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Parallel session 3.2: Climate and disaster risk financing and social protection

The increasing role of pre-arranged financing for social protection in the Global Shield and beyond

This session was hosted by the Global Shield against Climate Risks and the World Food Programme (WFP).

Zoe Scott, Independent Consultant, gave a framing presentation and moderated the discussion between the following panelists:

  • Sara Jane Ahmed, Finance Advisor to the Vulnerable Group of Twenty, Ministers of Finance of the Climate Vulnerable Forum (CVF)
  • Erwing de Castilla Cisne, Technical Advisor, Ministry of Finance and Public Credit, Nicaragua
  • Amit Kumar Garg, Senior Advisor, UNCDF
  • Martin Kipping, Head of division for Climate Policy, German Federal Ministry for Economic Cooperation and Development (BMZ)
  • Mulder Mkutumula, Disaster Risk Finance Specialist and Coordinator at the National Local Government Finance Committee (NLGFC), Malawi
  • Dr Ana Solórzano, Social Protection and Climate Advisor, World Food Programme (WFP)

It is widely agreed that pre-arranged finance, which can be quickly and reliably disbursed in the event of a disaster, is critical in enabling social protection systems to protect people in the case of shocks like extreme climate events. In recent years, international organisations, donors and countries have begun to explore how to link climate and disaster risk financing instruments with national social protection systems in order to strengthen preparedness and support early action and shock response at scale. Some of these instruments include forecast-based financing and micro and macro insurance, among others.

The V20 / G7 Global Shield against Climate Risks recently launched at COP-27 aims to develop and support the access to climate and disaster risk financing for vulnerable countries. It also recognises the role social protection systems can play in managing the negative impact of climate shocks and protecting the poorest and most vulnerable people. In this context, new opportunities are emerging to continue exploring these linkages. However, despite the synergies between social protection and climate and disaster risk financing instruments, very limited global operational experience exists that can inform future developments.

This session brought together experts from governments and international organisations that have worked on this agenda in order to take stock of the different opportunities, challenges and lessons learned from linking pre-arranged financing instruments with social protection systems and to reflect on the key insights emerging from recent programmes and pilots. Specific country-level experiences were shared from Fiji, Malawi and Nicaragua.

Key points from the session included:

  • Disaster risk financing gives governments a sense of assurance that financing will be available when it is needed.
  • The first ‘green shoots’ of benefits from disaster risk financing can be seen, e.g. in improved cost-effectiveness and reductions in displacement.
  • Many challenges to implementation remain, from difficulties with payment systems to the need for greater and more effective communication to communities.
  • It can be difficult to bring together the different parts of government responsible for disaster response and social protection, and to institutionalise linkages between them.

© GIZ/Steffen Kugler
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