DISASTER MITIGATION FINANCING. Experts discuss measures to enhance disaster risk reduction financing at the Asia Pacific Ministerial Conference on Disaster Risk Reduction in Pasay City on Tuesday (Oct. 15, 2024). These include budgetary reforms, innovative financial mechanisms and frameworks, and stronger public-private partnerships. (PNA photo by Avito Dalan)
MANILA – Countries must implement budgetary reforms, innovative financial mechanisms and frameworks and strengthen public-private partnerships (PPPs) to boost disaster risk reduction management and efficiently mobilize resources.
At the Asia-Pacific Ministerial Conference on Disaster Risk Reduction in Pasay City on Tuesday, Environment Secretary Maria Antonia Yulo Loyzaga emphasized the significance of investing in resilience mechanisms in the face of natural hazards that frequently hit countries in the region.
“An integrated approach to disaster-risk financing that is both data and context-driven is needed to streamline risk prevention strategies across sectors and along different decision-making levels. This will allow us to ensure that we can leverage potential synergies across global financial mechanisms,” she said.
She said that under the Sendai Framework, the Paris Agreement, and the Global Biodiversity Framework, as well as in development financing, data is used to estimate direct and indirect disaster costs to enable targeted disaster risk reduction (DRR) investments and ignite investor interest.
Loyzaga cited that the Philippines’ National Adaptation Plan identifies that risk-informed infrastructure is essential and is a priority for adaptation, action, and disaster-risk reduction.
She said that disaster-risk financing from broad sources and different scales, from blended finance models to climate-resilient bonds, as well as innovative financial mechanisms and sector-specific risk-sharing instruments, are needed in this time and age.
Loyzaga noted that while the Asia Pacific region is the fastest growing regional economy, it also remains as the most disaster-prone in the world.
The region is home to 60 percent of the world's eight billion population.
Disaster losses
Kamal Kishore, Special Representative of the United Nations Secretary-General for Disaster Risk Reduction and head of the United Nations Office for Disaster Risk Reduction, highlighted the scope and magnitude of economic losses due to disasters.
He said that the Coalition for Disaster Resilient Infrastructure, in its biennial report issued in October 2023, said the expected annual average losses to infrastructure systems alone amount to around USD800 billion annually.
“It's not realized losses you can see. In the last few years, you know it ranges between USD200 billion to USD400 billion or something like that. That's a significant proportion of the size of the global economy and if we were to have a situation where probable maximum loss was realized, this could really set not just the development prospects, but the whole stability of the financial system,” he said.
With this background, Kishore noted the urgency to address the issue in a comprehensive manner.
“We have to look at national budgets. We have to look at sources of climate finance. we have to look at private finance, we have to look at how we can deploy different and innovative insurance risk transfer mechanisms and we also have to see what is the place for a new paradigm of overseas development assistance in this whole context,” he added.
Innovative financial instruments
Asian Development Bank (ADB) president Masatsugu Asakawa, meanwhile cited the need for an enhanced framework that supports innovative financial instruments like parametric insurance, and catastrophic bonds, among others.
He encouraged the creation of incentives for private entities that will invest in their own resilience. This includes tax breaks, subsidies, guarantees and risk-sharing arrangements.
Meanwhile, he said PPPs can help draw resources for DRR and maximize the impact of funding.
He said disasters and climate shocks impose heavy economic costs and place millions of people at risk, especially women and vulnerable people and that private partners can help.
Asakawa said international financial institutions like ADB need to step up and help build resilience in several ways, including enhancing financial resources and knowledge for DRR processes that respond to risk, promoting budgetary resources, and strengthening the enabling environment for DRR.
“ADB will continue to support these areas in our work. To be sure, we transformed ourselves into the Climate Bank for Asia and Pacific, scaling up our ambition to provide USD100 billion in cumulative climate financing from 2019 to 2030,” he said.
“Out of this USD100 billion, USD34 billion, so one-third, is for climate change adaptation. So not only mitigation, but we invest a lot in adaptation. And disaster risk reduction is of course a critical component of this,” he said.
Asakawa added that the ADB also supports quantitative disaster risk assessments, promotion of building codes, risk-informed land use planning, and disaster risk financing of separatists through its Asian Development Fund program.
The program provides a source of contingent financing for disaster response, recovery, and research.
“We have also a program like this right here in the Philippines with the Disaster Resilience Improvement Programme, or DRIP, totaling USD500 million. This is helping promote the use of disaster risk information in decision making, budget allocation, and project design,” he said.
Loyzaga noted that the public sector cannot bear the full cost of DRR investments alone.
“It is only through an all-of-society approach that the right investments in capacity building to continuously address risk, address the intersectionality of social vulnerability and the fragility of ecosystems, the adoption of appropriate and advanced engineering and technologies, and strategic partnerships across sectors and scales and geography. All of these combined will make us win the race to resilience,” Loyzaga said. (PNA)
