SE32: Financing Disaster Risk Reduction

Description

Government disaster risk financing strategies need to ensure that public expenditure levels on risk reduction are sufficient relative to the levels and nature of risk faced, the expected economic and social returns to risk reduction and the reasonable responsibilities and obligations of government; and that there are adequate financial arrangements to manage the residual risk in the form of post-disaster relief and recovery expenditure.

Natural hazards pose indirect threats both to planned activities and levels of public funding available for recurrent and capital spending in future years. They can also result in considerable loss of existing investment and related economic activity if sufficient risk reduction measures are not in place. The threats to human life and well-being due to inefficiencies related to poorly designed financing measures and missed development opportunities are considerable.

In reality, although many hazard-prone developing countries undertake some planning for disasters, none has a comprehensive disaster risk financing strategy. Instead, arrangements focus primarily around limited regular budgetary allocations for humanitarian relief and preparedness and, in a few cases, some use of risk transfer tools. Additional resources are obtained on an ad hoc basis in the aftermath of disasters, primarily via budgetary reallocations and international community grants and loans. Meanwhile, rational decisions around the appropriate balance and nature of risk reduction and post-disaster expenditure are rarely made. Risk reduction is often viewed as a somewhat separate activity, focused primarily around project-based, often piecemeal, investments in structural mitigation by relevant line agencies or (less frequently) through local government.

Expected Outcomes

This session will provide a snap shot of the historical evolution of disaster risk financing practices in developing countries and the strengths and weaknesses in the current system. It then poses a series of questions on potential ways forward, some of them deliberately provocative, aimed at moving towards the development of a more integrated, comprehensive approach, centred on risk reduction.

Inputs will be sought to frame a bigger research initiative that would provide useful inputs to the mid-term review of the Hyogo Framework for Action.

The session also complements the High Level Panel on disaster risk financing to take place during the Global Platform. It provides an opportunity to delve into more depth with some of the issues raised, and develop recommendations to take forward from the Global Platform.

Background Papers

> Financing Disaster Risk Reduction [PDF, 15.29 Kb]

Presentations

> Disaster Risk Financing: An Overview [PDF, 395.28 Kb]

Outcomes

Note: this is an interim report pending publication of the Conference Proceedings from the 2009 Global Platform.

> Report from SE32 [PDF, 25.03 Kb]