Working paper: Addressing climate and disaster risk through inclusive and participatory mechanisms

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  • Climate and disaster risk emerges from the interaction of hazards, exposure, vulnerabilities, and lack of coping and adaptive capacities.

  • To address this, a comprehensive risk management strategy includes different elements such as risk prevention, risk reduction, risk transfer, and risk retention.

  • Key considerations on risk management also include the roles and responsibilities of stakeholders from various levels and sectors as well as cross-cutting issues including social protection, gender, youth, just recovery, just transition, and others.

  • Development of inclusive and participatory risk transfer mechanisms needs to take into account policies and the enabling environment, access to information and technology, private sector, community engagement, and local knowledge.

  • Risk transfer is not a stand-alone solution and has weak points, but it can be part of a risk management framework on the micro, meso, or macro-level.

  • Key functions of inclusive and participatory risk transfer mechanisms revolve around scope, functionality, benefits to communities, and additional co-benefits such as financial access, risk reduction, development, coordination, data availability, and multi-stakeholder cooperation.

The impacts of climate change increasingly undermine efforts of sustainable development and the reduction of poverty. Climate and disaster risk finance and transfer mechanisms are key components of any comprehensive risk management framework to address these issues. If they are designed appropriately to cater to the needs of the most vulnerable communities, they can enhance the implementation of climate action, enable more resilient and sustainable economic development, and protect lives, livelihoods, businesses, public finances, and infrastructure.

Inclusive and participatory risk transfer mechanisms support climate action and adaptation measures, but they are also critical tools in addressing unavoidable losses and damages. In both cases, the nature of risk must first be understood and evaluated to identify effective, evidence-based approaches that can be scaled up and institutionalized through policies, legislations, processes, and mechanisms such as the Nationally Determined Contributions (NDCs), the National Adaptation Plan (NAP) process, the Warsaw International Mechanism for Loss and Damage (WIM), or the Sendai Framework.

Developing countries in particular require financial, technical, and capacity support to address loss and damage, enhance implementation of actions, integrate focus areas of the WIM into their national mechanisms, and update NDCs with comprehensive climate risk management frameworks that take into account climate-induced loss and damage. It is vital for developing countries to manage climate and disaster risk proactively and efficiently to not compromise the implementation of development plans and achievement of SDGs, protect vulnerable populations, and access finance, technology, expertise, and capacities.