Javier Spencer, Guest contributor
“We have lost everything” is the harrowing cry you would hear from someone in the aftermath of a climate disaster. And ‘everything’ in this context is not a hyperbole but a stark reality. For instance, the paradise islands of Barbuda (part of Antigua & Barbuda) and Dominica were hit by catastrophic hurricanes in September 2017. The hard blow experienced by both islands resulted in permanent infrastructural damages, economic losses, and losses of lives and livelihoods. The onset of these disasters has been coming at an increased frequency with incomparable strength. Citizens of Caribbean Small Island Developing States (SIDS) have no choice but to toil forward in fear – not knowing when or how strong the next hit will be.
After the catastrophe has departed, it leaves a dismal recovery for these Caribbean SIDS. These countries are characterized by small size, high debt burdens, and limited physical resources that make it particularly challenging to address the adverse impact of climate change disasters. This is what we call “loss and damage”. The consequences of climate change fast outpace the ability to adapt, coupled with the lack of resources to exploit in the face of a climate disaster. Out of curiosity, could Citizenship By Investment Programmes (CBI) in the Caribbean be one way to raise urgent finance to address loss and damage? This article considers whether these programmes could be one way to raise quick cash to address loss and damage.
The binary view of loss and damage shows one side as economic losses and the other as non-economic, but both categories are often woven tightly together. On the one hand, economic loss and damage emanates from productive sectors being negatively affected by climate change. In contrast, non-economic loss and damage, on the other hand, is simply the unreckonable human casualties – that is, the loss of life, the human displacement, and even the proliferation of physical and mental illnesses.
The writing on the wall is that Caribbean SIDS lack the requisite resources to build resilience and to merely implement adaptation and mitigation strategies equivalent to the extent of the resulting damage. Owing to this, developing countries, particularly SIDS, have for thirty years vociferously implored developed countries to agree to establish a multilateral fund that would assist them in tackling loss and damage.
The key tenets of the multilateral fund, however, are ‘new’ and ‘additional’. This means that the funding arrangement should be separate and distinct from existing global financial structures marred by eligibility criteria checkboxes that would exclude most SIDS – the most climate vulnerable – from accessing these funds. Furthermore, a specific, fit-for-purpose multilateral funding arrangement that is governed under the oversight of the United Nations Framework Convention on Climate Change (UNFCCC) would guarantee access for vulnerable countries, establish legitimacy and enhance transparency.
The logic is solid and cohesive. Yet, the road to a consensus to establish the fund was daunting and met with resistance from developed countries. Nevertheless, history was made by the sound of the gavel at COP27 in Sharm el-Sheikh, Egypt. Parties finally agreed to establish a long-awaited loss and damage fund for assisting developing countries that are particularly vulnerable to the adverse effects of climate change. This would compensate the most climate-vulnerable countries, which have contributed inconsequentially to the climate crisis.
Now that there is an agreement, what’s next? The next hurdle is negotiating the operationalisation of the fund – what are the sources of finance? What will the fund look like? How will it be administered? And more importantly, how soon will beneficiaries be able to access the fund? With these looming questions and details to iron out, operationalising the fund could be lengthy. But time is a luxury that SIDS cannot afford.
As cynical as this question may be, what if the fund takes another 30 years to operationalise? Some reports have indicated that the cost of weather-related events in 2021 is estimated at US $329 billion globally. In the context of Caribbean SIDS, out-of-the-box fundraising might have to be employed to fill the void and supplement a fund.
Citizenship by Investment (CBI) Programmes have met favour with some Governments in the Caribbean in generating quick revenue outside of traditional revenue streams to repay debts, invest in development projects, and fund other initiatives. CBI Programmes grant investors citizenship for significant investment contributions to the economy. These programmes currently exist in Saint Kitts and Nevis, Dominica, Grenada, Saint Lucia, and Antigua and Barbuda.
So far, these programmes are proving to be one way to generate foreign investment quickly. For instance, between 2016 to 2021, reports have shown that the CBI programme generated an annual average for Saint Lucia, XCD $ 30 million; Grenada, XCD $ 3 million; and Antigua Barbuda, XCD $ 33 million.
Looking at the dollars and cents at the surface shows that CBI programmes could be a veritable income generator. Zooming in, with specific reference to the one in Antigua and Barbuda, the investment options for investors are the National Development Fund (NDF), Real Estate, Business Investment, and the University of the West Indies (UWI) Fund.
In spite of the dollars and cents, these programmes have received negative global press – bringing into question governance, accountability and transparency. Ironically, the same carbon-emitting developed countries are the ones scrutinising CBI programmes in Caribbean SIDS. The increased scrutiny has certainly impacted these countries through blacklisting, tax haven labelling, and visa restriction for passport holders from these countries.
Very soon, we could see a rapid decline or even a sudden halt in CBI programmes. But while they are still alive, now is the time to consider adding a new investment stream: Climate Resilience Fund. This new revenue stream would be exclusively used to address loss and damage. Establishing this would require the integration of relevant local and authorised environmental agencies and a robust transparency and accountability framework that governs these programmes. This article should not be misconstrued to replace the multilateral loss and damage fund but rather a speedy self-fundraising mechanism to supplement the fund. Is this feasible?
Javier Spencer is an International Trade & Development professional with keen interests and specialization in Global Business, Communications and Diplomacy. You are free to reach out to Javier via email at firstname.lastname@example.org or on LinkedIn.