchange.Forexample,economicplannersfactorintonationalplansassumptionsaboutdemographicchangessuchaspopulationgrowthandurbanization,despitehighlevelsofuncertainty.Climateuncertaintypresentsanadditionalchallenge,butshouldnotbeastumblingblockifitcanbedemystifiedandtreatedasanadditionalfactorimpactingonmanysec-torsandaspectsoflife.

5. Betterunderstandingofclimatevariability,andimprovedmanagementof itsassociatedrisks,presentsarealpromisetodecisionmakersseekingtounderstandhowtoadapttoclimatechange. The patternsofregisteredpastclimatesettingscantellussomethingaboutwhatfutureclimatecouldbe.Climate,bydefinition,isthemeanandvariationofweathermeasuredoveraperiodoftime,ranging


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frommonthstothousandsofyearsinsomecases.Changesinmeanclimatetendtobeincremental,thus, small,onayear-to-yearbasis, comparedwithnaturalfluctuations.Becauseof this, strategiesdevelopedtomanageandbuild resiliencetoyear-to-yearclimatevariabilitygoa longwaytowardsmanagingpossibleclimatechangetocome.

6. CRM in Africa.CRMislittlepracticedinAfrica,wherenationalandsubregionalweather,waterandclimateinstitutionsareoftenisolatedfrommainstreamdevelopmentworkandrelativelyunderre-sourced.Recognitionthatextremeeventscansignificantlyunderminepovertyreductioninvestments,hasledtoincreasedinterestininvestinginclimaterelatedinformation,researchandservices.ClimateforDevelopment inAfrica (ClimDevAfrica)Programme isonesuch initiativeaimedatstrengtheningspecializedinstitutionalcapacitiesinordertoprovideusefulandreliabledata-information-knowledgeandservicesinsupportofmoreeffectivedevelopmentpolicies,economicplans,socio-economicactivi-tiesandclimateproofinvestmentsacrosstheAfricancontinent.

7. Mainstreaming climate change in planning. Atlongertimescales,ignoringclimatechangeinplanningwillresultininefficientandsuboptimalinvestmentsanddecisions.Plannershavehistoricallymanagedclimateriskswithdifferingdegreesofsuccess,depending,inpart,uponthequalityandscopeoftheclimateinformationavailabletothem.Forexample,designingwaterreservoirsbasedonshortrecordsofriverflowshaveresultedininefficientconstructionsandinequitableoperatingruleswhenthe“expected”riverflowsdidnotoccur.Inplaceswithgoodclimaterecordsavailable,expectationsabouthowclimateislikelytochangehavebeendevelopedbycreatingsimulationsoffutureclimatethatareconsistentwithpastvariations.Thisinformationcanbehelpfultomanagersandpolicymakerswhenlookingatlonger-terminvestmentsandstrategies.

8. Developingthecapacitytomanageclimateuncertaintytodayandinthefutureisparamount. Whileoneclearwaytoreduceclimateuncertaintyistoobtainbetterinformation,thismaynotalwaysbepossible and there will always be a significant degree of irreducible uncertainty about our future climate.Aparticularchallenge inAfrica is thescarcityofquality climate information.Thishamperseffortstobettercharacterizethecurrentclimateandclimatechange.Despitescientificadvancesinun-derstandingandmodellingourclimate,thelargestelementofuncertaintyisourfuturedevelopmentandgreenhousegasemissionpath.Assuch,thereisneedforcontinuousclimateandenvironmentalmonitoring,regularvulnerabilityassessmentandreliableearlywarningclimateinformationsystems.Thereisalsoagreatdealofuncertaintyaboutfeedbackloopsandinteractions.Forexample,modellingtheimpactsofclimatechangeonasinglespeciesisrelativelyeasy;runningthesamemodel,consider-inginteractionswithotherspeciesandpressuresisverycomplexandinvolvesahighdegreeofuncer-tainty.

B. Apracticalapproachtoclimateriskmanagement

9. Apractical,problem-centeredapproachtomanagingclimateriskshouldbeadoptednowandinthefuture.Practicalsolutionsforsomeclimate-sensitivesectorshavebeenexperimentedrecentlyinAfrica.Thereisaneedtoupscalethemwhileimplementing“noregrets”strategiesandsafetynetsforthebenefitofthemostvulnerable.

10. Quick wins with CRM.Anadvantageoftheclimateriskmanagementapproachisthatitprovidesimmediateassistancetothepublicandprivatesectors,whilehelpingstakeholderstoconfrontpossiblefuture climate change scenarios. Climate riskmanagement identifies immediate actions needed tomanagetheclimatevariabilitythatiscurrentlyaffectingsocieties.Furthermore,theimpactsofpos-


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sibleinterventionsalsobecomeevidentandverifiableintheshortterm,makingthemmoreattractivetopolicyanddecisionmakers.AfricanclimateinstitutionsliketheAfricanCentreforMeteorologicalApplicationsforDevelopment(ACMAD),theIGADClimatePredictionandApplicationsCentre(ICPAC),theSADCDroughtMonitoringCentre(SADC-DMC)haveworkedontheCRMapproachinconjunctionwiththeInternationalResearchInstituteforClimateandSociety(IRI)andarebuildingcapacitiesforitssmooth integrationwithinsectoraldecision-makingprocesses,suchasagriculturalproduction,foodsecurity,waterresourcemanagement,healthprotectionanddisasterriskmanagement.

11. “NoRegrets”Strategiesandsafetynetsaredesignedtoperformwellinnormalorgoodyearsaswellasreducevulnerabilitiestoclimatevariabilityandchange.Theseareoftentechnologiesandpracticesgeared towards improvedefficiency; forexample,developingmarkets, integratingclimatemonitoringandseasonalforecastproductsintoresourceallocationdecisionsorrepairinginfrastruc-ture.Theyarealsothetypesoftoolsthatreduceexposuretoclimatevulnerabilitiesandenabletheopportunisticexploitationoffavourableclimateconditions,suchasimprovedearlywarningsystemsandrisk-transferinstrumentssuchasindexinsurance.

Managing climate risks: Multiple benefits through index insurance

Throughout theworld,crop insurancehasallowednationaleconomiestodevelopthe fullpo-tential of their agricultural sectorby transferringweather-related risks away from the farmer.Thisenablesagricultureandrelatedindustriestosustaineconomicgrowth,inspiteofseasonalvariabilityinproduction.InAfrica,“indexinsurance”isawaytoovercomeobstaclestotraditionalagriculturalinsurancemarkets.

Index insurance is linkedtoan ‘index’,suchasrainfall, ratherthancropfailure.The insurancecompanydoesnotneedtovisitfarmers’fieldstoassessdamagessocostsarelow.Iftherainfallamountisbelowthethreshold,thentheinsurancepaysout,andthefarmeralwaysmakesthebestdecisionsforcropsurvival.

IndexinsuranceforAfrica:InMalawi,theGovernmentusesindexinsurancetohelpsubsistencemaizefarmersproduceexport-qualitygroundnutsbymeansofcreditsearnedwithinsuredrepay-ments.InEthiopia,indexinsuranceisalsobeingusedtostrengthenthelivelihoodsofdrought-concernedvulnerable farmers.Furthermore, there isa successful scheme in force inKenya toprotectherdersfromdroughts.Indexinsurancehasalsobeensuccessfullyusedtohelpmanagewaterresourcesandirrigationschemes.Ithasthepotentialtospreadtheriskofclimateimpactsawayfromthemostvulnerable.

Rapidpayoutsareamajoradvantageofindexinsuranceaswell. InEthiopiaandMalawi,foodsecurityindexinsurancehasbeenexperimentedsuccessfullynation-widetoexpeditequickre-sponsesintimesofcrisis.

C. Institutionalandsystemsstrengthening

12. Empoweringdecisionmakerswithpracticalskillsinclimateriskmanagementtomeetthechal-lengesathand,inallsectorsandatallscalesofdevelopmentinAfricarequirescarefulinvestmentinpolicy,practice,servicesanddata.


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13. Improved policy requires supportingevidence fromthefieldandunderstanding thepossibleimpactsofclimatevariabilityandchangeofdevelopment-relatedoutcomesingeneral,andthesitua-tionofthemostvulnerablepopulationsatdifferentgeographicalscalesfromsub-nationaltoregionallevels.Evidenceonpossibleimpactsofclimatevariabilityandchangewillhelpmakethecaseforac-celeratedmitigationandadaptationmeasures.Improvedpolicyalsorequiresclosecross-sectoralcol-laborationtoensurethatpoliciesdevelopedinonesectordonotnegativelyimpacttheabilityofothersectorstocopewithfurtherinducedchanges.

14. Improved practice on a large scale requires investments in capacity-building, training pro-grammesandpolicydialogues,knowledgemanagementandgeneration,aswellasdisseminationofbestpractices,developmentofsuitabletoolsandtransferofappropriatetechnologies.DevelopmentofCRMmethodsandtoolsisessential,asistheirintegrationintorelevanteconomicandfinancialanal-yses,whichassessvulnerabilitieswhileweighingtherisksinvolved.Suchtoolscouldhelpimprovetheeconomicrationaleof informeddecision-makinganddebatesunderclimaticuncertainty. Integratedadvisoryservicesandnetworksofearlywarningsystemswouldalsobeofhighbenefittoallinvolved.

15. Improved climate-related servicesinpro-poorservicesrequirescapacitytotailorandcommu-nicateinformationtouserneeds.Improvedcommunicationisalsorequiredbetweenclimateserviceprovidersandkeyclimatesensitivesectors.Technicaladvisoryservicesonclimateriskmanagementprovidedbyexpertswithaviewtoenablingtranslationofclimateinformationproductsstillappearstobethemissinglink.WhileClimDevAfricahasstartedinvestinginupgradingofregionalclimateservicesbystrengtheningregionalandsubregionalclimatefordevelopmentinstitutions,thereisstillroomforscalinguptheclimate-relatedeffortsatcountrylevel,inthecontextoftheGlobalFrameworkforCli-mateServices.

16. Improved climate dataisindispensable.Dataincludesobservationsforlocaluse,nationalandregionalplanningpurposesandforglobalmonitoringofclimatechange,withparticipationoftheusercommunities.Whileclimatesciencehasmadesubstantialadvancesinrecentyearswithmorereliableclimateinformationnowbecomingincreasinglyavailable,itisessentialthatthisinformationbemadelocallyaccessibletothemostneedy,withfullownershipbytherelevantcommunities.ConcernsstillremainforCRMdeliveriesduetothedatapoliciesinforceincountrieswhichrestrictaccesstodata.

ConclusionIII.

17. CRMmustbecomeanintegralpartofthemanagementcultureof“climate-sensitive”develop-mentsectors. Investmentinthesupplyofclimateinformationalonewillnotresult inclimate-smartdevelopment. Corresponding investment is also needed for (a) identificationof sectoral needs; (b)developmentof targeted information;and(c)buildingactiverelationshipsbetween“suppliers”and“users”.Inthisway,sectoraldecision-makingcanbesystematicallyimprovedthroughtheincorpora-tionandmanagementofclimaterisks.

18. Themainissuestobeaddressedare:Climatemonitoring,vulnerabilityassessmentandinstitutionalstrengthening;a)Climateservicesandinformationprovisiontodecisionmakersandpartnerships;b)Deployingregionally-integratedandcommunity-basedearlywarningsystems;andc)Instillingandsustainingasharedcultureofsectoralclimateriskmanagement.d)


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KeyquestionsIV.

19. Identifyingincreasedrisks:AreriskstoAfrica’snaturalresourcebaseadequatelyidentifiedintheirnature,magnitudeandinteractionsatallrelevantscalesfordecision-making?AreAfricancoun-trieswellpreparedtorespondtopossiblesignificantincreaseinweather-relateddisasters,subsequenttomuchlargerandmorefrequentextremeclimate-relatedevents?

20. Improvingclimateservices:Canearlywarning,preparednessandresponseprocessesbe im-provedinAfricancountries?Howcanweensurethateveryonehasaccesstotimelyintegratedearlywarninginformationonextremeevents?WhyhaveclimateservicesbeensopoorlymainstreamedintocurrentAfricandevelopmentagenda?Canclimate-relatedservicesbeadequatelydevelopedtomeetAfrica’sadaptationanddevelopmentalneeds?Isitjustaquestionofadequatefinance?Ifclimatology(andhydrology)areunderfundedunderpresentclimatemanagementsystems,could itbepossibletodevisemoreinnovativeandeffectivewaysfordeliveringmoredevelopment-orientedclimateser-vices?

21. CRM:Whyisclimateriskmanagementnotadequatelypracticedonthecontinent?Whatneedstobedonetoinitiateandsustainaculture of risk managementineveryclimate-sensitivesector?Howcanappropriatepoliciesandpracticesbedevelopedmosteffectively?Shouldglobalsupportpromotenationalpoliciesandpractices?

22. Environmentmonitoring:Howcanweincreasecommunityparticipationintheproductionanduseofweather,water,climateandenvironmentalobservationstoimprovelivesandlivelihoods?Doweneedadifferentinstitutionalsetting-integratedenvironmentandclimateinformationservicessuit-ableforagreeneconomy?Orcouldadequately-resourcedclimateinnovationcentres“networks”meetthediverseneedsofAfricanstakeholders?

23. Datapolicy:WhatisthemostappropriatedatapolicyforCRM-relatedinformationonimprovingaccessanduseofdataandknowledgeindevelopment?

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