The Private Sector

Opportunities for Engagingin Preparing and Implementing the

Strategy for Disaster and Climate Resilient Development in the Pacific

Private Sector Perspectives• Climate change is primarily an environmental rather

than a development issue;• Climate change is still unproven;• At worst, it is a future rather than current risk,

beyond timeframes relevant for investment purposes;

• Hence improving climate resilience takes the form of risk avoidance, only generating a return if and when an extreme event occurs;

• The political process, including the climate change convention and related negotiations, is notably lacking inputs from the private sector.Source: Biaginia and Miller, 2013

Private investment largely determines

disaster & climate risk

Risk Construction

Resilient Development

E.g. Avatiu Harbour, Rarotonga.A climate ready port.

E.g. Over watertourist accommodationIn a cyclone prone area.

Why Be Involved in Resilient Development?

• For your economic interest - many of private sector investments are at significant risk – managing these risks will make these investments and the returns less risky, and more profitable in the longer term;

• For your clients’ interest – in addition to the economic argument, there is also the ethical imperative for sustainable investment and business practice;

• For the interests of your country(ies) of operation.

The Economic Argument

• The total value of the infrastructure, buildings and cash crops in the Pacific islands region that is at risk from tropical cyclones, earthquakes and tsunami is estimated to be over USD 112 billion.

• This translates into annual average economic losses being as high as 7% of gross domestic product (GDP), with disaster losses in any single year sometimes exceeding the GDP.

Source: World Bank, 2012

Ways the Private Sector is Involved• Developing and marketing products and services that will

reduce the costs and impacts of climate change and natural hazards;

• Awareness raising, including potential risks and response measures;

• Capacity building to train private entities how to manage climate and disaster risks:

• Changing regulations, policies and institutional arrangements;• Developing and marketing insurance products;• Public-private partnerships and efforts that promote private

sector responses;• Entrepreneurship development/encouragement that opens

new private sector opportunities for increasing the resilience of development outcomes.

Risk Management Strategies for Businesses

Company Risk Management Strategies

Strengthened Risk Management

Low CarbonDevelopment

StrengthenedDisaster Preparedness,Response and Recovery

Management of Newand Emerging Issues

Capacity for Implementation

Pillars of Disaster and Climate Resilient Development

Approaches to Resilient Development

Reduce Exposure

Increase Resilience to

Ongoing Risks

Low Carbon Development

Reduce Vulnerability

Prepare, Respond and

Recover

Transfer and Share Risks

Relevance to the Private Sector

Exposure - the presence of assets in potentially damaging settings.

Reduce Exposure

Relevance to the Private Sector

Resilience - the ability of a system and its component parts to anticipate, absorb, accommodate, or recover from the effects of a potentially adverse conditions.

IncreaseResilience

Relevance to the Private Sector

Low carbon development – emphasises development that increases energy efficiency and conservation, fuel substitution through development of renewable energy, and ecosystem conservation such as the sustainable management of forests and the enhancement of forest carbon stocks.

Low Carbon Development

Relevance to the Private Sector

• Vulnerability – the propensity of exposed assets to be harmed when impacted by adverse conditions.

Reduce Vulnerability

Avatiu Harbour, Rarotonga.A climate ready port.

Relevance to the Private Sector

Disaster management - lessens the impact of disasters through preparedness, response and recovery initiatives

Prepare, Respond &

Recover

Relevance to the Private Sector

Transfer and Share Risks – pooling resources via taxation, insurance or investment in order to reduce individual exposure to risk.

Transfer and Share Risks

Group Discussion

Discussion

How can the private sector contribute to resilient development:• through strengthened risk management; • low carbon development; • strengthened preparedness, response and recovery;• clarification and management of emerging issues?