Insurance can be indemnity-based, where products are written against actual losses, or parametric, where products are written against a physical index (e.g., soil moisture), that is, against events that cause loss, not against the loss itself. A parametric instrument disburses funds based on a triggering event that reaches a pre-determined threshold of a quantifiable measure (for example, wind speed or precipitation), which importantly is not conditional on an on-site loss assessment. Semi-parametric schemes are also written, where the trigger is a combination of a hazard and its calculated/modelled impact based on known exposures and vulnerabilities (Molini et al. 2007).

Because they target the most vulnerable in the developing world and have featured prominently in the L&D discussions, two types of insurance are highlighted in this chapter: (1) micro-insurance that offers cover to households, farms and SMEs, and (2) regional sovereign risk pools providing support for national governments. The intent of micro-insurance is to make insurance accessible by avoiding the high costs of traditional insurance in order to service resource-poor markets, usually by offering limited cover and greatly reducing transaction costs (Mechler et al. 2006). The intent of regional sovereign risk insurance pools, including those already formed in the Caribbean, Pacific Islands and Africa, is to ensure needed and timely liquidity postdisaster.

#### **21.3 The Benefits and Costs of Insurance**

#### *21.3.1 Benefits of Insurance*

The central feature of insurance is its risk-pooling capacity. By pooling risks from a sufficiently large and independent number of individual households, farms, businesses and even sovereign states, insurance collectively reduces loss volatility (mathematically speaking, the variance of losses) and in this way can guarantee postdisaster liquidity to those individuals at risk (Kunreuther 1998). The assurance of post-disaster liquidity, in turn, can reduce impacts, including disaster-induced bankruptcy, hunger, selling of productive financial assets or taking kin out of school with long-term impacts on human capital formation. If correctly implemented insurance thus delivers risk pooling over space and time; faster and more efficient reconstruction; certainty about post-disaster support; and can reduce immediate welfare losses and consumption reductions (Brainard 2008; von Peter et al. 2012).

An important advantage of insurance over many other types of risk financing is the timeliness of the post-disaster payments. A study by Clarke and Hill (2013) suggests that rapid payouts and prompt assistance to affected populations can reduce the impact of disasters and enable poor and vulnerable people to recover more quickly. Examining experience of pro-poor insurance instruments shows that they have been an effective risk management tool in terms of providing timely payments post-event (Arent et al. 2017). Moreover, an insurance contract can be a more secure and timely means of coping with disasters than dependency on ad hoc and often delayed generosity of governments and donors. To add to these benefits, insurance can render clients more creditworthy, and in so doing promote investments in productive assets and higher-risk/higher-yield activities, in turn reducing disaster-related poverty traps (Hallegatte et al. 2016).

Turning to governments, sovereign disaster risk financing instruments including insurance pools aim at protecting public budgets in the wake of disasters. Due to limited tax bases, high indebtedness and low uptake of insurance, many highly exposed developing countries cannot fully recover by simply relying on limited external donor aid. Ex post liquidity through insurance enables governments to provide relief to the most vulnerable and to invest in reconstruction and recovery, thus reducing longterm losses and development setbacks from disasters. Sovereign risk transfers can also indirectly benefit households and other victims of disasters. With internationally backed risk-transfer programs, developing country governments will rely less on debt financing and international donations, and assured funds for repairing critical infrastructure can attract foreign investment. Finally, and importantly, insurance instruments may provide incentives to reduce risk (Newsham et al. 2011; Heltberg et al. 2009a, b), but only if they do not encourage behaviour that neglects to reduce risks in a cost-effective way, a common concern in insurance applications often referred to as 'moral hazard.' The preventative capacity of insurance instruments is the topic of Sect. 3, where we examine their risk-reduction potential in practice.

#### *21.3.2 Costs of Insurance*

While there are substantial benefits provided by privately or publicly offered insurance, the costs of insurance are considerable. The average financial cost of insurance generally surpasses average losses, meaning that un-subsidised insurance premiums are greater than what the client expects to lose. For this reason, clients should carefully consider the costs and benefits, and rely on insurance only after considering the alternatives, or in the words of Vaughan and Vaughan (2008, p. 62), only as a last resort. *Indeed, without outside subsidies and other forms of support policyholders can expect, on average, a higher financial burden in the long run with insurance than without it*. That insurance results, on average, in greater costs to those insured is often not appreciated and needs further explanation.

The insurance premium tends to be inflated above the 'actuarially fair value' or 'pure premium' (expected losses) due to the fact that on top of the annual expected losses a risk premium is charged. As shown in Fig. 21.2, the risk premium is determined by two factors: expense load and risk load (Pollner 2000). Additionally, in the case of private insurance a profit margin is charged. In general terms the *expense load* reflects the costs of the insurer doing business, and the *risk load* includes the cost of holding capital, reinsurance and of assuming uncertain contracts for high-level risks. The risk load distinguishes catastrophe insurance from other types of insurance, like life and health, since insurers covering catastrophic risks must be prepared to pay claims for disasters that affect whole regions or countries at the same time (co-variate risk). Still, if insurers are sufficiently diversified, the risk load will not only insulate them from large losses at one time, but will also in the long run result in significant profits.

**Fig. 21.2** Costs contributing to catastrophe insurance premium *Source* Adapted from Cummins and Mahul (2009)

The ratio of the premium paid versus the coverage obtained gives an indication of the insurance cost, particularly when comparing insurance to other risk financing tools. Using this ratio, Ghesquiere and Mahul (2010) found that risk transfer is very costly compared to most other financial instruments (Ghesquiere and Mahul 2010; Clarke and Dercon 2016). As a case in point, in the Caribbean region annual insurance premiums (paid mostly by businesses) were estimated to represent about 1.5% of GDP during the period 1970–1999, while average losses per annum (insured and uninsured) accounted for only about 0.5% of GDP (Auffret 2003).

If insurance premiums cost clients on average more than their anticipated losses, and in the case of co-variant catastrophic events significantly so, why do households, businesses and governments insure? This question is particularly pertinent for resource-poor households and governments, where premium payments can have high opportunity costs. The textbook rationale for purchasing insurance, verified by evidence on insurance penetration, is based on the concept of "risk aversion". Riskaverse persons and entities (generally people who cannot cope with large losses) are willing to pay more than they expect to lose on average to avoid catastrophic losses. Households and farms in developing countries are likely to be highly risk averse since large losses can threaten livelihoods and lives (and thus have severe costs and other implications beyond the sheer financial loss). The same holds for the public sector since disasters can significantly affect development if governments do not have the means for rapid reconstruction and relief efforts (Mechler 2004).

For middle- to high-income earners in developed as well as developing countries an insurance value proposition can often be discerned as shown by substantial insurance demand, yet it is pertinent to ask how insurance mechanisms can serve resource-poor clients facing high risk? As current programs demonstrate, insurance premiums are made affordable by targeting higher income clients, implementing cross subsidies, limiting coverage, providing outside support and forming partnerships (Linnerooth-Bayer et al. 2010). Whereas most discussions focus largely on making insurance affordable, it should be recognised that it may not be advisable from a benefit-cost perspective. Indeed, reliance on alternative financial arrangements, like donor solidarity, savings, credit and remittances, can be considerably less costly than insurance, and these arrangements can work reasonably well for low-loss events (Cohen and Sebstad 2003). However, they can be unreliable and inadequate for covariate and catastrophic shocks that place a significant financial strain on whole communities, regions and governments. *Insurance theory and recent cost*-*benefit assessments indicate that insurance and other risk financing instruments are mainly advisable, and viable, for large and residual risks that cannot be reduced or retained otherwise*.

#### **21.4 Preventative Response: Does Insurance Support the Risk-Reduction Response to the WIM?**

Many analysts argue that insurance can go beyond enabling *ex post* relief, reconstruction and recovery, to be an *ex ante* tool for promoting risk reduction (Kunreuther 1996; Kunreuther and Michel-Kerjan 2009; Crichton 2008; Botzen 2013). According to the chapter by Schäfer et al. (2018): "Insurance spurs transformation by helping countries reshape the way risks are managed. It does so by encouraging risk reduction, catalysing risk assessment, and driving more structured decision-making around ex-ante risk". Despite these claims, some commentators, including NGOs and parties to the UNFCCC, remain sceptical that insurance goes beyond risk spreading to risk reduction, and worry that insurance can even lead to a false sense of security or moral hazard if the insured, by not bearing the full costs of risky decisions, take on more risk (Vellinga et al. 2001; UNFCCC 2008). Moral hazard is widely recognised, and insurers address it through the design of insurance products by using deductibles or parametric products; however, questions remain whether insurance products lead directly to risk reduction. According to the Intergovernmental Panel on Climate Change (IPCC), insurance can "directly provide incentives for reducing risk, yet the evidence is weak and the presence of many counteracting factors often leads to disincentives…" (Chambwera et al. 2014).

Building on Surminski and Eldridge (2015) and Surminski (2014), Lorant et al. (*forthcoming*) identify ways in which the contractual elements and ancillary mechanisms of insurance can (in concept) encourage risk reduction. After surveying the developed-country practices of flood insurers, the authors note the disappointing evidence of a strong link between insurance and DRR and suggest ways that insurers can contribute more effectively, for example, making better use of hazard maps, monitoring household risk improvements, rewarding risk mitigation with premium discounts, inserting conditions or warranties into contracts, and developing protocols that will better link risk inspections of large facilities with underwriting practices. Beyond these design changes, there is evidence that public insurers invest more in preventative risk reduction than their private insurer counterparts (Schwarze and Croonenbroeck 2017; Ungern-Sternberg 1996). The evidence on the insurance-DRR link for the on-going work under the WIM is*that indemnity*-*based insurance as practiced in wealthy countries may need adapting if it is to be applied as an* instrument *to foster reduction of loss and damage in developing countries*. A similar conclusion was reached by the IPCC, where authors confirmed that risk-financing mechanisms contribute to increasing resilience, but that major design changes would be needed to avoid providing disincentives for DRR (Chambwera et al. 2014). As we witness in wealthy countries, *progress will be slow and patchy without public and private commitment to shaping insurance systems such that they foster practices that lead to investment in disaster risk reduction practices.*

#### *21.4.1 The Experience of Micro-insurance in Promoting Risk Reduction*

The message that insurance practices will require reform if they are to better promote risk reduction holds not only for indemnity-based systems in wealthy countries, but also for parametric micro-insurance systems that are increasingly targeting resourcepoor clients in the developing world (for reviews, see Linnerooth-Bayer et al. 2012; Mechler et al. 2006; Schäfer andWaters 2016). Already in 2010, there were a reported 36 parametric weather insurance programs, including 28 addressing individual farmers/herders, residents of informal settlements, village or cooperative risk (Hazell et al. 2010), with many other programs having appeared since then (Schäfer and Waters 2016).

Parametric systems are notable for the absence of moral hazard. The insured remain motivated to reduce their losses and damages because insurance disbursements, if they are triggered, are not based on actual losses. For example, a farmer with a parametric insurance contract, which pays out if rainfall falls below a predefined level, can gain doubly by planting drought-resistant crops since the farmer will have less losses and still receive a pay-out. Beyond the elimination of moral hazard, the literature on parametric micro-insurance makes little reference to specific risk-reduction requirements, for example, in the form of conditions or warranties, and there are few accounts of micro-insurers informing clients of hazards or advising them on risk-reduction activities.

One notable positive exception is the R4 Rural Resilience Initiative (R4) that offers micro-insurance for drought risk to food-insecure communities in Ethiopia, Senegal, Malawi and Zambia (see Box 21.1). R4 currently reaches over 40,000 farms through a combination of its four risk-management strategies: The first, R1, promotes improved resource management (risk reduction); R2 supports microcredit (prudent risk taking;); R3 is insurance (risk transfer); and R4 is savings (risk reserves). The most unique and interesting feature of this initiative is its direct link to the reduction of crop loss from drought. In lieu of paying aa premium, cash-constrained farmers can opt to participate in an insurance-for-assets (IFA) plan, whereby they pay the premium through their labour on projects that reduce risk in the community, such as field irrigation projects and tree planting (World Food Programme and Oxfam America 2016). It should be noted, however, that the R4 Program operates with generously subsidised premiums, even to those not participating in insurance-forassets, and cannot be compared to a market-based insurance program.

*R4 is exemplary by providing a proven insurance system design that promotes DRR,* especially since the risk management experiences of most micro-insurance programs suggest that they could become a more powerful DRR tool with carefully designed interventions by governments or donors. Importantly, the ability of those most vulnerable to reduce their own risk and to change their behaviour may be very limited or not feasible unless supported by donors.

#### **Box 21.1 R4 Rural Resilience Initiative for drought risk management**

**Countries**: Ethiopia, Senegal, Malawi, Zambia

**Partners**: farmers, local relief society, insurers, reinsurers, rural banks, university, government and donors

**Policy holders**: 40,000 Smallholder farmers' livelihoods in

drought-prone regions with a sum insured of USD 2.2 million, premiums of USD 370,000, and payouts USD 450,000 (2015)

**Fig. 21.3** The R4 Rural Resilience Initiative

#### **Integrated risk management framework**

**Insurance-for-work program** to supplement the government's "food and cash for work" Productive Safety Net Programme (PSNP)

**Work program** includes projects for reducing risk and building climate resilience, such as improved irrigation or soil management.

*Source* World Food Program & Oxfam America 2016; World Food Programme 2017

#### *21.4.2 The Experience of Regional Risk Pools in Promoting Risk Reduction*

The first of three regional sovereign risk pools, the Caribbean Catastrophe Risk Insurance Facility (CCRIF), was created in 2007 as a multi-government disaster risk pooling arrangement with the aim of providing sovereign insurance coverage for hurricanes and earthquakes to its participating member countries (UNISDR 2017). A second regional pool, Africa Risk Capacity (ARC) was established in 2012 as a specialised agency of the African Union to help member states improve their capacities to better plan, prepare and respond to natural disasters (Wilcox 2014). Recently, a third regional sovereign risk pooling arrangement has been created for the Pacific island states, the Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) (World Bank 2017). In all three cases, disbursements from the pool go to participating governments for the purpose of supporting their post-disaster relief and reconstruction efforts, although only one of the pools (ARC) makes requirements on how the disbursements are used by requesting its members to provide details about contingency management and disbursement when they join the pool.

A key feature of all three pools is the parametric nature of the insurance contract, which, as discussed for micro-insurance, makes payments faster and the claim process less costly than traditional indemnity-based insurance products for which claims are paid based on assessments of loss through on-site verification. Fast payment of claims is especially critical. Intervening quickly after a disaster can provide governments with funds that support households and prevent the adoption of damaging coping strategies (such as selling off or slaughtering livestock). A benefit-cost analysis carried out on the ARC shows that getting aid to households in the critical three months after harvest can result in economic gains of over USD 1,200 per household assisted (Clarke and Hill 2013). CCRIF announced that its payouts to Caribbean governments due to the impacts of Hurricane Irma, which devastated many island states in September 2017, will reach \$31.2 million, and the facility has now passed \$100 million of payouts to members since its launch. All of the \$100 million of payouts were made to members within 14 days of the catastrophe events that triggered their parametric insurance policies (ARTEMIS 2017a).

Advancing ex ante risk management is also important in all three regional programs, especially with respect to developing the knowledge base on which disaster risk reduction and management policy can be pursued. Each pool makes an effort, paid for by donors, to measure and quantify disaster risk in the relevant region by examining not only the hazard but also exposure and vulnerability using detailed mapping, data and modelling tools developed explicitly for this purpose. An example is ARC's modelling platform called African Risk View. It provides modelling input to ARC for insurance purposes, but also aims to be a financial early warning tool, supporting government decision-makers with cost estimates before and during a drought season. As such it can trigger early action and risk reduction measures. The models and quantification of risk constitute major progress as private markets and the governments of the region were not supplying this information previously. If combined with technical assistance and capacity building these advances in risk information can lead to a culture of risk management across governments, potentially inducing a more anticipatory approach to risk (Vivid Economics et al. 2016).

ARC is currently preparing for the launch of an additional tool, the Extreme Climate Facility (ARC-XCF), which aims to address adaptation and resilience shortfalls in African countries in the face of climate change. XCF is designed to take account of increasing risk of extreme weather event activity in order to disperse funds to be used to invest in risk-reduction activities (Wilcox 2014, see Box 21.3). This tool, requested by ARC member countries, offers an interesting approach to linking the risk transfer structure of ARC to climate adaptation and risk reduction investment.

Notwithstanding the paramount importance of assessing risks to countries in the pool and providing timely post-disaster funds, the regional pools have put into place very few explicit incentives or funds for reducing disaster risks. There are some requirements with regard to usage of pay-outs and emergency management, yet as shown in the case of ARC, there are no conditions for proven disaster and climate risk reductions. CCRIF has a disaster risk management function, but it focuses on reducing downstream losses after a disaster has occurred by providing immediate liquidity. In practice, then, beyond the data collection and modelling aspects (though only the ARC provides open source risk data), there is very little evidence that the regional pools shape DRR and climate adaptation policy in their member countries.

To conclude, it appears that more can be done to design regional sovereign risk pools that contribute to the preventative aspiration of the WIM, although the proposed ARC XCF offers an interesting proposition for this purpose. Design reform of the pools might include a requirement for detailed contingency plans for pre-disaster risk reduction and (in the case of CCRIF and PCRAFI) making risk data open source. The implementation of these plans could be made a requisite for continued membership in the pool.

#### **21.5 Curative Response: Does Insurance Promote the Equitable Compensation Response T the WIM?**

The WIM extends beyond aspirations for disaster risk reduction to include climateattributed loss and damage that cannot be effectively reduced. This has raised aspirations especially among highly vulnerable developing countries that a form of (legally non-binding) compensation for residual climate impacts may be in the offing. The question in this section is *whether insurance, by reimbursing loss and damage from climate disasters, contributes to the 'equitable compensation' or curative aspirations for the WIM?*

At the outset, it is worth emphasising that financial instruments, including insurance, are not neutral as to how disaster costs are shared. Risk-based instruments that require premiums or payments from those in the insurance program can shift responsibility to vulnerable households and communities and away from social institutions that may have previously aided reconstruction; in contrast, informal or public mechanisms, like remittances or reserve funds, share losses usually across family members and taxpayers. For insurance programs, it should be asked if the insured, themselves, pay the risk-estimated premium thus putting the full burden on their own at-risk communities (and at the same time providing incentives for them to reduce their risks). Alternatively, are there arrangements, like cross subsidies, that allocate this burden differently within the risk pool, or are there arrangements, like transfer payments, that allocate the burden at least partially to those outside the risk pool?

#### *21.5.1 Equity Principles in the Compensation of Loss and Damage*

The essential question for the L&D discussions is then "who pays the premium?" To address this question in Box 21.2 we distinguish three principles of fundamental importance for organising insurance arrangements, each principle building on a different view of equity. Private market-based insurance, unless it is subsidised from outside or within the pool, operates on the principle of mutuality and thus does not share losses beyond the at-risk insured community. Private insurers may deviate from the mutuality principle with premium cross-subsidies, e.g., by charging their wealthy, lower-risk clients higher premiums to make policies affordable to low-income clients in high-risk locations. Sometimes this means a flat or undifferentiated premium that helps high risk (and often less wealthy) clients and avoids the costs and administrative burdens associated with differentiated premiums. In some cases, regulation dictates how private insurers can set premiums, usually to safeguard affordability. In India, for example, commercial insurers are required to offer 'pro-poor' policies, which they finance by charging their wealthy clients a higher rate. Without these forms of subsidy in a mutuality-based system the policyholders, themselves, can expect (in the long term) to pay premiums that are approximately equivalent to their received claim payments (actuarially fair premiums), plus significant additional costs (loads shown in Fig. 21.2). *Thus, in an insurance system based on mutuality, there is no reimbursement to the victims of disasters (on average) outside of what they, themselves, contribute in premiums; in other words, the at*-*risk community finances its own curative measures*. This is an important and often misunderstood feature of the insurance mechanism, and arguably disqualifies commercial insurance as a curative measure as intended by the WIM.

*Solidarity* can take many forms, including subsidised or cross-subsidised premiums, reinsurance or other forms of assistance that reduce premiums paid by the most vulnerable. It is the fundamental principle underlying pre-disaster assistance and post-disaster humanitarian relief and reconstruction (see Schinko et al. 2018). Support can come from, among others, governments, NGOs, financial institutions or international development organisations. Indeed, almost all micro-insurance programs and macro-level pools operating in developing countries receive some type of donor or government support (Vivid Economics et al. 2016). Importantly, solidarity, in contrast to accountability, need not appeal to a causal relationship between historical greenhouse gas emissions and loss and damage, or culpability on the part of those providing support for insurance instruments.

#### **Box 21.2 Three equity principles for organising insurance Mutuality**

*Mutuality* is at the core of the insurance concept, according to which the insured participate in a disaster pool according to their risk class (and pay a risk-based premium). The pool then pays those insured in accordance with the scale of their losses. Mutuality is the primary principle underlying private, market-based insurance; clients enter the pool usually voluntarily, and pay according to the best estimate of the risk they bring with them. While insured agents receive payments from the pool depending on their losses, in the long run (and on average) they pay their own reimbursement, and more, since the premium is based on expected loss plus the additional insurance loads shown in Fig. 21.2. According to this principle, there are no transfer payments within the pool or from outside the pool (Wilkie 1997).

#### *Solidarity*

*Solidarity* is a profoundly different concept in that losses are paid according to need, and contributions to the pool are not made fully in accordance with the risks that the applicants bring with them, but perhaps partly according to ability to pay, or just equally. Solidarity can result from cross subsidies among those in the pool. It can also take the form of payments by those not in the pool, for example, aid agencies can subsidise micro-insurance schemes. Importantly, solidarity is based on the concept of voluntary transfers for humanitarian or other grounds; there is no underlying notion of liability. The concept of solidarity thus corresponds to the concept of distributive justice discussed in Wallimann-Helmer et al. (2018).

#### *Accountability*

*Accountability* as a concept differentiates itself from the solidarity principle in one important aspect; here, it is motivated by a perceived ethical or legal obligation for compensating those experiencing climate-attributed losses and damages. Accountability links an actor's actions with outcomes, either causally or legally (Honoré 2010) where the allocation of responsibility is based on causation and (often but not always) fault or negligence. Being accountable not only means being responsible for climateattributed impacts and risks but also ultimately being answerable for them.

A far more controversial and potent principle to underlie support for insurance instruments is *accountability* for loss and damage, which mirrors the "polluter-pays principle" that is invoked across many environmental issues. *Accountability* invokes questions of attribution (James et al. 2018) as well as some degree of culpability or fault. Both can be difficult to assign to state and other actors since the science is not sufficiently precise to estimate increased risk of losses and damages due to emissions of greenhouse gases, and fault for emissions can be questioned due to historical knowledge and other factors (Burkett 2014). The assignment of accountability for losses and damages, and ultimately responsibility, has been understandably resisted because of fears of legal liability. Indeed, the Paris Agreement explicitly rejects that the treaty provide a basis for liability or compensation (Simlinger and Mayer 2018). Yet, as Lees (2016) argues, the refusal to contemplate liability should not lead to a refusal to contemplate the allocation of ethical responsibility—what he refers to as a responsibility allocation mechanism. Indeed, recognition of ethical responsibility, as differentiated from legal liability, may be necessary, if not essential, for motivating even voluntary support for insurance instruments on the scale contemplated by the L&D discussions.

Principles of solidarity and accountability are strongly voiced in the Framework Convention on Climate Change (UNFCCC), which states that parties should act to protect the climate system "on the basis of equality and in accordance with their common but differentiated responsibilities and respective capabilities" (United Nations 1992). A fundamental element of this principle, which is restated in the preamble to the Paris Agreement, is the need to take account of the different circumstances, particularly each State's contribution to the problem and capacity to remedy it (Decision 3/CP.19). The WIM, likewise, refers to the need to take account of differentiated responsibility (accountability) for losses and damages (Lees 2016). *The principles set out in the UNFCCC and Paris Agreement suggest that those bearing responsibility for losses and damages, and those most capable of addressing it, should bear some obligation to contribute to insurance premiums for climate*-*attributed risks in highly vulnerable countries.* In fact, many developing country Parties and NGOs have advocated the accountability principle. The submission of CARE to the current WIM work plan is illustrative:

…(WIM) should apply principles of global equity, including taking into account a "polluter pays"-based approach to generating finance for addressing loss and damage from countries, companies and institutions who significantly contribute to the causes of climate change through fossil fuel emissions (CARE International 2017).

Invoking responsibility/accountability in the discourse on developed country support (but avoiding legal liability) changes the paradigm of post-disaster support from 'charity' to 'amends', which has significance in terms of allocating funds beyond humanitarian assistance budgets. Arguably, a responsibility-based discourse can change the motivation for assisting victims of climate-attributed impacts and risks—so essential to implementing the Paris Agreement and maintaining its voluntary, cooperation-focused approach (see chapter by Schinko et al. 2018).

#### *21.5.2 Experience of Micro-insurance for Equitably Allocating the Impacts and Risks Burden*

Almost without exception micro-insurance schemes that serve the resource-poor are subsidised either by national taxpayer funds or, more often, by international donors, international financial institutions, NGOs and official development assistance (Mechler et al. 2006; Schäfer and Waters 2016). Few private insurers are optimistic about the prospects of providing non-subsidised insurance to clients below the poverty level (Swiss Re 2012).

As one example, India's National Agricultural Insurance Scheme (NAIS), globally the largest micro-insurance crop program, targets mainly middle-income farmers and is heavily subsidised by Indian taxpayers (Mechler et al. 2006). As another example, the pro-poor R4 initiative discussed above is made possible by the significant support it receives from NGOs and donors as well as its reliance on funds (in Ethiopia) from Ethiopia's Productive Safety Net Program and the World Food Programme. An innovative micro-insurance program for herders in Mongolia is affordable and viable to insurers due to its layered system of responsibility and payment, including herders (who retain small losses or the lowest risk layer), the private insurance industry (riskbased premium payments for the middle layer of risk) and taxpayers (for the highest risk layer). In addition to subsidies, micro-insurance is typically made affordable by greatly reducing the cover offered. A micro-insurance program in Bangladesh, *Proshika*, that insures savings against natural disasters limits claims to twice the amount in the client's savings account (Mechler et al. 2006). Similarly, a microinsurance project in Malawi was made affordable by limiting cover to the cost of the hybrid seeds, which protects the banks against defaults for their seed loans, but does not protect households against drought losses (Linnerooth-Bayer et al. 2009).

The extensive support for micro-insurance falls thus solidly under the insurance principle of *solidarity*, where contributions to the pool are made, not in accordance with the risks that applicants bring to the pool, but typically according to their ability to pay the premium. Climate-attributed impacts and risks will likely continue to be framed as a humanitarian issue invoking solidarity, and not as an issue invoking accountability or liability.

#### *21.5.3 Experience of Regional Insurance Pools for Equitably Sharing the Impacts and Risk Burden*

The question addressed in this section is to what extent the regional insurance pools (CCRIF, ARC and PCRAFI) provide their members with an equitable *curative* respons*e* to climate-attributed losses and damages, keeping in mind that the pools provide cover to governments, which in turn (and in varying degrees) provide postdisaster support to vulnerable households, farms and SMEs. By 'equitable' we again refer to the three principles relevant to insurance: *mutuality, solidarity and accountability*. We ask, thus, who pays the price for membership in the risk pools, and based on which equity principle?

All pools have received donor support, mostly through capitalisation, payment of operational expenses, direct premium support or capacity building. While the premiums are therefore less than would be required without outside support, in the case of ARC and CCRIF the relative premiums (the proportion each member country pays to the pool) tend to be based on risk levels (i.e., there are no cross subsidies). The pools are thus based on *solidarity* from the outside, but *mutuality* in determining the relative payments from members. For ARC, all insured countries pay premiums based on risk estimates, while for setting up and operating the pools support comes from donor organisations. In other words, donors contribute to reducing some of the loads on the insurance premium. ARC's non-profit mutual insurance company (not necessarily meaning the premiums are based on mutuality) is capitalised by financial and development institutions, including the German Development Bank and the UK Department for International Development (DFID), which means that premiums are indirectly supported through a solidarity principle. For ARC, thus, there are elements of *mutuality* in setting country-specific trigger points and caps, which largely determine premiums, and also elements of *solidarity* given substantial donor support.

The PCRAFI, in contrast, bases premiums largely on ability-to-pay of its member countries rather than a calculated risk. This means there are substantial cross subsidies across member states. In addition, multiple development partners and IDA credit have contributed to the establishment of the pool as well as to premium support. The PCRAFI is thus based primarily on the principle of *solidarity* in terms of both outside- and inside-pool support.

Interestingly the principle of *accountability* has not been invoked in justifying the contributions of the donor community to these systems, even though climate change is a concern to all regional pools. However, not surprising after the devastating 2017 Hurricanes Harvey and Irma, the attribution of the covered hazards to climatic change is under investigation for CCRIF and the other pools. More specifically, as an innovative proposition, ARC is setting up an Extreme Climate Facility (XCF) that would be capitalised by the international community if trends in extreme weather are found attributable to climate change (Wilcox 2014). Thus, the XCF can be considered a manifestation of climate change risk, although there is no direct discussion of this facility extracting payments based on greenhouse emissions from wealthy countries, and thus no direct appeal to the *accountability* principle.

#### **Box 21.3 The Extreme Climate Facility (XCF) of the African Risk Capacity (ARC) Function**

Additional financing for countries already managing their current weather risks through ARC.

#### **Data-driven modus operandi**

Payments to countries will be entirely data-driven over a 30 year period—if there is no significant *increase in extreme events over current climatology, then no payment is made.*

#### **Climate Adaptation**

Countries must use payments to invest in DRR or climate change adaption measures specified in pre-defined country level adaptation funds.

#### **Scale**

Payment size would increase with extreme event number and magnitude over and above a pre-specified threshold, corresponding to the degree of confidence that extreme events are increasing due to climate change.

#### **Action focus**

Leveraging ARC's existing infrastructure, XCF will ensure that countries and the international community properly monitor climate shocks and are financially prepared to undertake greater adaptation measures should their frequency and intensity increase. *Source* Wilcox (2014)

#### **21.6 Summary: The Evolving Insurance Narrative**

This chapter has asked whether insurance instruments, and particularly microinsurance and regional insurance pools, can serve as a risk-reducing and equitable compensatory response to climate-attributed losses and damages from weather extremes occurring in developing countries, and consequently if insurance instruments can serve the preventative and curative targets of the WIM and the Paris Agreement? As background, the chapter recognises that insurance, by dealing exclusively with residual, sudden-onset event risks, can be only one part of the L&D response.

The discussion has emphasised the substantial benefits of both micro-insurance programs and regional insurance pools: micro-insurance for providing post-disaster relief and reconstruction and also pre-disaster security (so important for adaptation and escaping poverty); regional insurance pools for decreasing the costs of reinsurance for governments and enabling early disbursement of emergency relief that saves lives, reduces distressed productive asset sales and mitigates disaster-induced poverty traps. The discussion has also emphasised the significant costs of insurance, noting that insured households and governments will on average pay considerably more for climate insurance than they expect to lose from extreme climate events.

Notwithstanding the benefits and costs, the discussion has examined insurance instruments for their role in meeting the curative and preventative aspirations for the WIM—equitably compensating for residual climate-attributed impacts providing strong incentives or directives for reducing risks. *A main message from this discussion is that absent significant intervention in their design and implementation, insurance mechanisms as currently implemented will likely fall short of fully meeting WIM aspirations as (differently) expressed by developed and developing country Parties.* This message is detailed in Table 21.3, which provides the mechanisms by which insurance can in principle support WIM responses.

Recent experience shows that with some important exceptions indemnity and parametric programs (mainly public-private partnerships), beyond pricing risk and reducing moral hazard, have few explicit incentives or requirements for risk reduction, even if their potential is promising. Reforming insurance programs for improved loss reduction can build on recent successful experiences, particularly evidence of significant risk-reduction activities on the part of public insurers compared to their private insurer counterparts, and innovations and developments in risk pricing and engineering, along with more targeted use of limits, deductibles and warranties. Still, as we witness in wealthy countries, *progress will be slow and patchy without public and private commitment to shaping insurance systems such that they foster practices that lead to investment in disaster risk reduction practices*.

A similar message emerges regarding the *curative* aspirations for the WIM. Insurance based on the principle of mutuality (typically private, market-based insurance), unless subsidised or otherwise supported, does not share risk beyond the at-risk insured community. *There is thus no reimbursement of losses to the victims of disasters (on average) outside of what policyholders, themselves, contribute in premiums, which disqualifies mutuality*-*based insurance as a curative mechanism meeting vul-*

**21.3**Anoverviewofpreventativeandcurativefunctionsofclimateriskinsurance

*nerable country aspirations for the WIM.* Mutuality, however, is not a feature of most donor-supported micro-insurance and regional insurance pools.

 In meeting this challenge, international financial institutions, development agencies and other donors will need to reconcile the contending equity and preventative objectives in their support of climate insurance programs. This is foremost a challenge in designing "smart" insurance programs that are considered equitable and at the same time provide incentives or directives to their clients to reduce risks.

Two often cited success stories for insurance instruments serving the most vulnerable the African R4 micro-insurance program and the African Risk Capacity (ARC) regional insurance pool, go a long way in combining these goals. Neither is a commercial insurance enterprise; neither is (fully) characterised by risk-based premiums; and both are highly subsidised. The R4 program's success has been attributed in large part to its close connection with public safety net programs in the participating countries, and the ARC can attribute its success largely to its required disbursement plans. As evidence of extreme climate-attributed impacts and risks becomes more widely available and accepted, ARC's innovative XCF program may serve as a conduit for institutionalising donor support in the form of increased pool capitalisation.

The provision of support to regional insurance pools and micro-insurance programs continues to be framed as humanitarian aid, not invoking accountability or liability for climate-attributed loss and damage. Indeed, support for insurance programs has come mainly from development and financial organisations, such as the World Bank, national development partners, and international NGOs, with emphasis on the potential role of insurance in supporting poverty reduction in the face of climate and disaster risks. In other words, the narrative for support has been framed as a humanitarian and development issue.

The insurance discourse may, however, be changing. This is perhaps most apparent in discussions on the recent G7 Initiative on Climate Risk Insurance (InsuResilience), which has the ambitious goal of increasing access to direct or indirect climate insurance coverage for up to 400 million of the most vulnerable people in developing countries by 2020 (G7 2015; InsuResilience 2017). While InsuResilience does not officially commit to any specific equity principle, there are a number of voices that raise this aspect. One example is the Munich Climate Insurance Initiative (MCII), a close advisor to InsuResilience. MCII is forthright about the need to ground financial support in ethical claims of accountability and also capability. In the words of this NGO (whose members include insurers, NGOs and researchers), InsuResilience should provide technical and financial support to the set-up and maintenance of risk facilities and pools, the capitalisation of national and regional risk pools and other forms of co-financing premiums. This support should follow the principles of "capability, including sharing the risks imposed by climate change and responsibility for climate change impacts" (Schäfer and Waters 2016). The G7 initiative has thus unleashed a broad-ranging discussion on who should pay for insurance, sovereign risk transfer and social protection systems in light of climate change. In a commentary in Nature Climate Change, Surminski and colleagues (2016) explicitly raise this issue:

As the intensity and frequency of climate extremes increase, is it fair to shift responsibility on to those who are the least responsible for climate change, the least able to shoulder the premiums, and in many cases the least able to reduce their losses?

As the recent G20/V20 Global Partnership on InsuResilience (launched at COP23) shows, the need for donor support is increasingly accepted by the development finance community. Importantly, this financial support should be 'smart', understood as reliable, flexible, minimise incentive distortions, and make the recipients aware of the true cost of the covered risk (Schäfer and Waters 2016). In this way, subsidised insurance can be linked to risk reduction (Hill et al. 2014; Vivid Economics et al. 2016). As a concrete proposal, Kunreuther and Michel-Kerjan (2009) have argued that the subsidy should take the form of an insurance voucher so that the recipient is aware of the unsubsidised premium. In addition, donor support should be conditional by requiring contingency and disbursement plans (Schäfer and Waters 2016; Surminski et al. 2016). A suggestion recently iterated by Schäfer and Waters (2016) is that smart premium support should cover only part of the premium, for example, only the markup (the risk and expense loads) while the beneficiary pays just the actuarial fair value or pure premium.

The message this chapter holds for the L&D discussions is to advise caution about relying on the market, alone, to provide insurance for fulfilling aspirations for the WIM, and to recognise the criticality of international and public intervention in climate insurance provision. Interventions can include subsidies, technical assistance, capitalisation of insurance programs, provision of reinsurance and other types of support that make insurance affordable to resource-poor and climate-sensitive clients; interventions can also enable regulatory regimes and public-private arrangements that exploit the potential for insurance to genuinely catalyse risk reduction far beyond what has been accomplished by commercial insurers thus far. It is therefore important to continue developing "smart" regional or national programs that explicitly combine insurance with loss prevention and that address the emerging equity issues as climate change impacts the most vulnerable and least responsible. The WIM Executive Committee continues to contemplate subsidies for pro-poor insurance programs (Executive Committee to the WIM 2016), a measure that will grow in importance if the insurance narrative continues to evolve from solidarity-based humanitarian assistance to accountability for climate-attributed impacts.

#### **References**

Alliance of Small Island States (AOSIS) (2008) Proposal to the AWG-LCA multi-window mechanism to address loss and damage from climate change impacts

Arent DJ, Tol RSJ, Faust E, Hella JP, Kumar S, Strzepek KM, Tóth FL, Yan D (2014) Key economic sectors and services. In: Field CB, Barros VR, Dokken DJ, Mach KJ, Mastrandrea MD, Bilir TE, Chatterjee M, Ebi KL, Estrada YO, Genova RC, Girma B, Kissel ES, Levy AN, MacCracken S,

Mastrandrea PR,White LL (eds) Climate change 2014: impacts, adaptation, and vulnerability. Part A: global and sectoral aspects. Contribution of working group II to the fifth assessment report of the intergovernmental panel on climate change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp 659–708

D.C.: World Bank Group. http://documents.worldbank.org/curated/en/512241480487839624/Un breakable-building-the-resilience-of-the-poor-in-the-face-of-natural-disasters. Accessed 30 May 2017

**Open Access** This chapter is licensed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

The images or other third party material in this chapter are included in the chapter's Creative Commons license, unless indicated otherwise in a credit line to the material. If material is not included in the chapter's Creative Commons license and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.

## **Chapter 22 Technology for Climate Justice: A Reporting Framework for Loss and Damage as Part of Key Global Agreements**

**Marc van den Homberg and Colin McQuistan**

**Abstract** Technology plays a critical role in the ability to retain, reduce or transfer climate risk or address impacts. However, vulnerable communities do not fully benefit from existing technology, whereas they are disproportionally impacted by climate change. This chapter assesses how technology can shape limits to adaptation and how to report on this injustice as part of key global agreements. We develop an access, use and innovation of technology framework. As a case on a relevant technology, we test it on transboundary early warning systems in South Asia. We find that only a limited set of the state-of-the-art technologies available globally is accessed and used. Insufficient capacity and funding result in the bare minimum, largely copycat type of technology. As climate change progresses, demands on technology increase, whereas, if no action is taken, the technology remains the same widening the adaptation deficit. A better understanding of the crossover from disaster risk reduction to climate adaptation and the emerging policy domain of loss and damage allows trade-offs in terms of reducing risks through greater investment in technologies for adaptation versus absorbing risks and then financing curative or transformative loss and damage measures. We argue that attention to especially distributive, compensatory and procedural climate justice principles, in terms of distributing technology, building capacity and providing finance, can help to motivate support for widening the technology spectrum available to developing countries. We

Practical Action, Rugby, UK

M. van den Homberg (B) · C. McQuistan

e-mail<EMAIL_ADDRESS>
C. McQuistan e-mail<EMAIL_ADDRESS>
propose as part of comprehensive risk management that, first, an inventory should be developed how of technologies shape soft and hard adaptation limits. Second, technology for climate justice might be included in the adaptation communications to support reporting on the expected and experienced impact of measures on loss and damage, at a sufficiently disaggregated level. Third, soft adaptation limits should be levelled by making technology research, innovation and design equitable between those countries having capacity and those not, recognising the commitment to leave no one behind.

**Keywords** Loss and damage · Flood early warning systems · Adaptation Climate risk management · Climate justice · Sendai framework for DRR Sustainable development goals · Paris agreement

#### **22.1 Introduction: Unequal Impact of Climate Change and the Role of Key Global Agreements**

Although anthropogenic climate change is a global phenomenon, its impacts are neither equally distributed over developing and developed countries nor between the rich and the poor. The poor face greater impacts when exposed to natural hazards than the non-poor (Hallegatte et al. 2016). There is evidence that adaptation capacity is and will be exceeded in various instances, requiring attention to loss and damage (L&D) (see book chapters by Handmer and Nalau 2018; Heslin et al. 2018; Haque et al. 2018; Landauer and Juhola 2018; and the introduction by Mechler et al. 2018). This inequality places the impacts of climate change (and climate variability) and the burden of climate action disproportionately on the most vulnerable (IPCC 2014). At the same time, those developing countries and poor communities that will be most heavily affected by the impacts of climate change have contributed the least (in terms of greenhouse gas emissions) to the problem (Clark 2011). This latter aspect has been discussed under the concept of Climate Justice in the domain of climate change impacts and mitigation. Climate justice is a term used for framing climate change as an ethical and political issue, rather than one that is purely environmental or physical in nature. This is done by relating the effects of climate change to concepts of justice, particularly environmental justice and social justice (see chapter by Wallimann-Helmer et al. 2018). This chapter focuses on the unequal dimensions of climate justice and, more particularly, it asks how technology can address climate risks for the most vulnerable in a just way, and where the practical limits are to what technology can achieve.

**Fig. 22.1** Community information board in the Banke and Bardia district in Nepal explaining appropriate flood mitigation measures and the community-based early warning system

More specifically, we aim to disentangle the relationship between technology and loss and damage, adaptation and disaster risk management from a climate justice perspective through three guiding questions (1) *How can the role of technology in reaching climate justice for vulnerable and poor communities be assessed?* (2) *How is technology shaping adaptation limits, thereby reducing losses and damages?* (3) *What are the current transparency mechanisms of key global agreements (and related regional, national and local ones) with relevance for climate change and how do these cover losses and damages and unveil technology (in)justice?* We use an exploratory and mostly qualitative research design to address these research questions. We combine desk research of scientific literature, an analysis of the reporting that is available on the global agreements (retrospectively) and an analysis of what will be reported in the future (forward-looking), national and local level documents in relation to disaster risk management on floods (the dominant climate-related risks globally) as well as a case study. The case study investigates transboundary flood community-based early warning systems (EWS) that are operational in the Brahmaputra river basin (Bangladesh–India) and in the Karnali river basin (India–Nepal; Fig. 22.1 shows community information on such an EWS in Nepal).

The chapter structure is as follows. Section 22.2 addresses research question (1) and presents five components to characterise the role technology plays in reaching climate justice. Section 22.3 categorises how technology can shape adaptation limits (research question 2). Section 22.4 shows how the plethora of reporting and reviewing mechanisms of the key global agreements and their regional, national and local counterparts cover loss and damage only to a limited extent and do not adequately unveil injustices (research question 3). Section 22.5 brings the results of these three sections together in a coherent framework that can be used to assess technology for climate justice in global agreements and applies it to a case study on EWS. The case study demonstrates far from equitable access to early warning and early action information, as well as untapped technology and innovation potential. Section 22.6 shows how the framework can be used to guide action. We identify windows of opportunities to include technology for climate justice more strongly into the crossover from adaptation to L&D in the climate agreement, but also to make sure there is a linkage to the other key global agreements.

#### **22.2 Technology for Climate Justice**

Climate justice is an umbrella term bringing together distributive and compensatory (see chapters by Wallimann-Helmer et al. 2018; Schinko et al. 2018), retributive, transitional<sup>1</sup> (Klinsky and Brankovic 2018) and procedural justice (Tomlinson 2015; Walker 2009) perspectives. Climate justice has spatial and temporal dimensions. As an example, distributive justice is based on an inter-generational or an intragenerational perspective, and compensatory justice on a retrospective one. We indicate how different justice dimensions could influence the means of implementation of the Paris Agreement through backward-, forward- and both backward- and forwardlooking actions in Fig. 22.2. Mitigation and adaptation are often discussed under one and the same heading of climate justice, whereas there are clear distinctions between what climate justice means in terms of duties for these two pillars (see chapter by Wallimann-Helmer et al. 2018). Climate justice aims to address inequalities and is hence key for the L&D debate. We focus on the role that technology could play in delivering climate justice. Technology and innovation are important enablers for climate actions. In addition, technology can be seen as a way to overcome political sensitivities. For example, a technological innovation process makes use of equitable procedures that engage all stakeholders in a non-discriminatory way, a form of procedural justice (Walker 2009).

Disaster risk reduction (DRR), climate change adaptation (CCA) and L&D strategies can minimise current and future losses and damages by protecting people, properties and ecosystems against climate-related stressors for flood risk (see box 22.1). Even though these strategies comprise a plethora of different hard and soft risk management measures, technology plays a crucial role. Inadequate or inappropriate technology reduces the range of available options as well as their effectiveness in reducing or avoiding risk from increasing rates or magnitudes of climate change (IPCC 2014). In terms of climate justice, access to technology and its benefits are not fairly shared.

<sup>1</sup>A way to recognise and at least partially remedy past injustices while also building a sense of cooperation. It helps to overcome tension about the ideal relationship between responsibility for past and future action and avoids the liability debate (Walker 2009; Klinsky and Brankovic 2018).

**Fig. 22.2** Overview of underlying climate justice principles and means of implementation

#### **Box 22.1 Importance of technology to reduce flood risk**

Our examination focuses on flood risk, as hydro-meteorological hazards cause the largest economic, social and humanitarian climate-related losses. Between 1980 and 2013, global direct economic losses due to floods exceeded \$1 trillion (2013 values), and more than 220,000 people lost their lives (Winsemius et al. 2015). In 2016, the high number of flood events, including river flooding and flash floods, was exceptional and accounted for 34% of overall losses, compared with an average of 21% over the past 10 years (Munich Re NatCatService 2017). Globally, economic losses due to flood events have increased, due to the expansion of population and property in floodplains (IPCC 2012) resulting from poorly planned socio-economic activities. Climate change increases the frequency and aggravates the severity of many of these hazards (IPCC 2014). In Asia and the Pacific, 32% of the economic losses from natural disasters in 1970–2013 were due to floods (UNESCAP 2015). Calculations for Bangladesh predict, for example, an average increase of flooded area of 3% in 2030 and 13% by 2050, combined with an increase of inundation depth in most areas that are currently already at risk, exposing 22% more of the population (World Bank 2010).

There are several frameworks developed by international organisations and Nongovernmental organizations (NGOs) to describe the transfer and diffusion of climate technologies. As one example, UNEP developed a framework to identify and analyse these barriers as part of technology needs assessments (as we will discuss in Sect. 22.4) (Boldt et al. 2012). They identified four key groups of barriers (or enabling environments). Klein et al. (2014) used four key considerations for technology as an adaptation constraint that are closely related to the barriers. For example, access is directly linked to the economic and financial conditions. The effectiveness

**Table 22.1** Practical Action's framework for technology justice with five components

in managing climate risk links to research and technological capacity but also to the social acceptance of a new technology. Both frameworks have a multi-stakeholder perspective and show that it is never about a straightforward transfer of technology. If that is done, like with agricultural machinery (Trace 2016) or advanced flood modelling software, chances are very high the technology is abandoned and not used. As an NGO example, the technology justice framework launched by Practical Action (Practical Action 2016) rethinks the role of technology from the perspective of the poor and vulnerable (Trace 2016) and consists of three components: Access, Use and Innovation. We complement these with Governance and Finance (see Table 22.1), creating five components that are closely linked to the three Paris means of implementation.

#### *Access to Services and Access to Technology and Knowledge is Not Equal*

The poor have almost always more limited access to basic services such as water and energy, but also to disaster-related services such as early warning and climate information (Raworth 2012). In addition, developing countries and, within those countries, the poor more than the rich have limited access to technology and knowledge (Traces 2016). In the case of an EWS, further discussed below, even if vulnerable communities receive early warning information, they often lack access to the knowledge required for early action (Cumiskey et al. 2014). Christiansen et al. (2011) extracted about 165 unmet technological needs related to adaptation (and mitigation) from technology needs assessments carried out in developing countries. Examples include applications to agriculture in Cambodia and Bangladesh and coastal zones in Thailand. In many of these cases patents and other forms of intellectual property protection constrain technology transfer, especially from developed to developing countries (Klein et al. 2014). Between 2008 and 2010, 262 patents were published making specific claims to abiotic stress tolerance (such as drought, heat, flood, cold and salt tolerance) in plants. Just six corporations, including DuPont, BASF and Monsanto, control 77% of these patents in relation to climate-ready crops (ETC Group 2010). National Meteorological and Hydrological Services (NMHS) in developing countries do not have access to the same level of knowledge and technology as developed countries. For example, digital elevation model data at sufficiently high resolution, required for more accurate flood risk modelling, is usually not affordable (Simpson et al. 2015).

#### *Use of Technology is Unjust*

Technologies are often used in unsustainable ways, depleting resources and stacking up problems for future generations (Practical Action 2016). For example, industrialised agriculture leads to biodiversity loss, thereby limiting the options available to farmers to respond to climate-induced shocks and stresses. In some circumstances, the use of technologies to reduce short-term risk and vulnerability can contribute to increased vulnerability to extreme events for future generations (Etkin 1999; Moser 2010). This was seen in the impacts of Hurricane Katrina, where a flood defence system enabling construction in a floodplain decades before failed, with catastrophic consequences for the population of New Orleans in 2005 (Freudenburg et al. 2008; Link 2010). Flood protection levees are known to eliminate overbank flooding, causing diminished sediment accumulation and eventual wetland loss, whereas wetlands are beneficial as a natural buffer for hurricanes (Turner et al. 2006).

#### *Technological Innovation and Implementation for the Most Vulnerable*

Technological innovation and implementation is rarely driven by the most pressing social and environmental challenges. Technology justice argues for the involvement of the poorest and most vulnerable so that technologies deliver impacts on our biggest human challenges and are not driven by a profit motive alone (Practical Action 2016). It requires looking into how technologies can empower vulnerable communities and which corresponding capacities they need to best utilise and further innovate these technologies. This requires a critical examination of not only how technology reduces vulnerability but also how the use of some technologies can increase vulnerability to disasters, for example by degrading the local environment or by creating a false sense of security.

#### *Governance Mechanisms to Enable Access*

Appropriate governance enables access to the technology and knowledge that is required, promotes the use of inclusive technologies and curbs those that adversely affect the environment (Practical Action 2016). Governance mechanisms should ensure that there is a coherence between the global and national/local policies and that technologies required for implementing climate risk management (CRM) are considered in national and local public investments. Governance mechanisms are directly related to the ownership and institutional arrangements around the use of technology (or orgware, as we will introduce in the next section).

#### *Financial Support is Essential*

The tragedy is that the poor and vulnerable are usually more exposed to natural hazards, but not in a position to invest in technology that could potentially reduce their exposure (Hallegatte et al. 2016). Similarly, at a national level, the least developed countries will in many cases have to apply their limited funds to deal with the losses and damages incurred, rather than to invest in adaptation. International climate change financing mechanisms are increasingly charged with addressing this funding gap, but currently at low levels. In addition, economic valuations such as cost-benefit analysis that are used to justify expenditures inter- and intra-nationally are not well designed to consider the poor and vulnerable in an equitable way, as, in absolute terms, the asset loss will be higher in the richer and more wealthy areas than in poorer areas (Hallegatte et al. 2016).

This shows that developing countries have severely lower institutional and technological capacities to pursue climate-resilient development pathways (IPCC 2014) as compared to developed countries. *Technology for climate justice requires rethinking access, use, innovation, finance and governance from the perspective of the poor and vulnerable and making sure there is justiceand equity in these components*. The transfer and diffusion of technologies for risk management can be assessed against the technology justice components at the global, regional, national and local level, to which we turn after describing the spectrum of technologies for dealing with climate-related risks.

#### **22.3 Technologies for Public and Private Actions to Address Loss and Damage**

Technology involves hardware, software and orgware (Christiansen et al. 2011; Boldt et al. 2012). Hardware refers to the tangible aspects such as capital goods and equipment and includes flood resistant crops and new irrigation systems. Software refers to the capacity and processes involved in the production and use of the hardware and ranges from know-how (e.g. manuals and skills, awareness-raising, education and training) and experience to practices (e.g. agricultural management, cooking and behavioural practices). Adaptation methods and practices that may not normally be regarded as technologies, such as insurance schemes or crop rotation patterns, may also be characterised as software (UNFCCC 2006). Orgware is equally important from an implementation point of view and relates to the ownership and institutional arrangements of the community or organisation where the technology will be used. It includes those organisations involved in the adoption and diffusion process of a new technology.

Adaptation measures either withstand, transfer or reduce risks, with risk reduction preferred over withstanding or transferring risk. Apart from managing the downside risk, there is also in some cases potential for up-side risk, where a positive impact results. For example, changing to flood-resistant crops might not only lower the down-side risk of losing a harvest during a flood, but might also increase the up-side risk by a higher yield. Maladaptation results if adaptation measures create additional risks instead of reducing them. O'Brien et al. (2012) give an example where irrigation might be beneficial in the short-term, reducing a farmer's vulnerability, but in the long-term increases vulnerability when the non-renewable source used for the irrigation is depleted. "Hard" engineering solutions can be expensive and may not cover costs and risks equally for all stakeholders across time. As an example, the Nanbéto dam in Togo reduced total days with flood conditions for downstream communities, but also increased their flood vulnerability every time an overspill and subsequent poorly managed and communicated release of water took place (Climate Centre 2017). In the United States, past building in floodplain areas downstream from dams that have exceeded their design life has become a major concern (O'Brien et al. 2012). In this case, losses and damages are being exacerbated for the more vulnerable communities. "Softer" solutions such as ecosystem restoration or stress tolerant crop varieties may provide a range of benefits now and in the future (IPCC 2014; van der Geest and Warner 2015) and can be very cost-effective sustainable solutions.

In the case of L&D risks that are "beyond adaptation" (see Box. 22.2 and introduction by Mechler et al. 2018), risks can only be absorbed, and we distinguish hard and soft adaptation limits. A soft adaptation limit means that adaptation options are currently not available to those affected, but might become available with cultural, social and economic change or technology and innovation (Dow et al. 2013). In other words, the limit is mutable. As an example, Alaskan native villages threatened by coastal erosion and inundation have, from their perspective, no available options to maintain their way of life (which is for them an intolerable risk), since protecting their infrastructure is economically not feasible (Klein et al. 2014). Hard adaptation limits occur if no adaptive actions are available now or in the future to avoid intolerable risks (Verheyen 2012; Klein et al. 2014). For example, protection against sea-level rise is in some cases considered impossible, no matter what welfare growth, institutional changes or technological innovations emerge (Dow et al. 2013). But, even hard adaptation limits can be dynamic over time. The inability to breed rice varieties that pollinate above 32–35 °C is currently considered as a hard limit (Klein et al. 2014). However, heavy investments in research might someday result in shifting pollination temperature limits upward (Dow et al. 2013).

#### **Box 22.2 Risk management and limits approach to L&D**

The risk management perspective classifies risks as either acceptable (no additional action required), tolerable (action required considering costs and other constraints) or intolerable (action required irrespective of constraints). It makes clear that, once standard adaptation in the form of DRR, CCA or development is no longer feasible in the intolerable space, transformative or curative action is required (Mechler and Schinko 2016). The limits to adaptation perspective focuses on soft and hard limits to adaptation (Klein et al. 2014; Dow et al. 2013). A cross-cutting distinction is between whether the option represents incremental, fundamental or transformative adjustment (Schinko and Mechler 2017). Kates et al. (2012) distinguish between incremental and transformational adaptation. The former aims to improve efficiency within existing technological, governance and value systems, whereas transformative adjustments may involve changes in some of the fundamental attributes of those systems. Kates et al. (2012) consider three groups of transformative actions, i.e. those adopted at a much larger scale or intensity, those that are truly new to a particular region or resource system, and those that transform places and shift locations. Schinko and Mechler (2017) use the connotation "transformative" to denote a profound change in risk management going beyond traditional adaptation measures, whereas Kates et al. (2012), with "transformational adaptation", refer to an innovative approach of adaptation and include shifting locations, which is strictly speaking no longer adaptation.

Considerable groups of vulnerable people who live in highly exposed and riskprone places and who lack the capacity to adapt have already reached either soft or hard adaptation limits (van der Geest and Warner 2015). Apart from accepting the limit and corresponding escalating losses, one can undertake curative or transformative measures, as we explain also in Box 22.2 on risk management. In the example of Alaskan villages, a transformative measure would be to relocate residents and economic activity away from high risk and increasingly unproductive areas—even though this is deemed politically impossible, given the estimated costs of up to US\$1 million per person (Huntington et al. 2012; Klein et al. 2014). If no transformative action is taken, only curative measures remain as a last resort. This involves redress and rehabilitation mechanisms, when climate change can be established as the key driver, for example, displacement and involuntary migration.

Clusters of technologies can be distinguished that are beneficial for multiple actions. Disaster risk management, such as EWS, and structural/physical technologies, such as ecosystem management, serve only adaptation purposes. Geographical information management and applications are instrumental both in the adaptation and "beyond adaptation" phase, for example for spatial or land-use planning. Technologies for poverty alleviation and livelihood security are clearly distinct. As an example, for livelihood security in the adaptation phase, one can diversify livelihoods by changing agricultural practices to ones that can cope with climate change, whereas for "beyond adaptation" one must find alternative livelihoods and shift from agriculture to, for example services. In this case, there is no longer a strong relationship between the livelihood and natural hazards.

Table 22.2 gives an overview of actions that public or private actors can take to reduce, retain, transfer or absorb climate risk (Subsidiary Body for Implementation 2012) by giving examples that are drawn from the case study on EWS. For each action, we explain the objective in terms of addressing loss and damage. We also indicate for both the private and public action if the technology required is basic, intermediate or advanced. The first column of Table 22.2 situates the action within the spectrum of policy options. Boyd et al. (2017) and the chapter by James et al. (2018) explain how different actor perspectives on L&D result in different ideas about what policy options are available for addressing L&D, both *ex ante* to address the risk of losses and damages and *ex post* to address impacts that have materialised. They distinguish the adaptation and mitigation, the risk management, the limits to adaptation and the existential perspective; we focus on the risk management and the limits to adaptation perspectives to construct the overview.

#### **22.4 Reporting Frameworks for Global, Regional, National and Local Policies**

We now turn to analysing key global agreements with their corresponding regional, national and local counterparts regarding their transparency mechanisms in relation to losses and damages and technology as a means of implementation. As tracking of the post-2015 agreements has started only to a limited extent, we include reporting under the pre-2015 agreements in our analysis.

#### *Global Agreements and Risk Management*

Figure 22.3 shows how the risk of losses and damages is associated with climate change and climate variability. These risks can be reduced, retained, transferred or addressed through climate action. There are three major global agreements which guide climate actions and priorities in addressing climate risks to different extents: the Paris Agreement on Climate Action (UNFCCC 2015), the Sendai Framework for Disaster Risk Reduction (UNISDR 2015) and the Sustainable Development Goals (SDG) (UN 2015), all agreed in 2015. The Paris Agreement distinguishes three pillars of climate action: mitigation, adaptation and L&D. Mitigation will reduce losses and damages by slowing down climate change. Adaptation will reduce risks, but without changing the level of climate change, and result in avoided losses and damage. The L&D pillar addresses losses and damages as they occur, losses and damages that mitigation failed to reduce and that were beyond the scope of adaptation (van der Geest and Warner 2015; see introduction by Mechler et al. 2018). Climate risk management (CRM) is an integration of traditional approaches of climate change adaptation (CCA) and disaster risk reduction (DRR) as well as transformational actions, and aims to provide stakeholders with relevant decision-support information and tools to face climate risks (IISD 2011; see also chapters by Handmer and Nalau 2018; Heslin et al. 2018; Heslin 2018; Haque et al. 2018; Landauer and Juhola 2018). Comprehensive risk management is used as a broader term that includes all actions aimed at reducing risk regardless of cause.

**Table 22.2** Overview of public and private flood risk actions and their intended effect on losses and damages

(continued)

**Table 22.2** (continued)

Examples are taken from the EWS case study discussed in this chapter, except for the one on dams building on ongoing forecastbased financing projects in Africa. *Source* Climate Centre (2017), Coughlan et al. (2016)

The Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts (WIM) is the United Nations Framework Convention on Climate Change (UNFCCC) body that has been tasked to develop this pillar (UNFCCC 2013). Sendai, as a framework tailored towards DRR, is part of adaptation. Sendai has indicators on losses and damages and includes paragraphs on relocation of human settlements,2 but Sendai does not go into attribution of losses and damages data to climate change and leaves the implications of relocation to the climate regime. The SDG compact encompasses development in many dimensions and has synergies with all three pillars.

Notions of climate justice are relevant for all three global agreements; however, there is now a crucial global opportunity to make climate justice a more coherent part of these three agreements and to ensure that climate actions that follow from these agreements are governed accordingly. Inequities play out more in those countries where existing measures are insufficient to cope with the global warming that will continue even if the ambitious target of the Paris Agreement in terms of limiting warming is met. Therefore, we focus on adaptation, as it can reduce losses and damages for the poorest and most vulnerable in developing countries on a shorter time scale than is possible for mitigation alone. In these countries, investments into transformative adjustments for adaptation and L&D as a step change to an alternative socio-economic reality may be necessary.

#### *Global Agreements and Transparency: Indicators and Reporting*

As the different agreements evolve, methodologies and terminologies used for providing transparency do so as well. The UNFCCC uses the stringent measurement, reporting and verification (MRV) mechanism (UNFCCC 2014), which is legally binding contrary to the actual mitigation targets in the nationally determined contributions (NDC) that are not dictated by the agreement (Bridgeman 2017). The UN has review or progress reports for the SDGs, and the UNISDR speaks of monitoring and reporting for Sendai, both of which are non legally binding (UNISDR 2015; UN 2015).

The transparency mechanism for the current climate agreements for non-annex I countries starts with the climate pledge, that is (intended) NDCs, where 85% also have an adaptation component (Pauw et al. 2016). Least developed countries such as Bangladesh and Nepal express their adaptation plans through the short-term national adaptation programme of action (NAPA). Countries are also developing mediumand long-term national adaptation plans. Reporting formats on implementing the convention are currently still different for the non-annex I countries due to "common but differentiated responsibilities and respective capacities" (CBDR-RC). The reporting mechanism consists of National Communications (NC) and biennial update reports (BURs), with sections on both mitigation and adaptation. As one example, the section on adaptation in the NCs for Bangladesh, India and Nepal is much less quantitative than for mitigation (see Box 22.3). These reports present no data on the

<sup>2</sup>Paragraph 27(k) of the adopted Sendai resolution reads "Formulate public policies, where applicable, aimed at addressing the issues of prevention or relocation, where possible, of human settlements in disaster risk zones, subject to national law and legal systems."

consequence of adaptation measures on impacts and risks. As another example, the second NC for Bangladesh identifies as a gap that there is hardly any research related to Loss and Damage. Scattered throughout the reports is some losses and damages data, but often at a highly aggregate level or very specific.

#### **Box 22.3 Case study findings on reporting frameworks**

We assessed national- and local-level policies in relation to the three global agreements for Bangladesh, India and Nepal. In general, ministries responsible for the environment and forestry develop the national-level climate change policy and investment plans, including the adaptation part. Both Nepal and Pakistan developed local adaptation plans of action (LAPAs) in response to perceived shortcomings of the UNFCCC's NAPAs (Klinsky et al. 2014). Despite successfully integrating vulnerability assessments and prioritising adaptation projects accordingly, the national plan is still seen as an overly broad, top-down estimation that has not adequately captured local needs. Since the impacts of climate change dramatically changed from one village to the next, a topdown process such as a NAPA is considered ill-equipped to cater for meeting local needs (Chaudhury et al. 2014). In Nepal, the LAPA process started mid-2010 and covered, by 2016, 90 village development committees and seven municipalities—the lowest administrative units in the country (Government of Nepal 2016). Nepal's LAPA has succeeded in mobilising local institutions and community groups in adaptation planning and recognising their role in adaptation. However, the LAPA approach and implementation have been constrained by socio-structural and governance barriers that have prevented the integration of local adaptation needs into local plans and thus failed to increase the adaptive capacity of vulnerable households (Regmi et al. 2016). For DRR, each state and district develops its own state and district disaster management plan by adapting the national plan to its local context. The Global Network of Civil Society Organisations for Disaster Reduction has the Frontline programme in which it collects community perceptions of disasters and risk to measure threats, local capacities and underlying development factors, bringing local knowledge to national, regional and global actors. It was one of the few agencies separate from the UN and the agencies that were being assessed that also produced a review of HFA. Frontline continues its programme for the post-2015 agreements, whereby it tries to capture data from local experience and reality on all three key global agreements instead of only on Sendai, by using grounded resilience indicators. Frontline has established baselines during 2015–2016 as a basis for ongoing monitoring during the currency of these frameworks. The Nepalese government, supported by The United Nations Development Programme (UNDP) and in dialogue with development partners, implemented the MDG goals in national-level policies and measures. In some cases, local-level implementation plans, and reporting was completed. Similarly, also for the SDGs, Nepal states in its SDG 2016–2030 National (Preliminary) Report its ambition to combine the localisation of SDGs with political setups at local levels that are willing and capable of handling the development agenda (National Planning Commission 2015).

Article 13 of the Paris Agreement describes the principles for a transparency framework. The new framework will build on the existing mechanisms, but will also introduce the adaptation communication, containing adaptation priorities, implementation and support needs, plans and actions. Standardised indicators for adaptation may be useful to make comparisons across countries possible, but are considered more complex than mitigation indicators, as the impact of climate change varies greatly from one country to another. It is important to make adaptation goals more specific and to build on monitoring approaches from different sectors (Transparency Partnership 2017). The transparency framework also aims at aggregating reporting on support offered and received, and gradually converging the review arrangements for developed and developing countries (ECBI 2017). The facilitative dialogue in 2018 supports the development of the transparency framework and also makes clear how it links to the global stocktake, the collective stocktaking of progress towards achieving the paris agreement, which will start for the first time in 2023 and will consider NDCs submitted in 2020 for the period 2026–2030.

Transparency regarding the WIM mechanism in its first phase from 2013 to 2017 can be said to consist of annual work plans, which report mostly on the first two functions of theWIM, i.e. enhancing knowledge and understanding of comprehensive risk management approaches and strengthening dialogue, coordination, coherence and synergies among relevant stakeholders. It is expected that the WIM in its second phase (2017–2022) will be able to work more on its third function, i.e. enhancing action and support. In that case, the transparency mechanism will very likely become more indicator-based.

The Hyogo Framework for Action (2005–2015) (HFA) was monitored through regional, national and, for a limited number of countries, local progress reports, usually at a 3—year interval. In 2015, the UN General Assembly endorsed its successor: the Sendai Framework for DRR 2015–2030, aims to improve on some of the issues encountered under Hyogo, such as the focus in the indicators on input rather than output or outcome, and the lack of clear links to millennium development goals (MDGs) and UNFCCC (Maskrey 2016). Four of sendai's seven global targets are outcome-focused instead of input- or output-focused and have clear links to the SDGs and the climate agreements. Mysiak et al. (2015) state that the wording used in the pre-conference version of the Sendai Framework seems to have been aimed at fortifying the claims advanced under the WIM, claims in terms of accepting liability for the residual risks. Sendai focuses not only on reducing existing risks, but also on preventing new risks and strengthening resilience. Outcome targets are objective and measurable, allowing international benchmarking of progress relative to a quantitative baseline of 2005–2015. A data readiness review for 87 countries has been done (UNISDR 2017). The first progress reports are expected in 2018. Every 2 years, UNISDR publishes the Global Assessment Report for DRR (GAR) as a supportive tool for HFA and Sendai, which monitors risk patterns and trends and progress in DRR while providing strategic policy guidance to countries and the international community.

MDGs (2000–2015) worked with country progress reports usually every 3 years, covering mostly MDG 1 through 7. MDG 8 was captured through annual MDG Gap Task Force reports. After the UN defined its SDGs, both government spending and donor funding will be tailored—although to a varying degree depending on the specific country and context—to the current scores on these indicators as well as the targets that are to be reached in 2030 (Martin and Walker 2017). In 2016 some countries had already submitted a voluntary national review. Table 22.3 shows the losses and damages indicators for SDGs (the MDGs only had indicators in terms of reducing loss of environmental resources and biodiversity).

#### *Transparency: National and Local*

Governments are expected to take ownership of the key global agreements in terms of integration with national planning processes. For example, the National Disaster Management Plan of India states that the country has incorporated substantively the approach enunciated in Sendai. Focal points in each country are responsible for the collection of high-quality, accessible and timely data on the indicators. But also collecting and analysing data at scales greater than national boundaries is required, as disasters do not stop at national borders. Key global agreements and several regional, national and local policies are interrelated, and has each its specific means of implementation. Therefore, regional follow-ups and reviews are held regularly based on the national-level analyses and contribute to follow-up and review at the global level.

#### *Means of Implementation: Technology*

CBDR–RC is a principle within the UNFCCC that acknowledges the different capabilities and differing responsibilities of individual countries in addressing climate change. UNFCCC mandated the technology mechanism (TM) in 2010, and it became fully operational at the end of 2013. The TM supports parties in promoting and facilitating enhanced action on mitigation and adaptation (Paris Agreement, article 10.4). The Paris Agreement further specifies that the TM, together with the Financial Mechanism, will support collaborative approaches to research and development, and facilitate access to technology, in particular for early stages of the technology cycle, for developing country parties (Paris Agreement, article 10.5). The Climate Technology Centre and Network (CTCN) implements the mechanism through technology needs assessments (TNA), corresponding technology action plans (TAP), and TT:CLEAR, the web platform for all information related to climate technology. A TNA and TAP has been performed for Bangladesh. A TNA was started but remains unfinished in Nepal. In general, TNAs have been performed for several developing countries, but there are still many that have not received and/or requested technical assistance, and the CTCN seems understaffed (Shimada and Kennedy 2017). The WIM executive committee has established at the end of 2016 a technical expert group on comprehensive risk management and transformational approaches and engages regularly with the Technology Executive Committee.

The Technology Facilitation Mechanism (TFM) that supports the implementation of SDGs has similar characteristics as the UNFCCC's TM, but is still in its early stages, as it started about 5 years later.<sup>3</sup> It aims to ensure equitable access to key

<sup>3</sup>It has three components: (1) a United Nations interagency task team on science, technology and innovation for the SDGs (IATT) with representatives from civil society, the private sector and the scientific community; (2) a collaborative multi-stakeholder forum on science, technology and innovation for the SDGs (STI Forum), which organises calls for innovations; and (3) an online platform as a gateway for information on existing STI initiatives, mechanisms and programmes (Antic and Liu 2015).

**Table 22.3** Transparency in the three key global agreements: reporting mechanisms, indicators related to impacts and risks, and means of implementation for technology, with some detail on Bangladesh, India and Nepal

(continued)

**Table 22.3** (continued)

*Note COP* Conference of the Parties, *HFA* Hyogo framework for action, *NC* national communication, *BUR* biennial update reports BUR, *NDC* nationally determined contribution, *NAP* national adaptation plan, *NAPA* national adaptation programme of action, *WIM* Warsaw International Mechanism for Loss and Damage, *MDG* Millennium Development Goal, *SDG* Sustainable Development Goal, *TNA* technology needs assessments, *TAP* technology action plan

technologies and knowledge for developing countries. It is highly likely that it will aim at avoiding overlap with what is being covered by the UNFCCC Technology Mechanism, but some degree of synergy can be expected. So far, no reporting on TFM has been done. Technology transfer was stimulated under the MDG framework as well, whereby especially ICT was put forward as an important enabling technology. The HFA framework emphasises the importance of technical assistance, technology transfer, knowledge and innovation, but means of implementation are not very well articulated. The United Nations Trust Fund for Disaster Reduction bilateral and multilateral cooperation are put forward as possible financing mechanisms. Sendai has a section on means of implementation, where it is reaffirmed that developing countries need technology transfer on concessional and preferential terms and that thematic platforms of cooperation can be used to enhance access to technology (for example global technology pools and systems to share know-how, innovation and research) (UNISDR 2015). Also, a science and technology roadmap was developed to support the framework with a set of expected outcomes, actions and deliverables, mostly aimed at the scientific community (UNISDR2016). However, these intentions have not yet led to the establishment of tangible mechanisms such as UNFCCC's CTCN.

#### **22.5 Reporting Framework for Technology to Address Loss and Damage and Contribute to Climate Justice**

The three key global agreements and their corresponding policy frameworks at regional, national and local level—as also discussed for Bangladesh, India and Nepal—have different ways of planning, reporting and reviewing and require the involvement of many stakeholders. The SDGs and Sendai have Loss and Damage related indicators. The Paris Agreement has no specific indicators, but the NCs do contain some usually highly aggregate losses and damages data. The reporting on adaptation is usually self-reporting without a review mechanism and standardisation that allows for comparability, done at a highly aggregate level and not specific on impact achieved. All three agreements have or are working on some form of technology facilitation for adaptation, but these mechanisms are still in their infancy, except for the TNAs. Overall, it is complex if not impossible to distil from the current transparency mechanisms a comprehensive overview of the status of progress on adaptation and its role in tackling losses and damages retrospectively or prospectively.

#### *Developing the Framework*

We thus proceed to lay out an analytical framework to analyse technology needs to reduce losses and damages for decision-makers that brings together the findings of the previous three sections, see Fig. 22.4. The framework puts centre stage two repositories that each relate impacts and risks to technology and its three components, hardware, software and orgware. One repository is an inventory of technologies used to address impacts and risks; the other repository is a target list of those technologies planned to address risk. Several repositories of technology are available that aim at connecting and matching users to technologies.4 These kinds of repositories can be used by practitioners, to select socially and environmentally sound technologies that match the needs of the poor and vulnerable/marginalised groups.

Global, regional, national and local policies have different means of implementation, i.e. technology, capacity-building and finance, as depicted on the right side

<sup>4</sup>For example, the ClimateTechWiki offers detailed information on several of the mitigation and adaptation technologies. It is a platform for a wide range of stakeholders in developed and developing countries who are involved in technology transfer and the wider context of low emission and low vulnerability development. The Technology Needs Assessment Database is complementary, with factsheets on several technologies. IEEE Engineering for Change created an online, decision-aid platform where users can search and compare technology-based solutions. The Flood Resilience Portal (www.floodresilience.net) is an online knowledge-sharing space that offers practical solutions to address the risks of flooding; the UN just started the Global Innovation Exchange.

**Fig. 22.4** Reporting framework for technology to address Loss and Damage and contribute to climate

of Fig. 22.4. The key global agreements and interrelated regional, national and local counterparts each have their own specific transparency mechanism, a way of measuring, reporting and in some cases validating progress, with each their particular focus. This plethora of reporting and reviewing mechanisms covers impacts and risks only to a limited extent and does not adequately help to unveil injustices, as the reporting is often based on self-reporting at a highly aggregate level with insufficient ground-truthed data.

Therefore, credible, timely and high-quality data is an essential input for the transparency mechanism, and as shown on the left side would be kept and updated in another repository element. Reporting frameworks need to have data on access to technology that reflects actual need and on the role that technology can play in reducing losses and damage, both backward- and-forward looking. There are several approaches, methodologies and tools available to collect pre-disaster data on the risk components, i.e. vulnerability, hazards and coping capacity, and data on the actual losses and damages (Surminski et al. 2012). To maximise utility, these databases must be inclusive, capture the poor and vulnerable, be interoperable, preferably open-access, timely (regularly updated) and represent different granularity levels from global to local. It is essential to narrow the gaps in representing the poor and vulnerable of developing countries in climate data, with the ultimate objective to provide an evidence base that can be used in the policy and funding debate around climate change, as well as for DRR and development. Apart from data, knowledge is essential to assess existing and foresee new technologies for adaptation and transformation, i.e. the repositories we referred to earlier.

#### *Applying the Technology for Climate Justice Reporting Framework*

We applied the technology justice components as explained in Table 22.1 to transboundary early warning systems for the Brahmaputra River (Bangladesh–India) and the Karnali River (India–Nepal).5 Seven key experts in Nepal, India and Bangladesh provided information both in writing and through follow-up interviews.

Whereas the MDGs had no reference at all to EWS, the SDG framework has two EWS targets. Target 3d is "Strengthen the capacity of all countries, in particular developing countries, for early warning, risk reduction and management of national and global health risks." Target 13.3 is to "Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning" (SDG 2016). Article 7 and Article 8 of the Paris Climate Agreement6 place a greater emphasis on understanding, action and support for EWS, but no reporting is as of yet available. Pre-2015 reports such as the national communications or the NAPAs do not have relevant data on early warning, except for more general statements. HFA and Sendai do have relevant reporting. Table 22.4 summarises the injustices for each of the components.

<sup>5</sup>The component on sustainable use does not directly apply to EWS, as EWS cause negligible intrusions such as through gauges that are put into rivers or radar installations.

<sup>6</sup>Article 7 is on "Enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change" and Article 8 is loss and damage and "the importance of averting, minimizing and addressing loss and damage associated with the adverse effects of climate change".

**Table 22.4** Injustices identified in current flood early warning systems in South Asia

*Note* National Meteorological and Hydrological Services (NMHS), *CRM* climate risk management

#### *Equitable Access to Early Warning*

The focus of National Meteorological and Hydrological Services (NMHS) is on calculating accurate forecasts nationwide. However, ensuring equitable access to these forecasts also for poor and vulnerable communities is not core to their mandate. Community-based early warning systems (CBEWS) try to bridge this gap, but they do not cover all flood-prone communities, provide only very short lead times and are not well integrated with national systems, hampering their sustainability. Communities that do not receive an early warning inevitably face higher losses and damages, but even those that do receive an early warning often do not have sufficient information to take well-targeted (early) actions that could limit or avoid losses and damages. It is key to characterise the early warning-early action gap to a sufficiently quantitative extent and not—as is currently the case for HFA—in a multi-hazard, country-wide and mostly qualitative way. The self-reporting on access in the HFA, and soon Sendai, has to be interpreted carefully, as the reporting is, to our current understanding, not based on representative surveys conducted by governments among communities that depend on early warning. In general, local self-reporting seems to give a more realistic picture than national self-reporting.

#### *Equitable Access to Technology and Knowledge*

Access to services and technology is far from equitable both at the public and private level. Access to more advanced flood risk modelling and observational data, including the required advanced computational power, enables NMHS to improve the spatial and temporal precision of the EWS. This in turn allows for better targeting of adaptation actions for reducing or avoiding losses and damages. Poor and vulnerable communities face digital disparities, impeding equitable access to early warning and early action information.

#### *Technological Innovation and Implementation*

Communities are better able to manage and utilise CBEWS when they are involved in the technology development process from the onset. The dissemination, communication and response component of EWS can benefit from relatively low-tech innovations, whereas the risk modelling and monitoring and warning components require both low and high-tech innovations. Current policies and plans have identified several of these innovation needs, but available budgets usually barely cover the rolling out and scaling up of existing copycat-type technology. In addition, capacity building to roll out flood CRM at local level is often not sufficient, due to many ad hoc, short-lived, mainly project-based interventions (Khan et al. 2016).

#### *Governance*

Many organisations are involved in implementing EWS at local, national, regional and global level. Most CBEWS initiatives start at the project or pilot level and face difficulties in scaling up and becoming sustainable. It is at the national to local and national to regional/neighbouring countries' interfaces that current governance is insufficient. Governance has to occur across these different dimensions, to promote synergy and coherence and to create political and financial support for using new technologies to reach the communities that need the information. In addition, there are a plethora of reporting frameworks and a lack of standardisation and quantitative data at sufficiently granular level. High-resolution spatial data on whether/how adaptation technologies meet the needs of the poor and vulnerable is required for the focal scale of flood impacts and interventions, but is lacking. It is complex if not impossible to distil from the current transparency mechanisms a comprehensive overview of the status of progress on adaptation and its role in reducing losses and damages. Clearly capacity for reporting is not sufficient and self-reporting of countries to the global policy agreements tends to lead to too-optimistic scoring, as is seen for example in terms of the reach of early warning into poor and vulnerable communities.

#### *Finance*

We find in the transboundary EWS case study area that costs for bridging the gap towards communities are currently not covered through structural and comprehensive funding streams. There is evidence from Bangladesh that shows that these costs form a significant percentage of the overall EWS costs. Innovations in the area of local data collection are urgently needed to reduce the current costs for data collection of water levels. Targeted crowdsourcing might be cost-effective to collect local data for flood maps as compared with costly gauges and gauge readers; at the same time, it will bring along uncertainties in relation to the continuity and validity of the collection. To convince policy makers and practitioners, it is essential that a more mature, longitudinal and standardised assessment of losses and damages at community level takes place against investments that are being made in EWS.

Overall, we suggest the framework proves to be an adequate mechanism to assess the injustices present in a flood CRM measure, such as a transboundary EWS, along the technology dimension. This assessment forms a starting point for change. In Table 22.4 we indicate in the third column which climate justice principle is applicable to tackle these injustices. For example, procedural justice means making sure the poor and vulnerable are included in evaluating a flood CRM measure. The fourth column in Table 22.4 estimates what kind of adjustment is necessary to bridge the gap between an unjust and just situation. Improving access to services can be a quick win with mostly incremental adjustments. However, funding and governance might require transformative adjustment.

#### **22.6 Discussion and Conclusions**

This chapter assessed the role of technology for the L&D debate and developed a reporting framework that links climate justice principles to access, use, innovation, finance and governance of technology to address loss and damage at the crossover from adaptation to "beyond adaptation" from the perspective of the poor and vulnerable. Application of the framework to a case study on a flood EWS showed that developing countries (as well as poor and vulnerable communities in these countries) can only use a small part of the technology spectrum available to address loss and damage as they have limited capacities and funding for innovating, accessing and using technology. They are therefore forced to implement the bare minimum largely copycat type of technology. As climate change progresses, the level of adaptation required increases, whereas if no action is taken, the technology available for adaptation remains the same. This means the adaptation deficit (Burton 2004) will increase.

We argued that attention to climate justice principles can help to motivate support for widening the technology spectrum available to developing countries and for addressing the injustices we inventoried by distributing means of implementation (technology, finance and capacity building) through underlying principles such as distributive, compensatory, transitional or procedural justice. We hold that global communities have a responsibility to ensure sustainable use of, equitable access to and inclusive innovation of technology to shape the soft adaptation limit and, once this limit is reached, to support transformative and curative measures necessary to tackle additional risks due to climate change.

In this concluding section, we build on the framework in order to develop recommendations for the Paris Agreement and WIM as to how technology can be mobilised to contribute to climate justice. As the required actions are partly in the adaptation and partly in the L&D pillar, recommendations will cover both. We organise our suggestions around the three main functions of the WIM (understanding, dialogue and support plus action).

#### *Understanding L&D*

Understanding the switch from adaptation to L&D enables improved investment in technologies for adaptation while clarifying the unavoidable risks requiring curative or transformative action. We emphasise that this will be possible up to the hard limit, after which only L&D measures are possible. The executive committee of the WIM may include in the work stream and expert group on comprehensive risk management an inventory of how technologies shape the soft limits in both developing and developed countries. It will also be important to reach a solid basis and agreement on what the hard limits from a technological point are for climate change risks, such as for sea-level rise, to avoid contentious political discussions on operationalising the L&D mechanism.

#### *Dialogue, Coordination and Coherence on Loss and Damage*

Parties may want to link dialogue, coordination and coherence to the transparency mechanism under Article 7, as the WIM does not have a transparency mechanism. Article 7 of the Paris Agreement states that each party should periodically submit an adaptation communication, which may include its priorities, implementation and support needs, plans and actions. In this context, Article 13 states that, under the transparency framework, countries are encouraged—without it being mandatory—to report information on their adaptation actions to highlight what they have done and what more needs to be done (Desgain and Sharma 2016). The transparency framework offers flexibility in the scope, frequency and level of detail of reporting, and in the scope of review (Kato and Ellis 2016). There is a window of opportunity as part of the facilitative dialogue to start a discussion on including technology in the adaptation communication and to make sure reported data captures the actual impact of adaptation on impacts and risks and represents the poor and vulnerable. However, reporting on adaptation has the risk of shifting the burden to developing countries if efforts to reduce risks are seen as their responsibility (ECBI 2017). It therefore has to go hand in hand with a further development of reporting on the WIM mechanism. It is also important to treat technology in coherence with the SDG and Sendai framework, and join forces in reporting on losses and damages in the broader sense (including L&D). A kind of devolution hub<sup>7</sup> that makes access to policies at global, regional, national and local level easily available and interpretable might be beneficial to stimulate coherency. In addition, standardisation of how to measure and report on losses and damages will be essential.

#### *Action in Relation to Technology to Contribute to Climate Justice*

In many instances, communities and countries still seem to have room for adaptation between the soft and hard limit, as indicated by the reported avoidable impacts and risks. Countries are expected to implement adaptation measures to the best of their capabilities (meaning up to their soft limit) to protect their populations from climate variability and/or to empower their citizens, especially those with the lowest capacity to adapt (Winkler and Rajamani 2014) ,to implement corresponding risk avoidance measures, given the common responsibility for adaptation. Governments should provide essential services for DRR, such as a basin-scale EWS making use of automated data collection, high-resolution satellite imagery and impact-based forecasting. But insufficient funding for adaptation is going to the least-developed countries, and the poor and vulnerable have limited access to technologies required for individual adaptation, let alone for keeping up with future risk trends.

Technology can play a role in creating additional adaptation options and/or shifting the soft adaptation limit. Soft adaptation limits should be levelled between developing and developed countries. This means that the objectives that shape the adaptation limit should not be different. Technologies should be shared among those countries having access and those not having access, recognising the commitment to leave no one behind. Why would an NMHS in a developing country settle for less EWS lead time than in a developed country? The technologies that do play a role in transformative actions are in general different from climate-related technologies, for example ICT technologies for distance learning or for outsourcing IT work. Technological development and proliferation has to involve all stakeholders in a fair and equal manner (procedural justice). It is essential to create funding possibilities for developing appropriate technology within existing technology mechanisms such as from the CTCN. The voices of the poor and vulnerable have to be heard. It does not all need to be high-tech; many local technologies can be adapted with investment in research, such as biodykes for flood mitigation, with the added benefit that they can be maintained by local people with existing skill sets.

The transparency framework we propose overall exposes injustices in technology innovation, access and use, with the objective of widening the technology spectrum

<sup>7</sup>Such as from the OpenInstitute, see http://www.openinstitute.com/devhubv2.

available to developing countries by distributing means of implementation (technology, finance and capacity building) through underlying climate justice principles.

**Acknowledgements** The Zurich Flood Resilience Alliance supported this work. The authors gratefully acknowledge input by the following experts from Practical Action: Jonathan Casey, Christine Comerford (UK), Gopal Ghimire, Dinanath Bhandari, Gehendra Gurung and Sumit Dugar (Nepal), Rigan Ali Khan (Bangladesh) and K. R. Viswanathan (India).

#### **References**

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