Joint OECD and World Bank report urges governments to improve resilience to disasters and related fiscal risks

melting ice 2019

Inutsaaip Aqqulaa 366, Scoresbysund, Greenland (Andy Brunner, Unsplash)

This article is brought to you in association with OECD.


Rapid economic development and climate change are increasing our vulnerability to natural disasters, and a new joint OECD-World Bank report calls for pro-active management of the financial costs of those disasters before they strike.

Released during the annual OECD Forum in Paris, Fiscal Resilience to Natural Disasters estimates that natural disasters cost advanced and emerging economies around USD 1.2 trillion in damages and economic losses over the last decade, more than double what they cost over the previous 10 years. On top of the tragic loss of life from recent disasters, earthquakes in Chile and New Zealand in 2010 and 2011 cost 10% and 20% of annual GDP respectively. Japan’s 2011 earthquake, tsunami and nuclear disaster contributed to a 2% economic contraction in the following quarter of that year. It also led to a surge in additional central government spending for recovery and reconstruction in 2012, equal to 8% o its GDP and over 20% of the general account budget.

“Central governments absorb a major share of disaster costs, especially in countries where private disaster risk insurance markets are under developed,” said Marcos Bonturi, Director of Public Governance at the OECD, launching the report at the OECD Forum in Paris. “Clearer ex-ante rules on burden sharing and more transparent conditionalities on financial assistance would help governments control or limit that cost and ease recovery when disaster actually strikes.”

The report identifies the most important sources of disaster costs for governments. Damages to public infrastructure assets and related service disruptions are among the largest sources of the costs governments assume, and they are also the most difficult to control. The report also shows that many of such costs arise through claims made by subnational government agencies, state-owned enterprises or other partners that own or operate infrastructure assets and services.

Broad or unclear rules about post-disaster assistance lead governments to take on a high share of disaster costs. Extreme disaster events put pressure on governments to act on an ad-hoc basis and often result in higher damage compensation.

The OECD report finds that governments should be able to control their disaster-related contingent liabilities more effectively. Setting up clear rules for disaster assistance, including how costs are to be shared, can lead to improved resilience to fiscal risks.

The report recommends that in the aftermath of disasters, governments could condition financial assistance to reward reconstruction designed to reduce future damages. For example, some countries decrease financial compensation for repeated damage claims to the same asset.

“Every country will face unique challenges in managing its response,” said Alfonso Garcia Mora, World Bank Global Director for Finance, Competitiveness and Innovation. “The common thread is the potential for disaster recovery alternatives that will rely on stable markets, strong institutions, international co-operation as well as innovation and technology to improve financial resilience,” he added.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

A European young student speaks about the Youth Policies of the European Commission

The Sichuan Province of China presents its cultural treasure to the EU

UN chief welcomes possibility of resumed talks between US and North Korea

Why Italy will not follow the Greek road; Eurozone to change or unravel

Ebola Outbreak in Democratic Republic Congo is ‘largely contained’: WHO

Why do thousands of migrants need to be drowned for Brussels to wake up?

EU’s Finance Ministers draft plan to raise tax bills of online giants like Google and Amazon

Central Africa: Security Council concerned by ‘grave security situation’, calls for better agency cooperation

How the United States is falling in love with secondhand clothes

Taking fast road to ‘e-mobility’ central to a sustainable future: COP24

‘Catastrophic’ healthcare costs put mothers and newborns at risk

Egyptian death sentences a ‘gross miscarriage of justice’: UN human rights chief

Austrian Presidency priorities discussed in committees

Human rights are everyone’s business, amid relentless crises around world: UN’s Bachelet

Three ways the world must tackle mental health

Music is a vital urban resource. How do we plan for it?

EU: Tax evasion and fraud flourish under political protection

Syrians still living on ‘razor edge’ as UN launches $8.8 billion dollar appeal

New study shows close link between GVCs participation and economic development

International Day of the Midwife: 5 things you should know

Time is running out to protect Africa’s forests

Finland, Switzerland and New Zealand lead the way at teaching skills for the future

EU to spend €6 billion on youth employment and training futile schemes

Security Council gravely concerned by Ebola outbreak in DR Congo, demands immediate end to violence hampering response

There is huge talent in the world’s refugee camps. We must realize this overlooked potential

Property regimes for international couples in Europe: new rules apply in 18 Member States as of today

A conceptual approach to Violence Against Healthcare in Turkey from SDG’s

Measuring consumer confidence isn’t useful anymore. Here’s what we should do instead

4 radical shifts required to achieve universal health coverage worldwide

How to future-proof India’s economy

There’s a global learning crisis and it’s leaving millions without basic skills

This is how attitudes to vaccines compare around the world

Hopes for Palestinian State hit by ‘facts on the ground’ : senior UN official

When it comes to envirotech adoption, NGOs can lead us out of the woods

SMEs are driving job growth, but need higher investment in skills, innovation and tech to boost wages and productivity

UN rights chief ‘strongly’ condemns ‘shocking’ mass executions in Saudi Arabia

These forms of exercise are best for your mental health

5G will redefine entire business models. Here’s how

Haiti stands ‘at the crossroads’ between peacekeeping, development – Bachelet urges strengthened ‘human rights protection’

DR Congo: Ebola response resumes despite ‘risky environment’

Europe turns out more jobs this summer

Tuesday’s Daily Brief: Bicycles for the environment, new leader for the UN General Assembly, UN values, Ebola, Syria and Libya

Thursday’s Daily Brief: dire living conditions in Idlib, migrants at US southern border, end in sight for trachoma, Human Rights Council

If airlines were a country they’d be one of the world’s top 10 greenhouse gas emitters

MWC19 Wrap Up, in association with The European Sting, GSMA’s Brussels Media Partner for the 6th Consecutive Year

Here’s how to make ‘value-based healthcare’ a reality

‘Ghost fishing’ is threatening our oceans. Here’s how we can tackle it

Schools must look to the future when connecting students to the internet

EU economy: Between recession and indiscernible growth

EU tourism industry expects a new record year in 2014

North-east Nigeria displacement crisis continues amid ‘increased sophistication’ of attackers, warns UN

Mental health: a medical school’s demand

How Eurozone consumers spend their income when they have one…

Portugal: Budget MEPs back €4.66 m in job-search aid for 730 redundant workers

Erasmus+: an expected budget of €3 billion to be invested in young Europeans and to help create European Universities in 2019

Indigenous peoples ‘lag behind on all social and economic indicators’: UN deputy human rights chief

Eliminating waste at scale – eight opportunities for blockchain

The US-Mexico trade deal a threat for others, Trump to single out China, Europe

We can decide to live within the limits of our planet

7 ways for businesses to capture the youth dividend

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s