Earth Today | Rethinking natural disaster financing for the Caribbean

THE CARIBBEAN is just one natural disaster away from catastrophe, and the region’s current financing model is failing to keep pace with escalating climate risks.

This is according to Jwala Rambarran, senior policy advisor at the Caribbean Policy Development Centre (CPDC), who said the issue needs urgent attention. He was speaking at a debt consultation in St Vincent & the Grenadines in February.

While presenting findings from his study, How Can the World Bank Better Support Natural Disaster Risk Financing in Caribbean SIDS? he said there is urgent need for effective financial instruments with prearranged emergency liquidity after natural disasters.

This, he said, will help Caribbean small island developing states (SIDS) without pushing them further into debt.

Rambarran’s study comes in the wake of Hurricane Beryl, which last July demonstrated the economic devastation that climate disasters can have on the region.

“Caribbean governments need access to guaranteed, pre-arranged financing efforts,” he insisted in a news feature from the CPDC.

His study recognises the World Bank’s efforts in helping Caribbean governments to integrate disaster risk management into their national development plans. However, he argues that more needs to be done, particularly in ensuring the availability of financial protection that matches the scale of current and future disaster risks.

“Caribbean governments should learn from the experience with Hurricane Beryl, which caused economic losses as high as 22 per cent of GDP in St Vincent and the Grenadines,” he said.

“They need to ensure that more prearranged financial protection mechanisms are in place. In this respect, the World Bank needs to significantly improve the rollout of its Crisis Preparedness and Response Toolkit in the Caribbean region,” he added.

Rambarran emphasised that while the World Bank has shifted from post-disaster response toward pre-disaster risk reduction, its financing tools still fall short in addressing the unique vulnerabilities of Caribbean nations.

A major flaw in the global financial system, he said, is its reliance on gross national income (GNI) per capita to determine eligibility for aid and concessional financing. This classification often labels Caribbean SIDS as middle- to high-income countries, overlooking their extreme vulnerability to climate-related disasters.

“The World Bank needs to supplement its GNI per capita measure with a multidimensional vulnerability index that better captures the economic, social, and environmental risks faced by Caribbean nations,” he argued.

To address these issues, Rambarran’s study makes several recommendations, including a call on the World Bank to develop a regional loss and damage data hub, use its influence to encourage greater uptake of catastrophe risk financing solutions, and launch a communications campaign to help Caribbean governments better understand financing tools.

“Time is of the essence. We are just one hurricane away from losing a decade of development,” Rambarran said.

“Caribbean decision-makers need to move with speed, partnering with the World Bank to implement practical solutions. CPDC stands ready to support this regional effort,ensuring that the voice of Caribbean civil society is heard at the table,” he added.

His study, presented under the Funders Organized for Rights in the Global Economy II, the Open Society Foundations and the Centre for Global Development projects, is part of a broader initiative to mobilise civil society organisations in advocating for sovereign debt relief and climate justice.

Supported by Debt Justice, CPDC continues to collaborate with civil society groups region-wide, ensuring that the Caribbean’s urgent need for sustainable disaster financing remains a priority on the global stage.