Turbulent tropics: Securing climate-resilient development in the Caribbean

Hurricane and flood risks are on the rise in the Caribbean and could threaten the region’s development prospects. But cost-effective adaptation measures are available to manage these risks, says a study on the Economics of Climate Adaptation (ECA) in the region released by the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and supported by Swiss Re analytics.

Every year hurricanes sweep across the island states of the Caribbean, putting lives and properties at risk from wind damage, storm surge and flooding. The devastation left by a severe weather system can set back years of development gains. Although the 2010 Atlantic hurricane season so far may seem more like a tropical island breeze, its relative tranquillity could be deceiving.

Hurricane risks are high in the Caribbean, and climate change could make matters worse. According to the preliminary findings of a new ECA study covering eight Caribbean countries, economic losses from storms and floods already add up to 6% of GDP per year. Without additional adaptive measures, increasing climate risks could cost some Caribbean states up to 9% of their annual national income by 2030.

The good news is that many adaptation initiatives are available to prepare for the worst. In fact, the study shows that some Caribbean countries can cost-effectively avert up to 90% of expected losses by constructing sea walls, enforcing building codes and implementing other prevention measures. But when it comes to protecting local communities against the financial consequences of very rare but severe weather events, insurance – or risk transfer – generally proves to be the most cost-effective adaptation measure.

Swiss Re supports the CCRIF as the lead reinsurer and has developed innovative insurance solutions for several countries in the Caribbean and Gulf of Mexico region, most recently for the US state of Alabama . The methodology used in the Caribbean study was previously devised and tested by a consortium of public and private partners, including Swiss Re. It gives decision-makers the facts to build a portfolio of affordable adaptation measures . We contributed analytical inputs to the latest ECA project in the Caribbean to quantify climate risks. To date, the study covers Anguilla, Antigua and Barbuda, Barbados, Bermuda, the Cayman Islands, Dominica, Jamaica and St. Lucia.

Published: 19 August 2010