Losses from climate variability and extreme weather events related to climate have been rising rapidly over the past three decades, and these losses are set to increase even more rapidly with the acceleration of long-term climate change. Efforts to prevent climate change by reducing the emission of greenhouse gasses are underway, of course, but technical, economic and political obstacles mean that we are unlikely to see stable atmospheric concentrations any time soon. In the meantime, more extreme weather can be expected [IPCC (2001)]. The United Nations Framework Convention on Climate Change (UNFCCC) also encourages adaptation designed to reduce losses attributable to climate change, and it provides for assistance to the most vulnerable countries in meeting the costs of adaptation. Available funds are subject to some severe restrictions, though, and the adaptation capacity of the most vulnerable countries is low and can only improve slowly. In some instances, adaptive capacity to climate change and variability continues to deteriorate over time as non-climatic stresses take their toll. Losses will therefore continue to grow in the absence of some new initiatives, and they will constitute an increasing threat to economic development. The costs of emergency humanitarian assistance to the global community will increase, and so will borrowing by developing countries to pay for the costs of reconstruction.