Disaster Risk Management Niels Holm-Nielsen Lead Specialist Disaster Risk Management
1 Who Cares?
1 tropical storm was the likely cause of 20% of the increase in poverty in Guatemala between 2006 and 2011
The Financial Markets Are Watching
Average losses due to extreme weather events for Selected countries from 1993-2012 Average Annual Losses per GDP (%) top 15 countries 10.00 5.00 0.00 Grenada Kiribati Dominca St. Kitts & Nevis Mongolia Belize Antigua & Barbuda Honduras Cuba Bahamas Djibouti Samoa Moldova Tajikistan Showing the top 15 countries in global rank. Sorted by Losses per GDP (%) Nicaragua Source: Harmeling, S. and Eckstein D. Global Climate Risk Index 2013. Germanwatch, November 2012. http://germanwatch.org/fr/download/7170.pdf
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2 Disaster risk today
Risks & Disaster Events Urban Agglomerations Concentrate Risks Disaster events in LAC are increasing, as are disaster losses $50,000 Damages from Disasters (US$ millions) $25,000 $0 1961-1970 1971-1980 1981-1990 1991-2000 Source: EM-DAT. Truncated for the 2010 losses. 2001-2010 600 Count of Disasters 300 0 1961-1970 1971-1980 1981-1990 1991-2000 2001-2010 Source: EM-DAT 10 10
Damages and Losses from disasters are fiscal shocks, which often result in budgetary deficits & increased debt Select Economic value of Damages and Losses from Disasters as a % of GDP 200% Hurricane: Hattie Hurricane: Ivan Hurricane: Georges 100% Earthquake Hurricanes: David & Frederick Hurricanes: Luis & Hurricane: Marilyn Luis Hurricane: Hurricane: Hurricane: Allen Luis Gilbert Hurricane: Mitch Flood Earthquake Hurricane: Tomas 0% Belize - 1961 Nicaragua - 1972 Dominica - 1979 St Lucia - 1980 Jamaica - 1988 AB - 1995 Dominica - 1995 St. Kitts & Nevis - 1995 Honduras - 1998 St. Kitts & Nevis - 1998 Grenada - 2004 Guyana - 2005 Haiti - 2010 St Lucia - 2010
3 How we work Managing disaster risk
Disaster Risk Management in the World Bank Group
Addressing disaster risk Bank DRM programs are organized around 5 pillars World Bank DRM Practice Group
Our clients: Ministries of Finance and line Ministries Make Govt decision makers aware of disaster risk Provide options to manage and reduce the contingent liability Prioritize investment Min of Finance: Contingent Liabilities Assess the Annual Expected & Probable Maximum Loss Based on previous events and modeled loss Line Ministries: Physical Risk to assets Complete multi-hazard risk models in identified high risk areas. Build platform to dynamically visualize expected physical impact Manage Liabilities -Budget mechanisms -Sovereign protection -Support to insurance market development Reduce Liabilities Identify and visualize specific risk reduce options Future risk: building code enforcement, land use planning, early warning Current Risk: protective infrastructure and retrofitting Using probabilistic CBA, present a menu of investments identified in physical risk assessment with assessed IRRs Menu of investments approach enables decision makers to assess compare the political costs with the economic gains
How we work: Preparedness in action
How we work: Financial Protection in Action
Including disaster risk within an integrated fiscal risk management framework Disaster Risk Management Disaster Risk Financing and Fiscal Risk Insurance Management (commodities, currency and others) Public Debt Management
Public Finance Approach to Disaster Risk Management Assess and quantify risks Define and measure contingent liabilities Pre-Disaster Assess Risks Reduce contingent liability Reduce disaster impact through integrating risk information in public investments Reduce economic impact by creating incentives for private sector resilience Reduce Financial Risk Secure Financing Integrate disaster risk in fiscal risk and public debt management Improve post-disaster budget response capacity Clarify post-disaster financial assistance Deploy and Monitor Funding Post-Disaster Establish effective administrative systems for post-disaster approval, transfer and monitoring of funds
Risk Profile Antigua and Barbuda Grenada Jamaica Source Risk Profile Earthquake AAL, Earthquake (US$ millions) $21 $5 $26 GAR 2013 AAL/Total Exposed Produced Capital, 8.7 3.7 0.9 GAR 2013 Earthquake (%) PML 250, Earthquake (US$ millions) $376 $170 $1,216 GAR 2013 PML 250 /GDP, Earthquake (%) 31.1 22.0 8.5 GAR 2013 Cyclones AAL, Cyclones (US$ millions) $12 $1 $59 GAR 2013 AAL/Total Exposed Produced Capital, 4.9 1.2 2.0 GAR 2013 Cyclones (%) PML 250, Cyclones (US$ millions) $446 $81 $2,255 GAR 2013 PML 250 /GDP, Cyclones (%) 36.8 10.4 15.8 GAR 2013 Earthquake + Cyclones AAL, Eq+Cy (US$ millions) $33 $6 $85 GAR 2013 AAL/Total Exposed Produced Capital, Eq+Cy 13.6 4.9 2.9 GAR 2013 (%) PML 250, Eq+Cy (US$ millions) $822 $251 $3,471 GAR 2013 PML 250 /GDP, Eq+Cy (%) 67.9 32.4 24.3 GAR 2013 Risk Financing Mechanisms Participation in CCRIF Yes Yes Yes CCRIF Annual Report 2011-2012 Payouts from CCRIF No No No CCRIF Annual Report 2011-2013 Property Insurance Penetration (%) 3.08 1.26 1.03 AXCO Global Statistics, 2013
SCHEMATIC OF A POTENTIAL CENTRAL AMERICA-CCRIF PARTNERSHIP Payout REINSURANCE MARKET Reinsurance Contract Caribbean Catastrophe Risk Insurance Facility (CCRIF) SHARED Capital Participation Deposit Donor Contribution Reinsurance Contract CARIBBEAN Countries Payout CARIBBEAN Capital CENTRAL AMERICA / DR Capital Payout CENTRAL AMERICA / DR
How we work: Resilient Reconstruction in Action
Barbados Doppler Radar Dec 24, 2013 7:55 PM 1.7 mm/hr Rabacca Station Dec 24, 2013 8:50 PM 18.8mm/hr Rabacca Station MAX SCALE 27mm/hr Dec 24, 2013 9:00 10:00 PM 119.3mm/hr Rabbacca Station
Poorest areas got the most rainfall Maximum Rainfall Intensity in 3 Hours, Dec 24 Poverty Head Count, 2008 Average poverty head count in affected areas - 44%
Impact Chateaubelair Georgetown Buccament Congo Valley
Damage and Losses: By Sector Damage and Losses by Sector Housing 9% Electricity 8% Millions $60 Damage and Losses by Sector (US$ millions) $40 W&S 4% Health 2% $20 Transport 76% Agriculture 1% I&C Tourism 0% 0% Education 0% Approximately 93% of the damage and losses experienced in the infrastructure sector $0 Damage Losses W&S - Water & Sanitation; I&C - Industry & Commerce