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Creating a Green Future

An often-quoted definition of sustainable development is development that "meets the needs of the present without compromising the ability of future generations' needs." Global warming has already affected the Caribbean with temperatures in the region having increased by about 1°C during the last century, sea levels rising by about 2-3mm per year since 1980, and these conditions were made worse by significant changes in rain fall patterns. All in all this makes the region vulnerable both economically and socially and highlights the importance of developing strategies in the region for sustainable development and protection against an ever-changing climate. Real estate and finance sectors not only have a unique opportunity, but also must play a key role in encouraging clients and Government to become more environmentally conscious.

In 2010, a report entitled The Economics of Climate Change Adaptation in the Caribbean (‘The ECA Study’) was published by the Caribbean Catastrophe Risk Insurance Facility (CCRIF)1 and focused on the impact of climate risks and change on a country’s real estate, tourism, travel, agricultural, industrial and services sectors. The study focused on eight pilot countries: Anguilla; Cayman Islands; Antigua and Barbuda; Dominica; Barbados; Jamaica; Bermuda; and St Lucia and involved the Caribbean Community Climate Change Centre and UN Economic Commission for Latin America and the Caribbean, with analytical support provided by McKinsey & Company and by Swiss Re. The study found that expected losses from wind, storm surge and inland flooding currently amount to up to 6% of GDP in some countries and climate change has the potential to increase expected loss by a further 1-3% of GDP by 2030. This shows that climate change presents one of the most serious threats to development prospects in the Caribbean with economic damage comparable to a serious ongoing economic recession.



However, the study shows that losses can be avoided cost-effectively. The main reasons being that the value of buildings is relatively high and high-value assets justify higher investments to increase their resilience. The amount of money that can be spent cost-effectively to protect a high value residential building is therefore proportionally larger. Secondly, coastal flooding or storm surge can be mitigated quite cost-effectively using risk mitigation measures and include (i) asset-based responses e.g. building dikes, retrofitting buildings and (ii) behavioral measures e.g., enforcing building codes.

Countries will often need to adopt laws and other measures to make their economies climate resilient and low carbon driven, in particular to:

  • Promote energy conservation and increase use of renewable energy;
  • Improve the resilience of existing critical infrastructure to climate change impacts and reduce construction of new infrastructure in areas or with materials prone to climate hazards;
  • Promote water conservation and enhance the resilience of natural water resources;
  • Enhance the resilience and natural adaptive capacity of biodiversity and ecosystems;
  • Minimise the vulnerability of insured and mortgaged properties to climate change impacts;
  • Strengthen food security by promoting increased use of local produce and appropriate technologies; and
  • Create and maintain environmentally responsible tourism industries and better prepare tourism infrastructure for climate change impacts.


Without sustainable development communities will see their local economies contract and with it, demand for property finance, investment and banking services generally. The local economies are reliant on finance, which at a local level is already vulnerable due its size. Brief illustrations are that property assets acting as security for lending may plummet in value as those properties become uninhabitable or uninsurable. Adverse climate change will also negatively affect insurance and reinsurance companies as extreme weather, natural catastrophes including rising sea levels and flooding gives rise to greater claims, raising premium levels to a point where insurance is unaffordable for many. Sustainability policies must be incorporated into business practices; for example, banks can encourage responsible building practices and energy efficiency by providing favourable terms. It is these entities that largely facilitate property development and thus they have a great deal of power to affect change and, it is these entities that will suffer first from a distressed property market. Insurers can also offer favourable terms to encourage energy efficiency and renewable energy for example, domestic solar panels in return for lower premiums or deductibles. The financial services sector is in a key position to support and promote sustainable development, particularly in countries that have developed or are developing their international finance sectors. It is in the interest of the finance sector that appropriate frameworks of cost-efficient regulation to promote sustainable development and climate change adaptation are established.


The CCRIF study is of value to both Caribbean policymakers and the business sector. Some governments may be only just beginning to understand the results of the study at a high level whilst others are already designing a cost-effective portfolio of adaptation measures, accessing funding by submitting fact-based requests, and accelerating implementation.

The finance sector and the real estate sector are key stakeholders in this process and should be looking to support and promote the strategies to be adopted by Governments. Establishing these strategies today means the region’s future generations and the environment will be not be compromised, but rather sustained by such wise action.


1 CCRIF is a risk pooling facility owned, operated and registered in the Caribbean for Caribbean governments. It is designed to limit the financial impact of catastrophic hurricanes and earthquakes to Caribbean governments by providing timely short term liquidity when a policy is triggered.

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