Global Assessment Report on Disaster Risk Reduction 2011
Revealing Risk, Redefining Development
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Chapter 6    Opportunities and incentives for disaster risk reduction

Runaway increases in exposure and risk are pushing up the costs of disasters, while at the same time, countries and communities are struggling to reduce their vulnerabilities. The link between this rapid increase in costs and certain development policies – such as liberalization of trade and financial markets, privatization of public utilities and services, and deregulation – has not been explored sufficiently.

Aside from reducing disaster mortality, existing risk governance capacities and arrangements generally fail to achieve their aims. A new paradigm for risk governance is required, one that must address the disaster risk internalized in, and sometimes generated by, development processes.

Whereas disaster risk management (DRM) has conventionally been delivered through stand-alone projects and programmes, a number of governments are now adapting development mechanisms and instruments designed to reduce risks and strengthen resilience. These include public investment planning, ecosystem-based approaches and social protection.1  Although many of these innovations are still incipient, they promise to address underlying risk drivers and generate important co-benefits for the people and organizations involved. These innovations often build on existing institutional capacities and thus offer powerful incentives for governments to adopt them.

There are likely to be greater incentives for DRM when such instruments simultaneously address the needs of a number of stakeholders and competing priorities. For example, improved water management not only addresses drought risk but may also increase generation of hydroelectricity, water-storage capacity for agricultural use, and the availability of domestic drinking water. In general, these incentives are stronger when DRM contributes visibly to improved economic and social well-being and choice for each citizen. Governments often go unrecognized for reduced disaster losses, or when good risk reduction prevents extreme weather events causing a disaster. To overcome the perception that DRM budgets compete with other priorities for scarce resources, disaster risk reduction must be seen as an integral part of local development.

These innovative instruments can help define a new approach to risk governance, especially if they are supported by political commitment, policy coherence among different levels of government, competent and accountable local governments, and partnerships with civil society and low-income households and communities. At the same time, effective risk governance must become an essential component of development in general.

6.1 Integrating disaster risk reduction into public investment decisions

Global public investments dwarf international aid. If national public investment systems truly account for disaster risk, they can reduce potential losses at a scale impossible to achieve through stand-alone DRM.

In 2008 alone, Peru’s National Public Investment System approved investment of approximately US$10 billion, about half of which was to be executed by local governments. In comparison, official development assistance received by Peru in 2008 was US$266 million. As such, the decision to evaluate the disaster risks internalized in public investment, and to ensure that cost-effective measures to reduce risks are included in all projects, has huge implications for whether the stock of risk goes up or down.

Public investment that is based on sound needs and risk analysis promotes growth. At the same time, investments in transport, communications and education have a particularly large effect on economic growth and poverty reduction (Barro, 1991


Barro, R.J. 1991. Economic growth in a cross section of countries. Quarterly Journal of Economics 106 (2): 407–443.
; Easterly and Rebelo, 1993


Easterly, W. and Rebelo, S. 1993. Fiscal policy and economic growth: An empirical investigation. Journal of Monetary Economics 32 (3): 417–458.
; Aschauer, 2000


Aschauer, D. 2000. Do states optimize? Public capital and economic growth. The Annals of Regional Science 34 (3): 343–363.
; Milbourne et al., 2003


Milbourne, R. Otto, G. and Voss, G. 2003. Public investment and economic growth. Applied Economics 35 (5): 527–540.
; Anderson et al., 2006


Anderson, E., De Renzio, P. and Levy, S. 2006. The role of public investment in poverty reduction: Theories, evidence and methods. Working Paper 263. London, UK: Overseas Development Institute.
). If public investment becomes a vehicle for DRM, not only is the quality and sustainability of public spending enhanced, but disaster-related losses and costs are also reduced and social and economic development stimulated. This can be a powerful incentive for governments. Upgrading and expanding inefficient, ageing water and drainage infrastructure, if planned from a risk reduction perspective, can reduce vulnerability to droughts and floods while improving the quality of water and sanitation. Building earthquake-resistant schools can improve education while saving children’s lives.

Public investment projects are normally shaped through a number of parallel and interconnected planning processes that include land use planning and management, development planning, sector investment planning and investment projects. Ideally, these would occur in a sequential order with one building on the other (Figure 6.1), but in reality this is rarely the case (see also Section 6.5).

In the 2009–2010 HFA Progress Review, approximately half of the reporting countries and territories stated that they use cost– benefit analyses to incorporate disaster risk reduction measures into the planning of public investment, and almost two-thirds assessed the impact of disaster risk on productive infrastructure, including dams, irrigation and transport systems. Although progress has been reported from different regions, the main impetus for formally incorporating DRM into this sequence has come from Latin America, where the modernization of public investment systems has been promoted by the Economic Commission for Latin America and the Caribbean.2 

Peru was the first country to include disaster risk into its evaluation criteria for public investment projects, followed by Costa Rica and Guatemala (Box 6.1). In Peru, it is now a legal requirement that all public investment projects be evaluated for disaster risks. If the risks are not addressed, the project is not financed.

The systems developed so far, however, are only a beginning. At least three challenges must be overcome if the tremendous potential is to be realized.

Figure 6.1 Sequential planning from broader land use systems to specific project investment
Figure 6.1

Box 6.1 Integrating disaster risk reduction into public investment in Latin America

The use of public investment systems to reduce disaster risk reflects a new approach to planning in Latin America. In the 1990s, many countries weakened or dismantled their planning and regulation mechanisms as part of a broader wave of reforms that promoted economic deregulation and trade liberalization. Whereas these reforms may have stimulated economic growth (and hence also increased hazard exposure), weaker planning and regulation almost certainly increased vulnerability. Since the early 2000s, public investment systems anchored in finance ministries have been developed by a new generation of planners aiming for efficiency, sustainability and equity in the investment of public resources.

In Peru, the National System for Public Investment was created in 2000, and by 2008 had approved 72,000 projects. Disaster risk was formally incorporated into the system between 2004 and 2007. This was achieved by developing risk concepts and assessment methods, convening a large number of actors from different levels of government and across departments, training more than 900 professionals, implementing new standards and instruments, and developing a long-term vision of investment. These have all proved to be critical success factors.

Costa Rica has built on the lessons learned in Peru, incorporating disaster risk into its new public investment system from its inception in 2007. A comparative analysis of other public investment systems helped generate political and bureaucratic support and enabled the country to fine-tune and improve upon the Peruvian model. Unlike Peru, where planning institutions were dismantled in the 1990s, Costa Rica benefited from a 30-year-old tradition that allowed investment decisions to be aligned with strategic development plans.

Learning from one another’s experiences has helped countries save time and avoid mistakes as they embark on similar processes. Added to this, strategic alliances with training and academic institutions and international support have enabled legislation, supporting regulation and planning systems to be developed in a sequential process in which one step builds on what was achieved previously.

(Source: GAR 11 paperCampos and Narváez, 2011


GAR11 Campos Garcia, A. and Narváez Marulanda, L. 2011. Study of implementation of strategies for incorporating risk management criteria for public investment in Latin America. Background paper prepared for the 2011 Global Assessment Report on Disaster Risk Reduction. Prepared by Florida International University. Geneva, Switzerland: UNISDR.

Click here to view this GAR paper.

First, although disaster risks are evaluated in the design of public investment projects, there is no analogous process earlier in the planning sequence. As a consequence, higher-level planning decisions, or a lack thereof, may actually create risks that are not evaluated and addressed until the project stage.

Second, the evaluation of risks in public investments, and of the costs and benefits of reducing risks, require detailed comprehensive probabilistic risk assessments. As the HFA Progress Review highlighted, these assessments are not available in many countries, implying that there may be no objective basis for evaluation.

Third, new mechanisms for planning and budgeting at the local level, as well as stronger partnerships with civil society and local governments, are essential if public investment is to be effective, sustainable and relevant to local needs. Examples, such as participatory budgeting in Porto Alegre, Brazil (Menegat, 2002


Menegat, R. 2002. Participatory democracy in Porto Alegre, Brazil. PLA Notes 44 (June 2002).
; UNISDR, 2009


UNISDR (United Nations International Strategy for Disaster Reduction). 2009. Global assessment report on disaster risk reduction: Risk and poverty in a changing climate. Geneva, Switzerland: United Nations International Strategy for Disaster Reduction.
Click here to go to GAR09 page.
), Local Coordinating Councils in Peru (Venton, 2011


Venton, P. 2011. Meso level partnerships for disaster risk reduction and climate change adaptation and how they address the underlying drivers of risk. Background Paper prepared for the Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR.
), and the coordination of development, environmental management and disaster risk reduction in Manizales, Colombia (Velasquez, 2010


Velasquez, L.S. 2010. La gestión del riesgo en el contexto ambiental urbano local: Un reto permanente y compartido. Caso Manizales, Colombia. Case study prepared for IIED Background Paper to the 2011 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR.
), demonstrate that many countries are adopting innovative approaches to public investment.


1  This chapter focuses only on the application of such instruments in selective areas of public administration. Other areas, such as rural livelihoods, were discussed in GAR09. There are also similar instruments in other sectors (e.g., health), which have not been documented here and which have the potential to be adapted for DRM. For more information, see Kirch et al., 2005


Kirch, W., Menne, B. and Bertollini, R., eds. 2005. Extreme Weather Events and Public Health Responses. Darmstadt, Germany: Springer-Verlag.
; WHO, 2007


WHO (World Health Organization). 2007. Disaster risk reduction and preparedness of health facilities. A literature review. Kobe, Japan: World Health Organization, Kobe Centre.
; IFAD, 2010


IFAD (International Fund for Agricultural Development). 2010. Rural poverty report 2011. New realities, new challenges: New opportunities for tomorrow's generation. Rome, Italy: International Fund for Agricultural Development.
; and Wisner et al., 2011


Wisner, B., Blaikie, P., Cannon, T. and Davis, I. 2004. At risk: Natural hazards, people's vulnerability and disasters. London, UK: Routledge.
2 For more information on how to integrate disaster risk management into public investment, refer to
GAR 11 Background documents

GAR11GAR 2011 Contributing Papers

Arnold, M. and Fuente, A. de la. 2010. Conditional cash transfer programs in Mexico: Progresa - oportunidades. [View]

Campos Garcia, A. and Narváez Marulanda, L. 2011. Study of implementation of strategies for incorporating risk management criteria for public investment in Latin America. Prepared by Florida International University. [View]

Daikoku, L. 2010. Citizens for clean air, New York. Case study prepared for the ADRRN. [View]

Fernandez, A,. Jadotte, E. and Jahnsen, J. 2011. Addressing disaster risk through conditional cash transfer and temporary employment programs in Latin America and the Caribbean. Prepared by UNDP for GAR 11. [View]

Krishnamurty, J. 2011. Employment policies and disaster risk reduction. [View]

Okazaki, K. 2010. Incentives for safer buildings. lessons from Japan. [View]

Olhoff, A. 2011. Opportunities for integrating CCA and DRR in development planning and decision-making. examples from sub-Saharan Africa. [View]

PEDDR (Partnership for Environment and Disaster Risk Reduction). 2010. Demonstrating the Role of Ecosystems-based Management for Disaster Risk Reduction. [View]

Rogers, D. Tsirkunov, V. 2011. The costs and benefits of early warning systems. [View]

Satterthwaite, D. 2011. What role for low-income communities in urban areas in disaster risk reduction? . [View]

Williams, G. 2011. The political economy of disaster risk reduction. Study on Disaster Risk Reduction, Decentralization and Political Economy Analysis for UNDP contribution to the GAR11. [View]

Johnson, C. 2011. Creating an enabling environment for reducing disaster risk: Recent experience of regulatory frameworks for land, planning and building. [View]
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