Small and Medium Enterprises as indicators of resilience to climate change in the Caribbean Asad Mohammed and Perry Polar Caribbean Network for Land and.

Small and Medium Enterprises as indicators of resilience to climate

change in the Caribbean

Asad Mohammed and Perry Polar

Caribbean Network for Land and Urban Management

May 5th 2015UWI, Trinidad

Many Indicators of significance- shift in IDB lending

Measuring vulnerability to Climate Change- weak data or unrealistic data expectations

Projectation and the failure of institutional strengthening- the CNULM and its work

The Caribbean Network on Urban and Land Management (CNULM) based at UWI was formed in 2008. Brings together universities, agencies and organizations involved in Urban and Land management across the region.

This presentation is based on a technical paper prepared for the Inter-American Development Bank (IDB) entitled “Small and Medium Enterprises as indicators of resilience to climate change in the water sector of the Caribbean”

Insights based on review of literature, interviews and sampling in T&T and Jamaica, focus group and general observations.

How does one determine if an infrastructural project has affected the vulnerability to Climate Change in a limited geographic area?

Vulnerability is: “the degree to which a system is susceptible to, and unable to cope with, adverse effects of climate change, including climate variability and extremes. Vulnerability is a function of the character, magnitude, and rate of climate change and variations to which a system is exposed, its sensitivity, and its adaptive capacity”

Vulnerability, a measure of possible future harm, is not an observable phenomena which can be easily measured (such as height). Hence there is need to make the concept operational by mapping it to observable phenomena (Indicators)

One to One or Composite indicators/ Index (e.g. Human Development Index)

Developing vulnerability indicators to CC is complex:◦ defining the vulnerable entity (country, city,

household etc.)◦ wide range of hazards and the political/

economic/ social factors which influence vulnerability and

◦ requires a predictive model which factors in time

http://www.ntnu.edu/geography/climate

Hinkel (2011) identified six purposes for assessing vulnerability:◦ To identify mitigation targets◦ To identify particularly vulnerable people, regions or sectors◦ To raise awareness of climate change ◦ To allocate adaption funds to particularly vulnerable regions◦ To monitor the performance of adaptation policy, and◦ To connect scientific research

Lending agencies setting climate change targets◦ IDB has set a target of 25% of total lending to support climate change

initiatives, a substantial increase from the 2006-2009 target of 5% (McCarthy et al. 2012) . Shifting of lending portfolio to the Caribbean and Central American region.

Measuring the change in vulnerability in a specified geographical area as a result of an infrastructural improvement or other type of project would be of importance to both donor and lending agencies as it would determine if they are meeting their targets.

Project impacts can be direct, additional or serendipitous

The aim is to develop a method is robust but simple enough to allow for urban practitioners, Non-Governmental Organisations (NGOs), business associations, communities and individuals to participate in the data gathering and understand the results.

This mirrors monitoring and evaluation procedures being developed by the IDB in their Emerging and Sustainable Cities Initiative (ESCI) where a platform for citizens led monitoring of programmes is developed very much in the form of the Bogota Como Vamos programme, Colombia.

Measuring impacts on the community directly is possible. However, we postulate the rate of change in SME parameters may be higher than in households and thus more measurable to determine serendipitous impacts.

Small and Medium Enterprises (including micro) (SMEs):◦ discrete enumerable entities◦ have a range of characteristics which are also measurable ◦ comprise the majority of the private sector, particularly in the Caribbean◦ normally conduct risk management as part of their daily operations◦ are impacted by small and large scale interventions of any nature which

can lead to closure (1/0)◦ Some data may already be collected by national agencies ◦ Can be rapidly surveyed ◦ the health of some are linked to the health of their host community◦ May successfully lobby for improvements more so than communities

Measurement of changes the SME population or parameters related to SMEs, we postulate could provide:◦ an indication of the vulnerability

and adaptive capacity to climate change of the private sector in the community

◦ Due to the relationship of some private sector activities to community development it can act as a proxy indicator of community health.

http://solutions-review.com/backup-disaster-recovery/hp-data-protector/

Indicators: ◦ SMEs per area; Type of industry; Registration status of business; Tenure status;

Insurance; Data storage; Organization membership, and Topography and environmental conditions (originally 34 indicators)

Categorization: ◦ Very high vulnerability (5), High vulnerability (4), Moderate vulnerability (3),

Low vulnerability (2) and Very low vulnerability (1). Weighting and composite score:

◦ Topographical and Environmental conditions (0.25); Type of Industry (0.2); SMEs per area (0.15); Registration, Tenure status and insurance status (0.1); Type and location of data storage and organisation membership (0.05).

Sampling: ◦ Pre project and post project assessment

Policy interventions: ◦ Areas with ‘Very High Vulnerability’ and ‘High Vulnerability’ should be prioritised

for interventions to reduce their vulnerability. Areas with ‘Moderate’, ‘Low Vulnerability’ or ‘Very Low Vulnerability’ should be monitored for changes.

The higher the density of SMEs the stronger the relationship to the host community.

SMEs will be classified according to number of employees based on the national classifications for SME (i.e. < 50 employees for T&T). The number of SMEs in each sample area (e.g. T&T -81,922 businesses) will be determined and divided by the area of the country (e.g. T&T -5128 km2) to determine the range.

Range e.g. T&T

Vulnerability

0 to national average for Trinidad and Tobago 0-16 Very high vulnerability (5)

National average +1 to (√ national average) 3 17-64 High vulnerability (4)

(√ national average) 3 +1 to (√ national average) 4 65-256 Moderate vulnerability (3)

(√ national average) 4 +1 to (√ national average) 5 257-1024 Low vulnerability (2)

> (√ national average) 5 >258 Very low vulnerability (1)

In the case of localised disasters, businesses which are highly dependent on the local community are more vulnerable than businesses which service a wider geographical range.

If the adaptive capacity of the community is high the business are likely to survive disaster and conversely if the community has low adaptive capacity the businesses will suffer. Type Linkage Vulnerability

Food and personal items Very high linkage Very high vulnerability (5)

Services High linkage High vulnerability (4)

Large retail/ Manufacturing Moderate linkage Moderate vulnerability (3)

Construction Linked Low vulnerability (2)

Other (national Sugar, oil etc.) Not highly linked Very low vulnerability (1)

An increasing proportion of registered businesses to informal businesses will give an indication of formal growth in the area and increasing resilience.

The percentage of registered SMEs relative to informal SMEs in a project area will be calculated using the formula (Registered SMEs/ Informal SMEs) X 100.

Registration Range Vulnerability Very low registration 0-20% Very high vulnerability (5)

Low registration 21-40% High vulnerability (4)

Moderate registration 41-60% Moderate vulnerability (3)

High registration 61-80% Low vulnerability (2)

Very high registration 81-100% Very low vulnerability (1)

Tenure status for SMEs can generally be classified in a continuum from informal to formal development with a range of intermediate tenure types and perceptions of security.

This indicator is partly paradoxical. If there is ownership of the premises, the vulnerability level can be higher if both the premises and business is affected. Nevertheless, when the premises are owned the vulnerability level decreases as there is a higher probability of improvements to reduce hazards. Tenure Status Vulnerability

Informal tenure (squatting) Very high vulnerability (5)

Traditional holdings/ family lands High vulnerability (4)

Rented premises Moderate vulnerability (3)

Formal tenure without documentation Low vulnerability (2)

Formal tenure with documentation Very low vulnerability (1)

The existence of personal (e.g. life, health etc.) or business insurance (e.g. fire, public liability, business interruption, goods in transit, workmen’s compensation etc.) can allow for financial resources to be available post disaster if the business was damaged or there was injury or loss of life by the owner or employees.

 Insurance Vulnerability No personal or business insurance Very high vulnerability (5)

Personal but no business insurance High vulnerability (4)

Single protection business insurance Moderate vulnerability (3)

Multiple protection business insurance Low vulnerability (2)

Both personal and multiple protection business insurance

Very low vulnerability (1)

Business information (e.g. accounts, employee information, supplier information, contracts etc.) will be necessary for recovery post disaster. Information stored on premises without backup are at greater risk than information stored off site. Paper files may be more a risk than electronic files if not copied.

Data Storage Vulnerability No data storage Very high vulnerability (5)

Data on mobile device High vulnerability (4)

Single copy paper and electronic files on premises only

Moderate vulnerability (3)

Paper and electronic files off premises Low vulnerability (2)

Paper and/or electronic files backed up in multiple locations

Very low vulnerability (1)

Some businesses are part of larger business organizations. Businesses in internationally linked to international Business Associations (e.g. American Chamber of Commerce of Trinidad and Tobago) are more likely to conform to environmental standards than locally formed Associations (e.g. Chamber of Commerce) (Shah and Rivera 2013).

 Membership Vulnerability No organisation membership or links to training and networking opportunities

Very high vulnerability (5)

No organisation membership but access to training and networking opportunities

High vulnerability (4)

Membership in a locally formed Associations Moderate vulnerability (3)

Membership in a internationally linked Association Low vulnerability (2)

Membership in a internationally linked Association Very low vulnerability (1)

The topographical and environmental conditions significantly determines the vulnerability of SMEs. This generally would not change drastically with projects unless they involve unless hard engineering adaptation solutions, for example associated with large infrastructural projects.

Based on multi-hazard datasets and datasets on location of businesses, an internal biophysical vulnerability score can be calculated for SMEs.

The location of squatter settlement in relation to multi-hazards in Jamaica (Source: Bailey (2014)

Climate change may impact national economies but felt by communities and individual households. As such, there is a growing need to build the adaptive capacity/resilience of communities and information that helps to understand such capacity is required for short, medium and long term planning.

Trinidad and Tobago is behind Jamaica in spatial multi-hazard mapping.

Data sharing among organizations needs to be improved

Organisations with climate change data do not often have SME data

Thank you ! Asad Mohammed

and Perry Polar

Caribbean Network for Land and Urban Management