Weather disasters displace more people than any other factor globally in 2020

A new report shows that weather related disasters were the primary driver of displaced people in 2020, with almost three-quarters of people internally displaced affected by weather, with storms and flooding the primary peril drivers of this.

In 2020 alone, some 40.5 million people were internally displaced within their own countries, with conflict and violence the cause of just over one-quarter and weather the rest.

Geophysical natural disasters were also a cause of displacement, with 655,000 people internally displaced by earthquakes and volcanic eruptions during the year.

Tropical storms, hurricanes and cyclones drove 13.6 million people out of their homes within their home countries in 2020, while flooding drove 14 million to become displaced.

Wildfires displaced another 1.2 million, while perhaps surprisingly drought was only responsible for displacing 32,000 and extreme temperatures 46,000.

By the end of 2020, according to the annual report from the Internal Displacement Monitoring Centre (IDMC), some 55 million were recorded as living in internal displacement.

The 40.5 million of newly displaced people was the highest annual figure recorded in a decade, the IDMC explained.

“It is particularly concerning that these high figures were recorded against the backdrop of the Covid-19 pandemic, when movement restrictions obstructed data collection and fewer people sought out emergency shelters for fear of infection,” explained the director of the Internal Displacement Monitoring Centre, Alexandra Bilak.

“It’s shocking that someone was forced to flee their home inside their own country every single second last year. We are failing to protect the world’s most vulnerable people from conflict and disasters,” added the secretary general of the Norwegian Refugee Council, Jan Egeland.

While rising temperatures are seen as increasing the intensity and frequency of weather-related hazard, the IDMC notes that climate change is not the only factor and says many more years of data are required to draw any direct links or conclusions on this.

“Today’s displacement crises arise from many interconnected factors, including climate and environmental change, protracted conflicts and political instability. In a world made more fragile by the Covid-19 pandemic, sustained political will and investment in locally-owned solutions will be more important than ever,” Bilak said.

Displaced people can put a significant burden on governments, as well as relief agencies and organisations.

This is why the subject of risk transfer and the use of insurance or reinsurance like structures to provide responsive solutions to trigger capital disbursements in response to displacement or migration events has been discussed over the last few years.

The burden on countries affected by severe weather and where populations can become more easily displaced after disasters is growing and looks set to continue to, making financing solutions to help in delivering capital and aid increasingly important.

As we’ve explained before, insurance, reinsurance and insurance-linked securities (ILS) mechanisms can provide a platform for post-disaster risk capital to reach those in most in need around the world.

In fact the role of catastrophe bonds, derivatives and parametric triggers has been discussed in relation to migration related financing since at least as far back as 2012.

This is why organisations like the Danish Red Cross have looked into the use of catastrophe bonds to finance refugee and migration response, a funding gap currently not addressed through normal humanitarian assistance.

Similarly, the World Bank has been exploring how risk transfer instruments, including cat bonds, could be used to deliver much-needed financing in the case of mass migration, or related events such as famines.

For aid agencies, having additional sources of private capital aligned with event occurrence can significantly help in ensuring best use of charitable and donor funds, while bringing additional capacity alongside in a responsive and efficient manner to augment disaster response, recovery and rebuilding.

As the need for capacity to support issues related to the displacement of people persists, looking to how risk transfer instruments can be structured to bring private capital into the equation seems a valuable way to add layers of protection to some of the world’s most vulnerable people.