OECD Managing Climate Risks, Facing up to Losses and Damages

Managing Climate Risks, Facing up to Losses and Damages POLICY POLICY HIGHLIGHTS HIGHLIGHTS

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

A critical moment for us all Time is running out to address the impacts of climate change. The Intergovernmental Panel on Climate Change’s latest scientific assessment makes the severity of the climate hazards we face very clear; even large-scale, highimpact events such as ice sheet collapse and abrupt ocean circulation changes cannot be ruled out.

We are in an increasingly perilous situation. A large share of the Earth’s current and future populations will face more frequent and intense climate events. The number of governments adopting net-zero goals is encouraging.

However, this needs to be translated into real action and real outcomes. In the short term, actions are in many cases not reducing climate risks, rather the opposite.

Building the transparency, trust and solidarity needed to achieve the goals set out in the Paris Agreement is critically important. The Paris Agreement itself provides transparency and review mechanisms to encourage increasingly ambitious and effective climate action. Individual governments have the critical responsibility to deliver on their commitments towards the Paris Agreement. But success will require solidarity across and within nations, effective institutions, coherent policies that set the right incentives across the economy, innovative partnerships, new technologies and transformative approaches as well as investments into increasing resilience.

Precisely how climate change will play out in different regions in the coming decades remains uncertain, but this is not an excuse to delay action. This OECD report explores the uncertainties associated with climate risks and examines in detail the three main types of climate hazard: namely, slow onset

changes, extreme weather events and tipping points. It then analyses the policy, financial and technological approaches needed to reduce and manage the risks of losses and damages from climate change.

The OECD is scaling up its support to countries in navigating the climate challenges ahead. This report is part of that effort. It makes a number of important recommendations. As well as limiting warming to 1.5ºC, governments should carefully consider uncertainties associated with climate risks to guide policy and investment decisions.

Developed countries need to scale up both financial and technical support to developing countries and make such support more accessible and predictable.

I hope that this report helps to inform discussions within the UN climate process on Loss and Damage. Further, it aims to inform policy, financial and technological responses on the ground to enhance the effectiveness of efforts to reduce and manage the risks of losses and damages related to climate change.

Mathias Cormann Secretary-General, OECD

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Precarious present, perilous futures Changes in the climate are rapid, widespread and intensifying. Human influence on this change is unequivocal. Changes are observed across all levels. The impacts are not, however, evenly distributed.

Developing countries – especially Least Developed Countries (LDCs) and Small Island Developing States (SIDS) – are disproportionately affected by the impacts of climate change. This is due both to their geographic location and high-levels of exposure and vulnerability to climate hazards. For example, the average relative change in extreme heat is 50% faster for a person in an LDC compared to global average increase.

Meanwhile, OECD members experience relative changes in extreme heat slower than the global average.

The impacts from climate change are severe and will get worse, leading to losses and damages. The heatwaves, wildfires and floods that have affected many parts of the world in recent years provide a foretaste of the future. Lives, livelihoods, even the social and economic stability of countries and regions, are at risk along with the natural environment on which we all depend. Marginalised populations and communities, within and across countries, are particularly vulnerable. Future generations will carry the burden for inadequate climate action by current and past generations.

People and communities are also vulnerable to non-economic losses and damages from climate change.

These include the psychological or mental health impact of extreme and slow-onset events, the loss of cultural

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artefacts and places, biodiversity and landscapes, and the loss of sense of identity and security. Such intangible effects are not easily quantifiable and rarely feature in socio-economic assessments. Many people, however, consider vulnerabilities of some intangible aspects (e.g. health of family members, sense of safety) more important than those of consumption associated with higher incomes.

The economic dislocation caused by the COVID-19 pandemic has not noticeably slowed the pace of climate change.

While year on year emissions took a one-off dip in 2020, atmospheric carbon dioxide (CO2) concentrations continue to grow rapidly. For most COVID recovery packages, only a small percentage aims to reduce the impact on the climate and wider environment; a far greater amount is being spent on investments and activity that does not consider environmental or climate objectives or will even make things worse.

A course change is needed. This will take time and will not prevent further losses and damages. Against this background, this report focuses on what can be done to reduce and manage current and future risks of such losses and damages.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

EXAMPLES OF LOSSES AND DAMAGES FROM CLIMATE CHANGE India experienced in 2018 around USD 13.8 billion of economic loss from heat waves, droughts, floods and storms. ___________ People’s Republic of China endured in 2019 the impacts of a protracted and intense rainy season. Flooding and landslides directly affected 6 million people, contributed to 91 deaths and direct costs of around USD 3 billion. ___________ The Russian Federation suffered an extreme heatwave and massive fires in 2010, leading to 55 736 reported deaths.

The heatwave also contributed to an increase in global grain prices by over 60% between June and August that year. ___________ Mozambique was hit by Tropical Cyclones Idai and then Kenneth in 2019, pushing government debt over 100% of gross domestic product (GDP). It was hit again by two major cyclones in January and February 2021 with government, debt projected to reach 125% of GDP by the end of the year. ___________ The Bahamas suffered at least 70 deaths and losses and damages estimated at around a quarter of GDP in 2019 due to Hurricane Dorian.

A precautionary approach The complexity and pace of climate change is stretching the adaptive capacity of human and natural systems.

Even in a 1.5°C warmer world, a large share of the world’s current and future population, infrastructures and ecosystems will face increasingly frequent and intense climate hazards.

In an interconnected world, losses and damages in one country – and the responses to them – can spill over geo-political borders, including through disruptions to supply chains, the spread of infectious diseases, and the movement of people.

Efforts to reduce and manage the risks should include consideration of actions in relation to the three components of climate risk as conceptualised by IPCC: •

Limit the increase in the frequency and intensity of hazards through deep and urgent reductions in greenhouse gas (GHG) emissions and actions to protect and enhance natural carbon sinks

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Minimise the exposure of lives, livelihoods and assets to those hazards

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Reduce the vulnerabilities of exposed human and natural systems to these hazards.

Both developed countries and large, rapidly growing and emissionsintensive developing economies must take the lead on mitigating emissions to limit future hazards in line with the temperature goal of the Paris Agreement. Complex historical processes have determined current exposures and vulnerabilities. Complementing a precautionary approach, aiming to limit warming to 1.5°C, all countries need to reduce exposure and vulnerability particularly of the most disadvantaged

communities to protect them from the risks of losses and damages. In many developing countries, such action will need to be supported adequately at the international level.

Decisions on addressing hazards, exposure and vulnerability are not made in isolation; they are an integral component of countries’ sustainable development objectives. They must therefore be assessed in relation to the broader spectrum of socio-economic aims and risks. If not carefully managed, some measures intended to reduce and manage risks may impact adversely on people’s well-being or even increase the risk of losses and damages for other segments of society or across countries.

In this report, the risk of losses and damages refers to the potential harm from interactions of climate-related i) hazards, ii) exposure and iii) vulnerability that can be reduced and managed through mitigation and adaptation, as well as other interventions including disaster risk reduction, disaster risk finance and humanitarian assistance.

Losses and damages can materialise even where risks are well understood and potentially avoidable. This might be due to the cost of reducing risks and the availability of financial resources (domestically and internationally); failure to mitigate GHG emissions (collectively) and adapt (nationally or locally); economic, social or technological barriers or inequalities; the effectiveness and coherence of policy interventions; physical limits to adaptation; or the contribution of compounding factors such as diseases or economic crises.

Adding to these challenges, are different types of uncertainties.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Different types of uncertainties and understanding of risks of losses and damages There is high confidence on the aspects of climate change directly related to warming of the climate system and the severity of the associated impacts. There are, however, uncertainties in relation to where, when and how climate hazards will occur and how they will interact with future socio-economic developments that determine levels of exposure and vulnerability.

These uncertainties are a strong call for accelerating, not delaying, action. High levels of climate change could put at risks lives and livelihoods and jeopardise development gains. A policy maker well-informed about the nuances of the risks and associated uncertainties is well placed to identify effective and robust courses of action to reduce and manage them. Different types of uncertainties and their implications for policy-making are summarised below.

Uncertainties in the Earth’s response to increased greenhouse gas concentrations

Uncertainties in projections of future climate hazards in specific regions The uncertainty about how climate change will manifest in different places over time is high. For example, the occurrence of extreme events in a particular region will depend on climate dynamics, which are challenging to model. Worryingly, extreme events and the impact of slow onset changes are already affecting human lives and livelihoods at current levels of warming.

Climate models were not designed to provide short-term forecasts of the exact timing of extreme events and projections differ among models.

A first-order question about a climate plan or strategy is how effective it will be in mitigating climate change. The uncertainty of the extent to which the planet will warm up as a result of an increase in GHG atmospheric concentrations influences the answer to that question. The best estimate for the long-term response to a doubling of CO2 concentrations is 3°C with a likely range of 2.5°C to 4°C. This uncertainty underlines the urgency of stringent GHG emission reductions. The world might aim at limiting warming at 1.5ºC but end up with far higher levels of warming, more severe and widespread impacts, leading to higher risks of losses and damages.

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Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

However, short-term projections in local or regional climate change can provide information on a range of potential changes to which human and natural systems may be subject to, even if the exact date and extent of those changes cannot be predicted with confidence.

Figure 1 shows yearly extreme temperature projections for Hyderabad (India) and Paris (France) from four different climate models, at two spatial scales and for three warming scenarios, successively representing greater levels of climate change. The projections have a large spread, with no correlation in the timing of yearly extreme temperature at fine spatial resolutions. Confidence in projections of extreme temperatures is higher at larger spatial scales, where patterns become smoother due to averaging of the underlying climate variability. With such averaging, however, the range of possible extremes is not apparent and the large-scale patterns therefore not a reliable indicator of local climate at a given point in time.

From a policy perspective, climate modelling at high spatial resolutions provides information on broad patterns and the potential for regions to experience episodes of extreme heat over the next century. This information can in turn guide policies dealing with climate risks. Figure 1 shows that in higher warming scenarios (RCP 4.5 and RCP 8.5) temperature extremes can exceed the average extremes in the 20year baseline period by up to 10ºC for both Paris and Hyderabad.

Hyderabad has a dry climate with temperatures already significantly higher than in Paris due to its location.

Temperature extremes of 10ºC in Hyderabad above average extremes could result in temperatures that

human and natural systems cannot physiologically endure. Understanding the relationship between geographic location and its underlying climate in the context of projected changes is therefore important for the understanding of climate risk in these regions and for the risk of losses and damages.

Uncertainties due to quality and quantity of observational data The Earth is more extensively and systematically observed today than at any other time. The ability to observe the climate has greatly improved in recent years thanks to improved technology. These include advances

in measurements of, for example, sea level and temperatures, and Earth information technology such as satellite remote sensing. Yet, there is still a long way to go before establishing a comprehensive, systematic global climate monitoring system. For example, quality and availability of data are highly heterogeneous geographically resulting in differing quality of weather forecasts in different regions, as well as limiting climate research.

Uncertainties due to socioeconomic data and projections Socio-economic data and evaluation is critical to effective climate policy decisions. Often, however, crucial data are unavailable or incomplete. Policy

Figure 1. Extreme temperature anomalies at different spatial scales RCP 1.9

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Time (years) CAMS−CSM1−0 EC−Earth−3 MIROC6 UKESM1−0−LL

Note: Yearly surface temperature extreme anomalies at different spatial resolutions around Hyderabad (India) and Paris (France). Temperature projections at small and large-scale result from average extreme temperature over a 1x1 and 50x50-degree cells around the cities in question respectively. Data were obtained from CMIP6 database for daily extreme temperature, for Representative concentration pathways (RCP)/ Shared socio-economic pathways (SSP) scenario combinations RCP1.9 (SSP1), RCP 4.5 (SSP2) and RCP 8.5 (SSP5); for models CAMS-CSMi-0, EC-Earth-3, MIROC, and UK-ESM1-0-LL. Extreme temperature anomalies were calculated as the difference of yearly maximum at any given year from the long-term average of yearly maxima for the period of 1986-2005.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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makers may therefore need to rely on alternative approaches, such as proxy variables or regression frameworks, which might introduce further uncertainties. Future socio-economic developments are highly uncertain – even before factoring in climate change.

Socio-economic systems are also incredibly complex.

Projections and estimates are inevitably sensitive to normative, political, economic and methodological assumptions. Table 1 provides a selective overview of estimated losses and damages from climate change using a diverse range of methodologies, illustrating the uncertainty around the scale of projected losses and damages.

Econometric estimates can provide important information about the scale of current losses and damages but

these relationships are unlikely to be stable as climate change and efforts to reduce and manage the risks evolve over time. Additionally, different modelling approaches may omit or be unable to

adequately represent key mechanisms likely to drive future losses and damages (e.g. potential loss of ecosystem services, effects of climate extremes).

Table 1. Selected estimates of projected global losses and damages Method

Hazard

Area of focus

Estimate

Resampling and reweighing model [1]

Temperature increase and extreme events

Levels of poverty

In the range of 30 and 130 million additional people in extreme poverty by 2030

CGE modelling [2]

Temperature rise, sea-level rise, cyclones and extreme temperatures

Economic effects

Around 1.5% of GDP by 2050 (1-3%)

Econometric [3]

Temperature increase

Economic effects

23% of GDP per capita until 2100, 10% by 2050

IAM [4]

Temperature increase

Non-economic damages to ecosystems

Around USD 190 trillion of non-economic damages to ecosystems by 2050

Climate-health models [5]

Temperature rise, variable rainfall patterns and extreme temperatures, affecting malnutrition, heat stress, diarrhoea and malaria

Healthcare costs

USD 2-4 billion increase of annual healthcare costs between 2030 and 2050

Mortality through malnutrition, heat stress, diarrhoea and malaria

250,000 excess deaths per year between 2030 and 2050

Literature review [6]

Extreme events

Mental health

Large effects on mental health, disproportionately affecting the most marginalised groups

Systematic case analysis [7]

Climate change

Non-economic losses and damages

Intangible losses and at-risk sentiments are pervasive across the world

Note: Percentages refer to the level of the shown year, for example, in the second row, a 1.5% decrease until 2050 means that the GDP in 2050 would be 98.5% of the GDP had climate change would have not taken place. IAM denotes Integrated Assessment Model.

Sources: [1] (Jafino et al., 2020); [2] (OECD, 2015); [3] (Burke, Hsiang and Miguel, 2015); [4] (Bastien-Olvera and Moore, 2020); [5] (WHO, 2014) ; [6] (Hayes et al., 2018); [7] (Tschakert et al., 2019).

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Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

Climate change impacts and their cascading effects

THE IMPLICATION OF SEA-LEVEL RISE (SLR) ON POLICY PRIORITIES IN SIDS

Natural, social and economic systems are interconnected at different scales – regional, national and international.

Climate change impacts may propagate domestically (e.g. through displacement of people after a disaster) or internationally (e.g. through impacts on global trade, financial flows and supply networks). These often poorly understood cascading effects across sectors, countries and international borders pose challenges to risk assessments.

The report considers three broad types of climate hazard: i) slow-onset changes, including sea-level rise (SLR), ocean acidification, glacial retreat, loss of biodiversity and desertification; ii) extreme weather events, including higher frequency and severity of e.g. heatwaves, droughts, extreme rainfall and cyclones and iii) tipping points (Figure 2), including collapse of the Atlantic Meridional Overturning Circulation (AMOC) and the Amazon rainforest dieback. These hazards pose serious threats to human and natural systems, leading to losses and damages already today in the case of extreme and slow-onset events. The severity of many of these hazards is projected to increase and they can act together, compounding the risks.

Sea-level rise in Small Island Developing States SIDS comprise a heterogeneous group of island territories. Irrespective of their diversity, all SIDS are vulnerable to climate change, including sea-level rise. Firstly, the most habitable area of SIDS is the low-lying coastal zone.

Secondly, given their locations, SIDS are disproportionally affected by weather-related disasters. Thirdly, SIDS have fragile economies, a limited range

The policy responses in SIDS to SLR can be grouped in four categories, each with strengths and weaknesses depending on physical and socio-economic circumstances: •

protect, to reduce losses and damages through hard engineering structures or nature-based solutions

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advance, to prevent the propagation of coastal hazards inland by building new land seawards and upwards

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accommodate, to reduce the vulnerability of people, livelihoods and the built environment

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retreat, to reduce or eliminate exposure by moving people, infrastructures and human activities out of the risk zone.

Given the deep uncertainty about future SLR, SIDS must determine which longterm decisions can be postponed until the level of uncertainty decreases. Those that cannot be postponed, such as on critical infrastructure investments, must factor in the implications of SLR. The uncertainty preferences of stakeholders will influence the choices made. Many technical options are available for adapting to even high levels of SLR. However, implementing these at significant scale would be costly and lead to radically different coastal landscapes.

This would, in turn, threaten the rich cultural diversity and heritage of SIDS.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Figure 2. Candidate tipping elements in the climate system Arctic Sea Ice

Permafrost

Greenland Ice Sheet Boreal forest

Atlantic overturning El Niño-Southern Oscillation

Boreal forest

Subpolar gyre

Tibetan Plateau West Africa Monsoon

Sahel

Indian Monsoon

Amazon rainforest

Wilkes Basin Ice Sheet

Southern Ocean Sea Ice

West Antarctic Ice Sheet

Cryosphere Entities

Circulation Patterns

Tropical Coral Reef

Biosphere Components

Note: Global map of candidate tipping elements of the climate systems and potential tipping cascades. Arrows show the potential interactions among the tipping elements that could generate tipping cascades, based on expert elicitation.

Source: World map obtained from Peel, M. C., Finlyson, B. L., and McMahon, T. A. (University of Melbourne).

of natural resources and only loose connections to wider markets. Losses and damages in SIDS as a result of SLR are manifold and linked: coastal flooding; coastal erosion and loss of land, ecosystems and freshwater resources.

Quantifying the contribution of climate change to adverse impacts with extreme event attribution Assessing and quantifying the real-world impacts of climate change represents an enduring challenge. Analysis informed by attribution science reveals that heatrelated extremes are becoming more frequent and severe than other types of extreme weather, and in some regions changing orders of magnitude more rapidly. High temperature extremes over land are growing faster than changes in global mean temperature by a factor of up to 1.8 in some locations. Different regions of the world will experience

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different relative changes in extreme heat for different warming levels.

Tropical oceans are, by far, witnessing the most rapid relative changes in high-temperature extremes, followed

by North African and Middle Eastern arid regions and then other tropical land areas.

Climate change will make the future increasingly unrecognisable. Figure 3 shows the levels of global mean warming required to locally exceed two thresholds of extreme heat emergence.

The thresholds are defined by the point at which:

Even at the levels of warming already experienced (panel A), extreme heat considered rare in the past is becoming the norm for many regions of the world. Extreme temperatures could threaten human habitability of many areas, although no singular definition or threshold is precise enough to identify when a location will no longer be suitable for “human habitability”.

1. The hottest day of an average year in the future climate would be considered rare in the past (panel A)

The severity of a physical hazard is an imperfect proxy for the severity of impacts; vulnerability and exposure also play a crucial role in determining the magnitude of losses and damages.

Indeed, relatively common and frequent weather hazards can still cause significant and detrimental impacts if they strike vulnerable, exposed communities.

2. The hottest day of the coolest year in the future would still exceed the hottest temperatures ever experienced in the past (panel B)

Attribution science offers a method to causally link extreme weather events with climate change. However, it too often produces an inconclusive result

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

Figure 3. Warming required to exceed future thresholds of extreme heat beyond past experiences (A) Time of emergence of extreme heat

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Global warming threshold at which the hottest day in an average year in the new climate was rare in the past (ºC)

(B) Time of emergence of unprecedented heat

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Global warming threshold at which the hottest day in the coolest year in the future exceeds all extremes in the past (ºC)

Note: Panels (A) and (B) estimate the global mean temperature increase (using RCP8.5) required to cross two thresholds, respectively: (i) when the hottest day of an average year in the new climate would be considered rare in the past and (ii) the hottest day of even the coolest year in the future would still exceed the hottest temperatures ever experienced in the past.

RECENT HEATWAVES IN THE PACIFIC NORTHWEST The 2021 Pacific Northwest heatwave impacted the United States and western Canada in June when a large mass of high pressure air settled over regions over four days. Temperatures rose far above 40ºC in many regions. The peak temperature was recorded in Lytton, British Columbia at 49.6ºC, setting a new record for the entire country and contributing to a wildfire that destroyed much of the city. The high temperatures were particularly harmful for the region as it is not adapted to extreme heat. More than 500 reported deaths and 180 wildfires were recorded in British Columbia and about 200 related deaths in Oregon and Washington with a sharp rise in emergency department visits also reported.

The 2021 heat wave caused mass death of marine life and restructuring of entire marine ecosystems. Preliminary estimates show that billions of marine animals died from the extreme heat. These included mussels that live on the shoreline and sea creatures that live in the mussel beds. This loss will have cascading effects to other animals, e.g. sea ducks that feast on mussels before migrating to their summer breeding grounds in the Arctic.

when considering weather extremes that impact lower income countries.

Specific impediments to raising the quality and quantity of event attribution studies for lower income countries include: poor observational records, inadequacy of lower-resolution climate models and differences in extreme event impact reporting mechanisms. There is an urgent need to enhance the collection and interpretation of data on extreme events and impacts in developing countries, including to underpin attribution studies and climate policy.

Attribution of extreme events relies on climate models realistically simulating the type of event in question. For example, the impacts of extreme tornado or hailstorm events will remain unassessed while current-generation models fail to meaningfully simulate the relevant physical processes. In such circumstances, non-probabilistic approaches to identifying and characterising climate risks, such as the storylines approach, can inform efforts to limit and manage the risks of losses and damages.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Collapse of the Atlantic Meridional Overturning Circulation The abrupt weakening or collapse of the AMOC, as a result of global warming, would result in a climatic shift with profound regional, and even global, implications. The reorganisation of the climate system induced by such a collapse would have serious and pervasive impacts, including on human health, livelihoods, food security, ecosystems, water supply and economic growth.

Projected changes to sea-surface temperature and rainfall patterns in the tropical Atlantic, as a result of a collapse of AMOC are shown in Figure 4. The northern hemisphere would experience a widespread cooling (particularly over the North Atlantic), with European annual mean surface air temperatures falling by 1°C to 8°C while North America would experience a less severe decline.

Conversely, the southern hemisphere would experience widespread additional warming due to the AMOC collapse amplifying the underlying warming trend. Most of the northern hemisphere would experience a drying with the exception of North America, that on

average would become slightly wetter.

In this modelling exercise, India loses more than half of its current rainfall due to AMOC collapse.

Atlantic will impact the stability of the Amazon rainforest. Climate analogues that consider both temperature and precipitation find the future climatology of the Amazon region to match current savannah or grasslands type regions in Africa, suggesting this would cause large-scale dieback of the Amazon rainforest.

The AMOC is the “great connector” in the climate system. A collapse of the AMOC would therefore have an impact on other recognised tipping elements, namely the Amazon rainforest, boreal forests, and the monsoon systems of India and West Africa.

Boreal forests over Europe and Asia would respond differently to a collapse of the AMOC than those in North America. This is due to the widespread cooling and drying across Europe and

Changes in sea-surface temperature and rainfall patterns in the tropical

Figure 4. Surface air temperature and precipitation response to an AMOC collapse after 2.5ºC warming above pre-industrial AMOC collapse after 2.5°C warming

AMOC collapse after 2.5°C warming

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Note: Surface air temperature (left) and precipitation (right) response to AMOC-collapse scenarios, accounting for the effects of global warming using the future warming scenario (SSP1-2.6, the combination of Shared Socio-economic Pathway SSP1 and Regional Concentration Pathway RCP2.6) in the model HadGEM3-GC31-MM. HadGEM3-GC31-MM reaches a mean global warming of 2.5°C above pre-industrial levels by the end of the century (2071-2100). This warming pattern is overlaid to the impacts of an AMOC collapse to establish the overall impact if the AMOC were to collapse after 2.5°C global warming relative to the present-day climate (2006-35).

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Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

Asia combined with weaker cooling and increased precipitation in North America.

This would reduce the net productivity of boreal forests in Europe and Asia and a possible transition to steppe grasslands, which store less carbon than boreal forests.

collapse of the AMOC would also disrupt both the Indian and African monsoons. The Indian summer monsoon, which occurs from May to September, is fundamental to Indian agriculture and the economy. Weakening of the Indian monsoon would impact on Indian farmers’ rice harvests and

Figure 5. Differences in crop climate suitability as a result of an AMOC collapse after 2.5ºC warming above pre-industrial levels Wheat

A 60°N 30°N 0° 30°S 60°S

Maize

60°N 30°N

livelihoods. Under climate change, West Africa is projected to experience the largest decreases in rainfall on the planet. An AMOC collapse would exacerbate this, potentially leading to widespread drought over much of the region. High rates of poverty and limited government capacity, would compound the challenges of trying to adapt to changes of such magnitude.

A collapse of the AMOC combined with climate change would have catastrophic effects on food security. The major staple crops of wheat, maize and rice provide over 50% of global calories. The total percentage of land area suitable for growing these crops, in a world without anthropogenic climate change, is approximately 20% (wheat), 14% (maize) and 3% (rice). AMOC collapse combined with 2.5°C of warming globally would reduce the areas suitable for wheat to just 8% and maize to just 5%; suitable areas for rice growth would potentially see a modest increase with the AMOC collapse, but this is dwarfed by losses in suitable area from wheat and maize as shown in Figure 5.

Rice

The collapse of the AMOC is just one of the many parts of the Earth system that have the potential to display a tipping point. IPCC assesses the collapse of the AMOC as “very unlikely” within this century (i.e. 0 10% likelihood), but that such a collapse cannot be ruled out.

Recent research shows the AMOC is at its weakest in a millennium and that this slowdown will likely continue. Given the potentially far-reaching cascading impacts, such high-impact lowlikelihood events must be included in risk assessments, as the IPCC recommends.

0°

As well as rapid and deep reductions in GHG emissions, measuring and monitoring of key tipping elements, such as the AMOC, is needed to provide countries with as much time as possible to develop strategies to deal with the consequences of such abrupt changes in the climate systems.

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Note: Differences shown here are the suitability (percentage) in world without an AMOC collapse minus the suitability after an AMOC collapse and a future warming scenario (SSP1-2.6).

This analysis does not overlay the subset of areas where each crop is actually grown.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Decision making under uncertainty

Areas that historically have experienced frequent floods may in the future face challenges associated with droughts for which there is little management experience. Slow-onset changes, such as SLR, are threatening the way of life and livelihoods of coastal and island communities, including traditional belief and cultural systems.

Crossing tipping points in the climate system could result in severe and widespread disruptions to economies and societies, regionally, nationally and globally.

The novelty of some hazards in terms of their nature and intensity, combined with the different types of uncertainties outlined above, will challenge individual, societal and policy and international efforts to reduce and manage the risks of losses and damages.

understanding of the risks, and take a strict precautionary approach when choices may lock-in long-term changes to risks. The approaches also call for an understanding of the thresholds and decision points where alternative responses may be needed.

Some risks cannot be described in terms of their probabilities or the range of possible outcomes; sometimes the full range of outcomes may not even be known. The uncertainty is lower for hazardous events in the near future (e.g. the intensity and landfall of a Tropical cyclone in the next week) than for some of the potentially existential risks that could materialise even if global average temperature increase is limited to 1.5°C.

Addressing components of climate risks and their drivers of change

The level of uncertainty demands a shift from traditional “predict then act” approaches to policy, management and investment choices that are robust and flexible under a range of potential futures. Such approaches typically rely on institutional structures that facilitate an iterative and adaptive approach, are guided by learning and evolving

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Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

Approaches to reduce and manage the risks of losses and damages must include a focus on the three components of the risks as well as their drivers and interactions.

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Hazards: Limiting the severity of climate hazards requires rapid and deep reductions in global GHG emissions and the protection and enhancement of natural sinks consistent with efforts to limit temperature increase to 1.5°C. How these challenging goals are approached will have critically important implications for sustainable development and

well-being outcomes and therefore also for the other two components of climate risk (exposure and vulnerability).

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•

Exposure: Exposure to hazards is dynamic, influenced by history; geography; economic, social and institutional context; and individual choices. Climate change itself will affect exposures as the location, frequency and intensity of hazards shift. Policy approaches include regulation and standards; pricing mechanisms and early warning systems. While direct exposure of people to some hazards may decline with economic development, losses and damages related to livelihoods and assets may increase.

Vulnerability: Resources, capacities, institutions, policies and practices determine the ability of people and societies to prepare for and respond to climate hazards. Practices, infrastructures and ecosystems that may once have been resilient to hazards may no longer be so; climate change will also create novel hazards. Three types of capacities

influence the ability of different segments of society to access the resources needed to prepare for and respond to hazards: i) economic (e.g. income diversity, savings, and access to social protection and insurance), ii) institutional (e.g. access to, and awareness of, resources that can inform and facilitate proactive and protective efforts; and iii) political (e.g. access to and active participation in decision-making processes).

Many countries have identified ways of addressing the risks of losses and damages in their climate action and disaster risk management plans. These efforts are sometimes supported by the related international processes, such as the Sendai Framework for Disaster Risk Reduction and Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts.

This reflects growing recognition of the potential benefits of enhanced policy coherence across national and international policy communities, including those focusing on climate change adaptation, disaster risk reduction and sustainable development in general.

BANGLADESH: COMPLEMENTING EFFORTS TO REDUCE EXPOSURE AND VULNERABILITY TO HAZARDS Due to its location, topography and multiple river systems, Bangladesh is exposed to numerous weather hazards, including cyclones, heavy rainfall, floods and drought. Its vulnerability is furthered by high and growing population density and multidimensional poverty. Between 1991 and 2011, it experienced 247 extreme events with an average annual death toll of 824; financial losses for some events went as high as 6% of GDP. The government has over the years enacted laws, policies and procedures to reduce exposure to climate hazards. This has included a shift in emphasis from disaster relief and recovery to early warning and evacuation, including the construction of multi-purpose cyclone shelters. Nature-based solutions, such as planting mangroves and restoring sand dunes, have also lessened the impact of hazards on coastal communities.

This has been effective in protecting lives. During Super-cyclone Amphan that hit the Bay of Bengal in May 2020, early warning and evacuation systems led to evacuation of 2.5 million people to shelters, limiting the death toll in Bangladesh to 12. Nevertheless, Amphan destroyed 150 kilometres of embankments, which led to flooding of infrastructures, agricultural lands and fields that remained inundated for months. Many displaced people could not access evacuation centres and had to shelter in tents or on open embankments.

While most evacuated people could return home relatively quickly, about 10% were left homeless, with the majority resorting to begging, borrowing or selling household assets. Amphan is not an isolated case; Cyclone Sidr in 2008, Isla in 2009, and Fani and Bulbul in 2019 all struck the same areas.

The impact on livelihoods is expected to worsen with climate change. In 2019, the government initiated a two-year pilot programme to develop a national mechanism on loss and damage. It seeks to i) firmly embed climate change perspectives within policy approaches on disaster risk reduction; ii) address gaps in policy frameworks on climate change adaptation and disaster risk reduction; and iii) design a comprehensive system for a stronger response to losses and damages from climate impacts.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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TRANSFORMATIVE CHANGES TO REDUCE AND MANAGE THE RISKS OF LOSSES AND DAMAGES

Transformative changes, rather than gradual adjustments, may be needed in some circumstances, even in the absence of tipping elements being triggered in order to manage risks. At the national level, examples include changes to land-use, infrastructure development or sectoral strategies. At the individual or household level, livelihood choices can reduce vulnerability to weather and climate hazards.

•

•

In northern Kenya, some pastoralists have replaced cattle with camels that are better suited to its increasingly hotter climate with less predictable rainfall. Camels require less water, eat a wider variety of vegetation and produce up to six times more milk than local cattle species. Over time, the market for camels and camel milk in Kenya has developed, boosting livelihoods and food security.

In Costa Rica, some farmers are switching from coffee to oranges as they are better suited to warmer temperatures, and more profitable.

These farmers have also noted that oranges are more resilient to droughts, floods, temperature fluctuations, erratic rainfall and higher winds.

The changes in Kenya and Costa Rica have occurred autonomously, without government support. For such transformations to be sustainable, partnerships across policy, science and local and Indigenous groups may be valuable to help identify such opportunities for action.

Policies and plans that make available information (e.g. climate information), technical assistance (e.g. extension services) and financial resources supportive of the transition are important. In some cases, market policies (e.g. agricultural subsidies) will need to be adjusted to remove barriers to climate-resilient products and approaches and support market creation for emerging products, such as camel milk.

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In contexts of sometimes significant uncertainty, partnerships that facilitate collaboration across policy and science and are inclusive to different types of knowledge, including local and Indigenous knowledge, can be effective in bridging the gap between scientific understanding of the risks and the underlying socio-economic context.

Institutions, governance and norms for reducing and managing losses and damages Institutions, formal rules and informal norms shape the political context for decision making. Social norms influence how risks are perceived, valued, prioritised and addressed; institutional structures and rules empower some interests but reduce the influence of others. While some societal and technological transitions can happen relatively rapidly (e.g. in response to a devastating extreme weather event or a major technological breakthrough), institutional inertia, values and interests may prevent or delay others. For example, groups with a vested interest in continued fossil fuel consumption appear to have been instrumental in spreading

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

doubt about the credibility of climate science and the severity of its impacts.

So-called norm entrepreneurs can contribute to the diffusion of new norms by identifying and promoting the implications of different choices. Young people are today playing a major role in bringing climate change to the attention of the broader public. This increases the political pressure on governments to act, while highlighting the implications of individual consumption and lifestyle choices. Over time, this may lead to shifts in wider public opinion.

Finance and financial risks in the face of growing losses and damages

possible changes in severity, in their relationship and co-occurrence, thus, in potential losses and damages.

This would result in reduced lending and increased insurance premia. Climate hazards in general can challenge existing risk management approaches due to

90

Hurricane Maria ~200% GDP loss

100

Tropical Storm Erika ~90% GDP loss

Hurricane Lenny ~50% GDP loss

Figure 6. Increasing debt levels in Dominica following frequent, major hurricanes

Government debt-to-GDP ratio (%)

The complex nature of climate impacts suggests that a shift may be needed in the way financial risks are approached. For example, the resilience of national financial systems may come under increasing pressure.

Risks of losses and damages to household and business assets can lead to nonperforming loans and reduce the value of capital and collateral within the financial system, thus potentially increasing the costs of services supplied by banking and insurance sectors.

The effects of adverse climate impacts on households, businesses and financial systems as well as subsequent relief and recovery efforts can impact government finances. For major disasters or repeated lower impact events, this can affect fiscal sustainability. Economic impacts will reduce revenues, while the realisation of contingent liabilities and expenditure for relief may reduce resources available for achieving wider development goals and long-term climate objectives.

80

70

60

50 1990

2000

2010

2020

Note: Evolution of Dominica’s government debt-to-GDP ratio (blue line), against the major extreme events (orange vertical lines). Dashed line shows the linear trend.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Impacts are already stretching the fiscal resilience of many vulnerable countries, especially SIDS and LDCs. Figure 6 shows the level government debt (as a share of GDP) of Dominica.

Government debt increases with every major hurricane and while it falls back afterwards, the frequency of hurricanes over the last thirty years has led to a trend increase in indebtedness over time.

effectively, making appropriate use of risk reduction, risk retention and risk transfer approaches in relation to their needs and capacities.

Risk reduction: Efforts to reduce risks entail an interaction between governments and other societal actors.

Attempts by one actor to reduce their risks also affect the risks faced by others.

One of the key ways governments can reduce risks is by providing an enabling environment, for households and businesses to manage their own risk.

When national governments provide high levels of financial support for losses incurred that could have been insured or avoided through proper risk management, incentives to manage such risks in the future are likely to be

Financial mechanisms to reduce, retain and transfer risks Governments, households and businesses have different financial mechanisms at their disposal to manage climate risks. These can be grouped into three broad categories: risk reduction, risk retention and risk transfer. An ideal risk management strategy employs and blends these approaches in a comprehensive manner, as shown in Figure 7. Risk reduction decreases the costs of both risk retention and risk transfer. As such, it plays a central role in risk management. Increasing awareness of risks is necessary for the different actors to manage their risks

Figure 7. Risk management options Risk retention (e.g. reserve funds) Risk transfer (e.g. catastrophe bonds, risk pools)

Government

Risk reduction (e.g. stable tax revenues)

Risk reduction (e.g. social protection, enabling environment)

Households and businesses

Risk transfer (e.g. insurance)

Risk retention (e.g. savings)

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(Re)insurance and capital markets

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

Insurance market

and multilateral development finance increasingly realise the importance of explicitly addressing the risks of losses and damages in their strategic programming. These efforts need to be scaled up, including through climaterelated development finance, support for disaster risk reduction, disaster risk finance and humanitarian assistance.

As fiscal sustainability concerns become increasingly severe and widespread, international development finance needs to ensure that the instruments used reflect the nature of these risks. With this in mind, development co-operation providers will have to consider how best to support countries that are no longer eligible to Official Development Assistance but highly vulnerable and exposed to climate hazards.

reduced. Vulnerable segments of the population, however, might not be able to afford or access risk management instruments, underlining the need for social protection, for example cash and food transfer. Risks can be reduced but residual risks will almost certainly remain, requiring additional financial mechanisms.

Risk retention: Savings or reserve funds are appropriate for responding to less intense and more frequent hazards.

Such resources can be accessed relatively quickly, but have an opportunity cost as they tie up resources in low-yielding liquid assets. Opportunity costs are likely to be especially significant if resources are only identified ex post after a disaster has struck, for example through emergency budget reallocations or the issuing of bonds on capital markets, which tends to be significantly more costly than an equivalent issue ex ante would have been. For more intense and less frequent hazards, financial needs are likely to exceed immediately available budgetary funds. Hence the need for risk transfer.

Risk transfer: This involves the use of insurance and other risk financing mechanisms that transfer a part of the risk to actors for managing the

risk more effectively and efficiently.

Relevant third-parties in this context include insurance and reinsurance companies, international capital markets, multilateral development banks and risk pooling mechanisms among countries facing similar risks, such as the African Risk Capacity. International development assistance can be critical in setting up and consolidating such mechanisms.

In general, risk transfer constitutes an important building block of an efficient risk-layering approach, which needs to be tailored according to relative costs and benefits of different risk reduction, retention and transfer mechanisms in comparison with the hazards they address.

Providers of development assistance face another dilemma: how to balance rapid humanitarian assistance and support for recovery, and medium- to longer-term investments to achieve sustainable development. This is a challenge that also concerns national governments. As climate change is altering the nature and intensity of hazards, the need for greater collaboration across humanitarian and development actors is increasingly recognised.

International development finance supporting country approaches to reduce and manage risks International development finance has an important role to play in supporting partner countries, who are calling for enhanced, simplified and predictable access to finance that reflects national circumstances and is aligned with national priorities, promotes country ownership, and sub-national needs and solutions. Providers of bilateral

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Technology in support of risk governance ability to observe and understand the complexity of the climate system, but better coverage is needed.

Technology – including the equipment, technique, and skills for performing a particular activity – is vital for supporting efforts to reduce and manage the risks of losses and damages from climate change. This includes technology for i) the characterisation and ii) evaluation of risks, complemented by iii) the development and implementation of approaches to reduce and manage the risks.

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Technology for the characterisation of risks Assessments of the hazard, exposure, and vulnerability will be an essential first step to understand and characterise the risks of losses and damages. Hazard assessments rely on the availability and functioning of weather and climate information services (WCIS) (see Figure 8). Developments in technologies underpinning WCIS infrastructure, such as space observation equipment, remote sensing, mapping software and telecommunication systems, have provided tools essential to improve the

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

Exposure and vulnerability assessments requires granular socio-economic data and understanding of the impact of hazards on people, their livelihoods and well-being. Geospatial technology and data products can provide insightful overlaps of hazard, exposure and vulnerability data to improve the granularity and thus relevance of risk assessments for local contexts. Surveys and predictive analytics (e.g. modelling, machine learning and data mining) coupled with the use of social media can also provide valuable information about the diversity and intensity of risk perceptions, concerns and potential impacts. Enhanced international cooperation can help overcome some current gaps.

Technology for the evaluation of risks The information gained from the risk characterisation can inform the evaluation of the risks to allow decision-makers to identify actions to reduce and manage losses and damages. Technologies for monitoring and modelling the climate system will

redesign systems to limit the growth in energy and materials demand will help to avoid risky reliance on technologies to remove carbon dioxide from the atmosphere later this century.

also be essential for characterising the evolution of hazards over time and space. This can inform the understanding of the multiple, and potentially cascading impacts of climate change.

In order to determine the level of tolerability and acceptance of the risks, the evaluation of the risks must also consider the possibility of large-scale irreversible changes in the climate system. Techniques for improving the understanding of the proximity of reaching tipping points of various systems are still in their infancy. Technological developments can improve high-level observations to study the disturbances in tipping elements in the climate system

and inform early warnings of those changes.

Technology for the development and implementation of approaches to reduce and manage the risks While decisions on which risks to address, when and how often will be a political or personal choice, the implementation of those choices may in some cases be subject to technologies and technological capacity being available. Limit the increase in the frequency and intensity of hazards, for example, deep and rapid reductions in GHGs are required. Low-emission pathways that rapidly scale up the use of low-emission technologies and

Technologies for limiting exposure and reducing vulnerability include, early warning systems for climate hazards, among others. Such systems must consider a range of timescales and potential hazards. Technologies also underpin innovations that can reduce losses and damages in the event of a disaster by accelerating financial payments to affected individuals, communities and countries.

The availability of technologies must be complemented by local, regional and international co-operation. Cooperation can help overcome the capacity and financial constraints of, e.g. state-of-the-art modelling and forecasting capabilities. International support can also support efforts to address capacity constraints (financial, technical, and organisational) and support technology development and innovation. Partnerships can support the collection and sharing of observational data, climate monitoring and modelling, and weather forecasting needs. Local actors are important for informing the local context and capacity needs for improved technology diffusion.

Figure 8. Weather and climate information service value chain

Observation and Monitoring • Meteorological stations • Hydrological stations • Wireless sensor networks • Satellite remote sensing

Data and Information Management

Research, forecasting, and modelling

Service development and delivery

• Data collection, storage and analysis • High performance computing • Data assimilation

• Multidisciplinary research • "New generationmodels" • Machine learning techniques

• Information products • Client relations • International obligations • Data exchange

Stakeholder engagement, knowledge building, and capacity strengthening

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Taking the agenda forward

The call for urgent action on climate change is at or near the top of most political agendas, despite the continuing pandemic and related economic dislocation. This is true in the context of the international climate negotiations and also at local, regional and national levels. In different ways and with different resources and levels of ambition, governments, the private sector, researchers, civil society organisations and individual citizens – often in partnerships – are taking action.

These different stakeholders have complementary roles that offer areas for further action and collaboration.

Recommended actions to reduce and manage both economic and non-economic losses and damages, with a focus on the role of governments, include:

1

2

Take a precautionary approach by aiming to limit the temperature increase to 1.5°C:

Create a more effective international development finance landscape supporting efforts to reduce and manage current impacts and projected risks of losses and damages:

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Accelerate the transition to netzero, recognising that different countries will follow different pathways and developed countries should aim to reach net-zero earlier than 2050.

Rapidly scale up finance, technology, capacity development, and other support for mitigation and adaptation action in developing countries, delivering on developed country commitments.

Put in place credible, ambitious and adequately resourced shorter-term targets and plans that generate wider socio-economic benefits and deliver on longer-term or net-zero commitments.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

•

Scale-up climate-related development finance to support communities and countries already experiencing losses and damages and to reduce and manage future risks, particularly for LDCs and SIDS.

•

Improve access to finance and reduce transaction costs by streamlining multiple accreditation and reporting requirements and strengthen complementarities across financing mechanisms.

•

Develop local and national capacity, foster country ownership and better align international development finance with national priorities, circumstances and needs.

•

Enhance the predictability of international support for efforts to reduce and manage the risks of losses and damages.

3 Strengthen the global architecture for climate and disaster risk finance: •

Enhance the availability and access to financial protection that is comprehensive (i.e. to different hazards) and systematic (e.g. different layers of risk), particularly for the most vulnerable.

•

Increase the coherence of international support for climate and disaster risk finance through enhanced exchange, co-operation and agreement on joint principles by providers of support.

4 Enhance fiscal resilience to deal with increasingly adverse impacts: •

Implement a comprehensive approach to risk management, using a set of complementary financial mechanisms to reduce, retain and transfer risks of losses and damages.

•

Limit contingent liabilities, incentivise and enable private actors to reduce and manage their own risks, including through disclosures, understanding and awareness of climate risks.

•

Review the implications of climate risks for debt sustainability and identify options for addressing these, including the eligibility of countries highly vulnerable to climate risks to international financial support.

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6

Protect livelihoods, reduce precarity through insurance, social protection and humanitarian assistance:

Adopt approaches to decision making that account for uncertainties in climate risks:

•

•

Develop insurance markets to make available coverage for climate risks and incentivise those with the financial capacity to do so to manage them Enhance social protection for the most marginalised segments of society that do not have the financial means to access formal insurance markets to reduce vulnerability to climate-related hazards and subsequent losses and damages.

•

Manage risks across different time and spatial scales and understand how they can compound and cascade across systems and borders.

•

Enhance capacities within the decision-making process to incorporate quantitative and qualitative assessments of the implications of uncertainty for options and outcomes.

•

Adopt iterative and adaptive decision-making processes, guided by learning and evolving understanding of the risks and take a strict precautionary approach when choices may lock-in long-term changes to risks.

•

Identify and manage risks that may overwhelm local capacities by anticipating future thresholds and decision points where alternative responses may be needed.

Reduce losses and damages through anticipatory humanitarian action and improve the predictability of humanitarian assistance.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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7

8

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Integrate climate and sustainable development objectives and improve policy coherence:

Improve data, capabilities and processes for climate risk governance:

•

Approach decisions on climate risks as an integral component of sustainable development and assess options in relation to the broader spectrum of socio-economic risks and uncertainties relevant for decision making.

•

Facilitate inclusive stakeholder engagement that builds on the knowledge, expertise and values of different actors and gives due recognition to intangible losses and damages:

Increase coherence across national and international policy communities, including climate change adaptation and risk management, humanitarian and the broader development communities, building on their respective strengths and areas of expertise.

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•

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Enhance international support for access to observational and forecasting capabilities, technology and capacity building in developing countries, prioritising high quality, high resolution observational data collection and management.

Prioritise international action to enhance the collection and interpretation of data on extreme events and impacts in developing countries, including to underpin attribution studies and climate policy.

Further strengthen weather and climate information services, particularly in LDCs and SIDS, ensuring they are demand-driven, usable and useful.

Establish an international mechanism to monitor climate tipping elements to enhance understanding on their potential impacts and to develop techniques to detect and, where feasible, provide early warning for strategies and actions.

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

•

Develop partnerships to enhance coordination and collaboration nationally and internationally, across policy, science, and other expertise, including Indigenous and local communities.

•

Improve awareness and understanding of how climate change threatens what people value and develop context-specific approaches to reducing and managing intangible, as well as economic, losses and damages.

•

Leverage private sector expertise to support broader societal efforts to reduce and manage the risks of losses and damages.

References Bastien-Olvera, B. and F. Moore (2020), “Use and non-use value of nature and the social cost of carbon”, Nature Sustainability, Vol. 4/2, pp. 101-108, http://dx.doi. org/10.1038/s41893-020-006150. [4]

Hayes, K. et al. (2018), “Climate change and mental health: risks, impacts and priority actions”, International Journal of Mental Health Systems, Vol. 12/1, http:// dx.doi.org/10.1186/s13033-0180210-6. [6]

Burke, M., S. Hsiang and E. Miguel (2015), “Global non-linear effect of temperature on economic production”, Nature, Vol. 527/7577, pp. 235-239, http://dx.doi. org/10.1038/nature15725. [3]

OECD (2015), The Economic Consequences of Climate Change, OECD Publishing, Paris, https://dx.doi. org/10.1787/9789264235410-en.

[2]

Hallegatte, S. et al. (2015), Shock Waves: Managing the Impacts of Climate Change on Poverty, Washington, DC: World Bank, http:// dx.doi.org/10.1596/978-1-46480673-5. [1]

Tschakert, P. et al. (2019), “One thousand ways to experience loss: A systematic analysis of climate-related intangible harm from around the world”, Global Environmental Change, Vol. 55, pp.

58-72, http://dx.doi.org/10.1016/j. gloenvcha.2018.11.006. [7]

WHO (2014), Quantitative risk assessment of the effects of climate change on selected causes of death, 2030s and 2050s, https:// apps.who.int/iris/bitstream/ handle/10665/134014/ 9789241507691_eng. pdf?sequence=1&isAllowed=y. [5]

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Disclaimer: This document, as well as any data and any map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Photo credits: Page 2 Freeport, Grand Bahama Island, Bahamas – October 11 2019: Huge tree trunk on top of a vehicle. Eastern part of the Grand Bahama Island where most of the devastation occurred from Hurricane Dorian. © Anya Douglas/Shutterstock.com Page 3 Aerial drone view of a small boat on a mangrove forest river heading towards open ocean past towering limestone cliffs and islands. ©Richard Whitcombe/Shutterstock.com Extreme drought in a cornfield under a hot sun. There is one green stalk of corn. ©Scott Book/Shutterstock.com Natural disaster and Flood affected area in Bangladesh. ©Namebie.com/Shutterstock.com Page 4 Aerial photo poor water village in Asia. Climate change threatens these coastal slums. Poverty. ©Rich Carey/Shutterstock.com Page 6 Aerial View of the Almeda Wildfire in Southern Oregon Talent Phoenix Northern California. Fire Destroys many people’s livelihoods and flips their lives upside down after fire had blown through town. ©Arboursabroad/Shutterstock.com Page 7 Glaciers of polar caps of the Earth. Ice Wall of sheet glacier (Ice front, zone of ablation), glaciology, glaciers study, climate change, ice melting. Franz Joseph Land, Rudolf island. ©Maximillian cabinet/Shutterstock.com Indigenous Fijian girl walking on flooded land in Fiji. On Feb 2016 Severe Tropical Cyclone Winston was the strongest tropical cyclone in Fiji Islands in recorded history. ©ChameleonsEye/Shutterstock.com

Page 9 Calcutta, India – June 10, 2015: Local people take bath from municipal water source to keep them self cool from heat wave on June 10, 2015 in Calcutta, India. ©Saikat Paul/Shutterstock.com Page 10 Aerial view of Amazon rainforest in Brazil, South America. Green forest.

Bird’s-eye view. ©Curioso.Photography/Shutterstock.com Page 12 Fire burning hay and dry small tree. hot fire burning,Wind blowing on a flaming trees during a forest fire,Forest fire, several hectares of pine trees burned during the dry season. ©Pix One/Shutterstock.com Page 13 Dhaka, Bangladesh – July 21, 2020: Vehicles try to drive through a flooded street in Dhaka. Encroachment of canals is contributing to the continual water logging in Dhaka, Bangladesh on July 21, 2020 ©Sk Hasan Ali/Shutterstock.com

Page 18 Space Satellite Telescope. ©Neo Edmund /Shutterstock.com Magelang, Central Java/ Indonesia09/26/2020: Photo of an officer checking the condition of the solar panel, early warning system, in anticipation of landslides. ©Dwi Martono Photo/Shutterstock.com Page 19 Early warning system station in middle of sea with mountain and tropical tree in background. Tsunami, high water and low water automated detection for casualties prevention and safety. Sunny weather. ©Luthfi Syahwal/Shutterstock.com Page 20 Children with drought. ©M2020 /Shutterstock.com

Page 14 Drought and famine – dead hungry cattle on dry Masai land in Kenya. ©Etreeg/Shutterstock.com

Page 21 Drone / Aerial view of the northern Boreal Forest. ©Harlan Schwartz/Shutterstock.com

8 November 2013. Tacloban, Philippines.

Typhoon Haiyan, known as Super Typhoon Yolanda in the Philippines, was one of the most intense tropical cyclones on record. ©ymphotos/Shutterstock.com

Page 22 Hurricane Irma as she passes through the Caribbean. This shot was taken from the coastline of Grand Cayman where the stormy conditions created a violent ocean. ©Drew McArthur/ Shutterstock.com

Page 15 6 May 2019 – Pemba, Mozambique: Collapsed houses and flooded roads after a hurricane in African town. ©fivepointsix/Shutterstock.com Page 16 Palms at hurricane. ©Photobank gallery/Shutterstock.com

Graphic design: MH Design/Maro Haas

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Page 17 Marsh Harbor, Abaco Island, The Bahamas – November 10, 2019: Destruction from hurricane Dorian showing debris and structural damage to buildings and trees. ©Paul Dempsey/Shutterstock.com

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

Smoke field fireman after wildfire silhouette. ©Chuangz/Shutterstock.com

Managing Climate Risks, Facing up to Losses and Damages Policy Highlights

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Managing Climate Risks, Facing up to Losses and Damages This report addresses the urgent issue of climate-related losses and damages. Climate change is driving fundamental changes to the planet with adverse impacts on human livelihoods and well-being, putting development gains at risk. The scale and extent of future risks for a given location is, however, subject to uncertainties in predicting complex climate dynamics as well as the impact of individual and societal decisions that determine future greenhouse gas emissions as well as patterns of socio-economic development and inequality.

The report approaches climate-related losses and damages from a risk management perspective. It explores how climate change will play out in different geographies, over time, focusing on the three types of hazards: slow-onset changes such as sea-level rise; extreme events including heatwaves, extreme rainfall and drought; and the potential for large-scale non-linear changes within the climate system itself. The report explores approaches to reduce and manage risks with a focus on policy action, finance and the role of technology in supporting effective risk governance processes. Drawing on experiences from around the world, least developed countries and small island developing states in particular, the report highlights a number of good practices and points to ways forward.

For more information: Recommended citation: OECD (2021), Policy Highlights: Managing Climate Risks, Facing up to Losses and Damages, OECD Publishing, Paris.

This summary is based on OECD (2021), Managing Climate Risks, Facing up to Losses and Damages, OECD Publishing, Paris, https://doi. org/10.1787/55ea1cc9-en.

The report was prepared with financial support from the German Federal Ministry for Economic Cooperation and Development of Germany (BMZ).

oe.cd/cc-losses-damages env.contact@oecd.org @OECD_ENV

© OECD, November 2021

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Managing Climate Risks, Facing up to Losses and Damages Policy Highlights