Half of the world’s infrastructure that will exist in 2050 is yet to be built. This presents us with unique challenges and unprecedented opportunities. The key challenge is that during their long lifecycle, all infrastructure systems will be exposed to a range of disasters including more frequent, severe and unpredictable extreme weather and climate events. The opportunity is that given the scale of investment, if we get it right, we can lock-in resilience for the long term. India, in collaboration with partner countries and the UN Office for Disaster Risk Reduction, has launched a Coalition for Disaster Resilient Infrastructure (CDRI). The Paris Peace Forum served as a unique platform to advance dialogue under the CDRI and engage a range of stakeholders with a view to identify specific areas where international cooperation and mutual exchange can promote disaster and climate resilient infrastructure. The message was clear: let’s invest in resilience!
Date : 12 November 2019
Paris, France – Grande Halle de La Villette, Auditorium
Watch the full debate
- Moderator: Onno Rühl, General Manager, Aga Khan Agency for Habitat (AKAH)
- Azali Assoumani, President of the Union of the Comoros
- Antoine Denoix, CEO, AXA Climate
- Koen Doens, Director-General, Directorate-General for International Cooperation and Development (DEVCO), European Commission
- Kamal Kishore, Member, National Disaster Management Authority (NDMA), India
- Laurence Tubiana, CEO, European Climate Foundation
Key takeaways from the discussion
- For years, we heard about carbon emissions in international discussions and negotiations such as COP, but not so much about adaptation. Talks were focused on finance, solidarity between North and South, but not impacts, because they were seen as something in the distant future. “We haven’t delivered on mitigation. We are witnessing now that the impacts are happening,” Laurence Tubiana observed. At least one billion people already suffer from climate hazards today. While laborious efforts are made to curb climate change effects at an international level, what can we do in the meantime to help people live better when the sword of Damocles is hanging over their heads?
- President Assoumani shared the example of the Comoro islands where climate change-induced natural disasters have multiplied the past years and resulted in massive destructions. With all cities located no further than 20 km from the coasts, the submersion, flood and cyclone risks are high. The government has made it a priority to work on risk prevention and education. He said that, “The concept of resilience should be taken into account in the inception and construction of infrastructure to give it the necessary flexibility to adjust and be better prepared for climate crises.” Given the magnitude of such task, and of the necessary investments, the President concluded that an international and coordinated action was needed and thus commended the Indian initiative.
- Kamal Kishore furthered this analysis and urged “to go beyond saving lives, we have to save livelihoods” as infrastructure is closely linked with people. If chances of dying in cyclone prone areas are now lower than before in India, the chances of losing one’s livelihood are much higher for the population through knock on effects. Ms. Tubiana added that the disruption brought about by climate change was a “civilizational risk” that extended to ecosystems, economies and the very social fabric of societies. “I listen to people talking about the cost of climate actions, and I’m furious. We shouldn’t delay our response because the impact is now. We are losing points of GDP already. Data is important to prove how much we are losing now because of this disruption.” With inaction, the social, capital and human costs increase. “In an interconnected global system, nobody in the world should think they’re safe, it’s an illusion, everybody lives downstream,” Mr. Kishore stated, and “no place can be left behind.”
- Knowing that 50% of the world infrastructure that will exist in 2050 is yet to be built, it is an opportunity for countries to design it with a new risk profile in mind. Mr. Kishore elaborated on the Coalition for Disaster Resilient Infrastructure (CDRI) recently launched by India in collaboration with partner countries and the UN Office for Disaster Risk Reduction. He explained that CDRI will complement mitigation efforts, advance adaptation agenda for infrastructure through knowledge sharing and capacity development. It will bring together a variety of players from the public and private sectors and academia. He argued that in developing countries, discussions on finance need to go beyond risk financing, and nudge all infrastructure towards resilience. He pointed out four items CDRI is looking at: 1) a new paradigm in the way to look at risks, i.e. not just asset level risks, but also system risks, and not just risks to infrastructure but the risks from infrastructure 2) update standards regulation including regulating professions involved in infrastructure 3) the role of finance 4) the need of a better and quicker recovery from disasters in infrastructure sector, and more predictable mechanisms at local government level.
- Speakers stressed the importance of data for the success of such an endeavor. If many actors now acknowledge they need to have adaptation plans, there’s still uncertainty about what infrastructure to build to take into account how the climate will unfold. “How can companies, cities, people prepare for the future when all the data used in the past is no longer relevant?” Ms. Tubiana asked. “We need more understanding and research to know how this uncertainty can be deployed and how to respond to it. We have to factor this in now.” Axa Climate’s CEO Mr. Denoix gave an example of how the private sector can use its core business for public good and prevention. He explained how the data gathered by the insurance company to formulate risk assessments (on flood, earthquake risks…) was now considered public information and made available to clients for risk prevention.
- DEVCO’s Director-General Koen Doens showed how the European Commission is factoring in these new challenges and risks when investing with partners. He recalled that the Paris agreement was the reference for the EU’s external action and that the Green New Deal put forward by new EU Commission’s President Ursula von der Leyen will mean putting climate mitigation and adaptation at the heart of partnerships with other countries within the EU and beyond. So, when the Direction prepares a new budgetary cycle, one of the benchmarks will be climate change in its adaptation and mitigation angles. “This is no longer a question, but a given,” he asserted. He highlighted four main strands of EU action:
- Defining evidence-based policies, and creating a disaster-resilient knowledge hub, a joint research center to share lessons and experiences on preparedness and get inputs from various actors such as the members of the European Covenant of Mayors for Climate & Energy
- Working with partners like the UN to create risk profiles per country, and develop finetuned response strategies fit for each country
- Investing in resilient infrastructure encompassing roads, electricity, schools, water sanitation… Japan was given as an inspiration with their across-the-board approach on earthquake-proof infrastructure.
- Involving the private sector to help impacted and vulnerable population who are usually not within their reach
- Ms. Tubiana underlined that this shift of focus was a revolution. “Before we were fighting for things that are now integrated and at the core of policies,” she observed with relief.
- Regarding financial aspects, Ms. Tubiana noted a “cognitive dissonance.” “People still think it’s safer to invest in 19th or 20th century type of activities with fossil fuels instead of adaptation ones for the future,” she lamented. “There is a disconnection between the discourse, the risks faced and where money is invested. An intellectual shift is needed.” Many investors are hedging their risks and adaptation is perceived as a cost, the same way mitigation was seen as a cost before. Governments recognize the problems, but say they have more other urgent problems to deal with first. Fortunately, things are slowly evolving, and asset managers are gradually seeing it as a good investment opportunity for the future. In many cases, mitigation and adaptation projects are the same ones, so they do include both issues. Mr. Doens was also optimistic and added that the EU’s role was to devise a policy framework to push investments in the right direction. “We no longer do mitigation just to save the planet, but also because that’s where the market is. Investment banks are looking for opportunities there,” he said. He specified that “if you want to bring big money there, there is a need for internationally established and recognized criteria for what green finance is or isn’t,” which is why the EU, along with other partners like China, is currently working on a taxonomy for green finance.
- Mr. Denoix illustrated what role the private sector can play and how an insurer can deal with these new risks. According to him, the insurance sector has only recently considered the disastrous climate change impacts and realized that their offer was no longer adapted. He said that insurers have not succeeded for years to reduce the “protection gap,” which is now likely to increase even more as climate-related weather hazards become more complex and unpredictable. Consequently, they have developed new ways to contribute to the support of population and infrastructure, such as parametric insurance products. Parametric insurance enables companies to deliver insurance more efficiently with quicker payouts. With such coverage, pre-agreed payment for a claim is delivered automatically upon the occurrence of a triggering event, which must have been pre-defined based on specific parameters or metrics related to the insured’s particular weather exposure. This swift payout issued even before actual damages are assessed provides much needed financial liquidity that is critical for a country’s recovery efforts. Parametric insurance is also used to protect banks’ credit portfolio and thus enables them to lend money to weather sensitive and renewable energy projects that would otherwise not have been financed because of their volatility. Finally, he insisted on Axa’s growing responsibility as an investor. The recent launch of an Impact Fund is a testament to the fact that the company wants to invest in projects that are not purely based on financial KPIs, but also on more meaningful and sustainable ones such as the capacity to adapt to climate change, to safeguard infrastructure or to save human lives.
See President Assoumani Azali’s contribution to the Peace Globe at the 2019 Paris Peace Forum.