Access to cost effective climate change funding
4 July, 2017, 12:00 am
LAST year, Cyclone Winston wiped off $US1.4 billion worth of Fiji’s gross domestic product (GDP) which was quite significant.
The Attorney-General and Minister for Economy and Minister Responsible for Climate Change, Aiyaz Sayed-Khaiyum, made these comments while addressing stakeholders during Session 2 of the Climate Action Pacific Partnership Event at the Grand Pacific Hotel in Suva yesterday.
Speaking on public and private climate financing and insurance in Fiji’s situation he said as a result of the cyclone Fiji’s growth rate was downgraded from a 3 per cent projected rate to about 2 per cent after Government made early interventions into the market.
“Now what can we do going forward?”
He said all these required being able to access finance that was cost effective and not as expensive.
“We’ve have had discussions at the World Bank to date and have made submissions that deemed middle income countries, in the event of climatic events, should not be deemed as such so they can access concessional funding,” he said.
He said Fiji was deemed to be a middle income country so it could not get concessional funding.
“So we believe that if we have a single climatic event that is catastrophic enough to put you back a couple of decades you should be able to access that type of finance.”
He said in Fiji’s recent budget, Government in consultation with Reserve Bank of Fiji, decided to issue about a $100 million worth of Green Bonds to be able to get some investment in climate change.
He also explained about the removal of the Environmental Levy of 6 per cent and its replacement with a 10 per cent ECAL-Environmental Climate Adaptation Levy.
Mr Sayed-Khaiyum said Fiji hoped to collect about $90m in one year from this and Government would make the information available to the public and tourists on how and where ECAL funds were spent.
“With this level of transparency we hope that the level of ECAL can go up,” he said.
On insurance he said only 10 per cent of homes in Fiji were insured.
He said after the cyclone last year about 40,000 homes were damaged and Government decided to put in a Help for Homes Initiative where they had already spent $125m.
“We cannot do this year in year out and God forbid if we have another cyclone it’s actually not financially viable to do so. So we need to get insurance.
“But the requirement of the building code we have is so onerous that only the rich can only afford to have these requirements met.”
He said Government was talking to the Insurance Council of Fiji of getting a very basic cover for about $7000 or $5000 with some minimal requirements of meeting certain standards.
“If you are able to do that, it does not only provide immediate relief for people whose homes are damaged, it also puts less pressure on the state to have to provide that level of financial assistance.”
He said Government had also set aside funding in the budget that once an insurance cover or product is approved and put in place by the insurance council and the engineers before the next cyclone season, they would pay for the premium for those families from lower income backgrounds.