Costa Rica has just taken a major leap forward in protecting its people, economy, and environment from the growing risks of climate change and natural hazards. The country’s Request for Climate and Disaster Risk Finance and Insurance (CDRFI) Support to the Global Shield was recently submitted, with an official launch event for the milestone taking place earlier this month.
The event was co-hosted by Costa Rica´s Ministerio de Hacienda (Ministry of Finance) and the Superintendencia General de Seguros (SUGESE – the national Insurance Supervisory) and supported by the Global Shield Secretariat. Key stakeholders gathered to catch first-hand insights on the country’s Request for Support (RfS) to the Global Shield, reiterate existing needs and priorities, and learn about next steps. Costa Rica had embarked on the Global Shield In-Country Process (ICP) in 2024, recognising the critical challenge posed by climate and disaster risks. In so doing, the Central American nation sent a strong message to its population, with the country-led, inclusive ICP model intended to scale up pre-arranged financing and close urgent protection gaps.
Informed by multi-stakeholder consultations, the RfS builds on existing national disaster risk management frameworks, enhances fit-for-purpose insurance solutions, and addresses priority gaps identified in financial protection (read RfS summary here). From the given results, a tailored Support Package is now being designed by the Global Shield Solutions Platform (GSSP) and the Global Shield Financing Facility (GSFF), with the support of the broader Global Shield community. The Support Package will strengthen the country´s financial protection systems and enable instruments that ensure faster and more effective responses when disasters strike.
How Costa Rica is Building a Stronger Safety Net
With nearly 78% of the population and 80% of economic activity located in areas vulnerable to floods, tropical storms, and earthquakes, Costa Rica knows first-hand the toll that natural hazards can take in destroying livelihoods and plunging vulnerable people and communities into poverty, with little to no safety net and bleak perspectives of recovery.
The RfS led to a detailed Stocktake and Gap Analysis report, which highlights key vulnerabilities, and existing barriers and limitations in accessing and implementing financial protection instruments. Moreover, the Gap Analysis served to outline options for improving Costa Rica’s financial preparedness and to close financial protection gaps. This has distilled four priority areas, in light of climate-induced disasters and shocks:
- Sustainability of the National Emergency Fund
- Implement a long-term strategy to ensure the sustainability of the National Emergency Fund.
- Strengthen Costa Rica’s resilience at the sovereign level.
- Access to Risk Transfer Instruments
- Secure resources to design and access risk transfer instruments, such as insurance products at all levels – macro, meso and especially micro.
- Focus on vulnerable sectors and affected population groups.
- Technical Capacity for Risk Modelling, Risk Management and Insurance
- Enhance technical capabilities in both public and private institutions.
- Develop tools and improve expertise for risk modelling, disaster risk management and innovative climate and disaster risk insurance.
- National Open-Access Risk Platform
- Develop a national open-access platform for risk data.
- Enable stakeholders to access information to support CDRFI strategy and product development.
Each priority area explicitly addresses one or several of the sectors identified as most vulnerable to climate- and disaster-induced impacts, namely: critical infrastructure, tourism, agriculture and artisanal fisheries, and natural capital, with the latter making up the backbone of the country’s most important economic activities. In addition, as a cross-cutting theme, the RfS underlines the significance of gender-sensitive financial protection.
Leadership Speaks
“Costa Rica is no longer just reacting to climate risks—we’re planning and preparing,” said Finance Minister Nogui Acosta Jaén. “We’re creating a layered, resilient system that will help us better manage both current and future emergencies and we have developed a resilient risk management and emergency response system, which will now be modernised with sophisticated mechanisms, not only for financing, but also for risk transfer and local capacity building.”
General Superintendent of Insurance Tomás Soley Pérez echoed these remarks, calling the submission of the Request for Support “a historic step” towards a comprehensive climate and disaster risk finance strategy: “It allows us not only to strengthen inter-institutional coordination and the design of more effective protection mechanisms, but also sends a clear signal of the country’s commitment to proactive risk management. This process has been the result of a technical, participatory and strategic effort, which aims to protect the people, communities and sectors most vulnerable to the effects of increasingly frequent and intense natural climate and disaster shocks more effectively.”
And from the Global Shield Secretariat, Implementation Lead Daniel Stadtmueller lauded Costa Rica’s leadership “for delivering a Request for Support with well-defined sectoral priorities and needs to increase the country’s financial protection in the face of climate change. We are ready to continue supporting the country in the next steps, and to embark on an implementation process with a clear and long-term vision to increase the country’s climate and financial resilience.”
Next Steps
During the launch event, concrete next steps were outlined, as the country moves towards implementation. The Global Shield’s Financing Vehicles will now continue consultations with a view to preparing an actionable Support Package that responds to the Request for Support and that is tailored to the country´s identified needs and barriers. As a truly engaged CDRFI community continues to take shape in Costa Rica, national stakeholders are very much looking forward to what’s in store. The Global Shield process and Costa Rica´s Gap Analysis Report had already created a positive press response on the concrete climate action being taken nationally and now through its Request for Support, the country has set an ambitious agenda and workplan to carry forward the momentum.
A Model for the Region
Costa Rica is engaging as a regional pioneer in proactive climate and disaster risk financing. The country is the first in Latin America and the Caribbean to officially access support from the Global Shield against Climate Risks. By investing in forward-thinking, sustainable solutions to climate risk, the country shows what it means to lead in the face of crisis. This is also a promise to future generations that Costa Rica is ready to meet the climate challenge—head-on, and together with the Global Shield and its partners.
