An overview of Climate and Disaster Risk Financing Options for Pacific Island Countries – June 2021

The following lessons may assist policy-makers to capitalise on the benefits of climate and disaster risk finance: 1) A strong analytical basis is required to support the further development of appropriate climate and disaster risk financing arrangements in the Pacific: Further analysis of current and potential climate and disaster risks is required to produce the breadth of data and models needed. [...] 2) A layered approach to climate and disaster risk financing instruments is required to address the range of risks and financial protection gaps that Pacific island countries face: Due to the range of different risks faced by PICs and the differing severity, scale and coverage involved with specific events, it is increasingly important to layer instruments and products to increase the coverage. [...] 4) Pacific island countries have begun to improve their capacity to use, access and navigate available products and instruments through the development of national climate and disaster risk finance strategies: To effectively address and consider the above recommendations, PICs will benefit from developing national strategies to guide the use, combination and implementation of climate and disaster. [...] The high exposure of PICs to a range of evolving climate and disaster risks can make the analysis of risk, and ability to amass the data needed to respond strategically to risk, more complex.22 Efforts to improve risk assessment information in the Pacific is often hampered by capacity constraints, a lack of public asset registers23, limited availability of localised and historical climate data,24. [...] As risks increase, this type of finance is unreliable and difficult to programme into strategic and effective national responses.43 Following a significant literature review and the assessment of the available instruments and options the following key messages and recommendations are evident in relation to the Pacific context and its risk financing needs: 1) Invest in the data and analysis needed.