Financial instruments for vulnerable locations




Silver, N.
Potskowski, B.


Financial instruments for vulnerable locations




Government Office for Science UK


This paper forms part of a Foresight Project, the aim of which is to investigate ‘How can we best understand global migration arising from environmental change to help those who move, those in host areas, and those who stay behind, and what are the policy implications?’
The Project aims to assess how a broad range of environmental factors could, in interaction with other socioeconomic drivers of change, influence patterns of migration globally out to 2060, and to assess the policy implications at the level of national governments and international bodies. The aim of this paper is to investigate, ‘What market-based or other solutions are available for vulnerable locations (such as coastal mega-cities, low-lying areas) to finance insurance or mitigation?’
There has been a considerable amount of research into how financial mechanisms can facilitate risk management for people, communities and governments notably from development, climate change and disaster risk reduction perspectives. This is considered in the context of a changing migratory background.
This paper starts with the broad-brush conclusions drawn from the findings of the rest of the Project. Firstly, migration is currently mainly economic and forms part of a livelihood strategy. Secondly, it potentially causes positive and negative effects on the emigration and immigration regions. Migration is predominantly intra-country from rural to urban areas and the level of ‘catastrophic’ migration, for example due to conflict and natural catastrophe, though mainly temporary and at a much lower level than economic migration, is potentially disastrous at a regional level.
Climate change is predicted to introduce new risks and change existing risks, which will impact on current livelihood strategies and will alter the push and pull factors on migration. A key concept is adaptive capacity: how resilient people and communities are to shocks. Financial mechanisms can potentially enhance resilience to shocks, but only as part of a package that complements people’s culturally specific livelihood strategies.
The following section examines how financial instruments can have the potential to form part of a risk management strategy for people living in vulnerable locations. Section 3 focuses on insurance instruments which aim to reduce the damage caused by catastrophes. As much of the focus of insurance instruments to date has centred on rural areas, Section 4 focuses on urban areas which are of increasing significance given migratory trends. The topic of mitigation finance is then addressed in section 5, and the final section outlines the key conclusions of this report.


Silver, N., & Potskowski, B. (2011). Financial instruments for vulnerable locations. London : Government Office for Science UK.