Caribbean Trade Law and Development

Tag: climate resilience

  • Building Climate Resilient Agriculture

    Building Climate Resilient Agriculture

    Sandiford Edwards, MA, MBA, ACCA

    Sandiford Edwards, MA, MBA, ACCA – Guest Contributor

    Agri-Sector Vulnerability

    There can be no denying that the coronavirus disease 2019 (COVID-19) has had a deleterious effect on livelihoods and economies around the world, with a precipitous decline in global travel, upending many traditional brick and mortar businesses and reorganising of many hospitality services. The Caribbean Region has not been exempted from the scourge of COVID-19 and the consequent economic fallout.

    Whilst international supply chains and connectivity (air and sea) remained relatively stable for agri-food products, local and regional producers were faced with the double burden of market interruptions, on the occasion of the imposition of ‘stay-at-home’ orders and excess supply for agri-food products primarily targeted for the hotel, restaurants and fast-food markets. This tested the resiliency of their enterprises and by extension the agri-food sector.  

    Overshadowed by the COVID-19 pandemic, primary agri-food producers in many parts of the Region struggled with long term drought. The 12-month review (April 2019 to March 2020) according to the Caribbean Regional Climate Centre, indicated that conditions were severely to exceptionally dry[i]. In the absence of well-developed and implemented integrated water management plans and corresponding irrigation system, primary agri-food producers many of whom are small family farmers, reliant on rain fed agriculture were front and center, experiencing the excruciating pain of limited availability of water for their crops and livestock.

    The acute water stress finds genesis in the fact that Caribbean agriculture is highly seasonal being dependent on weather. Natural climate variability but more so climate change has altered the status quo making traditional agricultural methods less efficient.

    June 1st ushered in the 6-months long annual Atlantic hurricane season which according to the National Oceanic and Atmospheric Administration – Climate Prediction Center is expected to be an extremely busy season, “forecasting a likely range of 13 to 19 named storms (winds of 39 mph or higher), of which 6 to 10 could become hurricanes (winds of 74 mph or higher), including 3 to 6 major hurricanes (category 3, 4 or 5; with winds of 111 mph or higher)”[ii].

    The unnerving prediction can potentially exacerbate the lingering effects of both the drought and the COVID-19 pandemic on the agri-food sector, exposing its fragile structure and huge vulnerability. Interestedly, the majority of the countries in the region have been ranked as medium – high on the classification of vulnerability to external shocks – inclusive of exposure to natural hazards and climate change[iii].

    Exposure to this exogenous threat is evident in the recurrent incidences of tropical cyclones of varying magnitude to befall the region over the last two decades, averaging once in less than every two years (Table 1).

    Table 1 – Weather Systems Impacting the Region from 2000 – 2019

    YearNameYear Name Year Name
    2000Keith2005Emily2015Joaquin
    2001Iris2005Wilma2016Matthew
    2002Lili2005Katrina2017Irma
    2003Isabel2007Dean2017Maria
    2004Ivan2014Gonzalo2019Dorian

    Additionally, over the last two decades, the Region has suffered approximately US $32 billion in damage and loss for which infrastructure, housing and agriculture were most pronounced[iv].

    Notably, examples of impact of tropical weather systems in the Region are: Hurricane Ivan in 2004, was estimated to have stripped over 91 percent of the forest land and watershed vegetation in Grenada and wiped out an entire years’ crop, destroying approximately 85 percent of nutmeg trees, Grenada’s main export crop[v]. In the case of Dominica, damage and loss to the agriculture was estimated at US$170 million from hurricane Maria[vi]. Thirdly, the Bahamas reportedly lost approximately 60,000 livestock with damage and loss to agriculture assessed to be upwards of us$ 80 million as a result of hurricane Dorian[vii].

    The question therefore, is whether the Region has learnt the lessons from previous catastrophic climatic events and has truthfully embarked on the journey to strengthen its agriculture resilience with a level of urgency. 

    Achieving Resilience

    Resilience personifies the concept of having an adequate policy-induced ability for an economy to withstand or recover from the effect of exogenous shocks[viii]. More broadly put, the level of resilience will be determined by how well the actions and interplay of the various systems (political, economic & societal) can safeguard the performance of the economy[ix]. Resilience is therefore, underpinned by robust institutional frameworks to dampen or render shocks negligible or the speed to which an economy can return and surpass normal productivity following shock events.

    Interestingly, vulnerability does not equate to inability to achieve resilience as seen in the “Singapore Paradox” which confirmed the paradigm that small countries with high economic vulnerability ratings can still be economically resilient and attain consistently high Gross Domestic Product (GDP) growth rates with a consummate elevated level of Gross National Income (GNI) per capita and high standard of living as measured by the Human Development Index (HDI).

    As governments seek to reopen borders aimed at boosting economic activities, they cannot afford to be blindsided by COVID-19, losing sight of the imperative of building the resilience of the agri-food sector to the potential wreckage that can arise on the occasion of climatic weather events.  

    Hope that the next few months will bring respite from any other exogenous shock might be misplaced as this year’s Atlantic hurricane season has already recorded two named storms. Evidence of COVID-19 and the impact of tropical weather systems on the region elucidates the rationale behind the need for governments to have a long term commitment to agri-food resilience building.

    Proactive steps are therefore needed to confront this looming challenge of the predictive above-average Atlantic hurricane season.

    Recommendations

    Having regard to the foregoing, the prevailing conditions around regional food and nutrition security and cognisant of the inexhaustible compendium of policy recommendations already available and intensely debated, I wish to highlight a few areas of consideration that I consider germane and an absolute imperative for building resilient agriculture.

    1. Hurricane Resistant Agriculture Technology – it will be foolhardy if the region continues to promote the use of greenhouse and other protective agriculture technology (livestock, crops & aquaculture) that are not technically designed to withstand hurricanes. The urgency to sustain livelihoods or even to build back after the impact of a climatic event should not be traded for inappropriate technology ill-suited for the regions challenges. According to the United States based National Institute or Building Sciences, every $1 spent on mitigation saves at least $6[x]. Transposing this conclusion without accounting for variables would imply that investment of $175 million in disaster mitigation and appropriate climate smart technology can yield over $1 billion in savings.
    • Policymakers should institute a well-coordinated and systematic integration of climate adaptation principles into agriculture and food and nutrition security development policies, plans, programmes, projects, budgets and processes. For example, the Caribbean Climate Risk and Adaptation Tool (CCORAL) should be a standard feature in the evaluation of the agriculture projects. The use of CCORAL should also be augmented with sub-sector and geographic considerations to ensure local relevance.  
    • Updating of national integrated water resources management strategies, enhancement of agriculture catchment storage capacities and aggression transition from a predominantly rain-fed agriculture approach to irrigated agriculture. Technical skills in the region should be enhanced for drip irrigation technologies with a mass proliferation of same among farming systems.

    Farmers should receive training in water conservation measures, especially in drought -impacted areas. Additionally, where countries have not yet introduce funding mechanisms for water resources management, they should commence budgetary allocations for implementation, monitoring and enforcement (especially within the upper watershed, i.e. sustainable use of forest resources and disposal of agricultural waste).

    • Mainstreaming of climate smart and regenerative agricultural techniques – this should no longer be a buzz phrase but ought to be diligently implemented noting its potential to achieve resilient agriculture impact, especially within vulnerable communities. Simple practices such as organic mulching, agro-forestry, housing animals in raised pens or high ground to combat flooding, proper storage practices for agriculture inputs, provision of shade and ample water for livestock to safeguard animal health and protect from heat-stroke should be common practice.

    Sandiford Ruel Edwards, MA, MBA, ACCA is a Development Finance Specialist with experience in many countries in the Region.

    The views and opinions expressed herein are solely those of the guest author and are not necessarily representative of those of the Caribbean Trade Law & Development Blog.

    [i] CariSAM Bulletin Vol 3 Issue 12 May, 2020, Caribbean Regional Climate Centre

    [ii] https://www.noaa.gov/media-release/busy-atlantic-hurricane-season-predicted-for-2020

    [iii] Ram, Justin; Cotton. J, Jason; Frederick, Raquel; and Elliot, Wayne (2019) Measuring Vulnerability: A multidimensional vulnerability Index for the Caribbean, Caribbean Development Bank Working Paper No. 2019 /01 https://www.caribank.org/sites/default/files/publication-resources/Measuring%20Vulnerability-A%20Multidimensional%20Vulnerability%20Index%20for%20the%20Caribbean.pdf.

    [iv] Source Caribbean Development Bank Estimates cited in Ram, Justin (2020) Resilience Impact Securities with Equity (RISE) — How to Finance and Democratize Resilience Building during and after the POST COVID-19 Era. https://medium.com/@justinram/resilience-impact-securities-with-equity-rise-how-to-finance-and-democratize-resilience-b8bd0290557a

    [v] Grenada:  A Nation Rebuilding an assessment of reconstruction and economic recovery one year after Hurricane Ivan, (2005) The World Bank

    [vi] Antoine, Patrick (2018) Dominica, A Glo9bal Centre for Agriculture Resilience Among SIDS

    [vii] http://www.tribune242.com/news/2020/may/26/bahamas-lost-60000-livestock-to-dorian

    [viii] Lino et al, (2008). Economic Vulnerability & Resilience. United Nations University

    [ix] Brinkmann, Henrick, (2017). Economic Resilience. A new Concept for Policy Making?

    [x] https://www.pewtrusts.org/en/research-and-analysis/articles/2018/01/11/every-$1-invested-in-disaster-mitigation-saves-$6

  • COP25 climate talks: What’s at stake?

    COP25 climate talks: What’s at stake?

    Alicia Nicholls

    Caribbean representatives will shortly join their international counterparts in Madrid, Spain, from December 2-13, 2019 for the 25th meeting of the Conference of the Parties – the decision making body of the United Nations Framework Convention on Climate Change (UNFCCC).

    Climate change is the greatest threat facing the planet, and for many low-lying small island developing States (SIDS), coastal cities and communities, it is an existential one.  In recognition of the climate crisis, leaders from over 190 countries signed the historic Paris Climate Change Agreement in 2015 at the end of COP21 in Paris. Inter alia, they agreed to the ambitious but important goal of keeping global average temperature increases to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts towards a 1.5 degrees Celsius ceiling.

    To achieve this goal, the Agreement’s framers recognised that the world needed to reach global peaking of greenhouse gas (GHG) emissions as soon as possible.  However, with emissions still rising, countries’ levels of climate action and ambition remain too feeble to address the severity of the climate crisis. A significant increase in both at COP25 will be needed if the world is to avert the impending climate disaster.   

    World climate action/ambition still off-track

    The just released United Nations Environment Programme (UNEP) Emissions Gap Report 2019 showed that GHG emissions “continue on an upward trajectory and reached a record high of 55.3 GtCO2e in 2018”. The report found that G20 members, which account for 78 per cent of global GHG emissions, are collectively “on track to meet their limited 2020 Cancun Pledges”.  But, it noted that “seven countries are currently not on track to meet 2030 NDC commitments, and for a further three, it is not possible to say”. The report concluded that greater action by G20 members “will be essential for the global mitigation effort”.

    Making reference to the “large” emissions gap, the Emissions Gap Report further indicated that “in 2030, annual emissions need to be 15 GtCO2e lower than current unconditional Nationally Determined Contributions (NDCs) imply for the 2°C goal, and 32 GtCO2e lower for the 1.5°C goal”. This means the level of ambition in countries’ NDCs – their national commitments for reducing emissions and pursuing adaptation – remains too low to meet the Paris goal. As such, countries will need to agree to deeper emissions cuts in a shorter time frame.

    What will be discussed at COP25?  

    Even in its planning stages, COP25 has already faced and overcome two potential ‘crises’. Firstly, Chile assumed COP25 chairmanship after Brazil reneged on its offer to chair the event, shortly following the election of then incoming President Jair Bolsonaro. Secondly, weeks leading up to the event, Spain stepped in as the host nation after mass civil unrest caused the Chilean government to abandon hosting both the COP25 and an APEC trade summit. As such, the event will be chaired by Chile but held in Madrid. The President-designate of COP25 will be Her Excellency Carolina Schmidt of Chile.

    At COP24 in Poland last year, parties completed the majority of the implementation rules and guidelines of the Paris Agreement – the so called ‘Rulebook”. At COP25, they will continue deliberations to allow for the Agreement’s full operationalization. Key on the agenda to be resolved is establishing rules for implementing Article 6 of the Paris Agreement which pertains to market-based tools for limiting GHGs, such as international carbon markets.  Due to the sensitivity of this issue, the parties were unable to agree on ‘Article 6 rules’ at the COP24 and deferred the issue to COP25.

    Developing countries will, in particular, be concerned about climate finance critically needed for their mitigation and adaptation efforts. The parties at COP25 will also review the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts.   

    Importantly, a goal of COP25 will be ramping up global climate ambition in advance of 2020 – when countries have committed to submitting their revised NDCs and their long-term low GHG emissions development strategies.

    On this note, it would not be lost on participants that the US, the highest producer of GHG emissions on a per capita basis, has formally withdrawn from the Paris Agreement. While the US’ withdrawal will not take effect until November 2020, the Trump Administration has in the interim been reversing environmental regulations, including those enacted under the former Obama Administration.

    To date, the US is the only country to have withdrawn from the Paris Agreement. Other major emitters such as China (the world’s largest producer of GHG emissions on an absolute basis), the EU and India have not followed suit. Indeed, incoming president of the EU executive Commission, Ursula von der Leyen, plans to make the EU “the world’s first climate-neutral continent” by 2050 and has promoted a European Green Deal.

    Although the Trump administration has been reversing federal level environmental regulations, several US states, cities and businesses have maintained their commitment to climate action under America’s Pledge Initiative. According to the America’s Pledge Initiative, these represent “65% of the US population and 68% of the economy”. While this is some comfort, the potential absence of the world’s second largest emitter from the Agreement is a political setback for ratcheting up climate action at a time when the stakes are ever higher.

    Stakes remain high

    The Intergovernmental Panel on Climate Change (IPCC) Special Report on Global Warming of 1.5°C published in 2018 found that human activity has already caused the earth to warm by 1 degree Celsius. Though a point five degree difference may sound negligible, the IPCC report found that even a 2 degree Celsius increase in warming could cause catastrophic impacts. The IPCC also more recently published two other special reports highlighting the real impact of climate change on land, and on the ocean and cryosphere.

    There has been a noticeable increase in the number of climate-related events and disasters internationally, be it droughts, flooding, record wild fires or faster than expected melting of the polar ice caps. These events have affected several countries around the world. But, it must be emphasized, while SIDS contribute the least to climate change (together accounting for less than 1% of global emissions), they are among the most negatively affected by the adverse impacts of climate change. Indeed, rising sea levels are already negatively affecting our fragile coastlines.

    The recent IDB assessment on the effects and impact of Hurricane Dorian in the Bahamas estimated damages at $2.5 billion, and losses at $717.3 million, with most of the damage confined to the Abaco Islands and to a lesser extent, Grand Bahama. According to the IDB report, there were 67 confirmed deaths and 282 missing persons as of 18 October 2019. This is by no means an isolated incident. As sea surface temperatures increase, scientists predict more intense hurricanes.  

    Climate change has already caused shifts in weather patterns with implications for food security and access to water. Besides the human impact, it also threatens the tourism, manufacturing and agriculture industries, which are the economic building blocks, to varying extents, of most of our Caribbean economies.   

    Debate in silos

    On another note, the debate on climate change and trade is still to a large extent occurring in silos. The Paris Agreement does not touch on trade, which is not only a contributor to climate change, but can and has been impacted by climate change. Similarly, trade officials are not among the negotiators at climate talks.

    However, the World Trade Organisation, the global regulator of international trade, has since April 2018 hosted three Natural Disasters and Trade symposia, and will on November 29 host its fourth. With financing from the Permanent Mission of Australia to Geneva, three research studies focused on the macro-economic impacts on disaster-affected countries and the trade issues arising in the disaster response, recovery and resilience-building. The country studies were Nepal, the Caribbean (Dominica and St. Lucia) and The Pacific (Fiji, Tonga and Vanuatu).

    Barbados’ co-hosting of the UNCTAD XV quadrennial conference in October next year is the perfect opportunity to keep climate action high on the trade and development agenda and to bring these two disciplines together.

    In conclusion

    Nearly four years after world leaders gathered at COP21 and negotiated and signed the historic Paris Agreement, levels of climate action and ambition do not match the severity of the impending climate crisis. Certainly, governments, businesses, households, and individuals all have their role to play in reducing their emissions footprint. But it is imperative for governments to set the policy tenor by enacting environmental legislation, and creating an enabling environment for the adoption of renewable energy and climate-friendly practices, products and services. With COP25 a mere week away, what the world needs right now is urgent and coordinated action to step up mitigation and adaptation efforts and accelerate the shift to a climate-friendly and resilient future.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.

  • Climate refugees: A new reality for Caribbean Small States?

    Climate refugees: A new reality for Caribbean Small States?

    Alicia Nicholls

    For many people, the decision to leave one’s place of birth, family, friends and possessions for lands unknown is not one that is lightly taken. But this is a decision an increasing number of people will be forced to make. In 2018, a groundbreaking World Bank report entitled ‘Groundswell: Preparing for Internal Climate Migration’ estimated that in three regions of the world (Sub-Saharan Africa, South Asia and Latin America), just over 143 million people – or 2.8 percent of these regions’ population – could be internally displaced due to the effects of climate change by 2050. The year 2050 may seem like a long time away, but already in the Caribbean, we bear witness to the impact of displacement due to climate change.

    How climate change causes displacement

    Climate change is, without doubt, one of the biggest threats facing the planet and mankind. The Geneva-based Internal Displacement Monitoring Centre (IDMC) estimates that over the period 2008-2018, approximately 265.3 million people worldwide were internally displaced due to disasters. The IMDC further noted that Small Island Developing States (SIDS) were disproportionately affected by natural hazards. As climate change worsens, this number is increasing.

    Climate change causes displacement in several ways. Firstly, rising sea levels cause coastal erosion. Kiribati, an archipelagic nation in the Pacific comprising some thirty low-lying atolls, is on the frontlines of the climate crisis. Rising sea levels have already claimed some of its land area and it is estimated that the island nation will be uninhabitable within decades as whole islands could disappear.

    Secondly, hurricane damage can displace entire populations. The whole island of Barbuda (part of the island nation of Antigua & Barbuda) had to be temporarily evacuated following Hurricane Irma in 2017. A reported 130,000 Puerto Ricans (4% of the population) have left that US island territory in the aftermath of Hurricane Maria, according to the US Census Bureau.

    In September this year, the island of Abaco in the Bahamas was rendered virtually ‘uninhabitable’ due to category-five Hurricane Dorian which lingered above the island for hours unleashing torrential rain and storm surges. Thousands of Abaco residents had to be evacuated to Nassau, the capital of the Bahamas.

    Thirdly, changes in weather patterns can make some places uninhabitable due to drought, declining water supply and falling crop yields which force residents to move to more inhabitable and productive places. Sea level rise can also lead to saltwater infusion into natural aquifers, rendering the water undrinkable.

    Displacement due to climate change can affect any country. But the problem is exacerbated in SIDS like those in the Caribbean, the Asia-Pacific and the Indian Ocean, some of which are either low-lying and/or have small land areas. Even in some SIDS with larger land areas and/or more mountainous land topographies, the population and major infrastructure tend to be concentrated primarily along coastal areas putting them at risk to storm surges during storms and sea level rise.

    Whereas in a larger country like the US, for example, displaced populations can move to another State, inhabitants of small islands have no such luxury. For many SIDS, the threat of their homeland being rendered uninhabitable and eventually disappearing is a real one.

    What can be done?

    Firstly, it is important to tackle the root cause of climate-caused displacement – climate change. From individuals, to households, to businesses, to municipalities, to countries, we all have to make cutting our emissions and adopting environmentally friendly habits our imperative.

    We must pressure our leaders to honour the commitments they made upon signing the historic Paris Agreement in 2015. It is incumbent on SIDS to hold the international community to account, to not just aim for limiting global average temperature increases to no greater than 2 degrees Celsius above pre-industrial levels, but the more ambitious goal of 1.5 degrees. The previously mentioned World Bank Report noted that global action now could reduce the number of people forced to move due to climate change by as much as 80 percent.

    Secondly, while the term ‘climate refugee’ is used to describe natural persons who are displaced from their homelands by the adverse impacts of climate change, it is not a recognized term in international law. It also should be noted that while used interchangeably, ‘migrant’ and ‘refugee’ are two different concepts.

    The Convention Relating to the Status of Refugees of 1951 (Geneva Convention on Refugees), ratified by over 140 countries worldwide, only recognizes as a ‘refugee’ a person who is outside his or her country of nationality or habitual residence and who is unable or unwilling to return because of a “wellfounded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion”. Therefore, only persons falling under this definition are regarded under international law as ‘refugees’ and are entitled to the rights and protections under the Convention.

    Refugees have several rights and protections under the Geneva Convention on Refugees and other international conventions. These include the right of non-refoulement (not to be returned to the place where his/her life or freedom would be threatened due to any of the reasons listed in the Convention), right to education, employment, housing, freedom of movement, freedom of religion, inter alia.

    The UN Global Compact for Safe, Orderly and Regular Migration, signed by over 160 countries in 2018, was the international community’s first step towards recognising the concept of climate migrants for the first time. In light of growing numbers of displaced persons due to armed conflicts, political crises and natural disasters, this international agreement sought to create a global response for better managing migration. However, not only is the agreement non-binding, but several major countries have opted not to ratify it due to immigration concerns. The agreement is also limited to migrants, and does not explicitly recognise ‘climate refugees’.

    Countries’ asylum laws also do not currently recognize or protect ‘climate refugees’. It is, therefore, of interest to see one Democratic candidate, Julian Castro, in the current US Presidential election in 2020 commit to expanding US immigration law to provide recognition and protection for ‘climate refugees’.  In a report it was noted that “while the EU has so far not recognised climate refugees formally, it has expressed growing concern and has taken action to support and develop resilience in the countries potentially affected by climate-related stress”.

    The battle will not be easy. Climate-caused displacement is coinciding with a global migration crisis and a groundswell of nationalism, xenophobic sentiment and closing borders across the world, particularly in the US and western Europe. Just this week, in a sad but unsurprising move, the Trump Administration refused to grant temporary protection to Bahamians fleeing the post- Hurricane Dorian devastation in their homeland. However, as the countries most responsible for anthropogenic (manmade) climate change, the ‘Global North’ has a moral obligation to assist those poorer countries which are the most affected and least culpable for climate change, not only in terms of facilitating our mitigation and adaptation, but assisting our displaced people.

    The reality is that unless urgent action is taken to reduce global greenhouse gas emissions to limit climate change, we all may become climate refugees one day. Caribbean countries should join with other sympathetic nations to lobby for increased global action and lasting solutions to climate change, and the climate migration crisis. This includes calling for the explicit recognition of, and protections for, climate-displaced persons both in international law and the domestic law of countries.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.

  • Caribbean Citizenship by Investment Programmes and Climate Resilience

    Caribbean Citizenship by Investment Programmes and Climate Resilience

    Alicia Nicholls

    Citizenship by investment programmes (CIPs) are currently operated by five countries in the Caribbean. These are St. Kitts & Nevis, Dominica, Grenada, Antigua & Barbuda and St. Lucia. Caribbean CIPs face increasing threats stemming from reputational risks, increased regional and international competition and heightened international scrutiny. Despite these challenges, some Caribbean CIP-operating countries are utilising CBI revenues to finance climate change adaptation/mitigation initiatives in order to build climate resilience.

    The Climate Change Challenge

    June 1st of each year marks the official start of the Atlantic Hurricane Season. It is exemplified in the rhyme many Caribbean school children learn: “June – too soon, July – standby, August – you must prepare, September – remember, and October – it’s all over”.

    Rhymes aside, Caribbean countries are no strangers to the human, economic, financial and social devastation inflicted by weather systems around this time of the year. 2017 was an unforgetable year as Hurricanes Maria and Irma caused significant damage to a number of Caribbean islands, most notably Dominica, the island of Barbuda (part of Antigua & Barbuda) and the US territories of Puerto Rico and the US Virgin Islands.

    In a 2016 International Monetary Fund (IMF) study, Acevedo wrote that in the Caribbean, “storms cause on average 1.6 percent of GDP in damages every year, but that figure could be 1.6 to 3.6 times larger due to underreporting of disaster and damages.” One of the many adverse impacts of climate change is more intense weather systems. As such, the level of damage from hurricanes and tropical storms is expected to rise.

    Whereas climate change mitigation focuses primarily on emissions reduction, adaptation recognizes the irreversibility of some climate change impacts and emphasizes resilience building through targeted programmes, initiatives, policies and projects. Caribbean countries’ domestic financing constraints necessitate their disproportionate reliance on international financing and support for their climate change adaptation efforts. High debt overhangs mean they often lack the fiscal space to respond quickly and adequately to climatic shocks. Rebuilding requires significant capital, which can be burdensome for small countries beset by narrow tax bases and limited ability to attract the large inflows of FDI required. In some cases,  high gross national income (GNI) per capita restrict their access to most official development assistance and concessional funding from multilateral agencies.

    Role of CBI Revenues

    In light of these constraints, revenues from CIPs are increasingly attractive sources of inflows for funding development programmes and initiatives. In its Staff Concluding Statement of the 2019 Article IV Mission for Grenada published in May 2019, the IMF noted that “robust FDI flows, including from the citizenship-by-investment (CBI) program, are financing the external deficit while supporting economic growth.” It further noted that these inflows “have helped channel sizable resources to the contingency fund that could be used for mitigating the effects of natural disasters”.

    In September 2017, St Kitts & Nevis introduced a temporary third investment option, the Hurricane Relief Fund, to prepare for future hurricanes, repair property damage and support Caribbean neighbours in need. The minimum contribution is US$150,000. The Fund was controversial because it was criticised as further evidence of a “race to the bottom” among Caribbean CIPs. Nonetheless, it was reported that over 900 persons benefited from the Hurricane Relief Fund. A reported 1200 applications were received under the Fund, but it is unclear how many were successful.

    CBI assisting Dominica’s recovery

    In September 2017, category five Hurricane Maria caused Dominica pervasive human, social and economic damage equivalent to 226% of its GDP (Post Disaster Needs Assessment 2017), resulting in 31 confirmed deaths and 34 missing. According to the Government of Dominica, CBI inflows have been pivotal in financing Dominica’s recovery. In its Article IV Report on Dominica, the International Monetary Fund (IMF) noted that “fiscal performance deteriorated sharply due to the fall in tax revenue after the hurricane, but was partially offset by a surge in grants and buoyant Citizenship-by-Investment (CBI) sales revenues.”

    Following Hurricane Maria, Dominica has sought to become “the world’s first climate-resilient nation”. The island nation has emphasized resilience-focused rebuilding with the help of international donor funding coordinated through its Climate Resilience Executing Agency for Dominica (CREAD). This includes building climate-resilience structures.

    In a recent article, the Dominica Citizenship by Investment Unit (CBIU) noted as follows:

    After Hurricane Maria last year, Dominica’s CBI Programme was responsible for funding housing and hotel developments, as well as tourism and agriculture projects that cumulatively helped the island recover. The collected financial resources also enabled the Dominican authorities to make payments to affected home owners in the region of £26 million, whilst a government scheme to build 5,000 new homes is financed entirely by CBI income, according to Prime Minister Roosevelt Skerrit.

    Moreover, it was announced that the Housing Revolution, which is providing climate resilient low income housing is “completely funded by Dominica’s Citizenship by Investment (CBI) Programme”. 

    Conclusion

    CIPs have significant risks, but can also be tools for promoting sustainable development. The revenue inflows can assist cash-strapped governments in financing climate climate adaptation and mitigation programmes.

    This is not to suggest, however, that CIP revenues are a panacea for financing resilience. Firstly, heavy dependence on these revenues is a real risk which must be guarded against due to the potential volatility of CBI revenue inflows. Fiscal discipline, including prudent management of these inflows, is important to ensure these countries have the fiscal space to respond to any shocks. Fiscal responsibility frameworks such as that adopted by Grenada are important.

    Secondly, due diligence standards of CIPs must be maintained and should not be lowered or compromised just to attract greater inflows.   

    Thirdly, any special climate/disaster relief funds financed by CBI revenues should be situated within a coherent national policy framework for catalyzing and making optimum use of these and other resources for building climate resilience.

    Fourthly, transparency is also important. This also includes timely data on the number of applications received under special funds, timely audits of the funds and reporting of the audits of these special funds. It also requires sensitizing the general public about the use to which the funds are being put.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.