Renewed call for new funding model

The call for some of the world’s richest nations to do more to help vulnerable countries mitigate against climate change continues to grow, with Minister in the MInistry of Investment Marsha Caddle calling for a new funding model.

In fact, she suggested that they look to Barbados as an example of how to provide new financial instruments to help more exposed countries deal with the effects of natural disasters brought on by the climate crisis.

As part of its debt restructuring a few years ago, Government included a natural disaster clause, which would allow for the capitalization of interest and suspension of debt payments on new bonds for two years, in the event that Barbados is adversely affected by a natural disaster such as flood, earthquake or tropical cyclone.

“I really think that the Barbados-style natural disaster clauses are the way to get financing to countries. I think financing is the problem that we have to solve . . . ,” said Caddle.

The Minister acknowledged that the recent World Bank Group/International Monetary Fund (IMF) Debt Service Suspension Initiative (DSSI) will see some of the world’s poorest countries saving over US$12 billion owed to creditors this year.

However, she said, “the funding gap is US$12 trillion” adding that “Barbadian style natural disaster clauses are going to fill that gap and we need some first movers in this space to be able to demonstrate, to be able to show that this works. I think that is how we can work together to make sure that we fill the financing gap in terms of tackling the climate crisis”.

She was addressing the Insurance Development Forum Summit 2021 on Tuesday, examining the theme Meeting the Moment: How Leaders can Build Back a Better Crisis Financing System at this year’s G7.

Caddle’s call came amid suggestions from other panellists that the private sector, insurance companies and civil society groups can play a greater role in influencing governments to do more to help in the fight against climate change.

“So I am calling on G7 countries,” she said.

The G7 group, which consists of the United States, Canada, the United Kingdom, France, Germany, Italy and Japan, are scheduled to meet for the 47th G7 summit from June 11 to 13 in the UK.

High on the agenda at the meeting, which will include representatives from the European Union Council and specially invited representatives from other nations, will be issues relating to the climate crisis and the COVID-19 pandemic.

Caddle argued that the countries that contribute greatest to the greenhouse gases “don’t bear, currently, the highest cost”. This, she said, was an imbalance that was driving climate change and she insisted that big nations should take greater responsibility.

“Until we fix it, the climate crisis is going to continue,” said Caddle, who pointed out that Barbados and other Caribbean countries face more intense natural disasters and slow onset events.

She said it was therefore necessary that the current “imperfect” and “broken” financing system, which takes into account a country’s gross national income per capita, be urgently changed to a “poor and vulnerability approach”.

Caddle noted that more than 75 per cent of the world’s poorest people live in countries that are classified as middle to high income countries, adding that the bulk of climate-related finance was not reaching countries “on the front line of the climate crisis” because of the criteria for funding.

“What we have is an imperfect system to be able to finance both disaster and slow onset events like drought. Barbados is among the top 15 water scarce countries in the world and this is worsening drought because of the climate crisis,” said Caddle.

“What we need are eligibility criteria that are less backward looking, less looking at historical gross domestic product and gross national income, and more focused on future risks, focused on wipe-out risks – the possibility that a country loses its entire GDP – and focus on inability to absorb those risks. That is what we need to fix about the current system.”

Meanwhile, Christina Bennett, Chief Executive Officer of Start Network, a network of global non-governmental organization aid agencies, suggested that a more proactive approach was needed to help fund countries affected by the climate crisis.

She said research showed that more than half of crises were predictable, but less than one per cent of funding goes towards those crises ahead of time. Bennett also pointed out that evidence showed that when funding reaches individuals and nations ahead of a crisis, the impact was lessened.

“So it is really clear that the benefits of a participatory approach are there, it is just the political will that is missing to really shift the way we prepare for disasters,” said Bennett.

“So the problem is not that we need to rebuild it and start from scratch. The problem is that it is piece meal and fragmented and uncoordinated. So rather than redesigning the system, I would like to see that we build upon the infrastructure and the elements that already exist. We need to reinforce them and connect them with one another and we need to pool them and scale them up,” she added.
(marlonmadden@barbadostoday.bb)