The Stern Review has argued that climate change is the ‘greatest and widest ranging market failure ever seen’ (Stern et al. 2006). As a result of the emissions released by the past and present population of a subset of the world’s nations, future generations across the globe must bear the costs of climate change adaptation, regardless of their degree of responsibility. This is particularly the case among developing countries, whose per capita emissions remain low yet many of which face acute challenges with regard to phenomena such as desertification, rising sea levels, and the frequency of natural disasters. In order to meet such challenges, these countries are likely to require substantial donor aid from international development organizations in the years to come, as well as substantial technical assistance.

One important aspect of adaptation cost is in the form of prevention and response to natural disasters – events involving dramatic though poorly anticipated geographic change such as floods, droughts, heat waves, earthquakes, and tsunamis. Natural disasters are responsible for thousands of deaths every year due to their direct impact on vulnerable communities, and millions of deaths every year due to their indirect effects via damage to health, sanitation, and irrigation infrastructure. Alterations in the climate, or ‘climate change,’ will produce a higher degree of natural disasters, as these by definition are extreme weather events, where ‘extreme’ is defined in relation to human expectations and capacities. As low-income societies are increasingly faced with unexpected climatic phenomena, to which their infrastructure is poorly adapted, the rate of natural disasters is expected to increase in coming years. Between 1971 and 1995 these caused an average of 128,000 deaths per year, affected 136 million people, and caused a total $439bn of damages; of those affected by natural hazards between 1971 and 1995, 99 per cent were individuals living in the global South (IFRC 1997).

Section 1.0 of this paper begins by assessing the ability of countries to manage the costs of climate change adaptation, looking at success and failure at managing natural disasters - with ‘success’ defined in terms of a lower rate of deaths relative to the number of disasters faced by a society. In examining this issue, we use data published by the Centre for Research on the Epidemiology of Disasters as part of their recently assembled EMDAT database (CRED 2004). As well as including economic and demographic variables (such as income per capita and population density), we assess the role of difference political and social institutions in determining the capacity of societies to respond effectively to the onset of natural disaster, using composite institutional indices developed within the World Bank. Specifically, we make use of the Worldwide Governance Indicators, as measures of different dimensions of state effectiveness (Kaufmann, Kraay and Maastruzzi 2008), and the Indices of Social Development, as measures of such areas as intergroup cohesion and the density of civil society (World Bank 2008).

Having examined the determinants of effectiveness at natural disaster management, Section 2.0 turns to the question of environmental governance – the success or failure of states at achieving climate change mitigation and adaptation tasks, such as limitation of emissions, improvements in air and water quality, recycling. Though analysts and policymakers have often simply taken for granted the willingness and ability of states to 2