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Disaster risk reduction and international catastrophe risk insurance facility

Author

Listed:
  • Nipawan Thirawat

    (Mahidol University International College)

  • Sirikamon Udompol

    (Thai Ministry of Finance)

  • Pathomdanai Ponjan

    (Thai Ministry of Finance)

Abstract

The objectives of this research are to investigate resource loss effects from flooding and to provide recommendations on disaster risk reduction policies. This research utilized a dynamic computable general equilibrium (CGE) model, which found that losses of resources had major negative impacts on real gross domestic product (GDP). Transitioning from national catastrophe insurance fund to an international risk pooling approach is discussed, and as the Global Catastrophe Risk Insurance Facility has not yet been established, our proposal suggests the Association of Southeast Asian Nations plus three (ASEAN + 3) Catastrophe Risk Insurance Facility (ACRIF) and the Association of Southeast Asian Nations plus three catastrophic bonds (ASEAN + 3 CAT bonds) as effective means of reducing fiscal liabilities arising from natural disasters, also effectively enhancing disaster risk reduction. These tools are complementary to Catastrophe Risk Swaps which are innovative global financial adaptation strategies designed to make communities and governments more resilient to disaster damages. They are ex-ante risk financing tools and sources of liquidity for damage restoration and economic recovery, which facilitates flexibility among the Association of Southeast Asian Nations plus three (ASEAN + 3) and other governments requiring special assistance. Most importantly, utilization of insurance and catastrophic bonds promotes the achievement of set objectives of global adaptation strategies, sustainable economic growth, and climate resilient development.

Suggested Citation

  • Nipawan Thirawat & Sirikamon Udompol & Pathomdanai Ponjan, 2017. "Disaster risk reduction and international catastrophe risk insurance facility," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 22(7), pages 1021-1039, October.
    • Handle: RePEc:spr:masfgc:v:22:y:2017:i:7:d:10.1007_s11027-016-9711-2
    DOI: 10.1007/s11027-016-9711-2
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    References listed on IDEAS

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    1. Erwann Michel-Kerjan & Ivan Zelenko & Victor Cardenas & Daniel Turgel, 2011. "Catastrophe Financing for Governments: Learning from the 2009-2012 MultiCat Program in Mexico," OECD Working Papers on Finance, Insurance and Private Pensions 9, OECD Publishing.
    2. Abhas K. Jha & Jennifer Duyne Barenstein & Priscilla M. Phelps & Daniel Pittet & Stephen Sena, . "Safer Homes, Stronger Communities : A Handbook for Reconstructing after Natural Disasters," World Bank Publications, The World Bank, number 2409, September.
    3. J. David Cummins & Olivier Mahul, 2009. "Catastrophe Risk Financing in Developing Countries : Principles for Public Intervention," World Bank Publications - Books, The World Bank Group, number 6289.
    4. Toshihiko Hayashi, 2012. "Japan's Post‐Disaster Economic Reconstruction: From Kobe to Tohoku," Asian Economic Journal, East Asian Economic Association, vol. 26(3), pages 189-210, September.
    5. Shigeyuki Abe & Shandre M. Thangavelu, 2012. "Natural Disasters and Asia: Introduction," Asian Economic Journal, East Asian Economic Association, vol. 26(3), pages 181-187, September.
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