Cape Town, South Africa —
On the 23rd and 24th of October 2019, public sector stakeholders from local, provincial and national
spheres of government will meet in Cape Town to discuss the opportunities for sub-national risk
pools and their viability to manage climate risks. Globally over 90% of disasters are now climate
related and economic costs of dealing with such events growing, alternative financing mechanisms
are required to deal with such risks. Participants from climate change, finance and disaster
management departments across multiple tiers of government will be in attendance which
demonstrates the complexity of the financial instrument and its need for a multi-stakeholder
engagement.
The Municipal Risk Pooling (MURP) project is funded by the International Development Research
Centre (IDRC) based in Canada. Risk pools are insurance mechanisms that allow for premium cost
Cape Town, South Africa —
On the 23rd and 24th of October 2019, public sector stakeholders from local, provincial and national
spheres of government will meet in Cape Town to discuss the opportunities for sub-national risk
pools and their viability to manage climate risks. Globally over 90% of disasters are now climate
related and economic costs of dealing with such events growing, alternative financing mechanisms
are required to deal with such risks. Participants from climate change, finance and disaster
management departments across multiple tiers of government will be in attendance which
demonstrates the complexity of the financial instrument and its need for a multi-stakeholder
engagement.
The Municipal Risk Pooling (MURP) project is funded by the International Development Research
Centre (IDRC) based in Canada. Risk pools are insurance mechanisms that allow for premium cost
benefits and quick payouts owing to the linkage of the mechanism to environmental parameters
and thresholds. A municipal risk pooling (MURP) facility would avoid issues experienced by risk
pools which exist at the country level, such as compromised decision making and issues of using
public budget to benefit other countries.
The MURP project seeks to build on the learnings of sovereign risk pools while creating new
knowledge in the field of climate change adaptation finance. It is the intention of the project that
risk pools at the sub-national level, if viable, become mainstreamed in disaster risk financing
approaches thereby enhancing comprehensive climate risk management.
Kamleshan Pillay, the technical lead for the MURP project based at SouthSouthNorth in Cape
Town, states: “Given the linkage between climate change adaptation and disaster risk
management, financing approaches may be applicable. Risk pools are one such example. If the
pre-feasibility is viable, it is likely that the 2nd phase will look to pilot this innovative mechanism
in the Western Cape. This would be one of the first case studies on risk pools at the sub-national
level, globally.”
Western Cape Government Climate Change Director, Goosain Isaacs, also mentions the
possibilities of the risk pool assisting the financing of climate change adaptation in the province.
He states: “Municipalities typically are on the coalface of responding to the climate crisis yet have
limited resources to do so, as such alternative financing mechanisms are urgently needed to ensure
that when disasters do happen financing pools are available in order to reduce unplanned and ad
hoc resource diversion, particularly in an increasingly constrained economic environment. The
Western Cape Government as a coordinating tier of government, is excited to partner with
international partners and experts, to provide support to municipalities by exploring possibilities
such as Risk Pools as one of the potential solutions to this complex climate challenge.”