Financing Disaster Risk Reduction for Sustainable Development in Asia and the Pacific (original) (raw)
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Promoting Disaster Risk Financing in Asia and the Pacific
2017
Key points • The economies in Asia and the Pacific are exposed to disaster risks, which can cause fatalities as well as economic losses. One strategy to mitigate the economic losses and strengthen financial resilience to disasters is developing disaster risk financing. • There are two policy options in implementing disaster risk financing: public sector and private sector disaster risk financing tools. Each option has challenges that need to be addressed for them to be effectively implemented. • Two possible strategies could be pursued for overcoming the implementation challenges of disaster risk financing: the establishment of institutional arrangements for a combined public– private response to disaster risk financing and the development of a state-sponsored disaster insurance scheme. No. 2017-1 (January)
Review Paper - Financial Instruments for Disaster Risk Management and Climate Change Adaptation"
The International Panel on Climate Change (IPCC) has called for a new balance between reducing the risks from climate extremes and transferring them (for example, through insurance) as means for effectively preparing for and managing disaster impacts in a changing climate. This paper elaborates on this balance with an overview of disaster risk financing mechanisms and how they contribute to disaster risk reduction and climate change adaptation in developing countries. We suggest a risk management approach that targets risk reduction and risk financing to different layers of risk, including a layer that represents a possible limit to adaptation. By reviewing traditional post-disaster financial arrangements, such as government compensation, and nontraditional pre-disaster instruments, such as index-based insurance, we show how risk financing can complement and stimulate risk reduction. We discuss the benefits of financial instruments, including the provision of post-disaster finances for recovery and pre disaster security necessary for climate adaptation and poverty reduction. These benefits come at a cost, and we discuss the risks, challenges, and future prospects of risk financing in developing countries.
This paper explores innovations in index-based risk transfer products (IBRTPs) as a means to address important insurance market imperfections that have precluded the emergence and sustainability of formal insurance markets in developing countries, where uninsured natural disaster risk remains a leading impediment of economic development. Using a combination of disaggregated nationwide weather, remote sensing and household livelihood data commonly available in developing countries, the paper provides analytical framework and empirical illustration on showing design nationwide and scalable IBRTP contracts, to analyse hedging effectiveness and welfare impacts at the micro level, and to explore cost effective risk-financing options. Thai rice production is used in our analysis with the goal to extend the methodology and implications to enhance development of national and regional disaster risk management in Asia.
This paper explores innovations in index-based risk transfer products (IBRTPs) as a means to address important insurance market imperfections that have precluded the emergence and sustainability of formal insurance markets in developing countries, where uninsured natural disaster risk remains a leading impediment of economic development. Using a combination of disaggregated nationwide weather, remote sensing and household livelihood data commonly available in developing countries, the paper provides analytical framework and empirical illustration on showing design nationwide and scalable IBRTP contracts, to analyse hedging effectiveness and welfare impacts at the micro level, and to explore cost effective risk-financing options. Thai rice production is used in our analysis with the goal to extend the methodology and implications to enhance development of national and regional disaster risk management in Asia.
International Journal of Disaster Risk Science
The Southern African Development Community (SADC) region, a regional economic body comprised of 16 member states, is one of our planet’s most vulnerable regions to natural hazards, and has a complex disaster risk profile. The region has sustained several disasters over the past decades. These events include annual floods in 2004–2019 and extreme droughts (1990–1993); other climate-induced disasters, such as cyclones, also have had devastating impacts, particularly on the Indian Ocean island states and east coast countries. To reduce the risk and impacts of disasters, governments must invest in disaster risk reduction (DRR). However, interventions aimed at reducing social and economic vulnerability and investing in long-term mitigation activities are often few, poorly funded, and insignificant in comparison with money spent on humanitarian assistance, disaster relief, and post-disaster reconstruction. This study investigated whether DRR is adequately funded within SADC member states ...
Journal of Infrastructure, Policy, and Development-EnPress Publisher, 2024
This research analyzes disaster risk financing within the framework of the disaster management policy in Indonesia as the implementation of the Disaster Management Law, Number 24 of 2007, by examining recent issues, challenges, and opportunities in disaster financing. Utilizing a qualitative approach, the research systematically reviews various studies, reports, and existing regulations and policies to understand the current landscape comprehensively. Recent developments in disaster risk financing in Indonesia highlight the need for a nuanced exploration of the existing policy framework. Fiscal constraints, evolving risk landscapes, and the increasing frequency of disasters underscore the urgency of effective disaster risk financing strategies. Through a qualitative examination, this study identifies challenges while illuminating opportunities for innovation and improvement within the current policy framework. The contribution of this research extends to both theoretical and practical levels. Theoretically, it enriches the academic discourse on disaster risk financing by offering a nuanced understanding of the complexities involved. On a practical level, the findings derived from the examination provide actionable recommendations for policymakers and practitioners engaged in disaster management in Indonesia. The insights aim to inform the refinement of disaster management policies and practices, fostering resilience and adaptability in the face of evolving disaster scenarios.
Disaster Risk Financing and Insurance: How Far Have We Known?
Bina Ekonomi
Natural catastrophes have resulted in massive losses for Indonesia. The government lacks the capacity to pay all damages caused by the disasters. The purpose of this research is to map the literature on catastrophe risk finance and insurance, particularly in terms of financial instruments that can be deployed. The scoping review approach was used in this study to locate and map relevant material. The findings of this study revealed that there are still significant research gaps on the issue of catastrophe risk finance and insurance, beginning with the research aim, financial instruments mentioned, and research methodologies and procedures applied. This study is planned to serve as the foundation for future research on the subject of catastrophe insurance in developing nations.
Disaster Risk Reduction and Sustainable Development
Scientific research and practitioner experience have revealed that disasters, development and poverty are intimately linked. Destruction of assets and livelihoods in disasters set back hard-won development gains and worsen poverty, often for extended periods of years. Progress in ending extreme poverty may be reversed in the face of a disaster event and poverty re-entrenched. Disaster impacts are growing, amplified by rapid growth and unsustainable development practices that increase the exposure and vulnerabilities of communities and capital assets. Governments increasingly recognize that the reduction of disaster risks is a foundation for successful sustainable development, and that disaster risk is a crosscutting issue, requiring action across multiple sectors.
The Role of a Macro-Economic Model for Disaster Risk Reduction Policy in Developing Countries
IDRiM journal, 2014
It has been noted that in recent years disaster risk reduction (hereafter DRR) investment, in particular such investment prior to a disaster, is important in dealing with increasingly large-scale natural disasters that have serious socioeconomic impacts. Especially, developing countries are in a vulnerable position vis-à-vis natural disasters, as the scale of economies in these countries is small and they do not foster a culture of reducing disaster risks. As a result, disasters directly harm their economic underpinnings, inhibiting their economic growth and sending them back into the poverty trap. DRR investment prior to a disastrous event is an extremely effective measure of preventing or ameliorating such conditions. However, no definitive method for evaluating the quantitative effects of DRR investment as a decision making tool has been established. Given this situation, we develop a model in this study that allows the quantitative evaluation of DRR investment focused on developing countries. Moreover, we use data from Pakistan to confirm the efficacy of the model, as well as to confirm that DRR investment contributes to economic growth and the alleviation of poverty in developing countries.