Mon | Nov 29, 2021

Editorial | Volcanoes and CARICOM’s resilience bonds

Published:Tuesday | April 13, 2021 | 12:07 AM

Unless the eruption of the La Soufrière volcano becomes so geologically catastrophic as to make the whole country uninhabitable, it is unlikely that Vincentians will abandon the island. In the event, they do not have quite the same options as the people of Montserrat, a British overseas territory, when their Soufrière Hills volcano had its major eruption 24 years ago.

Not everyone in Montserrat left. Half of them remained. And those who lived in the shadow of the volcano moved to safe zones in the north. They made the town of Brades the island’s new administrative centre, replacing the destroyed capital, Plymouth. Notably, though, the estimated 17,000 people who have been ordered evacuated from St Vincent’s danger zone is 31 per cent more than Montserrat’s entire population in 1997.

Against the backdrop of these observations, St Vincent’s catastrophe demands an urgent review, and, perhaps, tweaking, ahead of implementation of one of the key recommendations by the commission that Caribbean Community (CARICOM) leaders asked for suggestions to achieve sustainable growth in regional economies. That is the proposal for the raising of regional bonds to finance climate resilience within CARICOM.

VIOLENT STORMS

The commission’s focus was primarily on the risks posed to regional countries by climate change, including the increased frequency of violent storms and floods that cause severe and costly damage to infrastructure and other areas of economies. Dominica provided an apt case study for the commission.

In 2011, Tropical Storm Ophelia left damage to the island to the tune of 46 per cent of its gross domestic product (GDP). Four years later, in 2015, the rain and floods from Tropical Storm Erika cost Dominica 97 per cent of GDP. The island was still recovering from the events, in 2017, Hurricane Maria slammed into it, leaving a trail of destruction. This time, the cost was 226 per cent of national output.

The scale and frequency of these catastrophes, and attendant costs, are unsustainable by regional economies. Indeed, the danger is not only Dominica’s.

But the commission pointed out that the catastrophe risks at the level suffered recently by Dominica would be “uninsurable” at tolerable premiums. However, building resilience, so as to leave a risk of between two and 20 percent of GDP, would likely be manageable, and financeable, via existing arrangements and new schemes that could be designed for the purpose. But this would require CARICOM countries first “waterproofing” their economies, thus putting regional homes and infrastructure in a position to substantially survive storms and floods.

This, the commission acknowledged, would be expensive, but far less so than if the region did nothing about it. And the cost would be lowered by building a market for resilient buildings, supported in part by bonds that could create a pool of low-cost funds from which people could borrow to finance resiliency projects.

“The public sector’s key role in this initiative is to help mobilise private, regional savings for investment in regional resilience,” the commission said. “It is the role of regional instigator, convener and regulator, of identifying priorities and defining resilience. It is not the role of the main borrower.”

RISKS POSED BY VOLCANOES

The commission contemplated the establishment of “safe spaces” and other safeguards as part of the process of building resilience. It is not our sense, though, that among their immediate concerns were dangers such as those now being posed by La Soufrière. Should there be a need to permanently settle displaced persons, the Vincentian government, already in a midst of an economic crisis, will face an added fiscal burden.

The potential risks from awakened and destructive volcanoes are not only St Vincent’s and Montserrat’s. For example, while none has erupted for more than 500 years, Dominica is the home of nine volcanoes. The island’s geology shows that Roseau, the capital, and much of the country’s infrastructure, sits on the pyroclastic flow from an old eruption. Of other CARICOM members in the Lesser Antilles, St Kitts and Nevis has two volcanoes; St Lucia, one. Grenada has one on land and two in the nearby sea. Most of these CARICOM members also have close neighbours with volcanoes. Further north, Haiti, also a CARICOM member, has one.

Given the events in St Vincent, what previously happened in Montserrat, and the recent rumblings of Mount Pelée in Martinique, the hazards of volcanoes, too, may need to be brought to the centre of CARICOM’s discussion on resilience.