Climate Sense

[

] 203

Innovative risk transfer options as adaptation

strategies to growing hydro-meteorological

risks in the Caribbean Basin

Simon Young and Ekhosuehi Iyahen, Caribbean Risk Managers Limited, Facility Supervisors,

Caribbean Catastrophe Risk Insurance Facility

limate change is adding to the already severe and steadily

worsening risk exposure of the Small Island Developing

States (SIDS) of the Caribbean Basin. Exposed to severe

hurricane hazards as well as extreme rainfall and related flood

and landslide hazards, small islands have a relatively high

length of coastline and a huge concentration of economic activ-

ity in coastal zones and/or the lower reaches of river valleys.

This is due to the high and growing economic importance of

tourism (dominantly coastal-based) and the great concentration

of the population on coastal flats. The other main economic

engine of the region, agriculture, is also highly exposed to hydro-

meteorological hazards.

An added problem for small countries with small economies is the

devastating effect that single-event catastrophes can have both on physi-

cal infrastructure and the socioeconomic fabric of the country. A small

regional economy combined with existing physical vulnerabilities often

results in an amplified effect from natural hazards on these

countries. For example, in 2004 Hurricane Ivan impacted

almost 200 per cent of the annual gross domestic product

(GDP) in each of two Caribbean islands, Grenada and the

Cayman Islands, as well resulting in significant damage

in Jamaica. By contrast, Hurricane Katrina’s impact in the

US was less than one per cent of annual US GDP and only

about 30 per cent of Louisiana’s annual GDP – assuming

half of the total economic impact was in Louisiana.

Althoughmuch work remains to be done to fully under-

stand the impacts of climate change on the Caribbean, a

consensus is emerging that extreme events are likely to

increase in both frequency and severity. This may hold for

hurricanes as well as non-cyclonic rainfall events. Evidence

provided by the 2007 Fourth Assessment Report of the

Intergovernmental Panel on Climate Change provides

overwhelming support of the probability of these changes

isk

overnance

and

anagement

Damage resulting from Hurricane Ivan’s impact on Cayman in September 2004

Image: Mike Whiteman