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Cat DDOs: More than emergency lending for disaster relief

Ede Ijjasz-Vasquez's picture
Disasters can strike anywhere and anytime. As climate change intensifies, extreme weather events, for example, are on the rise around the world, and countries are increasingly seeking to improve both their physical and financial resilience to all kind of disasters. An important dimension of sustainability in urban and rural areas is resilience–resilience for the natural disasters of today and those of tomorrow.   

One way to better prepare for disasters is securing access to financial resources before a disaster strikes through financial instruments such as the Cat DDO. 

Cat DDO stands for “Catastrophe Deferred Drawdown Option.” It is an innovative contingent line of credit that can provide immediate liquidity to countries in the aftermath of a disaster resulting from an adverse natural event. The World Bank has made it available to countries since 2008, to make it possible for them to have quick access to financial resources upon the declaration of state of emergency in the aftermath of a disaster, following an adverse natural event and in accordance with local legislation. The funds that provide liquidity to the countries are preapproved based on a sound disaster risk management program and an adequate macroeconomic framework. 

[Read: Disasters, funds, and policy: Creatively meeting urgent needs and long-term policy goals]

Why are Cat DDOs an important disaster risk financing instrument for countries?
  • It serves as an early financing tool while funds from other sources such as government reallocations, bilateral aid, or reconstruction loans/credits become available.
  • It allows the countries to address the emergency without distracting resources from their social and development programs.
  • It enhances the countries’ financial capacity to prepare for disasters.
  • It also generates or consolidates a dialogue on disaster risk management between the countries and the World Bank to learn from experience and apply good practices.

What are some of the examples of “Cat DDOs in action”? How will this innovative tool evolve to better manage increasing disaster risks? Watch a video with World Bank Senior Director Ede Ijjasz-Vasquez (@Ede_WBG) and Senior Disaster Risk Management Specialist Armando Guzman to learn more. 


 

Let’s build the infrastructure that no hurricane can erase

Luis Triveno's picture
Hati after Hurrican Matthew
Hurricane Matthew destroyed an estimated 90% of homes in Haiti's Grande Anse department. Stronger public knowledge infrastructure can help better facilitate post-disaster recovery.
(Photo: EU Delegation to the Republic of Haiti)
The news from Haiti about the aftermath of Hurricane Matthew is a familiar story: more chaos, rubble, and loss of life from another natural disaster. Though recent improvements to Haiti’s infrastructure at the local level kept the death toll at 534—3,000 died in the 2004 hurricane; more than 200,000 in the 2010 earthquake—the number is still way too high.
 
Worldwide, natural disasters claimed 1.3 million lives between 1992 and 2012, with earthquakes accounting for 60%of disaster deaths in low- and middle-income countries, where the preponderance of sub-standard housing increases the risks. Today, 1.2 billion people live in substandard housing. By 2030, this figure will almost triple.
 
The good news is that most of those deaths and property losses can be prevented. In 2003, for example, within three days of each other, earthquakes of similar magnitude struck Paso Robles, California and Bam, Iran. The death toll in Bam was 40,000—nearly half the city’s population. Two people died in Paso Robles.
 
Even when destruction does take place, proper planning and measures can ensure a speedy recovery.

The Old Man is Snoring

Dan Hoornweg's picture

Flooding in Bangkok‘It’s raining, it’s pouring. The old man is snoring.’ Truth be told, I apparently snore, and I suppose I’m not that young anymore. But hard to believe, I’m sure this nursery rhyme is not about me. And despite the recent Noah-like floods in Europe, Bangkok, Calgary, Dhaka, Jakarta, New York and Toronto, it’s not really about any one city, or any one country, or even any one continent. But, ‘went to bed and bumped his head. And won’t get up in the morning,’ aptly describes our current political paralysis.

Many children know this song. Soon they will learn how their grandfathers and fathers slept through the rain.

Here in troubled Toronto and gritty Calgary, there was the inevitable debate on whether or not the recent floods could be attributed to climate change. ‘If it’s this bad now, what’s the future hold?’ people wondered. ‘Sleepwalking into trouble,’ came to mind for many.

How Tweet it is: Metro Manilans rise above the floods with Information and Communication Technology

Artessa Saldivar-Sali's picture



After reading a World Bank publication about leveraging ICT for development, I wondered how Manilenos used their social networks to remain resilient to the devastating floods of the past weeks. In a country with a per capita income that is only 56% of the East Asia & Pacific regional average, the data for ICT penetration is astounding (although anybody who knows how popular SMS is in the Philippines might not be surprised):

My curiosity piqued, and wanting to find out how my friends were holding up, I set up a (highly unscientific) poll of my Facebook network to find out how social media, mobile communication, and ICT are used by Metro Manilans during disasters.  The following are just a few examples of the answers: