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Evidence Wanted: Effectiveness of Sovereign Disaster Risk Financing and Insurance

Daniel Clarke's picture

Photo: When disasters strike – like floods, tsunamis, earthquakes or cyclones – they can cause, not just human suffering, but financial damage. Using well-crafted Disaster Risk Financing and Insurance (DRFI) instruments can help ease the impact of a potential financial catastrophe. Credit: World Bank Photo Collection.

When Tropical Storm Sendong battered the Philippines in late 2011, catastrophic flash floods claimed more than 1,200 lives and damaged over 50,000 houses. In addition to the human suffering, disasters like this often have a devastating effect on the budget of vulnerable countries, leading to the reallocation of scarce resources away from development programs to recovery and reconstruction. Governments also need immediate resources for rapid response to minimize post-disaster impacts.

But the Philippines had taken steps to prepare against such disasters. Just months before Sendong made landfall on the island of Mindanao, the government signed a US$500 million contingent credit line with the World Bank. This provided immediate access to liquidity to help finance emergency response and recovery operations.

Yet questions remain about financial protection strategies and instruments such as this contingent credit in the Philippines. For example: Does a government need to establish prior rules for post-disaster expenditure, or does it otherwise risk a slow and poorly targeted response with low impact on poverty and developmental outcomes? Was contingent credit the most appropriate instrument to finance this risk, or should other instruments, such as insurance, have been considered instead of or in addition to it? And fundamentally: Is disaster risk financing and insurance (DRFI) a cost-effective way of reducing (expected) poverty and improving (expected) developmental outcomes?

How to Cut Down the Illegal Logging Mafia

Illegal logging is a global epidemic (Credit: Getty Images)

“Every two seconds, across the world, an area of forest the size of a football field is clear-cut by illegal loggers.” This is not the work of poor people trying to find wood to cook a few grains of rice to sustain life. No. This is the work of the illegal logging mafia - aided and abetted by corrupt government officials - from forest rangers to ministers of government. They do this for greed and with the arrogance of those who have no fear of arrest or prosecution. 

Managing garbage to save the planet

David Lawrence's picture

The plight of refugees is in the news all the time, mostly as a result of war. But recently, I saw a post in Dot Earth, a New York Times blog, about a documentary called Climate Refugees. It suggests that climate change will lead to massive refugee problems, mainly as a result of flooding. Disasters in New Orleans, Bangladesh and Myanmar offer a glimpse of what might come.

Geothermal energy: an under tapped, climate-friendly resource

David Lawrence's picture

A few years ago I had the pleasure of swimming in a big, heated pool. Outdoors. In winter. It sounds like an unaffordable luxury, and in most places, it is. But in Iceland, you can swim all year round in geothermal swimming pools. Iceland sits on the boundary of the Eurasian and North American tectonic plates, which are slowly pulling apart, giving it extraordinary geothermal resources. Besides year-round outdoor swimming, this renewable resource provides heat, hot water, and electricity.

World Investment Report 2010: Investing in a low-carbon economy

Low-carbon FDI in areas such as renewables, recycling and low-carbon technology manufacturing is already large (some $90 billion in 2009), but its potential is huge. This is one of the conclusions of UNCTAD’s 2010 World Investment Report, released last month. The report is the most recent in an annual series exploring the latest trends and prospects for FDI flows and recent policy changes, and also offers a deeper analysis of a topically relevant issue of the day.

Seeking sustainable development in a climate changed world

Rachel Kyte's picture

The weekend in Copenhagen was characterized by a plunging thermometer outside - forcing demonstrators to wrap up ever warmer on the streets of the city. Inside the Bella Center, a whole new set of people have arrived, just as negotiations enter into in a fragile state. The second week is VIP week, and so we add around 200 limousines to the general melee.

But there is good news: huddled in various hotels and echoing "offices" in the delegation portakabins, national actions are being readied irrespective in some ways of the agreement reached.

What is the best way to fail?

Rachel Kyte's picture

So now the drama really starts ratcheting up inside and out of the

Bella Center in Copenhagen. Outside in the kind of biting cold that

reminds you of standing (before stadium seating) in a fourth division

football match on a Saturday afternoon as a kid, thousands of people

are massing to march on the center - they say 50,000 and on the TV

screen it looks like it could be.

Inside, the entrenched positions see no sign of budging yet and the

negotiations are poised for the second week, normally characterized by

Where does big business fit into Copenhagen 15?

Rachel Kyte's picture

A strange day in Copenhagen today. More and more people arriving and the building and the incredibly generous and helpful Danes straining to cope. The Bella Center beginning to look like a scene from a science fiction movie where the whole of humanity takes off from earth into some kind of space vehicle. The rumor, counter rumor, the side shows, the side events, the spontaneous demonstrations in the corridors, the more planned but no less emotional demonstrations by delegations in the plenary and working groups: is there life outside?