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Development Impact Bonds in Financing Flood Risk Management

Author

Listed:
  • Marcin WiÅ›niewski
  • Krzysztof Å yskawa

Abstract

In this paper, the authors propose a new innovative solution to financing flood prevention and financing its consequences using the development impact bonds model. Firstly, the necessity of financing the flood problem is to be described as a public task, including the presentation of previous methods and solutions. Secondly, the authors derive a new model for financing flood problems basing on development impact bonds. This kind of financing comes from the New Public Management idea called “payments-by-results†. The new model shows that there is a possibility to construct a financial mechanism, which allows financing anti-flood interventions, such as relocation of residents from flood-threatened areas, using private financial resources, and giving the government the guarantee to pay only for the success of the intervention, which means a guarantee of effective public spending. At the end of the paper a SWOT analysis into this solution is presented. JEL Codes - G22; G23; H40; H54; H70; H84; Q54

Suggested Citation

  • Marcin WiÅ›niewski & Krzysztof Å yskawa, 2020. "Development Impact Bonds in Financing Flood Risk Management," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 67(4), pages 437-452, December.
    • Handle: RePEc:aic:saebjn:v:67:y:2020:i:4:p:437-452:n:176
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    References listed on IDEAS

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    1. Sandra Thiel & Bram Steijn & Marine Allix, 2007. "‘New Public Managers’ in Europe: Changes and Trends," Palgrave Macmillan Books, in: Christopher Pollitt & Sandra Thiel & Vincent Homburg (ed.), New Public Management in Europe, chapter 6, pages 90-106, Palgrave Macmillan.
    2. Thomas Thaler & Thomas Hartmann, 2016. "Justice and flood risk management: reflecting on different approaches to distribute and allocate flood risk management in Europe," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 83(1), pages 129-147, August.
    3. Cooper, Christine & Graham, Cameron & Himick, Darlene, 2016. "Social impact bonds: The securitization of the homeless," Accounting, Organizations and Society, Elsevier, vol. 55(C), pages 63-82.
    4. Marcin Wisniewski & Jakub Zielinski, 2019. "Green bonds as an innovative sovereign financial instrument," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 18(1), pages 83-96, March.
    5. Cernea, Michael, 1997. "The risks and reconstruction model for resettling displaced populations," World Development, Elsevier, vol. 25(10), pages 1569-1587, October.
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    More about this item

    Keywords

    flood risk; social impact bonds; development impact bonds; insurance companies; relocation;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H84 - Public Economics - - Miscellaneous Issues - - - Disaster Aid
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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