* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
By Sven Harmeling, advisor on climate and development with Germanwatch, and Koko Warner, researcher at the United Nations University Institute for Environment and Human Security (UNU-EHS)
The La Nina-related floods that have devastated Pakistan since July highlight the growing need for an international risk transfer mechanism for weather-related events.
U.N. Secretary General Ban Ki Moon has bemoaned the fact that too little aid is coming too late to help the estimated 21 million homeless and flood-affected people of Pakistan. Donor fatigue, lack of celebrity involvement and the protracted unfolding of the disaster have led to insufficient funding at Pakistan's time of need.
How could an international insurance mechanism within the U.N. Framework Convention on Climate Change (UNFCCC) process help in the case of such events? The first step is to link serious planning and implementation of risk reduction measures to wider climate risk management strategies.
The second is to ensure that a global insurance approach, supported by the international community, catalyses adaptation and risk management in countries facing rising medium and high-level climatological risks.
The benefits include an incentivised focus on risk reduction, and advance planning for adequate financial resources when and where they are needed.
Experience has shown that insurance mechanisms can make payouts rapidly. Funds from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) were the first to reach Haiti after January's calamitous earthquake - about a month before humanitarian donations began flowing.
ACCOUNTABILITY
One challenge is that it is difficult to guarantee that insurance payouts will be used effectively and appropriately by participating governments. That could be circumvented by establishing national climate change funds that can receive international insurance payments - as Bangladesh has done, with its fund governed by a multi-stakeholder committee rather than a government ministry.
To make such a model work, the committee would have to work out how to distribute payments before any disaster occurred. This approach would complement wider adaptation strategies by encouraging coherence of risk management strategies and ex ante planning.
The current negotiating text being discussed at U.N. climate talks considers the establishment of this kind of international insurance coverage as one function of a broader mechanism to address loss and damage from climate change.
Devastating events - of which Pakistan's flooding is an exemplary case - underscore the urgent need for such approaches. An insurance mechanism should be one of the operational elements of the adaptation framework negotiated in the UNFCCC process and should be financed from a share of international funds provided for adaptation.
Piloting regional approaches through the "fast-start" climate finance donors are providing from 2010 to 2012 could generate important lessons on how to operate an insurance scheme that would speed up adaptation, promote more effective risk management, and support humanitarian efforts in vulnerable countries.
