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Who owns African disaster risk? From responsibility to subsidy, from insurance to adaptation

Authors: Leigh Johnson*, University of Oregon
Topics: Cultural and Political Ecology, Development, Economic Geography
Keywords: Insurance, finance, Africa, drought
Session Type: Paper
Presentation File: No File Uploaded

In an era of changing climate risks, governments in the Global South are increasingly implored to develop safety nets to cushion vulnerable populations from risks posed by extreme weather events. The ownership of these risks and the financing for their transfer are growing subjects of negotiation. This paper chronicles an attempt to finance drought safety nets by insuring a pool of African sovereign states: the African Risk Capacity Ltd (ARC), a risk pool bringing African nations into a mutual insurance relationship for drought protection with backstopping by global reinsurers. If triggered, ARC payouts are used to fund a country’s relief operations for its most vulnerable populations. Extolled as an exemplar of how remote sensing and financial technologies can facilitate disaster management, risk sharing, and climate adaptation at continental scales, ARC once celebrated its success convincing countries to pay for their own climate risk protection. Yet membership declined dramatically as countries struggled to consistently finance premium payments from national treasuries, drawing the existence of the pool into question. In response, ARC’s financial model has shifted from a responsibilizing one in which vulnerable states shoulder their own premiums, to a subsidized one in which donors support premium financing. This paper draws on reflections and deliberations amongst ARC’s Western donors and technocrats, demonstrating how ARC’s dwindling membership both raised the question of responsibility for reparative climate justice and occasioned the repositioning of insurance as adaptation in order to access “big money” pools of adaptation finance with which premiums could be subsidized.

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