Abstract
Extreme weather has been having an increase in frequency and severity because of global warming. Heavy financial burden on governments has been increasing as reconstruction of natural disaster and prevention of public construction spending. Unlike the climate mitigation activities, the main purpose of climate adaptation is to establish climate risk management system. We discuss several types of financing instruments and collect several cases in both developed and developing countries internationally. We find that budget reallocation or government bonds are regularly used for losses from natural disaster in developing countries while both government bonds and insurance penetration are used to against catastrophe risks in the developed countries. Finally, we also find that insurance-related instruments are feasible and have been applied in some middle-income countries with assistance from the World Bank.
Highlights
The Adaptation Framework was set at COP16 held in Mexico in 2010
Extreme weather has been an increase in frequency and severity because of global warming
It is expected that heavy financial burden on governments is increasing caused by reconstruction of huge enormous natural disaster and prevention of public construction spending
Summary
The Adaptation Framework was set at COP16 held in Mexico in 2010. Climate adaptation aims to establish the climate risk management system, being different from climate mitigation. An increase in climate-related extreme weather events potentially manifest the fact that governments have to pay much attention to disaster risk management (Linnerooth-Bayer and Mechler, 2006) [1], especially for high losses from natural catastrophe and low insurance penetration for natural catastrophe in Asian countries. This paper aims to investigate the ex-ante and post-disaster financial instruments for climate change adaptation according to the four-level approach provided by Michel-Kerijan et al (2011) [2]. We introduce main financial instruments of climate change adaptation financial support mechanism and cases what financial instruments are used We apply both four-level approach in Michel-Kerijan et al (2011) [2] and financial instruments suggested by Ghesquiere and Mahul (2010) [3] to discuss cases of financial instruments in this paper.
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