PLES has hosted the second seminar of “Responding Strategies of Law and Policy - Sustainable Environmental Regulations under Climate Change” at Multimedia Room of Tsai Lecture Hall on May 12, 2012. Here is the summary of the second session of the seminar.

The seminar was hosted by Daigee Shaw , researcher of Institute of Economics, Academia Sinica . During the first session, Professor Wen-chen Shih spoke on the seminar’s topic: ” the Alignment of Our Nation’s Foreign Aid Policies from a Bilateral Financial Mechanisms Perspective for Climate Change.” Professor Shih presented the importance of financial mechanisms for climate change field is increasingly important in either adjustment or mitigation dimensions. On the other hand, the hot research topic of the tension and interaction between climate change and national development policies are receiving more attention, due to the fact that climate change issues have become more and more intertwined with national development than before. Therefore, the “Official Development Aid, ODA” has come in to the picture as one of the projects financed by “Organization for Economic Co-operation and Development, OECD,” with the increased amount of climate change foreign aid through years. Professor Shih pointed out that, as the international financial mechanisms are inadequate, implementing a bilateral financial mechanism would be of a more flexible and dominant method in climate change aid. Our diplomatic allies are mostly island countries, and they are easily influenced by climate change effects greatly. Bilateral financial mechanism is a policy of numerous advantages. It grants us the opportunity to offer assistance for our diplomatic allies in a more efficient way; and it also assembles more interaction towards international organizations and development banks. Professor Shih presented a new diagram with the examples of seven international bilateral financial mechanisms, giving us a new idea applying climate change financial mechanism as one of Taiwan’s foreign aid policies. Firstly, as to resources gathering, we could arrange the income from the auctions as sources of the fund aside from the former budget. In that way, we could also encourage private sectors’ involvement. Secondly, as to resources allocation, we could consider investing or aiding international climate fund besides loans, bestowment, or technology aiding. As to the types of the projects, we could slowly allocate our assistance on adjustment projects. Thirdly, we could cooperate with organizations specialized with issues such as foreign aid and environment, and climate change. Panelist Professor Catherine Li began with agreeing with Professor Shih’s contention of brining bilateral financial mechanism into foreign aid policies. She further pointed out that the current foreign aid polices were based on the directives of White Paper of foreign aid policies (published by the ministry of foreign affairs on May, 2009) and the International Cooperation Development Law, and the current issue is that most foreign bestowment policies did not have a supervising system. The bilateral financial mechanism for climate change should avoid this situation, and could better deliberate more ideas through the aspect of investing foreign aid, and the cooperation between public and private sectors.

On the second part of the seminar, Associate Professor Hsin-Chun Wang presented a speech on the topic of: “The Construction of Insurance Mechanism and the Adjustment and Alleviation for Climate Change: Internalized Risk and Moral Risk as the Center.” During the presentation, Professor Wang pointed out that, the mechanisms of insurance and the function of risk distribution have become inevitable when it comes to facing the risk of climate change. However, there is still room for discussion as to how the insurance mechanism should decide on the role participated in risk management, and what insurance models should be adopted. These are also the main focus of Professor Wang’s research presentation of the seminar. Professor Wang examined the bases of the internalization of the risk, and the mechanism of the insurance, pointing out the moral hazard and the difficulties in applying these two principles in climate change issues. The first one is using the principle of tort liability and liability insurance as its bases; and the second one is applying the compensation insurance and the transfer of catastrophic risks as its bases. The difficulty for the former is that we have to consider the above for tort liabilities. Associate Professor Wang further addressed that the future climate change insurance could be cooperated by both public and private sectors, and the Compulsory Automobile Liability Insurance and the Residential Earthquake Insurance Schemes that have been practiced in our country could be its references.

Panelist Professor Shih-Chieh Chang started from the point of efficiency, saying that the insurance mechanism not only has the function of compensation, it also controls the risk in advance, and it internalizes the risk. However, our government and people are lack of the knowledge of insurance; therefore, the government procedure does not include the internalization of risk into its procedures. As for the future risk management for climate change, how to efficiently integrate the resources and use the concept of risk management into government arrangement is a major focus for the central government. And the local government and the public should consider how to enhance the incentives for self-risk management through policies.