* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Funding for development must be better targeted at reducing disaster risk
Heavy-hitting and repeated cyclones in the Caribbean, intense and devastating flooding across South Asia – and this in just the last few weeks. Unabated, unmanaged disaster risk is wreaking havoc across our planet, killing, destroying and setting back progress.
A few months ago, not far away from where Harvey, Irma and Maria touched land, a key international conference took place in Cancun – the Global Platform for Disaster Risk Reduction, which ended with a call for all countries to “systematically account for disaster losses by 2020”, a critical baseline to assess progress, challenges and opportunities ahead.
Several weeks earlier, Robert Glasser, the U.N. Secretary-General’s Special Representative for Disaster Risk Reduction (DRR), and Patricia Espinosa, Executive Secretary of the U.N. Framework Convention on Climate Change, blogged that “disasters – 90 percent of which are classed as climate-related – now cost the world economy US$520 billion per year and push 26 million people into poverty every year”.
These economic losses and associated costs in human life and livelihoods (and quite likely the growing humanitarian bill) suggest we are still failing to take disaster risk into account as much as we should. And we only need look at the Caribbean right now to see the financial impact of our failure to tackle disaster risk: the most recent report from Hurricane Maria alone suggests an insured loss in the range of $40 billion to $85 billion.
Glasser is correct in saying that we need to understand the losses to get us closer to addressing them. Dollars are a useful, indeed critical, lens – though not the only one – through which to take stock of progress in managing disaster risks.
But crucially, the global processes around DRR seem to systematically fail to talk about finance flows and better investment in risk and resilience that would help us deliver and maintain sustainable development (including economic progress).
Finance - whether managing funds, or acquiring and spending funds - gives us an insight into effort (scales of investment) and effectiveness (impact of investment), and opens the door to a variety of financial mechanisms and tools that can be applied to manage disaster risk, such as risk-pooling. It is both a means to an end, and a tool to support DRR, and needs to be more central in international DRR processes.
Thankfully, the profile of risk and its intrinsic relationship to development has grown significantly in the last ten years. The Sendai Framework for Disaster Risk Reduction, the Third Financing for Development Conference, the Sustainable Development Goals and the Paris Agreement on climate change all acknowledge the importance of risk management – managing both our exposure and vulnerability to the range of shapes, sizes and forms of hazards. But what comes after this recognition?
All governments are obliged to deliver risk-informed development to their citizens. This means reducing both vulnerability and exposure to a variety of hazards to provide and maintain development gains.
The Chair’s Summary from Cancun contains some recommendations on what this might entail for DRR - on disaster loss databases, early-warning systems, local authority empowerment to manage risk, economic planning and women’s empowerment. But it says little about the financial reality of those recommendations, or how countries can invest and support investment to make them a reality. It is more explicit however, in talking of risk being applied to “overall economic planning” and urging risk-informed investments in housing and infrastructure.
National governments have the final responsibility to deliver risk-informed development. But within international frameworks, rightly so, developed countries have made commitments and have historic responsibilities to help in particular, the countries most vulnerable to environmental risks, as well as those least able to manage the problem themselves. This support is particularly critical for least-developed countries, small-island nations and fragile and conflict-affected states.
In this regard, donor portfolios must support the reduction or transfer of risk and certainly avoid adding or locking in risk in the countries they are trying to help. It goes without saying that this support must be done with national ownership and in alignment with national priorities, but from a funding perspective, risk-informed development means several things.
Firstly, it is about ensuring that all donor contributions are screened properly, working with developing-country governments to ensure that risk is managed and lowered rather than increased through investments.
Secondly, donors need to support the global and national commitments to the Paris Agreement. Reducing emissions is, over the long-term, the best and indeed only solution to ensuring climate risk and its related disasters do not continue to escalate in frequency severity and duration, nor fluctuate in timing and location.
Thirdly, it is about helping developing countries actively ensure risk is taken into account in every development decision - from investment in basic services through to long-term infrastructure. Here financing becomes the tool for direct risk reduction - it is the heavy-lifting to ensure that development really is risk-informed, sector by sector.
While donors have been accepting of a growing international rhetoric around risk-informed development, fewer have been interested in putting this into practice. Any de-prioritisation of disaster risk reduction, or any hesitancy of donor engagement in funding its implementation would therefore be worrying.
The donor community can also support the use of limited public finance in the best way possible, including through blending and mobilising private investment. An example might be donors working with governments in the Caribbean so that insurance payouts triggered by recent events are used to build back better in a more risk-informed way, utilising insurance industry expertise and data to do so.
Development practitioners have long recognised risk in their portfolios and projects, whether governance, political or even reputational risk. In each case, managing these risks is not simple. Yet they have endeavoured to integrate them in their actions and methods of implementation. It is time to do the same for disaster risk.
This is not a call for more money – which can be counterproductive. Rather we need “better money” that targets donor and national development interventions to ensure risk is indeed reduced.
Without action that programmes development finance to address disaster risk, there will be more Irmas and Harveys and Marias to come.
Charlene Watson is a research associate at the Overseas Development Institute, focusing on how investment decisions need to react to multiple and interacting risks to achieve sustainable development.
Jan Kellett coordinates the United Nations Development Programme’s climate, disaster and energy external work, responsible for partnerships, advocacy, research and evidence.