dependent upon primary production and ecosystem services. As a proportion of GDP potential economic losses are highest in low and middle income countries. In addition, it is the same countries – from Africa, Central, South and Southeast Asia and Central America and the Caribbean – that record the highest mortality rates from natural disasters, adding human to economic vulnerability (UNDP, 2004). Past experience and projected risk of human loss through mortality and morbidity are also strongly skewed to poorer countries where income is dependent on primary extraction and where populations are not protected from environmental hazards by safe buildings, infrastructure, health services, and transparent and responsive governance (IFRC, 2010).
Observed data based on losses to past patterns of disaster events is the best guide to current vulnerability and backward looking adaptive capacity, but climate change means past patterns of hazard may not be as useful a guide to the future as had once been assumed; the so-called problem of non-stationarity(Milly
et al.
, 2008). Figure 1.1 shows an example of forward looking assessment of relative vulnerability to climate change and extremes under a warming of 5.5 degrees C. It incorporates adaptive capacity as a component of vulnerability. Vulnerability is calculated based on input variables for human resources (dependency ratios and literacy rates), economic capacity (market GDP per capita and income distribution) and environmental capacity (population density, sulphur dioxide emissions, percentage of unmanaged land). The advantage of this approach is that it is not tied to past experiences of extreme events. Despite this, results largely confirm the burden identified above for poorer countries. High levels of vulnerability are associated with low and middle income countries in South America, southern Asia and Africa. High vulnerability is also found in China and some of Eastern Europe. But this method also suggests North America and Europe are extremely vulnerable, painting a portrait of widespread vulnerability across the globe where adaptive capacity is overwhelmed by climate change even over the next 40 years (Yohe
et al.
, 2006). This is a compelling case for the need for urgent and deep levels of mitigation alongside the need to support adaptation to reduce vulnerability from current and inescapable future climate variability and extremes.
The IPCC (2007) calculates that for the most exposed countries, such as coastal states in Africa, adaptation costs may be as high as 10 per cent of national GDP. For low-lying small island developing states the relative costs are even higher. Oxfam (2008) estimates that at least US$50bn is needed annually to support adaptation in developing countries. UNDP (2007) identifies an additional need of around US$86bn by 2015 (0.2 per cent of developed country GDP) on top of existing overseas development assistance budgets from bilateral and multilateral donors. These are large sums, but not unprecedented. The UNDP (2007) equates its total cost estimate to around 10 per cent of the current military expenditure by OECD countries.
The international architecture for support of adaptation is developing as adaptation rises on the political agenda. The UNFCCC provides one management structure for support of low and middle income countries. Bilateral and multilateral agencies, such as the development banks and other UN agencies, also provide financial and technical support. Investment decisions in the corporate private sector also impact on adaptation, including policy decisions from the insurance and reinsurance sectors, and are likely to increase in importance as businesses in middle and high income countries are forced to adapt. The emerging infrastructure is, however, built around existing poles of power – nation states and the UN system which is beholden to them, or banking interests, with nation states or private investors at the helm. Can these