China, India outsource emissions, risking goal

Insurance for reefs, mangroves?

KUALA LUMPUR, May 14, (RTRS): A rising tide of industries moving operations from China and India to less-developed Asian countries undermines global targets to reduce climate-changing emissions, researchers said.

Many energy-intensive industries, including manufacturing and raw materials processing, are relocating to cheaper countries like Indonesia, Vietnam and Thailand, a study by Britain’s University of East Anglia (UEA) showed on Monday.

“The Chinese production system is starting to transform to be more higher value-added,” said Dabo Guan, professor of climate change economics at UEA and a co-author of the report.

“The price of labour in China has increased quite a lot,” he told the Thomson Reuters Foundation.

The shifts in production and trade will make it harder to meet the Paris Agreement goal of cutting emissions enough to keep the rise in global average temperatures to “well below” 2 degrees Celsius (3.6F) above pre-industrial times, Guan said.

Efforts by smaller developing nations have a growing role to play in staying below that limit — but it could be jeopardised by the new pattern of manufacturing, the report added.

It found that trade among developing nations — known as “South-South” trade — more than doubled between 2004 and 2011.

Energy-intensive industries, such as electronics and steel production, have come under pressure to clean up in recent years as Beijing looks to cut emissions, improve working conditions and reduce air pollution in its towns and cities.

Meanwhile, the growth of carbon emissions generated in the manufacture of Chinese exports has slowed or reversed, while emissions embedded in exports from less-developed countries like Vietnam and Bangladesh have surged, the report said.

International trade increased by more than 50 percent from 2005 to 2015, with about 60 percent of that rise tied to growing exports from developing nations, it added.

In the same period, South-South trade more than tripled to 57 percent of all developing-country exports in 2014, said the study published in the journal Nature Communications.

Many Chinese companies — like mobile phone makers — have begun to expand globally, choosing other developing countries for their manufacturing bases, Guan said.

China and India should help ensure power-efficient technologies and methods are adopted by industries that move off-shore to less-developed countries, he added.

Shoppers in the United States and Europe must also be educated to become more sustainable consumers, said Guan.

Fast fashion and buying more than one car are examples of consumer practices that need to change, he said, warning such habits are being copied by rich Chinese and Indians.

“We only have one planet, unless we move to Mars,” Guan said. “If all the 7 billion people in the world consumed like Americans, we would need seven or eight planets.”❑

Guan

Insurance turns to coral reefs, mangroves:

Coral reefs, mangroves and even some fish could soon have their own insurance policies as the industry seeks new ways to boost protection for those affected by the ocean changes wrought by climate change.

Warmer sea temperatures have led to more intense storms in the Atlantic Ocean, contributing to $320 billion in disaster losses from weather and climaterelated events last year, according to the World Meteorological Organization. Only about a quarter of these were insured. But despite high payouts, industry experts speaking at the Ocean Risk Summit in reinsurance hub Bermuda said so-called “ocean risk” — which encompasses storms and hurricanes as well as marine diseases and declines in fish stocks — can present opportunities for insurers if the risks are modelled correctly.

One way to increase coverage is to devise new financial instruments to insure “green infrastructure” — such as coral reefs, mangroves and salt marshes that act as natural barriers against storms and can reduce devastating losses on land.

“There is a new role for insurance companies in the context of development strategies for countries most vulnerable to ocean risk,” said Falk Niehorster, director of Climate Risk Innovations, a risk management consultancy.

Niehorster has urged the creation of new insurance products to cover the $1.5 trillion global “blue economy” including fisheries, marine transport and other sectors.

Mark Way, a former reinsurance official who helped Swiss Re implement a policy for dozens of kilometres of coral reef and beach in Mexico this year — a world first — said his charity was inundated with calls from other insurers after the concept was announced.

“There’s a lot of capital looking for investment opportunities so there are incentives to find innovative new ways to provide cover,” Way, head of global coastal risk and resilience for The Nature Conservancy, told the Thomson Reuters Foundation on the sidelines of the summit last week.

Governments also have a keen interest in such insurance policies since they can reduce the human and infrastructure losses on land that devastated parts of the Caribbean last year.

Kedrick Pickering, deputy premier of the British Virgin Islands, which was hit by Hurricane Irma last year, said reef insurance was something the country would consider.

The Mexican reef insurance model works by automatically triggering payouts once storm-force winds hit a certain level.

The same concept theoretically could be applied to damage to fish stocks causes by El Nino, based on changes to water current. Payouts would go to fishermen in that case.

“There is a whole host of ideas and we are just scraping the surface,” Way said.

However, some risks — such as pollution and overfishing, which scientists say could contribute to the loss of as much as 90 percent of global reefs by 2050 — are not covered under the novel Mexican insurance model.

And many species that have an enormous value to ocean ecosystems, such as crucial oxygen-generating bacteria, do not have easily quantifiable benefits to humanity, so are difficult to insure.