LIMA – Four countries as part of the Pacific Alliance aim to create a new bond with the World Bank that covers losses as a result of extreme weather. During the latest Pacific Alliance summit in the Peruvian capital of Lima, the members’ finance ministers announced talks are ongoing. Extreme weather events are occurring more often in these countries due to the climate crisis.
During a press conference at the Pacific Alliance summit early July, finance ministers of Chile, Peru, Colombia and Mexico announced the plans of launching a new bond with the World Bank to insure losses in the event of extreme weather. It would be the second catastrophe bond between the Pacific Alliance and the World Bank.
Peruvian Finance Minister Carlos Oliva said according to Reuters that this second bond is aimed at covering losses from “hydrometeorological events, climate, the el Nino phenomena”.
In February 2018, the Pacific Alliance had signed an agreement with the World Bank, launching a USD$1.36-billion-dollar bond that would cover losses in the event of earthquakes. After the earthquake in May in Peru, Chile’s northern neighbors are set to receive a USD$60-million-dollar payout to compensate their losses, being the first member to make use of the agreement.
What Do We See as Extreme Weather?
According the United Nations International Strategy for Disaster Reduction, Hydrometeorological hazards, or extreme weather events, are events “of atmospheric, hydrological or oceanographic origin. Examples are tropical cyclones (also known as typhoons and hurricanes); floods, including flash floods; drought; heatwaves and cold spells; and coastal storm surges. Hydrometeorological conditions may also be a factor in other hazards such as landslides, wildland fires, locust plagues, epidemics and in the transport and dispersal of toxic substances and volcanic eruption material.”
After a tornado destroyed parts of Los Ángeles yesterday, another tornado caused severe damage to Concepción and…
How Can Chile Benefit from Such a Bond?
For Chile, a bond that insures losses after such events can be of big help, as the country due to its geographical location suffers annually from extreme weather events. An overview from the past twelve months:
On January 19, a 6.7-earthquake hits the town of Coquimbo. Nearly 7,000 citizens were without electricity, buildings collapsed, and the mayor asked to have a state of emergency declared.
· Forest fires
The entire summer in Chile was an ongoing fight against forest fires. Thousands of hectares were burnt, Code Red Alerts were issued on a daily basis and hundreds of people had to get evacuated.
On May 31, a tornado hit the coastal town of Talcahuano, heavily damaging houses, cars and infrastructure and causing the death of at least one person.
Early 2019, the Altiplanic Winter caused dramatic scenes in the northern regions of Chile. Rivers overflowed, mud streams destroyed bridges and several people drowned.
Lack of drinking water, disappearing lakes, heat records: every year seems worse than the one before when it comes to drought in Chile. Few countries will get hit by a water deficit as hard as Chile in the decades to come.
The government has declared the region a catastrophe zone as forest fires keep destroying hectares of land.
Posted by Chile Today on Tuesday, February 5, 2019
Editor-In-Chief Boris van der Spek is the founder of Chile Today. He worked in Colombia, Surinam and the Netherlands as reporter and works with international media during major events, like the social crisis, the elections and the Pope’s visit.