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Financial protection of the state against natural disasters : a primer

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  • Ghesquiere,Francis
  • Mahul,Olivier

Abstract

This paper has been prepared for policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of governments of developing countries in the aftermath of natural disasters, while protecting their long-term fiscal balances. It analyzes various aspects of emergency financing, including the types of instruments available, their relative costs and disbursement speeds, and how these can be combined to provide cost-effective financing for the different phases that follow a disaster. The paper explains why governments are usually better served by retaining most of their natural disaster risk while using risk transfer mechanisms to manage the excess volatility of their budgets or access immediate liquidity after a disaster. Finally, it discusses innovative approaches to disaster risk financing and provides examples of strategies that developing countries have implemented in recent years.

Suggested Citation

  • Ghesquiere,Francis & Mahul,Olivier, 2010. "Financial protection of the state against natural disasters : a primer," Policy Research Working Paper Series 5429, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5429
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    Citations

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    Cited by:

    1. Stéphane Hallegatte, 2012. "An exploration of the link between development, economic growth, and natural risk," Post-Print hal-00802047, HAL.
    2. Clarke, Daniel & Mahul, Olivier, 2011. "Disaster risk financing and contingent credit : a dynamic analysis," Policy Research Working Paper Series 5693, The World Bank.
    3. Daniel J. Clarke & Olivier Mahul & Richard Poulter & Tse-Ling Teh, 2017. "Evaluating Sovereign Disaster Risk Finance Strategies: A Framework," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(4), pages 565-584, October.
    4. Vasily Astrov & Mahdi Ghodsi & Richard Grieveson & Mario Holzner & Artem Kochnev & Michael Landesmann & Olga Pindyuk & Robert Stehrer & Maryna Tverdostup & Alexandra Bykova, 2022. "Russia’s invasion of Ukraine: assessment of the humanitarian, economic, and financial impact in the short and medium term," International Economics and Economic Policy, Springer, vol. 19(2), pages 331-381, May.
    5. World Bank Group, 2016. "Colombia," World Bank Publications - Reports 25288, The World Bank Group.
    6. Christian Herdinata & Fransisca D. Pranatasari, 2022. "Impact of COVID-19 on Organizational Support in Financial Technology," Economies, MDPI, vol. 10(8), pages 1-14, July.
    7. repec:wbk:wboper:16761 is not listed on IDEAS
    8. World Bank, 2013. "Financing Post-Disaster Recovery and Reconstruction Operations," World Bank Publications - Reports 22418, The World Bank Group.
    9. Stefan Hochrainer-Stigler & Qinhan Zhu & Alessio Ciullo & Jonas Peisker & Bart Hurk, 2023. "Differential Fiscal Performances of Plausible Disaster Events: A Storyline Approach for the Caribbean and Central American Governments under CCRIF," Economics of Disasters and Climate Change, Springer, vol. 7(2), pages 209-229, July.
    10. Yarovaya, Larisa & Brzeszczyński, Janusz & Goodell, John W. & Lucey, Brian & Lau, Chi Keung Marco, 2022. "Rethinking financial contagion: Information transmission mechanism during the COVID-19 pandemic," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 79(C).
    11. Vikrant Panwar & Subir Sen, 2019. "Economic Impact of Natural Disasters: An Empirical Re-examination," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 13(1), pages 109-139, February.
    12. Goodell, John W., 2020. "COVID-19 and finance: Agendas for future research," Finance Research Letters, Elsevier, vol. 35(C).
    13. Sungyoon Lee & Jennifer Dodge & Gang Chen, 2022. "The cost of social vulnerability: an integrative conceptual framework and model for assessing financial risks in natural disaster management," 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. 114(1), pages 691-712, October.
    14. World Bank Group, 2014. "Financial Protection Against Natural Disasters," World Bank Publications - Reports 21725, The World Bank Group.
    15. World Bank, 2013. "Building Resilience : Integrating Climate and Disaster Risk into Development [Crear resiliencia mediante la integración de los riesgos climáticos y de desastre en el proceso de desarrollo - Resumen," World Bank Publications - Reports 16639, The World Bank Group.
    16. Melissa L. Finucane & Joie Acosta & Amanda Wicker & Katie Whipkey, 2020. "Short-Term Solutions to a Long-Term Challenge: Rethinking Disaster Recovery Planning to Reduce Vulnerabilities and Inequities," IJERPH, MDPI, vol. 17(2), pages 1-19, January.

    More about this item

    Keywords

    Insurance&Risk Mitigation; Banks&Banking Reform; Debt Markets; Natural Disasters; Hazard Risk Management;
    All these keywords.

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