Workstream 2:
Action & Implementation

Enable effective action and implementation of high-quality Climate and Disaster Risk Finance and Insurance solutions in poor and vulnerable countries

Insights from the Field:
Addressing Compound Risks in Response to Covid-19 Perspectives from Mercy Corps

By Mercy Corps

Mercy Corps is a leading global organization working in more than 40 countries around the world — helping people to triumph over adversity and build stronger communities from within. Mercy Corps began responding to Covid-19 in January when infection rates signalled a looming crisis. As a member of the InsuResilience Global Partnership, we are excited to contribute to the InsuResilience Annual Report 2020 and share our experiences and learnings in the face of the Covid-19 pandemic.

Long before the Covid-19 pandemic, the climate crisis was disproportionately affecting the poorest and most vulnerable people. The pandemic has overlain these existing threats – and has underscored the importance of recognizing and addressing compound risks – the full range of (often mutually reinforcing) threats and challenges facing any community.

While reducing greenhouse gas emissions remains a priority, it is equally important to manage the unavoidable impacts of climate change (i.e. adaptation) and build the resilience of communities which will be most impacted. There are solutions available: early action and investment in building

community resilience are cost-effective and can save lives and sustain livelihoods. Countries around the world are spending trillions of dollars responding to the Covid-19 crisis. In spite of this massive effort, much more will be needed to build back in a sustainable way. To be effective, Covid-19 response and recovery packages must build resilience to multiple hazards and maintain momentum on reducing climate-related risks.

Below are some specific examples of our efforts to address the Covid-19 pandemic in a holistic manner.

Country case studies

Nepal: supporting Covid-19 recovery, disaster risk reduction and climate change adaptation in annual planning and budgeting

Covid-19 is exacerbating difficult socioeconomic conditions facing the most vulnerable people in Nepal while the impacts of climate change accelerate.

Three out of four people living in poverty in Nepal depend on agriculture and natural resources to sustain their livelihood. People working in the informal sector, such as in agriculture, are most vulnerable to the effects of both Covid-19 and climate change.

To assess the situation facing flood-vulnerable communities experiencing monsoon rains during the pandemic, the Zurich Flood Resilience Alliance partners in Nepal (Mercy Corps, Practical Action and the IFRC) analyzed the challenges facing 46 community disaster-management committees in five districts.

Our research resulted in Avoiding a perfect storm: Covid-19 and floods in Nepal, which we shared with national, sub-national and local governments, as well as donors and peer organizations to provide recommendations for addressing the compound risks of Covid-19 and flooding from the monsoon season.

Bangladesh: impact assessment of Covid-19 and monsoon rains in the flood-vulnerable communities of Bangladesh

Bangladesh is at the forefront of the fight against climate change. Extreme weather events, the annual monsoon season and the health and economic impacts of the pandemic are hitting communities hard. Without urgent action by the government and donors, the impact of the monsoon will compound the effects and risks of Covid-19 and increase the chances of transmission in already highly vulnerable populations. Floods and their resulting impacts, such as loss of housing, inundation of agricultural land, damage to critical infrastructure including health facilities, congregated sheltering and exposure to contaminated water, can further exacerbate the socio-economic and health conditions of communities already under considerable strain.

Concern Worldwide, Mercy Corps and Practical Action, members of the Zurich Flood Resilience Alliance in Bangladesh, conducted an assessment of 15 Union Disaster Management Committees (UMDC) across three districts to understand the state of flood-vulnerable populations during the pandemic and provide recommendations for governments, donors and communities to better prepare for the compound risks of Covid-19 during the monsoon season. The findings from that assessment are shown here.

Indonesia: innovative finance and resilient market-systems development

Pekalongan City and Regency, both on the North Coast of Central Java, Indonesia, are among a growing number of coastal areas in Asia suffering from extreme flood events. The situation in Pekalongan is alarming with some northern (coastal) parts of the city permanently flooded, resulting in loss of property, land and livelihoods. Inland areas are also negatively affected by extractive local industry, deforestation and inadequate flood-defence infrastructure. In Pekalongan City, over 70% of households experienced negative social and economic impacts from the Covid-19 outbreak. Despite the severe secondary impacts of Covid-19 across the country, the Indonesian Government’s budgets are now dedicated to addressing immediate health needs. In response to the health crisis and requirement for immediate social support, the local government has reallocated more than half of its response funding to the Covid-19 response.

This funding has previously been used to respond to floods and other natural hazards. The diversion to health needs could have dire implications for ongoing flood mitigation. Medium-term and longer-term recovery initiatives that concurrently address building climate resilience and economic recovery will be essential.

We are developing a financial vehicle that will fund flood-resilience projects including nature-based solutions and livelihood initiatives. In the short term, we will help the local batik and aquaculture sectors develop climate-resilient business models and in the longer term we are looking to develop a result-based financing mechanism that can fund these models and flood resilience more broadly at scale. The foundational feasibility study for this work was completed with support from the InsuResilience Global Partnership.

Kenya, Tanzania, Ethiopia and Nigeria: reaching nine million farmers in the joint Covid-19 and desert locust crises

The Covid-19 pandemic has drawn attention to the complex challenges facing many so-called fragile countries, most visibly at the interplay of public health, markets and food systems. African countries are now faced with the challenge of how to swiftly and effectively scale preventive approaches to reduce the immediate risk posed by Covid-19 to people’s health, and the short and long-term negative implications for markets, livelihoods and food systems. Coupled with the worst Desert Locust outbreak in decades, signs point towards a looming food security crisis.

Mercy Corps was already working in these areas under their ‘AgriFin’ programme which provides digital services and products to boost the productivity and income of smallholder farmers to build climate resilience.

In the face of the growing crisis, AgriFin pivoted to respond. Since April, AgriFin has been deploying information campaigns across several different platforms (including WhatsApp, SMS, IVR, Call Centres, TV shows and Facebook) to inform response efforts in close collaboration with local partners, government agencies and research organizations to capture as wide an audience as possible. These campaigns have reached over nine million smallholder farmers enabling them to combat the spread of Covid-19, prepare for Desert Locust swarms and report any sightings to spur ground and aerial response.

Perspectives on compound risk in fragile contexts:
reaching breaking point

Even before the devastating impact of Covid-19, only 18% of fragile and conflict-affected states were on track to meet the Sustainable Development Goals (SDGs) by 2030. Myriad challenges including hunger, extreme weather events, violent conflicts and poor governance were holding fragile places back. Now, those challenges make fragile contexts particularly vulnerable to the impacts of the pandemic. Covid-19 is not only affecting the health and economic well-being of communities, but amplifying inherent drivers of fragility and violent conflict. The impacts of Covid-19 will be especially devastating in those fragile places, with long-lasting and far-reaching repercussions.

To better understand and therefore better respond to the challenges in fragile contexts, Mercy Corps analysts have been tracking the effect of Covid-19 impacts in fragile places. Summarized in the report, Covid‑19 in Fragile Contexts: Reaching Breaking Point, findings show that some of the most severe and long-lasting impacts of Covid-19 will be on food security, employment, local markets, gender equality and sustainable peace. The report provides recommendations on how we can use the opportunity provided by the response to Covid-19 to not only help communities cope with this crisis, but strengthen their resilience and leave communities and systems better prepared to tackle the next, inevitable shock.

Analysis found:

Fewer jobs, more inequality

The longest lasting global impacts from Covid‑19 are likely to be economic. Mercy Corps’ Covid‑19 Rapid Market Impact Report showed that small businesses and informal workers are being hit particularly hard, as they lack formal registrations and connections to adapt their businesses and do not benefit from any social safety nets or unemployment services. The impact is greatest on women, young people and displaced groups.

Violent conflict on the rise?

Covid‑19 is amplifying key causes of conflict such as weak governance, economic inequality and deficits in public trust. The risk of conflict will likely increase as the virus continues to spread, in the short term at a local level, through restricted access to resources and at multiple levels in the medium and long term as economic impacts unfold and populations become frustrated with government responses. One recent projection anticipates an increase in violence in fragile states due to the exacerbating effects of the pandemic, with thirteen countries likely to experience new conflicts in the next two years. During Covid‑19, as with other epidemics like Ebola, misinformation has consistently increased in the most fragile places.

Gender equality: from bad to worse

Existing gender inequalities are already being further deepened as women and girls bear the brunt of the pandemic: from health to security, employment to social protection. At the same time, women are largely absent from decision-making and leadership roles in responses to the pandemic. This is especially true in fragile contexts where, on top of discriminatory gender norms, women can face additional barriers to participation, such as personal security.

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