Costa Rica was on Monday on a list of the first countries to receive funds from the G7's so-called 'Global Shield' initiative, which will provide rapid financial relief to countries affected by climate disasters during or after an emergency, the program announced at the 2022 United Nations Climate Change Conference (COP27).
Global Shield, coordinated by the German presidency of the world's seven most powerful economies (G7), has so far raised $215 million and aims to respond "rapidly" by deploying funds in times of disaster, said the joint statement from Germany and the V20 group of 58 potential beneficiaries.
The V20 or Vulnerable 20 Group is a cooperative initiative of economies systemically vulnerable to climate change in which some 1.5 billion people live. The V20 originated in the Costa Rica Action Plan of the Climate Vulnerability Forum (2013-2015) that was born as a major effort to strengthen the economic and financial response to climate disasters.
Apart from Costa Rica, early recipients of Global Shield money include Bangladesh, Fiji, Ghana, Pakistan, the Philippines and Senegal. Global Shield is intended to address current weaknesses in the financial protection structure of these economies with pre-defined disbursements quickly and reliably, before or just after disasters.
According to Monday's announcement, it would provide protection tools to governments, communities, businesses and households to protect lives and livelihoods in vulnerable economies. The grant includes insurance and other tools to protect against damage to crops, property or other damage resulting from business interruption.
In terms of implementation, Global Shield will be aligned with countries' climate change strategies to close financial protection gaps. At the household and business level, support instruments include, among others, livelihood protection, social security schemes, livestock, crop and property insurance. In addition, business interruption policies, risk-sharing networks and credit guarantees.
At the level of national governments, humanitarian agencies and non-governmental organizations, Global Shield will support the integrated development of tools to make money available when needed, as well as processes to ensure that funds are spent as intended.
According to recent V20 research, at least 98% of people in these nations lack financial protection in a set of countries whose workforces are mainly employed by small and medium-sized enterprises. These nations are spread across the globe. Outside of Costa Rica, the Central American and Caribbean region also includes Nicaragua, Barbados, Colombia, Haiti, Honduras, Grenada, St. Lucia, St. Vincent and the Grenadines, Dominican Republic, Guyana and Guatemala.
According to the study, these V20 countries have lost a total of $525 billion to climate impacts since 2000. As the risks of loss and damage from climate impacts increase, the cost of capital and debt have risen to unsustainable levels, especially in countries with climate-sensitive economies.
This story was produced as part of the 2022 Climate Change Media Partnership, a journalism fellowship organized by Internews' Earth Journalism Network and the Stanley Center for Peace and Security. It was first published in Spanish in La Nacion on 14 November 2022 and has been translated to English and lightly edited for length and clarity.
Banner image: Residents of neighborhoods in La Lima de Cartago suffered extensive damage from recent floods / Credit: Jose Cordero.