Finance for reducing disaster risk 10 things to know

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  • Finance for reducing disaster risk: 10 things to know

Finance for reducing disaster risk: 10 things to know

Finance for
reducing disaster risk:
10 things to know
Charlene Watson
Alice Caravani
Tom Mitchell
Jan Kellett
Katie Peters
March 2015
Acknowledgements
The authors would like to thank Ian Clark, Dan Sparks and Merylyn Hedger for their constructive review
comments. Thank you also to Steven Dickie and Ore Kolade for their support in the report's production.
The report is funded by UNDP though the views expressed are solely of the authors and do not necessarily
represent those of UNDP or ODI.
The corresponding author is Dr. Charlene Watson:
e-mail: c.watson@
The report is available electronically at:
sendai-2015-new-global-agreement-disaster-risk-reduction
Design: Steven Dickie - design
Photo: NASA Goddard MODIS Rapid Response Team - Typhoon Haiyan after moving through the Philippines
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Finance for
reducing disaster risk:
10 things to know
Charlene Watson
Alice Caravani
Tom Mitchell
Jan Kellett
Katie Peters
March 2015
Acknowledgements
The authors would like to thank Ian Clark, Dan Sparks and Merylyn Hedger for their constructive
review comments. Thank you also to Steven Dickie and Ore Kolade for their support in the report's
production. The report is funded by UNDP though the views expressed are solely of the authors and
do not necessarily represent those of UNDP or ODI.
The corresponding author is Dr. Charlene Watson:
e-mail: c.watson@
The report is available electronically at:
sendai-2015-new-global-agreement-disaster-risk-reduction
4 FINANCE FOR REDUCING DISASTER RISK: 10 THINGS TO KNOW
Contents
Introductionii
1. Disasters are increasing and their costs growing1
2. DRR spending accounts for a fraction of
development assistance2
3. Development assistance for DRR supports a range of
actions, but is biased towards preparedness3
4. Poor, drought prone countries miss out on DRR finance4
5. Sources of finance for reducing disaster risk are
varied and complex 5
6. A number of countries have mobilised their own
DRR finance7
7. Climate finance presents a new opportunity to
finance DRR8
8. Ensuring all new investments are resilient to disaster
risk is an opportunity to reduce, rather than lock-in risk9
9. Both government and the private sector can invest to
reduce loss and tackle risk at the same time 10
10. International agreements must provide strong signals
that reinforce the reduction of disaster risk as a key
element of sustainable development finance 12
UNDP's investment in disaster risk reduction: A global
overview14
References16
i
Introduction
The current discussion around the financing of disaster risk reduction (DRR) remains unsatisfactory. What little literature exists on
DRR finance relates predominantly to the transfer of risk through insurance and reinsurace and is driven largely, but not exclusively,
by private sector insurance companies (e.g. Swiss Re, 2008; Cummins and Mahul, 2010; UNEP FI, 2014). Work is now also emerging
on the financial cost of DRR inaction in the face of growing disaster risk (World Bank, 2014). There remain few publications that
systematically address issues in DRR finance, such as outlining the funding opportunities that exist in the current international and
national landscape, what activities are being or could be funded and whether finance is being targeted and allocated to the right places
(Kellett and Sparks, 2012; Kellett and Caravani, 2013; Kellett and Peters, 2014). Instead, the rhetoric remains around inadequate
scales of finance that support short term, piecemeal interventions and rarely cover the full suite of actions required to effectively reduce
disaster risk at the scale and duration required (ISDR, 2009a; ISDR, 2011).
This is, in part, a result of the way in which the DRR debate and practice has evolved. Reference to financing in the Hyogo Framework
for Action (2005 to 2015) is inadequate with little mention of financial commitments or tools. Compounding this, the DRR finance
that exists is not sufficiently tracked, though tracking itself can create the perverse incentive of encouraging separation from wider
financing flows. As the community rightly moves to articulate DRR as something to be mainstreamed in all investment decisions, public
or private, it becomes harder to explicitly identify the DRR finance sources, channels, their instruments and their outcomes. However,
without an improved understanding of DRR finance, as the financial flows that act to reduce disaster risk, it is increasingly complex to
generate synergy and complementarity between national and global development priorities and finance streams. Ensuring all investment
flows are disaster resilient presents a substantial opportunity to reduce rather than generate risk, an increase in which could slow
development and economic progress.
Finance for reducing disaster risk: 10 things to know focuses on the basics of DRR finance and the opportunities that the Post-2015
development finance landscape can offer. In the Post-2015 Framework for Disaster Risk Reduction - the successor to the Hyogo
Framework for Action (HFA) - it is imperative that the discussion on financing is elaborated. This accompanying report to the '10
things to know about finance for reducing disaster risk' provides a clear overview of the needs and trends in DRR finance, the available
channels and a nuanced narrative to capture the attention of decision-makers and stakeholders in advance of the Sendai World
Conference on Disaster Risk Reduction (WCDRR).
ii FINANCE FOR REDUCING DISASTER RISK: 10 THINGS TO KNOW

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