Transboundary Climate Risk and Adaptation

World Adaptation Science ProgrammePolicy Brief Series

Adaptation Futures

29th April 2021

Magnus Benzie

& Katy Harris

Pakistan flooding 2010 –food-related riots

UK food affordability – emergency food banks

Russian Heatwave 2010 – wheat export ban

Based on Challinor et al, 2018

Carter et al (in press)

Transboundary climate risks

• The impacts of climate change that cross national borders

• The effects of adaptation actions that cascade across nation states

Photo credit: Michael H/Getty Images

The idea that countries, communities and companies can adapt in

isolation is hard to accept in an interconnected world, but this is

the implicit assumption behind much of mainstream adaptation

research and practice.

Responding to the global nature of the adaptation challenge will

not be easy, but it could inject new momentum and spark new

kinds of cooperation on adaptation – raising the bar to the benefit

of all.

WASP Position Paper #2: Transboundary climate risk and adaptation

WASP_Science_for_Adaptation_Policy_Brief_No._2.pdf (wasp-adaptation.org)

1. Adaptation is not (just) local or national – it

can also be regional or global, it requires

scientific knowledge and cooperation at all

scales, and should be recognized as delivering,

in some cases, global public goods.

2. Adaptation is not necessarily benign – it can

redistribute vulnerability and create or magnify

risk for others, especially across borders.

3. Adapting to transboundary climate risk falls

between the remits of government

departments and national jurisdictions and

ends up being “no-one’s job” – analysis is

needed to support solutions at various scales.

4. Adaptation science should support the policy

community to adopt a transboundary lens to

better manage the systemic nature of climate

risk.

Transboundary Climate Risk

Benzie & Harris (2020) WASP Policy Brief #2

What countries are doing

• LDC recognition; MDC reports

• Context > Impacts

• Very little adaptation

What needs to happen

• Dialogue

• Reframing adaptation

• Knowledge, guidance, solution

What we know

• Awareness

• Significance

• Self-interest

What we don’t

• Transboundary effects of adaptation

• Social distribution of TCR costs

• Risk ownership

A territorial approach to adaptation – far from serving the national

interest – is likely to heighten a country’s vulnerability to climate

risk, as well as raise the risk exposure of their closest neighbours

and allies.

WASP Position Paper #2: Transboundary climate risk and adaptation

Adaptation Without Borders

magnus.benzie@sei.orgkaty.harris@sei.org

THANK YOU

Transboundary Climate Risks in Asia: Research & Policy Needs

S.V.R.K. Prabhakar, PhD

Research Manager, Institute for Global Environmental Strategies, Japan

The Context: Asia is Experiencing Rapid Regional Integration

• The Boon and Bane of Regional Integration:

• In Asia, Hindu Kush Himalaya Region and the Southeast Asian regions are prominent to mention in terms of regional and global integration.

• These regions have benefited immensely from the regional and global integration. The reduction in poverty, increase in standard of life, and ability to move across the region are some of the immediate benefits that people in the region have benefited from.

• On the contrary, regional integration has also brought distinct risks to these regions. Due to still under developed risk management systems, the phenomenon of globalization of local risks, and greater exposure to global risks can be observed.

• With greater dependency on transboundary natural resources, the natural resources in the region are coming under immense pressure because of the regional integration. With natural resource governance poorly developed, this could mean a significant impact for all the countries in the region.

• The Adaptation Gap Report 2020: 34% of all nature based solutions lie in the areas of rivers and forests & 21% in agriculture and allied areas.

• Asia has a predominant rural and agrarian population, and • Asia has some of the major transboundary natural resources in the world that provide a

significant opportunity to target adaptation.

1. Growing International Investments in the Vulnerable Asia

• FDI in Asia has more than doubled from 1990, and stood at 460 b USD in 2016.

• Top 20 countries of WRI and CRI have attracted an FDI of 243 and 203 billion USD resp. in 2016.

• The disaster losses in these countries were 1.8 and 51 billion USD resp. in 2016.

Prabhakar, 2019

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2. Impact of Bangkok floods (2011) on Japan

• A total estimated loss of 47 billion USD, 90% of the losses were accrued to Japanese companies and related investments.

• More than 550 Japanese affiliate firms were affected by these floods, production facilities such as buildings and machinery were severely affected.

• Supply chain impacts: As these firms provide supplies to other factories in Malaysia, Vietnam and Indonesia and other parts of the world, the production of these factories were also affected due to the shock to the supply chains.

• The loss borne by the Japanese insurance companies stood at about 1.8 billion USD.

• The impact on the industrial production of the world was estimated to be 2.5% (Haraguchi & Lall, 2015).

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3. India’s Food Import Dependency on Fragile countries• During 2011-2020, 42% of total food imports

came from climatically vulnerable countries, and 29% from politically unstable countries.

• India imported food from 23 of top 30 climatically and 11 politically unstable/vulnerable countries during this period.

• The nexus between political stability and climate change is well recognized globally. This puts India’s food imports at risk.

Source: data from APEDA and Germanwatch, 2021

India also exports food to several of these countries in significant quantities.

How to forecast such global price fluctuations and their impact on India’s food security?

4. Food Price Volatility & weather vagaries

1. Global food crisis of 2008: 10-15% decline in food consumption (15-20% increase in food expenditure) in 50-70% of poor households from 2007 to 2008 (WFP 2009), food riots and poverty.

2. Impact on food security: poorer section of the urban population (casual and unskilled labourers)

3. Impact on livelihoods: petty traders, labourers and peri-urban agriculturists.

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rice

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FAO 2016

Guardian, 2011

2008 Global food price crisis• Global rice prices had risen 10 percent in just 2 months

• Rice prices increased when Cambodia and Egypt joined the restrictions.

• Thailand’s long-grain rice prices exceeded $1,000 per ton in late April 2008, more than double of prices in early February and triple of prices in November 2007.

• Major short-term factors for price rise:• temporary export bans and restrictions implemented by

several major and mid-level rice exporters (India, Vietnam, Cambodia, Egypt)

• Panic buying by several large rice importers

• Weather-related problems in specific growing areas

• A sharp decline in the value of dollar in fall 2007 and winter

USDA 2009

• Major long-term factors • sharply rising incomes in developing Asian countries

• very high prices for other foods

• extremely high nominal fuel and fertilizer prices

• the elimination of excess global rice stocks

• negligible yield growth for rice over the past decade

• a massive increase in the production of biofuels in recent years

2008 Global food price crisis

USDA 2009

5. Implications of Risk insurance in risk spreading beyond borders

• Risk insurance has been advocated as an important measure for DRR and CCA.

• In most of the cases, governments are the insurers of the last resort.

• However, in significant number of cases, as in catastrophic loss events, the risk gets transferred to international financial markets.

• Portfolio management operations of insurance companies that invest in financial markets (through securatization, retrocession, investment banking, credit default swaps etc.)

• This is a concern given that significant proportion of investments are made by insurance companies in financial markets and fluctuation in stock market prices of financial institutions as a result of catastrophic events and other shocks have serious implication for the financial viability of insurance companies and wider markets in question.

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In developing Asia, governments are still the insurers of the last resort. However, this is expected to change with development of Asian re-insurance markets and their links

with the global financial system.

Significant Challenges for Mitigating Transboundary Climate Risks

• Limited recognition for adaptation as a regional/global good

• Limited cooperation and institutional structures for sharing risk information among countries and actors (exception: ASEAN and MRC)

• Highly fragmented risk assessments not recognizing links with other sectors leading to limited understanding of risks and inefficient risk communication.

• There is a need for comprehensive and integrated risk assessments.

• Geopolitical situation and the ‘sensitivity’ attached to sharing risk information hindering regional cooperation in certain parts of Asia

Hope that the panel discussion sheds some light on some of these limitations

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Need 1: Risk Assessment and Risk Communication is the Key

Prabhakar et al., 2019

• Majority of foreign investing entities do not have deeper understanding of local risks!• Transboundary climate risks are seldom considered. • There is a poor risk communication between FDI recipient countries in investment entities.

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~30%

~12%~13%

Need 2: Regional Cooperation for Adaptation Planning

• Regional cooperation (RCAP) offers a mechanism for a collective effort of countries on regional adaptation planning.

• RCAP would harness regional technical and financial resources and or those available internationally but are not easily accessible to individual countries.

• RCAP would promote ‘self-help’ among Asian countries as a form of south-south cooperation in addressing the transboundary risks.

• For South Asia, RCAP can be led by SAARC Centre for DM or ICIMOD. For the Southeast Asia, RCAP can be led by ASEAN Sec.

5. Achieving complementarity and continuity with national and sub-national processes

4. Identify and commit national and regional resources

3. Agree on adaptation goals for the region

2. Understand transboundary risks of climate change (TBR assessments)

1. Identify & recognize transboundary resources

SEQUENCE OF STEPS FOR REGIONAL ADAPTATION PLANNING

National Adaptation Plan Process

Identify Goals &

Objectives

Impact, vulnerability assessments

Review objectives

Identify and evaluate actions

Implement actions

Track, monitory &

evaluate

Regional Adaptation Plan Process

Institutional setup

Information dissemination

Training and Capacity Building

Characterize and agree on regional natural resources and flows

Mapping of inter-country/inter-regional dependencies

Characterization and quantification of transboundary impacts of climate change

Characterization and quantification of benefits of interventions

Regional Cooperation

Understanding

Agreement

Commitment

Complementarity

Prabhakar et al., 2018

How a Cooperation for Regional Adaptation Planning can help?

• Strengthen research for assessing climate change risks of a country accrued from climatic events from outside its border.

• Facilitate sharing risk information among all the countries on regional basis or on thematic basis (e.g. trade risks, health risks, financial market risks, food price fluctuations)

• Establish a coordination mechanism for planning and implementing a regional adaptation solutions.

Thank You!

https://pub.iges.or.jp/pub/transboundary-impacts-climate-change-asia

Email: prabhakar@iges.or.jp

https://www.iges.or.jp/en/pub/globallocal/en

Transboundary Impacts of Climate Change in Asia: Making a Case for Regional Adaptation

Planning and Cooperation

International investments and businesses as enablers of globalization of local risks: A case for

risk communication and climate fragility reduction

The implications of cascading climate risks for global food security and for adaptation programmingDrawing on the example of Tunisia

Hanne Knaepen (hk@ecdpm.org)

29 April 2021

Outline

1. What are cascading climate risks to livelihoods?

2. What are the implications for adaptation

programming?

3. What are the knowledge gaps and practical

challenges?

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1. Cascading climate risks to livelihoods?

28

Cascading climate risks to livelihoods

29

The Transnational Climate Impacts (TCI) Index (SEI 2016) uses nine indicators of country-level exposure to cascading climate risks to rank countries. One indicator is cereal import dependency.

Continued reliance on subsidies

Less food security

Social unrest

Tunisia

Cascading climate risks to livelihoods

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Increased variability in

precipitation and reduced

precipitation

Drought

Reduced freshwater availability

Soil erosion

Reduction in agricultural

yieldsReduced export

volume/price shocks

International markets

Higher food prices

Less market opportunities

& income Rural-urban migration

Strain on provision of public services

Reduction in opportunities

Climate trigger

Initial impact

System component

Recipient risk

Transmission of risk

…….... Border

Cascading climate risks to livelihoods

31

Cascading climate risks to livelihoods

32

Unrest & instability

Tunisia

Europe

Increased migration

Climate trigger

Initial impact

System component

Recipient risk

Transmission of risk

…….... BorderPressure on diplomatic relations

2. Implications for adaptation programming?

33

Implications for adaptation programming

34

Building a diversified, environmentally sustainable national agri-food system, less dependent on food imports, is a way to adapt.

However, technical adaptation solutions face socio-economic, governance and political barriers, including:

● Poor governance & policy incoherence

● An export-oriented agri-food system and a lack of national food self-sufficiency

● Territorial inequalities

3. Knowledge gaps and practical challenges?

35

Knowledge gaps and practical challenges

● How to bridge the science to policy to practice gap?

● How to coordinate the governance of cascading climate risks and adaptation at different scales with different actors?

● How to ensure policy coherence?

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Want to know more?

www.cascades.euContact me: hk@ecdpm.org

European Centre for Development Policy Management

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The implications of compound and systemic risk for governance

Insights from IIASA/ISC Science Platform “Pathways to a post-COVID World”

Reinhard Mechler

Adaptation Futures pre-conference Webinar on

“Transboundary Climate Risk and Adaptation”

April 29, 2021

Co-hosted by: TERI and the World Adaptation Science Programme

Supported by: Adaptation Without Borders, CASCADES, Mistra Geopolitics and the Stockholm Environment Institute

39

Building pathways to sustainability in a post-COVID world

• IIASA & ISC partnership combining the strengths and expertise to define and design sustainability pathways through a multi-stakeholder dialogue, that will enable a more equitable post-COVID world

• Global hub for consultation, deliberation, and collaboration

among scientists, policymakers, and representatives from civil society and private sector around four key interconnected themes:

• Governance for sustainability• Strengthening science systems• Resilient food systems• Sustainable energy

Systemic RiskCOVID-19: an awareness trigger

• Remote triggers spreading impacts in a globalized world

• Impacts come from direct effects and societalresponses

• Cascading effects across systems and border make it a systemic multi-layer risk

o Individuals

o Business networks

o Financial and governance networks

• Risk governance needing further attention

climatestorylines.eu/wp-content/uploads/2020/12/Policy-Brief-Lessons-from

Compound risk: Covid-19 and climate-related hazards

floodresilience.net/resources/item/avoiding-a-perfect-storm-covid-19-and-floods-in-nepal/

Phillips et al., 2020

Climate-attributable hazards likely to intersect with COVID-19

COVID-19 has shown that current socio-ecological trends bring

us to a world that is facing increasing systemic and

compound risks in addition to being unequal and

unsustainable. Learning how intertwined human and natural

systems are and how a local threat can quickly become a global

crisis, our consultations with leading experts, advisors and

policymakers have shown that realizing sustainable development

is an imperative to systemically reduce risk, build resilience

and secure long-term development gains.

Narrative: learning from Covid-19 for Sustainability Transformations

IPCC, 2014

Pathways towards resilience: Decisions in the opportunity space

Pathways exercise

• Consider feasibility, enablers and entry points for shortlisted policy options in global consultations with policy, practice and research

• Time dimension: next 10 years (SDG ambition period)

• Prioritize and enable options from the consultations shortlist:

o Global governance enhanced at global and regional scales to shift development towards sustainable and resilient pathways in view of increasing compound and systemic risk

o Multi-level governance: Boosting awareness and understanding of compound and systemic risks across governance arrangements at all scales

o National governance involving to upgrade compound and systemic resilience governance

Present concerns and Covid-19 findings Pathways elements

TWI, 2018

Options for enhancing governance for sustainability

Global Governance: Reform and repurpose global institutions to enhance global governance in an ever-riskier world

Options:

● Shift towards more integrated processes (e.g. regular

coordination platforms, incl. crisis provisions)

● Strengthen science-policy-society interfaces for evidence-

based, participatory decision-making (e.g. advisory bodies

with regular/on-demand consultation arrangements,

participatory platforms)

● Build accountability and transparency provisions into more

integrated governance arrangements (e.g. through safe-

guarded mechanisms for sharing data, monitoring &

evaluating of objectives)

● Cooperate in mission-oriented ways to drive action in multi-

stakeholder coalitions incl. new institutional arrangement

Learning: Today’s global challenges (COVID-19, climate change, …) characterized by interconnectedness → international

system based on “specialized agencies” increasingly unfit to respond to today’s interconnected problems

FOGGS, 2021foggs.org/wp-content/uploads/2021/03/FOGGS_GRC-Brainstorming-Note-Final31-March-2021.pdf

Proposal for ‘Global Resilience Council’

Multi-level Governance: Boost awareness and understanding of compound and systemic risks across governance arrangements at all scales

Learning: COVID crisis shows a need for understanding, accounting and managing social and environmental externalities and

risks. Shared understanding and experience of risk from the individual and community level is needed to drive collective action at

all scales.

Options:

● Launch a multi-level global risk and resilience dialogue generating bottom-up and top-down

awareness-raising and mapping of risks (and underlying drivers) for strategic embedding of resilience in

strategies and plans.

● Alignment of investments with the SDGs and managing long-term risks.

● Extend on-going process related to the Taskforce on climate-related financial disclosures into an all-risk

SDG disclosure mechanism addressing other global commons and social goals

● Science-based targets and metrics, business and societally-relevant scenarios

Governance in National Systems: Make systemic resilience & sustainability a core government priority

Learning: Addressing vulnerability and building resilience create multiple dividends; failure to investment in that reduce our

collective capacity, across countries and across generations, to thrive and cope with crises

Options:● Make systemic resilience a core government priority by moving it to the center of government

(CoG): from risk managers to resilience offices through the following actions

● Ensure shorter-term Covid recovery packages integrate sustained investments into SDGs and

SDG wide resilience and lead to longer-term transformations to build forward rather than

back

● Devise science-based tracking mechanism assessing the alignment of the green fiscal

recovery packages with the SDGs and systemic resilience

Resilience to systemic risks?Triple dividend decision-making framework

• Gradual evolution of the definition of ‘resilience’ in relation to human societies in recent years: Resilience as a movement to a new, more desirable state after being disturbed

• Focus on systemic investments - Resilience as creating opportunities across relevant systems and borders and leading to broader societal progress.

• Reforms in areas such as taxation, development assistance, subsidy reform and environmental regulation will need to accompany such investment.

• Recent interest and work with ADB, World Bank and DG ECHO

ODI, LSE, World Bank 2016

3 Resilience Dividend example: Flood resilience in transboundary river basins (Nepal, India)

Rozer et al., 2021 /www.lse.ac.uk/granthaminstitute/wp-content/uploads/2021/04/working-paper-385-Roezer-et-al-1.pdfWork with the Flood Resilience Alliance

IIASA-ISC Consultative Science PlatformBouncing Forward Sustainably: Pathways to

a post-COVID World

https://covid19.iiasa.ac.at/isc/