Risk financing key to building resilience against disasters
KATHMANDU, FEB 01:
Disaster losses have risen faster than Asia-Pacific’s economy has expanded, according to a new report from Asian Development Bank (ADB), which recommends regional governments find ways to offer disaster risk financing instruments like calamity funds, tax credits, and catastrophe bonds to strengthen disaster resilience.
“Asia’s economic gain is being eroded by disasters, often hitting the poorest hardest,” said ADB’s vice president for Knowledge Management and Sustainable Development Bindu Lohani. “As the region is the most vulnerable to climate changes, we no longer have a choice but to focus on disaster risk management.”
Significant investments to strengthen disaster resilience can reverse this, according to the report ‘Investing in Resilience - Ensuring a Disaster-Resistant Future’, which noted that a wide range of gaps and obstacles sit behind the existing trend of rising disaster losses, like inadequate risk data, weak and misaligned incentives, poor legislative and regulatory frameworks and enforcement, disjointed government, limited funding, and power disparities.
Natural hazards continue to cause significant loss of life in Asia and the Pacific. Between 1970 and 2010, some 1.7 million hazard-related deaths were recorded in the region — some 51 per cent of global total. It has also examined instruments and mechanisms that currently exist in Asia to protect against disasters, and offers solutions for stronger disaster resilience, including how disaster risks can be financed through disaster risk insurance, reinsurance, catastrophe bonds, and other means.
A wider range of disaster risk financing instruments is particularly crucial for Asia and the Pacific, which lags behind other regions in developing innovative financial solutions for disaster resilience. Less than five per cent of disaster losses in developing Asia are insured as compared to 40 per cent in developed countries, it said.
To overcome these challenges, the report identified critical next steps to better assess, reduce and manage disaster risk. It includes the need for national and sub-national governments to develop and implement comprehensive disaster risk financing strategies to provide adequate and timely post-disaster support to strengthen financial resilience.
Most Asian countries have disaster handling capabilities but few have adequate provisions for financing post-disaster losses and rehabilitation, the report mentioned, adding that disaster losses are expanding at a faster pace in Asia due to environmental degradation, climate change, demographic pressures, and widespread failure to consider disaster risk in designing and locating many critical development investments.
Source: THT
