Financing DRR

The high visibility of disasters has historically motivated short-sighted politicians and government authorities, local, national and donors alike, to keep or reallocate huge financial resources for disaster response.

The amount spent on disaster response has continually increased from 1991 to 2010 from $1bn to more than $8bn. DRR spending has risen from a negligible amount to approximately $1bn in the same period.

Despite the benefits, it has proved extremely difficult to mobilise the finances required for DRR. 23 low-income countries received a total of $5.6bn in disaster response over the last 20 years. In comparison they received $1 of DRR for every $160,000 of response money. DRR accounts for only a tiny proportion of development aid, less than 40 cents in every $100. Low-income countries received only 12% of total international DRR finance between 1991 and 2010.

DRR is currently financed through multiple sources:

  • Private
  • Public
  • National
  • International

(Peters and Caravani 2015)

Countries seeking national public funding face the challenge of creating a national DRR strategy which is financially ‘realistic’ amid other competing priorities. Costs not only of implementation but those linked to coordination, plan consultations and communication, and capacity building should also be included as part of the overall budget of the national DRR strategy.

A review of national financial models by Kellett et al. (2014) showed that there are many potential arrangements for funding. Funds may be part of the disaster management budget originally focused on response and preparedness. Otherwise, DRR may be funded as part of environmental management or development planning. Alternatively, DRR may have its own fund.

Most often, a country’s DRR activities are funded through finances from across disaster management, planning and other responsible ministries. So, multiple strategies are defined within the narrow remit of each. This makes a joined-up strategic approach under Sendai difficult. Departments are unlikely to want to relinquish either their historical strategic responsibilities or, more specifically, the budgets associated with them.

The financing of DRR is in all cases an evolution in each country context, and is based very specifically on the state of development of the system of law and governance.

(Kellett et al. 2015)

However, effectively integrated strategies are more likely to be able to access not only DRR funding but external climate adaptation and sustainable development as well. ‘Globally available data does suggest that adaptation funding is increasingly financing DRR’ (Kellett et al. 2015: 33)

External funds may come from international aid, donor governments or development banks, foreign investment national private sector, charitable foundations and (I)NGOs.

As of 2014, there was very little empirical or academic evidence for the limitations and benefits of the various approaches to DRR funding. This is partly due to the complexity of DRR funding at a national and local level and the lack of transparency and accountability of sources and spending.

Your Task

In your opinion, if transformation of DRR financing was possible in your country of choice, what would the system look like?


References

Kellett, J., Caravani, A., and Pichon, F. (2015) Finance for disaster risk reduction [online] available from https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/9473.pdf [18 December 2019]

World Bank. (2012) Disaster risk financing and insurance in Sub-Saharan Africa: Review and options for consideration [online] Washington DC: The World Bank. available from http://www.preventionweb.net/go/31323 [18 December 2019]

Kenny, C. (2012). ‘Disaster risk reduction in developing countries: costs, benefits and institutions’. Disasters, 36 (4), 559–588.

UNISDR (2011) Global Assessment Report on Disaster Risk Reduction 2011. Section 5.3: Tailoring DRM strategies [online] available from https://www.preventionweb.net/english/hyogo/gar/2011/en/why/financing.html [18 December 2019]

UNDP (2015) Climate and Disaster Public Expenditure review methodology. [online] available from https://www.asia-pacific.undp.org/content/rbap/en/home/library/democratic_governance/cpeir-methodological-guidebook.html [18 December 2019]

ODI and UNDP (2014) Financing Disaster Risk Reduction: Towards a Coherent and Comprehensive Approach [online] available from https://www.odi.org/publications/8347-financing-disaster-risk-reduction-towards-coherent-and-comprehensive-approach [18 December 2019]

World Bank (2016) Peru: A Comprehensive Strategy for Financial Protection Against Natural Disasters [online] available from https://www.mef.gob.pe/contenidos/pol_econ/documentos/PeruFinProtectionFL_ENG_low.pdf [18 December 2019]

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Disaster Risk Reduction: An Introduction

Coventry University